02/23/1993 09:02 AM Senate CRA

  CHAIRMAN PHILLIPS brought SB 88 (CAPITAL PROJECT GRANTS) and                 
  SB 89 (APPROP:  CAPITAL PROJECT MATCHING GRANTS)  before the                 
  committee as the next order of business.                                     
                                                                               
  JACK FARGNOLI,  Senior Policy Analyst,  Office of Management                 
  and Budget, presented a brief recap  on the provisions of SB
, which is a high priority of Governor Hickel.                             
                                                                               
  The  Governor has proposed in the appropriation bill, SB 89,                 
  a  total  of $67  million  for  funding,  which,  under  the                 
  provisions of the  appropriation bill, would be  split $65.3                 
  million   for   municipalities    and   $1.7   million   for                 
  unincorporated communities.   Under both of  those programs,                 
  there would  be matching  grant provisions  that are  broken                 
  down by the  sizes  of  the communities involved, such  that                 
  each time a  grant or  part of  a grant was  drawn from  the                 
  communities  accounts that will  be created, the communities                 
  would be  responsible for  putting up  a match.   The  match                 
  could be in dollars or it could be in-kind.                                  
                                                                               
  Mr.  Fargnoli  said the  primary  intent in  introducing the                 
  legislation is to help encourage  and maximize the influence                 
  of the  local communities  themselves in the  identification                 
  and prioritization of  their projects.   The Governor  would                 
  propose those projects in  their same priority order  in his                 
  capital budget  each year, subject  to the  total amount  of                 
  appropriations available,  and then transmit  those projects                 
                                                                               
                                                                               
  as  part  of his  capital  budget  to  the  legislature  for                 
  consideration.  A  separate provision  of the bill  provides                 
  that if he  for any reason  departs from the priority  order                 
  that is identified by local  communities themselves, then he                 
  would explain  in writing to the legislature his reasons for                 
  doing so.                                                                    
                                                                               
  Mr. Fargnoli reiterated that it is the Governor's sense that                 
  this is important  both for the  process is creates and  the                 
  attention is gives to local priorities.                                      
                                                                               
  Mr. Fargnoli related  that Shelby  Stastny, Director of  the                 
  Office of Management  and Budget, was  unable to attend  the                 
  hearing because he was in a meeting with Governor Hickel.                    
                                                                               
  Number 270                                                                   
                                                                               
  SENATOR  TAYLOR referred  to page  11,  lines 3  through 11,                 
  which relates to  the local share  percentage.  He said  the                 
  population in  Wrangell is  very similar  to Barrow  and the                 
  North Slope Borough.  One  mill in Wrangell generates  about                 
  $75,000 total, whereas one mill in the North Slope generates                 
  several  million.   He said  the percentile is  based merely                 
  upon population and  totally disregards the tax  base of the                 
  community and its ability to pay.  He then suggested putting                 
  this on a mill equivalency basis.  JACK FARGNOLI said in the                 
  earlier  versions  of the  bill that  were  in the  last two                 
  sessions, there was  a rather elaborate  set of formulas  to                 
  deal with the  fiscal capacity of the  different communities                 
  just  to capture those  kinds of differences.   The decision                 
  was made this year that the desirability of simplifying  the                 
  bill  for purposes  of  ease of  understanding  and ease  of                 
  administration would outweigh those concerns.   The bill was                 
  changed to a  flat three-tiered structure, grouping  them by                 
  population, knowing  that in some cases there would be those                 
  kind of discrepancies.  He added that Senator Taylor's point                 
  was well taken and he had no reason to disagree with it.                     
                                                                               
  Number 325                                                                   
                                                                               
  SENATOR HALFORD commented that  any time we try to  classify                 
  by   some   arbitrary   standard,  we   run   the   risk  of                 
  discriminating unfairly.   He asked  if they had  considered                 
  using  the same  match  percentage across  the state.   JACK                 
  FARGNOLI acknowledged that they had, and their conversations                 
  indicated pretty strongly that then  you wouldn't be dealing                 
  simply with  the polarities  between the  extreme cases,  so                 
  they departed from that rather early.   SENATOR HALFORD said                 
  if he were  to support the bill,  he thinks equity is  a far                 
  better way to  simplify it.   He suggested it should  simply                 
  say that the match initially is 10 percent  and the match at                 
  the second tier is 20 percent, and leave the provisions that                 
  do provide some kind of cost  of living differential and who                 
  is  eligible  for  a  match  in  the bill.    JACK  FARGNOLI                 
                                                                               
                                                                               
  responded that he thought they would be willing to make that                 
  change.                                                                      
                                                                               
  Number 345                                                                   
                                                                               
  CHAIRMAN RANDY  PHILLIPS  stated  that  he  was  considering                 
  offering an amendment that  would limit the projects  for $1                 
  million to a  community.   It limits that  community or  the                 
  non-organized  area, or the organization that is doing it to                 
  10 percent  for administrative  costs.   JACK FARGNOLI  said                 
  that they wouldn't have a problem with that change.                          
                                                                               
  Number 360                                                                   
                                                                               
  SENATOR TAYLOR  suggested that  within the percentiles  that                 
  there be some significant readjustments and that it be based                 
  on a  mill equivalency basis,  or perhaps  a combination  of                 
  population and mill  equivalency.  He  also said he was  not                 
  willing to accept  the Department of Community  and Regional                 
  Affairs' formula.                                                            
                                                                               
  SENATOR HALFORD said  that if  we're trying to  find a  real                 
  formula that reflects ability to pay, then it has to be mill                 
  rate per capita.                                                             
                                                                               
  Number 387                                                                   
                                                                               
  CHAIRMAN RANDY PHILLIPS stated SB 88 and SB 89 would be back                 
  before the committee at the Thursday, February 25 meeting.                   
                                                                               
  There  being  no   further  business  to  come   before  the                 
  committee, the meeting was adjourned at 9:30 a.m.