Legislature(1999 - 2000)
03/28/2000 08:07 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 137-MUNICIPAL DIVIDEND PROGRAM Number 0089 CHAIR JAMES announced the first order of business is HOUSE BILL NO. 137, "An Act relating to the municipal dividend program; and providing for an effective date." REPRESENTATIVE MOSES said that had the legislature done this bill when he first introduced it several years ago it would have eliminated the initiative [property tax cap] the state now has before it. He explained that he believes that HB 137 is a proper use for permanent fund (PF) surplus earnings and it is a good bill. He noted that there are many things that the legislature can do with HB 137 down the line to take things out of budget. He commented that the state does many things in communities that no other state does and he could even envision doing an education program through it. He hoped that the committee can move HB 137 out today. Number 0182 CHAIR JAMES indicated that in 1995, the legislature had appointed some of Alaska's brightest folks to a long-term task force to try to figure out how to balance the budget over the long term. The task force had put together a very determined study and had come back with a recommended solution which the legislature promptly threw in the trash. In retrospect, it seems to her that the legislature would have been a lot better off if it had been a little bit more attentive to that particular plan and would not have boxed itself in regarding so many areas today. She emphasized that the legislature has a huge job ahead. The way she sees HB 137 operating, if it were to pass, is that no matter what long-term plan the legislature may establish, HB 137 would continue to work as long as there is a PF. She recognized that HB 137 could work with any other plan that might go forward. Number 0337 REPRESENTATIVE MOSES said he agreed with Chair James' assessment of HB 137 and also agreed that the legislature should have paid more attention to the long-term task force study. CHAIR JAMES observed that sometimes the legislature is "too soon old and too late smart" and even lets public opinion get in the way. Public opinion is extremely important, but legislators as leaders have a responsibility. KEVIN RITCHIE, Executive Director, Alaska Municipal League (AML), said AML held its legislative conference last week and filled the room with folks who were extremely enthusiastic about the HB 137 concept. The reason they were enthusiastic is because HB 137 is a first step toward a long-range financial plan. He explained that he does not believe that there is anybody that does not think there needs to be some new source of revenue in state budget to make it work. He noted that the AML folks were excited about HB 137 because it actually shows Alaskans that PF earnings can be used in a way that is acceptable to people and benefits the public. Number 0501 MR. RITCHIE commented that essentially the plan would distribute an average of $125 per Alaskan in benefits, which could either be increased service in police, fire, road maintenance or tax offset. Over the past ten years, the biggest pressure on raising property taxes in municipal governments has been cutbacks in revenue sharing from $140 million down to this year's level of $28 million in the House budget. When $110 million is cut per year out of municipal revenues, it does affect taxes, it has to and it has. He agreed that HB 137 would stop pressure to raise property taxes, thus stabilizing property taxes, and AML thinks the public would appreciate it. At the same time, the public can tie the use of PF earnings directly to services that they think are the most important which are fire, police, and roads. He emphasized that AML thinks that HB 137 is something that the public is going to think is a good idea and AML folks are going back to communities to talk about it. He remarked that AML very much hopes HB 137 moves on to the Finance Committee so that it can be discussed in greater detail. Number 0603 MARY GRISWOLD testified via teleconference from Homer and read her testimony as follows: I am opposed to HB 137 because although I support an increase to municipal assistance, it should be funded through the general fund after evaluation against other spending priorities and available revenue. I am also opposed to this bill because it promotes the current PF earnings distribution calculation. The general fund should receive a portion of PF earnings based on an annual payout of 5% of the PF's market value similar to provisions of HB 411. Number 0652 CHAIR JAMES promised she would write an e-mail message to Ms. Griswold in response to Ms. Griswold's concerns. Number 0701 REPRESENTATIVE HUDSON said he believed that once HB 137 gets into the Finance Committee, it could be coordinated and consolidated with the principles of HB 411. He noted that HB 137 and HB 411 do not have to be mutually at odds with each other, rather the two could easily be put together. Representative Moses has recognized in HB 137 that the public has indicated by the September 14, 1999 vote that they want to know where the money is being spent, and HB 137 tells them exactly where it is being spent. He commented that HB 137 tells exactly where the money is coming from, and he does not believe that on a long-term basis HB 137 will have any major effect on the dividends. The legislature has to have both a state and municipal long-term plan because they are both serving the same constituents. He indicated that HB 137 is the first step in marrying some sort of common plan between local and state government. He emphasized that it can all be done in a manner that does not adversely impact the concepts which will be explained in HB 411. Number 0889 REPRESENTATIVE KERTTULA moved Amendment 1, 1-LS0591\K.1, Cook, 3/24/00, which read: Page 5, line 12, following "dividends': Insert "appropriated and" Page 13, line 26, following "section": Insert "and subject to appropriation" Page 13, lines 30 and 31" Delete all material and insert: "permanent fund dividends paid by the Department of Revenue for the calendar year immediately preceding the year the transfer is made under this subsection; or" Page 14, line 1, following "account": Insert "on the date of the transfer under this subsection" CHAIR JAMES asked whether there was any objection. There being none, Amendment 1 was adopted. She said Amendment 1 is a result of the conversation the committee had with Jim Baldwin at the committee's last meeting. She noted that according to Tam Cook, who is a drafter of legislation, the amendment was not imperative to make HB 137 constitutionally correct, but Ms. Cook's amendment does make HB 137 clearer in that appropriations are an important part of this issue, and the committee is not trying to violate legislative constitutional mandate regarding appropriations. She explained that Amendment 1 is clean-up language to make absolutely sure that the money is appropriated from PF earnings into the municipal dividend. She mentioned that Amendment 1 also made it perfectly clear that dividends issued in the previous year are being counted for this year in order to figure HB 137. Number 0991 REPRESENTATIVE OGAN stated that he objects to Amendment 1 because legislators are constantly doing "sleights of hand" in the budget, and Amendment 1 is another sleight of hand. He reiterated that HB 137 is written as a dedicated fund, and Amendment 1 simply says HB 137 is not a dedicated fund. He said that he believes that in spirit HB 137 is a dedicated fund and though Amendment 1 might make HB 137 technically correct, he objects to the amendment. CHAIR JAMES replied that she was surprised because HB 137 is exactly the same thing that is done with the PFD. She asked Representative Ogan if he called the PFD a dedicated fund. REPRESENTATIVE OGAN answered that he did not know if the PFD is the same thing as HB 137. He said he needed to see the language. CHAIR JAMES asked Representative Ogan if he thought the PFD was an appropriation. She noted that there is statutory delineation as to how the dividend is calculated, but the legislature appropriates the money; if they do not, they are in trouble. She explained that HB 137 is no more a violation of dedicated funds than the PFD itself because it is exactly the same thing. She commented that HB 137 is a municipal dividend while the PFD is a personal dividend, and no one can dislike one without disliking the other. Number 1057 REPRESENTATIVE OGAN replied that he would not have an objection but he has not looked at the language in the PF. He said he is sure that Chair James is correct, and there are other funds that are treated in the same manner. Nevertheless, he would prefer to process HB 137 on a year-by-year appropriation basis through legislative vote rather than do HB 137 by some kind of formula. Number 1064 CHAIR JAMES said that HB 137 sets the formula, but that does not necessarily mean folks are going to get it if it is not appropriated, so it is still in the hands of the legislature. She noted that HB 137 is only a mechanism to tell people at home that the legislature is taking some of the PF earnings and sending them back home to the people to help them with their local needs, such as police, fire, emergency medical services (EMS) and roads. She sees it as the legislature allocating $125 for every dividend that is sent out, which means that everybody is getting a dividend plus $125, and the $125 goes to offset some of the taxes or makes living at home much more comfortable. Number 1127 A roll call vote was taken. Representatives Green, Hudson, Kerttula, Smalley, Whitaker, and James voted for the amendment. Representative Ogan voted against it. Therefore, Amendment 1 passed by a vote of 6-1. CHAIR JAMES commented that she might just send a proposed CS (which has not been presented to the committee) along with a separate memo to the Finance Committee. Her proposed CS simply creates the [municipal] dividend pool of money and distributes it under the existing municipal assistance and revenue sharing plan. She prefers HB 137 because she thinks HB 137 does encourage folks who do not perform community services to start doing it. She emphasized that money will be available to small communities to provide services as outlined in HB 137, and she feels very strongly about these particular issues. Every municipality ought to be concerned about these issues, and she would like to help them to develop concern since the issues are basic. She reminded the committee that issues outlined in HB 137 are basic issues for having any government in the first place and that all should share in the cost for police, fire, EMS and roads. Number 1359 REPRESENTATIVE SMALLEY made a motion to move CSHB 137, version 1- LS0591\K, Cook, 3/15/00, as amended, out of committee with the attached fiscal note. REPRESENTATIVE OGAN said he objected to the proposed CS because on September 14, 1999 the voters overwhelmingly sent a message and that message was reaffirmed by his trip to his district convention last weekend. At his district convention, he heard that the legislature should not do anything with the PF until back-to-basics government is achieved, and the PF is protected. He explained that HB 137 is "the cart before the horse." He noted that Chair James seems to be willing to put forth many different plans that use the PF or taxes, but he cannot get a hearing on constitutional protection for the dividend. He has requested a hearing for his bill a number of times, and she has not consented to hear it. Without some discussion of constitutional protection for the dividend and the mind set of this committee to just put problem bills in Finance Committee, then his bill should be sent to the Finance Committee too. He reiterated that he objects to the proposed CS because it is formula funding of different community projects, and he thinks it more appropriate to make those decisions on a yearly basis based on need and through public process rather than based on formulas. He objected to the proposed CS in the strongest terms. Number 1502 CHAIR JAMES asked Representative Ogan if next Tuesday was okay to hear his constitutional amendment. REPRESENTATIVE OGAN replied that next Tuesday would be wonderful. He said he would remove his objection and write "do not pass" on the bill sign sheet. There being no objection, CSHB 137(STA) moved from the House State Affairs Standing Committee.
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