Legislature(1997 - 1998)
03/18/1998 08:02 AM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 208 am - VOTER APPROVAL OF SERVICE AREA CHANGES Number 0863 CHAIRMAN IVAN announced the next order of business would be SB 208 am, "An Act relating to municipal service areas and providing for voter approval of the formation, alteration, or abolishment of certain service areas; and providing for an effective date," sponsored by Senator Sean Parnell. Number 0884 SENATOR SEAN PARNELL came before the committee to present SB 208 am. He stated that SB 208 is an act to strengthen service areas and local control of service areas. Article X, Section 1, of the Constitution of Alaska established a principle of maximum local self government. To help achieve that goal, Article X, Section 5, provides for the creation, alteration or abolishment of service areas subject to provisions of law. He pointed out that AS 29.35.450 codifies these constitutional provisions and establishes a mechanism by which service areas are created, altered and abolished. Senator Parnell explained a service area is simply an area where the local residents assess themselves to provide for a particular service. He pointed out in his district that is road maintenance, snow plowing and that sort of thing. SENATOR PARNELL explained that there are 250 service areas, statewide, where the local residents assess themselves to pay for that particular service. The legislation amends AS 29.35.450 to strengthen local control by prescribing a majority vote mechanism under three scenarios. If the local assembly wants to abolish a service area, it will require a majority vote of those people within the service area. If the assembly wants to combine service areas together, the bill would require a majority vote of the people within each service area before that can occur. He said if an assembly wants to alter the boundaries of a service area, that will require a majority vote of the people within the service area and a majority vote of the people coming into the service area. SENATOR PARNELL informed the committee that the bill is supported by many service area boards around the state. He noted he has included letters of support from some of those boards in the committee file. He pointed out that Fairbanks has over 100 service areas. He stated that Representative Therriault made a constructive suggestion and so an amendment was drafted for the consideration of the committee. The amendment would exempt fire protection service areas from the bill. Senator Parnell said in the North Pole area, there are 20,000 or 30,000 people in a fire service area. He said, "Developers build little pockets - a little circle of homes and to attach them to the service area to require a majority vote would be burdensome for the benefit conferred because in the case of homes that are, for instance, road service areas, you're paying for upgraded maintenance of roads on a daily basis - weekly basis. A fire service area does not entail as much additional costs, if anything, because your talking about the cost of running a truck out there in the event of a fire. Your not talking about a daily maintenance situation. He offered that as a distinction. He felt that would strengthen the bill if we took out 'fire protection service areas.'" Senator Parnell said he would offer that for the consideration of the committee. Number 1110 REPRESENTATIVE OGAN said the Alaska Municipal League (AML) is against the bill and one of the things that they spoke of was that it requires that resident and nonresident property owners vote in service area elections. He said it would be somewhat burdensome and expensive to notify nonresident property owners. Representative Ogan asked if he is correct in that the bill requires the municipalities to make some kind of effort to locate the nonresident property owners to mail them ballots, et cetera. He said he assumes it would be based on the list of last known address of who owns the property. He asked if they would vote on the issue even though they don't live in the area. SENATOR PARNELL said that is correct. He said the original version of the bill required a vote of those who reside in the district. However, it's not those who reside in the district only that pay taxes or pay assessments for these services. It is the property owners who pay taxes. Senator Parnell pointed out the concept is that if you have to pay an assessment for a service, you ought to have a voice or say in a provision of that service. Senator Sharp added an amendment on the Senate floor to require that not only if you reside there, but if you're a property owner in a service area and live elsewhere then you're entitled to vote as well. Number 1206 SENATOR DYSON referred to Section 5 of SB 208 am and said in brackets it says, [OR OWN REAL PROPERTY]. SENATOR PARNELL explained that Section 4 is the operative section. He read from Section 4, "(c) If voters reside within a service area, abolishment of the service area is subject to approval by the majority of the voters who reside or own real property in the service area and who vote on the question." He pointed out that a constitutional issue was raised on whether or not we can do this. Currently, there is no precedence in the state for property owners and residents voting. Senator Parnell said if Section 4 is found to be unconstitutional, Section 5 would kick in which reverts back to subject to approval by the majority of the voters who reside in the service area. In other words, if for some reason "residents and property owners" can't be included together in an election, then Section 5 becomes operable and only those residents can vote in the next election. Number 1360 REPRESENTATIVE ALBERT KOOKESH said he knows the courts have thrown out two pieces of legislation that have recently been passed by the House and Senate. Representative Kookesh stated that he doesn't know whether the AML has said that they agree with the change and it does make it constitutionally supportive. SENATOR PARNELL said the AML has not been offering any constitutional legal opinions and Legislative Legal has. REPRESENTATIVE KOOKESH said that is why he is worried as two have recently been thrown out. SENATOR PARNELL noted there is a provision in the bill that if it is thrown out by the courts, then they would go back to residents voting. REPRESENTATIVE KOOKESH said he is very supportive of the AML and asked Senator Parnell if he has had a chance to ask them whether it was acceptable to them and if they would withdraw their objection. SENATOR PARNELL said he doesn't think that they will be withdrawing their objection to the bill as they represent a fundamentally different perspective on the issue. They're perspective is local assemblies ought to be able to determine, by ordinance, these decisions. Senator Parnell stated his perspective is that if you're going to assess residents and tax them, they ought to have a say. REPRESENTATIVE RYAN asked if the bill addresses the fact that the property owner, who may be renting a place out or may be living in the place, is stuck with the bill either way. SENATOR PARNELL stated that it does address that issue in that whether or not the property owner lives there, they have a vote just like everybody else who resides in the district. He referred to the issue of renters and said if he is a property owner and he is renting property, he'll receive rent from those people to pay his assessments and taxes that relate to that building. In his view, the renters are paying for the services. To him, that is separate from the bill because if you are a resident in a service area or a proposed service area, or if you own property in that area, either way you're going to be impacted and will have to pay. They ought to have a say. Number 1534 REPRESENTATIVE OGAN asked if people who live out-of-state would be able to vote on the issue. SENATOR PARNELL responded if they own property in the proposed service area they would vote because they're paying taxes on the property. REPRESENTATIVE OGAN asked about people living out of the country. SENATOR PARNELL responded that he doesn't know, but he supposes if they are in the military and are out of the country, if they own property and are being taxed for it, they would have a say. He said he originally had included the wording "residents" and they had to reside in the area. REPRESENTATIVE OGAN asked Senator Parnell if he agrees with the amendment made on the floor of the Senate. SENATOR PARNELL said he voted for it and supported it. He stated he supports the concept that if you own property and you pay taxes, you ought to have a say. Number 1615 REPRESENTATIVE DYSON said he believes the reason that the city of Anchorage's assembly and the AML doesn't like the legislation is that it is the messy part of democracy. He questioned what do you do when the people don't do it right. Representative Dyson said "In my view, what the city of Anchorage has done in its wisdom is you get a sledge hammer and if you can't get them to do it right, you hit them. But there is a practical problem here and it's why Representative Ogan has brought it up. When a service area wants to do something in its best interest, my guess is that the absentee landlord is going to have less of a community view and so on and so forth. There is a tendency to only be thinking about what's best for his pocketbook and that's why I don't like the absentee landlords being able to - who are not living in and vested in the community to be having a voice. In some places we have significant voices. We have some areas where we have huge blocks of land that are owned by absentee landlords. So I will think about here as we hear the testimony in trying to amend your bill to take that real property owner out of Section 4." SENATOR PARNELL said Sections 5, 6 and 8 would also be taken out. Basically, it would be the original bill. Number 1699 REPRESENTATIVE RYAN stated that when a person has to reach in their pocket and come up with money, they have a very definite interest. He indicated that he doesn't have a problem with the guy that is footing the bill having a say. There is always someone who knows better how to spend your money than you do. REPRESENTATIVE OGAN referred to a scenario where there could be a sheik in Saudi Arabia who owns a chunk of real estate in downtown Anchorage and would have the right to vote. He stated that doesn't set well with him SENATOR PARNELL said that would be an appropriate argument for an amendment. Number 1837 WILLIAM GREEN, Assistant Municipal Attorney, Municipality of Anchorage, testified via teleconference from Anchorage. He said he assumes the committee has received a copy of the Anchorage Municipal Assembly resolution respecting SB 208. The resolution was passed 7 to 4 by the Anchorage Municipal Assembly. He said SB 208 provides for what is frequently referred to as a dual majority vote. In other words, it is a vote by people in an existing service area and a separate majority vote by people outside the service area which might be affected by an expansion or alteration of the existing service area. Mr. Green referred to SB 208 and said it is first time in nearly 40 years since the Alaska Constitution was adopted that the legislature has taken under consideration restrictions on the authority of the assembly, in particularly home rule and first class boroughs. He said Section 1 of Article X of the Alaska Constitution makes it very clear that the intent of the constitutional framers was to provide for maximum local self government. Clearly, that section states the very purpose of that article for a strong home rule government system. Section 2 goes on to mandate the powers of local government be vested in boroughs and cities, it establishes the assembly as the governing body of boroughs. Mr. Green said Section 5 mandates that the local assemblies have the power to establish, alter and abolish service areas. There are only two local government powers that are specifically mentioned in Article X. One is taxation and the other is service areas mentioned in Section 5. He said Section 5 specifically delegates those powers to the local governing assembly. MR. GREEN stated that the Alaska Constitution Convention clearly intended that jurisdiction over service areas and the organized boroughs and unified municipalities be vested in the assembly. He noted that unified municipalities are boroughs and, by state statute, they are automatically home rule municipalities. The purpose of vesting in the assembly the authority over service areas was to assure a unified supervision of all municipal functions. He said a well known constitutional scholar, Vic Fisher, has stated that jurisdiction over service areas of organized boroughs was to be vested in the assembly, primarily to assure a unified overview of all local government functions and to place the power of taxation under a single areawide authority. Mr. Green stated that in a report to the legislature in 1961, directed by the legislature, the Alaska Legislative Council and the local affairs agency reported in their final report on borough government that service areas will be under the jurisdiction of the borough's assembly. The borough assembly may establish advisory or administrative agencies for this service area. Thus, a single areawide agency will be responsible for fiscal matters and will ensure balanced taxation of the entire area. Mr. Green pointed out that those provisions take on a heightened significance when applied to home rule municipalities. MR. GREEN referred to Section 11 of Article X on local government and said it grants home rule municipalities the authority to exercise the legislative power of the state legislature when not otherwise prohibited by law or municipal charter. He noted that in the 1961 report, it was commented that the home rule provision enables the home rule cities and boroughs of Alaska to take care of their own problems and leave the state unhampered in its control over cities and boroughs where necessary for the interest of the state as a whole. Number 2125 MR. GREEN referred to Sections 1 and 5 of Article X and said the purpose of local government section was to provide for a minimum number of local government units for tax purposes and, at the same time, to maximize local government participation in the affairs or their locality. The constitution clearly recognized that services areas was one of those unique local powers that the local assembly would have. MR. GREEN pointed out that the local assembly is elected from districts of a relatively small constituency. In the event that the assembly does not respond to the wishes of the local populace, there are broad powers reserved to the voters for initiative and that would include the initiative to change charter provisions that govern the Anchorage service area. Number 2201 MR. GREEN said since the legislature acts as the assembly in services areas in an unorganized borough, SB 208 might affect the legislature's action in those service areas. Mr. Green stated that the legislation substantially diminishes the assembly's local government powers to control and deal with service areas and their related taxation issues in a unified overall perspective. It diminishes the home rule powers of the local boroughs, while at the same time, leaving cities with essentially the same power unrestricted. He noted the power he is referring to is the power for differential tax zones under AS 29.45.580. He said he would be happy to answer any questions the committee may have. Number 2269 REPRESENTATIVE SANDERS asked if the legislation would have an affect on the hillside police services in Anchorage. MR. GREEN referred to Anchorage having a police service area where police protection services are provided which includes a wide range of things beyond subdivision patrols or automobile traffic patrols. They include things such as the jails, the cost of running the municipal prosecutors office, et cetera. Mr. Green stated that there have been numerous attempts over the years to include the hillside area into the police service area and those attempts failed. He said, "Finally, what was done was the assembly passed a bill to put on the ballot, which would simultaneously dissolve the existing police service area and that would be voted on by the people in the existing police service area. The other half of that ballot then proposed to create a new service area which included the old service area and the hillside. And that second ballot would be voted on by everybody, including the people on the hillside. Both of those propositions passed at an election, the end result of which the Anchorage police service area became the Anchorage metropolitan police service area and included the hillside. In that instance, everybody affected voted. The only difference was -- difference from what this bill would provide is that people on the hillside voted as part of the larger group of Anchorage voters. This bill would provide in that kind of a situation a requirement for dual majority whereby the voters on the hillside would have been able to essentially veto the wishes of the remaining voters to encompass the hillside as part of the police service area." Number 2396 REPRESENTATIVE SANDERS asked if the bill would retroactively have any affect on that vote. MR. GREEN stated that it would not but noted it would, prospectively in the future, prohibit the local assembly from doing that kind of thing again. TAPE 98-17, SIDE B Number 0001 REPRESENTATIVE DYSON asked Mr. Green if he has seen the original version of the bill as well as the amended copy that is before the committee. MR. GREEN responded in the affirmative. REPRESENTATIVE DYSON said it seems to him that both versions may have constitutional problems. He said if the property owners who are absentee are not allowed to vote, it seems that we would be getting into taxation without representation. On the other hand, if they are allowed to vote there would be a political decision made for an area by people voting that don't belong to it. Representative Dyson asked Mr. Green how he reads to constitutionality of either option. MR. GREEN informed the committee that he hasn't looked at that particular constitutional issue except very cursory. The issue exists, but he isn't able to advise the committee on what his legal perspective is because he hasn't taken a close enough look at it. Number 0067 PAT POLLAND, Director, Division of Municipal and Regional Assistance, Department of Community and Regional Affairs (DCRA), testified via teleconference from Anchorage. He explained that the DCRA has six fundamental concerns relating to the legislation. (1) The department believes it diminishes local self government; (2) It restricts the ability of boroughs to promote efficiency; (3) It limits the capacity of boroughs to comply with constitutional provisions regarding the creation of service areas; (4) It's contrary to the concept of home rule municipal government in Alaska; (5) It facilitates overlapping municipal jurisdiction; and (6) It appears as if the bill would adversely affect the ability of the legislature to alter or abolish service areas in the unorganized borough. MR. POLLAND said SB 208 diminishes local self government by imposing state statutory restrictions on the manner in which borough service areas may be altered or abolished. He stated it is in contrast with Alaska's constitution which calls for maximum local self government with regard to boroughs. Those who wrote the Alaska Constitution intended that the borough assemblies would be (indisc.) with jurisdiction over service areas to ensure proper overview of all borough functions. Mr. Poland pointed out that service areas are not independent units of local government, they are dependent units created by the borough governments themselves. He said he would like to emphasize that the ability to grant the voters kind of a higher degree in the decision making in the establishment or disillusion of services areas already exists. He said he is aware of one borough that has such a provision. The legislation is not creating or allowing something that is currently prohibited. It really mandates that all boroughs that they operate in a certain fashion. Number 0142 MR. POLLAND informed the committee that SB 208 restricts the ability of boroughs to promote efficiency and economies of scale. By imposing limits on the abolishment or alteration of service areas, the legislation restrains boroughs from promoting minimum numbers of local government units that are called for in the Alaska Constitution. Currently, there are about 250 service areas within the 16 organized boroughs in Alaska. The legislation would greatly solidify those independent service areas. Mr. Poland explained that the legislation would compel boroughs to form new service areas whenever the voters of existing service areas refuse to allow an expansion of those service areas. The Alaska Constitution prohibits the creation of new service areas when services can be provided through an existing service area. Mr. Poland said one of the concerns is that pockets of wealth can be identified, services areas can be created, and small groups can benefit from that and also have control over whether the larger communities can access that resource. MR. POLLAND explained that the Alaska Constitutional Convention intended that the legislature would not limit home rule powers except when there was an overriding state interest or to resolve conflicts of authority between home rule cities and home rule boroughs. He explained that of the many hundreds of provisions in Title 29 of the Alaska statute covering municipal government, the legislature currently applies only 53 to home rule municipal governments. Mr. Poland stated, "SB 208 would add one more to the list in which it's been absent from state statute governing the service areas and organized boroughs was first enacted by the legislature in 1961. If Alaska's constitution expressly prevents duplication of tax levying jurisdiction, yet SB 208 may actually foster duplication of tax levying jurisdiction. A case in point involves the current proposal to enact territory to the city of Kodiak. An area being considered for annexation includes three or four service areas created by the Kodiak Island Borough to provide fire protection, road maintenance and utility services. Those very same services are also provided by the city of Kodiak. If the city of Kodiak annexes the area in question, but the voters refuse to develop service areas, the city of Kodiak and Kodiak Island Borough will have overlapping tax levying jurisdiction. Again, Alaska's constitution expressly calls for the prevention of such a circumstance." Number 0244 MR. POLLAND said, "The sixth and final point concerns whether SB 208 would affect the legislature's ability to abolish or alter service areas in the unorganized borough. The service areas include regional education attendance areas (REAA), coastal resource service areas and nonprofit corporate regional salmon enhancement associations created pursuant to AS 16.10.380. In that context, the Alaska Constitution provides that the legislature may exercise any power or function in an unorganized which the assembly may exercise in an organized borough. At the request of DCRA, the Attorney General's office briefly examined SB 208 as respect to a limitation on the legislature. While no written opinion was rendered, we were advised verbally that the legislature, when exercising powers or functions in an unorganized borough under Article X, Section 6, appears to be subject to the same limitations as an assembly of an organized borough. I would add that the belief was also expressed that the legislature could exempt the application of SB 208 to the unorganized borough. For the reasons listed above, DCRA does not support SB 208." He said he would be happy to answer questions the committee may have. Number 0300 REPRESENTATIVE RYAN indicated the committee had information Senator Parnell gave to the committee which is an explanation of government in Alaska. He said, "In your definition of an 'organized borough' (indisc.) are municipal corporations and political subdivisions of the state of Alaska. If that definition is true, does that not give this legislative body, the state legislature, the power and authority to pretty much structure these things any way we choose?" MR. POLLAND responded, "Certainly, that's not in question at all." REPRESENTATIVE RYAN asked what seems to be the problem if the legislature decides how service areas are to be established or disestablished. MR. POLLAND responded that one of the specifics he was talking about was service areas in the unorganized borough. The remainder of the issues relate to what is the intent of the constitutional provision with respect to how service areas operate, whether there is a minimum number of local government units, whether there is overlapping tax levying jurisdiction. The legislature has the authority to dictate how service areas operate within the contrast of the local government article of the constitution. Number 0388 OCIE ADAMS, Secretary, Mat-Su Local Road Service Area Advisory Board, testified via teleconference from the Mat-Su LIO. He stated the Mat-Su Local Road Service Advisory Board supports the spirit and the language of SB 208, as it was originally written, dated January 12, 1998. He said if the bill moves forward as it is currently written, it will be defeated constitutionally because of the voter registration laws. He pointed out that there are currently provisions in voter registration laws for absentee ballots by military members, members of government who are absent for long periods of time, and a couple other special cases regarding particularly long hospitalization. He said he thinks that those voter registration laws are encompassing enough to cover those voters who are absent. Mr. Adams pointed out that voter registration laws do require a member to be a resident and a registered voter in an area to participate in the voting process. The original wording was clean, straight forward and covered the point. Mr. Adams stated the only problem the members of the advisory board had with the original bill was with one word where it said that the city agrees by ordinance "or". It was originally on line 2 of page 2. He said if the committee goes back to the original language and replaces "or" with "and" or just remove the word "or," the bill would be acceptable to all members of the advisory board because it constitutes a large chunk of real estate in the state of Alaska. He said they would certainly hate to see the bill defeated for constitutional reasons. MR. ADAMS stated that Mr. Poland is correct when he says that this will end up with dual levy of taxation. The word "or" will cause that. He informed the committee that he has read the Alaska Constitution and the U.S. Constitution and nowhere in those documents did he read anything that would restrict the voters from participating in a political process. He thanked the committee for allowing him to testify. Number 0538 REPRESENTATIVE OGAN asked Mr. Adams what his position is on the board. MR. ADAMS responded that he is the secretary on the Mat-Su Local Road Service Area Advisory Board. REPRESENTATIVE OGAN asked if that is the main advisory board for the borough for road service areas. MR. ADAMS indicated that is correct. He noted the members are not paid members, but are volunteers and they work for the people. They are appointed by the mayor of the borough. REPRESENTATIVE OGAN asked Mr. Adams if he is aware that the Mat-Su Borough put in a resolution opposing the legislation. MR. ADAMS stated he is aware of that, but the taxpayers don't support that. The taxpayers in the borough have resisted consolidation on three attempts by the borough. He again stated that represents the taxpayers and not the borough. Number 0586 WILLIAM LARKIN, Road Service Area Supervisor, Road Service Area 25; Chairman, Road Service Advisory Board; testified via teleconference from the Mat-Su LIO. He stated he is speaking more as taxpayer and a person who has been involved in road service areas and has fought against the consolation of road service areas in the Mat-Su Valley. Mr Larkin said, "I've listened to a lot of arguments against this bill and basically what I'm running up against is that you stupid voters don't know what the heck you're doing. You can't be trusted to vote for something. Of course, voting and electing the officials means that the officials have been voted on by stupid ignorant people who don't know any better. This is basically the argument I'm going enjoy listening to. That's all it's been. If the people have got to take actions on something, they want to see their taxes spent for what they want. Not for what somebody who has decided that the taxpayer doesn't know any better. Now we know that the money should be used somewhere else. We'll take your $200,000 and we'll spend it 600 miles away or 16 miles away." MR. LARKIN said he lives in the Bogart Road service area, but he lives in the Wasilla Lake fire service area. It used to be the lake service area and then it became the Wasilla Lake service area. Then all of sudden Point McKenzie became part of the Wasilla Lake service area. Mr. Larkin informed the committee that a fire station is being built at the Point McKenzie area which is approximately 32 miles from his home. He stated he is paying for it. Mr. Larkin said, "Now if you can consider that an intelligent way for the borough to take my tax money and use it where there is no tax base, build something that they want, I don't agree with it. This is something that has already been done, so this bill will not - will not correct that problem, but it will prevent any more problems. This bill prevents taxpayers from being told that they don't know what they're doing and that they should not be allowed to vote on what they have to pay out of their pocket. If that was true, then there would have been an Anchorage sales tax a long time ago." Number 0737 SENATOR PARNELL said fundamentally, the issue is who has the control and power. He asked if it is the local government or the people who are being assessed. Senator Parnell said the bill limits the powers of the assembly putting the power in the hands of the people who are being taxed. Senator said he personally feels that is how it ought to be. He referred to a comment made by Mr. Green about this being the first time that limitations are being put on home rule government and stated he doesn't think that is what Mr. Green meant to say. Mr. Poland took that a step further and basically said, "No, that's wrong because in AS 29.10.200 it's entitled home rule limitations and we have 53 limitations on local government in terms of what they can and can't do on behalf of the citizens." He stated this is nothing new, he is just trying to put the power in the hands of the people who are being assessed. Senator Parnell said Mr. Green also mentioned that we are supposed to have a minimum number of local government units, and then Mr. Poland implied that this would somehow set up more and more government units. He stated, "Mr. Poland made it very clear, even though he is testifying in opposition of the bill, he made clear my position and the supreme court's position that we're not creating more and more local government units because these are not independent local government units. They've been defined as -- they're not, they're dependent government units. They're dependent upon state law and limitations placed upon them." SENATOR PARNELL said the committee may want to adopt the language contained in the original bill. He said the only change he believes would need to be made is to change the title to reflect the title that passed the Senate, which was a tight title. Number 0859 CHAIRMAN IVAN said he would be working with Senator Parnell on the bill. He noted there are two amendments that have been recommended. SENATOR PARNELL stated he would not be opposed to the fire service amendment. He said he believes it will ultimately help the bill in final passage. He pointed out the amendment might depend upon what version the committee adopts. For example, the committee may want to adopt the original bill, make a title change as an amendment and then adopt the fire service amendment conceptually. Number 0907 REPRESENTATIVE DYSON said if the committee adopted the original version of the bill and it was found to be unconstitutional in that the absentee property owners were being taxed -- he asked if that is a distinct possibility. He also asked that if that happened, where would the committee be in recovering the intention of bill. SENATOR PARNELL said, "First, if we go back to the original bill which says that only those who reside in the area vote, no constitutional issues, in terms of the constitutionality of that kind of a voting set up - no constitutional issues have been raised by any lawyers that I'm aware of. The only constitutional issue was raised for the nonresident property owners being allowed to vote." REPRESENTATIVE RYAN asked if the title is changed, would there be a need for a concurrent resolution. SENATOR PARNELL responded in the negative because it came across with the tight title. Number 0971 TOM WRIGHT, Legislative Assistant to Representative Ivan Ivan, Alaska State Legislature, informed the committee members that the only change in the title that would have to be made if the original version of the bill was adopted would be to provide for an effective date. SENATOR PARNELL said it needs to be changed to conform with the title that came over from the Senate so there isn't a need for a title resolution. CHAIRMAN IVAN said he would like to take further testimony. He noted the bill would be held over in order to clear up any misunderstandings or if the committee might need more information. Number 1047 NADINE WINTERS, Fairbanks North Star Borough, testified via teleconference from Fairbanks in opposition to SB 208. She stated that the borough has numerous concerns and they fall into three categories. One is that their concern is that SB 208 is going to cause a proliferation of more service areas. Along with that proliferation, their other concerns are that in larger service areas there are definite demonstrated economies of scale, both administratively and on items like limiting a hard tax for the actual services on the road. Ms. Winters said that there has been a lot of discussion about service areas having more control and local government having less control. She referred to the word "overview" and said she believes that it has been demonstrated that service areas are focused on their individual needs and wants. It is frequently appropriate that local government look at the overview all the services and how best to provide those. She said wouldn't consider it a control issue, but more of somebody having to look at the big picture. She said there are frequently other issues. MS. WINTERS said currently people that are requesting annexation, vote on that annexation and the existing service areas do not. She said the borough's concern with the bill is that people who are happy with their service are going to basically vote "no" on those annexations. Then they are left with people who are not large enough to form a separate service area and they are going to be kind of out of luck in general. She stated that Fairbanks has 116 service areas and there are 250 service areas statewide. Ms. Winters stated the borough's interest is to have the least amount of new service areas created for the economy of scale issue. Number 1205 DAN LaSOTA, Assembly Member, Fairbanks North Star Borough, came before the committee. He stated the position of the Fairbanks North Star Borough after the assembly voted unanimously in an 11 to 0 vote was against the passage of SB 208. He explained a map to the committee members which showed the various road service areas and the overlaying fire service areas, in which there are five in the borough. He noted there is also one lighting service district and one sewer and water district in the borough. MR. LaSOTA pointed out that often a property owner will wish to get into a fire service area to obtain cheaper fire insurance. He said he thinks it would be a waste of time to send election ballots out to the many residents in the existing fire service area just to amend in a particular tax lot. Mr. LaSota stated he isn't sure if the residents would even care if a single tax lot were to come in. They typically deal with 10 or 12 fire service area amendments each year. MR. LaSOTA referred to road service areas and said sometimes there are very large service area and one or two lots will come in under new construction, for instance, of a contractor who built up lots and there is no way to get through to the state road system except through the road service area. Sometimes there are differences between contractors and existing neighborhoods and perhaps the neighborhood might not want the contractor to come in and join their service area. The contractor's new home would be using the service area's roads and there is really no reason not to add them to the tax base. MR. LaSOTA explained other examples of annexation may include lots that aren't owned by individuals, but rather by corporations. The assembly will be considering a few next summer where they will try and move the boundaries over of some road service areas that would join the pipeline and get some of that revenue. It would deliver more of a tax base to the particular road service area. MR. LaSOTA said another objection is the vagueness in the property owner language. There is potential for not only nonresidents to vote in these matters, but there is also the potential for people to have multiple votes. For example, what if a property owner owns a lot inside and outside the existing area and the new area. He asked if they would get multiple votes or would they get one vote per lot. Mr. LaSota referred to floating municipal bonds and stated that property owners do not have a vote in those particular elections and they have much more of a fiscal impact than a service area would have. Number 1491 MR. LaSOTA referred to comments made by Senator Parnell and said he respectively disagrees with him. Mr. LaSota stated Senator Parnell didn't mention that in Article X, Section 5, that you can't create a service area if there is already an existing service area that can provide the service. He showed the committee members his map and said there is quite a number of road service areas in Fairbanks. Some of the service areas existed before the borough was created. Mr. LaSota explained that service areas, in his opinion, aren't a local government, but are an instrument of a local government. He referred to a portion of the legislation about the abolishment of service areas and said he would submit that the assembly sets the mill rate in a particular area and cuts the budget each year. He said if the assembly wanted to, they could set the mill rate at zero and the service areas would still exist, but it would not have any funds to operate with. Mr. LaSota said, "The assembly is elected by the people and we have, I think, a broader view especially in Fairbanks where we're representing the entire area. We don't look at just the particular neighborhood, but the effects it would have on the entire borough." MR. LaSOTA referred the fire service amendment and asked the committee to consider generalizing it. He said the Alaska Constitution doesn't address a difference between a fire service area and a road service area. In certain cases there will be instances where a large road service area may have 3,000 residents. The fiscal impact on the borough would be about $5,000 when you consider mailing applications, processing time, a canvasing of an election board, et cetera. He stated that money will come directly from the service area. In some service areas, they have a hard enough time keeping the roads clear and he is sure they don't want to be burdened with election costs. Mr. LaSota said, "I would suggest that in the spirit of the fire service amendment, you would consider something that would -- if the area could be annexed with less than a certain percentage of the existing area, then it would be just left up to the people coming into the area. That percentage could be reflected on either a number of voters, the number of tax lots, perhaps a percentage of the assessed value -- some form that you could gauge that would be fair. It would certainly take care of the fire service areas and it might help avoid some of those costly elections. The election itself would cost more than the proposed maintenance and operations of the area." MR. LaSOTA said there wouldn't be a problem if there was parity between a new area and an existing area, at least in Fairbanks. In Fairbanks there is a problem with an area that has been kept up for 30 years. He said in a neighborhood next to it has a problem with their road because of weather. The people in the existing area have a reluctance to have their reserve funds and tax base tapped by what will take some money to bring the road up to par. There would be less of a reluctance of both the people inside and outside the service area to join and form a more economical unit. Right now there isn't a way to create parity. Number 1857 REPRESENTATIVE DYSON suggested that Mr. LaSota draft some language to address his concerns and bring it back to the committee. Number 1925 REPRESENTATIVE JOULE stated that at a previous committee hearing, he believes the committee heard from people along the Chena Hot Springs Road in that they are paying a tax to the borough, but they don't have fire protection. He asked how the bill would impact that situation, if at all. MR. LaSOTA pointed out that the residents along the Chena Hot Springs aren't currently within a fire service area and they aren't paying taxes towards fire protection. They are paying taxes towards general government. Mr. LaSota said in that area, it is difficult to deliver service in an economical manner. If the bill was to become law, it would make it difficult for one area to be annexed into another. It is logical to pull your resources together rather than to have smaller units. One fire engine can deliver the same service to a larger neighborhood. There is no sense in having two fire engines, two stations, two chiefs, et cetera. REPRESENTATIVE JOULE said if the legislation were to become law, wouldn't it allow them to assess themselves to provide that service. MR. LaSOTA responded that they currently have that ability. He pointed to an area on the map called Salcha and said there is a rescue station there, but they don't have fire protection service. The borough operates emergency services on a non areawide basis. Mr. LaSota stated, "We do deliver ambulance services out to the entire borough, but not fire service area. And the people in Salcha, for instance, wanted - they wanted a fire station every five miles which is certainly a reasonable request, but it's not reasonable when you consider the tax base. They just don't have a tax base to accommodate it even if they encompass the pump station and the pipeline is down there. There is just not that many people there." Number 2124 REPRESENTATIVE JOULE said, "Actually what we heard was specifically on the Chena pump, if I could Mr. Chairman, was with regards to no schools along that road and fire protection." MR. LaSOTA pointed out that there is one school out there. There has been a lot of local debate as far as those people having to send their kids to North Pole High School. He stated that is a real local issue in Fairbanks - those people live in the remote areas feel that they're not receiving as many services as those who live in a core area. Number 2247 CHAIRMAN IVAN noted Representative James was in attendance and asked if she had any comments. REPRESENTATIVE JEANNETTE JAMES informed the committee that the bill affects her district. She pointed out that a road service area in her district is the Eilson (ph.) Farm Ag. Road and she attends their road service meetings twice a year. Representative James said they have been able to save money so that they will be able to take care of some big concerns that might come up. She said, "Meanwhile there is an obvious new subdivision that needs to add into their area and they don't have any choice. These people will be coming in. And their biggest concern is spending the $35,000 first and not having to share it with them. So I have an empathy for that sort of situation. On the other hand, I think we have to look at the big picture. And so it's difficult for me doing that considering that I am a representative for the state of Alaska and that the benefits and advantages or disadvantages to certain people in our state, at the expense of others, is not necessarily a good decision to make." Number 2397 REPRESENTATIVE JAMES continued, "In my current fire service area, which is the North Star Fire Department, quite frankly one of the best fire departments there is in the state - the one that serves me. And I spoke to Tim Bagain (ph.), the fire service director and he's looking at a small area called the Herning Subdivision and bringing that into the fire service area - the rest of the North Star fire service district. So this is a fire service area problem. And he said if he gets the people in the Herning Subdivision to vote, which they have to vote to be able to come in so that they can be taxed for the service, then that would cost about $300. If he has to put out the vote - all of the other people who live in the North Star fire service district.... TAPE 98-18, SIDE A Number 0001 REPRESENTATIVE JAMES continued, "trouble to make their services come within the existing funds that they have. The problem with the Herning Subdivision would be that the revenues that would come in after it becomes a part of the service area and the taxes are collected would be maybe about $300 a year. And in order to pay for the $4,000 that it took to put it out to a vote of the people would take them a good number of years to ever recoup the cost of doing that. And certainly, even after the $4,000 is spent to make the people vote on it, certainly the amount of money that's going to come in over the period of time is going to be a deterrent as to whether or not they would let them in. Mr. Chairman, I'm extremely distressed about the number of people that live in the Fairbanks North Star Borough who have no fire service. In fact, we have had houses burn down just outside of the boarders of fire service areas. And it is difficult for some of these areas where there is sparse population to create their own service district. So they are pretty much left out unless they wish to join an adjoining one. It appears to me that since the cost of providing service to a small number of population would have a different effect on the entire district that quite frankly these people would vote 'no' if its going to affect their service that they have. I probably would myself. I think we all vote generally, when you get down to the voter, on how it affects us personally, not necessarily how it affects the people across the state. But as a legislator, I think we have a bigger responsibility than that." REPRESENTATIVE JAMES stated that she knows that there is an amendment to exclude fire service areas. She noted that there are other service areas. She referred to the situation discussed by Mr. LaSota of a small subdivision that might want to come in to a service area and can't create one of their own because the constitution says they can't create their own if they can be served by another one. She said if it was to go to a vote of the people and they said 'no,' would that get them out of the constitutional mandate of not joining service areas and allowing them to have their own. She said it might, but many of them would be small enough that they realistically could not have a service area of their own. REPRESENTATIVE JAMES informed the committee that she is sympathetic to the cost of administering the taxes that area collected. The legislature deals with that issue every day -- the cost of government to provide the services. The taxpayers want their money to go to the issue that they're spending the money for as opposed to creating another job for someone else to administer the funds. She noted that it is more expensive to administer funds for a lot of small service areas as opposed to some of the larger ones. Representative James stated that she has a lot of friction within herself regarding the issue. By allowing a certain group to have a say about what other people can or can't do is difficult for her when those people are willing to pay the same amount as those who are getting the service. She pointed out that road service areas and other service areas are all a provision that the legislature has made for an extension of local government. It is not a government on its own although it is managed by commissioners. She said she believes that the legislation would disallow a lot of people to be in a service area when they're willing to pay to be a part of a service area. If the voters won't let them in, they won't allow them to do it. REPRESENTATIVE JAMES said the issue is a difficult issue and she will not vote for the current version of the bill, and if it excludes fire service areas, she won't vote for the bill. It is a decision that should be made as to whether it is in the best interest of the public. REPRESENTATIVE JAMES noted the issue of the unorganized boroughs is extremely difficult for her to deal with. The legislature is the borough assembly for all of the unorganized boroughs and there is a restriction on the service areas that are dependent on local government. She said, "It appears to me that anything that we do here to restrict and allow the vote of the people to be going in or out of service areas will do the same in the unorganized boroughs. And so people in the unorganized borough said, 'That's fine, they won't be able to give us -- or take away or move the lines of our service districts without our vote - REAAs, et cetera. I think that probably is a result of this bill that wasn't intended by this bill, but I don't see how you can make a law for some areas and not for others and I think the same effect will be in the unorganized borough, and may in the long run, eliminate the legislature's ability to make some rational decisions that may not, in the short- term, be popular, but in the long-term - the best interest of the public." Number 0555 REPRESENTATIVE RYAN said you have contractors that will come in and develop and they'll do it outside of an organized municipality so they don't have to put with the building codes and a number of other things. It's cheaper to develop. He stated that those developers will then petition the governing body to accept that development as annexation. Then the property owners there get the taxes, the service areas, everything that is overlapping in the adjacent areas because they become part of the area and the developer hasn't sold the property yet. So they make some money because they built cheep, and through annexation they receive the services. Number 0734 KEVIN RITCHIE, Executive Director, Alaska Municipal League, came before the committee to testify on SB 208. He said, "This is a real difficult decision for municipal government because municipal government is generally in favor of more and better voting. Though in this case, I think Representative James has probably laid out the real issue as well as anybody could." Mr. Ritchie stated it is a basic local decision. He pointed out that sometimes what is right for one local government may not be right for another local government. Mr. Ritchie said he believes he heard testimony from somebody in the Mat-Su Borough where there had been three attempts to consolidate service areas and all three of those attempts were decided by the community and were turned back. That is the way home rule works. MR. RITCHIE referred to the case of changing home rule powers and said this negates parts of the charters such as with the Municipality of Anchorage. It would also negate part of the charter of the City and Borough of Juneau. He said he thinks from a standpoint of understanding of what that would mean, it is the same as the federal government coming in and doing something that would negate a part of the constitution of Alaska. He said it is clearly a local issue. Each community can fight it out or talk it out or however they decide things in their community. The Municipality of Anchorage could have a charter election. The process exists in local government to solve the problems in a way that benefits the people of a local government. Number 0848 MR. RITCHIE said what may be perceived in the best interest of one group of people may not be in the best interest of the community as a whole. He said in every level of government many people bemoan the concept of "not in my back yard." He said a community may want to undertake an economic development project which is good for the entire community. People right around the project may not think that it is a good thing even though it may be a good thing for the whole community and there was a process of community debate to arrive at an answer on what the solution is. If you allowed the people in a small section to negate or veto something that would be good for the entire community, it wouldn't be the local government process. Mr. Ritchie said the concept of sort of de facto creating units of local government is a dangerous one. He pointed out that in the case of service areas, it is not the same as vetoing an economic development project, but there are efficiencies that would benefit a broader group of people or the community as a whole. The legislation would take a step towards stopping that. He stated that this is a local issue and there are mechanisms in local governments to take care of this. Mr. Ritchie said the concept of allowing the community, as a whole, to make these decisions and to evolve service areas to benefit the community as a whole is an important issue. Number 0972 REPRESENTATIVE RYAN referred to a city being within a second class borough, and asked if neither one has the right to levy property taxes. MR. RITCHIE explained they both do have the right. They both perform different powers like education is an areawide power in the borough and the borough taxes areawide for that. He referred to road service and said and they can tax for that if they wish. Number 1094 CHAIRMAN IVAN indicated that SB 208 am would be heard again at a later date. He noted that a committee substitute would be developed that would consider some of the points raised such as an amendment for fire service protection areas, absentee voters and an effective date.
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