05/01/2005 01:00 PM Senate FINANCE

                                                                                                                                
     CS FOR HOUSE BILL NO. 119(FIN)                                                                                             
     "An Act extending the termination date of the Alaska regional                                                              
     economic assistance program; and providing for an effective                                                                
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
KACI SCHROEDER,  Staff  to Representative  William  Thomas Jr.,  the                                                            
bill's  sponsor,  and  Committee  Aide  to  the  House  Community  &                                                            
Regional   Affairs  Committee,   explained   that  the  bill   would                                                            
reauthorize the  Alaska Regional Economic Development  Organizations                                                            
(ARDORs) assistance program  through 2010. This program, which began                                                            
in 1988, currently  provides approximately $50,000  annually to each                                                            
of  the  eleven   ARDORs  in  existence   today.  These   non-profit                                                            
organizations  are comprised "of local  volunteers working  together                                                            
to  promote  economic  development  within   their  regions".  ARDOR                                                            
activities   include  working   with  other   economic  development                                                             
activities  in their regions, collecting  and distributing  economic                                                            
information, and being  a liaison between the region, the State, and                                                            
the federal government.                                                                                                         
                                                                                                                                
Ms. Schroeder  noted that  each ARDOR could  use the funds  they are                                                            
provided, as they  deem appropriate. The Legislature  has repeatedly                                                            
reauthorized the ARDOR program since its inception.                                                                             
                                                                                                                                
Co-Chair Wilken opined  that while some ARDORs are doing a good job,                                                            
others are simply  taking the money and "having meetings".  He noted                                                            
that he had  previously expressed  concern in this regard,  and that                                                            
he  was pleased  that  three  ARDORs  had dissolved.  As  a  result,                                                            
additional  funds had  been provided  to the  remaining ARDORs  that                                                            
"are trying  to do a good job". Nonetheless,  he preferred  that the                                                            
ARDOR program  be extended  three years rather  than the  five-years                                                            
proposed  in this legislation,  as a shorter  timeframe would  allow                                                            
for more Legislative oversight of the ARDOR activities.                                                                         
                                                                                                                                
Co-Chair Wilken also asked  whether some component of the program is                                                            
being expanded as a halftime  position appears to have been added in                                                            
the  Department  of Commerce,  Community  and  Economic Development                                                             
$650,000 Fiscal Note #2 dated April 6, 2005.                                                                                    
                                                                                                                                
Ms. Schroeder deferred  to the Department of Commerce, Community and                                                            
Economic Development.                                                                                                           
                                                                                                                                
2:40:35 PM                                                                                                                    
                                                                                                                                
KATHRYN  DODGE, Executive  Director,  Fairbanks  North Star  Borough                                                            
Alaska Regional  Economic  Development Organization,  testified  via                                                            
teleconference from an  offnet site in support of the bill on behalf                                                            
of the 11 ARDORs existing  in the State. The bill would allow ARDORs                                                            
to continue their economic  development activities. In addition, the                                                            
proposal to  extend the program for  a five-year period rather  than                                                            
the historical  every-other year reauthorization period  would allow                                                            
the program to  concentrate on development activities  as opposed to                                                            
concentrating  on whether or not the program would  be reauthorized.                                                            
                                                                                                                                
Ms. Dodge disclosed  that ARDORs return nine dollars  for each State                                                            
dollar  "invested"  in the  program. In  addition,  the program  has                                                            
implemented an  accountability program which "defines  what a highly                                                            
performing  ARDOR  does; measures  and  rewards the  activities  and                                                            
programs";  and assists ARDORS in  improving their performance.  She                                                            
urged that the bill be moved out of Committee.                                                                                  
                                                                                                                                
Co-Chair Green  commented that while ARDORs have accomplished  "some                                                            
very   good  things",   she,   like   Co-Chair  Wilken,   has   some                                                            
reservations.  Rather than the program continuing  as an entitlement                                                            
program, she would prefer  it being a competitive grant program. The                                                            
Department  of  Commerce, Community  and  Economic  Development  and                                                            
other program  analysts have  communicated  to her that the  initial                                                            
program funding  was intended to be  "start-up" money; there  was no                                                            
intent to support the program indefinitely. She agreed with Co-                                                                 
Chair  Wilken   that  the   reauthorization   timeframe  should   be                                                            
shortened.  While some mechanism  might currently  exist, she  would                                                            
like a process instilled  through which both the Legislature and the                                                            
Department would  be provided information about the  ARDOR decision-                                                            
making process,  activity follow-up  procedures, and the  end result                                                            
of the activities.                                                                                                              
                                                                                                                                
2:42:56 PM                                                                                                                    
                                                                                                                                
SALLY  SADDLER,   Legislative  Liaison,   Department  of   Commerce,                                                            
Community and Economic  Development, communicated that approximately                                                            
one-third   of  the  Department's   professional  local   government                                                            
specialists provide support  and coordination for the ARDOR program.                                                            
The  half-position  referenced  by  Co-Chair  Wilken  would  provide                                                            
administrative  staff to support those  individuals. The  Department                                                            
focused  on the accountability  concern for  approximately  the past                                                            
one-and-a-half years, and  as a result, a performance accountability                                                            
system has been  developed. The system has been implemented  and has                                                            
provided incentives  for performing ARDORS, while  placing the "non-                                                            
performing ARDORs  on a two-year notice that their  funding might be                                                            
in jeopardy".                                                                                                                   
                                                                                                                                
Co-Chair  Green asked whether  funding has  ever been withheld  from                                                            
any ARDOR.                                                                                                                      
                                                                                                                                
Ms. Saddler  responded in  the negative,  as the performance  system                                                            
was  just recently  implemented.  A  non-performing  ARDOR would  be                                                            
provided a one  to two-year timeframe in which to  "correct, remedy,                                                            
and improve performance" before any action would be taken.                                                                      
                                                                                                                                
Co-Chair  Green  asked  that  a sample  of  the  performance  system                                                            
guideline be provided.                                                                                                          
                                                                                                                                
Ms. Saddler  responded that  she would provide  a copy of the  "FY06                                                            
ARDOR Tier  Application" [copy on  file], which lists "the  criteria                                                            
for the different"  ARDOR tiers. Funding  is based upon tier  level.                                                            
                                                                                                                                
Co-Chair Green ordered the bill HELD in Committee.                                                                              
                                                                                                                                
2:45:04 PM