Legislature(1993 - 1994)
03/04/1993 01:00 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE March 4, 1993 1:00 p.m. MEMBERS PRESENT Representative Jerry Sanders, Vice-Chairman Representative Con Bunde Representative John Davies Representative Cynthia Toohey Representative Ed Willis Representative Bill Williams MEMBERS ABSENT Representative Harley Olberg, Chairman COMMITTEE CALENDAR *HB 124: "An Act relating to grants to municipalities, named recipients, and unincorporated communities; establishing capital project matching grant programs for municipalities and unincorporated communities; establishing a local share requirement for capital project grants to municipalities, named recipients, and unincorporated communities; and providing for an effective date." HELD IN COMMITTEE FOR FURTHER CONSIDERATION *HB 125: "An Act making appropriations for capital project matching grant programs; and providing for an effective date." HELD IN COMMITTEE FOR FURTHER CONSIDERATION (* first public hearing) WITNESS REGISTER Shelby Stastny, Director Office of Management and Budget Office of the Governor P.O. Box 110020 Juneau, AK 99811-0020 Phone: 465-3568 POSITION STATEMENT: Supported HB 124 & HB 125 Jack Fargnoli, Policy Analyst Office of Management and Budget Office of the Governor P.O. Box 110020 Juneau, AK 99811-0020 Phone: 465-3568 POSITION STATEMENT: Responded to questions related to HB 124 and HB 125 Jim Kohler, Executive Director 124 West 5th Street Juneau, AK 99801 Phone: 463-3445 POSITION STATEMENT: Asked questions related to HB 124 and HB 125 Bruce Geraghty, Deputy Commissioner Department of Community and Regional Affairs (DCRA) P.O. Box 112100 Juneau, AK 99811 Phone: 465-4700 POSITION STATEMENT: Rendered information of the DCRA's fiscal notes of HB 124 PREVIOUS ACTION BILL: HB 124 SHORT TITLE: CAPITAL PROJECT GRANTS BILL VERSION: SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR TITLE: "An Act relating to grants to municipalities, named recipients, and unincorporated communities; establishing capital project matching grant programs for municipalities and unincorporated communities; establishing a local share requirement for capital project grants to municipalities, named recipients, and unincorporated communities; and providing for an effective date." JRN-DATE JRN-PG ACTION 02/03/93 216 (H) READ THE FIRST TIME/REFERRAL(S) 02/03/93 216 (H) CRA, STATE AFFAIRS, FINANCE 02/03/93 216 (H) -3 FNS (CRA, CRA, ADM) 2/3/93 02/03/93 216 (H) -3 ZERO FNS (DCED, DEC, LABOR) 2/3/93 02/03/93 216 (H) GOVERNOR'S TRANSMITTAL LETTER 03/04/93 (H) CRA AT 01:00 PM CAPITOL 124 BILL: HB 125 SHORT TITLE: APPROP: CAPITAL PROJECT MATCHING GRANTS BILL VERSION: SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR TITLE: "An Act making appropriations for capital project matching grant programs; and providing for an effective date." JRN-DATE JRN-PG ACTION 02/03/93 218 (H) READ THE FIRST TIME/REFERRAL(S) 02/03/93 218 (H) CRA, STATE AFFAIRS, FINANCE 02/03/93 218 (H) GOVERNOR'S TRANSMITTAL LETTER 03/04/93 (H) CRA AT 01:00 PM CAPITOL 124 ACTION NARRATIVE TAPE 93-10, SIDE A Number 000 VICE-CHAIRMAN JERRY SANDERS called the meeting to order at 1:10 p.m. He noted for the record that Representatives Bunde, Williams and Willis were present. HB 124: CAPITAL PROJECT GRANTS HB 125: APPROP: CAPITAL PROJECT MATCHING GRANTS Number 035 SHELBY STASTNY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, testified on both HB 124 and HB 125. He began, "HB 124, being the governor's capital matching grants program, a program that the governor is extremely interested in and feels is an equitable way to allocate some of the capital dollars throughout the State of Alaska. The governor for some time now has been concerned that... usually that capital money is allocated to the communities through their representatives to the communities that have the most able representation. ...And it isn't always the projects that the local people necessarily are in favor of." MR. STASTNY continued, "Another concern that he (the governor) had was that many times, the money for projects is 100 percent granted to a community and whenever there's 100 percent granted to a community, it isn't necessarily a project that they had to buy into... In order to solve both of these problems, the governor suggested that we have a program that attempts to equitably allocate, across the state, some portion of the capital budget. ...Small communities, their population counts two for one...there are some medium size communities whose population counts one and a half to one and the larger communities are one to one. So there's a little bit of skewing in the allocation." MR. STASTNY said, "The other thing we attempted to do then was put a match in, that when a community is allocated money, they have that money available for projects, but they have to come up with some share of the project...and this is a sliding scale as to how much they have to come up with...based on a community's ability to come up with a match. The bill (HB 124) that you see before you, is a bill that's simpler than the prior bills. In last year's (1992) bill we had what some people said was a pretty complex formula that calculated ability to pay." Number 155 MR. STASTNY continued, "Another thing that the bill (HB 124) does is it allows communities to accumulate their allocation for five years. So if 150,000 dollars is allocated to a community and that's not large enough to do the project they want to do, in effect they have a savings account of 150,000 that they can keep in the "bank" and if there's another appropriation next year then they can continue to keep that for a period of five years and utilize the money when they have the match." MR. STASTNY also stated, "There was some concern that a lot of smaller communities didn't have the cash available for match and so we tried to make it as liberal as possible that a community can come up with land, they can use sweat equity, whatever way they can come up with the match." Number 177 REPRESENTATIVE CYNTHIA TOOHEY asked if, in the case of Lime Village, native lands could be matched for a sewer project. MR. STASTNY said Lime Village would generally be allocated $25,000 under HB 124 which would only cover small projects. Number 199 REPRESENTATIVE BILL WILLIAMS ensured that lands matched would not be from Native corporations. MR. STASTNY concurred and said, "The way the formula works Anchorage, for example, would get a significant part because it is based pretty much on population. This year the appropriation bill (HB 125) that you have is $67 million dollars... (but) no community gets less than $25,000... It's not for big projects obviously in the smaller communities." Number 233 REPRESENTATIVE TOOHEY asked if the communities receiving money would have to use union labor. MR. STASTNY said, "Whatever the community can do, I'm not really familiar with all those rules..." Number 245 REPRESENTATIVE CON BUNDE said, "There may be some problems with the Little Davis-Bacon Act." JACK FARGNOLI, POLICY ANALYST, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, responded, "According to the Department of Labor, the communities will not run into any problems with Little Davis-Bacon." VICE-CHAIRMAN SANDERS referred to a letter sent to Senator Randy Phillips from Mayor Tom Fink of Anchorage supporting the Senate companion bills to HB 124 and HB 125, SB 88 and SB 89. (A copy of this letter may be found in the House Community and Regional Affairs Committee Room, Capitol #110, and after the adjournment of the second session of the 18th Alaska State Legislature, in the Legislative Reference Library.) Number 276 JIM KOHLER, EXECUTIVE DIRECTOR, SOUTHEAST CONFERENCE, testified, "I'm not here to speak really in support or against this particular bill (HB 124), but rather I bring with me a couple of questions that I have been asked over the last few weeks by members of our organization... Is the degree to which the dollars that it would be appropriated to the execution of this particular program, to what degree that other dollars are available for projects, be they larger projects or perhaps be they projects that go beyond a single municipality, they may be regional in nature, etc., are accessible in what a lot of municipalities feel is a traditional approach, that is through your legislature, trying to access the dollars. ...To what degree do these dollars usurp perhaps, the dollars that traditionally representatives and senators try to pass down into their districts from a larger capital pot, basically." MR. KOHLER continued, "Secondly, is their the availability either through this program or through other capital appropriation activities that will allow a matching grant project but of a regional nature?" Number 330 REPRESENTATIVE TOOHEY asked for an example of a state project that has not benefited a specific municipality. Mr. KOHLER gave a hypothetical example. Number 375 REPRESENTATIVE BUNDE said, "Capital budgets, like other budgets, are finite budgets and if we take this amount out there will be that much less available for these other projects that you address and I don't see anything coming down the pike that will be available for regional (projects). I think that would require strong cooperation among the various cities, villages of the region." MR. KOHLER explained he was trying "to make sure that municipalities have a clarification as to what is accessible under what circumstances, and where to invest their energies for different types of projects." Number 392 MR. FARGNOLI clarified saying, "This is not designed for regional projects...(but) if they do wish to use these grants, even though they are intended for smaller projects...they are unfettered...we intentionally did not try to clutter up that pathway to prohibit them from forming associative relations on joint projects." REPRESENTATIVE JOHN DAVIES asked, "What's the intent here? What is this new approach in allocating capital funds trying to fix? Why do we need to do this?" Number 436 MR. FARGNOLI said, "The governor's trying to do three things basically with the bill (HB 124). He's trying to increase, enhance, or improve the ability of local communities to select the projects they feel are most important... Second reason he wanted to give this the priority that he has, is to leverage state dollars in terms of limited capital to make state capital grant dollars go further. ...Third reason...was to help by establishing a sense of local ownership, to have that be an effective screening devise so they would result in better projects... These kinds of grants tend to be treated as the discretionary capital grants that get usually allocated at the very end of session, and it's in everyone's interest to have that process be as little chaotic as possible." Number 467 REPRESENTATIVE DAVIES described the current process for funding capital projects. "(HB 124) imposes another administrative level in between the local community and the representatives who openly allocate the funds... We add another administrative hoop to jump through rather than making it a process that somehow gets the people's choice allocated more clearly." MR. FARGNOLI responded, "I agree with you in that respect. The process is certainly on the executive branch side fairly chaotic. ...We'll have fewer dollars to give to these kinds of projects over the next decade or whatever. In the past, a lot of projects had been funded with very little forethought at the local level or the state level, to be candid about it. So we think there is some improvement there, certainly on our side in helping the governor establish what his selections or decision would be, vis-a- vis, the governor's economic development strategies or community infrastructure development strategies." Number 511 REPRESENTATIVE BUNDE asked if Bruce Geraghty, the DCRA's Deputy Commissioner, would elaborate on the DCRA fiscal note. BRUCE GERAGHTY, DEPUTY COMMISSIONER, DCRA, said, "When the governor first proposed this, of course, the department had the resources with which to not have to deal with fiscal notes. I believe last year's fiscal notes were zero to very insignificant. Due to budget cuts last year and loss of some people we've had to submit a fiscal note with regard to travel and doing the normal monitoring that we do with regard to grant projects, the internal accounting and the administrative section." REPRESENTATIVE BUNDE asked for details on the travel budget. MR. GERAGHTY indicated it was for follow-up and "if they run into problems with the project and they need to amend..." Number 556 REPRESENTATIVE ED WILLIS asked if Vice-Chairman Sanders intended to move HB 124 and HB 125 out of committee today. REPRESENTATIVE SANDERS said, "No, we're just going to take testimony." REPRESENTATIVE WILLIS asked if there was a Municipal League representative present to testify. VICE-CHAIR SANDERS said the Municipal League representative was out of town "that's why he sent" the letter the members have in their packets. (A copy of this letter may be found in the House Community and Regional Affairs Committee Room, Capitol #110, and after the adjournment of the second session of the 18th Alaska State Legislature, in the Legislative Reference Library.) ADJOURNMENT Number 567 VICE-CHAIR SANDERS adjourned the meeting at 1:42 p.m.