04/11/1996 01:04 PM House CRA

 SB 20 - STATE AID TO MUNIS & UNORGANIZED BOROUGH                            
                                                                               
 CO-CHAIR AUSTERMAN brought SB 20 before the committee and invited             
 Deb Davidson to present the bill.                                             
                                                                               
 Number 0057                                                                   
                                                                               
 DEB DAVIDSON, Legislative Aide to Senator John Torgerson, sponsor             
 of SB 20, introduced the bill.  She explained that SB 20 changed              
 the name of the Municipal Assistance Fund to the Safe Communities             
 Fund.  It required municipalities that levied taxes to list money             
 received from the Revenue Sharing for Safe Communities Fund on the            
 "Notice to Taxpayers".  It also removed the hold-harmless provision           
 from the base amount account and allowed that amount to be                    
 proportionately reduced in the event of future reductions.  The               
 minimum entitlement for a community was raised to $40,000.                    
 Additionally, the date of payment under the program was changed to            
 July 31, the same date as payment of revenue sharing funds.  Thus,            
 communities would receive one payment from both programs, which               
 would assist in their budgeting processes.  Ms. Davidson noted that           
 the remainder of the bill was primarily housekeeping measures to              
 reflect the new name.                                                         
                                                                               
 Number 0223                                                                   
                                                                               
 LAMAR COTTEN, Deputy Commissioner, Department of Community and                
 Regional Affairs (DCRA), testified that DCRA supported SB 20.  The            
 department liked the elimination of the hold-harmless clause, which           
 meant that for any future cuts to municipal assistance, all                   
 communities would receive the same cut.                                       
                                                                               
 MR. COTTEN voiced DCRA's support for the $40,000 minimum payment,             
 a combination of revenue sharing and municipal assistance for the             
 smaller communities, citing two reasons.  First, smaller                      
 communities that would qualify for a $40,000 minimum combined                 
 entitlement generally had a limited ability to tax locally.                   
 Therefore, their general fund budgets contained a                             
 disproportionately high percentage of funds from the state through            
 municipal assistance and revenue sharing.  Second, it was a good              
 investment in the long term.  Mr. Cotten referred to the forecast             
 for future weak fishing seasons and other reductions of government            
 transfer payments.  He said smaller communities had a double                  
 challenge meeting minimal service needs and were always faced with            
 having restricted property within their communities and other                 
 limitations on raising taxes.                                                 
                                                                               
 MR. COTTEN expressed the department's concern about moving the                
 payment date from February 1 to July 31.  "It's the                           
 Administration's position we'd rather see it closer to November or            
 October," he said.  "It's roughly $130,000 each month you move it             
 towards the July 31st date."  Other than that, he said, the                   
 department liked the bill, which was a product of the communities,            
 the department, and the Alaska Municipal League.                              
                                                                               
 Number 0380                                                                   
                                                                               
 CO-CHAIR AUSTERMAN asked if Mr. Cotten thought inclusion of the               
 February date might create a problem with passage of the bill.                
                                                                               
 MR. COTTEN replied he thought it would be a problem, although he              
 did not know how big of a problem.  He restated the wish to see it            
 closer to October or November.                                                
                                                                               
 Number 0400                                                                   
                                                                               
 REPRESENTATIVE PETE KOTT asked what the rationale was for the                 
 February 1 date in the original bill.                                         
                                                                               
 MR. COTTEN deferred to Bill Rolfzen for an answer.                            
                                                                               
 Number 0450                                                                   
                                                                               
 BILL ROLFZEN, State Revenue Sharing, Division of Municipal and                
 Regional Assistance, Department of Community and Regional Affairs,            
 responded, "I believe the original municipal assistance payment               
 date was in June for state fiscal year municipalities.  Calendar              
 year municipalities receive their payment on February 1.  When                
 Title 29 was rewritten, I believe in 1986, they moved the payments            
 so all municipalities receive their payment on February 1."                   
                                                                               
 Number 0520                                                                   
                                                                               
 KEVIN RITCHIE, Alaska Municipal League (AML), testified that while            
 the bill sounded simple, 140 municipalities had to agree on it.  A            
 tremendous amount of work had gone into the bill, which was                   
 carefully balanced.  He stated strong support for the bill, saying            
 it was an important move as far as making do with fewer resources             
 on the parts of communities.                                                  
                                                                               
 REPRESENTATIVE KIM ELTON asked Mr. Ritchie about moving the date to           
 October or November.                                                          
                                                                               
 Number 0580                                                                   
                                                                               
 MR. RITCHIE replied, "When I talked about the balancing part, ...             
 considerable additional funds are being moved towards smaller                 
 communities.  That's about, I believe, $238,000 dollars that larger           
 communities are providing to smaller communities.  There [are] 41             
 smaller communities right now that do not receive $41,000.  It's              
 very hard, obviously, for any community to say, `yeah, we have a              
 wonderful new bill and it's going to provide us less resources'.              
 The balancing is created by moving the payment date back to the               
 July period."                                                                 
                                                                               
 REPRESENTATIVE ELTON said, "So, that would be $130,000 a month,               
 then.  So, if it moved from July 31 to October 31, that would be a            
 loss of $260,000 (indisc.)."                                                  
                                                                               
 MR. RITCHIE concurred.  He explained that resources were allocated            
 to communities two ways:  1) through the $40,000 minimum or 2) by             
 getting rid of the hold-harmless provision.                                   
                                                                               
 Number 0679                                                                   
                                                                               
 DENNIS EGAN, Mayor, City and Borough of Juneau (CBJ), stated he was           
 also a board member for the Alaska Municipal League (AML), the                
 subcommittee chairman for the AML legislative committee, a member             
 of the Alaska Conference of Mayors, and, because of his position as           
 mayor, a CBJ assembly member.  "All those groups that I just named            
 are in unanimous support of Senate Bill 20," he said.                         
                                                                               
 MAYOR EGAN thanked Senator Torgerson, a former assembly member from           
 the Kenai area and former president of AML, for recognizing the               
 seriousness of the problem faced by local municipalities,                     
 especially the smaller ones.  "One of the most important facets of            
 Senate Bill 20 is that small communities get their minimum                    
 entitlement up to $40,000," Mayor Egan said.  "As you know, many              
 communities in the state of Alaska are dissolving.  What that will            
 do to the state of Alaska is create another level of bureaucracy              
 because somebody is going to have to take care of the ... smaller             
 bush communities, especially, throughout the state of Alaska.  And,           
 in fact, more money is going to be expended providing services to             
 those communities when they dissolve."                                        
                                                                               
 MAYOR EGAN stated SB 20 would end serious cuts to municipal                   
 assistance and state shared revenue that communities had                      
 experienced since 1986, by combining those programs into the Safe             
 Communities program.  He noted that SB 20 was bipartisan and said             
 it improved equity, especially for the future.  He had been                   
 involved with the AML since 1989.  "We're usually divisive," he               
 said.  "It's not that way on Senate Bill 20.  And some of the major           
 communities and medium-sized communities in the state of Alaska are           
 taking a hit because of the upping of the minimum entitlement to              
 $40,000.  We don't have any problem with that, because I think                
 everybody in the state of Alaska is out for the best of the                   
 communities in the state of Alaska and we would appreciate your               
 support of Senate Bill 20."                                                   
                                                                               
 Number 0879                                                                   
                                                                               
 TOM SMITH, Manager/City Clerk, City of Palmer, testified via                  
 teleconference that the City of Palmer, a member of the AML,                  
 endorsed SB 20, a performance-based program that would reward                 
 communities that provided basic services to their citizens.                   
                                                                               
 Number 0979                                                                   
                                                                               
 JOE MURDY, Assembly Member, Municipality of Anchorage, and                    
 President, Alaska Municipal League, testified via teleconference in           
 support of SB 20.  He stated it was a fair bill for all communities           
 involved.  He believed the early funding date was key to the                  
 legislation.                                                                  
                                                                               
 Number 1036                                                                   
                                                                               
 TIM ROGERS, Legislative Program Coordinator, Municipality of                  
 Anchorage, testified via teleconference on behalf of Mayor Rick               
 Mystrom.  "As president of the Alaska Conference of Mayors, Mayor             
 Mystrom urges your support of this important legislation," Mr.                
 Rogers said.  "It accomplishes several things for us.  It clearly             
 defines services supported by the program.  It ties funding more              
 directly to priority public services and provides more flexibility            
 to municipalities while increasing the minimum entitlement to                 
 smaller communities without increasing the total allocation of the            
 program."  Mr. Rogers noted the unified support by municipalities,            
 a result of the AML and Conference of Mayors working on the bill              
 with Senator Torgerson for at least a year and a half.                        
                                                                               
 CO-CHAIR AUSTERMAN asked if there was further testimony and closed            
 the public hearing.  He expressed support for the bill and                    
 acknowledged the Administration's concern about the payment date.             
 He suggested that although the state might lose some money in                 
 interest, if the communities were half-way responsible, they would            
 "pick it up on the other end, with the communities getting some               
 interest out of it."                                                          
                                                                               
 Number 1145                                                                   
                                                                               
 REPRESENTATIVE KOTT expressed support for the general concept.                
 However, he said, "I think it ought to be made clear for the record           
 that by adjusting the date to correspond with the fiscal year, we             
 are drawing from the general fund and allowing the communities to             
 draw from that money the interest that generally would be                     
 accumulated in the state's general fund.  So, it will mean fewer              
 general fund dollars available."  He noted the Governor had an                
 8percent reduction in his budget that this would certainly                    
 mitigate.  "But I fear that at some point in the future, we may               
 have to revisit the issue as we start again to address the idea of            
 decentralizing, down to the local communities, responsibility for             
 government," he concluded, suggesting that might result in cuts to            
 the program in general.                                                       
                                                                               
 Number 1209                                                                   
                                                                               
 REPRESENTATIVE JERRY MACKIE moved that CSSSSB 20(FIN) move from               
 committee with individual recommendations and accompanying fiscal             
 notes.  There being no objection, it was so ordered.