Legislature(1993 - 1994)
02/16/1993 09:05 AM Senate CRA
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SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE
February 16, 1993
9:05 a.m.
MEMBERS PRESENT
Senator Randy Phillips, Chairman
Senator Robin Taylor, Vice Chairman
Senator Rick Halford
Senator Ad Adams
MEMBERS ABSENT
Senator Fred Zharoff
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 20
Disapproving the Local Boundary Commission recommendation
regarding the annexation of territory to the City of Palmer.
SENATE BILL NO. 88
"An Act relating to grants to municipalities, named
recipients, and unincorporated communities; establishing
capital project matching grant programs for municipalities
and unincorporated communities; establishing a local share
requirement for capital project grants to municipalities,
named recipients, and unincorporated communities; and
providing for an effective date."
SENATE BILL NO. 89
"An Act making appropriations for capital project matching
grant programs; and providing for an effective date."
PREVIOUS SENATE COMMITTEE ACTION
SJR 20 - See Community & Regional Affairs minutes dated
2/9/93.
SB 88 - No previous action to record.
SB 89 - No previous action to record.
WITNESS REGISTER
Kent Swisher
Alaska Municipal League
217 Second St.
Juneau, AK 99801
POSITION STATEMENT: Testified in support of SB 88
Senator Jay Kerttula
State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Has concerns with SB 88
Jack Fargnoli
Office of Management & Budget
Office of the Governor
P.O. Box 110020
Juneau, AK 99811-0020
POSITION STATEMENT: Offered information on SB 88
Shelby Stastny, Director
Office of Management & Budget
Office of the Governor
P.O. Box 110020
Juneau, AK 99811-0020
POSITION STATEMENT: Testified on SB 88
ACTION NARRATIVE
TAPE 93-6 , SIDE A
Number 001
The Senate Community & Regional Affairs Committee was called
to order by Chairman Randy Phillips at 9:05 a.m. He
introduced SJR 20 (DISAPPROVE PALMER BOUNDARY CHANGES) as
the first order of business, noting that the Alaska Boundary
Commission has recommended the annexation, however, the
resolution recommends the annexation be disapproved.
Senator Halford moved that SJR 20 be passed out of committee
with individual recommendations. Hearing no objections, it
was so ordered.
Number 025
Chairman Randy Phillips introduced SB 88 (CAPITAL PROJECT
GRANTS) and SB 89 (APPROP: CAPITAL PROJECT MATCHING GRANTS)
as the next order of business.
KENT SWISHER, representing the Alaska Municipal League,
stated the League's support for SB 88, however, they do have
some concerns with the legislation. One concern is with new
restrictions on Section 315 grants which previously have had
neither a matching requirement or administrative rule making
as part of that process. SB 88 provides both of those items
and has the potential of creating a negative situation.
Another concern is the process outlined in the bill which
the League feels is a long and cumbersome process and is one
that has potential for major changes. He said anything that
can be done to shorten the process would be beneficial.
In terms of the kind of match required from local
governments under SB 88, the League suggests that while a
match is appropriate, perhaps the ratios for the first year
are high enough.
Mr. Swisher suggested that the League would like to have the
flexibility to use 315 monies as the local match. There may
be circumstances in which the grant provided in SB 88 can be
put to a good purpose, yet the jurisdiction simply may not
have the ability to raise cash.
Number 125
SENATOR KERTTULA said it takes more money in the rural areas
to build these projects, and he doesn't think a population
base is necessarily the only criteria that should be plugged
into a matching grant process for making decisions.
Ken Swisher noted that the Alaska Municipal League supports
the concept of recognizing a cost differential in
construction in rural areas. He further noted that the bill
does not include that, and its only deviation from a
population is the use of a population multiplier in
determining the amount of funding and in establishing a
minimum. The League recommends that the minimum be
increased from $25,000 to $50,000.
Senator Kerttula commented that there is good reason for
having local matches, but he doesn't feel it has been
properly spoken to in SB 88. The small rural areas that
need a project don't have a chance under this bill of ever
getting anything of significance. Under this program the
rural areas don't get enough dollars to do anything with
them, but the urban areas do. He suggested the legislation
needs amending to get a fairness doctrine.
Number 218
Senator Adams moved to table SB 88 and SB 89. Senator
Phillips objected. A hand vote was taken with the following
result: Senator Adams voted "yea;" Senators R. Phillips and
Halford voted "nay." The Chair announced the motion had
failed.
Number 232
JACK FARGNOLI, Office of Management & Budget, Office of the
Governor, explained the purposes of the proposed program are
two-fold. One, essentially to help create a sense in
capital projects on the part of the communities and the
other is to help leverage the use of state dollars in this
time of declining oil revenues.
The legislation has two components: one is the proposed
capital project matching program that has been before the
legislature the past two sessions; and the second is that
the legislation also would extend the same match provisions
to the existing municipal grant program in the Department of
Administration and the same to the unincorporated community
grant program in the Department of Community & Regional
Affairs.
The matching grant program treats municipalities and
unincorporated communities separately, and the legislation
proposes creating a fund within the Department of
Administration to handle the municipal grants and a parallel
fund within the Department of Community and Regional Affairs
to handle the unincorporated community grants. The grants
that go through those two programs would be allocated by
separate procedures for each of them, and the communities
would provide a match, either in cash or from a variety of
in-kind sources.
The municipal portion would have three tiers of rates,
depending on the population of the municipality. Basically,
those rates would be 25 percent for municipalities with over
5,000 population; 15 percent for municipalities between
1,000 and 5,000 population; and five percent under 1,000
population.
Those rates, under the proposed bill, would go up in two
years, counting this current fiscal year as the first of
those two years, to 50 percent, 25 percent and eight percent
respectively.
A new element to this program would be that under the
extension of the matches to the existing programs that are
already in place, named recipients, as well as
municipalities and unincorporated communities would also be
subject to the match provision for their grants. The match
rates would apply to the named recipients that are located
within those municipalities, such that if a named were
within a municipality of over 5,000 population, it would
have the same match as a municipality, i.e., 25 percent.
Those grants in the municipality side would be allocated by
the population to the individual accounts that would be
established for each municipality, and the allocation
procedure would essentially be on a population basis, except
that before the allocation spread is made, there is proposed
in the legislation a set of weighing factors effectively
enlarging the population of the smaller size municipalities.
They would be 1.0 for municipalities over 5,000 population
and then they go on down so that the smaller municipalities
would get an adjustment that would reflect the differences
they have relative to the larger municipalities with regard
to access to capital and the cost of doing business.
On the unincorporated side, the allocations would be spread
equally, simply taking the total appropriation to the
unincorporated community grant fund and then dividing the
total appropriation by the number of unincorporated
communities. In that case, they would be spread to all
unincorporated communities that are eligible for the state's
revenue sharing program. Mr. Fargnoli said the distinction
to keep in mind is that it's not spread among those who
participate in the state's revenue sharing program but
rather those who are eligible. Basically, it uses the
definition of the revenue sharing program which is any
identified entity representing more than 25 people. There
are some communities who elect not to participate in the
state's revenue sharing program, but under this legislation,
they would still be eligible for a grant.
Number 312
Senator Halford asked if there is a minimum grant and the
requirement is only 25 people to form an unincorporated
community, why would an area want to form one unincorporated
community if they have a population of 200 people and could
form four different entities. Jack Fargnoli answered that
under the provisions of the bill, the Department of
Community and Regional Affairs would work with the local
community to identify a single recipient to administer the
grant.
Senator Halford responded that if you are using the criteria
of revenue sharing without any of the ability to
discriminate in revenue sharing, you may find that there are
three or four entities that want to qualify by adjusting
their boundaries so that they don't overlap. Jack Fargnoli
agreed that it could be a problem, but they basically use
the same communities that are designated for revenue
sharing. The revenue sharing program makes the
determination of who is eligible and they would use that
first category.
Number 345
Chairman Randy Phillips referred to the fiscal notes on the
legislation, saying he has some concerns with them, and he
cautioned that OMB would have to justify them when they get
to the Senate Finance Committee.
Chairman Randy Phillips said he wanted to have an amendment
prepared that would limit any local government's take to 10
percent for administrative costs, because in his community
in the past, the local government has taken an excessive
amount of money to implement a program.
Chairman Randy Phillips also questioned where the guaranty
was that local governments would get a match from the
municipality for the money that local government is
generating through local taxes for a working capital fund.
Jack Fargnoli responded that they are working with the
Department of Community & Regional Affairs to see if there
is a solution to this.
Number 400
Senator Taylor arrived at the meeting.
Senator Halford asked how they dealt with the overlapping
jurisdiction of boroughs and cities. Jack Fargnoli answered
that they have tried in the bill to not get overlaps by
basically using the population basis for the distribution of
the grants to be non-overlapping conceptual areas. The
borough populations are defined in the bill as the residual
population after subtracting first the included communities.
Senator Halford commented that the funding for the program
is $67 million as a starting point, but if the funding gets
down to somewhere around $10 million, all it is is a $25,000
grant to everybody, regardless of size. Jack Fargnoli
agreed that the legislation does cover for that eventuality
and that was correct. If the funding were actually lower
than that, it would be less than even that.
Number 448
SHELBY STASTNY, Director, Office of Management & Budget,
referring to administrative costs, said it was their
intention that all of this money go to projects and he would
support a provision that no money could go to administrative
costs. He added that they changed the language in the
matching portion of the bill to make it clear that a
municipality couldn't use their administrative costs as part
of their match. He said he would not oppose going one step
further and saying that they couldn't pay themselves for
administrative costs.
Number 470
Chairman Randy Phillips closed the public hearing on SB 88
and SB 89 and stated it would be back before the committee
at its next meeting or the following week.
There being no further business to come before the
committee, the meeting was adjourned at 9:40 a.m.
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