Legislature(2001 - 2002)

05/09/2002 09:37 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                           May 09, 2002                                                                                       
                              9:37 AM                                                                                         
SFC-02 # 91,  Side A                                                                                                            
SFC 02 # 91,  Side B                                                                                                            
SFC 02 # 92,  Side A                                                                                                            
SFC 02 # 92,  Side B                                                                                                            
CALL TO ORDER                                                                                                               
Co-Chair Pete  Kelly convened the meeting at approximately  9:37 AM.                                                            
Senator Pete Kelly, Co-Chair                                                                                                    
Co-Chair Dave Donley, Co-Chair                                                                                                  
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Loren  Leman                                                                                                            
Senator Lyda Green                                                                                                              
Senator Gary  Wilken                                                                                                            
Senator Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Senator Donny  Olson                                                                                                            
Also Attending:  REPRESENTATIVE RICHARD FOSTER; REPRESENTATIVE  JOHN                                                          
DAVIES;  LARRY LABOLLE, Chief  of Staff  for Representative  Richard                                                            
Foster; EDDY JEANS, School  Finance Manager, Department of Education                                                            
and Early Development;  AMY ERICKSON,  Staff to Representative  Lisa                                                            
Murkowski;  PATTI SWENSON, Staff to  Representative Con Bunde;  LORI                                                            
BACKES, Staff  to Representative Jim Whitaker; JAN  WRENTMORE; HEATH                                                            
HILYARD, Staff to Representative Jeannette James                                                                                
Attending    via   Teleconference:    From    Nome:   STAN    LUJAN,                                                          
Superintendent,  Nome Public Schools  District; From Anchorage:  BOB                                                            
EVANS,  Employee,   Anchorage  construction  company;   TIM  ROGERS,                                                            
Legislative Program Coordinator,  Municipality of Anchorage; From an                                                            
Offnet Site: DAN  BOCKHORST, Local Boundary Commission,  Division of                                                            
Community  and Business  Development,  Department  of Community  and                                                            
Economic  Development;   From  Fairbanks:  ROD  COMBELLICK,   Chief,                                                            
Engineering  Geology  Section,   Alaska  Division  of  Geological  &                                                            
Geophysical Surveys,  Department of Natural Resources;  MILT WILTSE,                                                            
State  Geologist  and Director,  Alaska  Division  of  Geological  &                                                            
Geophysical Surveys,  Department of Natural Resources;  From Kodiak:                                                            
GARY CARVER, Geologist                                                                                                          
SUMMARY INFORMATION                                                                                                         
HB 239-VOCATIONAL EDUCATION PILOT PROGRAM                                                                                       
The Committee  heard testimony from  the sponsor, the Department  of                                                            
Education  and  Early  Development,   and  the  Nome  Public  School                                                            
District. The bill was held in Committee.                                                                                       
HB 521-MUNICIPAL IMPROVEMENT AREAS                                                                                              
The Committee heard from  the sponsor and took public testimony. One                                                            
amendment was adopted, and the bill reported from Committee.                                                                    
HB 332-DOMESTIC VIOLENCE/SEXUAL ASSAULT COUNCIL                                                                                 
The Committee  heard from  the sponsor, considered  and adopted  one                                                            
amendment, and reported the bill from Committee.                                                                                
HB 296-MUNICIPAL MERGER AND CONSOLIDATION                                                                                       
The Committee  heard from the sponsor,  the Department of  Community                                                            
and  Economic  Development,  and took  public  testimony.  The  bill                                                            
reported from Committee.                                                                                                        
HB 53-SEISMIC HAZARDS SAFETY COMMISSION                                                                                         
The Committee  heard  from the  sponsor, the  Department of  Natural                                                            
Resources,  and  took  public  testimony.  The  bill  reported  from                                                            
HB 451-MUNICIPAL BOND REIMBURSEMENT                                                                                             
The  Committee  heard  from  the  sponsor   and  the  Department  of                                                            
Education  and  Early  Development.  One  committee  substitute  was                                                            
proposed  then withdrawn from  consideration.  The bill was  held in                                                            
     SENATE CS FOR HOUSE BILL NO. 239(HES)                                                                                      
     "An Act establishing a pilot program for a regional learning                                                               
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
REPRESENTATIVE  RICHARD FOSTER, the  bill's sponsor, explained  that                                                            
this legislation  would provide  the Bering  Strait School  District                                                            
(BSSD) and the Nome City  School District with State funds to assist                                                            
in the  development  of a joint  regional pilot  program to  enhance                                                            
educational  opportunities for approximately  200 junior  and senior                                                            
high school  students from the 15  villages that comprise  the BSSD.                                                            
He communicated  that currently most  BSSD village school  graduates                                                            
remain in that  village and have limited  employment opportunities.                                                             
Representative  Foster explained that on an annual  basis, this non-                                                            
traditional  boarding school style  program, which would  operate in                                                            
Nome, would  provide job shadowing  opportunities and courses,  some                                                            
with a  duration of  only one or  two weeks,  to educate BSSD  youth                                                            
about such things  as how to find a job or how to  work in retail or                                                            
the transportation  industry.  He stated that  once State funds  are                                                            
secured for  the program,  federal funds would  be sought to  assist                                                            
the program's continuing development.                                                                                           
Senator Wilken  commented  that a similar  program is scheduled  for                                                            
the Fairbanks  area; however,  he stated,  the Fairbanks North  Star                                                            
Borough has  committed to pay 30 percent  of the construction  costs                                                            
of the  program's facility  and would additionally  provide  funding                                                            
for the program  through the Borough's school district  budget which                                                            
is supported by local property taxes.                                                                                           
Senator Wilken  asked whether a pro forma plan has  been established                                                            
to outline  the program's  direction  and funding  requirements.  He                                                            
noted that  the fiscal note  specifies that  State support  would be                                                            
required for the  program's initial four years with  the expectation                                                            
that the program  would be self-supporting  after that time  period.                                                            
Senator Wilken  asked how the Bering Strait School  District and the                                                            
City of Nome propose to support the program.                                                                                    
LARRY  LABOLLE, Chief  of Staff  to Representative  Richard  Foster,                                                            
noted  that responses  to the local  support  inquiry indicate  that                                                            
Nome would  support the program with  property tax revenue  and that                                                            
both the City  of Nome and the BSSD  have the option to use  federal                                                            
funds to support the program.                                                                                                   
Dr. LaBolle asserted  that this program differs from  the Fairbanks'                                                            
program in that this program  would require students to be housed in                                                            
Nome in order  to be provided with opportunities for  such things as                                                            
driver's education,  water safety  programs, as well as exposure  to                                                            
expansive  career opportunities  that are  not readily available  in                                                            
their villages.                                                                                                                 
Senator Wilken  specified that the May 1, 2002 letter  from Dr. John                                                            
A. Davis  and Dr. Stan  Lujon of the Bering  Strait School  District                                                            
[copy  on file],  addressed  to  the Senate  Finance  Committee  Co-                                                            
Chairs, does not  identify the source of the fifth  year funding. He                                                            
asked whether a financial analysis has been undertaken.                                                                         
Dr.  LaBolle  commented  that no  additional  information  has  been                                                            
Senator  Green commented  that a fifth  year analysis  has not  been                                                            
provided  because this  is  a four-year  pilot program.  She  voiced                                                            
concern regarding how the  State's school foundation formula funding                                                            
might be impacted since  the districts would be, in essence, sharing                                                            
students.  She  stated  that  the  Nome  School  District  would  be                                                            
required  to hire additional  teachers in  addition to housing  BSSD                                                            
students. She pointed out  that this scenario is not provided for in                                                            
the school  foundation formula funding.  She reminded the  Committee                                                            
that  expenses  for such  things  as a  program  coordinator,  food,                                                            
travel, and house parents  would also be a fiscal consideration. She                                                            
remarked that  even though she considers this to be  a good program,                                                            
fiscal concerns must be addressed.                                                                                              
Senator  Wilken noted  that  the letter  from  the City  of Nome  to                                                            
Representative  Foster,   [copy  on  file]  dated  April  26,  2002,                                                            
specifies that  "House Bill 239 is  needed to assist in sending  the                                                            
State portion  of school  funding with the  students as they  attend                                                            
school in the  Bering Straits School District or in  the Nome Public                                                            
Schools." He  reiterated Senator Green's  concern regarding  how the                                                            
State  school foundation  formula  funding  would provide  for  this                                                            
Senator  Wilken declared  that  it is  "uncomfortable"  to  consider                                                            
committing  State funds to a project  that has "no plan."  He stated                                                            
that the Fairbanks  North Star Borough has committed  local taxes to                                                            
support the program in  their community; however, this bill contains                                                            
no  local  participation  requirement.  He  opined  that  this  bill                                                            
"strikes  at the  very  heart of  the problem"  that  exists in  the                                                            
State, as  exampled by  the practice in  Rural Education  Attendance                                                            
Areas to  "spend as you  wish, because there  is no accountability,                                                             
there is no requirement  to have any local participation  so whether                                                            
it is sewer and water or  schools," they want to do it because there                                                            
is no local commitment involved.                                                                                                
Senator  Wilken  announced   that  were  this  project  proposed  in                                                            
"organized  Alaska," it would  be accompanied  by a plan that  would                                                            
provide  assurances as  to how the  pilot program  would be  able to                                                            
continue after the fourth year.                                                                                                 
Senator  Wilken argued  that  the expectation  should  be that  this                                                            
pilot program is a good  thing and would continue to operate through                                                            
local  involvement  and support,  and  not  because "the  people  of                                                            
Alaska are  being asked to shoulder  the burden." He suggested  this                                                            
program be set aside until  a plan is presented that provides viable                                                            
funding assurances for the program after the fourth year.                                                                       
EDDY JEANS,  School  Finance Manager,  Department  of Education  and                                                            
Early Development,  informed the Committee  that the State's  school                                                            
foundation  formula funding  would be  allocated,  as routine,  to a                                                            
student's  home school district,  which he  clarified, in this  case                                                            
would be  the Bering Strait  School District.  He communicated  that                                                            
the BSSD  would contract  with the City of  Nome School District  to                                                            
provide  the   required  services.   He  characterized  this   as  a                                                            
"cooperative effort between the two school districts."                                                                          
Mr. Jeans  voiced  the understanding  that, in  the program's  fifth                                                            
year,  other  grants would  be  sought  to support  the  program  in                                                            
addition  to  the  use of  the  State's  school  foundation  formula                                                            
Co-Chair  Kelly questioned  whether the pilot  project school  would                                                            
qualify for the State school  foundation formula funding as a result                                                            
of the two school districts' contractual agreement.                                                                             
Mr. Jeans clarified  that the students' home school  districts would                                                            
transfer  portions of  their foundation  formula  funding and  other                                                            
impact aid funding to support the pilot program.                                                                                
Co-Chair  Kelly stated  that there  is no language  specifying  that                                                            
this funding support must occur.                                                                                                
Mr. Jeans agreed,  but reiterated that school districts  are allowed                                                            
to enter into cooperative agreements.                                                                                           
Co-Chair  Kelly asked  Senator Wilken  whether  Mr. Jeans'  comments                                                            
provided the pertinent funding information he requested.                                                                        
Senator Wilken replied that, "they did not."                                                                                    
Senator Green  asked whether the funding  agreement between  the two                                                            
districts  could begin  with the  programs' first  year rather  than                                                            
with the fifth year.                                                                                                            
Mr. Jeans clarified  that the State  funding requested in  this bill                                                            
would supply "the  seed money" required to initiate  the program. He                                                            
continued that  this "seed money" would provide the  foundation upon                                                            
which  to  approach  the  federal  government  for  further  funding                                                            
assistance  to address  such needs  as housing  facility  renovation                                                            
expenses and on-going operational costs.                                                                                        
Senator  Green explained  that the State  school foundation  formula                                                            
allots  annual funds  to schools  based  on the  number of  students                                                            
enrolled in that  district, and she specified that  this funding and                                                            
student/teacher  ratio  guidelines  determine  staffing  needs.  She                                                            
voiced concern that a long-term  funding plan for this program might                                                            
be difficult  to develop because of  the uncertainty of this  annual                                                            
funding amount.                                                                                                                 
Senator Green  stated; however, that  if the BSSD does not  allocate                                                            
their money to hire District  staff; they could support this project                                                            
by providing  funds  to the  Nome School  District  to hire  program                                                            
Mr. Jeans  commented  that it  has not  been established  that  Nome                                                            
would be  required to hire  additional teachers.  He stated  that as                                                            
part of  the program, students  from the  BSSD would be temporarily                                                             
housed  in   Nome  as   a  means  to  supplement   the  educational                                                             
opportunities provided  by their own District; however, he noted, no                                                            
mechanism exists to offset  the boarding home expenses because these                                                            
students  are disqualified  from  receiving boarding  home  stipends                                                            
since their  participation  in the program  would be funded  through                                                            
their home district. He  stated that the boarding home expenses "are                                                            
really a core issue."                                                                                                           
Mr.  Jeans opined  that  the  interaction  between Nome  and  remote                                                            
village students would additionally provide cultural benefits.                                                                  
Senator Green  understood that three or four additional  staff would                                                            
be required to  facilitate the program. She stated  that even though                                                            
the  formula  funding  might  not provide  a  funding  mechanism  to                                                            
support  the boarding  home  component of  the program,  the  Bering                                                            
Strait School  Board could  choose to allot  money from its  formula                                                            
funding to support it.                                                                                                          
Mr.  Jeans  reiterated   that  he  is  not  aware  that   additional                                                            
instructional  staff would be required;  however, he noted  that the                                                            
Department  of  Education   and  Early  Development's   fiscal  note                                                            
specifies  that the  program would  require three  staffers: one  of                                                            
whom  would be  the program  coordinator  with the  other two  being                                                            
housing staffers.                                                                                                               
Senator  Green  expressed  the  understanding  that  the  additional                                                            
staffers would be teachers.                                                                                                     
Mr.  Jeans  commented  that  the  school  districts  could  allocate                                                            
portions of  their "discretionary  money" to fund housing  and other                                                            
program expenses.                                                                                                               
STAN LUJAN, Superintendent,  Nome Public School District,  testified                                                            
via teleconference  from Nome  and informed  the Committee  that the                                                            
BSSD has Rural  Education Attendance  Area (REAA) funding  available                                                            
to hire  vocational education  staff; however,  those funds  are not                                                            
currently  being  accessed  because the  District  does  not have  a                                                            
vocational  technical  training facility.  He continued  that  those                                                            
funds could  be accessed  to fund  three staffers  if BSSD  students                                                            
were in this program.                                                                                                           
Senator Green asked who would supervise the staff.                                                                              
Mr. Lujan  stated  that a  Memorandum of  Agreement  (MOA) would  be                                                            
developed between  the two school  districts to address this  issue.                                                            
He stated  that in  order for  the REAA  funds to  be realized,  the                                                            
instructors  would be required  to hold  either a  Type A or  Type C                                                            
vocational education certification.                                                                                             
Senator Austerman  asked whether local  matching funds are  required                                                            
to receive State foundation formula funding.                                                                                    
Mr.  Jeans  replied  that  Nome  residents   do  contribute  to  the                                                            
education  formula funding  and that the BSSD  "is an REAA  and make                                                            
their contribution through impact aid."                                                                                         
Senator  Austerman  asked  Senator  Wilken to  further  explain  his                                                            
concern about local funding participation in the Nome program.                                                                  
Senator  Wilken explained  that  his concern  is  that these  school                                                            
districts  have a $30 million  school budget  and are requesting  an                                                            
additional  $1  million  of  State money  to  undertake  this  pilot                                                            
program. He stressed that  no information is included in the request                                                            
regarding how  the Districts would fund the program  after the four-                                                            
year pilot program  funding concludes. He asserted  that no business                                                            
plan  has  been provided  and  that  no  local  community  financial                                                            
support has been established.                                                                                                   
Mr. Jeans  responded  that Nome  is a "first  class  city" and  is a                                                            
separate  school  district  within  the Bering  Straits  region.  He                                                            
clarified  that  Nome  does  locally  contribute  funds  to  support                                                            
Senator  Wilken agreed and  acknowledged that  Nome contributes  the                                                            
maximum four-mils in support of education.                                                                                      
Senator Hoffman  stated that other  entities, such as the  Kuskoquim                                                            
School  District, could  contribute  to this  program,  as there  is                                                            
great demand for vocational  training in the region, particularly in                                                            
the health  care field. He detailed  some of the possible  non-State                                                            
funding opportunities  that could  materialize. He stated  that many                                                            
entities  support the program  and that the  benefits realized  from                                                            
the State investment would offset the expense.                                                                                  
Senator  Hoffman continued  that this demonstration  project  at the                                                            
high school level  could unite the region in retaining  and training                                                            
local people for jobs rather  than continuing the current "revolving                                                            
door"  employment situation.  He stressed  that the  success of  the                                                            
program  would  spawn  continuing  support  momentum  from  regional                                                            
Senator Wilken  voiced appreciation  for Senator Hoffman's  comments                                                            
that "helped  define" the program  goals; however, he asked  why the                                                            
region's students  could not attend one of the three  existing rural                                                            
vocational/technical  schools instead of duplicating  those efforts.                                                            
He voiced concern that  this program might defer funds away from the                                                            
existing programs.                                                                                                              
Senator  Hoffman  responded  that  there might  be  duplications  of                                                            
efforts;  however, there  are benefits  in keeping  students  within                                                            
their region  as it provides support  groups and a familiarity  with                                                            
regional needs  and job opportunities. He stated that  some students                                                            
would  suffer  "cultural  shock"  if  they  were  sent  to  a  large                                                            
community which might result  in them "dropping out" of the program.                                                            
He stated  that regional  job needs could  more easily be  addressed                                                            
were the program located within the region.                                                                                     
Senator  Olson addressed  the  duplication  of efforts  question  by                                                            
commenting that were this  program looked at through the eyes of one                                                            
of  the rural  high  school students  from  a small  remote  village                                                            
rather than through the  eyes of someone from outside of the region,                                                            
it would be  determined that a program  in their region would  be an                                                            
easier  transition  than being  sent to  a larger,  unfamiliar,  and                                                            
distant area.                                                                                                                   
Senator  Wilken questioned  whether  a student  who attends  similar                                                            
programs in Nome rather  than the existing program in Kotzebue would                                                            
recognize any  differences. He stated that if the  Committee decides                                                            
to support a new four-year  pilot program in Nome, perhaps a similar                                                            
vocational  technical  program  slated for  construction  in  Bethel                                                            
should  instead be  located in  Nome since  facility infrastructure                                                             
already exists.                                                                                                                 
Senator  Wilken reiterated  his  request for  a program  plan to  be                                                            
provided to the Committee.                                                                                                      
Co-Chair Kelly  requested Superintendent  Lujan to submit  a program                                                            
plan to the Committee to address concerns about the bill.                                                                       
Senator  Olson commented  that  Kawerak,  a Nome  non-profit  social                                                            
services  agency,  is  successful  at  securing  federal  funds  for                                                            
training programs and that  a local union is also a strong supporter                                                            
of training  programs.  He reminded  the Committee  that the  Bethel                                                            
vocational  training  center  is,  specifically   a  post  secondary                                                            
education facility,  whereas the Nome  program would be provided  to                                                            
high school students.                                                                                                           
Senator  Wilken acknowledged  that  the Nome  and Bethel  facilities                                                            
would  serve differing  age  groups; however,  he  asked, "what  the                                                            
difference  is between the proposed  Nome facility and the  Kotzebue                                                            
tech facility, three years from now."                                                                                           
Dr. LaBolle  communicated  that  the Kotzebue  vocational  technical                                                            
program is a concentrated  post-secondary education  program through                                                            
which students  learn a trade. He  continued that the program  being                                                            
considered in  Nome would expose high school juniors  and seniors to                                                            
a variety of careers  that the region supports. He  stated that this                                                            
process would  provide students with job shadowing  opportunities as                                                            
well  as  introducing   students  to  the  needs  of   the  regions'                                                            
Dr. LaBolle informed  the Committee that individuals  from "outside"                                                            
of the region  are employed  in the majority  of the viable  jobs in                                                            
the region,  and he asserted,  the goal of  the program would  be to                                                            
have area  students  choose an  educational path  which would  allow                                                            
them to assume these jobs over time.                                                                                            
Co-Chair Kelly  asked for confirmation that the BSSD  would contract                                                            
with  the Nome  School District  and thereby  provide  a portion  of                                                            
their  student  foundation   formula  funding  to  the  Nome  School                                                            
District to support the program.                                                                                                
Dr. LaBolle  replied  that the  BSSD would  continue  to claim  BSSD                                                            
students in  the community in which  they reside, and that  the BSSD                                                            
would  contract  with  the  Nome  School  District  to  provide  the                                                            
educational  services in  "short block" programs.  He asserted  that                                                            
this is not a boarding school scenario.                                                                                         
Co-Chair Kelly  requested Mr. Lujan  to supply the Committee  with a                                                            
more detailed plan. He  voiced support for the concept, but stressed                                                            
that further  information  is necessary to  address the Committee's                                                             
program  funding  concerns. He  stated  the need  for  the State  to                                                            
undertake  steps "to  transition rural  Alaska out  of the past  and                                                            
into the future."                                                                                                               
Senator  Hoffman  informed the  Committee  that because  many  rural                                                            
residents   "live  off  the  land,"   many  professionally   trained                                                            
individuals  regard  these  Native  peoples as  "the  experts"  when                                                            
regional  geophysical   and  wildlife  information   is  needed.  He                                                            
asserted  that residents  of the area  are well  equipped to  assume                                                            
area jobs once  formal training is acquired, and he  shared that one                                                            
of his  relatives pursued  a wildlife  degree and  is now  gainfully                                                            
employed in the region.                                                                                                         
Senator Wilken  interjected  for clarification  that the BSSD  has a                                                            
current  school budget  in excess  of $30  million,  and that  Nome,                                                            
being a first  class city, provides the maximum local  funding match                                                            
required to receive State school foundation formula funds.                                                                      
Senator  Green suggested  that  a study  be conducted  to  determine                                                            
whether State funds would  be required to further the development of                                                            
this type of program  in the State. She additionally  requested that                                                            
the  two school  districts  investigate  methods to  implement  this                                                            
program without requiring State support.                                                                                        
Mr. Lujan stated  that the BSSD receives annual grants  amounting to                                                            
approximately  $2.5  million  and  that future  increases  of  grant                                                            
receipts  would alleviate  some of the District's  demand for  State                                                            
Co-Chair Kelly  asked Mr. Lujan to include this type  of information                                                            
in the project plan.                                                                                                            
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
SFC 02 # 91, Side B 10:24 AM                                                                                                    
     CS FOR HOUSE BILL NO. 521(CRA)                                                                                             
     "An Act relating to municipal improvement areas."                                                                          
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
AMY ERICKSON,  staff to Representative Lisa Murkowski,  Chair of the                                                            
House  of  Representatives   Labor  and  Commerce  Committee   which                                                            
sponsored this bill, informed  the Committee that this bill proposes                                                            
language clarification  to address  "certain ambiguities  in current                                                            
statute relating to municipal  improvement areas" by specifying that                                                            
municipalities  could use general  obligation and revenue  bonds for                                                            
"tax increment  financing."  She stated  this bill  also widens  the                                                            
definition  of "a blighted  area;" thereby  providing for  increased                                                            
redevelopment  opportunities.  She continued  that these changes  to                                                            
existing  law would  increase  a community's  ability  to "shape"  a                                                            
comprehensive  development plan and  she asserted, "that  successful                                                            
urban renewal  projects are most successful  when the State  commits                                                            
its resources to property improvements and new developments."                                                                   
Amendment #2: This amendment  deletes "and general obligation bonds"                                                            
and  inserts   "general  obligation   bonds,  and  other   forms  of                                                            
indebtedness"  in Section 1, line 8 of the bill to  read as follows.                                                            
     The  municipality  may issue  the bonds  as general  obligation                                                            
     bonds  or as  revenue  bonds  or as  a combination  of  revenue                                                            
     bonds,   general   obligation  bonds,   and   other  forms   of                                                            
Senator Leman moved for adoption of Amendment #2.                                                                               
Co-Chair Kelly objected for discussion.                                                                                         
At ease 10:28 AM / 10:28 AM                                                                                                     
Co-Chair Kelly withdrew his objection.                                                                                          
There being no further objection, Amendment #2 was ADOPTED.                                                                     
AT EASE 10:30 AM / 10:31 AM                                                                                                     
[Note: Equipement  recording  difficulties  prevented the  following                                                            
segment of the meeting from being recorded.]                                                                                    
BOB EVANS,  a representative of an  Anchorage construction  company,                                                            
explained the differences  between an unimproved area and a blighted                                                            
Senator Green  asked whether this  legislation changes the  public's                                                            
involvement in the process.                                                                                                     
Mr. Evans responded that it does not.                                                                                           
Senator  Ward  asked whether  land  located  adjacent  to a  vacated                                                            
trailer  park in a  designated blighted  area would  be affected  by                                                            
this legislation.                                                                                                               
Mr. Evans responded  that while this in not the intent  of bill; the                                                            
land's owner  could participate  in a joint  venture to improve  the                                                            
area  with  such things  as  construction  of  a road,  which  would                                                            
increase the value of the adjacent property.                                                                                    
Mr. Evans responded to  a question from Senator Ward by stating that                                                            
the language in this bill clarifies the ambiguity.                                                                              
Senator  Ward  asked  whether  a  municipality  should  use  general                                                            
obligation  (GO)   bonds  or  revenue  bonds  to  address   blighted                                                            
Mr. Evans responded  that a city could use any form  of indebtedness                                                            
to pay for revenue bonds.                                                                                                       
TIM  ROGERS,  Legislative   Program  Coordinator,  Municipality   of                                                            
Anchorage  stated  that this  legislation  would  allow incremental                                                             
taxes to  be used to fund  public purpose  projects. He stated  that                                                            
the  city would  support the  allowed  funding options  either  with                                                            
local taxes or with collateral.                                                                                                 
Senator Ward asked  whether these GO or Revenue bonds  could be used                                                            
to support other projects.                                                                                                      
Mr. Rogers replied  that the money would be designated  specifically                                                            
for public projects.                                                                                                            
Co-Chair Kelly ordered the Bill to be HELD In Committee.                                                                        
[This bill is re-addressed after the recess.]                                                                                   
RECESS TO CALL OF CHAIR 10:39 AM / 5:58 PM                                                                                      
[NOTE: Recording resumes.]                                                                                                      
     CS FOR HOUSE BILL NO. 521(CRA)                                                                                             
     "An Act relating to municipal improvement areas."                                                                          
[This bill was addressed earlier in the meeting.]                                                                               
Senator  Green offered  a motion "to  move HB  521 out of  Committee                                                            
with individual recommendations and zero fiscal note."                                                                          
There being  no objections,  SCS CS  HB 521(FIN)  was REPORTED  from                                                            
Committee  with a previous  zero fiscal note,  dated April  22, 2002                                                            
from the Department of Community and Economic Development.                                                                      
     CS FOR HOUSE BILL NO. 332(FIN)                                                                                             
     "An  Act  extending the  termination  date  of the  Council  on                                                            
     Domestic   Violence  and  Sexual   Assault;  relating   to  the                                                            
     council's  duties; placing the executive director  and staff of                                                            
     the  council  in  the exempt  service;  and  providing  for  an                                                            
     effective date."                                                                                                           
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
PATTI SWENSON,  Staff to  Representative Con  Bunde, the sponsor  of                                                            
the bill,  explained to the  Committee that  this bill would  extend                                                            
the sunset  date  of the  Council on  Domestic Violence  and  Sexual                                                            
Assault  (CDVSA)  to  June  2006.  She  asserted  that  the  Council                                                            
provides an  essential service to  victims of domestic violence  and                                                            
to  perpetrators.  She  stated that  the  accompanying  fiscal  note                                                            
details the  expenses that  would be incurred  were the Council  not                                                            
extended,  and she noted  that the  bill includes  a provision  that                                                            
would change  the status of CDVSA  employees to exempt as  suggested                                                            
in the Alaska  Division of Legislative  Audit report [copy  on file]                                                            
dated October 31, 2001                                                                                                          
Amendment #1:  This amendment inserts a new bill section  to read as                                                            
     Sec. 4.  The uncodified law of  the State of Alaska  is amended                                                            
     by adding a new section to read:                                                                                           
          TRANSITION FOR POSITIONS COVERED BY COLLECTIVE BARGAINING                                                             
     AGREEMENTS. This Act  does not terminate or modify the terms of                                                            
     a collective  bargaining agreement  in effect on the  effective                                                            
     date  of  this  Act.  As  soon  as any  collective   bargaining                                                            
     agreement covering  positions affected by secs. 1 and 2 of this                                                            
     Act  expires,  those  positions   shall  be considered   exempt                                                            
     positions as provided in secs. 1 and 2 of this Act.                                                                        
Senator Wilken moved for adoption of Amendment #1.                                                                              
Senator Green objected for discussion.                                                                                          
Senator  Wilken  stated  that  Representative  Bunde's  staff  would                                                            
explain the amendment.                                                                                                          
Ms.  Swenson  announced  that  this amendment   contains  transition                                                            
language to  allow current staff to  retain their classified  status                                                            
until  the current  labor  contract  expires in  July  of 2003.  She                                                            
furthered  that this  amendment provides  for  notice to  employees;                                                            
thereby protecting the State from legal challenges.                                                                             
Senator Leman  asked whether the inclusion  of this amendment  would                                                            
require a title change                                                                                                          
Ms. Swenson replied that a title change would not be required.                                                                  
Senator Green withdrew her objection.                                                                                           
There being no further objection, Amendment #1 was ADOPTED.                                                                     
Senator Green moved to  report "House Bill 332 out of Committee with                                                            
individual recommendations and accompanying fiscal notes."                                                                      
There being  no objections,  SCS CS HB 332  (FIN) was REPORTED  from                                                            
Committee with  previous fiscal notes from the Department  of Public                                                            
Safety,  Council  on  Domestic  Violence  &  Sexual  Assault,  dated                                                            
February  4, 2002 in the  amount of $9,725,200;  a fiscal note  from                                                            
the Department  of Public  Safety, Batterers  Intervention  Program,                                                            
dated February 4, 2002  in the amount of $320,000; and a fiscal note                                                            
from the  Department of  Public Safety, Victims  for Justice,  dated                                                            
February 4, 2002 in the amount of $246,000.                                                                                     
     SENATE CS FOR CS FOR HOUSE BILL NO. 296(JUD)                                                                               
     "An Act relating to mergers and consolidations of                                                                          
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
LORI  BACKES,  Staff to  Representative  Jim  Whitaker,  the  bill's                                                            
sponsor, informed the Committee  that this bill contains language to                                                            
correct  "perceived  unfairnesses   in  statute  in  regard  to  the                                                            
consolidation petition  process as well as the election process" for                                                            
AT EASE 6:02 PM / 6:03 PM                                                                                                       
Ms.  Backes commented  that  some  municipalities  have experienced                                                             
difficulties  in following  current  State statute  procedures.  She                                                            
exampled  that currently  there  is no  time limit  imposed for  the                                                            
gathering of  signatures on a consolidation  petition and  that this                                                            
bill imposes  a limit of 365 days.  She stated that this  time frame                                                            
is necessary because  some petitions have circulated  for up to five                                                            
years, and at the time  the petition was verified, it was found that                                                            
many of the signers no longer resided in the municipality.                                                                      
Ms.  Backes  explained  that   Sections  2  and  3  specify  that  a                                                            
consolidation  question "must be approved  by the voters  within the                                                            
borough  but outside  the cities  when it  is a  consolidation  of a                                                            
borough  with  one  or more  cities  within  it,  and must  also  be                                                            
approved  by  the  voters  in  at least  one  of  the  cities."  She                                                            
furthered that  these two sections  provide for a city "to  opt out"                                                            
of the  consolidation process  when there are  more than two  cities                                                            
within the  borough identified  on the  consolidation petition.  She                                                            
stressed  that "this  opt  out language"  must  be included  in  the                                                            
petition. She  stated that the process of consolidating  two or more                                                            
cities  within a  borough also  must be  approved by  a vote of  the                                                            
Ms Backes summarized  that the goal  of this bill is "to  allow each                                                            
individual  city, the voters  within each  individual city,  and the                                                            
voters outside of the city  but within the borough to have their own                                                            
vote  of  self-determination  as  to  whether  they  want  to  be  a                                                            
consolidated community or not."                                                                                                 
Ms. Backes  noted that Section 4 exempts  the new petition  language                                                            
from applying  to a petition  or a vote on  a petition filed  before                                                            
the effective date of the bill.                                                                                                 
Senator Green  asked why  the language changes  in Sections  2 and 3                                                            
are necessary.                                                                                                                  
Ms. Backes responded that  current statute specifies that a petition                                                            
for consolidation  must  be approved  by  a majority  of the  voters                                                            
within both the  city and the borough. She noted that  currently the                                                            
entire petition  for consolation  would fail  in the instance  where                                                            
the voters  outside of the city but  within the borough approve  the                                                            
consolidation  but one of  two cities proposed  to consolidate  does                                                            
not approve  of  the merger.  She continued  that  the new  language                                                            
would permit the one city  to remain unconsolidated, but would allow                                                            
the  other  parties  to  continue  the  consolidation  process.  She                                                            
reiterated that this "opt  out option" language must be specified in                                                            
the petition.                                                                                                                   
Senator  Hoffman  opined  that  this  "self-determination  opt  out"                                                            
language should  also be considered  for communities that  might not                                                            
want to become part of a "mandatory borough."                                                                                   
DAN BOCKHORST, Local Boundary  Commission, Division of Community and                                                            
Business   Development,  Department   of   Community  and   Economic                                                            
Development, testified  offnet to voice opposition  to components of                                                            
the bill that  would alter the outcome of a consolidation  election.                                                            
He stated  that current law  specifies that  a simple majority  vote                                                            
would  determine the  outcome  of a merger,  and  that the  proposed                                                            
legislation  would establish  "de facto voting  districts"  for each                                                            
city and  for voters within  the borough but  outside of a  city. He                                                            
stated that the  proposed process "weights the vote  of residents of                                                            
small districts more heavily  than the vote of residents of populace                                                            
districts." He exampled  that a vote by the City of Kupreanof with a                                                            
population  of  "less  than  one-half-of-one-percent  of  the  total                                                            
voters" of  the City of Petersburg,  in opposition to the  merger of                                                            
these two adjoining cities  in Southeast could block a consolidation                                                            
or  merger  even  if  99-percent  of  the  voters  in  the  City  of                                                            
Petersburg support  it. He stated that the Department's  position is                                                            
that this bill's language  "would disregard the will of the majority                                                            
of the voters about their preferred form of local government."                                                                  
Mr. Bockhorst  identified contradictory  elements within  the bill's                                                            
components,  particularly Section  3, lines 26 and 27. He  furthered                                                            
"that the provisions of  the bill are intended to be consistent with                                                            
the   voting   requirements   for   annexation   specified   in   AS                                                            
29.06.040(c)(1);   however,  there  is  absolutely  nothing  in  the                                                            
reference statute  that provides for de facto voting  districts." He                                                            
stated that, "the statute  provides for the exact opposite: approval                                                            
of a local  option annexation by a  simple majority of the  votes in                                                            
the affected  area." He exampled various  de facto voting  scenarios                                                            
whereby   the  proposed   language  would   incur  a  contradictory                                                             
Mr. Bockhorst  continued  that the  proposed bill  "would reflect  a                                                            
major  departure  from  constitutional  principles  and established                                                             
legislative policy"  in which State statute "specifies  a minimum of                                                            
local government units  and encourages the prevention of duplication                                                            
of tax  levying  jurisdictions."  He stated  that  this bill  "would                                                            
perpetuate   inefficient,   inequitable,   and   ineffective   local                                                            
government structures  resulting in duplication of  government units                                                            
and  tax  levying  jurisdictions  regardless  of  the  will  of  the                                                            
majority  of  the   local  voters."  He  stated  that   the  current                                                            
legislation  has,  for 30  years,  allowed  for "harmony"  with  the                                                            
principles  of the  State Constitution  as well  as "efficiency  and                                                            
fiscal accountability in  the local governments." He stated that the                                                            
proposed  bill would hinder  that forward  progression and  notified                                                            
the  Committee  that the  Local  Boundary  Commission  has issued  a                                                            
formal statement,  dated May  1, 2002, [copy  on file] that  opposes                                                            
the proposed legislation.                                                                                                       
Ms. Backes  expressed awareness of  the Local Boundary Commission's                                                             
concerns;  however, she stressed  that the  bill's sponsor  strongly                                                            
supports  the  people's   right  to  self-determine   what  type  of                                                            
community  they  wish to  live in.  She  elaborated  that this  bill                                                            
essentially  prohibits  "a hostile  takeover"  of one  community  by                                                            
another. She presented examples of this scenario.                                                                               
Senator  Hoffman   concurred  with  the  sponsor's  reasoning,   and                                                            
asserted, "that self-determination  should the most important factor                                                            
in self-government."                                                                                                            
Senator Green  noted that  within a relatively  short distance  from                                                            
the  Mat-Su  area  where  she  resides,   there  are  four  separate                                                            
communities,   each  with  their   own  governmental  offices.   She                                                            
questioned  whether the original  intent of  the current  regulation                                                            
was  to eliminate  or  discourage duplication  of  local  government                                                            
services in the same or similar areas.                                                                                          
Ms. Backes responded that  the original intent of the regulation was                                                            
not to  prevent duplication;  however, she  clarified, "that  is the                                                            
intent of consolidation or unification."                                                                                        
Senator Green opined that  the reason for establishment of the Local                                                            
Boundary Commission  was to prevent  duplication. She surmised  that                                                            
the proposed legislation would "do away" with that directive.                                                                   
Ms. Backes  clarified  that rather  than blocking  consolidation  or                                                            
mergers or  encouraging the duplication  of services, the  intent of                                                            
the proposed legislation  is "to merely make the voting and petition                                                            
process more  fair." She asserted  that Alaska's Constitution  calls                                                            
"for the  maximum local  self-government with  the minimum  of local                                                            
government units,"  and mandates that the Local Boundary  Commission                                                            
consider  the  consolidation  of  these  governments.  However,  she                                                            
insisted, this  should not be "forced  over the will of a  residents                                                            
of that area."                                                                                                                  
AT EASE 6:18 PM / 6:19 PM                                                                                                       
Co-Chair Donley  commented that at  the time of Statehood,  the goal                                                            
"was that all  of Alaska would be organized into some  form of local                                                            
government;" however, some  people have resisted because they do not                                                            
want to pay local taxes.  He reminded the Committee that a few years                                                            
prior at  public hearings  regarding education,  many people  voiced                                                            
that  they did  not want  to contribute  "a penny  to educate  their                                                            
children"  or  to support  local  services.  He asserted  that  this                                                            
position  is not  fair to  the people  of  Alaska who  do pay  local                                                            
taxes,  and it  is "clearly"  not  attuned with  the  vision of  the                                                            
drafters  of Alaska's  Constitution.  He stated that  Alaska is  the                                                            
only State that does not  have widespread governmental organization.                                                            
He noted  that some  communities do  not provide  funds to employ  a                                                            
local  police staffer,  and  that local  services  are not  provided                                                            
without some  sort of outside  assistance.  He voiced concern  about                                                            
any  proposal  that   discourages  inclusion  of  people   in  local                                                            
governments  because,  he  opined,  in the  long  run, this  is  the                                                            
direction the State must go.                                                                                                    
Senator Wilken  voiced uncertainty as to how to establish  a balance                                                            
in this  legislation, as "it  is a one size  fits all" type  of bill                                                            
that,  while  addressing  the  needs  of one,  harms  the  needs  of                                                            
Senator  Olson characterized  this legislation  as "setting  another                                                            
layer  of government  out  there." He  contended  that multiple  and                                                            
overlaying State, federal and local governments result in non-                                                                  
productivity,  and he stressed that  the costs associated  with this                                                            
duplication  usually  "fall   onto  the  shoulders  of  the  private                                                            
sector."  He voiced  that the possibility  of  a larger community's                                                             
"hostile   takeover"   of   a   smaller   community   is   "somewhat                                                            
JAN WRENTMORE,  Resident,  City of Skagway,  informed the  Committee                                                            
that this is an  important bill for Skagway because  it supports the                                                            
issue  of  self-determination.   She  informed  the  Committee  that                                                            
Skagway, the oldest incorporated city in the State, is self-                                                                    
sufficient, has real estate,  tourism and sales taxes, and funds 52-                                                            
percent  of  the  community's  education   needs.  She  stated  that                                                            
townspeople  were disturbed to receive  a Local Boundary  Commission                                                            
determination  stating  that Skagway  is viewed  as  not being  self                                                            
sufficient,  that the  community's  government  is inefficient,  and                                                            
that  the  residents  do  not make  sufficient   contributions.  She                                                            
contended  that this legislation  would allow  residents to  vote on                                                            
whether they desire  to merge with another community.  She continued                                                            
that  in  some  situations,  mergers  or  consolidations  might  not                                                            
increase  efficiencies in  government as  differing communities  may                                                            
have  different  lifestyles,   distance  might  be  an  obstacle  to                                                            
efficiencies,   and  communities  might  become  polarized   due  to                                                            
differing "ethics"  regarding major industries such  as tourism. She                                                            
urged the Committee  to consider the  affect this legislation  would                                                            
have on communities.                                                                                                            
Senator  Green stated  that, as part  of the  petition process,  the                                                            
Local   Boundary  Commission   grants   the  authorization   for   a                                                            
consolidation  or  merger  petition  to  be  circulated.  She  asked                                                            
whether permission to petition  could be granted without the express                                                            
approval from  the affected communities, which she  characterized as                                                            
a "hostile consolidation" situation.                                                                                            
Mr. Bockhurst  replied, "that a petition may be initiated  by a host                                                            
of  different  parties;  some of  which  might  be construed  to  be                                                            
hostile and some not be  construed to be hostile." He continued that                                                            
in most  situations, it is  impossible to  have 100 percent  support                                                            
for a  consolidation  or merger  proposal; however,  the  Commission                                                            
endeavors to consider  the broad public interest as  intended in its                                                            
Constitutional creation.                                                                                                        
AT EASE 6:31 PM / 6:34 PM                                                                                                       
Senator Olson asked Mr.  Bockhorst how this legislation would affect                                                            
new boroughs.                                                                                                                   
Mr.  Bockhurst  stated  that "this  legislation  directly  does  not                                                            
affect  the incorporation  of new  boroughs from  an area within  an                                                            
organized borough,  but technically, a consolidation  of a city in a                                                            
borough results  in the incorporation  of a  new borough so  in that                                                            
sense, it would affect  the creation of boroughs." He explained that                                                            
State law specifies that  "the incorporation of a borough government                                                            
is subject  to area-wide  voter  approval, and  this bill  certainly                                                            
would represent  a significant  departure from  that practice  if it                                                            
were applied  to an organization of  a borough from the unorganized                                                             
territory of  Alaska;" however, it  "would not affect a new  borough                                                            
from an unincorporated area of the State."                                                                                      
Senator Olson voiced that  perhaps an amendment should be considered                                                            
"so that it is applicable to the new boroughs."                                                                                 
Senator Austerman  moved to  report "Senate  CS for House Bill  296,                                                            
Judiciary, from  Committee with individual recommendations  and zero                                                            
fiscal note."                                                                                                                   
Co-Chair Donley objected.                                                                                                       
A roll call was taken on the motion.                                                                                            
IN  FAVOR:  Senator Leman,  Senator  Olson,  Senator  Ward,  Senator                                                            
Wilken, Senator Austerman, Senator Green, Co-Chair Kelly                                                                        
OPPOSED: Co-Chair Donley                                                                                                        
ABSENT: Senator Hoffman                                                                                                         
The motion PASSED (7-1-1)                                                                                                       
SCS CS  HB 296 (JUD)  was REPORTED  from Committee  with a  previous                                                            
zero fiscal  note, dated  February 28, 2002  from the Department  of                                                            
Community and Economic Development.                                                                                             
     CS FOR HOUSE BILL NO. 53(STA)                                                                                              
     "An Act establishing the Alaska Seismic Hazards Safety                                                                     
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
REPRESENTATIVE  JOHN  DAVIES,   the bill's   sponsor,  informed  the                                                            
Committee  that  this bill  would  establish  a  nine-member  Alaska                                                            
Seismology Safety Commission.                                                                                                   
SFC 02 # 92, Side A 06:38 PM                                                                                                    
AT EASE 6:38 PM / 6:39 PM                                                                                                       
Representative  Davies continued that the purpose  of the Commission                                                            
would be  to identify and  mitigate earthquake  disasters.  He noted                                                            
that  the  State  has established  procedures   regarding  emergency                                                            
responses,  but  does not  have  established  procedures  on how  to                                                            
prepare  for and mitigate  disasters  before they  occur. He  stated                                                            
that this legislation  would address  such things as building  codes                                                            
and land use patterns.                                                                                                          
Representative   Davies  qualified   that  these  plans   should  be                                                            
implemented gradually,  but systematically, as not  to incur general                                                            
public panic. He expressed  that while disasters such as earthquakes                                                            
have  huge   impacts;  their  infrequency   tends  to  make   people                                                            
complacent.  He  added  that because  most  earthquakes  are  minor,                                                            
people are  "misled" regarding the  potential severity. He  asserted                                                            
that building codes should  mandate that buildings be constructed to                                                            
withstand severe earthquakes,  as 80 percent of the loss of life and                                                            
damage resulting from an  earthquake occurs within the interior of a                                                            
building. He explained  that the Commission should be a component of                                                            
the Governor's  Office rather than  within a specific department  in                                                            
order  to provide  effective  coordination  between  affected  State                                                            
Representative  Davies noted that a $33,000 fiscal  note accompanies                                                            
this legislation  and that the Commission would be  required to meet                                                            
four times  a year.  He expressed  that Alaska  is the only  western                                                            
state  that  does  not  have  an  established  seismic  Commission,                                                             
although residents  of the State "live in earthquake  country and we                                                            
ought to be prepared."                                                                                                          
Co-Chair Kelly asked the function of the State's seismologist.                                                                  
Representative  Davies responded that  the State's seismologist  has                                                            
some authority to address  these issues; however, this position does                                                            
not have  the authority  to  coordinate procedures  between  various                                                            
departments.   He  explained  that  the  seismologist   could  offer                                                            
workshops,  but is  not in  a position  to coordinate  a  widespread                                                            
effort to address such things as upgrading building codes.                                                                      
Co-Chair Kelly stated that  while it is possible to predict where an                                                            
earthquake  might occur, it is difficult  to predict when  one might                                                            
occur or its resulting  damage. He stated that being  prepared for a                                                            
disaster  would be the  prudent course of  action, especially  since                                                            
populated areas of the State could be affected.                                                                                 
Representative  Davies asserted  that it is  important to  establish                                                            
this Commission  in  order to gather  new research  information.  He                                                            
stated   that   the  Municipality   of   Anchorage   is   conducting                                                            
"microzonation"  research that identifies  neighborhoods  within the                                                            
City that are  more prone to earthquake  activity, and he  continued                                                            
that this information  should be compiled  to determine appropriate                                                             
building  codes.   He  contended  that  when  confronted   with  the                                                            
possibility  of a  large loss  of life,  the tendency  is to  "over-                                                            
design." He stated  that it would be possible to identify  differing                                                            
building  codes for  different  areas,  which would  generate  sound                                                            
fiscal investments.  He asserted that  "the smarter we can  get, the                                                            
more efficient we can be in the whole process."                                                                                 
Senator  Green asked  whether the  Commission  would concentrate  on                                                            
municipal  areas rather than  more remote  areas and/or areas  where                                                            
codes currently exist.                                                                                                          
Representative  Davies   replied  that  the  tendency  would  be  to                                                            
concentrate on areas where structures exist.                                                                                    
Senator  Green  questioned  whether  the  Commission  would  address                                                            
issues on a  statewide basis or would  concentrate on areas  such as                                                            
Anchorage and  Fairbanks where building  codes currently  exist. She                                                            
mentioned  that  the  Mat-Su  area   does  not  have  building  code                                                            
Representative  Davies clarified  that while  the City of  Fairbanks                                                            
has building  code  regulations, the  Fairbanks  North Star  Borough                                                            
does  not.  He furthered   that it  is  fairly  common  for  lending                                                            
institutions  to require  structures to  meet nationally  recognized                                                            
industry standards  before a loan  is granted, and he stressed  that                                                            
these codes should be continually  up-dated and appropriate for each                                                            
region.  He informed  the Committee  that a  recent national  coding                                                            
entity placed the communities  of Fairbanks, Ketchikan and Juneau in                                                            
the same category as Anchorage,  even thought it is less likely that                                                            
those  communities would  experience  earthquakes  the magnitude  of                                                            
those that Anchorage might  receive. He stated that if these codings                                                            
had  been accepted,  building  costs  would  have increased  in  the                                                            
affected  communities. He  exclaimed that  Alaska must be  proactive                                                            
rather than reactive in addressing the earthquake situation.                                                                    
Senator  Austerman asked  whether  new building  codes would  affect                                                            
existing structures.                                                                                                            
Representative  Davies replied that the Commission  could only issue                                                            
recommendations. He noted  that requiring existing buildings to meet                                                            
new codes  would  be "extremely  expensive;"  however, he  contended                                                            
that were  an existing  structure to undergo  major remodeling  then                                                            
implementation  of the  new building  codes should  be required.  He                                                            
announced  that there is  a safety concern  regarding many  existing                                                            
structures, including  a high school in the Kodiak  school district.                                                            
Senator Austerman  agreed, but continued to voice  the concern about                                                            
imposing new codes upon existing structures.                                                                                    
Representative  Davies  responded  that the  nine-member  Commission                                                            
would   be  comprised   of   engineers,  insurance   professionals,                                                             
earthquake  scientists,  and  other  individuals   from appropriate                                                             
fields  of expertise  who  would consider  the various  factors  and                                                            
manage the process  in the most cost effective manner  for the State                                                            
in those circumstances.                                                                                                         
Co-Chair  Kelly clarified  that the language  in the bill  specifies                                                            
that the Commission  could primarily  "recommend" and would  have no                                                            
policing powers.                                                                                                                
Senator Green  asked how the Commission would coordinate  activities                                                            
with the Department of Military and Veterans Affairs.                                                                           
Representative Davies reiterated  that the State's disaster response                                                            
mechanism is  very effective and that  the Commission would  include                                                            
the Department of Military  and Veterans Affairs in its coordination                                                            
efforts. He stated  that a good working relationship  exists between                                                            
the State and  federal agencies regarding  response efforts,  and he                                                            
exclaimed that,  "Alaskans have a can-do spirit that  when something                                                            
happens we  tend to all  pull together."  He stressed that  Alaska's                                                            
response efforts  "are in pretty good  shape;" however, he  stressed                                                            
the  mitigation   efforts   are  lacking.   He  expressed   that  an                                                            
appropriate  mitigation   plan  would  have  a  positive  impact  on                                                            
response efforts.                                                                                                               
Representative  Davies  continued   that while  emergency   response                                                            
personnel   currently   undertake   mitigation   efforts   such   as                                                            
establishing  evacuation  routes in  the event of  a tsunami,  these                                                            
efforts  are  limited.  He  reiterated  that  the  most significant                                                             
portion  of  the mitigation   effort would  be  the  development  of                                                            
building code models.                                                                                                           
Senator Leman  stated that he is impressed  with the work  conducted                                                            
by   the  Municipality    of  Anchorage's   Geotechnical    Advisory                                                            
Commission. He asked whether  the proposed Commission would function                                                            
in a similar fashion but on a statewide basis.                                                                                  
Representative Davies stated that is correct.                                                                                   
Senator  Leman asked  how  the Commission  would  interact with  the                                                            
State Emergency Response Commission (SERC).                                                                                     
Representative Davies anticipated  SERC would have representation on                                                            
the proposed  commission;  however,  he did not  anticipate,  "there                                                            
being much overlap" in the two Commissions' endeavors.                                                                          
Senator Leman  stated that the nine-member Commission  appears to be                                                            
"light on the technical side of it" and "heavy on bureaucracy."                                                                 
Representative  Davies  responded that  the intent  of limiting  the                                                            
Commission to  nine members was to prevent it from  being too large.                                                            
He  explained  that  in addition  to  the  designated  three  public                                                            
members,  technical expertise  would be further  available  from the                                                            
University of Alaska representative  who is also currently the State                                                            
Seismologist;    from   the   Department   of   Natural    Resources                                                            
representative   who  would  probably  have  expertise   in  seismic                                                            
hazards; and from  the Department of Military and  Veterans Affairs'                                                            
representative  who would  be qualified in  the earthquake  response                                                            
component.  He  asserted  that  the Departments   would be  able  to                                                            
provide technical expertise.                                                                                                    
Senator Leman  asserted that the Governor  should appoint  qualified                                                            
technical experts to serve as Commission members.                                                                               
Representative Davies agreed.                                                                                                   
ROD COMBELLICK, Chief,  Engineering Geology Section, Alaska Division                                                            
of  Geological   &  Geophysical  Surveys,   Department  of   Natural                                                            
Resources,  testified  via teleconference  from  Fairbanks to  voice                                                            
that the  establishment of  this Commission  "has little to  do with                                                            
generating  State revenues,  but would  have everything  to do  with                                                            
preserving  State  resources."   He stated   that  the Commission's                                                             
recommendations  would  strengthen buildings  and  the State's  road                                                            
system and result in making  the State's "critical buildings safer."                                                            
He  asserted  that  these  recommendations   would  save  the  State                                                            
significant  money because  requiring higher  standards of  building                                                            
construction  to reduce  earthquake  vulnerability  would result  in                                                            
less damage in the event  of an actual earthquake. He noted that the                                                            
outcome  of similar  commissions  in other  states  has resulted  in                                                            
lowering earthquake damage  costs. He urged the Committee to support                                                            
this bill.                                                                                                                      
MILT  WILTSE,  State Geologist  and  Director,  Alaska  Division  of                                                            
Geological & Geophysical  Surveys, Department of Natural  Resources,                                                            
testified  via  teleconference   from  Fairbanks  to  attest,  after                                                            
studying other  states' mitigation commissions, that  the subject of                                                            
earthquake mitigation is  complex in that it impacts a wide spectrum                                                            
of society including: infrastructure,  utilities, local governments,                                                            
and access  corridors.  He stated that  it is  important to  bring a                                                            
wide spectrum  of representatives together "to mitigate  the effects                                                            
that a very  large-scale earthquake"  could produce. He stated  that                                                            
the Division of Geological  & Geophysical Surveys (DGGS) has studied                                                            
this issue  for years and has determined  that the establishment  of                                                            
this sort of Commission would be very beneficial to the State.                                                                  
GARY CARVER,  Geologist,  testified via  teleconference from  Kodiak                                                            
that his expertise  is in earthquakes and seismic  geology. He noted                                                            
his long-term  involvement  in earthquake studies  in the State  and                                                            
spoke of his experience  with the California Seismic  Commission. He                                                            
asserted that  the proposed Commission  could provide the  avenue to                                                            
consolidate  diverse  ideas  and opinions  and  provide  a  synopsis                                                            
addressing how  to reduce earthquake hazards. He noted  "that Alaska                                                            
is the most  seismically active State  in the Union," and  he warned                                                            
that  the State's  most  populous  areas  are located  in  extremely                                                            
hazardous  earthquake zones.  He stressed  that it  could be  just a                                                            
matter of  time before a  major earthquake  might impact the  State,                                                            
and  he avowed  that  mitigation  is  the key  to  offsetting  major                                                            
damage.  He noted  that the establishment  of  the Commission  could                                                            
relieve the burden placed  on small community governments to attempt                                                            
to develop  and implement local mitigation  plans. He asserted  that                                                            
the passage  of  this bill  would, "in  the long  run" save  Alaskan                                                            
lives and tax dollars,  as it would cost much less to recover from a                                                            
major earthquake were the  State prepared. He urged the Committee to                                                            
support this bill.                                                                                                              
Senator Ward  offered a motion to  report "the committee  substitute                                                            
for House  Bill 53 State  Affairs out of  Committee with  individual                                                            
recommendations and accompanying fiscal notes."                                                                                 
There being no objection,  CS HB 53(STA) was REPORTED from Committee                                                            
with a previous  fiscal note for $33,500  dated April 19,  2002 from                                                            
the Office of the Governor.                                                                                                     
Senator Leman asked the length of terms for Commission members.                                                                 
Representative  Davies  stated  that  Commission  members  would  be                                                            
appointed for three-year terms.                                                                                                 
     HOUSE BILL NO. 451 am                                                                                                      
     "An Act relating to municipal bond reimbursement for school                                                                
     construction; and providing for an effective date."                                                                        
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
HEATH HILYARD,  Staff to Representative Jeannette  James, the bill's                                                            
sponsor, informed the Committee  that current State statute mandates                                                            
that  a   five-point  maintenance   plan   accompany  school   grant                                                            
proposals;  however he explained,  there is no such requirement  for                                                            
school  bond  reimbursement  proposals.  He stated  that  this  bill                                                            
corrects that  disparity by requiring a five-point  maintenance plan                                                            
accompany both components.                                                                                                      
Senator  Austerman  asked how  school  districts  currently  develop                                                            
preventive  maintenance plans and  whether those plans are  working.                                                            
Mr.  Jeans stated  that the  Department  has "taken  an incremental                                                             
approach"  to  the   five-step  requirement  whereby,   through  the                                                            
regulatory process,  districts could apply for waivers  if they meet                                                            
some, but  not all  five, of the  steps. He  informed the  Committee                                                            
that the  Department has  been allocated  an additional position  to                                                            
monitor  schools'  implementation  of their  maintenance  plans.  He                                                            
stated, that  during site visits,  implementation of the  five-point                                                            
plan is discussed;  however, he noted,  no district currently  meets                                                            
all five of the plan components.  He asserted that progress is being                                                            
made and  that most districts  would implement  the five-point  plan                                                            
within a few years.                                                                                                             
Senator  Austerman asked  whether this legislation  could assist  in                                                            
moving districts closer to that goal.                                                                                           
Mr. Jeans  asserted "it is  a step in the  right direction"  as this                                                            
legislation places  the same eligibility requirement  that exist for                                                            
the grant  program as a  "qualification for  the debt reimbursement                                                             
program." He added that  this directive only affects municipalities.                                                            
Senator  Leman  communicated  that  one  criticism  of  the  current                                                            
preventive  maintenance  plan  is  that  it  gets  "bogged  down  in                                                            
details,"  and that  the school  districts must  spend time  dealing                                                            
with petty  details such as the number  of light bulbs required.  He                                                            
stressed that the intent  of the original legislation was to develop                                                            
plans to address, for instance,  school roof maintenance, but not to                                                            
delve into  minutia. He stated that  he is "hesitant to extend  this                                                            
interpretation" to other programs.                                                                                              
Mr. Jeans voiced  concern that the  Department might have  presented                                                            
overly  burdensome  regulations  to  the State  Board  of  Education                                                            
regarding  the  interpretation   of  the  original   intent  of  the                                                            
legislation. He further  explained that recommendations are reviewed                                                            
and  submitted   to  the  Board  of   Education  through   the  bond                                                            
reimbursement  and  grant  program   process.  He  stated  that  the                                                            
Department  has  requested  school  districts   to  furnish  reports                                                            
regarding  their  preventative  maintenance  plans  at  an  upcoming                                                            
scheduled  meeting, and he  noted that, at  that same meeting,  bond                                                            
reimbursement  representatives would be present to  listen to school                                                            
district concerns. He anticipated  that the State Board of Education                                                            
would be  presented with  revised regulations  that would loosen  up                                                            
some of the requirements.                                                                                                       
Senator Leman  voiced appreciation  for the Department's  efforts to                                                            
address concerns, and he recommended that changes should occur.                                                                 
Senator  Austerman verified  that  numerous Legislators  have  heard                                                            
these concerns.                                                                                                                 
Senator Green  asked whether Section  5 of the committee  substitute                                                            
removes the expiration date for available funds.                                                                                
Co-Chair  Kelly responded  that is correct;  however, he noted  that                                                            
the proposed committee substitute was not yet been adopted.                                                                     
Senator  Wilken moved  to adopt  HB 451,  Version  22-LS1524\J  as a                                                            
working document.                                                                                                               
Senator Green objected.                                                                                                         
Co-Chair  Donley asked  what specific  changes are  included in  the                                                            
Version "J" committee substitute.                                                                                               
Co-Chair  Kelly  noted  the  Version "J"  removes  the  ending  date                                                            
regarding bond availability.                                                                                                    
Co-Chair  Donley asked  how the removal  of this  date would  impact                                                            
school districts.                                                                                                               
Mr.  Jeans  responded  that  this  "would  affect   the unobligated                                                             
balances under  Senate Bill 11 to  the Fairbanks North Star  Borough                                                            
School District  and the unobligated  balances under House  Bill 281                                                            
for Fairbanks, Sitka and  Petersburg" school districts. He continued                                                            
that, "there is authorization  on the books to issue debt for school                                                            
construction" to these  communities; however, those school districts                                                            
have not,  as of yet, submitted  projects  nor received local  voter                                                            
approval to issue that debt.                                                                                                    
Senator Green  asserted that  the removal of  the ending date  would                                                            
extend this  program and  would result in  allowing the funding  "to                                                            
sit there  even if  it is not  being used  and no  one else has  the                                                            
opportunity  to  use  that money."  She  stated  that  the  original                                                            
legislation was "date certain."                                                                                                 
Senator Green informed  the Committee that a new school construction                                                            
funding  request  is  pending  "for her  school  district  which  is                                                            
continually  in need and is  willing to go  to bond, and as  long as                                                            
this money is allowed to  sit there and a district not use it, other                                                            
districts would  never be able to  get a bond package put  forward."                                                            
Co-Chair  Donley  asked  for  further information   as to  how  this                                                            
situation would  prohibit other school districts bond  requests from                                                            
being furthered.                                                                                                                
Senator  Green responded  that  the  likelihood of  receiving  voter                                                            
approval  of  a  school  bond  bill for  a  facility  in  "just  one                                                            
district" is slim.  She stressed that statewide support  is required                                                            
to issue school  bonds, and she voiced  that allowing money  to just                                                            
"sit there and  wait for a district that is not taking  advantage of                                                            
them"  undermines  the ability  of  other  school districts  to  get                                                            
support for their projects.                                                                                                     
Co-Chair  Kelly  ascertained  that  the  funding  allocated  to  the                                                            
aforementioned  districts is not connected to future  school bonding                                                            
Senator Green countered that they are.                                                                                          
Co-Chair  Donley qualified  that  as long  as a  large district  has                                                            
access to available  funds, there would be no statewide  support for                                                            
funding projects in other regions of the State.                                                                                 
Co-Chair  Kelly  asked  for  further  information   about  how  this                                                            
amendment would affect future bonding packages.                                                                                 
Senator  Green reiterated  that,  in  order to  receive Legislative                                                             
support,  a bond package  must include  projects  from a variety  of                                                            
statewide school  districts. She exampled that a bond  package might                                                            
encompass five  Municipality of Anchorage school projects,  two Mat-                                                            
Su Borough  school projects  in addition  to projects from  numerous                                                            
other  communities. She  stressed  that allowing  districts to  have                                                            
unallocated  funds  "takes  the  issue  off  the  table"  for  other                                                            
districts because it undermines  statewide support for future school                                                            
bond packages.                                                                                                                  
Co-Chair  Kelly insisted  that  "some Legislators  actually  support                                                            
other districts when they need things."                                                                                         
Senator Green  contended that the legislative process  involved in a                                                            
school bond  package requires  Statewide interest  and support.  She                                                            
exampled  various  school district  projects  included  in  previous                                                            
school bond packages. She  stated that the Municipality of Anchorage                                                            
usually fully  funds their school projects with an  expectation that                                                            
State  funding support  would follow,  and that  the Mat-Su  Borough                                                            
traditionally supports "70/30 bonding proposals."                                                                               
Co-Chair  Kelly   commented  that  the  Municipality   of  Anchorage                                                            
traditionally  has supported  Statewide  school  bond packages  even                                                            
though they usually fund their own school projects.                                                                             
Senator  Green clarified  that while the  Municipality of  Anchorage                                                            
does fund its own projects,  the City anticipates that State funding                                                            
would become  available, and  she informed  the Committee that  such                                                            
funding did materialize in the majority of these instances.                                                                     
Senator  Green voiced  acceptance of  a one-year  extension for  the                                                            
expiration date,  but stated that she could not support  there being                                                            
no ending date. She argued  that a bond proposal package anticipates                                                            
that all the  specified monies would  be used rather than  set aside                                                            
indefinitely for a district's  project. She argued that the majority                                                            
of State funded allocations are time-certain.                                                                                   
Senator Wilken stated that  money is not actually set aside for some                                                            
districts,  but rather that  the authorization  to expend monies  is                                                            
Senator Green concurred.                                                                                                        
Senator Wilken  voiced that school districts should  not be "rushed"                                                            
into a project  because of a specified timeline. He  stated that the                                                            
Fairbanks North  Star Borough School  District has projects  "in the                                                            
cue waiting to be voted  upon, knowing that this authorization is in                                                            
place." He  stated that he does not  take issue with the  open-ended                                                            
Co-Chair  Kelly furthered  the  position  that the  un-spent  monies                                                            
allocated  to some  school  districts has  no "connection  to  other                                                            
projects in the State."                                                                                                         
Co-Chair  Donley confirmed  Senator Green's  understanding that  the                                                            
most recent  Municipality  of Anchorage  school  bond projects  were                                                            
approved  by the city's voters  with the  expectation that  the city                                                            
would receive State bonding reimbursement.                                                                                      
Co-Chair  Donley additionally  supported  Senator  Green's  position                                                            
that school  districts  "that have  money available  to them  at any                                                            
given time," might  not necessarily provide the necessary  consensus                                                            
to support  other  school bond  packages.  He voiced  support for  a                                                            
designated time-certain  approach to the funding, and suggested that                                                            
a one-year extension would be acceptable.                                                                                       
Co-Chair Kelly  concurred that a one-year  extension would  not be a                                                            
problem as, he  noted that the Fairbanks North Star  School District                                                            
would  be voting on  their school  projects  within that  timeframe.                                                            
However, he  asserted, the ending  date should not be an  issue, and                                                            
he questioned  whether the  need for an ending  date is based  "upon                                                            
the internal  politics of  getting a bond  package passed"  or other                                                            
reasons that are unclear.                                                                                                       
Senator Green  asked whether a five-year  sunset date is  designated                                                            
in State statute  for most State programs, and she  asked, were this                                                            
the case,  whether a  project that  extends beyond  that time  would                                                            
require  re-authorization.   She  asked  why  this  authorizing  and                                                            
obligating  of  State  funds  should  be  treated  differently  than                                                            
established procedures.                                                                                                         
Senator Wilken  suggested that one difference is that  the voters of                                                            
the Fairbanks  North Star Borough  must approve 100 percent  Borough                                                            
funding for  school projects that  would subsequently be  reimbursed                                                            
by the State.  He continued that the local voter authorization  of a                                                            
school bonding  project provides  "the filter"  that it is  "okay to                                                            
spend the money"  whether it is spent in two years  or six years. He                                                            
avowed that  the State should only  be concerned with the  fact that                                                            
local voters  have agreed  that the money  should be spent  in their                                                            
community to provide better schools and education programs.                                                                     
Co-Chair Donley  attested that the five-year sunset  is to necessary                                                            
to control  the timeframe in which  the State would be obligated  to                                                            
pay for  the debt  service.  He stated  that if  the timeframe  were                                                            
unlimited,  a local community  might undertake  a project at  a time                                                            
when the State could not  afford the reimbursement. He stressed that                                                            
specified sunset  dates place reasonable  timeframes on a  community                                                            
regarding the State's debt service obligations.                                                                                 
Senator  Wilken  countered   that,  as  the  end  of  the  five-year                                                            
timeframe   approaches,   the  State's   obligations   increase   as                                                            
communities rush to get  their projects underway; whereas were there                                                            
no specified ending  dates, the State's obligations  would level out                                                            
over time.                                                                                                                      
Co-Chair Donley  contended that the  Legislature "could not  predict                                                            
the  State's fiscal  situation  in  an unlimited  future  amount  of                                                            
years." He stressed that  the five-year time limits were established                                                            
in order to define the  State's obligations rather than having other                                                            
entities control the financial situation.                                                                                       
Senator Leman  asked the  amount of the unused  authorized  funds in                                                            
Mr. Jeans stated  that approximately  $42 million is authorized  for                                                            
the Fairbanks  School District  and that  approximately $300,000  is                                                            
authorized each for Sitka and Petersburg.                                                                                       
Senator  Leman   commented  that   a  sunset  date  does   not  seem                                                            
unreasonable. He voiced  support for allowing a timeframe that would                                                            
permit  the  Fairbanks  North Star  School  District  to  adequately                                                            
address it projects.                                                                                                            
SFC 02 # 92, Side B 07:26 PM                                                                                                    
Senator Leman asked whether  the Fairbanks North Star Borough school                                                            
projects could be implemented within a two-year timeframe.                                                                      
Senator Wilken  and Co-Chair  Kelly concurred  that this would  be a                                                            
manageable timeframe.                                                                                                           
AT EASE 7:27 PM / 7:36 PM                                                                                                       
Senator Wilken moved to withdraw the motion to adopt committee                                                                  
substitute, Version "J."                                                                                                        
There being no objection, the motion to adopt committee substitute,                                                             
Version "J," was WITHDRAWN.                                                                                                     
Co-Chair Kelly ordered the bill HELD in Committee pending further                                                               
discussion with the bill's sponsor.                                                                                             
Co-Chair Pete Kelly adjourned the meeting at 07:38 PM                                                                           

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