Legislature(1997 - 1998)
02/05/1997 08:05 AM House CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 record. 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 them? 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 note. 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.