Legislature(2001 - 2002)

03/25/2002 09:17 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 25, 2002                                                                                      
                              9:18 AM                                                                                         
SFC-02 # 41, Side A                                                                                                             
SFC 02 # 41, Side B                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair Pete  Kelly convened the meeting at approximately  9:18 AM.                                                            
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Dave Donley, Co-Chair                                                                                                   
Senator Ward, Vice-Chair                                                                                                        
Senator Loren Leman                                                                                                             
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Donald Olson                                                                                                            
Senator Alan Austerman                                                                                                          
Also Attending:   REPRESENTATIVE FRED  DYSON; HEATHER BRAKES,  Staff                                                          
to  Senator   Therriault;  PAT  DAVIDSON,   Director,  Division   of                                                            
Legislative Budget and Audit                                                                                                    
Attending  via  Teleconference:     From  Anchorage:   JEFF  JESSEE,                                                          
Executive  Director, Mental  Health Trust  Authority, Department  of                                                            
Revenue; DAN BOCKHORST, Staff, Alaska Local Boundary Commission                                                                 
SUMMARY INFORMATION                                                                                                         
SB 342-LONG TERM CARE OMBUDSMAN                                                                                                 
The  Committee  heard from  the  sponsor  and  the bill  moved  from                                                            
SB 270-BOARD OF DISPENSING OPTICIANS                                                                                            
The  Committee   heard  from  the   sponsor  and  the  Division   of                                                            
Legislative Budget and Audit. The bill moved from Committee.                                                                    
HB  16-HOME RULE COMMUNITIES                                                                                                    
The Committee  heard from the sponsor,  the Alaska Municipal  League                                                            
and the  Alaska  Local Boundary  Commission.  The bill  was held  in                                                            
[Note audio  equipment malfunctioned.  First portion of the  meeting                                                            
is not  recorded  on master  audiocassette. Alternate  recording  is                                                            
available although it is of poorer quality.]                                                                                    
     CS FOR SENATE BILL NO. 342(HES)                                                                                            
     "An Act relating to the long term care ombudsman."                                                                         
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Senator  Green,  Chair  of  Senate  Health,   Education  and  Social                                                            
Services Committee,  spoke to the  bill. She reminded the  Committee                                                            
about the previous year  when the Long Term Care Ombudsman authority                                                            
was transferred from the  Department of Administration to the Mental                                                            
Health Trust  Authority (MHTA).  She noted  this change was  made to                                                            
prevent a  potential conflict  of interest.  In the process  of this                                                            
transfer, she stated that  a provider of assisted living and nursing                                                            
care informed  the MHTA that the Long Term Care Ombudsman  would not                                                            
be  permitted on  their  premises  due to  certain language  in  the                                                            
enabling statute.                                                                                                               
Senator Green  stated this legislation  corrects the language  error                                                            
and provides  access of the Long Term  Care Ombudsman to  facilities                                                            
that  provide  assisted living  or  nursing  care services  for  the                                                            
purpose  of investigating  complaints. She  stressed this  ombudsman                                                            
oversight is required by  the federal government, which provides the                                                            
majority of the funding for the ombudsman activities.                                                                           
JEFF  JESSEE, Executive  Director,  Mental Health  Trust  Authority,                                                            
Department of  Revenue, testified via teleconference  from Anchorage                                                            
that he is available to answer questions.                                                                                       
Senator Green offered a  motion to report SB 342 from Committee with                                                            
individual recommendations.                                                                                                     
There  was  no  objection  and  the CS  SB  342  (HES),  MOVED  from                                                            
Committee with accompanying  zero fiscal note #1 from the Department                                                            
of Administration.                                                                                                              
     CS FOR SENATE BILL NO. 270(L&C)                                                                                            
     "An Act extending the termination date of the Board of                                                                     
     Dispensing Opticians; relating to the regulation of dispensing                                                             
     opticians; and providing for an effective date."                                                                           
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
HEATHER  BRAKES,   Staff  to  Senator  Therriault,  testified   this                                                            
legislation was drafted  based on an audit conducted by the Division                                                            
of Legislative  Budget  and Audit  and released  by the Legislative                                                             
Budget and Audit Committee on January 24, 2002.                                                                                 
Ms. Brakes  stated that the  audit "had several  concerns about  the                                                            
Board". She said  this included the disparity between  the number of                                                            
people who  become licensed and the  number of people registered  to                                                            
be   apprentices,    noting   the    6,000-hour   requirement    for                                                            
apprenticeship may unduly  prohibit apprentices from obtaining their                                                            
licenses.  The  auditors,   she  pointed  out,  suggest   the  Board                                                            
reconsider  the   necessity  of  the  6,000-hour  requirement.   She                                                            
informed  that  the  Board  of  Dispensing  Opticians  agreed  to  a                                                            
reduction,  but requested  a provision  requiring  completion  of an                                                            
$800 correspondence course.  She reiterated this would be a hardship                                                            
to the employee and could possibly be shifted to the employer.                                                                  
Ms. Brakes listed  another concern identified in the  audit relating                                                            
to the Board's State examinations.  She referenced a previous sunset                                                            
review  report issued  by  the Division  of Legislative  Budget  and                                                            
Audit in 1995, which recommended  the Board "improve the objectivity                                                            
and consistency  of the State's exam." After again  finding that the                                                            
Board's process was "flawed",  she remarked, the auditors suggest in                                                            
the current  report that the Board  "give serious consideration"  to                                                            
discontinuation  of the  practical examination  and instead  utilize                                                            
the  nationally recognized  exams  available.  She  pointed out  the                                                            
nationally recognized exams are identified in SB 270.                                                                           
Ms. Brakes cited language  from the audit report, "The Board has not                                                            
resolved  the prior  sunset  audit recommendations   related to  the                                                            
State practical examination.  The objectivity and consistency of the                                                            
State practical examination  did not improve over the current sunset                                                            
review period  resulting in successful challenges  by applicants who                                                            
originally were determined to have failed the test."                                                                            
Ms. Brakes  continued that  although the  Board has offered  several                                                            
solutions, none  would fully resolve the situation.  She pointed out                                                            
the audit makes an assessment  that "eliminating the Board does have                                                            
merit  in the future".  She emphasized  the  legislation before  the                                                            
Committee does not eliminate the Board.                                                                                         
Co-Chair Kelly  noted he reviewed  the Legislative Budget  and Audit                                                            
report and clarified this  legislation does not provide an extension                                                            
date as long as normal  because of the intent that the Board develop                                                            
a more objective examination.                                                                                                   
Ms. Brakes replied  the legislation provides for the  removal of the                                                            
examination authority from the Board.                                                                                           
Co-Chair Kelly  clarified the intent is that the Board  would be re-                                                            
audited sooner  than would normally occur, and that  the examination                                                            
authority  could  be reinstated  if  the Board  takes appropriation                                                             
Ms. Brakes concurred.                                                                                                           
Co-Chair  Kelly   then  noted  the  legislation  also   reduces  the                                                            
apprenticeship from 6,000 hours to 3,000 hours.                                                                                 
Ms. Brakes  added  that the  legislation recognizes  an associate's                                                             
degree as a substitute for apprenticeship hours.                                                                                
Senator  Green  asked   for  further  explanation   of  the  Board's                                                            
recommendation for a course of study.                                                                                           
Ms.  Brakes   replied  that   the  Board   agreed  to  the   audit's                                                            
recommendation   to  reduce  the  number  of  apprenticeship   hours                                                            
required,   however,   the  Board   requested   substitution  of   a                                                            
correspondence course that would cost the apprentice $800.                                                                      
Co-Chair Kelly qualified this is not included in the bill.                                                                      
Senator Green asked the reason.                                                                                                 
PAT DAVIDSON,  Director, Division  of Legislative Budget  and Audit,                                                            
testified the correspondence  course requirement was not included in                                                            
the   legislation   because   an   employee   of   an  Optometrist,                                                             
Ophthalmologist,   or  dispensing  Optician,   who  assists  in  the                                                            
distribution   of  eyeglasses  and   contact  lenses,  must   be  an                                                            
Apprentice Dispensing Optician.                                                                                                 
Ms. Davidson  reiterated there is  a "wide discrepancy" between  the                                                            
number of apprentices  and the number  of dispensing opticians.  She                                                            
listed one  reason as the  length of time  required to complete  the                                                            
apprenticeship, noting  that many apprentices leave the field before                                                            
completion.  She listed as another  reason that some apprentices  do                                                            
not intend  on becoming a  dispensing optician  as a career  choice.                                                            
Therefore,  she stated that to require  these employees to  complete                                                            
an $800 course  is unreasonable, given  the lower salaries  paid for                                                            
these positions.                                                                                                                
Ms. Davidson  detailed the  two methods for  becoming licensed  as a                                                            
dispensing  optician:  experience  in  the field,  or  an  associate                                                            
degree. She  noted passage  of a state examination  is required  for                                                            
both methods.                                                                                                                   
Senator Olson asked how this compares to other states.                                                                          
Ms.  Davidson  responded  that  22  other  states   either  register                                                            
dispensing opticians  or have no minimum requirements.  She remarked                                                            
that the majority of states license dispensing opticians.                                                                       
Senator Olson asked how  the training requirements in Alaska compare                                                            
to the states that license the practice.                                                                                        
Ms. Davidson  replied the current  6,000-hour requirement  in Alaska                                                            
is not the highest, as a few other states require more time.                                                                    
Senator  Olson next  wanted to know  whether there  is a  difference                                                            
between   opticians    working   under   the   "guidance"    of   an                                                            
ophthalmologist and those opticians working independently.                                                                      
Ms. Davidson  replied  there is  no difference  for apprentices,  as                                                            
they  all  must  operate  under  the  supervision  of  a  dispensing                                                            
Senator  Green asked  if the  apprenticeship  is  designed to  train                                                            
apprentices to become dispensing  opticians or whether the intent is                                                            
to provide an education.                                                                                                        
Ms. Davidson  answered  both are correct.  She stated  that much  of                                                            
training  for the  job of dispensing  optician  involves "hands  on"                                                            
experience;  however, a certain  amount of  studies is necessary  to                                                            
pass the  national  examination. She  qualified  that an  apprentice                                                            
could chose  to take  the correspondence  class  to prepare for  the                                                            
examination, although it  is not necessary to require the course for                                                            
everyone working as an apprentice.                                                                                              
Senator  Wilken offered  a motion  to report SB  270 from  Committee                                                            
with individual recommendations and attached fiscal note.                                                                       
There was  no objection  and CS  SB 270 (L&C)  MOVED from  Committee                                                            
with accompanying  $20,600  fiscal note  #1 from  the Department  of                                                            
Community and Economic Development.                                                                                             
     SENATE CS FOR CS FOR SS FOR HOUSE BILL NO. 16(JUD)                                                                         
     "An Act  relating to cities incorporated  under state  law that                                                            
     are  home rule  communities;  and  providing for  an  effective                                                            
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
REPRESENTATIVE  FRED  DYSON,  sponsor, requested  the  Committee  to                                                            
"raise  the threshold"  for home  rule  communities from  25 to  100                                                            
residents,  which he stated  Tam Cook of the  Division of Legal  and                                                            
Research Services as deemed appropriate.                                                                                        
Representative Dyson reminded  that the Alaska Constitution requires                                                            
the  Legislature  to  provide  for maximum  self-determination   for                                                            
Representative  Dyson read Appendix  C: Home Rule as a Native  Self-                                                            
Governance  Option  produced by  the  Economic Resource  Group,  The                                                            
Institute for  Social and Economic  Research, University  of Alaska,                                                            
Anchorage into the record  as follows. [Copy on file includes source                                                            
     Alaska's constitution  establishes a policy of maximizing local                                                            
     self-government.  This also is  the goal of the Native  peoples                                                            
     of Alaska have for  themselves. As shown in this report, Native                                                            
     communities  have pursued different  paths toward this  goal of                                                            
     self-government,   many  participating  in  the  state  system,                                                            
     others  staying   outside  it.  Home  rule  for   rural  Native                                                            
     communities  is a  largely unexplored  self-governance  option.                                                            
     Implementing   home  rule  in most  Native  communities   would                                                            
     require  some  changes   in home  rule   requirements,  but  in                                                            
     general,   anything  that  state  can  do  to  facilitate   the                                                            
     development  of self-governing  instructions  will benefit  not                                                            
     only  Alaska's  Natives  but  the  state's  overall  system  of                                                            
     governance  and  would come  closer  to realizing  the  state's                                                            
     constitutionally expressed self-governance objective.                                                                      
     The second-class city  status of many Native villages in Alaska                                                            
     does  not  carry  with  it any  significant  measure  of  local                                                            
     autonomy  and control. Under  this status, city governance  and                                                            
     operations  are carried  out in accordance  with state  general                                                            
     law,  with no leeway  for adaptation  to traditional values  or                                                            
     local  circumstances.  The main  benefits of  this status  have                                                            
     come  from higher state  revenue sharing  payments and  greater                                                            
     access  to other state  assistance programs  than are  possible                                                            
     for  unincorporated  areas.  However,  the  state constitution                                                             
     provides  the means to create  local governments that  could be                                                            
     far more  adaptable and appropriate  for rural Alaska  than the                                                            
     existing municipal system.                                                                                                 
     Alaska's  home  rule provision  is the  most  extensive in  the                                                            
     United  States. It provides that  "a home rule borough  or city                                                            
     may exercise  all legislative  powers not prohibited  by law or                                                            
     by charter." Exercising  "legislative powers" essentially means                                                            
     that  a home rule  jurisdiction  can have any  powers that  the                                                            
     Alaska  state legislature has,  subject only to limitations  of                                                            
     the state constitution,  state statutes, and the municipality's                                                            
     own  charter.  The  legislature  has  enumerated  a  number  of                                                            
     specific  limits  on home  rule  organization  and powers,  but                                                            
     beyond these, the  community itself can determine how to design                                                            
     its own government.                                                                                                        
     Under  current law, first class  cities and communities  with a                                                            
     permanent  population of over  400 people can attain  home rule                                                            
     by an  affirmative vote of the  people and their adoption  of a                                                            
     charter.  However,  there  is no  particular reason  to  retain                                                            
     these  classification and size  constraints on this  particular                                                            
     form of self-government.  The constitution allows  home rule to                                                            
     be extended  to other classes of cities. It would  take only an                                                            
     act of the legislature  to allow other communities in Alaska to                                                            
     adopt home rule charters.                                                                                                  
     Making  home rule  available to  rural communities  would  be a                                                            
     significant  step toward more effective local  government. This                                                            
     is  especially  the  case  where  Natives  constitute  a  clear                                                            
     majority of the population  and can expect continued control of                                                            
     the  local  government,  and  where  tribal   institutions  and                                                            
     village  corporations  work  together.  Instead  of  having  to                                                            
     follow  everything that  is spelled out  in general law,  as is                                                            
     now  required in  second class  cities, a  home rule  community                                                            
     would  be able to  design its  own government  to meet  its own                                                            
     needs,  circumstances, and objectives.  Along with the  ability                                                            
     to create  a more appropriate  municipal governance  structure,                                                            
     home  rule could provide  tools for  the effective exercise  of                                                            
     law  enforcement and  other police powers,  management  of land                                                            
     and   resources,   protection   of  subsistence   habitat   and                                                            
     environmental  quality,   and for  carrying  out  other  public                                                            
     To  accomplish  some  of  these  objectives,   home  rule  city                                                            
     boundaries  would need to include  sufficient land,  water, and                                                            
     subsistence resources  to protect the community and its ways of                                                            
     making  a living, and the state  would need to remove  existing                                                            
     statutory  obstacles to effective local control  and adaptation                                                            
     to local ways of self-governing.  Finally, the state would need                                                            
     to  abide  by the  constitutional  directive  that  "A  liberal                                                            
     construction  shall be given to the powers of  local government                                                            
Representative  Dyson  expressed,  "These  are really  the  marching                                                            
orders  that  we've  been  working  at  nearly  six  years  on  this                                                            
Senator Ward asked  the "floor" population level for  a second-class                                                            
Representative  Dyson replied the  amount is currently 25,  although                                                            
he recommends increasing the number to 100.                                                                                     
Representative  Dyson pointed out that the Alaska  Municipal League,                                                            
the Southeast League and  a number of communities have endorsed this                                                            
legislation  and  plan to  organize  into  local governments  if  it                                                            
passes  into  law. He  assured  there  would  not be  a significant                                                             
difference  in the  amount of funds  allocated  to the communities.                                                             
However, he stressed, the  "far more official and recognized" manner                                                            
in which to receive those funds.                                                                                                
Senator Ward shared that  with the exception of the identified large                                                            
groups  of  Bethel,  Goldbelt,  Sitka,  etc.,  the  Alaska  National                                                            
Interest   Lands  Conservation   Act   (ANILCA)   required   village                                                            
corporations  have at least 24 shareholders.  Otherwise,  he pointed                                                            
out, the village  was classified as  a "group". He asked  the number                                                            
of ANILCA-certified groups.                                                                                                     
Representative Dyson did not know the number.                                                                                   
Co-Chair Kelly remarked  that statutes governing a second-class city                                                            
exist and are  almost identical to the proposed home  rule community                                                            
structure.   He  asked  why  this   legislation  is  necessary,   as                                                            
interested communities could opt to form second-class cities.                                                                   
Representative  Dyson replied this legislation allows  the potential                                                            
cities to write  their own charter,  to "tailor" it to the  cultural                                                            
background  of   the  community,  and  to  determine   the  type  of                                                            
government and scope of responsibilities desired.                                                                               
Co-Chair  Kelly stated second-class  cities  do not write their  own                                                            
Representative Dyson furthered  that a second-class city must follow                                                            
the Alaska State  General Law Provisions, which he  characterized as                                                            
a model municipal  charter, and is  often not appropriate  for rural                                                            
communities or Native communities.                                                                                              
Co-Chair Kelly  asked if second-class cities are audited  every five                                                            
years and whether  the home rule communities established  under this                                                            
legislation would also require audits.                                                                                          
Representative  Dyson replied audits  would not be required  of home                                                            
rule communities  but could be performed. Instead,  he stated, these                                                            
governments  would be required  to submit  an authorized version  of                                                            
their records.                                                                                                                  
Senator  Wilken expressed  several  concerns with  this legislation                                                             
although he appreciated Representative Dyson's intent.                                                                          
Senator  Wilken  asserted,  "This  bill flies  in  the face  of  our                                                            
constitution."   He cited   Article  X,  Section  1  of  the  Alaska                                                            
Constitution,  "The  purpose  of  this  Article is  to  provide  for                                                            
maximum  local  self  government,"   as  discussed,  but  noted  the                                                            
sentence continues, "…with  a minimum of local government units". He                                                            
opined  the   State  should  be  organizing   into  more   efficient                                                            
governments rather than more inefficient governments.                                                                           
Senator  Wilken  next read  from Section  III  of Article  X,  "…the                                                            
standards    shall   include   population,    geography,    economy,                                                            
transportation and other factors.                                                                                               
Senator Wilken  asked how home rule communities would  relate to the                                                            
organization  of  Alaska  into  local  governments.  To  answer,  he                                                            
pointed out  that only the language,  "or a home rule community"  is                                                            
added to existing law.                                                                                                          
Senator Wilken  directed attention to a spreadsheet,  "Standards for                                                            
Borough Incorporation"  and to charts he had distributed  [copies on                                                            
file],  one  showing  the  relationship  of  local  governments  and                                                            
boroughs that  serve several communities, and the  other showing the                                                            
autonomy home  rule communities would  have under this legislation.                                                             
He noted  the sixteen criteria  listed on  the spreadsheets  must be                                                            
met before  a borough could be incorporated.  He opined that  rather                                                            
than "working toward the  good of a common unit" as specified in the                                                            
State constitution,  the home rule  community proposal would  create                                                            
local  governments  within   an  area  each  with  their  own  self-                                                            
Senator Wilken  mentioned there are 11 ways to organize  a community                                                            
in  Alaska,  referencing  the  spreadsheet,   "Structures  of  Local                                                            
Government  in Alaska" [copy on file].  He pointed out the  proposed                                                            
home rule  communities  would be  identical to  second-class  cities                                                            
with the exception  that the home rule communities  would be powered                                                            
by a charter.                                                                                                                   
Senator Wilken remarked  that a charter is "organic law" and equates                                                            
to a constitution  for  a municipality. He  stressed these  charters                                                            
are  very  powerful,   but  are  difficult  to  write   and  require                                                            
expertise.  He spoke to a  proposed city  charter rejected  the year                                                            
prior that  would have overruled actions  of the State Legislature.                                                             
Senator  Wilken  noted  this  legislation  would  allow  up  to  200                                                            
different charters  across the state and the Legislature  would have                                                            
no input  into the powers  granted by those  charters. He  suggested                                                            
the  charters could  be written  with  no consideration  for  "their                                                            
neighbors down  the street, down the river or across  the mountain."                                                            
Senator Wilken  stated this legislation allows rural  communities to                                                            
continue, "shirking  their responsibility  for local education."  He                                                            
explained  the bill  provides  that home  rule communities  are  not                                                            
required  to contribute to  education costs.  He compared  organized                                                            
communities in the state  and the $269 million total amount of funds                                                            
they contributed  to education,  to unorganized  communities,  which                                                            
contributed  no funds.  He  ascertained that  this  bill allows  the                                                            
continuation of "a major problem in this State today."                                                                          
Senator Wilken  commented that this  legislation is contrary  to the                                                            
goals of  the Alaska Municipal  League of  maximum local  governance                                                            
with minimal governing  units. He relayed that although  he has been                                                            
told the organization  supports the bill, he has yet  to see written                                                            
confirmation of such.                                                                                                           
Representative  Dyson  responded  by agreeing  with  Senator  Wilken                                                            
regarding  the State  constitutional  "encouragement"  of a  minimum                                                            
number   of  governments.   Representative   Dyson  furthered   that                                                            
requiring  multiple  villages  that  are separated  by  distance  to                                                            
operate  as one  city,  is unreasonable,   although he  predicted  a                                                            
pattern  whereby each  community would  organize  as one  government                                                            
with several communities  collaborating into a borough.  He expected                                                            
that  allowing  communities   to organize   under  State  law  would                                                            
encourage  the process  of the aggregation  "that  we all want."  He                                                            
also anticipated  several second-class cities would  convert to home                                                            
rule communities  for  the purpose  of writing a  charter that  most                                                            
accurately reflects their culture and needs.                                                                                    
Representative  Dyson referenced  communities  organizing under  the                                                            
proposed home rule method,  and disputed that this "does anything to                                                            
make them more  selfish." He predicted the self-interests  would not                                                            
change remarkably,  although the formation of self-government  would                                                            
give residents  a  broader interest  and a means  for communicating                                                             
with other  communities.  He shared  his experiences  of working  in                                                            
approximately  20 villages on power plants and wastewater  treatment                                                            
plants. He told of the  multiple governing bodies in the unorganized                                                            
communities  and the lower esteem  granted to the State government.                                                             
Representative  Dyson remarked there would be no "down  side" to the                                                            
addition  of home  rule  communities  to  the options  of  municipal                                                            
Representative  Dyson disagreed  with  Senator Wilken  and with  the                                                            
Local Boundary  Commission  that writing charters  would not  be too                                                            
difficult for communities.  He shared that two former members of the                                                            
Local  Boundary Commission  recently  formed  a private  company  to                                                            
consult  with  communities  on  these matters.  He  also  noted  the                                                            
governments  of Native  communities  in Canada  could  be used  as a                                                            
model. He disputed  the claim that  writing a charter would  place a                                                            
burden on communities forming  a home rule government, expressing it                                                            
is an  "elitist  attitude" that  the State  must  protect the  local                                                            
residents in  the event they "mess  it up" or are "mischievous".  He                                                            
stated that  people could  make their own  decisions, and  mistakes,                                                            
and learn  from  them. He  expressed that  to deny  communities  the                                                            
ability  to  organize because  of  these  concerns,  "is  absolutely                                                            
against every  concept I know in the  whole movement of freedom  and                                                            
democracy  and constitutional  government  in  our world.  I am  not                                                            
afraid of freedom.  I'm not afraid of giving everyone  out there the                                                            
chance to make their own  decisions write their own constitution and                                                            
to make  mistakes." He compared  this situation  to that of  being a                                                            
parent and allowing children to make their own decisions.                                                                       
Representative  Dyson agreed  with Senator  Wilken's assertion  that                                                            
the issue  of contributions  to local education  costs is  important                                                            
and must be addressed.                                                                                                          
Representative  Dyson expressed  his  intent is  to provide  further                                                            
incentive for local communities to organize local governments.                                                                  
Co-Chair  Kelly  spoke  of  a  construction  company  no  longer  in                                                            
business that  was instructed by certain government  representatives                                                            
that  the  company  would  be required  to  conduct  business  in  a                                                            
specific manner.                                                                                                                
SFC 02 # 41, Side B 10:05 AM                                                                                                    
Co-Chair  Kelly  informed  that  this  company  was  cautioned  that                                                            
permits for  projects located in some  organized communities  "might                                                            
not be forthcoming" if  the company "didn't play ball". He noted the                                                            
company did  not conform  to the requirements  and subsequently  did                                                            
not receive the necessary  permits. He asserted this practice, which                                                            
he characterized  as  extortion, might  be continuing,  although  it                                                            
could not be proven.                                                                                                            
Co-Chair Kelly  questioned whether  creating this new form  of local                                                            
government  could potentially establish  200 organizations  with the                                                            
ability to issue permits  based on criteria greater than that of the                                                            
State. He  asked if  this would place  small groups  of people  in a                                                            
position of significant  power in determining how funds are spent in                                                            
private industry. He summarized  his concern that this process could                                                            
create  "an entirely  new permitting  regime that  could be used  to                                                            
leverage dollars in the private sector or otherwise."                                                                           
Representative  Dyson responded this is a danger,  and that there is                                                            
always concern  that when  granting power,  it could be misused.  He                                                            
predicted in  the next five years  that 12 communities would  become                                                            
organized under the proposed  home rule provisions, rather than 200.                                                            
However,  he  assured  that  because  these   communities  would  be                                                            
organized  under  State law,  there  would  be more  opportunity  to                                                            
address problems. He reminded,  "Illegal activity is still illegal".                                                            
He  reiterated  he  is  willing  to the  take  the  risk  that  some                                                            
communities  would  "do  it  wrong" to  allow  more  communities  to                                                            
Senator Ward  commented that both  Representative Dyson and  Senator                                                            
Wilken have described a  problem. Senator Ward suggested including a                                                            
provision  in this  bill that  would allow  a community  to write  a                                                            
charter but would  impose certain restrictions relating  to taxation                                                            
for education.  He surmised that a  significant number of  residents                                                            
of unorganized  communities  would contribute  to education  funding                                                            
although there is currently no method for them to do so.                                                                        
Representative Dyson replied  that "major discussion" on this matter                                                            
has occurred  over the past three  years. However, he expressed  his                                                            
intent to  create the home  rule community  system independently  to                                                            
funding and specifically,  taxation. He spoke to legislation  passed                                                            
by  the  House  of  Representatives   that  includes   taxation  for                                                            
education funding and other governmental services.                                                                              
Representative  Dyson anticipated several communities  would utilize                                                            
their current Indian Reorganization  Act (IRA) structure and convert                                                            
to home rule  communities. He clarified  that no "racial  component"                                                            
would be allowed under  State law relating to who could vote or hold                                                            
Senator  Wilken   pointed  out  that   other  legislation,   SB  48,                                                            
establishes a system to  analyze whether communities are "ready" for                                                            
self-government.  He noted that audits are not required  for second-                                                            
class cities  currently. This  underscored to  him that there  is no                                                            
difference between the proposed home rule community and second-                                                                 
class  city  structures,  with  the exception  of  the  charter.  He                                                            
stressed  the state would  have no  oversight for  the charter  of a                                                            
home rule community. This  was "important" and "troublesome" to him.                                                            
Senator Green expressed  the need to consider this matter carefully.                                                            
She asked if a  recognized sovereign community, or  IRA, must have a                                                            
racially defined component or characteristic.                                                                                   
Senator Olson  answered no; there  is no stipulation that  a certain                                                            
percentage  of  the residents  of  such  a community  must  be of  a                                                            
specific ethnic background.                                                                                                     
Senator Ward  countered that the US  Secretary of the Interior  must                                                            
certify a community for  it to be recognized under IRA, and that the                                                            
Secretary  would  not  certify  if the  residents  were  not  Native                                                            
American. Therefore, he stated there is a racial component.                                                                     
Senator  Olson  agreed,  but  clarified  that  a  community  of  100                                                            
residents could  still qualify if 25 residents are  white and 25 are                                                            
Senator  Ward   acquiesced  and  specified   that  the  "overriding                                                             
government" of an IRA must be a Native organization.                                                                            
Senator Green next asked  if there are other methods, beside IRA, to                                                            
qualify  as  a  recognized   sovereign  community   by  the  federal                                                            
Senator Olson responded no.                                                                                                     
Senator Ward explained  there are there is a real difference between                                                            
an IRA and a sovereign nation                                                                                                   
Co-Chair Kelly asked for clarification of IRA.                                                                                  
Senator Ward  explained that  the IRA was  developed to address  the                                                            
situation of Native  Americans in the Lower 48 and  their ability to                                                            
self-govern.  He stated that when  the Native Claims Settlement  Act                                                            
was  adopted  in  1971,  it  was  established   there  would  be  no                                                            
recognized sovereign Native  nations in Alaska with the exception of                                                            
some  existing  nations  including  Metlakatla,  Tyonek  and  Arctic                                                            
Village. He noted that  communities attempted to become certified as                                                            
sovereign nations  after this date due to funding  opportunities and                                                            
because of these  efforts, it was decided that all  214 villages are                                                            
equivalent  to an IRA. However, he  qualified, not all villages  are                                                            
certified as IRA.                                                                                                               
Co-Chair Kelly asked the number of IRA villages.                                                                                
Senator Olson explained  that the IRA passed the US Congress in 1936                                                            
with  the goal  to grant  additional  self-determination  to  Native                                                            
community  members.  He  stated  that  federal   funding  has  since                                                            
provided  further incentive  for communities  to organize under  the                                                            
Senator Ward responded  to Co-Chair Kelly's question  that there are                                                            
approximately  50 recognized IRA communities.  He stressed  there is                                                            
significant effort required to become recognized.                                                                               
Senator  Austerman  commented there  is an  IRA village  located  on                                                            
Kodiak  Island,  which  is ineligible  to  receive  State  municipal                                                            
matching grants.                                                                                                                
KEVIN RITCHIE, Alaska Municipal  League, testified that the League's                                                            
Local Government  Subcommittee/Legislative   Committee reviewed  the                                                            
legislation and provided  conceptual support. However, he emphasized                                                            
the group did not consider  the "significant change in the powers of                                                            
communities"  and  instead  considered  the options  of  allowing  a                                                            
community to determine the type of government.                                                                                  
Mr. Ritchie appreciated  the Committee's discussion,  asserting that                                                            
the future of municipal governments in Alaska is important.                                                                     
Senator Green asked the League's definition of municipality.                                                                    
Mr. Ritchie  replied the  League follows  the State's definition:  a                                                            
local  government created  under the  rules and  regulations of  the                                                            
State of Alaska.  He understood that a home rule community  would be                                                            
defined  as a  city  under this  legislation,  although  it was  not                                                            
specifically stated as such in the bill title.                                                                                  
Senator Green asked about population perimeters.                                                                                
Mr.   Ritchie  responded   that   statute   establishes   population                                                            
perimeters for the different types of municipalities.                                                                           
Senator Wilken asked the League's position on the bill.                                                                         
Mr.  Ritchie   reiterated   the  League  has   supported  the   bill                                                            
conceptually,  but qualified the Committee  has discussed  different                                                            
issues, which  could impact the position. He informed  that when the                                                            
subcommittee reviewed  the legislation, it was under  the impression                                                            
that there would be no significant change to municipal powers.                                                                  
Senator  Ward asked  the relationship  between  the  League and  IRA                                                            
Mr. Ritchie replied there is no formal relationship at present.                                                                 
Senator Ward asked if the  League would oppose this legislation if a                                                            
provision  were  added  to  require  a  mandatory  contribution  for                                                            
education funding.                                                                                                              
Mr. Ritchie stated he would pose the question to the League.                                                                    
Representative  Dyson remarked  he has made  no effort to  encourage                                                            
those  parties  in  support  of  this  legislation  to  contact  the                                                            
Committee. He stated, "I  have naively assumed, and it has been true                                                            
all through  the  committee process,  that  this thing  is so  self-                                                            
evidently valuable  and we have such  widespread support  within the                                                            
legislative  body for self-determination  and removing barriers  and                                                            
making it attractive."                                                                                                          
Representative Dyson opined  this discussion has identified that the                                                            
"crux of  the issue" relates  to philosophical  differences  between                                                            
Senator Wilken  and himself.  He stated,  "Senator Wilken sees  that                                                            
giving the folks  the right to, and the opportunity,  to write their                                                            
own constitution and not  have State supervision, as long as they do                                                            
it within our  constitutional framework and the legal  framework. He                                                            
sees that as  an issue of grave concern.  I see that as an  issue of                                                            
great celebration: giving  folks the freedom to do whatever the heck                                                            
they  darn well  do within  constitutional  boundaries,  not  having                                                            
State government,  Big Brother,  looking over  their shoulder,  is a                                                            
marvelous opportunity and a cause for great celebration."                                                                       
Co-Chair  Kelly commented  that  if  the Legislature  were  "working                                                            
under the  assumptions  of a Bill  of Rights,  where all people  are                                                            
equal, maybe  we wouldn't be afraid;  but in this state,  all people                                                            
are  not equal.  Adding  the  power of  a  government  to those  who                                                            
already are  throwing around incredible  economic weight  might just                                                            
scare them.  I don't see this as a  liberty issue because  the roles                                                            
are  scrambled  in Alaska  anymore;  you  can't talk  about  liberty                                                            
anymore.  If you  were  to apply  this in  a situation  of  complete                                                            
equality, like  the Founding Fathers  had assumed, I'd buy  into it.                                                            
We don't have that. We  don't have anywhere that in this State right                                                            
Co-Chair  Kelly announced he  would hold the  bill in Committee  and                                                            
that  he  had conveyed  such  to  Representative  Dyson  before  the                                                            
hearing was scheduled.                                                                                                          
DAN BOCKHORST,  Staff, Alaska Local  Boundary Commission,  testified                                                            
via teleconference  from  Anchorage, to inform  that the  Commission                                                            
has the  responsibility  under  State law  to act  on petitions  for                                                            
incorporations    of   city    and   borough    governments,    city                                                            
reclassification,   municipal  annexation,  merger,  consolidation,                                                             
detachment and  disillusion. He stated the Commission  reviewed this                                                            
legislation at  a meeting held March 9, 2002, and  authored a letter                                                            
to the  Committee on the  matter [copy on  file.] He summarized  the                                                            
contents of the letter,  noting the Commission recognizes that HB 16                                                            
is "well intended"  and that the Commission  formally commended  the                                                            
sponsor for  "seeking ways to enhance  local government in  Alaska."                                                            
Mr.  Bockhorst  pointed out,  however,  two  "fundamental  concerns"                                                            
detailed in the  correspondence, the first questioning  the need for                                                            
a new  type of local  government  as the Commission  concludes  that                                                            
existing options are available  for flexibility and adaptability for                                                            
self-governance.  He detailed  the options  currently available  for                                                            
local governments  and noted  the similarities  of the second-class                                                             
city structure to the proposed home rule community structure.                                                                   
Mr.  Bockhorst  listed  the  second   concern  as  relating  to  the                                                            
requirement that  the community develop a legally  sound charter. He                                                            
informed  that   currently  only   boroughs  and  first-class   city                                                            
governments  could  develop  charters,  which  also  have  statutory                                                            
restrictions.  He spoke  to difficulties  encounters by communities                                                             
attempting to draft charters.                                                                                                   
Senator Leman  shared that 38 years  ago, when he was in  the eighth                                                            
grade, he studied  the Alaska Constitution and anticipated  that all                                                            
Alaska communities  would be organized by this time.  He shared some                                                            
of  Senator  Wilken's   concerns  on  this  matter.  Senator   Leman                                                            
expressed   his  intent   that  Alaska   residents  in  unorganized                                                             
communities  should  "be  participating".   He  asked  whether  this                                                            
legislation provides a  "better mechanism" for this to occur, and he                                                            
surmised it would.                                                                                                              
Senator   Leman  addressed   the  concern   regarding  granting   of                                                            
construction  permits  and  noted  state  and  federal  laws  define                                                            
illegal activities.                                                                                                             
Senator  Leman expressed,  "Within  the broader  context, I  believe                                                            
that giving communities  and people the opportunities for some self-                                                            
determination…  is probably a good  thing to do and will  advance us                                                            
toward the goal that many of us have."                                                                                          
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
Co-Chair Pete Kelly adjourned the meeting at 10:37 AM                                                                           

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