Legislature(1997 - 1998)
03/18/1998 06:10 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE 18 March 1998 6:10 p.m. TAPES SFC-98, #83, Sides A and B CALL TO ORDER Senator Bert Sharp, Co-chair, reconvened the meeting at approximately 6:10 p.m. PRESENT In addition to Co-chairman Sharp, Senators Phillips, Torgerson, Parnell and Adams were present when the meeting was reconvened. Senator Donley arrived thereafter. Also Attending: Senator GARY WILKEN; JOHN CYR, President, NEA-Alaska; AL WEINBERG; and aides to committee members and other members of the Legislature. Via Teleconference: see individuals listed below in the order they testified. SUMMARY INFORMATION SENATE BILL NO. 337 "An Act relating to the mandatory incorporation of certain boroughs in the unorganized borough and to certain third class boroughs; and providing for an effective date." PHYLLIS HYDE via teleconference from EAGLE opposed SB 337. GLEN MARUNDE via teleconference from Tok opposed SB 337. He felt the borough form of government was not the best for rural Alaska. Senator Phillips asked how they paid for school. Mr. Marunde said he donated $5,000 through a building project connected with this business. GEORGE MIDVAG via teleconference from SLANA opposed SB 337. He felt they could do away with the property tax. It was applied unequal; some paid and some didn't. He said they need to look for a better way. JOHN GLOTFELTY via teleconference from DELTA JUNCTION directed the committee's attention to section two of the proposed bill. He said it needed to be rewritten to include REAAs. CAROLINE SMITH via teleconference from DELTA JUNCTION indicated that she concurred with the testimony of Mr. Glotfelty. PAT DALTON via teleconference from DELTA JUNCTION opposed SB 337. He said he did not want a borough and reminded the Legislators that they were not only representing organized boroughs but they were also representing unorganized boroughs. According to the Declaration of Independence it was wrong to impose a government upon the people. DAVE DENGEL, Valdez City Manager via teleconference from VALDEZ. He said the City strongly agreed that local citizens should contribute from the local tax base towards education. However, reviewing SB 337 it appeared that the City of Valdez would lose revenue from the raw fish tax and National Forest Receipts and Payment in Lieu of Taxes Program. It didn't seem right for municipalities that were already contributing towards education to continue to take more from them. He urged the committee to reconsider SB 337. ERIC WEATHERS via teleconference from CORDOVA opposed SB 337. He said the Legislature was elected to protect people from unfair laws. DENNY WEATHERS via teleconference from CORDOVA asked who sponsored the bill. Co-chair Sharp said it was being sponsored by the Senate Finance Committee. Ms. Weathers continued her testimony. She said she opposed SB 337. She chose to live in rural Alaska and therefore wanted to remain remote. She didn't feel they should be taxed for services the borough cannot provide. TOM CHURCH via teleconference from CORDOVA spoke on behalf of the City council. He said the town citizens were already clamoring for a tax cap. More time was needed to analyze SB 337 and the impact it would have, especially as tied to SB 36. He noted they were going to be watching closely as this bill moved along. JOHN BORG via teleconference from EAGLE opposed SB 337. He said he chose to live a rural life. PAT DONNALLY via teleconference from EAGLE opposed SB 337. JOHN HANDELAND, Mayor, City of Nome via teleconference from NOME opposed SB 337. He did say he appreciated the Deferred Maintenance Task Force. STEPHEN WAHL via teleconference from TOK opposed SB 337. He said the bill was based on faulty information and that it would overlook the rights of residents of the unorganized borough. He said section 2 (b) of the proposed bill represented fantastic and unrealistic economic predictions. ART GRISWOLD via teleconference from DELTA JUNCTION with reference to the testimony given by Mr. Van Sant, State Assessor would like to see the bill worked on. It has many problems. Senator Phillips asked how he would propose paying school. Mr. Griswold said he did not oppose paying for school, he opposed the formation of a borough. "Why should we be combined with Tok?" Senator Phillips said one couldn't say "no" for "no's" sake. He reminded Mr. Griswold he was asking for services but paying nothing. PATRICK SCHLICHTING via teleconference from DELTA JUNCTION asked what was the purpose of the teleconference. Co-chair Sharp briefly outlined SB 337 and noted this was a starting point. Mr. Schlichting said he hoped the testimony of individuals would be considered. Anchorage and Fairbanks owe their existence to rural Alaska. He said rural Alaska had made no demands other than education. He was upset that people could come to Alaska, make money and leave paying no taxes. GERALD OLIVER via teleconference from DELTA JUNCTION opposed SB 337. He said there were plenty of taxes and the Legislature was responsible for spending it. (Tape #83, Side A switched to Side B at log number 590.) Mr. Oliver continued saying that the small rural areas got no money. He reiterated that he was strongly opposed to this bill. RICK TYRRELL via teleconference from CENTRAL opposed SB 337. He said this would be disastrous for his school district, Yukon Flats School District. The district would lose three schools if the bill passed. Most of the funding for the school in that district is Federal funding. Senator Phillips asked Mr. Tyrrell how the Federal funding worked but the call had already been disconnected. DENNIS LAYMAN via teleconference from EAGLE noted he was a thirty-year resident and current council member. He said he was the longest operating businessman in the community. There was little hiring in the community and most were minimum wage jobs. However, they did have a good grip on their economy even though there was very little going on. It would be totally devastating to the community if there were to become a borough as most of the burden would have to be shared by two or three residents. At the same time they understood there needed to be a school; they had a $3.5 million school built with pipeline money. He, along with most residents was opposed to SB 337. He felt there needed to be more input into this matter. RUS BOWDRE from DELTA JUNCTION testified in Juneau before the committee. He said he had looked at the bill extensively and felt the problem was education funding and that the Legislature was trying to regulate around the problem. He has four children, all taught at home by his wife. He suggested that if funding of the schools was a problem they should find out why funding was a problem. Was there an unequal funding process? Then perhaps the funding process should be addressed not the creation of boroughs. They should not be creating a new problem. Senator Phillips said they have to fix, however, what's broke. Mr. Bowdre said he felt the real problem was unequal distribution of State funds. He also noted for the record that his home schooled children were "B+" students. LESLIE KAY KIRK from DELTA JUNCTION testified in Juneau before the committee. He noted his background for the committee as having been in the Army for thirty years and commanded Fort Greely from 1982 - 1984. He has five sons who are champion wrestlers in Alaska. His main concern was the formation of a borough, combining the cities of Tok and Delta. And they would pay all the taxes including for all the other areas included. Delta Junction is a second class city and if a borough is organized then there are two forms of government in one city. He felt the people of the community should decide what type of "government" they wanted. He suggested a "unified municipality" and it should encompass basically the same area they had for a school district. They don't want another problem created. He also noted that according to the Constitution the State should provide education for all children. THOR WILLIAMS via teleconference from BETHEL said he, as most of the majority of rural areas opposed SB 337. Bethel was running out of money and had poor economic situation. Most of the land surrounding Bethel that would be considered a borough was Native land and Federal land that were exempt from taxation. So where would money come for a new school? He said they had not seen a new school in years. DICK COOK via teleconference from EAGLE said he was a forty- year resident of Eagle, retired veteran. He opposed the formation of a borough to get taxation for schools. He felt there had to be a less discriminatory, less burdensome way to get money for education. MEL RADA via teleconference from EAGLE asked why would the Legislature want to create a borough and tax them. This sense of taxes for the bush people was getting out of hand. He felt they had too many teachers in the schools. It did not take eight or nine teachers to teach twenty-five children. Co-chair Sharp said he concurred. Mr. Rada said most folks living in Eagle were on social security and could not be further taxed. Co-chair Sharp advised Mr. Rada that for seniors over the age of sixty-five there were no taxes on the first $150,000 of their home. P.R. MILLER via teleconference from DELTA JUNCTION suggested that they do away with organized boroughs and then there would be more money. A State tax could be instituted which would be equitable for everybody. He said that was good enough for him. MICHAEL O'BRIEN via teleconference from BETHEL, member Bethel City Council. He said there was no argument that they needed to help provide funding for the education of their children. He was concerned that Bethel would be in a position to not only support themselves with their limited tax base but also five other schools as well. He was further concerned with the disembowelment of the largest school district in the State of Alaska. Five or six Native villages with absolutely no tax base whatsoever, separated by snow machine in the winter and boat in the summer, and were going to be included in the same school district. He supported the idea of everyone on an equal as possible basis providing for the education of Alaska's children, but there were still too many questions regarding a solution to this matter. ROBIN MOORE, vice-mayor of Whittier via teleconference from WHITTIER opposed SB 337. She said there was a limited tax base in Whittier, not very much land and a lot of railroad. She agreed that it was everyone's responsibility to support their local schools, but an overall solution needed to be found. DORIS BENDER via teleconference from WHITTIER opposed SB 337. She was greatly concerned about those who come to Alaska, make money and then leave without paying any taxes. She suggested the Legislature look at another way to provide education funding. LEE TOLLIVER via teleconference from TOK said that the only employer bringing in any money was Westmark Tours. He felt they should be taxed accordingly. This was a small community. He has to do all his shopping either in Fairbanks or Anchorage and pays their taxes. Now, these same cities want to tax his community for their schools. He did not feel this was right. BRENDA STEVENS via teleconference from TOK opposed SB 337. She asked what happened to the money brought into the economy by the tourists in the amount of $700,000 million. There was $5.2 billion in the value of exports out of the State. What happened to that money? She noted further that there was talk of cutting funding for Head Start programs and school sports, etc. She asked what would happen to the places that had nothing but a "honey bucket"? The money was not being spent on schools. What the public did not know was where the money was being spent. AGNES L. PHILLIPS, Mayor of Bethel via teleconference from BETHEL opposed SB 337. The solution should be to reinstitute State income tax. Rural Alaska does help pay their way by shopping in Fairbanks and Anchorage and paying local taxes. DON HAMILTON via teleconference from FAIRBANKS opposed SB 337. He felt it was a bill that would benefit the urban areas more than the rural areas. He also said he did not feel the rural areas had enough representation. He felt a small sales tax would help the school funding issue. JEERRY NELSON via teleconference from EAGLE opposed SB 337. He lives in Eagle because of the simple life style even though most live well below the poverty level. Co-chair Sharp thanked everyone who signed up to testify. He reviewed the calendar for tomorrow and said the committee would meet at 10:00 a.m. (Tape changed from #83 Side B to #84, Side A.) An unidentified moderator advised that there was an individual in Tok and Slana that wished to testify. LARRY EARL via teleconference from TOK introduced himself to the committee as a disable vet living on limited source of income. He said there would be more welfare problems for the State with enforced boroughs. He said the State should provide necessary funding for education. (pause on line) Unidentified moderator said she noted someone from SLANA also come on line that's been waiting. Duffy's Roadhouse in Slana advised the Co-chair that they were waiting on line and had a few people that wished to testify. (pause) CHRISTOPHER COOK on line from Duffy's Roadhouse in SLANA said he felt, along with many of his neighbors that SB 337 was a very bad concept and seemed that it was d j vu to SB 280. The residents felt that the Legislators they were sending to Juneau to resolve problems were bent on creating more. He said the people should decide the issue. OLIE BATES on line from Duffy's Roadhouse in SLANA said that everyone was interested in good education for their children. He suggested that perhaps the dividend check could be used for education. He opposed SB 337. MICHELLE HADLEY on line from Duffy's Roadhouse in SLANA said she opposed SB 337. Most families in Slana were homestead. She suggested that the out-of-state people coming in and taking jobs should have to pay a fee. This could be contributed to education funding. MAX OLSEN on line from Duffy's Roadhouse in SLANA opposed SB 337. He said they did not need more taxation. LARRY CTIBOR via teleconference from BETHEL said even though his testimony wouldn't make any difference to those who already have their minds made up. But, he felt he should testify. He was not opposed to taxes and would pay, for instance, an income tax for education. He said that Public Law 874 brought millions of dollars into the State from the Federal government each year. Most comes from rural areas. However, it is kept by the State and parceled back out to urban areas first and then to rural. It is a misconception that rural areas are not contributing in that regard. In the past year mostly rural areas provided $42 million in PL 874 funds. He said the education system needs disaster relief right now. He also agreed that there could be an educational endowment set aside out of the permanent fund. BO FAY via teleconference from EAGLE said he felt the problem was not lack of money but rather fiscal irresponsibility. He noted that there was no need to collect more taxes and cited the GST that was added in Canada to help solve monetary problems, but the government only spent more money, and said that would eventually be the case here, too. He said there had to be a more equitable way to provide education funding. He suggested that some of the State administrators should be gotten rid of. There was no economy in Eagle. Who were they going to tax? He said they needed to get in touch with rural Alaska. There just wasn't any money. Co-chair Sharp told Mr. Fay that the committee was not present to respond but rather to listen to public testimony. He advised all individuals still listening that, in order to fund the education budget of $700 million, each working person would have to pay $3,000 income tax to fill the gap. This is a big problem and the Legislature was attempting to address it. ADJOURNMENT Co-chair Sharp adjourned the meeting at approximately 8:05 p.m. SFC-98 -8- 3/18/98 pm
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