Legislature(1997 - 1998)

02/05/1997 08:05 AM House CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HB 86 CITIES: PAYMENTS IN LIEU OF TAXES                                     
 Number 2177                                                                   
 CHAIRMAN IVAN, as sponsor, presented HB 86 to the committee.  This            
 legislation would give the Department of Community and Regional               
 Affairs the authority to pass through federal funds to cities in              
 the unorganized borough.  He read the sponsor statement into the              
 House bill 86 establishes the payment in lieu of taxes program                
 within the Department of Community and Regional Affairs for home              
 rule and general law cities located in the unorganized borough                
 within federally designated areas of Alaska.                                  
 The payment in lieu of taxes program or PILT is financed by funds             
 the state will receive annually from the federal government under             
 31 U.S.C. 6901 - 31 U.S.C. 6902, which was passed as part of the              
 Omnibus Parks and Public Lands Management Act of 1996 (P.L. 104-              
 333, sec. 1033).  The particular section (sec. 1033) of this                  
 federal legislation was sponsored by Senator Stevens to allow                 
 cities in the unorganized borough to receive payment.                         
 The main purpose of this bill is to provide a method for the                  
 Department of Community and Regional Affairs to distribute the                
 annual funding and to establish criteria to determine whether a               
 city is eligible to receive payment under the program as intended             
 by federal law.  The amount of money to be distributed to each                
 eligible home rule and general law city in the unorganized borough            
 will be based upon the population of the city as certified by the             
 commissioner of the department for the fiscal year preceding the              
 year in which payment is made to the city.  This bill establishes             
 an annual payment date of November 1 of the state fiscal year.  The           
 money received by the cities from this program may be used for any            
 general propose for which a city is authorized under federal, state           
 or local law.  Finally, the bill is given an immediate effective              
 date in order to meet the first year's application and payment                
 schedule set out in the bill.                                                 
 Number 2330                                                                   
 REPRESENTATIVE SCOTT OGAN asked about the zero fiscal note attached           
 to this legislation and whether or not this was because of the pass           
 through nature of the federal funds.  He also wondered if this was            
 a new program that simply enables this new legislation to allow               
 these communities to receive this money?                                      
 CHAIRMAN IVAN stated that yes, this was the case.                             
 Number 2347                                                                   
 BILL ROLFZEN, State Revenue Sharing, Department of Community and              
 Regional Affairs, testified on HB 86.  He stated that                         
 Representative Ogan was correct, that these are new federal funds             
 which will be coming into the state.  This legislation provides the           
 mechanism for the department.  Once those payments are received,              
 they will be distributed directly to the cities.                              
 Number 2360                                                                   
 REPRESENTATIVE JOE RYAN asked what the administrative fee the                 
 department will charge to handle this fund.                                   
 MR. ROLFZEN stated that there will be no fee which is reflected in            
 the zero fiscal note.                                                         
 REPRESENTATIVE RYAN asked what would happen if these funds stop               
 coming into the state.  Would the state be expected to supplement             
 MR. ROLFZEN stated that no, these are federal funds coming into the           
 state.  The organized boroughs receive their payments directly from           
 the Bureau of Land Management (BLM) at the federal level.  The                
 department will be the liaison, so to speak, to receive the                   
 payments and turn them around to distribute since the department              
 already deals with the municipalities and they have all the systems           
 in place to take the money and distribute it out with a zero fiscal           
 Number 2392                                                                   
 REPRESENTATIVE OGAN noted that there is a sovereignty issue coming            
 up before the state and he asked what happens when a community                
 becomes a sovereign nation?                                                   
 MR. ROLFZEN stated that as eligibility for distribution, there are            
 certain criteria which a community must meet, mainly that they are            
 a functioning municipality organized under state law.  If a                   
 community dissolves its municipal government, they would no longer            
 be eligible.                                                                  
 TAPE 97-4, SIDE B                                                             
 Number 000                                                                    
 REPRESENTATIVE SANDERS asked how this money would be distributed,             
 whether on a per capita basis or per area?                                    
 MR. ROLFZEN stated that at the federal level they determine what              
 the payment for that federal census area is based on a somewhat               
 convoluted formula that incorporates the amount of entitlement                
 federal lands within that area and the population.  Once they do              
 this calculation they send the state a check for that area.  The              
 state then, with this legislation in place, will distribute this              
 funding to each city within that area on a strict per capita basis.           
 Number 034                                                                    
 REPRESENTATIVE OGAN asked if there was any idea of the numbers they           
 were talking about.                                                           
 MR. ROLFZEN said at this time it would be pure speculation, but it            
 will probably be several million dollars, any where between $1                
 million and $5 million.                                                       
 Number 090                                                                    
 KEN WEAVER, Manager, City of Bethel, testified on HB 86.  After               
 examination of the information he had on HB 86 he supports this               
 concept.  It would be especially beneficial in the bush communities           
 and the rural areas, particularly Bethel, which has had a reduction           
 in other revenue sources from the fish tax and sales tax revenue as           
 a result of the reverse multiplying affect from this reduced                  
 revenue.  He did ask whether there would be a population cap on the           
 communities of 5,000 residence or more.                                       
 MR. ROLFZEN stated that there is a population ceiling cap at the              
 federal level when they determine the payment for each federal                
 census area, but as far as a state program the proposed legislation           
 does not include a population ceiling cap, but just a straight per            
 capita base.                                                                  
 Number 168                                                                    
 REPRESENTATIVE SANDERS moved and asked unanimous consent to move HB
 86 out of committee with individual recommendations and                       
 accompanying zero fiscal note.  Hearing no objection, HB 86 was               
 moved out of the House community and Regional Affairs committee.              

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