Legislature(2005 - 2006)CAPITOL 124

03/03/2005 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 25(CRA) Out of Committee
Heard & Held
Scheduled But Not Heard
Moved CSSSHB 133(CRA) Out of Committee
Bills Previously Heard/Scheduled
HB  49-MUNICIPAL AID GRANTS                                                                                                   
CO-CHAIR THOMAS announced that the  first order of business would                                                               
be HOUSE BILL  NO. 49, "An Act relating to  municipal aid grants;                                                               
and providing for an effective date."                                                                                           
REPRESENTATIVE   NORMAN  ROKEBERG,   Alaska  State   Legislature,                                                               
sponsor, opined  that HB 49 is  the first, small step  in the re-                                                               
institution  of municipal  aid  grants in  the  modest amount  of                                                               
$50,000  to  the  local  governmental  units  around  the  state.                                                               
Representative Rokeberg  related the plight of  local governments                                                               
due to the end of revenue  sharing.  This proposed grant would go                                                               
to all  163 municipalities  in the  state in  order to  avoid any                                                               
allocation problems.   Representative Rokeberg  acknowledged that                                                               
even with  this relatively modest  grant amount, the  fiscal note                                                               
is  significant.    Representative   Rokeberg  opined  that  this                                                               
committee, of  all the committees, should  recognize the problems                                                               
in   Alaska's  small   communities.     Representative   Rokeberg                                                               
concluded by recognizing  Representative Moses long-time advocacy                                                               
for municipal dividends.                                                                                                        
8:11:22 AM                                                                                                                    
REPRESENTATIVE  NEUMAN asked  from where  the $8.1  million would                                                               
REPRESENTATIVE ROKEBERG specified that  the money would come from                                                               
the general  fund (GF).   In  further response  to Representative                                                               
Neuman,  Representative  Rokeberg  informed  the  committee  that                                                               
historically  there  have  been  two  major  programs  that  have                                                               
provided [funds] for small communities.   Although those programs                                                               
remain  in statute,  the funding  for them  has been  zeroed out.                                                               
Representative  Rokeberg highlighted  that he  tried to  make the                                                               
legislation simple and create a simplified grant system.                                                                        
8:12:27 AM                                                                                                                    
REPRESENTATIVE SALMON  questioned why about 66  villages wouldn't                                                               
be included in this municipal aid grant.                                                                                        
REPRESENTATIVE  ROKEBERG pointed  out that  the committee  packet                                                               
includes  a   listing  of  the   163  municipalities   that  have                                                               
incorporated  as  local governments  under  state  statute.   The                                                               
aforementioned is the  method that has been used in  the past and                                                               
in this legislations.                                                                                                           
REPRESENTATIVE SALMON  emphasized the need to  recognize that the                                                               
66 villages are  "under the state law" and should  be entitled to                                                               
this program as  well.  He questioned why these  66 villages have                                                               
to be  left out  just because the  state doesn't  recognize them.                                                               
He stressed the  need to cover the entire state  rather than just                                                               
those [entities] recognized by the state.                                                                                       
REPRESENTATIVE  ROKEBERG  related   his  understanding  that  the                                                               
municipal revenue  sharing programs  and aid in  the past  was in                                                               
place to  encourage the  maximum amount  of local  government and                                                               
local  participation.   In fact,  Article X  of the  Alaska State                                                               
Constitution encourages  local government.   He pointed  out that                                                               
subsection  (c) of  HB 49  indicates  that under  federal law  an                                                               
entity  with  reservation status  would  be  recognized, such  as                                                               
8:15:22 AM                                                                                                                    
REPRESENTATIVE NEUMAN  inquired as  to what these  66 communities                                                               
would have to do to fall under this legislation.                                                                                
REPRESENTATIVE ROKEBERG answered that  these 66 communities would                                                               
have to incorporate at some level to be recognized.                                                                             
8:16:38 AM                                                                                                                    
REPRESENTATIVE  LEDOUX  asked   whether  this  legislation  could                                                               
include  areas  that function  as  municipalities  and provide  a                                                               
certain level of services that  are generally viewed as municipal                                                               
REPRESENTATIVE  ROKEBERG  deferred  to representatives  from  the                                                               
Department  of   Commerce,  Community,  &   Economic  Development                                                               
(DCCED).    However, he  characterized  this  as a  statement  of                                                               
policy.  Moreover, the large  fiscal note illustrates the need to                                                               
determine the progress that can be made.                                                                                        
REPRESENTATIVE   NEUMAN  opined   that  Representative   LeDoux's                                                               
suggestion could be problematic.                                                                                                
8:19:27 AM                                                                                                                    
KEVIN  RITCHIE,  Executive   Director,  Alaska  Municipal  League                                                               
(AML),   highlighted  that   rural  Alaska   is  in   crisis  and                                                               
financially rural Alaska has no  way out.  Furthermore, there are                                                               
significant state financial impacts  beyond the crisis of service                                                               
in  rural Alaska.   He  noted that  [the committee  packet should                                                               
include]  a   number  of   letters  from   municipalities,  which                                                               
highlight  the  problems in  rural  Alaska,  including high  fuel                                                               
costs, high  unemployment, and virtually  no tax base.   Property                                                               
tax is not  a solution for rural Alaska, he  said.  However, most                                                               
communities in rural  Alaska tax themselves.   Although more than                                                               
100 communities have  a sales tax, the sales  tax generated isn't                                                               
enough to fill the gap.                                                                                                         
MR. RITCHIE informed the committee  that 9 of Alaska's 146 cities                                                               
are no  longer functioning.   Furthermore, 17 cities are  in deep                                                               
debt and  39 cities have  terminated key local services,  such as                                                               
police  and road  services.   He further  informed the  committee                                                               
that the insurance for 10 cities  has been canceled over the past                                                               
year and 33  cities are on month-to-month payment  plans.  "These                                                               
communities  cannot afford  to buy  municipal  insurance for  the                                                               
things that they're doing," he  emphasized.  He posed a situation                                                               
in  which a  police  officer is  involved in  an  accident and  a                                                               
citizen is  hurt in a  community with no insurance  and virtually                                                               
no assets.   If  the aforementioned  occurred in  the unorganized                                                               
borough, [DCCED]  and AML believe  that a  jury would look  for a                                                               
"deep  pocket."     Most   of  these   communities  are   in  the                                                               
legislature's unorganized  borough pocket and the  legislature is                                                               
obligated  to provide  services that  it deems  necessary in  the                                                               
unorganized  borough.   Therefore,  the impact  of one  uninsured                                                               
loss could be equal to the cost of HB 49.                                                                                       
MR.  RITCHIE  highlighted the  growing  movement  of people  from                                                               
rural  Alaska to  urban Alaska,  which he  believes is,  in part,                                                               
attributable  to the  lack of  services  [in rural  Alaska].   As                                                               
people  move to  urban areas,  they are  probably moving  without                                                               
jobs and the commerce that creates  about one out of five jobs in                                                               
urban  Alaska   is  going  to   decrease.     The  aforementioned                                                               
illustrates that Alaska is a  large economic network of which the                                                               
villages and communities are an important part.                                                                                 
MR.  RITCHIE  informed the  committee  that  the revenue  sharing                                                               
program has been  in existence since 1969, after  which 84 cities                                                               
organized.   This is the  first year the revenue  sharing program                                                               
hasn't been funded.   He mentioned the  governor's bill providing                                                               
for an interim  program this year.  Mr. Ritchie  related that AML                                                               
will support  any bill helping this  problem.  "A bill  like this                                                               
can  provide a  life  line  to buy  insurance,  to  buy fuel,  to                                                               
provide some level  of support to a ... public  safety officer to                                                               
provide  some road  maintenance.   So, it's  a key  ... need  for                                                               
rural Alaska," he emphasized.                                                                                                   
8:27:48 AM                                                                                                                    
CO-CHAIR OLSON  inquired as to  how many  of the 66  villages are                                                               
participating in AML and its joint insurance program.                                                                           
MR.  RITCHIE specified  that if  the area  isn't a  municipality,                                                               
then  it  can't  participate  in   the  insurance  program.    He                                                               
explained that a goal of  AML's Joint Insurance Association is to                                                               
be able to  allow tribal councils or other  nonprofits within the                                                               
unorganized  borough  to  buy  insurance.    However,  state  law                                                               
restricts membership to municipalities  and school districts.  In                                                               
further response  to Co-Chair Olson  specified that  full members                                                               
of AML are defined as cities or boroughs.                                                                                       
8:28:55 AM                                                                                                                    
REPRESENTATIVE NEUMAN  commented that HB 49  is a good bill.   He                                                               
acknowledged the  need for the legislature  to do what it  can to                                                               
support the  smaller communities, and suggested  working with the                                                               
areas not included  under HB 49.  He encouraged  the committee to                                                               
vote [in favor] of HB 49.                                                                                                       
8:29:26 AM                                                                                                                    
REPRESENTATIVE  SALMON highlighted  that  the federal  government                                                               
recognizes these other 66 villages.   He emphasized that those on                                                               
the tribal  councils strive for the  same things as those  on the                                                               
city   councils.     Therefore,   he  questioned   how  one   can                                                               
differentiate between tribes and  cities because "we're still the                                                               
people."   Representative  Salmon  said that  although he  agrees                                                               
that HB 49 is good for  the communities it includes, he disagrees                                                               
with leaving  out the 66 communities.   Therefore, Representative                                                               
Salmon  requested  that the  committee  review  this matter  more                                                               
8:31:48 AM                                                                                                                    
DAVID  TRANTHAM,  JR.,  Member,  Bethel City  Council;  Board  of                                                               
Directors for Alaska Municipal League  - Region 9, opined that HB
49  is  a   good  start,  although  not  including   all  of  the                                                               
communities in Alaska  seems to be a weakness.   Many of these 66                                                               
communities that  aren't included look to  tribal governments due                                                               
to the lack of revenue sharing.   He highlighted that the cost of                                                               
living  in Western  Alaska communities  is extremely  high.   For                                                               
example, in  Bethel, a gallon  of gas  costs $3.59 and  $2.99 for                                                               
heating fuel.  Moreover, there  is a fuel surcharge on everything                                                               
shipped into  the area.   Mr.  Trantham echoed  earlier testimony                                                               
regarding the  fact that many  communities are trying  to support                                                               
themselves  with a  sales  tax.   For  example,  Bethel  has a  5                                                               
percent sales  tax, a 5 percent  gaming tax, a 5  percent alcohol                                                               
user fee,  and various other taxes  and user fees.   Mr. Trantham                                                               
reiterated  that  HB 49  is  a  good  start,  and said  that  any                                                               
financial support to the [66] communities would be appreciated.                                                                 
8:35:55 AM                                                                                                                    
WILBUR NAPAYONAK,  Mayor, City of Koyuk,  discussed the situation                                                               
in  rural Alaska,  specifically in  Koyuk.   He  opined that  the                                                               
money coming in  is not enough to even function  as a government.                                                               
He said  that the  challenge today,  without revenue  sharing, is                                                               
trying  to pay  the monthly  bills.   Mr. Napayonak  related that                                                               
whether the  government of Koyuk  will continue is  the question.                                                               
Although  Koyuk is  looking  to increase  its  taxes and  utility                                                               
rates, money isn't  coming into the community.   Furthermore, the                                                               
lack of  jobs in the community  contributes to the problem.   Mr.                                                               
Napayonak expressed  interest in Koyuk  becoming self-supporting,                                                               
and  HB 49  is  very  important in  helping  Koyuk  move in  that                                                               
8:40:57 AM                                                                                                                    
CO-CHAIR  THOMAS  questioned whether  there  would  be a  problem                                                               
giving money to  unorganized boroughs if HB 49 was  amended to do                                                               
SALLY  SADDLER,  Legislative  Liaison,  Department  of  Commerce,                                                               
Community,   &   Economic   Development  (DCCED),   related   her                                                               
understanding that currently the language  in HB 49 calls for the                                                               
funding to go  to municipalities.  She said that  she isn't aware                                                               
of any  problem with giving money  to unorganized municipalities.                                                               
She characterized it as a policy call for the legislature.                                                                      
8:42:13 AM                                                                                                                    
BILL  ROLFZEN,   State  Revenue  Sharing   Municipal  Assistance,                                                               
Division   of  Community   Advocacy,   Department  of   Commerce,                                                               
Community,  &   Economic  Development,  responding   to  Co-Chair                                                               
Thomas, said that  there is no problem with  providing funding to                                                               
unorganized communities.   Historically, revenue sharing  and the                                                               
capital   matching    grant   programs   provided    funding   to                                                               
unincorporated  communities.   He  noted that  under the  revenue                                                               
sharing  program,  the  amount  provided  to  the  unincorporated                                                               
communities  wasn't at  the same  level  provided to  [organized]                                                               
city governments.   In further  response to Co-Chair  Thomas, Mr.                                                               
Rolfzen   recalled  that   in  fiscal   year   (FY)  2003,   [the                                                               
unincorporated communities] received  approximately $3,500, which                                                               
was  also  the amount  provided  to  the unincorporated  entities                                                               
under the temporary fiscal relief program in FY 04.                                                                             
8:43:10 AM                                                                                                                    
REPRESENTATIVE NEUMAN  inquired as  to why Talkeetna  and Trapper                                                               
Creek aren't included.                                                                                                          
MR.   ROLFZEN   explained   that   since   1969,   unincorporated                                                               
communities  within organized  boroughs haven't  received funding                                                               
directly from  the state.   It was  a local decision  whether the                                                               
organized  borough chose  to pass  through some  of the  money it                                                               
received to  the unincorporated communities within  the organized                                                               
area.   Historically,  unincorporated communities  outside of  an                                                               
organized borough were funded.  He  surmised that it was a policy                                                               
REPRESENTATIVE   NEUMAN  asked   whether   communities  such   as                                                               
Talkeetna receive any aid from the state at all.                                                                                
MR. ROLFZEN  replied no.   In response to  Representative Cissna,                                                               
Mr.  Rolfzen  specified  that   unincorporated  areas  within  an                                                               
organized  borough,  such  as Talkeetna,  can't  receive  revenue                                                               
8:44:44 AM                                                                                                                    
REPRESENTATIVE  LEDOUX  surmised   that  not  providing  [revenue                                                               
sharing  funds  to an  unincorporated  area  within an  organized                                                               
borough] is  a statutory provision  under current law  that could                                                               
be changed by the legislature.                                                                                                  
MR. ROLFZEN said that's correct.                                                                                                
8:45:12 AM                                                                                                                    
REPRESENTATIVE  NEUMAN inquired  as  to how  [that change]  could                                                               
MR. ROLFZEN  pointed out  that within  organized boroughs  on the                                                               
road  system,  defining  [an unincorporated]  community  and  its                                                               
boundaries is difficult.  For  example, in Juneau, one could make                                                               
the argument  that Douglas is an  unincorporated community within                                                               
a  borough.    Therefore,  if the  definition  of  unincorporated                                                               
community is  provided, the determination  could be made  and the                                                               
community could receive funds.                                                                                                  
8:46:22 AM                                                                                                                    
CO-CHAIR THOMAS announced that HB 49 would be held over.                                                                        
8:46:34 AM                                                                                                                    
REPRESENTATIVE   ROKEBERG  said   he   appreciated  the   debate.                                                               
However,  he  commented that  it  becomes  complex, in  terms  of                                                               
equity, when  one discusses federally recognized  tribal entities                                                               
vis-à-vis unincorporated cities  within boroughs.  Representative                                                               
Rokeberg  cautioned  the  committee  against the  perils  of  the                                                               
"Christmas tree  effect."  He related  his hope that HB  49 would                                                               
pass and be on the governor's desk this year.                                                                                   

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