Legislature(2005 - 2006)BELTZ 211

03/10/2006 01:30 PM COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Bills Previously Heard/Scheduled
+= SB 193 DEFERRAL OF MUNICIPAL PROPERTY TAXES TELECONFERENCED
Moved CSSB 193(CRA) Out of Committee
+= SB 291 MUNICIPAL HARBOR FACILITY GRANTS TELECONFERENCED
Moved CSSB 291(CRA) Out of Committee
+= SB 247 REVENUE SHARING PROGRAM TELECONFERENCED
Moved CSSB 247(CRA) Out of Committee
+= SB 246 APPROP TO REVENUE SHARING FUND TELECONFERENCED
Moved CSSB 246(CRA) Out of Committee
+= SB 248 ADMINISTRATIVE BOROUGHS/BOROUGH GRANTS/ TELECONFERENCED
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         March 10, 2006                                                                                         
                           1:35 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Bert Stedman, Chair                                                                                                     
Senator Gary Stevens, Vice Chair                                                                                                
Senator Thomas Wagoner                                                                                                          
Senator Johnny Ellis via teleconference                                                                                         
Senator Albert Kookesh                                                                                                          
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 193                                                                                                             
"An Act  relating to an  optional deferral of  municipal property                                                               
taxes  on  certain  primary  residences  owned  and  occupied  by                                                               
individuals with  incomes at or below  federal poverty guidelines                                                               
for the state."                                                                                                                 
                                                                                                                                
     MOVED CSSB 193(CRA) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 291                                                                                                             
"An Act relating to the  municipal harbor facility grant program;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
     MOVED CSSB 291(CRA) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 247                                                                                                             
"An Act  relating to the  revenue sharing program;  and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
     MOVED CSSB 247(CRA) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 246                                                                                                             
"An Act  making a special  appropriation from the  Alaska capital                                                               
income fund  to the  revenue sharing fund;  and providing  for an                                                               
effective date."                                                                                                                
                                                                                                                                
     MOVED CSSB 246(CRA) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 248                                                                                                             
"An  Act   relating  to  administrative  boroughs;   relating  to                                                               
municipal   school   districts;   relating   to   standards   for                                                               
incorporation   of    boroughs   and    unified   municipalities;                                                               
eliminating  obsolete  provisions  relating   to  a  third  class                                                               
borough  and making  technical changes  to  statutes relating  to                                                               
regional  educational  attendance  areas;  and  relating  to  new                                                               
borough  grants  for  certain  newly  incorporated  boroughs  and                                                               
unified municipalities."                                                                                                        
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 291                                                                                                                  
SHORT TITLE: MUNICIPAL HARBOR FACILITY GRANTS                                                                                   
SPONSOR(s): SENATOR(s) STEDMAN                                                                                                  
                                                                                                                                
02/14/06       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/14/06       (S)       CRA, FIN                                                                                               
03/06/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
03/06/06       (S)       Heard & Held                                                                                           
03/06/06       (S)       MINUTE(CRA)                                                                                            
03/10/06 (S) CRA AT 1:30 PM BELTZ 211                                                                                           
                                                                                                                                
BILL: SB 247                                                                                                                  
SHORT TITLE: REVENUE SHARING PROGRAM                                                                                            
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS BY REQUEST                                                                             
                                                                                                                                
01/23/06       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/23/06       (S)       CRA, FIN                                                                                               
02/22/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
02/22/06       (S)       <Bill Hearing Postponed>                                                                               
03/06/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
03/06/06       (S)       Heard & Held                                                                                           
03/06/06       (S)       MINUTE(CRA)                                                                                            
03/10/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 246                                                                                                                  
SHORT TITLE: APPROP TO REVENUE SHARING FUND                                                                                     
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS BY REQUEST                                                                             
                                                                                                                                
01/23/06       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/23/06       (S)       CRA, FIN                                                                                               
02/22/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
02/22/06       (S)       <Bill Hearing Postponed>                                                                               
03/06/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
03/06/06       (S)       Heard & Held                                                                                           
03/06/06       (S)       MINUTE(CRA)                                                                                            
03/10/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 193                                                                                                                  
SHORT TITLE: DEFERRAL OF MUNICIPAL PROPERTY TAXES                                                                               
SPONSOR(s): SENATOR(s) BUNDE                                                                                                    
                                                                                                                                
05/04/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
05/04/05       (S)       CRA, FIN                                                                                               
01/30/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
01/30/06       (S)       -- Rescheduled to 02/08/06 --                                                                          
02/08/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
02/08/06       (S)       Heard & Held                                                                                           
02/08/06       (S)       MINUTE(CRA)                                                                                            
02/15/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
02/15/06       (S)       Scheduled But Not Heard                                                                                
02/22/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
02/22/06       (S)       Heard & Held                                                                                           
02/22/06       (S)       MINUTE(CRA)                                                                                            
03/06/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
03/06/06       (S)       Heard & Held                                                                                           
03/06/06       (S)       MINUTE(CRA)                                                                                            
03/10/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 248                                                                                                                  
SHORT TITLE: ADMINISTRATIVE BOROUGHS/BOROUGH GRANTS/                                                                            
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS BY REQUEST OF ADVISORY                                                                 
COMM ON LOCAL GOVT                                                                                                              
                                                                                                                                
01/23/06       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/23/06       (S)       CRA, FIN                                                                                               
02/15/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
02/15/06       (S)       Scheduled But Not Heard                                                                                
03/08/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
03/10/06       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
KEVIN RITCHIE, Executive Director                                                                                               
Alaska Municipal League                                                                                                         
217 Second Street                                                                                                               
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:   Supported  the concept  embodied in  SB 246                                                             
and SB 247;  testified on version F  CS for SB 193  and said that                                                               
AML policy  is to  oppose anything that  would take  revenue away                                                               
from communities; and commented on SB 248                                                                                       
MELANIE MILLHORN, Director                                                                                                      
Division of Retirement and Benefits                                                                                             
Department of Administration                                                                                                    
PO Box 110200                                                                                                                   
Juneau, AK  99811-0200                                                                                                          
POSITION STATEMENT:  Testified on SB 246 and SB 247                                                                           
                                                                                                                                
VALERIE McCANDLESS, Mayor                                                                                                       
City of Wrangell                                                                                                                
P.O. Box 531                                                                                                                    
Wrangell, AK 99929                                                                                                              
POSITION STATEMENT:  Supported the idea embodied in SB 246 and                                                                
SB 247                                                                                                                          
                                                                                                                                
DEBBIE KENUKTOOK, Mayor                                                                                                         
City of Koyuk                                                                                                                   
P.O. Box 53029                                                                                                                  
Koyuk, AK 99753                                                                                                                 
POSITION STATEMENT:  Testified on SB 246 and SB 247 and                                                                       
supported revenue sharing                                                                                                       
                                                                                                                                
SHANE HORAN, Assessor                                                                                                           
Kenai Peninsula Borough                                                                                                         
144 North Binkley Street                                                                                                        
Soldotna, AK 99669                                                                                                              
POSITION STATEMENT:  Opposed version F CS for SB 193                                                                          
                                                                                                                                
CLYDE BAXLEY                                                                                                                    
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Opposed version F CS for SB 193                                                                          
                                                                                                                                
AL SUNQUIST                                                                                                                     
Anchorage, AK                                                                                                                   
POSITION STATEMENT:  Opposed version F CS for SB 193                                                                          
                                                                                                                                
ART GRISWOLD                                                                                                                    
Delta Junction, AK                                                                                                              
POSITION STATEMENT:  Opposed version F CS for SB 193                                                                          
                                                                                                                                
MARTY McGEE, Assessor                                                                                                           
Municipality of Anchorage                                                                                                       
4501 South Bragaw                                                                                                               
Anchorage, Alaska  99508                                                                                                        
POSITION STATEMENT:  Provided facts related to version F CS for                                                               
SB 193                                                                                                                          
                                                                                                                                
STEVE VAN SANT, State Assessor                                                                                                  
Division   of  Community   Advocacy,   Department  of   Commerce,                                                               
Department of Commerce, Community & Economic Development                                                                        
PO Box 110800                                                                                                                   
Juneau, AK 99811-0800                                                                                                           
POSITION STATEMENT:  Made clarifications  related to version F CS                                                             
for SB 193                                                                                                                      
                                                                                                                                
MERYL THOMPSON                                                                                                                  
Wasilla, AK                                                                                                                     
POSITION STATEMENT:  Opposed version F CS for SB 193                                                                          
                                                                                                                                
MARIE DARLIN                                                                                                                    
Capital City Task Force for AARP                                                                                                
Juneau, AK 99801                                                                                                                
POSITION STATEMENT:  Opposed version F CS for SB 193                                                                          
                                                                                                                                
MIKE BLACK, Director                                                                                                            
Division of Community Advocacy                                                                                                  
Department of Commerce, Community & Economic Development                                                                        
PO Box 110800                                                                                                                   
Juneau, AK 99811-0800                                                                                                           
POSITION STATEMENT:  Supported the concept of SB 248                                                                          
                                                                                                                                
ALAN LEMASTER                                                                                                                   
Gakona, AK                                                                                                                      
POSITION STATEMENT:  Testified on SB 248                                                                                      
                                                                                                                                
JOHN HOZEY, Representative                                                                                                      
Alaska Municipal League Task Force on Borough Formation                                                                         
Valdez, AK 99686                                                                                                                
POSITION STATEMENT:  Suggested amendment to SB 248                                                                            
                                                                                                                                
DAVE TRANTHAM, Council Member                                                                                                   
City of Bethel                                                                                                                  
P.O. Box 1388                                                                                                                   
Bethel, AK 99559                                                                                                                
POSITION STATEMENT:   Reported little  support for SB 248  in his                                                             
area                                                                                                                            
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR  BERT  STEDMAN called  the  Senate  Community and  Regional                                                             
Affairs  Standing  Committee  meeting  to order  at  1:35:32  PM.                                                             
Present  were  Senators  Gary  Stevens,  Thomas  Wagoner,  Albert                                                               
Kookesh,   and  Chair   Bert   Stedman.   Senator  Johnny   Ellis                                                               
participated via teleconference.                                                                                                
                                                                                                                                
            SB 291-MUNICIPAL HARBOR FACILITY GRANTS                                                                         
                                                                                                                                
CHAIR BERT  STEDMAN announced  SB 291,  version Y,  to be  up for                                                               
consideration.                                                                                                                  
                                                                                                                                
1:36:54 PM                                                                                                                    
                                                                                                                                
He recapped  the history  of harbor transfers  from the  state to                                                               
municipalities. Since the transfers  began ten years ago, there's                                                               
been an  ongoing debate regarding  the condition under  which the                                                               
harbors  were  transferred and  the  amount  the state  paid  the                                                               
municipalities  to  assume  ownership   and  operation  of  those                                                               
harbors.                                                                                                                        
                                                                                                                                
To  address  the  issue legislators  met  with  municipal  harbor                                                               
administrators  and  as  a  result   the  Alaska  Association  of                                                               
Harbormasters and Port Administrators  brought forward a proposal                                                               
for  a  50/50 matching  grant  program  for harbor  upgrades  and                                                               
renovations.  That  would  allow  municipalities to  use  the  50                                                               
percent  state  match  and  other   appropriate  funds  with  the                                                               
provision that other state grant money could not be used.                                                                       
                                                                                                                                
SB 291 would  establish the municipal harbor  facility grant fund                                                               
to which the Legislature would  make an annual appropriation from                                                               
the watercraft  fuel tax  account and from  the state  portion of                                                               
the fisheries  business tax.  Both sources  come from  the marine                                                               
industry  so harbor  users  would generate  the  revenue for  the                                                               
program. The bill  caps the funds that can be  used per community                                                               
per year  at $5 million so  that a large community  couldn't take                                                               
all  the available  funds in  any given  year. Communities  could                                                               
apply for the capital match  for any particular harbor just once.                                                               
The expectation  is that  communities would  establish, maintain,                                                               
and run an enterprise fund into perpetuity.                                                                                     
                                                                                                                                
As currently designed the program would  run for between 8 and 10                                                               
years and  at the end of  that time the harbors  around the state                                                               
should be up to a fairly good standard.                                                                                         
                                                                                                                                
CHAIR  STEDMAN announced  that  public  testimony had  previously                                                               
been taken on SB  291 and he would like a motion  to move it from                                                               
committee.                                                                                                                      
                                                                                                                                
1:41:15 PM                                                                                                                    
                                                                                                                                
SENATOR GARY  STEVENS motioned to  report CSSB  291(CRA), version                                                               
Y, with  attached fiscal note(s) and  individual recommendations.                                                               
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
             SB 246-APPROP TO REVENUE SHARING FUND                                                                          
1:42:04 PM                                                                                                                    
                 SB 247-REVENUE SHARING PROGRAM                                                                             
                                                                                                                                
1:42:49 PM                                                                                                                    
                                                                                                                                
CHAIR  BERT STEDMAN  announced SB  246 and  SB 247  to be  up for                                                               
consideration. He  noted that public  testimony was taken  at the                                                               
previous hearing and  that this day the  committee would consider                                                               
committee substitutes (CS) for each bill.                                                                                       
                                                                                                                                
Version  Y  CS  for  SB  247  establishes  the  municipal  public                                                               
employees' retirement  system unfunded liability  relief account.                                                               
Version  G  CS  for  SB 246  appropriates  $29,300,000  from  the                                                               
general  fund to  the relief  account to  make up  the difference                                                               
between  what  employers  will  pay in  FY07  and  the  actuarial                                                               
calculated rate.                                                                                                                
                                                                                                                                
At-ease from 1:44:06 PM to 1:45:16 PM.                                                                                      
                                                                                                                                
CHAIR STEDMAN asked for a motion to adopt version G.                                                                            
                                                                                                                                
SENATOR GARY STEVENS moved version G CS for SB 246.                                                                             
                                                                                                                                
CHAIR  STEDMAN objected  for  discussion  purposes. He  explained                                                               
that  the Alaska  Retirement Management  Board ("ARM  Board") was                                                               
created  last session  to  review  the issue  of  the roughly  $6                                                               
billion unfunded  liability for PERS  and to present a  report to                                                               
the Legislature  this session. It  has asked for  additional time                                                               
to make recommendations regarding long-term solutions.                                                                          
                                                                                                                                
Employers are  required to  adhere to a  payment schedule  to pay                                                               
off the liability that ticks on  as a solution is sought. Because                                                               
the  employers' contribution  rate  isn't at  the  rate that  the                                                               
actuaries calculate  it ought to be  to pay off the  liability, a                                                               
special  appropriation   is  to   be  established  to   fund  the                                                               
difference  between where  municipalities  are  on their  funding                                                               
schedule and where  the actuary requires them to be.  The goal is                                                               
to stop the  growth of the unfunded liability until  such time as                                                               
the ARM Board can submit its  report and some long-term action is                                                               
undertaken.                                                                                                                     
                                                                                                                                
He removed his  objection and announced that version G  CS for SB                                                               
246 was adopted.                                                                                                                
                                                                                                                                
1:49:06 PM                                                                                                                    
                                                                                                                                
SENATOR  GARY STEVENS  stated that  this  combines two  important                                                               
issues and should  address a number of  problems that communities                                                               
face.                                                                                                                           
                                                                                                                                
CHAIR  STEDMAN  clarified  that  version  G  doesn't  change  the                                                               
special appropriation  from the Alaska Capital  Income Fund. That                                                               
fund  is commonly  referred to  as  Amerada Hess  and it  resides                                                               
within the  Alaska Permanent Fund,  but isn't counted  toward the                                                               
annual dividend that citizens receive.                                                                                          
                                                                                                                                
1:50:37 PM                                                                                                                    
                                                                                                                                
KEVIN RITCHIE, Executive Director  of the Alaska Municipal League                                                               
(AML),  thanked  the committee  for  the  work  it had  done.  He                                                               
advised that  AML hadn't had time  to give the bill  full review,                                                               
but  it   would  get  the  information   out  to  municipalities.                                                               
Obviously, he said,  the concept of putting the  liability into a                                                               
holding pattern is significant.                                                                                                 
                                                                                                                                
At-ease from 1:51:18 PM to 1:52:14 PM.                                                                                      
                                                                                                                                
CHAIR STEDMAN asked for a motion to adopt version Y.                                                                            
                                                                                                                                
SENATOR GARY STEVENS moved version Y CS for SB 247.                                                                             
                                                                                                                                
CHAIR STEDMAN objected for explanation  purposes. He advised that                                                               
SB 247  is the  revenue sharing  bill and  state aid  for certain                                                               
municipalities'  under-funding  of  PERS  and  providing  for  an                                                               
effective date. Language in Section  2 on page 3 establishes that                                                               
in FY07 the funds will be  used to make up the shortfalls between                                                               
the  PERS   contributions  from   municipal  employers   and  the                                                               
actuarial calculated rate for  the contributions. The communities                                                               
that will  receive funds are  listed on  page 3, line  24 through                                                               
page 5,  line 2. Communities that  aren't on the list  are either                                                               
funding at the required actuarial  calculated rate or they are in                                                               
a funding surplus.  He noted that the under  funded amounts range                                                               
from $11 for the City of Egegik  to a high of $14,134,590 for the                                                               
Municipality of Anchorage.                                                                                                      
                                                                                                                                
He  removed  his  objection  and announced  that  version  Y  was                                                               
adopted.                                                                                                                        
                                                                                                                                
1:55:42 PM                                                                                                                    
                                                                                                                                
MELANIE MILLHORN, Director, Division  of Retirement and Benefits,                                                               
commended Senator  Stedman for the  work he  had done on  SB 247,                                                               
version  Y. She  recapped  the  bill and  said  it provides  that                                                               
appropriations will  be made to  the various accounts to  pay the                                                               
difference between what the actuary  has calculated as their rate                                                               
to be  for FY 07 compared  to what their contribution  rate is as                                                               
capped by regulation  to AAC 35.900. The division  would make the                                                               
appropriations to the various accounts by January 1, 2007.                                                                      
                                                                                                                                
CHAIR STEDMAN added if the  appropriations aren't made, the money                                                               
lapses into the general fund.                                                                                                   
                                                                                                                                
SENATOR  GARY STEVENS  referenced the  spreadsheet in  the packet                                                               
and asked what the $204,976  appropriation for the City of Seward                                                               
represents.                                                                                                                     
                                                                                                                                
MS.  MILLHORN replied  it represents  the difference  between the                                                               
24.26 percent  actuarial calculated  rate found  in column  5 and                                                               
the 18.74 percent employer's FY07 rate found in column 3.                                                                       
                                                                                                                                
CHAIR  STEDMAN asked  her to  include the  5 percent  cap in  her                                                               
explanation.                                                                                                                    
                                                                                                                                
MS. MILHORN  responded a  regulation in PERS  places a  5 percent                                                               
annual  cap on  the  contribution rate  increase  that the  board                                                               
adopts. That  regulation is  scheduled for  repeal, but  when the                                                               
ARM Board adopted the FY07  rate it was operative until repealed.                                                               
The valuation itself sets forward  an average calculated employer                                                               
rate,  but  the  PERS  supplement  report  that  accompanies  the                                                               
valuation  has an  individual employer  calculated rate  based on                                                               
the individual liabilities.  She told the committee  to note that                                                               
each liability  is different based  on the FY07 rate  compared to                                                               
the actuarial calculated rate.                                                                                                  
                                                                                                                                
SENATOR GARY  STEVENS asked her to  use the City of  Seward as an                                                               
example to explain each of the columns in the spreadsheet.                                                                      
                                                                                                                                
MS. MILLHORN  replied column  1 has  FY07 estimated  earnings. It                                                               
shows that  the City of  Seward has a  FY07 payroll base  of $3.7                                                               
million.  Column 2  shows the  FY07  rate at  18.74 percent.  She                                                               
noted  that the  supplement  report indicates  that  the rate  is                                                               
capped  at   18.74  percent.  Column   3  indicates   the  actual                                                               
contribution  amount   of  $695,880,   which  is   calculated  by                                                               
multiplying column  2 times column  1. Column 4 is  the actuarial                                                               
calculated  rate  at 24.26  percent.  Column  5 is  the  required                                                               
contribution according  to the  actuarial calculated  rate, which                                                               
is calculated  by multiplying column  4 times column 1.  Column 6                                                               
total is  $204,976, which  is the  difference between  the actual                                                               
contribution in column 3 and  the actuarial required contribution                                                               
in column 5.                                                                                                                    
                                                                                                                                
2:00:54 PM                                                                                                                    
                                                                                                                                
CHAIR STEDMAN  summarized that the  City of Seward has  an annual                                                               
payroll of  $3.7 million and  it should be  contributing $900,856                                                               
per year  into the retirement system,  but because of the  cap it                                                               
is only  contributing $695,880. Version  Y makes up  the $204,976                                                               
difference. This is a one-time  appropriation because the idea is                                                               
that by next year there will be a long-term solution.                                                                           
                                                                                                                                
SENATOR KOOKESH mentioned that the cap would be eliminated.                                                                     
                                                                                                                                
SENATOR THOMAS WAGONER asked when the cap would be removed.                                                                     
                                                                                                                                
MS. MILLHORN  replied the regulation  is scheduled for  repeal in                                                               
the next several months and will impact the FY08 rate.                                                                          
                                                                                                                                
2:02:24 PM                                                                                                                    
                                                                                                                                
KEVIN  RITCHIE  stated  that  this  is a  positive  step  and  he                                                               
reiterated  that  AML  would  get  the  information  out  to  its                                                               
members.                                                                                                                        
                                                                                                                                
2:03:27 PM                                                                                                                    
                                                                                                                                
VALERIE  McCANDLESS,  Mayor  of  the  City  of  Wrangell,  voiced                                                               
support for  the effort  represented in  SB 246  and SB  247. She                                                               
said she would follow the legislation  to see how it would affect                                                               
her community.                                                                                                                  
                                                                                                                                
2:04:35 PM                                                                                                                    
                                                                                                                                
DEBBIE KENUKTOOK, Mayor  of the City of Koyuk,  reported that the                                                               
city  financial situation  is bleak  and she  strongly encouraged                                                               
the Legislature to reinstate a revenue sharing program.                                                                         
                                                                                                                                
CHAIR STEDMAN  observed that  Koyuk isn't  the only  community in                                                               
Western  Alaska that  is  facing financial  strains  in the  last                                                               
several years.                                                                                                                  
                                                                                                                                
He noted there was no further  testimony and asked for motions to                                                               
move SB 246 and SB 247.                                                                                                         
                                                                                                                                
2:08:49 PM                                                                                                                    
                                                                                                                                
SENATOR WAGONER motioned to report  CSSB 247(CRA), version Y, and                                                               
attached   fiscal   note(s)   from  committee   with   individual                                                               
recommendations. There being no objection, it was so ordered.                                                                   
                                                                                                                                
2:09:18 PM                                                                                                                    
                                                                                                                                
SENATOR  WAGONER motioned  to report  CSSB  246(CRA), version  G,                                                               
from committee  with individual  recommendations. There  being no                                                               
objection, it was so ordered.                                                                                                   
                                                                                                                                
CHAIR STEDMAN called an at-ease from 2:09:42 PM to 2:11:54 PM                                                               
                                                                                                                                
          SB 193-DEFERRAL OF MUNICIPAL PROPERTY TAXES                                                                       
                                                                                                                              
                                                                                                                                
CHAIR STEDMAN  announced SB  193 to be  up for  consideration. He                                                               
reminded  members   that  the  committee  previously   heard  the                                                               
presentation  on   version  F   committee  substitute   (CS).  He                                                               
highlighted the  following: AS  29.45.030(b) doesn't  provide tax                                                               
assessors  clear direction  to  exempt properties  owned by  non-                                                               
profit religious  organizations that are used  to house educators                                                               
in private  or parochial schools; individual  educators living in                                                               
their own  homes do not  benefit; privately owned  residences are                                                               
not  applicable;  version  F  only  clarifies  existing  statutes                                                               
regarding  the tax  exempt  status of  properties  owned by  non-                                                               
profit religious  organizations; version  F is  appropriate under                                                               
the  original  bill because  it  deals  with the  same  statutory                                                               
section.                                                                                                                        
                                                                                                                                
He advised  that he would  take public testimony even  though the                                                               
committee had previously heard the bill.                                                                                        
                                                                                                                                
SENATOR THOMAS WAGONER asked for a brief at-ease.                                                                               
                                                                                                                                
2:13:55 PM                                                                                                                    
                                                                                                                                
SHANE  HORAN, Assessor  for the  Kenai Peninsula  Borough, stated                                                               
that version F CS for SB  193 would establish an unfunded mandate                                                               
that  could  cause  the  borough  to lose  between  $20  and  $30                                                               
thousand in revenue.  The potential loss would be  greater if the                                                               
various  service areas  were considered.  He  expressed the  view                                                               
that the  language is  broad and might  not exclude  coaches, for                                                               
example, who are oftentimes looked  upon as educators. He further                                                               
questioned  whether  volunteer   teachers,  substitute  teachers,                                                               
part-time  or seasonal  teachers might  be included.  He said  he                                                               
assumed that Sunday  school teachers would be  excluded. He asked                                                               
the committee  to keep  in mind that  most educators  in private,                                                               
religious  or   parochial  schools  are  compensated   for  their                                                               
services. Finally, he  said, this would be  an additional program                                                               
that would require administering and monitoring.                                                                                
                                                                                                                                
SENATOR THOMAS  WAGONER said  this is permissive  so it  isn't an                                                               
unfunded mandate.                                                                                                               
                                                                                                                                
CHAIR  STEDMAN clarified  that just  one section  of the  bill is                                                               
discretionary  and  that  is the  original  section  that  allows                                                               
certain  citizens to  apply to  a municipality  for property  tax                                                               
deferral.  The other  section is  new and  it cleans  up language                                                               
dealing with non-profit religious organizations.                                                                                
                                                                                                                                
2:16:48 PM                                                                                                                    
                                                                                                                                
CLYDE BAXLEY, Anchorage resident,  stated opposition to version F                                                               
committee substitute (CS) for SB 193  describing it as a huge tax                                                               
giveaway to the Anchorage Baptist  Temple. He urged the committee                                                               
to return  to the original  bill as sponsored by  Senators Bunde,                                                               
Dyson and Ellis  because the CS opens the  floodgates to lawsuits                                                               
for  discrimination against  public  schoolteachers  in favor  of                                                               
private schoolteachers.                                                                                                         
                                                                                                                                
MR. BAXLEY  asserted that the  legislation would  violate Article                                                               
1, Section  15 of  the Alaska State  Constitution because  it's a                                                               
special  bill for  special  people. It  also  violates Article  2                                                               
Section 9 and Article 1, Section 1.  This is a special act and it                                                               
only favors teachers working for religious organizations.                                                                       
                                                                                                                                
Taxpayers around the  state are looking for ways  to reduce their                                                               
property  taxes  and  this  bill  does  the  opposite,  he  said.                                                               
Furthermore the proposed definition  of "minister" is designed to                                                               
expand  the list  of  titles  conferred on  members  of a  church                                                               
organization for the  purpose of qualifying properties  for a tax                                                               
exemption. No  state criterion  governs how  a church  titles its                                                               
members  so title  decisions  are left  to  the principle  church                                                               
leader. That, he said, is  a flimsy basis for determining whether                                                               
or not a church property qualifies for tax-exempt status.                                                                       
                                                                                                                                
He  suggested that  if the  committee really  wants to  quiet the                                                               
complaints from  taxpayers then  it should  amend the  statute to                                                               
make it clear  that no church shall be entitled  to more than one                                                               
tax-exempt  residence  that is  occupied  by  one church  leader.                                                               
Doing so would  satisfy the Alaska State Constitution  and put to                                                               
rest the  squabbles that  have plagued  Anchorage for  last three                                                               
years.                                                                                                                          
                                                                                                                                
MR. BAXLEY urged the committee  to return to the original version                                                               
of SB 193.                                                                                                                      
                                                                                                                                
CHAIR STEDMAN  reiterated that the CS  clarified existing statute                                                               
and it fits under the original version of the bill title.                                                                       
                                                                                                                                
2:22:45 PM                                                                                                                    
                                                                                                                                
AL SUNQUIST, Anchorage,  spoke in opposition to version  F CS for                                                               
SB 193. He  said that he's aware that many  church properties are                                                               
in violation of  existing laws according to the  tax assessor and                                                               
he supports efforts to crack down  on what he refers to as "black                                                               
collar crimes."  He stated  that the  issue before  the committee                                                               
represents  an entanglement  of church  and state  and should  be                                                               
resisted.                                                                                                                       
                                                                                                                                
2:24:42 PM                                                                                                                    
                                                                                                                                
ART GRISWOLD, Delta Junction, testified  in opposition to version                                                               
F CS  for SB 193.  He acknowledged that the  area did not  have a                                                               
property tax  yet, but that it  was a possibility. He  noted that                                                               
the  state  doesn't  currently fund  tax  exemptions  for  senior                                                               
citizens or disabled veterans in  the organized boroughs and this                                                               
bill represents an additional exemption.  He reported that in his                                                               
area  there are  three major  church farms  with huge  homes that                                                               
will be completely  exempt from taxes if the area  is forced into                                                               
a  borough.  He  said  he  would like  to  see  legislation  that                                                               
clarifies that  religious organizations receive tax  exemption on                                                               
just one building where services are held.                                                                                      
                                                                                                                                
CHAIR STEDMAN asked  that the record reflect  that Delta Junction                                                               
does not pay property tax.                                                                                                      
                                                                                                                                
2:27:01 PM                                                                                                                    
                                                                                                                                
MARTY  McGEE,   Assessor  for  the  Municipality   of  Anchorage,                                                               
provided the following facts:  Anchorage Baptist Temple currently                                                               
owns 24 pieces  of property; 20 of the  properties are residences                                                               
of some  kind; 10 of the  residences are currently tax  exempt; 6                                                               
of the residences  will soon move to taxable  status leaving just                                                               
4 residences in exempt status.                                                                                                  
                                                                                                                                
If  this  bill  moves  forward  in  its  current  form  it  would                                                               
represent about  $80,000 of  tax revenue  that would  be exempted                                                               
from income. He  emphasized that whenever a property  is moved to                                                               
exempt status, it's  the remaining taxpayers who have  to make up                                                               
the lost  revenue. With that  in mind, he said,  the Municipality                                                               
of Anchorage does not support version F CS for SB 193.                                                                          
                                                                                                                                
2:28:46 PM                                                                                                                    
                                                                                                                                
SENATOR WAGONER  asked if  there are  other parochial  schools in                                                               
Anchorage.                                                                                                                      
                                                                                                                                
MR. McGEE replied there are  about 10 parochial schools, but only                                                               
Anchorage Baptist Temple  has an exempt status  issue with regard                                                               
to  housing for  teachers. "No  other  teachers of  any kind,  in                                                               
Anchorage, have any exempt status on homes," he said.                                                                           
                                                                                                                                
SENATOR  WAGONER asked  if the  other parochial  schools own  any                                                               
homes.                                                                                                                          
                                                                                                                                
MR.  McGEE  replied he  couldn't  answer  directly. The  Catholic                                                               
Church owns  a number of  homes in  Anchorage and he  thought all                                                               
were  residences  of ministers  or  church  officials. He  didn't                                                               
believe  that any  of those  individuals are  educators, but  his                                                               
investigation of all religious exempt property is ongoing.                                                                      
                                                                                                                                
2:30:33 PM                                                                                                                    
                                                                                                                                
STEVE VAN  SANT, State Assessor, Division  of Community Advocacy,                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED),  said  he would  like  to  make several  clarifications.                                                               
First  the  bill  really doesn't  clarify  anything  because  the                                                               
Alaska  Supreme Court  has  said that  educator's  homes are  not                                                               
exempt under statute. As currently  written the bill would expand                                                               
the statutes to include residences  of educators, but the meaning                                                               
of that particular term is somewhat unclear, he said.                                                                           
                                                                                                                                
He advised  that he has  been polling assessors across  the state                                                               
to get  an idea of  what this  unfunded mandate might  cost other                                                               
taxpayers and he believes it would be about $200,000 statewide.                                                                 
                                                                                                                                
2:32:10 PM                                                                                                                    
                                                                                                                                
SENATOR GARY STEVENS  referenced the section on  tax deferral for                                                               
primary  residences  on page  2,  line  24  and asked  whether  a                                                               
surviving spouse would immediately  be responsible for paying the                                                               
deferred property taxes.                                                                                                        
                                                                                                                                
MR.  VAN SANT  responded it's  his understanding  that under  the                                                               
existing language the  surviving spouse wouldn't have  to pay the                                                               
deferred taxes. Subparagraph (C) on line 24 speaks to combined-                                                                 
income. If one  spouse were to pass away the  survivor would then                                                               
fall under subparagraph  (C) on line 16, which  relates to income                                                               
that is less than three times the federal poverty level.                                                                        
                                                                                                                                
2:33:42 PM                                                                                                                    
                                                                                                                                
SENATOR ELLIS participated via  teleconference from Anchorage. He                                                               
said he would like to hear  Mr. Ritchie with the Alaska Municipal                                                               
League (AML) comment on version F committee substitute.                                                                         
                                                                                                                                
2:34:16 PM                                                                                                                    
                                                                                                                                
KEVIN  RITCHIE,  Executive  Director  for  the  Alaska  Municipal                                                               
League  (AML),  thanked  the  committee   and  Senator  Ellis  in                                                               
particular  for  asking  for an  additional  hearing  to  provide                                                               
opportunity  for the  assessors to  report on  the impacts.  As a                                                               
policy, he said, AML is  against anything that would take revenue                                                               
away from  communities. He  noted that  the committee  heard from                                                               
assessors around the state today and he couldn't add to that.                                                                   
                                                                                                                                
2:35:02 PM                                                                                                                    
                                                                                                                                
CHAIR STEDMAN asked for a motion.                                                                                               
                                                                                                                                
SENATOR ELLIS stated that the  testimony has been completely one-                                                               
sided  in   opposition  to  version   F  and  he  has   heard  no                                                               
justification in  favor of  the most  recent change.  He reported                                                               
that he  had spoken  to Tam  Cook about  the rules  governing his                                                               
participation via teleconference and that  she advised that he is                                                               
allowed  full participation  with the  exception that  he is  not                                                               
allowed to vote on a motion to move a bill from committee.                                                                      
                                                                                                                                
SENATOR ELLIS moved to return to the original version of SB 193.                                                                
                                                                                                                                
At-ease from 2:35:40 PM to 2:36:05 PM.                                                                                      
                                                                                                                                
CHAIR  STEDMAN   acknowledged  that  he  hadn't   run  into  this                                                               
situation  before and  asked  Senator Ellis  if  his staff  could                                                               
present any verifying information from Tam Cook.                                                                                
                                                                                                                                
SENATOR ELLIS  replied he spoke  with Ms. Cook very  recently and                                                               
she advised that  he is allowed to participate,  to make motions,                                                               
and to vote  telephonically. He is allowed to object  to a motion                                                               
to move a bill  from committee, but he is not  allowed to vote on                                                               
moving the bill.                                                                                                                
                                                                                                                                
2:37:19 PM                                                                                                                    
                                                                                                                                
CHAIR STEDMAN asked Senator Ellis to repeat his motion.                                                                         
                                                                                                                                
SENATOR ELLIS  motioned for the  committee to return from  the CS                                                               
to the original version of SB 193.                                                                                              
                                                                                                                                
CHAIR STEDMAN objected and asked for a roll call vote.                                                                          
                                                                                                                                
SENATOR  ELLIS reiterated  that justification  is lacking  in the                                                               
public  record   and  the  testimony   in  opposition   has  been                                                               
overwhelming. Senator  Bunde had  a great idea,  he said,  and he                                                               
and Senator Dyson  signed on as co-sponsors.  Public testimony is                                                               
on my side of the argument, he concluded.                                                                                       
                                                                                                                                
The motion  to return to  the original  version of SB  193 failed                                                               
with Senator  Kookesh and  Senator Ellis  voting yea  and Senator                                                               
Gary Stevens, Senator Wagoner and Chair Stedman voting nay.                                                                     
                                                                                                                                
CHAIR STEDMAN called an at-ease from 2:38:41 PM to 2:39:15 PM.                                                              
                                                                                                                                
2:39:28 PM                                                                                                                    
                                                                                                                                
MERYL THOMPSON, Wasilla, testified that  in its original form the                                                               
bill was  good, but that he  is totally against version  F CS for                                                               
SB 193. This  is an attempt to give the  Anchorage Baptist Temple                                                               
a tax  break and it's  a slippery slope and  a can of  worms that                                                               
you're opening  up. He could find  no support for the  bill other                                                               
than  a  Baptist  Temple  official  and  some  of  the  committee                                                               
members. He said he would imagine  that if this received a proper                                                               
public hearing you would hear  overwhelming opposition because it                                                               
simply isn't right or fair.                                                                                                     
                                                                                                                                
2:41:20 PM                                                                                                                    
                                                                                                                                
MARIE DARLIN,  Capital City Task  Force for AARP,  announced that                                                               
AARP did not  support Section 1 of  version F CS for  SB 193, but                                                               
it did  support the original  version. The issue of  property tax                                                               
deferral  needs  to be  addressed  and  AARP appreciates  Senator                                                               
Bunde's leadership in this area.                                                                                                
                                                                                                                                
2:44:08 PM                                                                                                                    
                                                                                                                                
SENATOR  WAGONER  commented that  this  is  the second  or  third                                                               
hearing on  the bill so  he didn't  agree that there  hadn't been                                                               
proper public  hearings. He acknowledged  that the  testimony had                                                               
been negative and he was  surprised that people who supported the                                                               
amendment hadn't come forward to  testify. He noted that the next                                                               
committee of referral is the  Finance Committee and Senator Bunde                                                               
could deal with it there.                                                                                                       
                                                                                                                                
2:45:07 PM                                                                                                                    
                                                                                                                                
SENATOR KOOKESH  clarified that no  action was taken on  the bill                                                               
at the last  meeting because people testifying from  the LIOs and                                                               
from off  net didn't  have a copy  of the CS.  There had  been no                                                               
public hearing on  the new CS, but there was  plenty of testimony                                                               
on the original version.                                                                                                        
                                                                                                                                
CHAIR STEDMAN  agreed with Senator Kookesh's  statement, but that                                                               
the hearing today  was thorough and under no  time constraint. He                                                               
asked for a motion.                                                                                                             
                                                                                                                                
2:45:40 PM                                                                                                                    
                                                                                                                                
SENATOR GARY STEVENS  motioned to report version F CS  for SB 193                                                               
and  attached  fiscal  note(s)  from  committee  with  individual                                                               
recommendations.                                                                                                                
                                                                                                                                
SENATOR KOOKESH objected.                                                                                                       
                                                                                                                                
SENATOR ELLIS voiced  objection and advised that he  had tried to                                                               
keep  an  open mind  and  had  been  looking forward  to  someone                                                               
stepping  forward to  justify the  current  changes. That  didn't                                                               
happen, which made him uncomfortable  moving the bill forward. He                                                               
announced that  he would remove his  name as a co-sponsor  if the                                                               
bill continued in its current form.                                                                                             
                                                                                                                                
CHAIR STEDMAN said he appreciated his position.                                                                                 
                                                                                                                                
SENATOR ELLIS said he would  restate his previous comment that if                                                               
this  had  been  the  intent  of  the  majority  members  on  the                                                               
committee then it would have  been more respectful and proper for                                                               
the  CRA Committee  to  introduce a  committee  bill rather  than                                                               
taking Senator Bunde's bill.                                                                                                    
                                                                                                                                
2:47:14 PM                                                                                                                    
                                                                                                                                
SENATOR  WAGONER  acknowledged  that  it would  be  a  burden  to                                                               
Anchorage  taxpayers to  make additional  properties tax  exempt,                                                               
but he takes a different  view because the parochial schools save                                                               
municipalities and  cities in terms of  educational expenditures.                                                               
At  last  estimate  Kenai  had  between  600  and  800  parochial                                                               
students  and  that  is  a  tremendous  burden  lifted  from  the                                                               
taxpayer, he said.                                                                                                              
                                                                                                                                
CHAIR STEDMAN restated  the point that the changes in  the CS fit                                                               
under the same section of the statutes.                                                                                         
                                                                                                                                
CHAIR STEDMAN asked the clerk to call the roll.                                                                                 
                                                                                                                                
CSSB  193(CRA), version  F, moved  from  committee with  Senators                                                               
Wagoner, Gary Stevens,  and Chair Stedman voting  yea and Senator                                                               
Kookesh voting nay.                                                                                                             
                                                                                                                                
At-ease from 2:49:48 PM to 2:51:38 PM.                                                                                      
                                                                                                                                
         SB 248-ADMINISTRATIVE BOROUGHS/BOROUGH GRANTS/                                                                     
                                                                                                                              
2:51:40 PM                                                                                                                    
                                                                                                                              
CHAIR BERT STEDMAN announced SB 248 to be up for consideration.                                                                 
                                                                                                                                
2:52:03 PM                                                                                                                    
                                                                                                                                
SENATOR GARY STEVENS  explained that since the  first borough was                                                               
formed in 1962,  15 additional boroughs have  been established so                                                               
that 43 percent  of the land and 87 percent  of the population in                                                               
Alaska  falls within  the  16 boroughs.  Meanwhile,  he said,  57                                                               
percent of the  land and 83,000 people live  outside of organized                                                               
boroughs.                                                                                                                       
                                                                                                                                
An  advisory commission  on local  government was  appointed last                                                               
session  and   SB  248  is   the  result  of   that  commission's                                                               
recommendations.  It creates  a new  class of  borough government                                                               
called   administrative  boroughs   and  it   encourages  borough                                                               
formation.                                                                                                                      
                                                                                                                                
Administrative boroughs  would provide  an elected  assembly that                                                               
would  have   powers  for  planning,   platting,  and   land  use                                                               
regulation. They would  also have the power to  levy sales taxes,                                                               
use taxes  and fees,  but they  wouldn't have  the power  to levy                                                               
property  tax  or to  provide  education.  Any other  powers  the                                                               
assembly might  adopt would have  to be in accordance  with Title                                                               
29.  To  cover  organizational  expenses, SB  248  would  provide                                                               
grants of $250,000 for the first  three years. The money would be                                                               
used to elect  an assembly, establish ordinances  and organize an                                                               
administrative office.                                                                                                          
                                                                                                                                
The  advisory  commission recognizes  that  a  lack of  available                                                               
land,  which helps  to  sustain borough  government,  is a  major                                                               
hindrance  to  new borough  formation.  Therefore,  SB 248  would                                                               
allow  boroughs that  are unable  to select  a minimum  of 15,000                                                               
acres the  ability to  receive a $15  million grant  and boroughs                                                               
that do  have the ability  to select  15,000 acres or  more could                                                               
receive  a  $12.5  million  grant.  Grant  funds  would  only  be                                                               
available to  new boroughs that  are formed within four  years of                                                               
the effective date. Furthermore, only  the interest could be used                                                               
to run the government; none of the principle could be spent.                                                                    
                                                                                                                                
Forming an  administrative borough  is completely  voluntary, but                                                               
doing so would offer the  opportunity for sustainability into the                                                               
future.                                                                                                                         
                                                                                                                                
2:56:24 PM                                                                                                                    
                                                                                                                                
MIKE  BLACK,  Director of  the  Division  of Community  Advocacy,                                                               
Department of Commerce, Community  & Economic Development, stated                                                               
support for  the concept embodied in  SB 248 because it's  in the                                                               
state's interest  to have regional  governments. He  advised that                                                               
borough formation  is a voluntary  process and in  recognition of                                                               
that, SB 248 provides incentives.                                                                                               
                                                                                                                                
The responsibilities associated with  this new form of government                                                               
are  minimal, but  the  department  believes that  administrative                                                               
boroughs will  provide a first step  or bridge to a  higher level                                                               
of responsibility embodied  in 2nd class, 1st class  or home rule                                                               
boroughs. The  department further  believes that the  benefits to                                                               
the  state  will   far  outweigh  the  costs   of  the  financial                                                               
incentives  offered  in  SB 248.  He  noted  that  administrative                                                               
boroughs would  be prohibited from providing  education, but they                                                               
would have limited powers to tax.                                                                                               
                                                                                                                                
The  department believes  that SB  248  will remove  much of  the                                                               
consistent objection to  borough formation that has  been seen in                                                               
the past and  will promote formation of  regional governments, he                                                               
concluded.                                                                                                                      
                                                                                                                                
3:00:30 PM                                                                                                                    
                                                                                                                                
SENATOR GARY  STEVENS asked Mr. Black  if he knows of  any region                                                               
that is considering this transitional phase.                                                                                    
                                                                                                                                
MR. BLACK replied  more areas have expressed  interest in borough                                                               
formation  since the  advisory commission  began meeting,  but he                                                               
isn't  sure  what   class  of  borough  the   various  areas  are                                                               
considering.                                                                                                                    
                                                                                                                                
SENATOR GARY  STEVENS remarked movement toward  forming any class                                                               
of borough would be a step in the right direction.                                                                              
                                                                                                                                
3:02:53 PM                                                                                                                    
                                                                                                                                
ALAN   LeMASTER,  Gakona,   testified  that   he  lives   in  the                                                               
unorganized borough and  is happy to have the  Legislature sit as                                                               
the assembly.  He suggested that  SB 248 offers a  brighter light                                                               
than  has been  seen in  the past,  but residents  of the  Copper                                                               
Valley  will probably  continue  to oppose  borough formation  at                                                               
this time.                                                                                                                      
                                                                                                                                
3:04:45 PM                                                                                                                    
                                                                                                                                
SENATOR GARY STEVENS reiterated this  is voluntary. SB 248 offers                                                               
an opportunity  and no one  will be  forced to take  advantage of                                                               
it.                                                                                                                             
                                                                                                                                
MR. LeMASTER  responded there  is some  apprehension that  at the                                                               
end  of the  four-year period  areas would  be forced  to form  a                                                               
borough.  A major  problem  in  this area,  he  said,  is how  to                                                               
support a  borough even with  the grant money that's  offered. He                                                               
said the  idea that  the school  board would  act as  the borough                                                               
commission is a little scary.                                                                                                   
                                                                                                                                
SENATOR GARY STEVENS said he  certainly couldn't promise that the                                                               
area wouldn't  be forced  into becoming a  borough at  some time.                                                               
Many areas were forced into  boroughs under the Mandatory Borough                                                               
Act,  but SB  248  doesn't deal  with that.  With  regard to  the                                                               
school board he clarified that  the responsibilities of the REAAs                                                               
wouldn't change under SB 248.                                                                                                   
                                                                                                                                
3:07:26 PM                                                                                                                    
                                                                                                                                
JOHN HOZEY, City  Manager for the City of Valdez,  testified as a                                                               
representative of  the Alaska Municipal  League (AML)  task force                                                               
on borough  formation. He  explained that the  idea for  the task                                                               
force stemmed  from community frustration at  not gaining headway                                                               
in efforts  to incorporate. He  listed the  following communities                                                               
that  have  been  unsuccessful   in  their  various  attempts  to                                                               
incorporate:  City  of  Toksook  Bay, City  of  Hoonah,  City  of                                                               
Valdez,  City of  Wrangell, City  of Petersburg,  City of  Thorne                                                               
Bay, City of Cordova, Municipality  of Anchorage, Denali Borough,                                                               
City of Coffman Cove, City of  Emmonak, City of Skagway, and City                                                               
of Klawock.                                                                                                                     
                                                                                                                                
On behalf of the task force  he asked that the committee consider                                                               
an  amendment to  SB  248  to address  the  "stranglehold on  the                                                               
process  called  the  model borough  boundaries."  The  amendment                                                               
would require  that each petition  to incorporate be  reviewed on                                                               
merit. It would  also expand the authority of  the Local Boundary                                                               
Commission (LBC) to  modify petitions to act in  the state's best                                                               
interest.                                                                                                                       
                                                                                                                                
He asked  the committee  to keep the  amendment language  in mind                                                               
for incorporation  in other appropriate legislation  in the event                                                               
that SB 248 doesn't move forward.                                                                                               
                                                                                                                                
3:11:18 PM                                                                                                                    
                                                                                                                                
SENATOR  GARY  STEVENS  advised  that  the  commission  carefully                                                               
considered the  comments and recommendations  that came  from the                                                               
task force and as a result there will be an amendment to SB 248.                                                                
                                                                                                                                
3:12:13 PM                                                                                                                    
                                                                                                                                
DAVE  TRANTHAM, Council  Member for  the City  of Bethel,  stated                                                               
that  there is  little  support for  SB 248  in  his area.  Model                                                               
borough  boundaries don't  meet the  needs of  the people  in the                                                               
area and offer no flexibility,  he said. As currently proposed 25                                                               
small  communities  in the  Bethel  area  fall within  the  model                                                               
borough  boundary and  the closest  state  land is  off the  road                                                               
system  and about  50 miles  away. In  this area,  he said,  it's                                                               
unlikely  that there  will  ever  be a  tax  base  to support  an                                                               
additional tier of government.                                                                                                  
                                                                                                                                
3:15:39 PM                                                                                                                    
                                                                                                                                
SENATOR  GARY  STEVENS  responded  one  bill  can't  solve  every                                                               
problem. SB 248  is optional and it will solve  problems for some                                                               
areas and  therefore move  the state  forward. Perhaps,  he said,                                                               
the discussion  of the LBC  and model boroughs should  take place                                                               
in another bill.                                                                                                                
                                                                                                                                
3:16:45 PM                                                                                                                    
                                                                                                                                
KEVIN  RITCHIE,  Executive  Director  for  the  Alaska  Municipal                                                               
League  (AML), thanked  the legislative  members of  the advisory                                                               
commission for the important work that was done.                                                                                
                                                                                                                                
He stated  that AML believes  that government that is  closest to                                                               
the people is best because it  empowers people at the local level                                                               
to   solve  problems   and   provide   self-regulation.  As   the                                                               
representative of  the task  force mentioned,  there have  been a                                                               
number of  changes to  the economy and  patterns in  Alaska since                                                               
the  model borough  boundaries were  formed in  1989 so  it makes                                                               
sense  to take  another look  at  those boundaries.  He said  his                                                               
final point is  that the provision for the $12.5  million and $15                                                               
million  grants  is truly  sustainable  revenue  sharing. If  the                                                               
money  is managed  to allow  a 4-5  percent annual  withdrawal it                                                               
will naturally  adjust for  inflation. 5  percent of  $15 million                                                               
would provide $750,000  per year and that would  be a significant                                                               
base for providing adequate public services for an area.                                                                        
                                                                                                                                
CHAIR STEDMAN announced he would hold SB 248 in committee.                                                                      
                                                                                                                                
There being  no further  business to  come before  the committee,                                                               
Chair Stedman adjourned the meeting at 3:21:26 PM                                                                             
                                                                                                                                

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