Legislature(2005 - 2006)CAPITOL 106
05/05/2005 08:00 AM House STATE AFFAIRS
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* first hearing in first committee of referral
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HB 28-MUNICIPAL DIVIDEND PROGRAM 8:05:30 AM CHAIR SEATON announced that the first order of business was HOUSE BILL NO. 28, "An Act relating to the municipal dividend program; and providing for an effective date." 8:05:33 AM REPRESENTATIVE CARL MOSES, Alaska State Legislature, introduced HB 28, as sponsor. He noted that he has sponsored the subject of the bill for many years, and each year it becomes more important for the community. He indicated that communities are closing their doors because of lack of funds, and the proposed bill would give permanent fund earnings to local governments to spend as they see fit. 8:06:37 AM REPRESENTATIVE MOSES offered some examples of approximately how much money various communities could expect to receive: Anchorage, $70 million; Matanuska/Susitna, $20 million; Fairbanks, $20 million; and the rural area of Kenai, $15 million. The smaller municipalities would receive a minimum of $40,000. He stated, "It's so important I can't understand why all members aren't co-sponsors." 8:07:53 AM CHAIR SEATON directed attention to a page [included in the committee packet, entitled, "Alaska Permanent Fund Corporation Bill Analysis - HB 28", which compares current statute versus the proposed legislation's plan to have a municipal dividend.] He observed an escalation from 2005-2015. He asked, "Is that due simply to population growth, if this is at $250 per person, or ... am I missing something that's built in there?" 8:08:33 AM REPRESENTATIVE MOSES answered, "Well, it will fluctuate according to the ... number of recipients in each community." 8:08:45 AM CHAIR SEATON offered his understanding that there would be a minimum of $40,000 per community and $250 per person. He observed that the numbers increase from 2005 to 2015. He clarified, "But I didn't see an inflationary index rating in the bill, and I'm just wondering if I missed it or if that's all calculated on just population increase." 8:09:15 AM REPRESENTATIVE MOSES said, "There's no inflation." 8:09:24 AM REPRESENTATIVE GATTO asked what the justification is for having a $40,000 minimum. 8:09:39 AM REPRESENTATIVE MOSES responded, "It just follows the way that way we have been doing municipal help in the past. We've always had a minimum per community." 8:09:55 AM REPRESENTATIVE GATTO pointed out that the smaller communities would receive more than $250 per person. He asked if there is something inherent about the smallest communities that says, "The smaller you are, the more you need municipal revenue sharing." 8:10:41 AM REPRESENTATIVE MOSES replied that there is a minimum amount necessary to justify incorporating a community, and the $40,000 minimum would encourage communities. 8:11:19 AM REPRESENTATIVE GATTO tried to recall when the committee had last discussed the definition of community. 8:11:37 AM CHAIR SEATON said that was during a hearing on another bill and the definition of community given at that time was that it must include a minimum of 25. 8:12:02 AM REPRESENTATIVE MOSES said he thinks the minimum number necessary to be counted as a community has been 25 for some years. In response to a follow-up question from Chair Seaton, he indicated that it would be acceptable to specify that number in an amendment. 8:12:39 AM REPRESENTATIVE LYNN asked Representative Moses to confirm for the record that the bill would not affect anybody's permanent fund dividend (PFD) at all. 8:13:30 AM REPRESENTATIVE MOSES answered that's correct. 8:14:30 AM KEVIN RITCHIE, Executive Director, Alaska Municipal League (AML), stated that AML has, for quite awhile, supported the proposed legislation. He noted that strong communities are probably more a part of the Alaska State Constitution than any other state's constitution. A number of small communities in rural Alaska have already been lost, while the larger communities are facing significant tax challenges and local taxpayers are being taxed too much. The proposed legislation would allow the state to pass money to communities to use as they will. He indicated that would act as tax relief and would bypass federal government. He offered further details. 8:16:15 AM MR. RITCHIE directed attention to [a three-page, double-sided handout in the committee packet, entitled, "Revenue Sharing Fact Sheet"]. He noted that [pages 2 and 3] show a survey that was conducted by a statewide professional polling organization. He noted that three out of four people surveyed suggested that [revenue sharing] was a good thing to do for both small and large communities. 8:17:13 AM REPRESENTATIVE LYNN referred to three of the categories of those polled, as shown in the survey: conservative, moderate, and progressive. He asked if "progressive" means liberal. 8:17:37 AM MR. RITCHIE responded, "I suspect it was." He explained, "Those were the three choices given people that were responding to that survey, and they chose the one." 8:17:45 AM REPRESENTATIVE GATTO asked what the communities [with the smallest populations] are likely to do with $40,000. 8:18:13 AM MR. RITCHIE responded that if a community is going to be viable, it needs staff, fuel, electricity, and phone service, for example. He said $40,000 is considered a bottom line to cover those basic costs. 8:19:15 AM REPRESENTATIVE GATTO asked if Mr. Ritchie's opinion is that the small communities would use the money for personnel, rather than to build a well or a dock, for example. 8:19:19 AM MR. RITCHIE said he can't answer that. Notwithstanding that, he said it would be fair to say, "Whatever the people needed the most to increase their quality of life, that's probably where the money would go ...." 8:20:05 AM ADAM BERG, Staff to Representative Carl Moses, Alaska State Legislature, testifying on behalf of Representative Moses, sponsor, specified that HB 28 addresses municipalities, not communities. He said there is a definition available from Department of Commerce, Community, & Economic Development (DCCED) of a municipality. Basically, a municipality has the ability to tax itself. In response to a question from Representative Gatto, he said Bill Rolfzen from DCCED could further address the issue of the makeup of a municipality. 8:21:55 AM MR. BERG, in response to a question from Chair Seaton, referred to Section 2 of the bill, which read as follows: *Sec.2. AS 37.13.145 is amended by adding a new subsection to read: (e) After the transfers under (b) and (c) of this section, on June 30 of each year, the corporation shall transfer from the earnings reserve account to the municipal dividend fund established under AS 29.60.800 the amount needed to fund municipal dividends for the next fiscal year, or the balance in the earnings reserve account, whichever is less. MR. BERG confirmed that (b) refers to the dividend program, while (c) refers to inflation proofing. 8:22:35 AM BILL ROLFZEN, Municipal Assistance, National Forest Receipts, Fish Tax, PILT, Juneau Office, Division of Community Advocacy, Department of Commerce, Community, & Economic Development (DCCED), reconfirmed that the bill deals with municipalities only. He said municipalities are incorporated political subdivisions of the state, defined under 29.71.800.13, which he read as follows: A municipality means a political subdivision incorporated under laws of the state that is a home rule or general law city, a home rule or general law borough, or unified municipality. MR. ROLFZEN said there are rigorous standards established under Title 20, Chapter 5, 29.05. For example, a first class city must have at least 400 permanent residents; a second class city must have at least 25 registered voters sign the incorporation petition. 8:23:55 AM REPRESENTATIVE GATTO asked if the term "population" would include every man, woman, and child, and the term "voter" only those who are voters. 8:24:18 AM MR. ROLFZEN responded as follows: For the purposes of an ongoing program, we look at permanent residence of the community, not necessarily voters. My illustration was just how to get to the point of being a city in the first place. 8:24:40 AM CHAIR SEATON closed public testimony. He reviewed the previous testimony heard. 8:25:21 AM REPRESENTATIVE GARDNER said she finds it interesting that the aforementioned survey did not include any question that relates to using permanent fund money. She said she wonders how the answers may or may not have been different had that question been included, given that 83 percent of the people voiced that they did not want the fund touched. 8:25:56 AM REPRESENTATIVE ELKINS moved to report HB 28 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 28 was reported out of the House State Affairs Standing Committee.