Legislature(1993 - 1994)
03/29/1994 08:00 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 393 - UNINCORPORATED COMMUNITY CAP PROJECT GRANT CHAIRMAN VEZEY opened CSHB 393 for discussion. Number 025 KAREN BRAND, STAFF, REPRESENTATIVE CARL MOSES, gave a brief overview of CSHB 393. (REPRESENTATIVE B. DAVIS joined the meeting at 8:03 a.m.) MS. BRAND stated CSHB 393 amends Alaska Statute Chapter 37, which is eligibility requirements to participate in unincorporated community capital matching grants program. Currently, only unincorporated communities that exist outside of boroughs can participate directly in the program. Those located within boroughs participate indirectly by obtaining a small share of municipal moneys the borough has received, if the borough sees fit. MS. BRAND stated CSHB 393 levels the playing field. Those unincorporated communities within boroughs, with 25 or more permanent residents, will be able to participate directly in the program administered by Department of Community & Regional Affairs (DCRA). She noted CSHB 393 would become effective July 1, 1994. MS. BRAND commented when the language for the program was drafted, there was an oversight in recognizing the Mat-Su Borough, Kenai Peninsula Borough and the Lake & Peninsula Borough, which have respectively 3, 5 and 11, unincorporated communities within them. MS. BRAND examined the two amendments adopted by the Community & Regional Affairs Committee. On page 2, the amendment allows borough oversight of the projects the unincorporated communities choose to fund. The second amendment eliminated a qualifier the sponsor had attached to require the community to be outside of the normal road system. She noted CSHB 393 now allowed unincorporated communities with 25 or more residents to become eligible to participate directly in the program. (REPRESENTATIVE G. DAVIS joined the meeting at 8:05 a.m.) CHAIRMAN VEZEY noted REPRESENTATIVE G. DAVIS's arrival. Number 089 REPRESENTATIVE FRAN ULMER inquired why the number 25 was chosen for the minimum number of residents, how many communities of this size could afford to meet the local match requirements and if the program would be justified. MS. BRAND responded that in consulting with the drafter, 25 residents was consistent with the Department of Community & Regional Affairs (DCRA) community population base. Number 113 CHAIRMAN VEZEY clarified the statutes in Chapter 37 which CSHB 393 amends, were just passed in 1993. He reiterated MS. BRANDS comments. He noted if the $25,000 funding unit was maintained, CSHB 393 would add $1.5 million to the appropriation. The addition of nearly 60 communities to the program by CSHB 393 may also substantially reduce the funds received by the communities brought into the program in 1993. He stated CSHB 393 may produce `winners' and `losers.' He questioned what was being corrected. How would the list be different. Number 149 MS. BRAND responded a total of 25 different communities were affected by an oversight of certain boroughs. She noted the Northwest Arctic Borough and the Denali Borough as additional examples. She emphasized the Lake & Peninsula Borough with 11 communities receiving a little over $3,000, was the hardest hit. Other communities usually receive approximately $25,000. MS. BRAND commented the Governor's 1994 capital budget funded the program again for $20 million. She agreed with CHAIRMAN VEZEY's $1.5 million impact; however, they had intended the capital funds would be broken up - half from the municipal and half from the unincorporated section. The breakup of the funds would bring down the $25,000 cap to possibly $23,000-$24,000. The municipal section would also reduce slightly. MS. BRAND addressed CHAIRMAN VEZEY's estimation of 60 communities which would be eligible. She commented 60 communities was a maximum quote and there would not be a final determination until later. DCRA would have to judge which communities would be eligible in some cases. She believed the number of communities would range from 40-60. Number 202 CHAIRMAN VEZEY mentioned 12 communities in the Fairbanks North Star Borough he believed might apply to CSHB 393. He felt the number of eligible communities would grow. MS. BRAND replied it was their intent to focus on more rural, isolated communities. Number 219 CHAIRMAN VEZEY asked if CSHB 393 did that. MS. BRAND affirmed CHAIRMAN VEZEY. The Community & Regional Affairs Committee (CRA) had discussed the issue and decided not to narrow the eligibility in CSHB 393 as much as the original HB 393 had proposed. The road system requirement was thereby eliminated. Number 230 CHAIRMAN VEZEY referred back to AS 29.60.140, which implies if a community was eligible, it still is, and vice versa. He questioned if the wording was actually leveling the playing field. Number 238 REPRESENTATIVE HARLEY OLBERG clarified the intent of CRA was to treat all communities equally that were similarly situated, regardless of whether they were on or off the road system. Number 243 CHAIRMAN VEZEY pointed out the statute stated the community had to be eligible, not that they had to receive aid. He believed Salcha, Ester, Fox, Chatanika, Six Mile Village and Badger Village fit into the description of an unincorporated community under CSHB 393. Number 264 MS. BRAND replied DCRA had provided a list of all potential candidates that might be eligible under CSHB 393. She noted if CSHB 393 were to pass, DCRA would have the authority to make judgments and imply the intent of the legislation. Number 276 CHAIRMAN VEZEY stated he was troubled with the authority given to the DCRA to determine the eligibility of communities. He asked why Moose Creek would not be eligible, and if it was not because of a DCRA decision, he believed CSHB 393 was "loose legislation." He understood the intent of CSHB 393; that being to make communities within boroughs eligible for the community capital matching grant program. MS. BRAND agreed with CHAIRMAN VEZEY on the intent of CSHB 393. Number 290 CHAIRMAN VEZEY clarified those communities within unified municipalities had been eliminated. He noted Anchorage and Juneau. MS. BRAND affirmed CHAIRMAN VEZEY. She stated that qualifier eliminated questionable places such as Douglas, which would technically apply. She noted for several pieces of passed legislation, it is DCRA's job to apply the particular program. Number 306 CHAIRMAN VEZEY stated when a population statistic which is not published by the United States Census Bureau (USCB) is deviated from, the potential chance for litigation arises. He noted the USCB is the only database to withstand all court challenges on the federal level. He questioned if it was good practice to deviate from the USCB statistics. Number 325 MS. BRAND responded when CRA brought up the same issue they found the USCB in very rural parts of Alaska did not have the most reliable population data. Therefore, CSHB 393 leaves DCRA to decide if there is a more accurate form of population data. Number 335 CHAIRMAN VEZEY stated he had received testimony from the Department of Labor which states the 1990 census was the most accurate database ever. He asked if MS. BRAND had heard contrary. Number 340 MS. BRAND answered no, she had not heard that testimony. She commented if DCRA finds the USCB the most reliable source, they will choose it as their source of population data. Number 349 CHAIRMAN VEZEY questioned how the DCRA could prove that they put more effort into establishing a database. Number 361 LAMAR COTTEN, LAKE & PENINSULA (L&P) BOROUGH, commented on CSHB 393. He stated the L&P borough had 17 communities, of which only five are incorporated. He noted the 11 eligible communities are similar to the five incorporated communities in terms of services and powers. He conveyed they should all be treated equally. MR. COTTEN referred to the CRA discussion of whether the borough would have oversight of the moneys in the unincorporated communities. He stated L&P does oversee the moneys and it also has its own capital matching program. To promote economic development, the L&P provides small unincorporated communities with grants; thereby they can seek a larger capital matching grant package. MR. COTTEN stated some individuals suggest CSHB 393 is a disincentive for people to organize their cities, believing the program is a "carrot" for small communities in rural Alaska to organize. He rebutted in many of the communities, however, there is no basis to have a city. Some communities already have an existing entity, such as an IRA council or a nonprofit group, that provides basic services. He commented CSHB 393 is a disincentive to large borough areas to organize as boroughs. He noted a series of unorganized communities which, if organized into a borough, would be ineligible for the program. CSHB 393 would be a policy question for L&P. Number 403 REPRESENTATIVE ULMER related to the differentiation between communities. She then compared the legislature providing money for unincorporated communities in unorganized boroughs to organized boroughs providing money to their own unincorporated communities. She understood communities from unorganized boroughs are worried their communities would have to sacrifice something or have less resources. She inquired which communities have these concerns. She was concerned that incorporated communities will choose to become unincorpoated if additional benefits were offered to unincorporated communities. She emphasized CSHB 393 might be expediting this process. Number 432 MR. COTTEN responded he did not know which communities were considering dissolving their city governments. He noted each community is unique; however, they each probably have other governments (e.g., IRA council, nonprofit organization) which provide the basic services they expect. There is too much emphasis on state subpolitical units as the only legitimate group that can provide the minimal level of services. He agreed that boroughs to provide a broader possible source of funding and they are a positive step. L&P has a raw fish tax, basically an income tax, on the gross ex-vessel value of the fish sold. Number 460 REPRESENTATIVE ULMER commented CSHB 393 impacts a lot of public policy associated with the way development occurs in rural Alaska. She agreed the legislative structure of government was not the only way that makes sense. She questioned the level of responsibility the state should have to fund those communities. She reiterated her concern about the 25 resident quota, believing the smaller the number, the more the state may be acting as an incentive for unsustainable projects. Number 472 MR. COTTEN agreed with REPRESENTATIVE ULMER's point made about the 25 resident quota. REPRESENTATIVE ULMER's statement applied more to unincorporated communities in unorganized boroughs. He noted the regional planning powers in organized boroughs which cannot be transferred to unincorporated communities, thereby forcing them to participate. Technical assistance and matching grants are assured from an organized borough. He pointed out CSHB 393 would be a disincentive for 10 unincorporated communities receiving grants to organize a borough because they would no longer be eligible for the program. Number 491 CHAIRMAN VEZEY asked why Salcha or Moose Creek in the Fairbanks North Star Borough would not be eligible for a grant with CSHB 393. Number 494 MR. COTTEN answered they may be eligible. He did not believe DCRA was trying to "push them away" because they are not traditional rural communities. They may be included because of the new road system provision from CRA. Number 505 CHAIRMAN VEZEY asked what would happen if the threshold of 25 was raised to 100 with respect to L&P. MR. COTTEN responded that in L&P, of the 11 eligible, 4-5 would then be ineligible. He referred back to CHAIRMAN VEZEY's comments about the USCB database from 1990 and noted the effective date of the program was 1995 whereby the database may still show a community as being under 100 in population even if it was not. He stated, boroughs to be in compliance with revenue sharing and municipal assistance do a survey of communities. In the past, communities were mapped out and individuals were identified by name and location. He believed this system was accurate and it cut down on exaggeration. Number 536 CHAIRMAN VEZEY noted billions of dollars are based on population census. He stated the USCB census has always been upheld in court. He expressed concern over future litigation which may arise from DCRA decisions and noted the communities would be public interest litigants, whereby the state would have to pay for it. Number 555 MICHAEL CUSHING, RESEARCH ANALYST, DEPARTMENT OF COMMUNITY & REGIONAL AFFAIRS, answered questions on CSHB 393. He referred back to CHAIRMAN VEZEY's previous questions about Moose Creek and other areas, and stated the communities he had mentioned were included in the list of 60 communities DCRA had proposed. The Fairbanks North Star Borough included Fox, Moose Creek, Pleasant Valley, Salcha and Two Rivers. He noted the DCRA list of 60 communities was the upper limit they believed would be in the program. DCRA assumed the list would be based on their current operating regulations for the revenue sharing program. He mentioned a social unit test. Number 577 CHAIRMAN VEZEY asked for a description of a social unit test. Number 578 MR. CUSHING explained statutes set communities with 25 or more residents as a social unit. A social unit is defined by DCRA in regulations in some detail. The communities cannot be transient or a work place (e.g., logging camp). He stated there are certain tests to establish there is a contiguous social unit that exists for a community, in perpetuity. He noted a community with strict rules as to who could live in the community (e.g., a religious commune) would not meet the social unit test according to DCRA regulations. An autonomous community with basic services would be looked for. He pointed out they sometimes must make calls when dealing with competing entities. He understood there were gray areas in judgment calls; however, it is DCRA's job to establish precedents and the rules. He stated after DCRA works with the 60 communities on the list, he expected 40-50 would ultimately satisfy the social unit test, presuming the social unit test applied to CSHB 393. MR. CUSHING referred to the USCB census as a reliable source, but noted the major problem is that it is only done every 10 years. Alaska grows too rapidly to use a number from 1990. The DCRA has set the census as a floor, then the state demographer in the Department of Labor using a permanent fund analysis, works from there. The new numbers are provided to the communities and they are given the opportunity to appeal them. If the communities find the demographer incorrect, the onus is on them to prove through a local survey that they have grown faster than estimated and their number is larger. He noted in the time he has been with the program they have never been litigated. When communities reach the alternative low levels around 25 residents, which could consist of 4-5 families, regional offices notify DCRA and they dispatch to work with the community and resolve its actual population. Number 653 REPRESENTATIVE ULMER mentioned communities of 25 composed of four families, and asked as a matter of public policy, what it meant when the state offered them $25,000 in matching grants. Could the very small communities sustain the operating and maintenance costs of the facilities. Number 661 MR. CUSHING responded the communities on their list are higher in population - 87, 746, 589, 144, 157, 60, 519, 105. He emphasized the communities they are focusing on are within the 100-500 range. There had been concerns with the original HB 393 because of its narrow restriction to smaller communities; however, CSHB 393 reduces this concern. He proposed some smaller communities may want to build bridges to access more resources or sheds to cover a piece of equipment, thereby better accommodating their area. Inspection is necessary. TAPE 94-39, SIDE B Number 000 REPRESENTATIVE OLBERG commented they should not be too hard on small communities because he could think of a "community of 600,000 that bought a bunch of stuff it can't afford." Number 016 CHAIRMAN VEZEY referred back to census data and stated every Alaskan community increases in the summer and decreases in the winter. USCB data is by law April 1st. He asked if DCRA did a statistical adjustment for the time of year the census is taken. How many resources is DCRA putting into building a database. He recalled the Department of Labor population estimate for Alaska was six-seven percent higher than the USCB results in 1990. Number 041 MR. CUSHING responded USCB admits there is a three-four percent under count in their numbers which they assume is across the playing field. DCRA does not maintain an active database. DCRA places the onus for resources for the demonstration of populations on the communities. He noted larger communities spend thousands of dollars to develop a population figure for planning purposes and the program. DCRA provides guidelines, then monitors their survey and results. In August, DCRA sends out a population determination, on which they have opportunity until November to appeal against. He stated the DCRA has two analysts plus himself, who throughout the fall work with the communities on their census formulas. If they are not satisfied with the communities demonstration, the communities have to send in various certified documentation for verification. Number 096 CHAIRMAN VEZEY asked if CSHB 393 was working for or against the state's overall intended direction; being less involved in the unincorporated borough. He was concerned that CSHB 393 might be encouraging communities to break off from organized boroughs. Number 118 MR. CUSHING responded CSHB 393 is a disincentive to regional government incorporation. Number 123 CHAIRMAN VEZEY stated CSHB 393 was a disincentive to regional incorporations. Number 124 MR. CUSHING corrected CSHB 393 was a disincentive to borough incorporations. Communities tend to lose substantial funds when they join into a borough, whereby the borough only receives a blanket amount. Number 156 CHAIRMAN VEZEY, hearing no more testimony, stated he would like to further examine information from DCRA before action was taken on CSHB 393. CSHB was held in committee. CHAIRMAN VEZEY asked if the everyone in the committee had received the new fiscal note. MS. BRAND commented on the fiscal note. She stated all of the original fiscal notes received on CSHB 393 were zero. She pointed out the analysis for the new fiscal note and explained DCRA had been unclear as to the planned action of House and Senate Finance Committees, whether or not the grants administrators were to be cut back. If they were cut back, DCRA would need to restore one of the positions. Current staff, however, can handle the additional workload made by CSHB 393. She noted House Finance has already closed out DCRA and they did not cut any grants administrators, therefore the new fiscal note would not apply. Senate Finance is still closing out the DCRA operating budget. She stated, upon speaking with Senate Finance staff, they do not intend to cut back the grants administrators. Number 213 CHAIRMAN VEZEY clarified DCRA would request the additional staff to administer grants. Number 215 MS. BRAND added if the grant administrators were cut back on their present staff by either finance committee. She noted neither committee had done so yet. She was hesitant to order a new fiscal note because the Senate was not yet done with their DCRA budget.
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