Legislature(2001 - 2002)
02/14/2001 01:43 PM House FIN
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* first hearing in first committee of referral
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HOUSE BILL NO. 16
"An Act relating to cities incorporated under state law
that are home rule communities."
REPRESENTATIVE FRED DYSON, sponsor, spoke in support of the
legislation. House Bill 16 is similar to HB 255, which
passed the House 37 to 0 in the previous year. He explained
that the legislation failed to pass the Senate Finance
Committee, due to concerns regarding local school support.
He maintained that the bill would facilitate and empower
local communities to organize and encourage self-
determination. It suspends disincentives and extends the
capacity of communities to write their own charter or
municipal Constitution. Communities could pick and chose
responsibilities. Currently, communities that want to become
a second class city must first organized as a first class
city and then make the move toward second class status. The
legislation would eliminate this process.
Representative Whitaker noted that he was a co-sponsor on HB
255. He reiterated that home rule communities under the
legislation would not be required to tax. He questioned if
communities are required to provide any services under the
legislation.
TAMARA COOK, DIRECTOR, LEGISLATIVE LEGAL AND RESEARCH
SERVICES, LEGISLATIVE AFFAIRS AGENCY provided information on
the legislation. She explained that communities would not
have any obligations. Home rule communities would be treated
similarly to current second-class cities, which do not have
a taxing requirement. Home rule communities would have the
same tax limitation that applies to second-class cities.
Their ability to tax would be limited to 2 percent of the
assessed property value.
Representative Dyson reiterated that home rule communities
would be able to write their own charters.
Vice-Chair Bunde clarified that they would not be required
to tax, but would be allowed to tax if they wanted to
provide support for their schools. Ms. Cook noted that home
rule communities cannot be a school district. If a second-
class city or home rule community is located within a
borough the borough itself is the school district. If they
are outside of a borough they would be part of a Rural
Education Attendance Area (REAA). The legislation would not
change their status as a REAA. They would not have the power
to provide education. The statutes are specific as to what
forms a school district. A home rule community cannot become
a school district. A municipality that raises tax revenues
must use the power to tax as it is authorized. A second-
class borough is a school district.
Co-Chair Williams noted that there are many types of
government. Ms. Cook agreed and noted that there are seven
forms of government. Co-Chair Williams questioned what the
bill would offer that the current forms do not.
Representative Dyson responded that the legislation would
allow local governments to write their own charter. This
privilege is current given to boroughs and first class
cities, but not to second-class cities.
Representative Hudson questioned how the legislation affects
the taxing authority. Ms. Cook noted that section 18 on page
6 inserts existing law that currently applies to second-
class cities. This addresses property taxation. A second-
class city has the ability to levy a property tax, not to
exceed 2 percent of assessed value. Home rule communities
would be given the same taxing authority.
Representative Hudson asked how the joint services agreement
would be established. Ms. Cook responded that home rule
communities would be subject to the same rules as any group
of people that try to organized a form of government. They
must go through the Local Boundary Commission. A petition to
organize must be submitted and must include a charter to be
voted on. The Local Boundary Commission must approve or
reject the petition. The Local Boundary Commission could
also elect to modify the petition. The Local Boundary
Commission determines if it meets the standards and is in
the best interest of the state of Alaska. Representative
Dyson surmised that areas would organize to their best
advantage. He stressed that the legislation would delete
disincentives.
Representative Hudson questioned if the legislation would
affect tribal/state relations. Representative Dyson noted
that the legislation was written before the state/tribal
question became an issue. He was hopeful that the
legislation would have a positive effect on the issue.
Co-Chair Mulder referred to section 18 and questioned why
second-class cities were limited to 2 percent of the
assessed value of local property taxes. Ms. Cook noted that
second-class cities have been restricted to the 2 percent
limit since before 1985. She observed that it is a policy
decision.
Representative Lancaster referred to section 19(3). He asked
why a population of less than 750 was chosen. He also
questioned if the legislation would affect revenue sharing
and municipal assistance.
Ms. Cook explained that revenue sharing and municipal
assistance is generally available to all classes of
municipalities. Unincorporated communities also qualify for
some benefits. If an unincorporated area organized under the
legislation it would probably find itself eligible for a set
of state benefits that it currently is not qualified for,
however it would be disqualified for other benefits. She
noted that the provision in section 19(3) is in existing
law.
Representative Croft concluded that the legislation asks if
second-class cities should be allowed to write a charter.
Vice-Chair Bunde noted that fish traps are considered
property. In response to a question by Vice-Chair Bunde, Ms.
Cook clarified that the vote would be among the residents of
the area that is petitioning to organize.
Representative Dyson clarified that the legislation would
affect about 75 or 80 communities.
GLENN MARUNDE, TOK spoke in support of HB 16. He stressed
that it could be a stepping-stone to a more sophisticated
form of government.
JOHN PEARSON, ECONOMIC DEVELOPMENT PLANNER, HYDER spoke in
support of HB 16. He noted that 13 or 14 communities in
Southeast Alaska would be affected and thought that 3 of
these would take advantage of the legislation. He pointed
out that Hyder is the only true border town in Alaska. Hyder
currently has no form of government, but there is an active
community association that oversees activities that would
normally be under government. The Hyder Community
Association operates a library, oversees snow removal,
operates a visitor center and museum during the summer and
applies for various grants as a non-profit organization. The
community receives funding from the Department of
Transportation and Public Facilities for snow removal. Hyder
also receives funding for space leased for the school and
forest service office. Hyder has an aggressive planning
process. A bottled water processing plant will open in the
next month.
Representative John Davies asked why Hyder did not
incorporate under second-class city provision. Mr. Pearson
explained that Hyder's population has been unstable.
Stability in the community has brought a change of
attitudes. Representative John Davies noted that the
legislation allows the writing of a charter. He asked what
would be left out of a charter that would be required of a
second-class city. Mr. Pearson noted that there is fear over
taking on the responsibility for education, police and
platting (platting would not be required). The legislation
would allow Hyder to pursue other funding programs and
bonding. This could allow a joint effort for projects such
as the inter island ferry.
Representative Hudson noted that Hyder is providing a lot of
services without the ability to raise income. He noted that
the legislation would allow the assessment of property
taxes. Mr. Pearson noted that there are few jobs in the
community. Revenues from the bottling plant would be used to
better the life of those in Hyder.
(TAPE CHANGE, HFC 01 - 26, SIDE 2)
Co-Chair Mulder stated that he thought that the tax levee in
section 18 should be raised to a more reasonable level, but
did not want to lessen the legislation's chances for
passage.
Representative John Davies asked what requirements for
forming a second-class city would prevent organization.
Representative Dyson emphasized that the legislation would
allow small communities to chose a form of government that
reflects their historic and cultural way of doing business.
Most disincentives have been financial.
Representative Harris clarified that boroughs and home rule
cities have a 3 percent or 30 mil cap level. He suggested
that the cap could be changed to 3 percent.
Representative Dyson added that a full-blown audit would not
be required.
Representative Foster MOVED to report SSHB 16 out of
Committee with the accompanying fiscal note
CSSSHB 16 (CRA) was REPORTED out of Committee with a "do
pass" recommendation and with fiscal impact note by the
Department of Law, dated 2/07/01.
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