Legislature(2005 - 2006)CAPITOL 124
03/03/2005 08:00 AM COMMUNITY & REGIONAL AFFAIRS
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* first hearing in first committee of referral
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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 come. 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 Metlakatla. 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 services. 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 closely. 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  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 direction. 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 so. 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 decision. 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 sharing. 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 happen. 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.