Legislature(2001 - 2002)
03/22/2001 09:11 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 22, 2001
9:11 AM
TAPES
SFC-01 # 50, Side A
SFC 01 # 50, Side B
SFC 01 # 51, Side A
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:11 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Loren Leman
Senator Lyda Green
Senator Gary Wilken
Senator Lyman Hoffman
Senator Donald Olson
Also Attending: Senator Gene Therriault, sponsor of SB 4, Alaska
State Legislature; Senator Johnny Ellis, sponsor of SB 6, Alaska
State Legislature;
Attending via Teleconference: Dennis McMillen, United Way;
SUMMARY INFORMATION
SB 4 - MUNICIPAL PROPERTY TAX EXEMPTION
After brief debate the bill was held in Committee.
SB 6 - MOBILE HOME PARK EVICTION NOTICE
The bill was amended and reported from Committee.
SB 48 - MUNICIPALITIES:INCORP/PROPERTY VALUATION
The Committee heard a presentation by Senator Wilken and after some
debate the bill was held in Committee.
SB 103 - ELECTION CAMPAIGNS AND LEGISLATIVE ETHICS
The bill was amended and held in Committee.
SENATE BILL NO. 4
"An Act relating to a mandatory exemption from municipal property
taxes for certain residences and to an optional exemption from
municipal taxes for residential property; and providing for an
effective date."
Senator Therriault indicated that as they discussed before, SB 4
was an attempt to satisfy the desire of the state to provide some
property tax relief to property owners. The bill proposed that
they expand the current statutory allowance to make a portion of
personal residential property exempt from taxation. He pointed out
that the current statutory language allowed the local government to
do that up to $10,000 and they asked to expand that to $50,000, but
due to concerns expressed by Senator Torgerson they backed it down
to $40,000. He added that they held the service areas in
municipalities out of the calculation, because they would be the
one entity at the local level that had no other way to make up
potential lost revenue. He noted that in the Fairbanks North Star
Borough the mayor had formed a revenue tax force to look at
alternative ways of raising revenue other than using the mill rate.
He did not believe that there would be any interest in giving a tax
break on the residential property and increasing the overall mill
rate for everyone else. He indicated that they would be looking at
a mix of sales tax or users fees or reductions in government
spending. He indicated that when they left off last time Senator
Donley expressed concern with regards to the fiscal note. He
believed that they had addressed those concerns to a large part
with the committee substitute (CS). He said that Senator Green had
a question with regards to the potential impact on the foundation
formula and they received a clarification that the foundation
formula equivalent is computed on the true and full value of the
government; therefore, there would be no impact from SB 4 on the
foundation and the way the mill rate was calculated.
Co-Chair Kelly indicated that there was a proposed CS, Version P,
which had not been adopted as a work draft.
Senator Wilken made a motion to adopt the proposed CS, Version P,
as a work draft.
Co-Chair Kelly asked if there was any objection.
Co-Chair Donley objected. He supported the Community and Regional
Affairs (CRA) CS for the same reasons that the CRA Committee
adopted it. He noted that the CRA CS does not include the change
to existing law regarding residential exemption and he believed
that it was a separate issue. He said that there was significant
taxation in some of the communities, especially the North Slope
Borough and the new CS, Version P, would just be "throwing gasoline
on an already burning fire".
Co-Chair Kelly referred to Senator Donley's amendment, which would
essentially take care of his concerns. He pointed out that Senator
Leman brought up a possible compromise, before the meeting, between
Senator Donley's amendment and the new CS, Version P. He said that
he would like to adopt the CS, Version P, and then adopt the
amendment or possibly take up Senator Leman's recommendation.
Co-Chair Donley indicated that he was not familiar with Senator
Leman's recommendation.
Senator Leman called his recommendation the "anti-back sliding
amendment," intended to keep the limits that were currently in
place in those municipalities as the cap. He explained that it
would keep them at their current maximum and the change in the law
would not increase the taxes on oil and gas property; therefore,
providing partial exemption.
Senator Therriault indicated that it would be somewhat helpful. He
pointed out that they did have some service areas that were
currently over the 18 mills. He noted that the City of North Pole
has two refineries within its' boundaries very close to the 18
mills. He clarified that if it were up to Senator Leman, everyone
would be frozen at his or her current mill rate. He said that it
would not be his personal preference.
Co-Chair Donley wondered if Senator Leman had that language
drafted.
Senator Leman indicated that he offered that language as a
conceptual amendment.
AT EASE 9:20 AM/ 9:27 AM
Co-Chair Kelly announced that SB 4 would be HELD in Committee.
Senator Hoffman believed that it was a complicated issue and
expressed appreciation for the extra time to look over the bill.
[Heard and Held]
CS FOR SENATE BILL NO. 6(L&C)
"An Act relating to required notice of eviction to mobile home park
dwellers and tenants before redevelopment of the park."
DENNIS MCMILLEN, United Way, testified via teleconference,
indicated that about a year ago they became aware that there were
developers asking for re-zoning on property that was currently
occupied by manufactured homes. He noted that while many people
living in those neighborhoods had the capacity to move, the United
Way was concerned that some of them were marginal and might not be
able to move their mobile homes. The intent was that if nothing
was done they might be creating a new class of homeless families in
their communities and indeed when they did the research that is
what they found. He pointed out that they pulled all the groups
working with housing, many non-profit organizations, municipalities
of the state and most importantly residents of the communities to
discuss the issue. He added that they also pulled in developers
and looked at what was going on and the possible impact and what
other state's have done. He explained that what they found was
that current laws were not adequate to protect these people and
they put together what was called "the manufactured home report."
He noted that listed in the report were many different options for
the municipalities of the state to look at, which would help build
a structure to keep people from being so much at risk. He
explained that the key was to give people a longer period from when
they understood that their property was going to be redeveloped.
He concluded that he was very pleased to see that it was going to
be looked at by a task force and the legislature.
ANGELA LISTEN, Director, Department of Justice, Archdiocese of
Anchorage, testified via teleconference, indicated that she worked
on the task force. She said that they thought that a one-year
notice was reasonable, on the other hand, time was of the essence
for the developer and they only needed six months on this
legislation. She expressed their support for SB 6 and said that
they believed it was a balance between the right of the landowner
and the right of the tenant.
STEPHANIE WHEELER, Program Director, Catholic Social Services,
testified via teleconference from Anchorage, echoed the concerns of
Mr. McMillen and Ms. Listen and reported that Catholic Social
Services were currently working with some residents who had been
recently impacted by the rezoning and they were assisting with the
re-location plan. She noted that SB 6 addressed their two major
concerns, which were adequate notice and financial compensation.
She urged the Committee to support SB 6.
MACKENNA JOHNS, Director, AMHRAC (tenant advocacy group) testified
via teleconference from Anchorage, indicated that they support the
bill and urged the Committee to pass SB 6.
Amendment #1:
Page 4, line 2: following "provided in a valid lease."
INSERT:
If the change in land use requires relocating 10 or more mobile
homes, the mobile home park owner or operator may contribute to a
pooled relocation fund $5,000 for each mobile home being relocated,
and the relocation fund shall pay the actual disconnection,
relocation, and reestablishment costs of each mobile home; however,
the relocation fund may not be required to pay more than the total
received from the owner or operator.
Senator Leman moved to adopt the amendment.
Co-Chair Kelly asked if there were any objections, there being none
Amendment #1 was adopted.
Senator Green wondered if any of the developers had testified.
Senator Ellis indicated that one of the developers might be on-line
to testify, but did send in a letter of support.
Senator Green wondered since this was an additional obligation to
the developer whether they would cross over into the issue of
"taking."
Senator Green clarified that she was talking about signing an
obligation to a landowner in order to use their land and she
wondered if they have then imposed the equivalent of a reduction in
value to that person, because of what they have to go through to
vacate the property or change the use of the property. She
inquired as to whether that would be seen as a "taking" that the
state is imposing on the landowner.
Senator Ellis did not believe that it would be imposing some
unjustified "taking." He noted that there was no effective date on
the bill.
Co-Chair Kelly indicated that a "taking" would be an extreme
explanation and said that it is more of a procedural matter and did
not see that it would drop the value of the property.
Ms. Listen commented that she found, originally, a similar statute
in Oregon and at that time it had not been challenged.
Senator Green indicated that she was not sure in Alaska if "taking"
would be challenged, since they do not have a "taking" provision,
but clarified that what she was saying was if a landowner has
another bar that he has to meet in order to use his/her land when
it has been legally rezoned than the state is imposing a penalty
until they can do what they want with their land. She said that
she did not see it as something she could support. She believed
that if a person owned the land and got the rezoning provision and
was able to move forward with the change in purpose then they would
have that right.
Senator Ellis explained that the research shows that Arizona,
Florida, Pennsylvania, California and Oregon all have, in their
landlord/tenant laws, a notice and compensation requirement. He
noted that it was really not adequate compensation, but it would
cover some people and it was a compromise and an effort. He
believed that it was a measured and balanced approach.
Senator Green commented that she would be really reluctant to use
Oregon as an example of land use.
Senator Hoffman indicated that he is a mobile home park owner. He
asserted that if the mobile home owner had been using that land for
income and then wanted to change that income source there would be
some obligation to those people who have provided him with his
livelihood. He expressed support for SB 6.
Senator Green wondered if there was any other provision in state
law that would present a penalty or buy out to whoever was
currently renting or using that income producing property.
Co-Chair Kelly explained that anytime the terms of a lease are
interrupted there is not a penalty, but there would certainly be
compensation to the leaseholder. He believed that SB 6 was sort of
an extrapolation on that concept.
AT EASE 9:44 AM/ 9:45 AM
Senator Leman moved to report CS SB 6 (L&C), 22-LS0216\P, as
amended from Committee with individual recommendations and
accompanying fiscal note.
Co-Chair Kelly asked if there were any objections, there being none
CS SB 6 (L&C) was reported from Committee.
CS FOR SENATE BILL NO. 48(CRA)
"An Act relating to the determination of full and true value of
taxable municipal property for purposes of calculating funding for
education and certain other programs, to incorporation of third
class boroughs, to incorporation of certain boroughs in the
unorganized borough and annexation of portions of the unorganized
borough to boroughs and unified municipalities, and to the
formation of separate unorganized boroughs; and providing for an
effective date."
Senator Wilken, Sponsor, referred to some handouts that were
presented to the Committee. He spoke to the handouts entitled "The
Need to Reform State Laws Concerning Borough Incorporation and
Annexation" by the State of Alaska Local Boundary Commission (LBC)
and "Background on Boroughs in Alaska" by the Department of
Community and Economic Development and the "Equity in Education
Funding Act." He summarized that SB 48 simply asked the question
"can you help." He pointed out that 92 percent of Alaskans pay for
education and 8 percent do not pay anything for education. He
noted that those 8 percent command 21 percent of the education
budget. He explained that SB 48 simply looked in an organized and
professional manner at those places that do not and asked "can you
help?" He indicated that 84 percent of Alaska is in boroughs that
they did not vote for, 4 percent of Alaska is in boroughs that were
voted for and the rest is in unorganized Alaska.
Senator Wilken further reported that Alaska is the only state in
the union that has unorganized areas. The Constitution of the
State of Alaska envisioned, back in the early 1960s, how Alaska
should be organized as it matured and developed over time. He said
that SB 48 would leave existing law in place, but provided another
method for organizing Alaska. Under the current system the
petition is filed and it goes through public hearings and the Local
Boundary Commission goes over the areas affected and receives all
sorts of input and develops what amounts to a structure for
organization. Next, it would be voted on and brought before the
legislature, which would have to take action within a certain
timeframe to deny the vote. He pointed out that SB 48 suggested a
different way. He explained that the process does not start at the
local level, but rather at the departmental level and they nominate
each year areas of the unincorporated Alaska that they feel may
have the capacity to organize and support government. The Local
Boundary Commission has the charge to go to those areas and
validate that nomination and the Local Boundary Commission would
make a decision and come before the legislature. He summarized
that in simple terms there would be two changes: one, the process
starts at the departmental level; and two, the provision for a
public vote is not in SB 48. He noted that existing law still
would stay in place for those that want to voluntarily organize.
Senator Wilken referred the book entitled "The Need to Reform State
Laws Concerning Borough Incorporation and Annexation" and indicated
that it was a book that they have come out with every year by law.
He pointed out that it was the basis for SB 48. He said that SB 48
was supported by a 5-0 vote on October 31, 2000. He detailed that
of the unorganized area amounts to 375 square miles, 11 census
areas, 37 of the school districts, 19 regional education attendance
areas, 96 of Alaska's 145 cities and 66 percent of all city
government. He pointed out that there are 11 standards that need
to be met. He pulled out one in particular; "each area (organized
or unorganized) should have a population and area with common
interest." He indicated that the LBC would have to check off each
standard in order for them to come up with a plan to bring to the
legislature. He said that it was the blue print for this
legislation.
Senator Wilken continued, "Founders intended that regions would be
classified as organized boroughs or unorganized boroughs depending
on their readiness and capability for government." He explained
that what SB 48 did was take the 375 thousand square miles of
unorganized area and section it up and asked, "what areas can
help?" He said that the Mandatory Borough Act of 1963 stated, "No
area incorporated as an organized borough shall be deprived of
state services, revenues, or assistance or be otherwise penalized
of incorporation." He suggested that organized Alaska is being
penalized by unorganized Alaska without unorganized Alaska even
asking, "can you help?" First, in his mind what drives the whole
issue [referring to a chart] is that general fund contributions
between the years of FY97 and FY02 that support operation of the
school districts was an average of $124 million out of roughly a
$700 million budget. He said that the legislature needed to ask
the question "is it valid and can those that don't pay today help
pay?" He pointed out that $124 million was going to unorganized
Alaska without any validation of that contribution.
Senator Wilken explained that on the capital budget side between
the years FY92 through FY01 they have spent $197 million on capital
spending in Rural Education Attendance Areas (REAAs). He pointed
out that there is $20 million a year going out for capital spending
without any local contribution. The problem that creates is all
the people in organized Alaska have working people having to pay
four mills to get a nickel of state money. For example, he pointed
out a list of capital improvement projects by the Department of
Education and Early Development where in one instance the City of
Kenai had a project with a total of $550,871 and the people of
Kenai were going to come up with $165,261 and the state would come
up with $385,610, because Kenai is a borough. In another instance
there was an REAA project with a total of $981,237 and the REAA
would come up with $19,625 and the state would come up with
$961,612.
Senator Wilken referred to a chart titled "1998 Per Capita Earnings
From Local Employment" and pointed out that there were only three
of the REAAs that had per capita earnings from local employment
higher than those in ten organized boroughs. He said that at least
it validated the question that there is economy out there. He
noted that they think of the amorphous area as destitute, but it is
not destitute. He referred to a newspaper that was sent to him
dated November 16, Thursday, and there is a real estate
advertisement for homes that are for sale all over close to
$200,000, which tells him two things: one, there is value out
there; two, there are arms-length transactions going on. He noted
that when the home is bought it establishes a value between the
buyer and the seller, which means there is a way to quantify what
goes on in the unorganized area and establish value. He referred
to the next chart titled "REAA Wages and Average Employment
(FY1999)".
SFC 01 # 50, Side B 10:05 AM
Senator Wilken further pointed out that in 1999 in the unorganized
areas 15,848 people made $388 million in earned wages and in 2000
16,257 people made $405 million in earned wages. He said that to
him it begs the question that there is wealth out there and there
is an economy. He reiterated that SB 48 asked the question "can
you help?" and if they can help than they should help like the
people in organized Alaska. He believed that it would be a ten-
year project. He added that it was the job of the legislature not
to focus their resources on the amorphous area known as the
unorganized borough, but rather on targeted areas.
ROBERT KOPCHAK, Director, Planning and Community Development for
the City of Cordova, read the following testimony into the record:
The City of Cordova has been in favor of the formalization of
a borough government for the Prince William Sound and Copper
River region for many years. In the past two decades, at
least four borough studies for the area have been undertaken.
These are in addition to the work done by the Local Boundary
Commission, and represent significant investment by the
community and the state. The Cordova City Council has adopted
a "Borough Priority", and an additional "in house" borough
economics study was completed about four months ago in a
continuing effort to move this governance issue forward.
For our region the borough government concept seems to be
economically desirable, and politically difficult. There are
significant disincentives for the formation of a borough, and
few resources available to provide for the level of financial
analyses and concept promotion needed to gain broad regional
approval. In areas with diverse interests, concentrations of
population, and rich/poor communities, current borough
formation law allows the "haves" to dictate the regional
politics related to borough formation at the expense of the
"have nots". I would offer the following example.
The model boroughs proposed by the LBC for Prince William
Sound (5) and the Copper River Basin (6) would be combined to
reflect a more "ideal" approach to responsive and
representative regional government. Entire drainages
undivided by multiple political/jurisdictional borders provide
for the maximum local participation in decisions that would
affect residents of the region. This borough would encompass
the entire drainage system, reflect the interconnected
dependence on regional resources, and the shared risks from
pollution and catastrophic oil spills that damage subsistence
lifestyles, economies and ecologies Coastal Zone Management,
Platting, and other related land use issues within the
drainage would be consolidated, and communities would share in
the risks and rewards related to resource development and land
use. Drainage boundaries would allow "upriver" residents to
share in the value of fisheries resources exploited by coastal
communities, resources that depend on the upriver areas for
their health and vitality. Coastal communities, and
communities removed from oil transportation corridors and
ports, would share in the value of the business of
transporting oil. Sharing in this value during normal safe
operations would help offset the impacts from inevitable
spills and catastrophic events.
Each community within this region shares a dependence on the
resources supported by the waters of Prince William Sound and
the Copper River/Bering River. Some communities are
completely dependent on the fisheries and subsistence game
found within the region. Over 75 percent of Cordova's economy
is directly tied to the fisheries of PWS, the Copper River and
North Gulf of Alaska. In PWS, Chenega and Tatitlek are 95
percent dependent on true subsistence and commercial fishing.
Although the shipment and loading of oil is a huge part of
the regional economy, few of the benefits of the dollars
generated by this part of the regions economy are shared
outside Valdez and the support service communities located
adjacent to the pipeline. It is interesting to note that
"down stream" communities most likely to be damaged by oil
spills enjoy virtually none of the economic benefits from oil
transportation and shipment. A break in the pipeline at a
river crossing has the potential of devastating salmon
production on the Copper River, impacting subsistence and
commercial fishing communities, both upriver and coastal, for
generations. These communities receive no benefits from the
shipment of oil across lands and waters put at risk. It is
unconscionable that a community at slight financial risk to
oil spill damage has a reserve account in excess of
$70,000,000 from regional oil transportation revenues, while
neighboring villages and communities whose economies and
subsistence lifestyles were damaged by and are still at risk
to spills struggle.
Most communities in this region do not contribute to the local
cost of education, and facilities and programs suffer from
limited budgets spent on duplicate administration. It is
interesting to note that in a recent evaluation of school
students ability to take the standardized graduation tests, it
was in communities with the greatest tax base/student ratios
that students performed best. Revenues produced from modest
borough taxes would easily pay the cost of a consolidated
regional education program and still allow for local education
control. In the region, the benefits of modest tax programs
in an expanded regional base are significant. After paying
the costs of Borough government administration, regional
education costs, and platting/coastal zone management,
sufficient revenues would remain to provide $100,000 in
revenue sharing to each community, and a per capita share of
any revenue surplus. This would be after a $450,000 deposit
to a Borough Reserve account. For the Prince William
Sound/Copper River Region, a borough makes financial sense
from an education and a revenue sharing standpoint. Why isn't
there a borough?
The ineffectiveness of the voluntary incorporation provisions
of the 1961 law is evident in the fact that only 4 percent of
Alaskans live in boroughs that were formed in a truly
voluntary manner. That is contrasted to 82.6 percent of
Alaskans who live in boroughs that were formed under the 1963
mandate drafted by Representative Rader. It must also be
recognized that most of the boroughs that formed voluntarily
had extraordinary resources that make boroughs particularly
attractive. The North Slope accounts for 25 percent of the
residents of Alaska that have formed voluntary boroughs, and
their tax base is an enviable $1,550,950 per capita.
If we look at the "ability to pay" as it relates to existing
and proposed boroughs, we note that 10 of the 12 areas in the
"unorganized borough" have a larger per capita income than the
Mat-Su, which was compelled to form a borough through
legislative action. Of the "Top Ten" areas on the state per
capita income list, it is notable that #6(the Cordova/Valdez
census area) is the only non-borough area.
The difficulty in using local initiative to form a borough
results from decades of incrementally expanding disincentives
to borough formation. An unfair burden is placed on
communities with the fewest assets. To even begin the borough
process they must pursue complicated, difficult and costly
processes. The resources simply are not there.
Boroughs empower regional populations and enable them to
provide for their own interests. With a modification in the
borough formation process that removes some of the burdens to
formation, additional boroughs will follow.
KEVIN WARING, Chairman, Local Boundary Commission, read the
following testimony into the record:
Chairman Donley, Chairman Kelly, and members of the Committee,
thank you for this opportunity to testify on behalf of the
Local Boundary Commission on Senate Bill 48. One of the
duties of the Local Boundary Commission under the Alaska
Constitution and under state law is the duty to review and
approve or disapprove all proposed city and borough
incorporations and boundary changes. The Commission would play
a central role in implementation of SB 48. My purpose today
is to explain how the Commission views this bill, and its
responsibilities under the bill.
First, some history on the origin of SB 48. Over the past
year, the Commission has worked to develop a new legislative
approach to borough incorporation in the unorganized borough.
We held several work sessions to study the issues and to work
on draft legislation. In October, the Commission voted
unanimously to approve a draft bill, and to make it available
for legislative consideration. Our goal was to put forward
for legislative and public discussion a fresh approach to
incorporation of new borough governments that was uniformly
fair, accountable, and within the framework of existing law.
The Commission believes that the legislation that Senator
Wilken and the co-sponsors have introduced as SB 48 meets
those goals.
As background for the proposed legislation, the Commission also
prepared and provided to committee members:
• a position paper on "The Need to Reform State Laws
Concerning Borough Incorporation and Annexation";
• a factual booklet that provides background on boroughs in
Alaska; and
• a four-page handout that summarizes key points about the
Commission's proposal and how it fits into existing law.
SB 48 as amended has eight sections. My remarks focus on
Section 4, which authorizes a new method for borough
incorporations and annexations in unorganized areas. I will
talk about the new method proposed for borough incorporations.
The method proposed for annexations of unorganized areas to
existing boroughs works similarly.
Section 4 of SB 48 authorizes two new steps in the borough
incorporation process:
· a new first step to initiate a borough incorporation
petition; and
· a new last step to approve a petition.
New First Step: Incorporation by Administrative Petition
Under current law, a petition for borough incorporation can
only be initiated voluntarily by residents of a proposed
borough. Few have volunteered. Only four percent of the
State's residents live in boroughs that were created by local
initiation. Another 83 percent live in boroughs established
by the 1963 Mandatory Borough Act, an extraordinary act of
local government legislation.
Section 4 of SB 48 adds a new option for incorporation by
administrative petition. It directs the Department of
Community and Economic Development to prepare annually a
preliminary list, with supporting analysis, of unorganized
areas that reasonably appear to satisfy existing legislative
standards for borough incorporation. It further directs the
Local Boundary Commission to select from this list areas that
may warrant incorporation, and to instruct the Department of
Community and Economic Development to prepare and file a
petition for incorporation. The Commission would then follow
the process now established in law for public review and local
public hearings on petitions.
New Final Step: Petition Approval
Section 4 also proposes a new final step to approve
incorporation petitions initiated under SB 48. This new step
is modeled on the process for approval of city and borough
annexations established by Alaska's Constitution, which was
overwhelmingly ratified by the voters in 1956.
Briefly, Article X, section 12 of the Alaska Constitution
established a method for approval of municipal boundary
changes without local election. The first legislature put
this process into law. Some annexation proposals, whatever
their merits, are not well-received by affected residents.
Therefore, the Constitution and legislature established a
method by which contested petitions that met standards set out
in law could be approved by the Local Boundary Commission
without a local election, but were subject to legislative
veto. Legislative review annexation has been successfully
used for over 100 city and borough boundary changes since
statehood. Most significant annexations are approved by this
method.
Similar to the existing method for legislative review
annexation, Section 4(c) of SB 48 authorizes the Commission to
approve incorporation petitions that meet the same
incorporation standards that apply to all other boroughs,
without a local election but subject to legislative veto.
Apart from these two new steps for initiating and approving a
borough incorporation or annexation petition, the Commission
would:
· standards for borough incorporation now in law, and
· follow other procedural requirements now in law,
including local public hearings, written decision by the
Commission explaining its decision, and opportunity for
administrative and judicial appeal.
The proposed steps include significant checks and balances.
Before an incorporation could take place under this new
method:
· the Department of Community and Economic Development must
find that a region likely satisfies incorporation
standards;
· the Commission must find that the petition meets all
applicable standards and should be approved on its
merits;
· the Commission's decision is subject to administrative
and judicial review; and
· the Commission's approval is subject to legislative veto.
Concerns Raised in Public Testimony
Next, I want to address three specific concerns that have been
raised in public testimony. A statement of how the Commission
would implement SB 48, if adopted, may help dispel them as
unfounded.
First, there has been concern that the Commission might
approve incorporation of areas that did not have the economic
resources to support borough government. Existing law-AS
29.05.031-already requires a Commission finding that the
economy of any area proposed for incorporation has the human
and financial resources needed to support municipal services.
The Commission's regulations, at 3 AAC 110.055, spell out in
detail the factors on which the Commission must make its
findings. Given the public concern on this topic, the
Commission is working with DCED staff to develop objective
economic benchmarks that a region should meet before it would
be nominated for incorporation.
Second, there has been concern that the Commission might not
hold adequate local public hearings for incorporation
petitions filed under the bill. SB 48 specifically requires
the Commission to hold at least one local public hearing in
each affected region. In practice, the Commission's intent
would be to hold local public hearings at regional centers
and, at minimum, in any community with 400 or more residents
and in every home rule and first class city in the affected
region.
Third, there has been concern that the Commission might move
quickly to approve numerous borough incorporations. In
reality, given the resources and time available to the
Commission and its staff, the Commission could, at most, take
up one or two petitions a year. In our view, implementation
of this law would likely stretch out over many years.
Establishment of borough governments has been a matter of
conflict for as long as Alaska has been a state. With that
contentious history, it is easy to lose sight of the fact that
borough governments have played an enormously positive role in
Alaska's development. For most of the state, boroughs have
been the means to fund and deliver local public services,
accountable to local residents. In local matters, local
government usually governs best. Boroughs have also been our
main tool to influence economic development for community
benefit. For example, it is hard to believe that urban and
rural communities and regions affected by oil pipeline
construction, oil and gas and mining development, management
of forestry and fishing resources, growing energy demands,
growth in tourism, and rapid urbanization would have fared
better without borough government.
To sum matters up, the Commission does not view SB 48 as the
second coming of the 1963 Mandatory Borough Act, or any
similar legislation. The Commission is not on a mission to
foster boroughs for the sake of boroughs. Unlike the 1963
Mandatory Borough Act, SB 48 provides for a measured, case-by-
case evaluation of each proposed incorporation. Each petition
will be evaluated on its merits. Proposals that do not meet
statutory standards will not be approved. And, as under
current law, even if a petition meets standards, the
Commission can reject the petition when there are sound
reasons to do so.
In closing, the Commission believes the new incorporation
steps authorized by SB 48 meet its goal for an approach that:
· uniformly implements the standards for borough
incorporation in existing law, but respects the diverse
circumstances in different rural regions;
· provides checks and balances; and
· is modeled on existing law and minimally changes law.
Senator Wilken noted that on page 33 of the handout titled "The
Need to Reform State Laws Concerning Borough Incorporation and
Annexation" there were five members listed from across the state
and four judicial districts and pointed out that they were all
volunteers. He indicated that they presented to him five
amendments and he said that he was okay with three of them. He
supported their effort to make SB 48 better and hoped to bring a CS
to the Committee next time.
Senator Hoffman wondered if any of the members of the Local
Boundary Commission were Alaska Native.
Mr. Waring answered not at this time.
Senator Hoffman stated that the question Senator Wilken asked was
"Can you help?" and the question he had was "Can it hurt", because
he believed that SB 48 was divisive and would further divide urban
and rural Alaska. He said that when they look at the communities
in the unorganized borough 90 to 95 percent of those communities
are predominately Alaska Native. He pointed out that they are
heavily dependent on the subsistence lifestyle. He explained that
just because they own land does not mean that they can pay and if
there was a property tax placed on those people in rural Alaska,
what land that they do have he believed would end up being lost in
foreclosure. They do not have the necessary income to pay. He
asked the representative from the Local Boundary Commission how
many municipalities in Alaska have opted to dissolve and how many
in the past ten years have formed or moved on to first-class cities
in rural Alaska.
Mr. Waring responded that he believed that 3 or 4 municipalities
have dissolved.
Senator Hoffman wondered if that was in the last ten years.
Mr. Waring reiterated approximately 3 or 4. He said that there
have been a number of boroughs formed in the past ten or twelve
years.
Senator Hoffman clarified his point and stated that the direction
of government in rural Alaska was moving away from organization
under state law and moving forward and incorporating under federal
law. He said that to add another layer of government to one that
does not work does not make sense to him. He believed that even
though the thrust behind this was to pay for education this
legislation goes far beyond that. He reiterated that this would
further divide urban and rural Alaska. He noted that federal
receipts presently pay many of the services provided for rural
Alaska. He said that when they look at the health corporations a
substantial portion of those dollars come from federal government
and a very small portion of those dollars are paid for by the
state. The corporations are formed to receive federal dollars in
the unorganized boroughs. He said that if SB 48 passed possibly
one or two boroughs would be formed on an annual basis, but all too
often when something is beneficial to urban Alaska and detrimental
to rural Alaska many financial dollars are spent there. For
example, in the fight for subsistence the Legislative Council spent
several thousand dollars when it was in the interest of urban
Alaska and not in the interest of rural Alaska. He concluded that
the legislation clearly divided urban and rural Alaska. He added
that if they went out and asked whether rural Alaska wanted to move
toward more federal intervention or more state intervention, he
believed that they would want more federal intervention and for
that reason he informed the Committee that he was opposed to SB 48.
Co-Chair Kelly explained that the intent of the bill, as he
understood it, was that if rural Alaska could pay than they should
pay some part of it. He declared that frankly he was getting tired
of comments regarding divisiveness and the rural and urban split.
He pointed out that throughout his time in the legislature he has
seen a lot of dollars going to rural Alaska and rural Alaska seems
to get what they ask for except for maybe on subsistence. He
suggested that Senator Hoffman check the Bill of Rights on that
before he started talking about the rural and urban split.
Senator Wilken associated himself with Co-Chair Kelly's remarks.
Co-Chair Kelly appointed SB 48 to a subcommittee consisting of
Senator Leman, Senator Wilken and Senator Hoffman.
[Heard and Held]
CS FOR SENATE BILL NO. 103(JUD)
"An Act relating to election campaigns and legislative ethics."
JEFF BALASH, staff to Senate State Affairs Committee, indicated
that he would walk through the Judiciary Committee Substitute (CS).
He explained that Section 1 codified the current interpretation and
regulation of the Alaska Public Offices Commission (APOC)
concerning different groups under the control of a single candidate
being treated as such towards the limit for contributions. Section
2 makes some clarifications as to the types of things that can be
paid for with surplus campaign funds.
Senator Green requested clarification with regards to Section 1.
Mr. Balash clarified that if a number of groups are under the
control of a single candidate than they are all bound by the
contribution limits and they are treated as one group.
Senator Therriault further clarified, "Basically, for Gene
Therriault, I could have, the friends and neighbors for Gene
Therriault and I could also have the nonpartisans for Gene
Therriault. My campaign effort could be split into different
groups, but if I control them than they all fall under the
contribution limit for Gene Therriault."
Mr. Balash indicated that Section 2 made changes to the allowances
for the use of surplus campaign funds. He explained that it allows
for thank you advertisements and seasonal greeting cards and also
removes the Public Office Expense Term (POET) account reserve to
help eliminate additional paperwork that successful candidates have
to go through each year. He added that this would allow the entire
lump sum to be transferred to the POET account and would eliminate
the reserve mechanism.
Senator Therriault said that he believes the Alaska Public Offices
Commission (APOC) supported the change. He indicated that APOC was
asked for the justification of the reserve account and they thought
that it came from some concern over federal taxation of the reserve
and that justification was not there anymore. He expressed that it
never made sense to him to have a separate checking account that he
wrote one check from each year just to transfer money from the
reserve account to the POET account. He referred to page 3, lines
21 and 22, pointing out that the transfer is limited to $10,000 for
House seats and $20,000 for Senate seats. He noted that it use to
be $5,000 per year multiplied by the number of years; in the
current bill version it simply states the entire amount.
Mr. Balash referred to Section 3 and indicated that it made changes
to the allowances for items that would be retained by the candidate
in terms of personal property, for example, seasonal greeting
cards, photographs used in the campaign and campaign signs.
Section 4 made a change to the uses of state funds, which was
necessary to conform to a later section regarding legislator's
ability to campaign for or against constitutional amendments.
Section 5 clarified the definition of contribution and also allowed
for a political party to send out two mass mailings per election.
Section 6 covered the definition of expenditures.
AT EASE 10:42 AM/10:43 AM
Mr. Balash referred to Section 7, which made conforming amendments
to the ethics code to allow legislators to use their offices longer
before and after session. Furthermore, it made an allowance for
the use of resources by a legislator toward state or federal
amendments to the constitution. Finally, Section 9 is a
transitional provision dealing with funds already in the POET
reserve account, which needs to be transferred to the POET account.
Senator Therriault pointed out that there was quite a bit of
controversy originally with regards to legislators and their
employees interacting with initiatives. He believed that it was
appropriate that a proposed constitutional amendment come from the
legislature, quite often an individual legislator, and a legislator
should be able to act as advocate for that amendment.
Amendment #1:
Page 6, line 5:
Delete "or"
Page 6, line 9, following ";":
Insert "or
(v) any communication in the form of a
newsletter from a legislator to the legislator's
constituents, except a communication expressly
advocating the election or defeat of a candidate;"
Page 8, line 13:
Delete "or"
Page 8, line 16, following ";":
Insert "or
(K) a legislator from sending any
communication in the form of a newsletter to the
legislator's constituents, except a communication
expressly advocating the election or defeat of a
candidate;"
Co-Chair Donley moved to adopt the amendment.
There was no objection and Amendment #1 was adopted.
Amendment #2:
Page 6, line 4
delete "photographs and biographies of"
insert "information about"
Page 9, line 26
after "solicit"
insert "or receive"
Co-Chair Donley moved to adopt the amendment.
Co-Chair Kelly asked if there was any objection.
Senator Leman objected and offered a friendly amendment to the
amendment to include photographs.
Co-Chair Donley clarified that the amendment to the amendment would
insert, "photographs, biographies, and information about".
There was no objection and the amendment to the amendment was
adopted.
Co-Chair Kelly indicated that Amendment #2 was before the Committee
and asked if there was any objection.
There was no objection and Amendment #2 was adopted.
Amendment #3:
Page 5, line 23-28, as follows:
Delete:
(i) services provided without compensation by individuals
volunteering a portion or all of their time on behalf of a
political party, candidate, or ballot proposition or question
[, BUT IT DOES INCLUDE PROFESSIONAL SERVICES VOLUNTEERED BY
INDIVIDUALS FOR WHICH THEY ORDINARILY WOULD BE PAID A FEE OR
WAGE];
Insert:
(i) services provided without compensation by individuals
volunteering a portion or all of their time on behalf of a
political party, candidate, or ballot proposition or question,
but it does include professional services, other than legal or
accounting services, volunteered by individuals for which they
ordinarily would be paid a fee or wage;
New Text Underlined [DELETED TEXT BRACKETED]
Co-Chair Donley explained that Amendment #3 would tighten up the
Judiciary version of the bill, Version W, clarifying that the only
exception to professional services being offered or volunteered to
a campaign would be for legal or accounting services. He made a
motion to adopt the amendment.
Co-Chair Kelly indicated that the change would be fairly
significant. He asked if there was any objection to the amendment.
There was no objection and Amendment #3 was adopted.
Amendment #4:
Page 9, following line 26:
Insert a new bill section to read:
Sec. 8. AS 24.60.080(c) is amended to read:
(c) Notwithstanding (a) of this section, it is not
a violation of this section for a
legislator or legislative employee to accept
(1) hospitality, other than hospitality
described in (4) of this
subsection,
(A) with incidental transportation at
the residence of a person; however, a vacation home
located outside the state is not considered a residence
for the purposes of this subparagraph; or
(B) at a social event or meal;
(2) discounts that are available
(A) generally to the public or to a
large class of persons to which the person belongs; or
(B) when on official state business, but
only if receipt of the discount benefits the state;
(3) food or foodstuffs indigenous to the
state that are shared generally as a cultural or social
norm;
(4) travel and hospitality primarily for the
purpose of obtaining information on matters of
legislative concern;
(5) gifts from the immediate family of the
person;
(6) gifts that are not connected with the
recipient's legislative status;
(7) a discount for all or part of a
legislative session, including time immediately
preceding or following the session, or other gift to
welcome a legislator or legislative employee who is
employed on the personal staff of a legislator or by a
standing or special committee to the capital city or in
recognition of the beginning of a legislative session
if the gift or discount is available generally to all
legislators and the personal staff of legislators and
staff of standing and special committees; this
paragraph does not apply to legislative employees who
are employed by the Legislative Affairs Agency, the
office of the chief clerk, the office of the senate
secretary, the legislative budget and audit committee,
or the office of the ombudsman;
[OR]
(8) a gift of legal services in a matter of
legislative concern and a gift of other services related
to the provision of legal services in a matter of
legislative concern; or
(9) a gift of transportation from a legislator to a
legislator if transportation takes place in the state on
or in an aircraft, boat, motor vehicle, or other means of
transport owned or under the control of the donor; this
paragraph does not apply to travel described in (4) of
this subsection or travel for political campaign
purposes."
Senator Olson addressed Amendment #4.
SFC 01 # 51, Side A 10:52 AM
Senator Olson noted that in his district access to most areas is
limited to air transportation and it is for this reason that he
asked that the Committee adopt Amendment #4. He moved for the
adoption of the amendment.
Co-Chair Kelly asked if there was any objection. There was no
objection and Amendment #4 was adopted.
Co-Chair Donley moved to report CS SB 103 (JUD), 22-LS0148/W, as
amended from Committee.
Co-Chair Kelly interjected that there were people to testify on the
bill that he had overlooked.
BROOKE MILES, Director, Alaska Public Offices Commission (APOC),
testified via teleconference, thanked the Committee for taking up
Amendment #3, which addressed volunteer professional services. She
referred to page 6, line 6 and explained that under the proposed
language any person is prohibited from campaign contributions,
other than lobbyists, to conduct a poll and give the results to a
campaign unless the poll was designed to primarily benefit the
candidate. She expressed concern with regards to that language and
said that the Commission saw this as administratively difficult.
She referred to page 5, line 6 and the Commission identified this
as costly, because it recognized a major change in current policy
that would substantially restrict public money either to support or
oppose ballot questions. She further explained that current law
required that public funds could only be used to support ballot
questions specifically appropriated to that purpose by state law
and municipal ordinance.
Senator Green requested clarification that if after two mailings
they are taken over the contribution limit, which would put them in
violation and they had no part of the decision making as to what
group advertisements would contain their information.
Ms. Miles responded after two free mailings for each election if
the state party or state party sub-division does a state mailing
then yes it would be considered a state contribution.
SUSIE BARNETT commented that the Ethics Committee has always
supported communication with constituents when the communication
relates to access to the elected official or reporting on
legislative matters. She believed that was the intent of Amendment
#1 was to preserve that important function. She pointed out that
there is a conflict in statute, AS 24.60.030 c.2 sets out certain
parameters on mass mailings using funds other than office
allowance. Secondly, the amendment actually broadens the current
interpretation and practice of most legislators to allow activities
beyond those of legislative matters. She recommended that they
consider different language.
Co-Chair Kelly asked Ms. Barnett to fax those recommendations to
Senator Therriault's office.
Co-Chair Donley indicated that he had spoke with the drafters that
morning and since the prohibition that Ms. Barnett spoke of was a
specific prohibition the bill would not negate that.
Ms. Barnett referred to Amendment #4 offered by Senator Olson and
said that the amendment appeared to tilt the playing field in favor
of those able to provide those types of gifts. She recommended
that they consider requiring public disclosure of acceptance of
gifts of that type.
Co-Chair Kelly reported that the bill would be HELD in Committee.
[Heard and Held]
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 11:04 AM
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