Legislature(1999 - 2000)
03/06/2000 01:37 PM Senate CRA
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SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE
March 6, 2000
1:37 p.m.
MEMBERS PRESENT
Senator Jerry Mackie, Vice Chair
Senator Jerry Ward
Senator Randy Phillips
Senator Lyman Hoffman
MEMBERS ABSENT
Senator Tim Kelly, Chair
COMMITTEE CALENDAR
SENATE BILL NO. 227
"An Act relating to the limitation of levy of municipal ad valorem
taxes in home rule and general law municipalities; and providing
for an effective date."
-MOVED SB 227 OUT OF COMMITTEE
SENATE BILL NO. 240
"An Act relating to the establishment of and accounting for an
administrative cost charge for the state's role in the community
development quota program and to the appropriation of receipts from
the charge; and providing for an effective date."
-MOVED CSSB 240(CRA) OUT OF COMMITTEE
SENATE BILL NO. 248
"An Act relating to the financing authority, payment in lieu of tax
agreements, and tax exemption for assets and projects of the Alaska
Industrial Development and Export Authority; relating to renaming
and contingently repealing the rural development initiative fund
within the Department of Community and Economic Development, and
establishing the rural development initiative fund within the
Alaska Industrial Development and Export Authority; and providing
for an effective date."
-MOVED SB 248 OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SB 227 - No previous Senate action.
SB 240 - No previous Senate action.
SB 248 - No previous Senate action.
WITNESS REGISTER
Mr. Dick Tremaine
Central Bering Sea Fisherman's Association
16251 Chasewood Lane
Anchorage, AK 99516
POSITION STATEMENT: Supports SB 240.
Mr. Gene Dusek
Director of Office of Management & Budget
Municipality of Anchorage
632 W. 6th Ave.
Anchorage, AK 99501
POSITION STATEMENT: Supports SB 227.
Mr. Harold R. Samuelson, Jr.
Chief Executive Officer
Aleutian/Pribilof Island Community Development Association
P.O. Box 412
Dillingham, AK 99576
POSITION STATEMENT: Commented on SB 240.
Ms. Bonnie Williams
Chair of Finance Committee
Fairbanks/North Star Borough
P.O. Box 82812
Fairbanks, AK 99708
POSITION STATEMENT: Supports SB 227.
Mr. Ted Smith
Mayor of City of Petersburg
P.O. Box 841
Petersburg, AK 99833
POSITION STATEMENT: Supports SB 227.
Mr. Jeff Bush
Deputy Commissioner
Department of Community & Economic Development
P.O. Box 110800
Juneau, AK 99811
POSITION STATEMENT: Commented on SB 240.
Senator Kim Elton
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 227.
Mr. Keith Laufer
Alaska Industrial Development & Export Authority
480 West Tudor Ave.
Anchorage, AK 99502
POSITION STATEMENT: Supports SB 248.
ACTION NARRATIVE
TAPE 00-03, SIDE A
Number 001
VICE-CHAIR JERRY MACKIE called the Senate Community & Regional
Affairs Committee meeting to order at 1:37 p.m. Present were
Senators Mackie, Phillips, Ward, and Hoffman. The first order of
business to come before the committee was SB 227.
SB 227-MUNICIPAL PROPERTY TAX LEVY LIMITATION
SENATOR KIM ELTON, sponsor of SB 227, stated if the initiative
passes it will accomplish three things. It will replace the
current 30 mill or 3 percent limitation with a 10 mill or 1 percent
levy, it will require payments on bonded indebtedness to be
included within the tax cap, and it will prohibit local property
assessments from rising more than 2 percent annually.
SB 227 allows local voters the ability to set a tax cap of higher
than 10 mills in a general election. SB 227 prohibits people in
one municipality from setting the mill rate for another
municipality. If the initiative passes municipalities have the
ability to lower the mill rate, but can't raise the mill rate above
10. SB 227 also exempts school bond debt from the tax cap.
SENATOR PHILLIPS asked if SB 227 would change the intent of
initiative.
SENATOR ELTON stated no. SB 227 loosens provisions of the
initiative, and moves school bond debt out from under the tax cap.
The Alaska Municipal League agrees that people in one part of the
State should not govern the tax cap in individual communities in
other parts of the State. Each community's voters should have the
option to determine mill rates and taxes for that community.
Financial pressure will be added to municipalities if the
initiative passes, and the public doesn't have the option to vote.
SENATOR ELTON gave examples of property values plummeting. SB 227
will not change the initiative, it gives alternative options if the
initiative passes. The Alaska Constitution states Alaska should
act within its powers to "provide for maximum local self government
with a minimum of local government units, and to prevent
duplication of tax levying jurisdictions." Without an opportunity
for local governments to set appropriate tax rates, the initiative
will discourage consolidation of local government units and local
taxing authorities.
Number 174
SENATOR PHILLIPS stated local governments should be educated on the
impacts of the initiative and SB 227.
SENATOR ELTON agreed and stated people in unorganized boroughs
should not be allowed to dictate what happens in other
municipalities in the State. The legislature should not focus on
tactics against the initiative but should create a safety net for
the people in municipalities. That is what SB 227 represents.
SENATOR PHILLIPS stated SB 227 would be a mechanism to prepare for
the initiative.
VICE-CHAIR MACKIE stated SB 227 gives people more reason to vote
for the initiative and fall back on SB 227, instead of trying to
fight the initiative.
SENATOR ELTON stated SB 227 won't make a difference in voter
behavior. People will vote for the initiative or not, but SB 227
will go into effect if the initiative passes.
VICE-CHAIR MACKIE asked, if the initiative gets voted down whether
SB 227 will go into effect.
SENATOR ELTON stated it will not. Some cities are contributing
more than the 4 mill property tax for their local contribution to
schools. A 10 mill tax limit with no safety net will pressure
municipalities to lower the 4 mill local contribution to schools to
still provide for other services.
SENATOR PHILLIPS stated SB 227 isn't a safety net, it represents a
transition. He asked how the votes were broken down to represent
each region of Alaska.
SENATOR ELTON stated most opinions came from Southcentral Alaska.
Number 333
MS. BONNIE WILLIAMS, Chair of finance committee for Fairbanks/North
Star Borough, stated support for SB 227. If the initiative passes
it will negatively affect Fairbanks' current year budget. The
schools, road service areas, and fire departments would suffer the
most if the initiative passes.
The Fairbanks North Star Borough has voted for a revenue cap which
prohibits the borough from spending above the current year revenue;
except for inflation, new construction, and new bonds that are
voter approved. Ms. Williams referred to California's tax
initiative that went into effect in 1978. From 1978 to 2000
California's population has grown from 22 million to 31 million
with no new schools being built to accommodate those children.
Number 420
MR. TED SMITH, Mayor of City of Petersburg, stated support for SB
227. SB 227 allows municipalities control over their taxation
destiny. Petersburg already has a 10 mill rate limit that was set
at the local level and can be changed by a vote of the people.
MR. GENE DUSEK, Director, Office of Management & Budget for the
Municipality of Anchorage, stated support for SB 227. Anchorage
mill rates for 2000 are estimated to be 17.91 mills. The school
board is asking the assembly for a mill rate of 8.09 mills. The
mill rate for city services differs from area to area, the average
mill rate is 9.82 mills. The total debt, excluding debt services,
is 14.66 mills. That will need to be cut to 10 mills if the
initiative passes. Mr. Dusek referred to charts given to the
committee.
SENATOR PHILLIPS moved SB 227 out of committee with individual
recommendations. Without objection, the motion carried.
SB 240-CHARGE FOR COMMUNITY DEVELOPMENT QUOTA
MR. JEFF BUSH, Deputy Commissioner, Department of Community &
Economic Development, stated the Community Development Quota (CDQ)
program was developed in 1991 by the federal government. CDQ
allocates a percentage of the ground fish fisheries to Western
Alaska and Bering Sea communities that are located within 50
nautical miles of the coast. The communities are organized into
six CDQ non-profit corporations. The State has been granted
authority to oversee the CDQ program. The CDQ program generates
royalties that are granted to the communities, approximately $20-30
million annually.
The CDQ program has been funded with $250,000 annually of general
funds. SB 240 proposes to stop using general funds and create a
fee structure to make the CDQ self sufficient.
SENATOR PHILLIPS asked where the northern border lies for the CDQ
program.
MR. BUSH replied at the northern end of Norton Sound.
SENATOR HOFFMAN stated he had a proposed amendment. The amendment
will give new communities coming into the CDQ program a two year
grace period to develop and not pay taxes.
TAPE 00-03, SIDE B
Number 585
SENATOR HOFFMAN moved Amendment number 1. Without objection,
Amendment number 1 was adopted.
MR. DICK TREMAINE, Central Bering Sea Fisherman's
Association(CBSFA), stated support for SB 240. CBSFA is the
smallest CDQ group in the State, it has the least amount of
communities and revenue strength. The State provides a service to
the group that is mandated by the federal government.
MR. HAROLD SAMUELSON, President of the Bristol Bay Economic
Corporation, stated support for SB 240 without the amendment.
Bristol Bay is just building its infra-structure and it has a
multi-faceted program.
Number 520
MR. LARRY COTTER, CEO of Aleutian/Pribilof Island Community
Development Association (APICDA), stated support for SB 240. He
commented that extending the borders beyond the Bering Sea is a
complicated issue.
SENATOR HOFFMAN moved CSSB 240 (CRA) from committee with individual
recommendations. Without objection, the motion carried.
SB 248-AIDEA: BONDS & RURAL DEVELOPMENT
MR. KEITH LAUFER, Alaska Industrial Development & Export Authority
(AIDEA), stated support for SB 248. SB 248 extends AIDEA's bonding
authority and transfers the rural development initiative fund loan
program from the Department of Community & Economic Development to
AIDEA. SB 248 also makes technical changes to tax provisions
concerning AIDEA's projects.
AIDEA's general bonding authority is subject to a sunset that takes
place July 1, 2000. The sunset would prevent AIDEA from issuing
general obligation bonds under $10 million for projects AIDEA owns,
and it will prevent AIDEA from issuing conduit revenue bonds. The
sunset will have no effect on bonds over $10 million, those bonds
require specific legislative authorization.
The rural loan program is a small business loan program for rural
Alaska, for communities with populations under 5000 people, and
loans of $200,000 or less. In 1993 and 1996, the legislature
authorized AIDEA to purchase several loan portfolios from the
State. Transferring this program to AIDEA will eliminate the need
for the periodic recapitalization. Mr. Laufer referred to changes
of provisions if SB 248 passed.
Number 436
SENATOR PHILLIPS asked what the public policy was.
MR. LAUFER stated the loan program is an enterprise fund and there
will be no general fund impact.
VICE-CHAIR MACKIE asked if Mr. Laufer had heard of opposition on SB
248.
MR. LAUFER stated no.
SENATOR HOFFMAN moved SB 248 from committee with individual
recommendations. Without objection, the motion carried.
There being no further business to come before the committee VICE-
CHAIR MACKIE adjourned the meeting at 2:56 p.m.
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