03/01/1994 09:05 AM Senate CRA

 SENATOR RANDY PHILLIPS brought  SB 291  (BOROUGH INCORPORATION &              
 ANNEXATION) before the committee as the next order of business.               
                                                                               
 Number 315                                                                    
                                                                               
 DAN BOCKHORST, Staff to the Local Boundary Commission, Department             
 of Community & Regional Affairs, testified via teleconference from            
 Anchorage.  He referred to a letter from the department expressing            
 any technical concerns it has regarding SB 291, and he said their             
 comments are not intended to express either support or opposition             
 to SB 291.                                                                    
                                                                               
 Mr. Bockhorst referred to Section 2(b) and said it is presumed that           
 other members of the committee [e.g., the chair of the Local                  
 Boundary Commission, who is not appointed under Sec (a)(3) - (7)]             
 are also entitled to per diem and travel expenses.  Also, Section             
 3 requires the Local Boundary Commission to conduct a boundary                
 study, and he pointed out that the Local Boundary Commission                  
 completed a "model borough study" of the unorganized borough in               
 1992.  Section 4(d) provides that if a borough incorporation is               
 disapproved, the commission may submit the proposal for                       
 incorporation to the First Session of the Eighteenth Alaska State             
 Legislature, and it is presumed it should read the First Session of           
 the Twentieth Alaska State Legislature.                                       
                                                                               
 Mr. Bockhorst noted that CSSB 164(JUD) would allow an                         
 unincorporated region to form a unified municipality, and he                  
 suggested that if that bill becomes law, it would be ideal to                 
 accommodate that option in SB 291.                                            
                                                                               
 Number 400                                                                    
                                                                               
 SENATOR TAYLOR referred to Section 4(a) which speaks to an election           
 in each region and area to determine whether the voters desire                
 borough incorporation or annexation, and he asked who would vote in           
 that election.  DAN BOCKHORST responded that only the voters                  
 residing in the area proposed for annexation would vote on the                
 issue.  SENATOR TAYLOR then expressed his concern that if an                  
 annexation is disapproved by the voters, the commission can then              
 submit the proposal for annexation to the Legislature.  He is                 
 concerned that this is an encroachment of state and local                     
 government over a lot of people in the state who would probably               
 just as soon not have that benefit available to them.                         
                                                                               
 Number 460                                                                    
                                                                               
 MIKE WALLERI, General Counsel, Tanana Chiefs Conference, said the             
 issue of borough organization has been a contentious issue for some           
 time.  They have conducted several studies on it, with the last one           
 be done in 1989.  The policy within the region has generally been             
 to oppose mandatory borough formation because they believe that               
 local government is something that should come from the people.               
 There is a dissolution movement of local  governments as the                  
 viability with local governments, with the decline of transfer                
 payments in particular, in rural Alaska is actually gaining a                 
 momentum.                                                                     
                                                                               
 Mr. Walleri said the major concerns should be:  is if the                     
 government is needed; and does it perform a useful function.                  
                                                                               
 Speaking to specific concerns with SB 291, Mr. Walleri suggested              
 the deletion of Section 4(d), which relates to the proposal for               
 incorporation being submitted to the Legislature.  There is also              
 concern with the representation on the committee on municipalities            
 in that it opens it up to a constitutional challenge because only             
 three of the seven members represent interests from the unorganized           
 borough.  He suggested it should be changed to reflect maximum                
 participation by unorganized borough residents.                               
                                                                               
 Mr. Walleri said the exact boundaries of a borough are critical in            
 determining the financial viability.  The viability, in terms of              
 long term and short term, vary depending upon the relative transfer           
 of payments available to the borough.  He suggested local                     
 government should be based upon the ability of an area to                     
 economically support a government rather than the State of Alaska             
 providing transfer payments in order for them to exist.                       
                                                                               
 Number 565                                                                    
                                                                               
 SENATOR RANDY PHILLIPS inquired as to the status of the Yukon Flats           
 Borough.  MIKE WALLERI responded that the Tanana Chiefs report in             
 1989 recommended against the organization of the Yukon Flats                  
 Borough, primarily because it would represent a net loss of                   
 revenues.  It would be totally supported by transfer payments from            
 the State of Alaska.  The organization of that particular borough             
 is not financially viable, especially with the proposed reduction             
 of transfer payments from the federal and state government.                   
                                                                               
 SENATOR PHILLIPS said he assumed then that the Tanana Chiefs                  
 wouldn't mind the North Star Borough annexing a portion of that               
 pipeline.  MIKE WALLERI answered that they would probably still be            
 opposed to that.                                                              
                                                                               
 TAPE 94-18, SIDE B                                                            
 Number 001                                                                    
                                                                               
 SENATOR ZHAROFF suggested the following change to Section 4,                  
 subsection (d) on page 3:  On line 18 change "may" to "shall" and             
 change "disapproved" to "approved;" and on line 20 delete "not" and           
 change "disapproved" to "approved."  He explained that by making              
 the change, rather than leaving it as a final decision of no                  
 action, the Legislature then has to take an action in order for               
 this to go through.  There would then be another step of                      
 "bureaucracy" to affirm that the borough formation should take                
 place.                                                                        
                                                                               
 Number 025                                                                    
                                                                               
 ALEXIS MILLER, staff to Senator Dave Donley, agreed with Senator              
 Zharoff's suggestion.  She added that this is a complex issue and             
 there is a lot of tinkering that needs to be done with the                    
 legislation.                                                                  
                                                                               
 Number 035                                                                    
                                                                               
 SENATOR RANDY PHILLIPS stated that conceptually, he is in favor of            
 the legislation due to Article X, Section 3 of the Alaska State               
 Constitution.  He said the Legislature acts as an assembly for the            
 unorganized areas and can make those decisions on behalf of those             
 people.   However, he said it can't be both ways, either get rid of           
 the mandatory borough act and Article X, Section 3, or just                   
 implement one of the two, but not both.  He believes it is about              
 time that the Legislature starts addressing this issue.                       
                                                                               
 Number 055                                                                    
                                                                               
 SENATOR DONLEY said the most important question to him is if people           
 in these areas can afford local government, and, if they can, they            
 should.  The Boundary Commission's studies analyzing the ability of           
 people in those areas being able to pay for local government                  
 generally showed most regions of the unorganized borough were                 
 capable of providing at least the minimum services required by law.           
 He said the legislation is a pretty reasoned approach in obtaining            
 this goal, especially with the state's current fiscal problems.               
                                                                               
 Number 085                                                                    
                                                                               
 SENATOR ZHAROFF pointed out that the fiscal note does not reflect             
 the added staff and administrative assistance required of the                 
 department, nor is there a breakdown on how much state assistance             
 a new borough would receive.                                                  
                                                                               
 SENATOR RANDY PHILLIPS asked if there was any reason why the                  
 unorganized areas cannot contribute to the state government for the           
 services they receive.  SENATOR DONLEY responded that it probably             
 could be done with a state sales tax or a property tax for those              
 unorganized areas that don't have their own sales tax or property             
 tax.                                                                          
                                                                               
 Number 195                                                                    
 SENATOR RANDY PHILLIPS stated a new fiscal note would be requested            
 from DCRA on SB 291.  He then adjourned the meeting at 10:10 a.m.