Legislature(2007 - 2008)BARNES 124

03/20/2007 08:00 AM House COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 202 COMMUNITY REVENUE SHARING TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 152 ESTABLISHING A RENEWABLE ENERGY FUND TELECONFERENCED
Heard & Held
HB 202-COMMUNITY REVENUE SHARING                                                                                              
                                                                                                                                
8:07:19 AM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH  announced that  the first order  of business                                                               
would be  HOUSE BILL NO. 202,  "An Act relating to  the community                                                               
revenue sharing program; and providing for an effective date."                                                                  
                                                                                                                                
8:07:30 AM                                                                                                                    
                                                                                                                                
SONYA  HYMER,  Staff  to   Representative  LeDoux,  Alaska  State                                                               
Legislature,  speaking  as  staff  to  the  House  Community  and                                                               
Regional  Affairs Standing  Committee, sponsor,  paraphrased from                                                               
the   sponsor  statement,   which   read  [original   punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     HB  202  establishes   a  sustainable  revenue  sharing                                                                    
     program  based   on  the  owner-state  concept.     The                                                                    
     resources of the state belong  to all Alaskans.  Cities                                                                    
     and  boroughs were  formed by  the  state as  political                                                                    
     subdivisions  to   provide  services  to   the  people.                                                                    
     Without  revenue  sharing,  the entire  cost  of  basic                                                                    
     services is [borne] by local taxpayers.                                                                                    
                                                                                                                                
     Skyrocketing  fuel  and  retirement  system  costs  and                                                                    
     inflation, in  conjunction with severe cuts  in revenue                                                                    
     sharing  over  the  past several  years  have  crippled                                                                    
     local  governments'  ability   to  provide  even  basic                                                                    
     services such  as public safety, snow  removal and road                                                                    
     maintenance, and the education of our children.                                                                            
                                                                                                                                
     HB  202  provides  a   means  for  sustainable  revenue                                                                    
     sharing  in  order  to allow  communities  to  continue                                                                    
     providing  basic  services.   HB  202  would allow  the                                                                    
     legislature to allocate 6%  of certain natural resource                                                                    
     revenues  to  revenue  sharing   every  year.    Basing                                                                    
     revenue  sharing on  the state's  annual income  allows                                                                    
     for  the flexibility  needed  to  continue the  program                                                                    
     during lean years, when state revenue is down.                                                                             
                                                                                                                                
     The Alaska Senate is  currently considering a companion                                                                    
     bill,  SB  72,  which   was  sponsored  by  the  Senate                                                                    
     Committee  on  Community  and  Regional  Affairs.  Last                                                                    
     month, the Senate CRA moved  a committee substitute for                                                                    
     SB 72 out of Committee.  That bill now awaits a hearing                                                                    
     in Senate  Finance.  SB  72 is nearly identical  to the                                                                    
     bill before  this committee  today. However,  there are                                                                    
     two important differences between HB 202 and SB 72.                                                                        
                                                                                                                                
        · In addition to providing for unincorporated                                                                           
          communities  in the  unorganized  borough, HB  202                                                                  
          includes payments  of $25,000  for the  benefit of                                                                    
          an  unincorporated   community  in   an  organized                                                                  
          borough.   According  to  Section 29.60.870(b)  of                                                                  
          this  bill, a  qualified unincorporated  community                                                                    
          has a population  of at least 25  people and there                                                                    
          is  a   non-profit  community  entity   or  tribal                                                                    
          council   providing  at   least  three   of  seven                                                                    
          services   to  the   community,  including:   fire                                                                    
          protection, emergency medical  services, water and                                                                    
          sewer, solid waste management,  public road or ice                                                                    
          road  maintenance, public  health, and  search and                                                                    
          rescue.   This  service-based eligibility  applies                                                                    
          to   unincorporated   communities   in   organized                                                                    
          boroughs.    In     the    unorganized    borough,                                                                    
          unincorporated   communities  with   25  or   more                                                                    
          residents would  continue to qualify  for payments                                                                    
          of $25,000.                                                                                                           
                                                                                                                                
        · Another difference between HB 202 and SB 72 is HB
          202's    'pass-through'    clause    in    Section                                                                    
          29.60.870(b),  by   which  the  assembly   of  the                                                                    
          organized  borough, rather  than the  State, would                                                                    
          determine  which   nonprofit  entity   or  village                                                                    
          council in  a community  should receive  the funds                                                                    
          and would cut the individual checks to the                                                                            
          communities.                                                                                                          
                                                                                                                                
     The House  and Senate versions  of this bill  share the                                                                    
     same  goals.   They establish  a dedicated  fund source                                                                    
     for  sharing  natural  resource revenues  in  order  to                                                                    
     fulfill  two requirements  of  our State  Constitution.                                                                    
     The first is  Article 8, Section 2: to  use our natural                                                                    
     resources  for the  maximum benefit  of  the people  of                                                                    
     Alaska.  The  second  is  Article  10,  Section  I:  to                                                                    
     maximize  local  government  with a  minimum  of  local                                                                    
     government units.                                                                                                          
                                                                                                                                
     Without   consistent,   dependable   revenue   sharing,                                                                    
     provision  of basic  local  services  will continue  to                                                                    
     decline.   Some small  communities have  already closed                                                                    
     their doors.   HB  202 provides the  tool to  solve the                                                                    
     problem  of   helping  local  governments   fund  basic                                                                    
     services.                                                                                                                  
                                                                                                                                
8:11:52 AM                                                                                                                    
                                                                                                                                
MS. HYMER suggested a conforming  amendment striking the language                                                               
"or  unincorporated community"  on page  3,  line 22.   She  then                                                               
highlighted  documents  in  the packet,  including  the  document                                                               
entitled "Unincorporated  Communities of At least  25 People" and                                                               
"HB 202  Community Revenue Sharing  Program."  The latter  of the                                                               
two  documents  points  out  that  the  Department  of  Commerce,                                                               
Community,   &  Economic   Development  (DCCED)   estimates  that                                                               
approximately  68 unincorporated  communities in  the unorganized                                                               
borough   that   would   qualify   for   $25,000   payments   and                                                               
approximately   68   unincorporated  communities   in   organized                                                               
boroughs would also  qualify.  She noted  that the aforementioned                                                               
are  merely  estimates  because  in  each  case  the  eligibility                                                               
requirements would  have to  be reviewed  in detail  to determine                                                               
which communities would qualify.                                                                                                
                                                                                                                                
8:13:35 AM                                                                                                                    
                                                                                                                                
MS.  HYMER, in  response to  Co-Chair Fairclough,  clarified that                                                               
the  estimates  are  "68  plus  68."   She  reiterated  that  the                                                               
estimates  are   that  68   unincorporated  communities   in  the                                                               
unorganized  boroughs   and  68  unincorporated   communities  in                                                               
organized boroughs would qualify.                                                                                               
                                                                                                                                
8:14:06 AM                                                                                                                    
                                                                                                                                
KATHY  WASSERMAN, Alaska  Municipal League  (AML), related  AML's                                                               
appreciation  for   HB  202.     She  explained  that   in  AML's                                                               
discussions  over  the  years  it  has  become  clear  that  most                                                               
legislators are  okay with revenue  sharing, but that  AML needed                                                               
to develop some sort of fund  that was sustainable.  Last summer,                                                               
AML discussed  tailoring the revenue sharing  program with regard                                                               
to  market fluctuations  related  to oil  revenue,  which is  the                                                               
state's  main source  of revenue.    Therefore, in  doing so  AML                                                               
developed  tying  [revenue  sharing]  to  6  percent  of  certain                                                               
natural  resource  revenues.    Ms.  Wasserman  opined  that  all                                                               
communities  need   revenue  sharing.     In  fact,   the  larger                                                               
communities have committed to deducting  the revenue sharing from                                                               
their tax  base, and thus  the savings will  be passed on  to the                                                               
residents.  However, the smaller  communities need the funds just                                                               
to provide basic services.   Ms. Wasserman pointed out that while                                                               
communities may receive  capital budget funds for  things such as                                                               
a new fire  hall or a new fire truck,  it still takes maintenance                                                               
hours,  employees, fuel,  and basic  services  to maintain  those                                                               
things   funded  through   capital   funds.     Communities   are                                                               
experiencing  difficulty  in  keeping  up  the  day-to-day  basic                                                               
infrastructure for  which there is  no grant or funding  from the                                                               
capital budget, she  further pointed out.   Ms. Wasserman thanked                                                               
the committee for hearing HB  202 and encouraged the committee to                                                               
forward it from committee.                                                                                                      
                                                                                                                                
8:17:22 AM                                                                                                                    
                                                                                                                                
MS. WASSERMAN,  in response to Representative  Neuman, reiterated                                                               
that most of  the larger communities have  committed to deducting                                                               
the revenue sharing from their property taxes.                                                                                  
                                                                                                                                
REPRESENTATIVE  NEUMAN  asked  if  there's  anything  in  writing                                                               
specifying that  an area with  a population over a  certain point                                                               
would have  to distribute  a certain  percentage of  the [revenue                                                               
sharing] to reduce the tax liability of the property owners.                                                                    
                                                                                                                                
MS.  WASSERMAN answered  that  AML had  no  intention of  placing                                                               
restrictions  on revenue  sharing  because  each community  knows                                                               
best how  to use the  money.   Last year the  tri-boroughs, which                                                               
consists of the Mat-Su Borough,  the Kenai Peninsula Borough, and                                                               
the Municipality of  Anchorage, all committed on  paper to offset                                                               
the amount of revenue sharing received on property taxes.                                                                       
                                                                                                                                
8:19:41 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  inquired  as  to whom  these  communities  have                                                               
committed.                                                                                                                      
                                                                                                                                
MS.  WASSERMAN said  that there  are some  letters of  commitment                                                               
from  some  of  the  larger communities,  which  she  offered  to                                                               
provide to the committee.                                                                                                       
                                                                                                                                
8:20:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   OLSON  asked   whether  the   Public  Employees'                                                               
Retirement System  (PERS) and  Teachers' Retirement  System (TRS)                                                               
contributions   planned  by   the  legislature   this  year   are                                                               
considered municipal assistance.                                                                                                
                                                                                                                                
MS. WASSERMAN replied no, adding  that over 90 communities aren't                                                               
involved in  PERS/TRS but will  still need operating funds.   The                                                               
revenue sharing funds, she opined,  are a way for the communities                                                               
to use the funds in a way the communities see fit.                                                                              
                                                                                                                                
8:22:09 AM                                                                                                                    
                                                                                                                                
TOM  QUICK,  Member, Ouzinkie  City  Council,  City of  Ouzinkie,                                                               
informed  the  committee  that  he   is  speaking  on  behalf  of                                                               
Ouzinkie,  which consists  of  six villages  around  the base  of                                                               
Kodiak Island.  He said that  by extension he is also speaking on                                                               
behalf  of the  250 villages  throughout  the state.   Mr.  Quick                                                               
opined that "we're" at a crisis  point.  In fact, 100 communities                                                               
of  the 250  communities  have moderate  to  severe concern  with                                                               
regard to  their financial integrity.   He likened  the situation                                                               
to damage  control.   Mr. Quick  related that  last week  the six                                                               
villages  from  Kodiak  met   and  discussed  the  organizational                                                               
structure,  roles, responsibilities,  and  the  positions of  the                                                               
village,  state, and  the  borough.   He  noted  that he  relayed                                                               
concerns  brought  out at  that  meeting  to the  Kodiak  Borough                                                               
Island  Assembly.   He  then  noted that  he  has  many years  of                                                               
experience  working  with  the Native  leadership.    During  the                                                               
aforementioned discussion,  there was review of  the communities'                                                               
ability  to   carry  out  and  sustain   the  individual  village                                                               
positions.   There was discussion  that originally the  state, as                                                               
it  was formed,  had the  authority to  collect revenue  from the                                                               
resources, which  were located by  and large in rural  areas, and                                                               
the  borough  had  the  authority  to  collect  and  redistribute                                                               
revenues from the state as well  as collect revenues from the tax                                                               
base on  the real estate and  businesses in Kodiak.   The bulk of                                                               
that budget goes to education.   He pointed out that the villages                                                               
don't have  any tax base.   Furthermore, the majority  of housing                                                               
is low-income  U.S. Department of  Housing and  Urban Development                                                               
(HUD)  housing   and  thus  those  properties   are  exempt  from                                                               
taxation.  The  local impacts in Ouzinkie  have been particularly                                                               
severe  and Ouzinkie,  in  particular, has  used  almost all  its                                                               
reserves.  Those reserves are coming  to a close and there aren't                                                               
any further options.  Basically,  Ouzinkie's fate is in the hands                                                               
of the  legislature, he opined.   Mr. Quick stated support  of HB
202 and SB 72.                                                                                                                  
                                                                                                                                
8:30:36 AM                                                                                                                    
                                                                                                                                
LUKE HOPKINS,  Member, Alaska  Municipal League  (AML); Presiding                                                               
Officer, Fairbanks  North Star Borough Assembly,  Fairbanks North                                                               
Star  Borough,  pointed out  that  in  many areas  where  natural                                                               
resources are  extracted/harvested, the general fund  dollars for                                                               
that flow  into state  coffers provide the  vast majority  of the                                                               
revenue used  in the  state government.   He further  pointed out                                                               
that  the Alaska  State  Constitution calls  for  sharing to  the                                                               
maximum benefit  with the  citizens of Alaska.   In  the previous                                                               
two  legislative sessions,  as  many as  22  different pieces  of                                                               
legislation addressed  revenue sharing.  In  closing, Mr. Hopkins                                                               
urged the  committee to  put in  place a formula  for the  use of                                                               
general fund dollars for revenue sharing.                                                                                       
                                                                                                                                
8:33:31 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  highlighted that  some very  large amounts                                                               
of money  have gone into  the Fairbanks area for  various capital                                                               
projects.  He asked if  Mr. Hopkins considered those as community                                                               
revenue sharing.                                                                                                                
                                                                                                                                
MR.  HOPKINS  answered  that  he   considered  such  support  for                                                               
transportation projects.  He then  pointed out that the Fairbanks                                                               
North Star Borough  doesn't have road service powers  and many of                                                               
the  funds received  for such  are grants  that come  through the                                                               
Department  of  Transportation   &  Public  Facilities  (DOT&PF).                                                               
Therefore, it's  a bit blurry  whether that's  considered revenue                                                               
sharing.    In further  response  to  Representative Neuman,  Mr.                                                               
Hopkins said he doesn't believe  the capital improvement projects                                                               
decreased property  taxes in  the area.   However, he  noted that                                                               
the  additional municipal  aid last  year  was used  to offset  a                                                               
portion  of  property  taxes  and  assisted  with  large  borough                                                               
maintenance projects.                                                                                                           
                                                                                                                                
8:35:53 AM                                                                                                                    
                                                                                                                                
LYNNE   WOODS,   Member,  Matanuska-Susitna   Borough   Assembly,                                                               
Matanuska-Susitna  Borough, highlighted  the  increasing cost  of                                                               
local  government and  the high  growth of  the area  causing the                                                               
market  value  to  increase, which  in  turn  increases  property                                                               
taxes.    Furthermore,  the  demand   for  various  services  has                                                               
increased also.   Ms. Woods stated  her support for HB  202.  She                                                               
informed the  committee that in the  two years she has  served on                                                               
the Mat-Su Borough  Assembly all possible measures  to reduce the                                                               
burden of  property tax  have been taken.   The  proposed formula                                                               
would certainly fall in line  with what other states and counties                                                               
have found  in an effort  to balance  their budget.   She related                                                               
that she  philosophically agrees  with the  approach taken  in HB
202.  Ms.  Woods recalled a recent assembly meeting  in which the                                                               
Mat-Su  Assembly had  to approve  local  tax dollars  to pay  for                                                               
improvements  to   a  state  road   for  which   the  legislature                                                               
appropriated  $150,000,   but  the  improvements   actually  cost                                                               
$320,000.    Therefore, as  the  state  demands more  from  local                                                               
[governments],  [local  governments]  need  more  resources  than                                                               
property taxes, which [the borough] is committed to reducing.                                                                   
                                                                                                                                
8:40:14 AM                                                                                                                    
                                                                                                                                
DAN  COFFEY,   Vice  Chair,  Anchorage  Assembly,   related  that                                                               
Anchorage has  pledged every  bit of state  money to  reduce real                                                               
property taxes and increased the  exemption for property taxes to                                                               
the maximum allowed.   He said, "We've been asking  for years for                                                               
the state to  stop unfunded mandates."  He  then highlighted that                                                               
the  state  has many  opportunities  with  regard to  sources  of                                                               
revenue, including  the substantial  permanent fund.   Therefore,                                                               
local property  tax relief  is necessary in  the form  of revenue                                                               
sharing, which was  a long-standing policy of the  state for many                                                               
years.   He said  he was  glad people  are bringing  back revenue                                                               
sharing.   The source of  revenue [for revenue sharing]  needs to                                                               
be consistent and reliable over time  in order to allow for local                                                               
governments  to plan  their budgets.   Furthermore,  such a  plan                                                               
should recognize that local governments,  in many instances, know                                                               
better how to spend their money  than does the state.  Mr. Coffey                                                               
urged the committee to offer  revenue sharing, whether through HB
202 or other legislation.                                                                                                       
                                                                                                                                
8:42:26 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  related his understanding from  Mr. Coffey                                                               
that communities don't  have anything left from  which to produce                                                               
more revenue,  and that [funds  for revenue sharing]  should come                                                               
from  the  permanent fund  dividend.    "The people  have  stated                                                               
several times  that they don't  want that  to happen and  I think                                                               
that that  money belongs to  ... all  citizens of the  state," he                                                               
pointed.  He  inquired as to how Mr. Coffey  would respond to the                                                               
aforementioned as  well as  the fact that  Anchorage has  a self-                                                               
imposed tax  cap and doesn't  meet the maximum amount  of funding                                                               
for education.                                                                                                                  
                                                                                                                                
MR. COFFEY said  that there's no law  prohibiting the legislature                                                               
from  making  adjustments  to  the   permanent  fund  if  it  was                                                               
desirous.   In response to Representative  Neuman's question, Mr.                                                               
Coffey questioned:   "How much  is enough  and why should  all of                                                               
the earnings be applied to the  permanent fund as opposed to some                                                               
of the  needs of  local government."   Mr. Coffey  then clarified                                                               
that his  earlier comment was  that local governments  have fewer                                                               
other  resources.   He opined  that the  vast resources  that can                                                               
solve these  problems aren't  found in  any one  local government                                                               
but rather are found at the state level.                                                                                        
                                                                                                                                
8:44:40 AM                                                                                                                    
                                                                                                                                
MARVIN YODER  said that the  source of  funds is the  change [for                                                               
revenue sharing] as  local governments are willing to  be tied to                                                               
the resources of  the state.  In the past,  revenue sharing plans                                                               
have  tried  to find  another  source  of  revenue and  obtain  a                                                               
general appropriation  each year, which  didn't really work.   He                                                               
then related  that as  he drives from  Palmer into  Anchorage, he                                                               
finds it ironic that public safety  services on the first half of                                                               
the trip  are paid  for out  of the  state's resources  while the                                                               
second half  of the  trip those  services are  paid for  by local                                                               
taxes in Anchorage.   It seems, he opined, that  the resources of                                                               
the  state should  be  applied equally.    The aforementioned  is                                                               
important when  reviewing the basic  revenue stream  that's being                                                               
tapped under  HB 202.  He  then pointed out that  revenue sharing                                                               
was  originally  tied  to  what  services  the  local  government                                                               
provided.   This  legislation,  he emphasized,  is  aimed at  the                                                               
basic services.                                                                                                                 
                                                                                                                                
8:47:06 AM                                                                                                                    
                                                                                                                                
TAMMIE  WILSON related  that  she  is in  great  support of  this                                                               
revenue sharing.   She noted  that probably like many  others she                                                               
has seen  her taxes increase over  the years.  She  said that she                                                               
likes HB 202 because it  provides a sustainable source of revenue                                                               
so  that new  monies won't  have to  be found  to meet  this need                                                               
every year.   Furthermore, HB  202 allows communities  to provide                                                               
basic services as well as give  tax relief to others.  Ms. Wilson                                                               
applauded   those  communities   and  municipalities   that  have                                                               
committed all of their revenue  sharing funds to relieve property                                                               
taxes.  With  regard to the PERS/TRS issue,  she characterized it                                                               
as  a separate  issue that  should be  addressed separately.   In                                                               
closing, Ms. Wilson  expressed her hope that  the committee would                                                               
support HB 202.                                                                                                                 
                                                                                                                                
8:49:14 AM                                                                                                                    
                                                                                                                                
TIM BOURCY,  President, Alaska Municipal  League; Mayor,  City of                                                               
Skagway; related  support for HB  202.  The  legislation provides                                                               
that  municipalities "share  in  the wealth  and  ... the  pain."                                                               
Although  the state  has so  much potential  and opportunity,  it                                                               
lacks the  basics of  sustainable government.   He  expressed the                                                               
need  to take  the  resources  the state  has  and  invest it  in                                                               
education  and infrastructure  in order  to create  opportunities                                                               
for  individuals  to establish  roots  and  start families.    In                                                               
conclusion, he requested the committee's support for HB 202.                                                                    
                                                                                                                                
8:51:22 AM                                                                                                                    
                                                                                                                                
CARTER  CRAWFORD  had her  testimony  read  by Tammie  Wilson  as                                                               
follows:                                                                                                                        
                                                                                                                                
     With  my involvement  with  the  upcoming elections  to                                                                    
     resolve  property taxes  and the  efforts  to keep  the                                                                    
     community block grant make it  painfully aware just how                                                                    
     important  the municipal  [revenue] sharing  program is                                                                    
     and  how critical  local analysis  of  needs and  local                                                                    
     allocation  of state  funding is.   So,  please support                                                                    
     it.                                                                                                                        
                                                                                                                                
8:52:21 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH,  upon determining  no  one  else wished  to                                                               
testify, closed public testimony.                                                                                               
                                                                                                                                
8:52:37 AM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH asked if there  was any opposition to holding                                                               
HB 202.   [None was stated.]  She related  her understanding that                                                               
committee  members  should have  copies  of  two amendments  from                                                               
Representative  Seaton.   She then  informed  the committee  that                                                               
staff  has   just  received  a   new  document  to   replace  the                                                               
aforementioned amendments.                                                                                                      
                                                                                                                                
8:53:42 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  clarified  that  Representative  Seaton's                                                               
[conceptual] amendment  that was  just provided to  the committee                                                               
is labeled 25-LS0489\K.1, Cook, 3/20/07.                                                                                        
                                                                                                                                
CO-CHAIR  FAIRCLOUGH announced  that HB  202 would  be held  over                                                               
until Thursday.                                                                                                                 
                                                                                                                                
[Further testimony was taken on HB 202 later in this hearing.]                                                                  
                                                                                                                                
HB 202-COMMUNITY REVENUE SHARING                                                                                              
                                                                                                                              
CO-CHAIR  FAIRCLOUGH,  noting  that  public  testimony  had  been                                                               
closed on  HB 202,  allowed testimony from  those who  had missed                                                               
the earlier opportunity to testify on HB 202.                                                                                   
                                                                                                                                
9:22:09 AM                                                                                                                    
                                                                                                                                
JEROME  SELBY,  Mayor,  Kodiak   Island  Borough,  expressed  the                                                               
significance and level of desperation  that exists in a number of                                                               
the smaller  communities in  the state.   There  are a  number of                                                               
villages in  the state, he opined,  that have about a  year left.                                                               
If the  legislature can't  determine how  to help  these villages                                                               
this year,  there will be  a disaster in these  small communities                                                               
in Alaska.  He  opined that the issue embodied in  HB 202 will be                                                               
the issue that  defines this legislature.  Mayor  Selby urged the                                                               
committee to move HB  202 and HB 152 forward.   He noted that for                                                               
villages  such as  Ouzinkie, the  cost of  electricity is  partly                                                               
what's driving it  out of existence and renewable  energy is part                                                               
of the long-term  solution to help bring operating  costs down in                                                               
rural Alaska.                                                                                                                   
                                                                                                                                
[Further testimony on HB 202 was taken later in this hearing.]                                                                  
                                                                                                                                
HB 202-COMMUNITY REVENUE SHARING                                                                                              
                                                                                                                                
9:29:01 AM                                                                                                                    
                                                                                                                                
CO-CHAIR FAIRCLOUGH  then returned  the committee's  attention to                                                               
HB 202 and reopened public testimony.                                                                                           
                                                                                                                                
9:29:11 AM                                                                                                                    
                                                                                                                                
TOM  ABELL, Member,  Kodiak Island  Borough Assembly;  President,                                                               
Southwest  Alaska  Municipal  Conference  (SWAMC),  informed  the                                                               
committee that he is  one of the 20 percent who  voted to use the                                                               
permanent  fund  for the  "rainy  day."    He then  informed  the                                                               
committee  that the  Public Employees'  Retirement System  (PERS)                                                               
and the Teachers' Retirement  System (TRS) [contributions planned                                                               
by   the  legislature]   don't  help   the  small   villages  and                                                               
communities as it's a minute matter  for them.  He echoed earlier                                                               
comments  that small  communities  are being  devastated.   These                                                               
communities,  he  opined,  need sustainable  revenue  sharing  in                                                               
order  to budget  things such  as landfills.   Mr.  Abell related                                                               
that although  Ouzinkie is one  of the better funded  areas, it's                                                               
within  a  few months  of  going  bankrupt  at which  point  [the                                                               
responsibility] will fall to the municipalities.                                                                                
                                                                                                                                
9:31:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   NEUMAN  recalled   that   Mr.  Ritchie,   former                                                               
executive  director of  the Alaska  Municipal  League (AML),  had                                                               
testified  that AML  would  identify the  permanent  fund as  the                                                               
source of funding  for revenue sharing.  He asked  if that's what                                                               
AML has been discussing.                                                                                                        
                                                                                                                                
MR. ABELL deferred to Mayor Selby.                                                                                              
                                                                                                                                
9:32:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   CISSNA  acknowledged   the  importance   of  the                                                               
communities  around  Kodiak Island  to  be  healthy in  order  to                                                               
maintain the health  of the town of Kodiak itself.   She inquired                                                               
as  to  the impact  on  Kodiak,  if the  surrounding  communities                                                               
failed.                                                                                                                         
                                                                                                                                
MR. ABELL  said that he  can't specify a percentage  of financial                                                               
impact because  he believes that the  devastation is to a  way of                                                               
life.  He explained that people  live in small towns because they                                                               
don't  want  to  live  in  the larger  town  and  if  there's  no                                                               
government  to   keep  the  smaller  town   moving  forward,  the                                                               
community ceases  to exist.   He  pointed out  that those  in the                                                               
outlying communities surrounding Kodiak  have to come into Kodiak                                                               
for supplies and it's where the  tourism industry is located.  As                                                               
an example of the deterioration  of these smaller communities, he                                                               
highlighted  that in  the small  town of  Port Lyons  the grocery                                                               
store  just  closed.    Mr.  Abell then  pointed  out  that  such                                                               
communities  can't afford  to come  and  represent themselves  in                                                               
larger venues.                                                                                                                  
                                                                                                                                
9:36:05 AM                                                                                                                    
                                                                                                                                
JEROME SELBY,  Mayor, Kodiak Island  Borough, related  that after                                                               
trying to work  through revenue sharing last  year, basically AML                                                               
stepped back.   He further related that [AML]  feels that revenue                                                               
sharing isn't  about a pot  of money but rather  about providing,                                                               
at  the  local   level,  basic  services  to   live  wherever  an                                                               
individual chooses  to live.   From  that perspective  the notion                                                               
was borne  to take  a percentage  of the  revenues coming  to the                                                               
state,  the  largest of  which  comes  from the  state's  natural                                                               
resources.    Furthermore,  according  to  the  constitution  the                                                               
revenue  from  the  state's natural  resources  is  the  people's                                                               
money.   He then left  the committee documentation  from Ouzinkie                                                               
illustrating  its dwindling  resources over  the past  few years.                                                               
Ouzinkie's situation  is repeated  in roughly 200  communities in                                                               
the state.                                                                                                                      
                                                                                                                                
9:39:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CISSNA identified  two  dynamics: government  and                                                               
public funding, and the private sector.   She then inquired as to                                                               
the value  of smaller  communities for Kodiak  Island as  a whole                                                               
and whether  there would be  tangible impacts were  those smaller                                                               
communities to go away.                                                                                                         
                                                                                                                                
MAYOR  SELBY   submitted  that  Alaska   is  about   its  smaller                                                               
communities and  which is  why they are  important.   Mayor Selby                                                               
opined that  the smaller  communities of  Alaska are  the state's                                                               
identity  and hold  the "real  Alaskans."   He  then opined  that                                                               
leaders  have a  responsibility  to ensure  that  those in  rural                                                               
areas  have the  ability to  live wherever  they want.   "It's  a                                                               
matter of  us sharing,"  he said.   He further  said that  it's a                                                               
matter of  where the state's  priorities lie rather  than whether                                                               
there's   money  available.     These   individuals  in   smaller                                                               
communities contribute to  the larger communities as  well as the                                                               
state economy.  However, these  smaller communities are too small                                                               
to generate  enough property  tax to  pay for  basic needs.   The                                                               
aforementioned  is why  revenue  sharing is  necessary, he  said.                                                               
"And in  a state with  $37 billion in the  bank and a  $3 billion                                                               
operating budget, we rank either 49th  or 50th ... in how much is                                                               
shared  back,"  he   related.    He  further   related  that  the                                                               
aforementioned is embarrassing to him.                                                                                          
                                                                                                                                
9:43:37 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH pointed  out that  Alaska ranks  last, after                                                               
the distribution  of the permanent  fund, for taxes.   Therefore,                                                               
she opined that the state shares  the wealth and it's a matter of                                                               
perspective.   Still, she  maintained that  [the state]  needs to                                                               
look to provide viable communities in rural Alaska.                                                                             
                                                                                                                                
9:44:23 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  FAIRCLOUGH,  upon determining  no  one  else wished  to                                                               
testify, again closed public testimony.                                                                                         
                                                                                                                                
[HB 202 was held over.]                                                                                                         

Document Name Date/Time Subjects