Legislature(2005 - 2006)CAPITOL 124


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved Out of Committee
Moved CSHB 371(CRA) Out of Committee
HB 371-COMMUNITY DIVIDEND PROGRAM                                                                                             
CO-CHAIR OLSON announced  that the final order  of business would                                                               
be HOUSE BILL  NO. 371, "An Act relating to  a community dividend                                                               
program; and providing for an effective date."                                                                                  
CO-CHAIR THOMAS moved to adopt  the proposed committee substitute                                                               
(CS)  for  HB  371,  Version 24-GH2063/G,  Cook,  1/28/06,  as  a                                                               
working  document.   There  being  no  objection, Version  G  was                                                               
before the committee.                                                                                                           
8:11:42 AM                                                                                                                    
SALLY  SADDLER,  Legislative  Liaison,  Department  of  Commerce,                                                               
Community  and   Economic  Development,   said  HB  371   is  the                                                               
Governor's bill to  establish a community dividend  program.  She                                                               
said  there  are  13  revenue  sharing  bills  currently  in  the                                                               
legislature, and  the administration welcomes the  opportunity to                                                               
work with  the legislature to craft  one.  She noted  that HB 371                                                               
calls for  establishing a community dividend  program funded with                                                               
a reliable  sustainable source: an  estimated $27.6  million from                                                               
the annual earnings of the Alaska  Capital Income Fund.  The bill                                                               
calls for base  grants to all cities and boroughs  under a three-                                                               
tier process.                                                                                                                   
MS. SADDLER said that $10  million would be distributed to cities                                                               
and boroughs  based on  their size.   Cities  with less  than 100                                                               
residents  would   receive  $25,000;  cities  with   100  to  249                                                               
residents would  receive $30,000;  cities with  250-500 residents                                                               
would receive $35,000; cities with  more that 500 residents would                                                               
receive $40,000;  and all  boroughs would  receive $50,000.   The                                                               
balance of  the $10 million  would be  allocated on a  per capita                                                               
MS. SADDLER  said the second part  of HB 371 calls  for financial                                                               
incentives  for  borough organization.    It  would increase  the                                                               
incorporation grants to areas that  organize into boroughs.  That                                                               
would consist of  $1 million for each of the  first two years and                                                               
$0.5 million in  the third year, which would be  an increase from                                                               
current financial  incentives of $300,000, $200,000  and $100,000                                                               
for each of the  first the three years.  She  said the third part                                                               
of the bill distributes the  remaining funds, which she estimated                                                               
at $16.6  million, to organized  boroughs on a per  capita basis.                                                               
The community dividend payments could  be used for public safety,                                                               
infrastructure, maintenance, education and fuel, she concluded.                                                                 
8:14:26 AM                                                                                                                    
REPRESENTATIVE  SALMON  asked   if  unincorporated  villages  are                                                               
8:14:48 AM                                                                                                                    
MS. SADDLER said they are not.                                                                                                  
8:14:51 AM                                                                                                                    
CO-CHAIR THOMAS  said that the  committee substitute  (CS) before                                                               
the  committee includes  those  villages.   He  opined that  "oil                                                               
money belongs  to the people  whether they are  unincorporated or                                                               
8:15:12 AM                                                                                                                    
REPRESENTATIVE NEUMAN said the  Matanuska-Susitna Borough and the                                                               
Municipality of Anchorage  will use a community  dividend for the                                                               
relief  of property  taxes, and  he asked  if the  bill could  be                                                               
amended to allow dividends to be used that way.                                                                                 
MS. SADDLER said the committee has the ability to do that.                                                                      
8:16:23 AM                                                                                                                    
KACI SCHROEDER  HOTCH, Staff to Representative  Bill Thomas, said                                                               
the  CS  allows  unincorporated communities  to  receive  grants,                                                               
including Metlakatla, which  is a reserve.   Another change would                                                               
give  $25,000 to each community,  and a community is defined as a                                                               
place in  the unorganized  borough that  is not  incorporated and                                                               
has 25 or more individuals residing  as a social unit.  She noted                                                               
that  that definition  has  been used  in  other revenue  sharing                                                               
8:17:45 AM                                                                                                                    
REPRESENTATIVE LEDOUX  said she  has a  number of  communities in                                                               
her  district that  are  in  the organized  borough  but are  not                                                               
cities.  "It  seems  like  my  communities  are  being  penalized                                                               
because they happen to be in a borough."                                                                                        
8:18:27 AM                                                                                                                    
MS. HOTCH said that might have  been an oversight, and it was not                                                               
the intent.                                                                                                                     
8:18:45 AM                                                                                                                    
REPRESENTATIVE NEUMAN asked what a reserve is.                                                                                  
MS. HOTCH explained that Metlakatla is an Indian reservation.                                                                   
REPRESENTATIVE NEUMAN asked if an  unorganized city would qualify                                                               
for this program under the CS.                                                                                                  
MS. HOTCH said that is correct.                                                                                                 
REPRESENTATIVE NEUMAN  offered Conceptual Amendment 1  that would                                                               
allow municipalities to  use the dividend money  for property tax                                                               
Hearing no objection, Conceptual Amendment 1 passed.                                                                            
8:19:57 AM                                                                                                                    
REPRESENTATIVE LEDOUX  offered Conceptual Amendment 2  to include                                                               
communities in organized boroughs.                                                                                              
Hearing no objection, Conceptual Amendment 2 passed.                                                                            
8:20:41 AM                                                                                                                    
KEVIN RITCHIE, Executive Director,  Alaska Municipal League, said                                                               
the  bill is  key for  all communities.   He  provided editorials                                                               
from the Voice  of the Times and the Daily  News, saying it shows                                                               
broad support for  the concept.  He noted that  the priorities of                                                               
the  Alaska  Municipal  League  are  in  a  document  before  the                                                               
committee.   He  said that  to provide  substantial property  tax                                                               
relief, "you'll  probably need something  closer to what  we have                                                               
in our  priority list, which is  about $75 million, so  this is a                                                               
very good base.  Obviously there are other  thoughts about adding                                                               
funding to it to have a  very sustainable program, which not only                                                               
helps small  communities, but also provides  substantial property                                                               
tax relief."                                                                                                                    
8:22:20 AM                                                                                                                    
CO-CHAIR THOMAS said  all the bills will come  together, and "the                                                               
idea is that  we continue to move the ideas  forward, and then we                                                               
will see what happens."                                                                                                         
REPRESENTATIVE  CISSNA asked  for a  side-by-side comparison  for                                                               
all the bills.                                                                                                                  
MR. RITCHIE said the Alaska Municipal League has one.                                                                           
REPRESENTATIVE NEUMAN asked about  Conceptual Amendment 2 that he                                                               
said  adds communities  in unorganized  areas of  the state.   He                                                               
expressed concern  that there  is a finite  amount of  funds that                                                               
would be  diluted "by adding  all the small communities  that are                                                               
population 25 persons or greater."   He said he believes that the                                                               
committee just added hundreds more communities around the state.                                                                
8:24:47 AM                                                                                                                    
CO-CHAIR  OLSON  said  Conceptual  Amendment  2  just  refers  to                                                               
communities within  the organized boroughs,  but it will  add new                                                               
MR. RITCHIE said he thinks that  "under the old program there are                                                               
about 75  unincorporated communities receiving  assistance under-                                                               
this is in the  CS that you put on the table-so  that would be 75                                                               
times  $25,000,  and   then  I  don't  have  a   number  for  the                                                               
unorganized communities within boroughs."                                                                                       
8:25:41 AM                                                                                                                    
BILL  ROLFZEN,  Municipal  Assistance,  Department  of  Commerce,                                                               
Community,  &  Economic  Development,  said,  depending  how  one                                                               
defines  them, there  are 75  to "well  over" 100  unincorporated                                                               
communities  within organized  boroughs.   He noted  that the  CS                                                               
will add about 75 communities within the unorganized boroughs.                                                                  
CO-CHAIR  OLSON  asked how  the  small  communities were  handled                                                               
three years ago in municipal assistance.                                                                                        
MR. ROLFZEN  said, "Historically only  unincorporated communities                                                               
within the  unorganized boroughs  received funding  directly from                                                               
the state through  revenue sharing or capital  matching grants or                                                               
other such programs."                                                                                                           
REPRESENTATIVE CISSNA  asked how  many communities  were included                                                               
before the CS.                                                                                                                  
MR.  ROLFZEN said  about 163  incorporated  cities and  boroughs,                                                               
plus Metlakatla.                                                                                                                
8:27:23 AM                                                                                                                    
MR.   ROLFZEN   said   the    qualification   language   for   an                                                               
unincorporated community to receive the  money is similar to that                                                               
in  statute  for paying  Metlakatla  under  the safe  communities                                                               
program, "and it's different from  the language we used under the                                                               
old revenue  sharing program to pay  unincorporated communities."                                                               
He said with the CS the  Native village councils across the state                                                               
in  unincorporated  communities  will   have  to  form  community                                                               
development  corporations and  hold  annual  elections, which  is                                                               
significantly different  than the  way they  were treated  in the                                                               
past.   He  said  the  CS uses  language  that  "was specific  to                                                               
Metlakatla  in the  old  programs, not  broadly  against all  the                                                               
unincorporated communities."   He added that,  "we used different                                                               
language when we  paid the Native village  councils and nonprofit                                                               
community associations across the  state under the unincorporated                                                               
community aid  program under capital matching  grants and revenue                                                               
CO-CHAIR THOMAS said, "We tried  to be consistent...and still try                                                               
to  pick up  some of  the smaller  villages."   He said  everyone                                                               
deserves to  share in the oil  revenues.  He added  that somebody                                                               
is going to take this language and "meld it all anyway."                                                                        
8:29:45 AM                                                                                                                    
REPRESENTATIVE SALMON asked if it  would help to add the previous                                                               
MR. ROLFZEN said  that was correct.  A slight  amendment would be                                                               
appropriate to pay Metlakatla through  this program, "and then if                                                               
you added one more section  that mirrored the old revenue sharing                                                               
unincorporated community,  that would cover  all the other  75 to                                                               
potentially 100 unincorporated  [communities] with Native village                                                               
councils.  So they would not have to adopt a charter and so on."                                                                
8:30:34 AM                                                                                                                    
REPRESENTATIVE  SALMON  asked  about  making  the  aforementioned                                                               
language Conceptual Amendment 3.                                                                                                
There were no  objections, so Conceptual Amendment  3 was treated                                                               
as moved and passed.                                                                                                            
8:30:48 AM                                                                                                                    
WAYNE STEVENS, President, Alaska  State Chamber of Commerce, said                                                               
one  of the  top six  priorities for  the chamber  is sustainable                                                               
community dividends  that use an  endowment management  method in                                                               
order to  provide tax  relief to businesses  and families  and to                                                               
assist in  providing basic services.   He added that  the chamber                                                               
supports the concepts and urges passage of HB 371.                                                                              
8:32:27 AM                                                                                                                    
MS.  SADDLER  said   part  of  the  spirit   of  this  [original]                                                               
legislation  is  to  provide  financial  incentives  for  borough                                                               
formation and  to protect those  communities that have  taken the                                                               
responsibility to organize.  She  said some of the unincorporated                                                               
communities  are  not organized  in  a  way  that can  make  them                                                               
accountable  for  receiving  money.   An  administrative  borough                                                               
would provide  that accountability and help  insure a sustainable                                                               
approach, she stated.                                                                                                           
8:33:41 AM                                                                                                                    
CO-CHAIR THOMAS  said he spent  all summer on  the administrative                                                               
borough  government  and there  is  an  incentive package  in  it                                                               
already.  He stated that  the governor's bill would conflict with                                                               
that,  and  added   that  oil  money  belongs   to  all  Alaskans                                                               
regardless  of  political  affiliation.   The  governor  did  not                                                               
participate in  the process, and  "doesn't know the lack  of land                                                               
for many of the regions, and $1  million don't get it."  He noted                                                               
that there is  already an incentive bill in  the legislature, and                                                               
he thinks it is confusing to  put incentives in a revenue sharing                                                               
bill.   "I  think that  we should  be concentrating  on community                                                               
dividends equally,  and let the  administrative bill...try  to go                                                               
forward," he concluded.                                                                                                         
8:35:58 AM                                                                                                                    
REPRESENTATIVE CISSNA  asked Co-Chair Thomas if  he envisions the                                                               
dividend to be  similar to the Permanent Fund  Dividend for every                                                               
man, woman and child-only for communities.                                                                                      
CO-CHAIR  THOMAS said  yes,  and that  he worked  on  a bill  for                                                               
incentives this summer.   He stated that oil  revenue and Amerada                                                               
Hess money  belong to everybody.   He said if the  PFD excluded a                                                               
political faction,  it would  be wrong.   He  said, "We  have not                                                               
introduced  the administrative  borough on  this side  because we                                                               
want to see what it looks like on  the Senate side.  If they take                                                               
the  incentives out,  then we  won't introduce  the bill  on this                                                               
side.  There  is  no  reason  to go  forward  with  formation  of                                                               
boroughs unless there's an incentive,  and it all revolves around                                                               
the land."   He said  some boroughs  have 300,000 acres  of land,                                                               
and the Petersburg/Wrangell borough has  2100 acres, "so there is                                                               
no way they  can sustain a government."  He  said the Glacier Bay                                                               
borough has  321 acres, and  "we've gutted pretty much  the primo                                                               
land in Southeast"  with the university taking all the  land.  He                                                               
said, "Once  people understand the  incentive bill, which  is the                                                               
administrative borough bill, they will  see what we are trying to                                                               
8:39:16 AM                                                                                                                    
REPRESENTATIVE  NEUMAN  said  the  money in  this  bill  is  from                                                               
Amerada Hess money, not from the permanent fund.                                                                                
8:39:48 AM                                                                                                                    
REPRESENTATIVE LEDOUX said she supports the bill as amended.                                                                    
REPRESENTATIVE  NEUMAN moved  to  report the  proposed CSHB  371,                                                               
Version 24-GH2063/G, Cook, 1/28/06,  as amended, out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes. There being  no objection, CSHB 371(CRA)  was reported out                                                               
of committee.                                                                                                                   

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