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
+ teleconferenced
= bill was previously heard/scheduled
Moved Out of Committee
Moved HCS SB 172(STA) Out of Committee
Moved CSHB 176(STA) Out of Committee
Heard & Held
Moved HCS SB 132(STA) Out of Committee
Bills Previously Heard/Scheduled
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                                                               
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                                                               
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                                                               
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.                                                                                         

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