Legislature(2013 - 2014)CAPITOL 106
02/10/2014 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| HB245 | |
| HB278|| HB291 | |
| HB245 | |
| HB278|| HB291 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 291 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 245 | TELECONFERENCED | |
| += | HB 278 | TELECONFERENCED | |
HB 245-SCHOOL FUNDING: REQ'D LOCAL CONTRIBUTION
8:05:03 AM
CHAIR GATTIS announced that the first order of business would be
HOUSE BILL NO. 245, "An Act repealing the required local
contribution to school funding; making conforming changes; and
providing for an effective date."
8:07:09 AM
REPRESENTATIVE SEATON asked for clarity regarding the mandatory
borough act and whether it was written as part of the
constitution or as state statute. He pointed out that change is
often made to state statute but the Constitution of Alaska is
handled differently.
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, speaking
as the prime sponsor of HB 245, said the act was signed by
Governor William (Bill) Egan. She opined that if the
legislature wants to see more areas become organized, the body
should understand that this act serves as a penalty to areas
considering such action. Using Nenana as an example, she
reported on attending local borough organizational meetings and
how focus was placed on the immediate imposition of a 2.6
required mil to fund education. The area schools currently
outside of the organized Nenana city limits are state funded
without a requirement of local contribution. The reason for
areas to organize is to receive services that are not provided
by the state.
8:09:41 AM
REPRESENTATIVE P. WILSON related having experienced similar
concerns in the communities on Prince of Wales Island, and said
the mandate for school funding presents a stumbling block.
Agreeing that changes need to be considered, she said the
subject is multi-faceted, and inquired about limiting the bill
to only one aspect.
REPRESENTATIVE T. WILSON said the scope of the bill was
intentionally limited in order to provide focus.
8:12:15 AM
REPRESENTATIVE SEATON offered that the state is required to
generate school funding, and suggested that an alternative could
be to impose a statewide property tax. He pointed out that the
current mechanism was devised by the state to meet education
funding requirements through taxing areas with an economic base
and a means for tax collection. He asked whether the proposed
legislation was drafted taking that effort into consideration,
and what is contained in HB 245 that would be clearly different
from existing practices.
REPRESENTATIVE T. WILSON clarified that the basic needs formula
was derived by the state, and opined that whether it is adequate
is arguable. She suggested that a statewide tax could be
helpful in serving to remove the penalty that organized areas
are experiencing. Impact aid does enter the equation, but does
not apply to all areas. Equality needs to be brought to bear,
and that is the intent of HB 245, she finished.
REPRESENTATIVE SEATON asked whether the sponsor would agree with
having a state property tax imposed, and if the disagreement is
with the current system.
REPRESENTATIVE T. WILSON expressed support for imposing a
statewide, equal tax based on income levels or property holdings
and deferred to legal for further comment.
8:17:52 AM
REPRESENTATIVE DRUMMOND said, "The governor is the mayor, and
the legislature is the assembly," of an unorganized borough and
a system of educational must be provided. Some people choose to
live in organized boroughs and enjoy the benefits and
conveniences. These residents pay taxes in those jurisdictions
in order to support the local services. "If we don't want to be
the legislature of the unorganized borough, then what are we
doing here," she finished.
REPRESENTATIVE T. WILSON underscored that local borough taxes
are collected to support extra services for the organized areas.
The boundary commission report indicates that these discussions
will be occurring throughout small communities, such as are on
Prince of Wales Island, who are looking at becoming organized
cities so as not to be incorporated into boroughs.
REPRESENTATIVE DRUMMOND said HB 245 could alter local versus
state authority for schools.
REPRESENTATIVE T. WILSON said whether an area collects local
contributions for schools or not does not affect the authority
and responsibilities governing education that are already in
place. She maintained that HB 245 addresses a promise that was
made under the mandatory borough act. Summarizing the intent of
the act, she said, "If you become an organized area, the state
will continue to give you the same services that they were
before hand."
8:21:33 AM
REPRESENTATIVE LEDOUX referred to Ketchikan Gateway Borough v.
State of Alaska, Case No. 1KE-14-16 CI (2014), and commented on
the legalities for allowing the regional educational attendance
areas (REAA's) the ability to completely opt out of
contributions, while mandating that an organized borough always
contribute. Distinctions can be made between entities without
violating constitutional law, as long as a rational relationship
exists. Some of the unorganized boroughs have a substantial
resource base, while some of the organized boroughs are
struggling. She pointed out that this represents the heart of
the Ketchikan lawsuit - an equal protection challenge not a
matter of what the state may have appeared to promise at one
time.
8:23:41 AM
LES MORSE, Deputy Commissioner, Department of Education and
Early Development (EED), offered to take questions, and
introduced support staff available to address aspects of HB 245.
8:24:18 AM
REBECCA HATTAN, Assistant Attorney General, Labor and State
Affairs Section, Department of Law (DOL), referred to Matanuska-
Susitna Borough School Dist. v. State of Alaska, 3PA-86-2022 CI,
(1997), and said the decision of the Alaska Supreme Court on
this case lends significant weight to the issues the committee
is considering. The allegations revolved around the disparate
treatment of REAAs versus the municipal school districts,
charging that this violated the equal protection rights of both
the borough and the individual tax payers. The court decided in
favor of the state, finding that the required local contribution
was a reasonable way of dealing with the reality that REAAs are
unable to levy property taxes. Although Ketchikan has not
indicated agreement with the 1997 finding, the decision presides
and the southeast borough case does not attempt to claim equal
protection violation.
8:26:10 AM
REPRESENTATIVE P. WILSON noted that two REAAs have a tax base,
and asked whether the 1997 decision implies liability for those
areas.
MS. HATTAN said the decision did not address the issue of
resource availability but rather the legal ability to levy
taxes, which is not a lawful function of REAAs.
8:27:27 AM
REPRESENTATIVE REINBOLD asked if it is equal protection when
some areas are required to pay and some aren't.
MS. HATTAN responded that two plaintiff classes were addressed
in the decision. The first part of the case was the
municipality as plaintiff and it was decided that suit could not
be brought by a municipality against the state on the grounds of
equal protection. She paraphrased from the decision, which
read:
The purpose of the Alaska due process and protection
clauses is to protect people from abuses of government
not to protect political subdivisions of the state
from action of other units of government.
MS. HATTAN said the decision then turned to the plaintiff's
rights of freedom from disparate taxation. The court fixed the
plaintiff rights at the low end of the equal protection spectrum
and the only burden on the state was to prove that there was a
rational basis between the means employed and the ends sought.
The court determined that the test had been met by the state.
REPRESENTATIVE REINBOLD noted that the mandatory borough act was
initially required in certain areas, and asked what the current
path is for communities to follow in order to organize and avoid
the described dis-incentives.
MS. HATTAN deferred.
8:31:05 AM
REPRESENTATIVE LEDOUX referred to the Matanuska-Susitna case,
and noted that the state did not determine which areas were
struggling and left it to the legislature to decide resource
availability and any subsequent borough mandates.
MS. HATTAN said hearings on the case, originally filed in 1987,
occurred over the course of several years. Plaintiffs claimed
no rational distinction between REAA and municipality
contribution requirements. The case was not decided until 1997,
which allowed an extended time for presentation of arguments.
She noted that the Alaska Supreme Court sat as appellate to the
Alaska Superior Court, taking all arguments under review. To a
follow-up question, she said, the nature and economic viability
of different areas of the state underwent ample exploration in
this case.
8:33:08 AM
REPRESENTATIVE SEATON asked whether any past legal suits would
prohibit the assessment of a state wide, education property tax.
MS. HATTAN said not to her knowledge.
8:35:27 AM
REPRESENTATIVE REINBOLD moved to report HB 245 out of committee
with individual recommendations and the accompanying fiscal
notes.
8:35:33 AM
REPRESENTATIVE SEATON objected, and said that the state has a
rational system for generating funds for schools via local
taxation. By eliminating the current system, a statewide tax
would need to be imposed and for the state to take that step
could prove cost prohibitive. The state established system
appears to be working well. Requiring the generation of a
statewide tax would be cost prohibitive and possibly create
issues. Additionally, many property tax exemptions can be
claimed and the amount generated may result in a shortfall in
many areas. Although HB 245 attempts to equalize educational
support across the state, he opined that it may prove to be a
detriment, if implemented.
8:37:54 AM
REPRESENTATIVE DRUMMOND commented that confusion could be
created by the passage of HB 245.
8:38:30 AM
REPRESENTATIVE LEDOUX said it would be helpful if the bill had a
referral to the House Judiciary Standing Committee.
8:38:52 AM
CHAIR GATTIS agreed, and commented that a cost could arise, and
that the bill represents a pivotal piece of legislation.
The committee took an at-ease from 8:38 a.m. to 8:39 a.m.
8:39:56 AM
REPRESENTATIVE SEATON withdrew his objection.
REPRESENTATIVE REINBOLD withdrew her motion.
8:41:04 AM
REPRESENTATIVE P. WILSON concurred that referral to the House
Judiciary Standing Committee would be helpful.
8:41:17 AM
REPRESENTATIVE T. WILSON agreed to approach leadership about
including a House Judiciary Standing Committee referral for HB
245. However, the municipal tax as a penalty, outlined in the
bill, has been discussed in previous legislatures, she reminded.
CHAIR GATTIS announced that HB 245 would be held over.
[The committee later returned its attention to HB 245.]
HB 245-SCHOOL FUNDING: REQ'D LOCAL CONTRIBUTION
8:53:43 AM
CHAIR GATTIS returned the committee's attention to HOUSE BILL
NO. 245, "An Act repealing the required local contribution to
school funding; making conforming changes; and providing for an
effective date."
CHAIR GATTIS related her understanding that the bill sponsor has
worked out the mechanics for the bill to be referred the House
Judiciary Standing Committee.
REPRESENTATIVE REINBOLD moved to report HB 245 out of committee
with individual recommendations and the accompanying fiscal
notes. Without objection, HB 245 was reported from the House
Education Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Molly Hunter Article.pdf |
HEDC 2/10/2014 8:00:00 AM |
HB 245 |
| HB278 Testimony - Patricia Young.pdf |
HEDC 2/10/2014 8:00:00 AM |
HB 278 |