Legislature(1995 - 1996)
04/24/1996 08:25 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
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SENATE BILL 20
"An Act establishing the Alaska municipal basic
services program, relating to certain programs of state
aid to municipalities and recipients in the unorganized
borough; and providing for an effective date."
SENATOR JOHN TORGERSON provided the Committee with a copy of
Amendment #1, 9-LS0319\W.1, Cook, 4/19/96. [Copy on file].
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Senator Torgerson stated that Amendment #1 would put the
program in-line. If a Native council or Native village is
not incorporated within the State of Alaska as a non-profit
entity, a waiver would be required to be signed stating that
they could be sued under the laws of the State. He
maintained that there are law suits currently pending and
questions which need to be answered regarding tribal
authority and municipal government. The amendment would
remove the unincorporated communities, making them a non-
profit corporation; then the funds paid to those areas would
no longer be subject to court scrutiny.
Representative Mulder MOVED to adopt Amendment #1.
Representative Martin discussed his concern with the
"broadness" of the term non-profit corporation. He asked if
there would be a limit to one non-profit per area. Senator
Torgerson stated that the Department of Community and
Regional Affairs (DCRA) would make that determination before
the grant was made.
Representative Brown inquired how many villages would be
affected through the passage of the legislation. Senator
Torgerson replied that thirty-six (36) would be affected,
and in order to receive the funding, another entity would
need to be formed. The amendment would recognize those
villages as corporations within Alaska subject to the laws.
Currently, they are not.
Representative Brown asked if there had been a specific
problem which required this change. Senator Torgerson said
that his intent was focused on future concerns in
determining tribal council rights. He distributed "MEMBER
ALERT, a Native American Rights Fund bulletin addressing the
legal battle to save Alaska Native rights". [Copy on file].
Representative Brown OBJECTED to Amendment #1.
A roll call was taken on the MOTION.
IN FAVOR: Martin, Mulder, Navarre, Parnell,
Therriault, Grussendorf, Kelly, Kohring,
Hanley, Foster.
OPPOSED: Brown.
The MOTION FAILED (10-1).
Representative Parnell MOVED to adopt Amendment #2. [Copy
on file]. The amendment would delete the word "safe"
throughout the proposed legislation. Representative Parnell
thought that language would not fully describe what the
funds purpose was.
Senator Torgerson commented that each time the formula was
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adjusted, large discrepancies surfaced. He stressed that
there was support of the legislation, regardless if it made
money or not. The support is not necessarily for the
contents of the proposed bill, although, added that the
municipalities had requested language which would guarantee
them opportunity to lobby. To date, the program continues
to be cut. The word "safe" and prioritizing have no affect
on law, although, it would have an effect at the time
members come to lobby their concerns. Senator Torgerson
noted that he was "neutral" on Amendment #2.
Representative Grussendorf pointed out that Page 5 lists the
communities priorities. He stressed that the priority
ranking indicates "safe" community interests. The intent is
to protect public welfare. Representative Martin stated
that he agreed with Amendment #2.
There being NO OBJECTION, Amendment #2 was adopted.
Representative Parnell informed members that following
discussion with Senator Torgerson, he intended to WITHDRAW
Amendment #3. [Copy on file]. Representative Therriault
proceeded to MOVE to adopt Amendment #3.
Representative Brown asked what type of accounting would be
required to show that the money had gone for the purposes
listed on Page 5. Representative Grussendorf spoke against
Amendment #3. He ascertained that the category of use for
the money should be indicated. He stressed the importance
of not deleting the recommended language. This language
specifies the items which the municipalities can return to
the Legislature for, when it is indicated that the
municipalities do not have safe communities.
Co-Chair Hanley discussed the fact that there does not exist
a legal ability within the State to delegate what the funds
can be spent on. The municipalities pick their priorities.
He continued that his concern exists, because the
regulations do not require that the priority list be used.
BILL ROLFZEN, STATE REVENUE SHARING, DIVISION OF MUNICIPAL &
REGIONAL ASSISTANCE, DEPARTMENT OF COMMUNITY AND REGIONAL
AFFAIRS, advised that the intention of the Department was
indicated on Page 4, Line 31: "A municipality may not
receive payment until it submits to the department a
resolution approved by the governing body of the
municipality..." He added that it was the intention of the
Department that the priority list be included in the
request. All municipalities, currently, must submit
financial statements to the Department on a yearly basis.
Co-Chair Hanley asked if the lists were required under
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current law. Mr. Rolfzen replied that municipal assistance
funds can be spent for any public purpose at the discretion
of the municipality. Under the legislation, a general list
would be required.
Representative Brown questioned the purpose served with the
additional accounting. Mr. Rolfzen replied, in the last ten
years, the program has been cut 60%. A misconceived
perception exists that the funds go toward salaries. The
proposed accounting would clearly indicate the purpose of
the funds spent.
Mr. Rolfzen added, at present time, the municipal assistance
money goes into the municipal general fund and is spent on
public safety concerns. A direct track does not exist.
Representative Grussendorf clarified that municipal
assistance was the newer of the programs and could be used
by the municipality for any services the municipality deemed
necessary. As the appropriating authority for that money,
the Legislature provides guidelines as to how the money
should be spent. He voiced strong opposition to Amendment
Representative Martin commented on the zero fiscal note by
the Department of Community and Regional Affairs (DCRA).
Mr. Rolfzen reiterated, presently, all municipalities as
determined by law must submit a financial report to the
Department. Under the revenue sharing program, the
municipalities receive money for safety purposes. The
Department tracks that money. The reports are already being
received, and the only additional work would be for the new
services.
Representative Therriault thought that the material proposed
for deletion would only place extra "verbiage" in statute.
(Remaining testimony inaudible).
Representative Grussendorf refuted that if the municipality
should decide not to offer a service, they then should be
the party responsible to their constituency. Co-Chair
Hanley affirmed that additional reporting would require
communities more intent in using the funds because of threat
of having the funds withdrawn. He thought that smaller
communities would more often be faced with that situation
than the larger ones, as financial scrutiny was increased.
A roll call was taken on the MOTION to adopt Amendment #3.
IN FAVOR: Therriault, Brown, Kelly, Martin.
OPPOSED: Mulder, Navarre, Parnell, Grussendorf,
Kohring, Foster, Hanley.
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The MOTION FAILED (4-7).
Representative Martin MOVED to adopt Amendment #4, to Page
5, Line 2, deleting "July 31" and inserting "October 31".
Representative Mulder OBJECTED. Representative Martin
thought that the language would remove the earned interest
opportunity; he opposed interest being earned by the
municipalities.
Representative Mulder stressed that SB 20 was a "gentle"
balance. Changing the date would loose the support of the
municipalities of Anchorage and Fairbanks. Representative
Martin agreed that support from any government which could
make more money would be lost.
Senator Torgerson voiced opposition to Amendment #4. He
added that there was a "minimum" entitlement to the
unincorporated communities. The money is currently coming
out of those taxed based communities which would benefit
from having the date moved forward from February to July
1st. There is $238 thousand dollars being removed at this
time. The larger communities have agreed to make this
amount available to rural Alaska under the minimum
entitlement. The trade-off was to move the date up to July
in order that they could then take advantage of the
increased interest.
A roll call was taken on the MOTION to adopt Amendment #4.
IN FAVOR: Brown, Martin.
OPPOSED: Navarre, Parnell, Therriault,
Grussendorf, Kelly, Kohring, Mulder,
Hanley, Foster.
The MOTION FAILED (2-9).
Representative Therriault asked about the minimum base of
$40 thousand dollars. He inquired if that amount would
include the road money. Mr. Rolfzen replied under the
revenue sharing program, after the basic services are
calculated for road money, ice road money, etc., and if the
municipality did not have at lease $25 thousand dollars
times the cost-of-living differential, they would then be
brought up to that level.
The legislation does not tinker with the revenue sharing
program. He explained that after the revenue sharing
program is calculated, including the entitlement and the
communities money, if the municipality is then not up to $40
thousand dollar level, the Department would add enough funds
from the Safe Community Fund to bring that municipality up
to $40 thousand dollar level.
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Representative Therriault questioned the excess dollar
amount that communities would receive differing from the
current system. Mr. Rolfzen said that amount would be $238
thousand dollars. Co-Chair Hanley asked if everyone would
receive the pro-rated percent reduction, this year being 8%
percent. Mr. Rolfzen explained, initially, everyone would
receive the 8% reduction, although, the minimum title add-on
would provide money to the smaller municipalities to bring
them up to $40 thousand dollars, so then the total impact
would be less than the overall 8% percent.
KEVIN RITCHIE, ALASKA MUNICIPAL LEAGUE, ALASKA CONFERENCE OF
MAYORS, JUNEAU, commented that the intent was that
communities would share future cuts and that all communities
would share to some extend. All communities must have a
stake in the overall funding for the program.
Senator Torgerson added, in future years, all communities
would be cut the same. This year, as a result of the
transitions and the hold-harmless, some communities will be
cut differently. Mr. Rolfzen corrected how future cuts
would be addressed. He stated that because of the $40
thousand dollar overall threshold, the smaller communities
would receive a percentage of the cut, but not necessarily
the prescribed percentage cut. Every year, each
municipality would experience the "pain" of a cut as a
result of the proration factor, but not to the extend of the
recommended percentage.
(Tape Change, HFC 96-134, Side 2).
Representative Mulder commented that communities like
Anchorage and Fairbanks have the ability to generate their
own income. The smaller village areas would benefit from
the passage of the legislation, which would be good public
purpose. He suggested encouraging the villages to create
city government to handle their own affairs would be good
planning. If in providing financial assistance offers that,
Representative Mulder encouraged passage of the legislation.
Co-Chair Hanley commented that it was his personal opinion
that providing these communities money would not be better
for the long range plan of the State.
Representative Mulder MOVED to report HCS CS SB 20 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CS SB 20 (FIN) was reported out of Committee with a "no
recommendation" and with fiscal notes by the Department of
Revenue dated 3/18/96 and the Department of Community and
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Regional Affairs dated 3/18/96.
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