03/09/2005 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB42 | |
| SB114 | |
| SB112 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 42 | TELECONFERENCED | |
| *+ | SB 112 | TELECONFERENCED | |
| *+ | SB 114 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
March 9, 2005
1:35 p.m.
MEMBERS PRESENT
Senator Gary Stevens, Chair
Senator Johnny Ellis
Senator Albert Kookesh
MEMBERS ABSENT
Senator Bert Stedman
Senator Thomas Wagoner
COMMITTEE CALENDAR
HOUSE BILL NO. 42
"An Act naming the Joe Williams, Sr., Coastal Trail."
HEARD AND HELD
SENATE BILL NO. 114
"An Act relating to consolidating or abolishing certain service
areas in second class boroughs."
HEARD AND HELD
SENATE BILL NO. 112
"An Act imposing a tax on residents of regional educational
attendance areas; and providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 42
SHORT TITLE: JOE WILLIAMS, SR., COASTAL TRAIL
SPONSOR(s): REPRESENTATIVE(s) ELKINS
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) CRA, TRA
01/20/05 (H) CRA AT 8:00 AM CAPITOL 124
01/20/05 (H) Moved Out of Committee
01/20/05 (H) MINUTE(CRA)
01/21/05 (H) CRA RPT 5DP
01/21/05 (H) DP: SALMON, LEDOUX, NEUMAN, OLSON,
THOMAS
01/21/05 (H) FIN REFERRAL ADDED AFTER TRA
02/08/05 (H) TRA AT 1:30 PM CAPITOL 17
02/08/05 (H) Moved Out of Committee
02/08/05 (H) MINUTE(TRA)
02/09/05 (H) TRA RPT 5DP
02/09/05 (H) DP: SALMON, NEUMAN, THOMAS, GATTO,
ELKINS
02/14/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
02/14/05 (H) Moved Out of Committee
02/14/05 (H) MINUTE(FIN)
02/16/05 (H) FIN RPT 9DP
02/16/05 (H) DP: HAWKER, WEYHRAUCH, CROFT, HOLM,
KELLY, STOLTZE, FOSTER, MEYER, CHENAULT
02/16/05 (H) ALL MEMBERS COSPONSORS
02/16/05 (H) TRANSMITTED TO (S)
02/16/05 (H) VERSION: HB 42
02/18/05 (S) READ THE FIRST TIME - REFERRALS
02/18/05 (S) TRA, CRA
03/01/05 (S) TRA AT 1:30 PM BUTROVICH 205
03/01/05 (S) Scheduled But Not Heard
03/03/05 (S) TRA AT 1:30 PM BUTROVICH 205
03/03/05 (S) Moved HB 42 Out of Committee
03/03/05 (S) MINUTE(TRA)
03/04/05 (S) TRA RPT 4DP
03/04/05 (S) DP: HUGGINS, FRENCH, KOOKESH, COWDERY
03/09/05 (S) CRA AT 1:30 PM BELTZ 211
BILL: SB 114
SHORT TITLE: SERVICE AREAS IN SECOND CLASS BOROUGHS
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS
02/23/05 (S) READ THE FIRST TIME - REFERRALS
02/23/05 (S) CRA
03/09/05 (S) CRA AT 1:30 PM BELTZ 211
BILL: SB 112
SHORT TITLE: TAX ON REAA RESIDENTS
SPONSOR(s): SENATOR(s) BUNDE
02/23/05 (S) READ THE FIRST TIME - REFERRALS
02/23/05 (S) CRA, FIN
03/09/05 (S) CRA AT 1:30 PM BELTZ 211
WITNESS REGISTER
Jim Van Horn
Staff to Representative Jim Elkins
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 42
Melanie Lesh
Staff to Senator Gary Stevens
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced SB 114
Renee Broker, Attorney
Fairbanks North Star Borough
PO Box 71267
Fairbanks, Alaska 99707
POSITION STATEMENT: Testified on SB 114
Rynnieva Moss
Legislative Aide for Representative John Coghill
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Testified on SB 114
Kevin Ritchie
Alaska Municipal League
217 Second Street
Juneau, Alaska 99801
POSITION STATEMENT: Strongly supported SB 114 and testified in
support of the concept of SB 112
Senator Con Bunde
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor of SB 112
John Borg
Eagle, AK
POSITION STATEMENT: Raised questions about SB 112
Joe Banghart, Superintendent
McGrath area school district
POSITION STATEMENT: Suggested the committee consider other
options than that proposed in SB 112
Darroll Hargraves, Chair
Local Boundary Commission
Department of Community & Economic Development
550 West Seventh Avenue, Suite
Anchorage, Alaska 99501-3510
POSITION STATEMENT: Spoke in support of the concept of SB 112
but the LBC took no position on the bill
Richard Schultz
Tok, AK
POSITION STATEMENT: Testified in support of SB 112
William Miller
Dot Lake Village Council
Alaska Gateway School Board
P.O. Box 226
Tok, AK 99737
POSITION STATEMENT: Suggested changes to SB 112
Issac Juneby, Chief
Eagle Village, AK
POSITION STATEMENT: Opposed SB 112.
Jim Nygaard, Superintendent
Southeast Island School District
P.O. Box 195691218A
Shoreline Drive
Thorne Bay, AK 99919
POSITION STATEMENT: Expressed concern with SB 112.
Patrick Dalton
Delta Junction, AK
POSITION STATEMENT: Supports SB 112
Irene Meade
Delta Junction, AK
POSITION STATEMENT: Supports SB 112
Denny K. Weathers
Cordova, AK
POSITION STATEMENT: Opposes SB 112
P.R. Miller
Delta Junction, AK
POSITION STATEMENT: Testified on SB 112
John Kunik
Glennallen, AK
POSITION STATEMENT: Questioned where the money would come from
for SB 112
Mike Murphy
Delta Junction, AK
POSITION STATEMENT: Testified on SB 112
Audrey Murphy
Delta Junction, AK
POSITION STATEMENT: Testified on SB 112
ACTION NARRATIVE
CHAIR GARY STEVENS convened the Senate Community and Regional
Affairs Standing Committee meeting at 1:35:57 PM. Senator Ellis
and Chair Gary Stevens were present and Senator Kookesh arrived
during the course of the meeting. He announced that a quorum was
not present and no action would be taken on bills that day.
1:36:43 PM
HB 42-JOE WILLIAMS, SR., COASTAL TRAIL
CHAIR GARY STEVENS announced HB 42 to be up for consideration.
JIM VAN HORN, staff to Representative Jim Elkins, explained HB
42 names three miles of coastal trail between Ketchikan and
Saxman the Joe Williams Sr. Coastal Trail. Mr. Williams served
as mayor of Saxman for 38 years, was active in public affairs
and was a highly respected citizen.
The bill honors the memory of a respected Native leader and his
family as well.
1:38:54 PM
CHAIR GARY STEVENS noted that most House members were co-
sponsors then asked whether the sponsor objected to the proposed
committee substitute, which would change the name to the Joseph
C. Williams Coastal Trail.
MR. VAN HORN responded the sponsor had no objection.
CHAIR GARY STEVENS held HB 42 in committee.
SB 114-SERVICE AREAS IN SECOND CLASS BOROUGHS
1:39:34 PM
CHAIR GARY STEVENS announced SB 114 to be up for consideration.
MELANIE LESH, staff to Senator Gary Stevens, explained that SB
114 relates to consolidation or dissolution of certain service
areas in second-class boroughs. It is the companion bill to HB
121 that is awaiting final House action.
MS. LESH explained that Senator Gary Stevens was asked to
introduce SB 114 to help resolve unintended consequences related
to the creation then cessation of funding for road service
districts.
Initially state revenue sharing was sufficient to allow
subdivisions outside city limits to maintain local area roads.
Local service area road commissions were created to collect
revenue sharing based on the miles of road in the particular
service area.
When the revenue sharing program terminated, a number of service
areas had insufficient funding to perform road maintenance.
Those service areas became non-functional and roads in those
service areas are deteriorating.
Second Class Boroughs have no road powers and no authority to
dissolve a service area without a vote of the residents, but
even so they are concerned about their liability for the
deteriorating roads. The proposed statute change would allow for
the dissolution or consolidation of non-functioning districts.
MS. LESH stated that SB 114 serves to resolve a problem in the
Fairbanks North Star Borough and the borough attorney would
provide further explanation.
1:41:29 PM
RENEE BROKER, attorney for the Fairbanks North Star Borough,
reported that the borough has 107 road-service areas. Since
state revenue sharing terminated, some service areas have become
unable or unwilling to tax themselves sufficiently to provide
some or any road maintenance. Some service areas aren't even
able to attract commissioners to serve on the service area
boards, which means they are headed for legal dysfunction. The
Fairbanks North Star Borough supports SB 114 to regain a measure
of control since it has the responsibility for dysfunctional
service areas and the liability for poorly maintained roads. It
wants to step in and exercise responsible action with respect to
those service areas specifically, but has no interest in
extending its authority to service areas that are functioning
legally and as intended.
CHAIR GARY STEVENS asked Ms. Moss to come forward.
1:44:00 PM
RYNNIEVA MOSS, legislative aide for Representative John Coghill,
reported she was testifying in support of SB 114 as chair of a
road service district in North Pole.
Initially she had concerns about protecting properly functioning
service districts but she is comfortable that the language in SB
114 does provide protection to service areas that function
properly and allows them to continue to conduct their business.
1:44:52 PM
CHAIR GARY STEVENS asked Ms. Moss if she sees the advantage in
removing road service areas that are non-functioning.
MS. MOSS replied yes and recapped the issue that Second Class
Boroughs become liable for roads that aren't maintained in
accordance with the state statutes that set up the service area.
SB 114 removes that liability. She contended that it's the
people that live in the service areas that will be liable
because ambulances, fire trucks and school buses will eventually
stop using roads that aren't maintained.
CHAIR GARY STEVENS said the borough might become the deep pocket
in the event of a lawsuit.
KEVIN RITCHIE, Alaska Municipal League (AML), reported that both
the AML legislative committee and the AML board strongly support
SB 114.
There was no further testimony.
1:46:57 PM
CHAIR GARY STEVENS announced he would hold SB 114 in committee
and take action at the next meeting.
At ease 1:47:15 PM - 1:50:46 PM
CHAIR GARY STEVENS noted that Senator Kookesh had joined the
meeting and a quorum was present.
SB 112-TAX ON REAA RESIDENTS
CHAIR GARY STEVENS announced SB 112 to be up for consideration
and asked Senator Bunde to come forward.
1:50:52 PM
SENATOR CON BUNDE, sponsor of SB 112, opened his comments with
the observation that all school districts could use more money
and that only 4 of 34 districts statewide contribute to the
maximum for schools.
SB 112 simply says let's have some equity and compare what the
average per capita payment for schools is in organized and
unorganized areas. It provides the opportunity for adults in the
unorganized areas to approach the average payment of adults in
the organized areas. He estimates that this would amount to a
tax of approximately $400 per person and by FY 08 and would
generate to nearly $13 million for schools.
This doesn't supplant existing support for school; the money
would be in addition to current funding. Although funds cannot
be dedicated, he contended that this would be a true school tax.
1:55:56 PM
CHAIR GARY STEVENS remarked his community receives payment in
lieu of taxes (PILT) money for the military base and REAAs also
receive some type of federal support. He asked the sponsor to
explain what that money does and does not do for the recipients
and how it fits into payment for education.
1:56:20 PM
SENATOR BUNDE asserted that PILT funds are pass through monies
from the federal government and, in his view, they aren't a
local contribution.
SENATOR KOOKESH pointed out that the funds don't have to be pass
through money because a number of other states funnel that money
directly to school districts.
SENATOR BUNDE replied the funds are pass through in Alaska.
SENATOR KOOKESH said his point is that other states have proven
that the money doesn't have to be pass through so the idea
shouldn't be brushed aside lightly.
SENATOR BUNDE responded he doesn't define it as a local
contribution.
SENATOR ELLIS questioned how enforcement and penalties would
work for late or non-payment issues.
SENATOR BUNDE said the Department of Revenue (DOR)
representative could answer in greater detail, but collection
would be a simple payroll deduction for those who are employed.
For the self-employed and unemployed, the tax would be paid
directly to the state. Anyone in default would be subject to
collection of the debt just like with any other bill.
SENATOR KOOKESH noted that DOR estimates that residents from the
unorganized borough have earned $5.5 million in income since
2004. For comparison purposes, he was curious whether the
department knew how much people in organized boroughs earned in
the same period. REAAs have contributed far more than $2 million
to the economy of the state and he was interested in whether the
sponsor had reviewed that information.
SENATOR BUNDE replied he didn't have the earned income in
organized areas at his fingertips, but he is looking at personal
local contribution. People living in areas with a sales tax make
a personal local contribution to services including schools. And
property owners living in communities with property tax also
make a local contribution to support schools.
"The contributions that we all make to our state's economy are
appreciated and are vital to our growth, but I view that as a
separate issue than what is the personal local contribution."
2:00:30 PM
SENATOR KOOKESH: responded he brought the question up because it
needs an answer before the bill goes forward.
CHAIR GARY STEVENS noted Mr. Fried and Mr. Harlamert from the
Department of Revenue were present to answer questions. He then
informed the sponsor that his intention was to bring the bill up
at a future meeting.
2:00:53 PM
KEVIN RITCHIE, Alaska Municipal League (AML), said the AML
legislative committee believes that the way the Legislature
deals with the unorganized area is a key issue. Assemblies
routinely work to find ways to pay bills while making life
better for residents and that's what the Legislature is doing
for the unorganized area. He stressed that the equity of this
type of tax requires serious discussion.
2:03:57 PM
The AML has spent considerable time discussing the evolution of
local government and this is yet another discussion of how to
govern the unorganized borough. This is a very important issue
and the AML would like to be fully engaged. Certainly there is
nothing that says that the unorganized borough may not be taxed,
but the key is how that will come about, he concluded.
CHAIR GARY STEVENS opened teleconference testimony.
2:04:48 PM
JOHN BORG from Eagle testified that the argument against
implementing a statewide income tax is that it would unfairly
impact lower income people and he thought the $424 tax
assessment would similarly impact low-income adults. Also, he
disagreed with the idea that families that pay for home school
materials should also be expected to pay for a school that they
don't use. There is no logic to that, he said.
CHAIR GARY STEVENS pointed out that people in organized boroughs
pay property tax to support schools whether they use them or
not.
2:07:16 PM
JOE BANGHART, superintendent, Iditarod School District, in
McGrath explained that his job includes balancing the books and
preparing a budget for the McGrath school district,which isn't
on the road system. Everyone is certainly concerned with
preparing young people with a good education, but the McGrath
REAA is faced with a projected deficit of at least $605,000 in
the '06 school year.
Instead of a flat rate tax on REAA residents, he suggested the
committee consider other options. A graduated scale tax based on
income or a state income tax would better accommodate low-income
individuals. Another option is to tax workers that come into the
state and work short term.
He reported that his district receives just $70,000 of the
annual $600,000 in pass through funds. Because of population
shifts that are occurring in rural areas of the state, he is
concerned that if a tax were levied more people might leave and
further impact the school.
If an agreement were made, how would the money be spent to
ensure that it would benefit the children, he asked. In closing
he used the following analogy:
Our school district has a serious cut ... that
requires 50 stitches to close our system or we're
going to bleed to death. Current offers in Juneau only
provide 5 to 10 of these stitches. The blood is
flowing and soon we will bleed to death.
2:13:16 PM
CHAIR GARY STEVENS thanked Superintendent Banghart, for his
comments and specific suggestions.
2:13:37 PM
DARROLL HARGRAVES, Local Boundary Commission (LBC) chair, spoke
in support of the concept of SB 112 and noted that in particular
it is a means to remove disincentives for borough incorporation.
He argued that it is clearly an impediment to borough formation
when you consider that REAA school districts aren't required to
make a local contribution to support schools while municipal
school districts are required to do so. SB 112 would remove that
impediment by leveling the playing field so that everyone would
pay taxes to help support state services offered on the local
level.
MR. HARGRAVES referenced pages 115-122 of the LBC annual report
for details about taxing unorganized areas. He acknowledged that
the bill might need technical refinements and that the LBC was
available to lend assistance in that regard.
2:17:41 PM
CHAIR GARY STEVENS thanked Mr. Hargraves for both his testimony
and efforts on behalf of the LBC.
SENATOR KOOKESH asked Mr. Hargraves to send a copy of the LBC
minutes in which it went on record in support of the concept of
SB 112
MR. HARGRAVES replied:
The commission put the concept together for its report
that it submitted to you earlier in the session. There
has been no specific action on [SB] 112. The concept
itself is in the report that we referred to you.
SENATOR KOOKESH reiterated his desire to receive a copy of the
minutes supporting the concept of SB 112 because he heard him
specifically say that "we support the concept on Senate Bill
112."
MR. HARGRAVES said:
I can tell you it was supported in the formation
of our report to you. Local Boundary Commission
members were surveyed to see how they
individually felt about this since this bill just
came up. And we did have unanimous support from
them to support this and speak to its support.
He referenced pages 115-122 of the LBC annual report and
said the specific concept is addressed there.
2:19:14 PM
CHAIR GARY STEVENS asked Senator Kookesh if he was satisfied
with the answer.
SENATOR KOOKESH replied he wasn't satisfied.
CHAIR GARY STEVENS asked if he needed a copy of the annual
report.
SENATOR KOOKESH replied, "It's interesting that SB 112 came out
after the annual meeting and for him to specifically state
that.... the commission is supportive of [SB] 112 is peculiar to
me."
2:19:43 PM
MR. HARGRAVES clarified it is the concept that the commission
has gone on record as supporting, but they aren't speaking in
support of the specifics of SB 112.
CHAIR GARY STEVENS reiterated that on pages 115-122 the
commission supported the concept, but they have taken no
position on the bill.
MR. HARGRAVES said that is correct.
2:20:28 PM
RICHARD SCHULTZ, former Alaska State Senator, testified from Tok
in support of SB 112. As the sponsor pointed out, the bill meets
the guidelines established in the Constitution under Article 1,
Section 1, but it also satisfies Article 1, Section 2; Article
10, Section 3; and Article 10, Section 6.
This is the fairest way to approach the inequities and
disparities that exist between the organized and unorganized
areas and the argument that people in the unorganized areas
aren't paying their fair share is legitimate. SB 112 allows
areas to remain unorganized while putting them on equal footing
with the organized areas.
MR. SCHULTZ pointed out that if the bill passed and the
unorganized areas ultimately decided they didn't like it, they
would still have the constitutional ability to petition to
become a borough and if that were successful, the area would
have the authority to determine the local tax structure.
The debate is in the legislative court, which is where it should
be. But be cognizant that the unorganized borough is nearly
unanimous in its opposition to mandatory boroughs as an
additional layer of unwanted and unnecessary government.
In terms of the bill mechanics, he suggested that accurate
information about how many people live in a particular area
should come from Permanent Fund Dividend applications rather
than from the Department of Revenue and/or the Department of
Labor and Workforce Development (DOLWD). Even if the tax weren't
deducted from the dividend, you'd still have accurate
information about who owed and who didn't owe.
He expressed respect for Mr. Hargraves and appreciation for the
time he has spent serving on the LBC. Nonetheless he opined that
system and the regulations that have been written are out of
control and are causing more problems than they are worth. He
stated support for the legislation and said he believes that
most people in the unorganized areas want the mandatory borough
issue to go away. If it requires some sort of a tax assessment,
then the unorganized area wants to sit at the table to address
that. Certainly no one is eager to pay a head tax, but it would
give the unorganized areas some legitimacy when it comes to
addressing issues of statewide equity.
In a closing comment he suggested that PL 874 money would not be
affected in the REAAs if the head tax were to pass, but that
Eddy Jeans could give a definitive answer.
2:26:08 PM
CHAIR GARY STEVENS thanked former Senator Schultz for his past
and present service to the state.
2:26:30 PM
WILLIAM MILLER, President, Dot Lake Village Council testified on
behalf of the council, which is the governing body of the
federally recognized tribe of Dot Lake. After reviewing the
bill, he had a number of comments and recommendations.
On page 1, line 7 he would prefer that the word "employed" were
used rather than "residing" because of the number of people that
work in the area but don't live there.
Page 1, line 8 indicates that the tax amount would be set and
this would be expensive for the individuals living on a limited
income. In addition, the bill doesn't address the disabled, the
unemployed and those living on Social Security and retirement.
He would prefer that the language say the tax would not exceed 1
percent of income. He also recommended deleting "by dividing
amount" from page 1, lines 9-10.
Page 2, lines 5-11 deals with the payment method, which could be
devastating to individuals that live from paycheck to paycheck.
He suggested a preferred method would be to withhold the taxes
the same way that employers presently withhold unemployment tax
so tax payments would be spread throughout the year.
He opined a percentage-of-income tax payment is appropriate for
employed individuals and the self-employed would pay the tax at
year-end based on the federal income tax form.
Using Senator Bunde's figures, he said that tax of $13 million
or 2.5 percent would be generated.
In conclusion Mr. Miller emphasized that employed individuals
should pay the tax and not everyone in the REAA.
2:32:54 PM
CHAIR GARY STEVENS asked Mr. Miller to send his written comments
to the committee if at all possible.
MR. MILLER agreed to do so.
2:33:50 PM
ISSAC JUNEBY, Chief of Eagle Village, testified in opposition to
SB 112. As Senator Bunde intended, the bill points to all rural
areas and it says it is in line with the Alaska State
Constitution. However, the statement is used in the wrong
context when used for tax purposes, he contended.
Another reason he opposes SB 112 is that there are no jobs in
some rural areas and some people live on very limited incomes
and they couldn't afford to pay a tax. He suggested that putting
money into resource development is preferable to this approach.
2:36:55 PM
CHAIR GARY STEVENS thanked Mr. Juneby.
2:36:58 PM
JIM NYGAARD, superintendent, Southeast Island School District,
expressed concern with regard to SB 112 because it puts the 225
students in his district at risk. He explained that the district
is an REAA with eight sites. Between 60 and 70 percent of the
children attending school in the district live at the poverty
level so the discussion about generating taxes locally is great
cause for concern.
Referencing earlier testimony on the PERS/TRS impact to the
state, he reported that in his district the PERS increase from
FY 04 to FY 06 amounts to more than $250,000. Both PERS and TRS
employees have less reason to stay and more reason to move out
of state all the time.
He referenced the analogy about needing 50 stitches to sew up a
wound but only having money for 5 stitches. His district can't
even afford to go to the doctor.
Because of teacher retention, children living at the poverty
level, and the cost of living rate in his REAA he opposed SB
112.
2:39:36 PM
CHAIR GARY STEVENS reiterated the concerns are that costs are
getting higher and that he doesn't see any way for his REAA to
fund the costs.
MR. NYGAARD replied, "If we tax a population that's in the
poverty level, it only accelerates the decline of other
opportunities."
CHAIR GARY STEVENS thanked Mr. Nygaard.
2:40:49 PM
PATRICK DALTON testified from Delta Junction in support of SB
112. He explained that a local group of citizens conducted an
informal survey to determine whether borough formation was
popular. Although the community didn't want a borough, it was
willing to support a direct head tax. He clarified that the
survey was sent to post office box holders. Twenty percent of
the box holders responded and 80 percent of the respondents
favored some sort of a head tax rather than forming a borough.
He reported that his area has renewed confidence in the
Legislature because with this action it is acting as the
assembly for the unorganized borough, which is exactly what it
is supposed to do.
2:42:14 PM
IRENE MEADE, Delta Junction local historian, testified in
support of SB 112. She reported that the community has studied
forming a borough a number of times over the last 30-40 years
and that the residents realize that Fairbanks has designs on the
area because of its potential wealth.
She discussed potential mining development and the expansion of
Fort Greeley as a missile base and pointed out that in the boom
cycles most of the workers aren't residents so the money doesn't
stay in the local area.
Most residents are willing to support the school system and she
looks forward to listening to further debate on SB 112.
2:44:48 PM
CHAIR GARY STEVENS said he appreciated Ms. Meade's historical
approach.
2:44:53 PM
DENNY K WEATHERS, Hawkins Island resident, testified via
teleconference to oppose SB 112. She said it's important to note
that prior to 1980, the State of Alaska had a statewide school
tax. In April of 1980 the Legislature repealed the tax after the
Department of Revenue asked it to do so. The justification was
that withholding the school tax in the absence of an income tax
would be an unnecessary burden on employers in future years and
that the revenue would be marginal.
Because SB 112 targets just REAA residents, she suggested the
tax would be discriminatory and unconstitutional. Pointing out
that SB 112 charges all REAA residents whether they use the
school system or not, she suggested that it might be time to
abolish the REAA and look into other means of education.
MS. WEATHERS said her husband pays a raw fish tax that goes to
the community in which he delivers fish, but neither her family
nor her school district receive anything from that tax. She also
pays the Cordova sales tax when she shops there and that tax
goes to the Cordova school system and not hers so she's helping
yet another community.
Most of the people that own homes in the Prince William Sound
area aren't full time residents so she disagrees with Mr.
Hargraves when he talks about SB 112 leveling the playing field.
She has no school building and no one paid for her to home
school her children.
She said this is yet another example of the government wanting
something that the people oppose. Two wrongs don't make a right
and the government needs to figure that out, she said.
Finally she asked Mr. Hargraves to clarify his statement
regarding the LBC supporting the concept of the legislation
because when she discussed the issue with Mr. Bockhorst he
indicated the department didn't have a position on the bill.
2:50:30 PM
CHAIR GARY STEVENS clarified that Mr. Hargraves said the LBC
supports the concept found in the bill, but it didn't support
the bill because SB 112 came out after the annual report. He
directed her to pages 115-122 of the annual report.
MS. WEATHERS replied the concept wasn't written the way SB 112
was written.
2:51:23 PM
P.R. MILLER, Delta Junction resident, quoted the state
constitution and suggested the state be reorganized into
delineated unorganized boroughs.
He takes exception to the idea that his area pays nothing to
support the school and other systems. He referenced the pipeline
running through the area, payment in lieu of taxes money for
Fort Greeley and Black Rapids, and borough start up money, which
amounts to millions of dollars. It's all coming from the Delta
area for not being a borough and the state would be very unhappy
if the area were to become a borough.
He had two ways figured out to fund schools. First, anyone that
files a federal income tax form could deduct $100 and donate the
money to the local school. The second suggestion requires a
payment of one percent of adjusted income.
2:55:56 PM
JOHN KUNIK, Glennallen resident, testified via teleconference
and took issue with page 2, lines 20-22 because he believes that
this is a dedicated tax. He suggested that his area contributes
about $6.5 million into the general fund when you consider the
pipeline and PILT payments.
He pointed out that most of the land in the area isn't in
private hands and isn't taxable so he didn't understand where
the money would come from if the area were forced into a
borough. The unemployment rate in the area is high and there is
no detailed analysis about land values and how much it would
cost to implement a governmental structure.
He asked the LBC what would happen and who would be responsible
if an area were to organize and subsequently found it couldn't
afford to sustain the governmental structure.
Where would the excess money come from, he asked.
2:58:59 PM
MIKE MURPHY, Delta Junction resident, testified via
teleconference and said he supports some sort of tax for people
living and or working in the unorganized boroughs simply as a
measure of fairness.
2:59:31 PM
AUDREY MURPHY, Delta Junction resident, said everyone receives a
PFD therefore she believes everyone could afford to pay
something for education. She concluded, "I want to support
education because I want to live in an educated populace and
this is a good way to do this."
3:00:13 PM
CHAIR GARY STEVENS asked Senator Bunde if he had any closing
comments.
3:00:47 PM
SENATOR BUNDE asked that discussion about mandatory boroughs and
education be kept separate because they are two different
issues.
He summarized using the last comments from his sponsor
statement.
The constitution says that all people are
equal and entitled to equal rights
opportunity and protection under the law.
And all people have a corresponding
obligation to the people in the state. An
educated populace benefits everyone and it's
critically important to see that Alaska's
children get an adequate education. SB 112
is not an attempt to penalize, but simply to
find additional funds.
3:02:07 PM
CHAIR GARY STEVENS announced he would hold SB 112 in committee.
There being no further business to come before the committee,
Chair Gary Stevens adjourned the meeting at 3:02:23 PM.
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