Legislature(2005 - 2006)BELTZ 211


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01:30:12 PM Start
01:31:45 PM SB77
01:59:20 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 77 Out of Committee
         SB  77-AK REGIONAL ECONOMIC ASSISTANCE PROGRAM                                                                     
CHAIR GARY  STEVENS announced  SB 77 to  be up  for consideration                                                               
and explained  that it is an  act to extend the  termination date                                                               
of    the   ARDOR    program    (Alaska   Regional    Development                                                               
He asked Ms. Ayers to come forward.                                                                                             
WANETTA  AYERS, executive  director for  the Southwest  Municipal                                                               
Conference (SWAMC),  explained that  they represent  the Pribilof                                                               
Islands, the  Aleutian Chain, the Alaska  Peninsula, Bristol Bay,                                                               
and Kodiak.  She referenced the  annual report that  outlines the                                                               
accomplishments of the 11 ARDOR programs across the state.                                                                      
Flexibility is built into the  program so that the various ARDORs                                                               
can develop  the type of program  that is needed in  a particular                                                               
region. The  report outlines how  each of the ARDORS  is involved                                                               
in  business  retention  and  expansion,  workforce  development,                                                               
market   development,    infrastructure   development,   economic                                                               
planning, and research.                                                                                                         
1:31:45 PM                                                                                                                    
Collectively the  ARDORs developed  a three-tier  funding formula                                                               
to provide financial incentives  for growing individual programs.                                                               
It's a reward  system for developing more funding  from the local                                                               
community  and  increasing  the   organization's  ability  to  do                                                               
economic   development   by   implementing   specific,   regional                                                               
She further  explained that all  certified ARDORs  participate in                                                               
the  first 70  percent  of  available funds.  ARDORS  in Tier  II                                                               
participate in  the next  20 percent  of the  funds and  the ones                                                               
that reach the third level participate in the final 10 percent.                                                                 
1:32:44 PM                                                                                                                    
She reported that in 2004,  every $1 the state invested generated                                                               
$8 in local,  federal, private sector or earned  income money for                                                               
economic  development.   She  assured  members  there   is  great                                                               
economic  opportunity  in  both  the  existing  programs  and  in                                                               
expanding  the  partnership  between  ARDORs  and  the  state  to                                                               
develop a  comprehensive statewide economic  development strategy                                                               
to continue to  work on improving the economic  situation and the                                                               
quality of life throughout Alaska.                                                                                              
1:33:39 PM                                                                                                                    
CHAIR GARY  STEVENS remarked that  he finds the  leveraging issue                                                               
particularly important and asked her  to explain how it works and                                                               
where the additional money comes from.                                                                                          
WANETTA AYERS  referenced page  2 of the  annual report  and said                                                               
the  Department of  Commerce, Community,  & Economic  Development                                                               
(DCCED) looks at the ability  to generate funds from sources that                                                               
are unique to  each ARDOR. For example SWAMC  receives per person                                                               
dues  from each  municipality and  flat fee  dues from  associate                                                               
members in the private sector.                                                                                                  
Some  ARDORs don't  have membership,  but they  might have  a tax                                                               
base in  the local  community. Each ARDOR  is different  and each                                                               
develops a funding formula that works.                                                                                          
The total combined ARDOR budget  is about $5.5 million. The state                                                               
is  investing  $650,000 in  the  program,  which  is  an 8  to  1                                                               
leverage of state funds.                                                                                                        
1:35:19 PM                                                                                                                    
CHAIR  GARY STEVENS  questioned  whether the  ARDOR grant,  other                                                               
state funds  and non-state funds  amounted to  approximately $5.5                                                               
MS. AYERS said it did.                                                                                                          
1:35:36 PM                                                                                                                    
SENATOR  JOHNNY  ELLIS  paid tribute  to  former  Senator  Arliss                                                               
Sturgulewski as one of the  original ARDOR program architects. He                                                               
then expressed  appreciation for  US Senator Steven's  ability to                                                               
"bring my federal tax dollars home to Alaska."                                                                                  
1:37:00 PM                                                                                                                    
He asked  Ms. Ayers whether she  ever had an experience  in which                                                               
federal money  inexplicitly appeared  or whether a  system exists                                                               
for coordinating appropriations.                                                                                                
WANETTA  AYERS   replied  they  typically  look   to  the  Denali                                                               
Commission for  the coordination function, but  SWAMC did receive                                                               
special  11th  hour  earmarked  funds to  help  mitigate  a  $130                                                               
million economic loss  caused by a federal  fisheries closure. It                                                               
was a  last minute earmark and  they had no advance  warning that                                                               
the funds were coming, she said.                                                                                                
They have  discussed broadband deployment  and believe that  is a                                                               
vital component  for economic development. She  acknowledged that                                                               
it  would  be  advantageous   if  the  compartmentalized  funding                                                               
streams that come into the state  could be pooled and reviewed on                                                               
a statewide basis.  She advised she is a member  of the taskforce                                                               
the Legislature established last year to work on that issue.                                                                    
She suggested  the state  develop better  outreach and  provide a                                                               
better profile for small businesses  by changing its web presence                                                               
from   a   governmental/department   perspective  to   a   market                                                               
perspective.  She  emphasized  that   it's  confusing  for  small                                                               
businesses  to have  to navigate  multiple department  web pages.                                                               
For  example, opening  a wilderness  lodge  entails visiting  the                                                               
Department  of Environmental  Conservation (DEC),  the Department                                                               
of  Labor and  Workforce Development  (DOLWD), the  Department of                                                               
Commerce,  Community, and  Economic  Development  (DCCED) at  the                                                               
very least. Some  of the difficulty could be  alleviated with one                                                               
stop shopping.                                                                                                                  
She concluded, "There  are multiple streams of  federal funds and                                                               
other  situations too  that maybe  could  be coordinated  better.                                                               
It's not necessarily an ARDOR  function, but it's something we've                                                               
talked to the Denali Commission about."                                                                                         
1:39:08 PM                                                                                                                    
SENATOR  ELLIS  reemphasized  his appreciation  for  the  federal                                                               
money  coming  to  Alaska,  but   better  coordination  and  more                                                               
communication about  how it all  fits would be helpful.  "I think                                                               
Senator [Ted]  Stevens has an  outstanding vision for  the future                                                               
of our state, but it  concerns me that it seems compartmentalized                                                               
and [that there seems to  be] a lack of communication sometimes."                                                               
He urged  working in a more  coordinated way to better  use those                                                               
tax dollars.                                                                                                                    
WANETTA  AYERS agreed  and said  Alaska is  fortunate to  have US                                                               
Senator  Ted  Stevens  in Washington  D.C.  and  she  appreciated                                                               
Senator Ellis'  mention of Ms.  Sturgulewski because she  too had                                                               
tremendous vision when the program was established.                                                                             
1:40:15 PM                                                                                                                    
CHAIR GARY  STEVENS noted that Representatives  Cissna joined the                                                               
meeting. He  said she  and Representative  Neuman are  members of                                                               
the House CRA Committee and were welcome to pose questions.                                                                     
1:40:34 PM                                                                                                                    
REPRESENTATIVE MARK NEUMAN asked  which community councils are in                                                               
Tier I.                                                                                                                         
WANETTA AYERS  told him the Lower  Kuskokwim Economic Development                                                               
Council is the only ARDOR in the Tier I category.                                                                               
REPRESENTATIVE NEUMAN asked how many are in Tier II                                                                             
1:41:04 PM                                                                                                                    
WANETTA  AYERS replied  she  might miss  some  but included  are:                                                               
Prince William Sound, Fairbanks  North Star Borough, Mat-Su RC&D,                                                               
and three others.                                                                                                               
REPRESENTATIVE  NEUMAN asked  whether  a program  exists to  help                                                               
other councils to rise to the top tier.                                                                                         
WANETTA AYERS said  they do have a program and  one criterion for                                                               
moving up is to conduct a  peer review. The review panel consists                                                               
of  an individual  named by  the program  manager, an  individual                                                               
from  the ARDOR  that's being  reviewed,  and a  director from  a                                                               
different ARDOR.  The ARDOR  that's reviewed  gathers information                                                               
showing how  they're meeting  the criteria  within the  tiers and                                                               
the panel  gives an  evaluation. The process  is designed  to get                                                               
everyone to the same level.                                                                                                     
1:42:12 PM                                                                                                                    
WANETTA AYERS said  the best outcome would be to  have all ARDORs                                                               
be a Tier III so the funding would be level.                                                                                    
CHAIR GARY  STEVENS questioned  whether ARDORs  could move  up or                                                               
down between the tiers.                                                                                                         
WANETTA AYERS  explained that when  an organization  is certified                                                               
as an ARDOR, it is a  Tier I. It maintains that certification for                                                               
18  months  while   establishing  regional  economic  development                                                               
strategies. After that,  the ARDOR has two years  to satisfy Tier                                                               
II criteria. Depending  on the resources in  the community and/or                                                               
the  scope  of  the  program,  the ARDOR  may  stay  in  Tier  II                                                               
indefinitely.  Moving  into  Tier   III  requires  the  ARDOR  to                                                               
continue  growing its  program until  it is  working in  all four                                                               
main  areas  of  economic  development.  Those  include  business                                                               
retention  and expansion,  workforce development,  infrastructure                                                               
and market development                                                                                                          
1:43:31 PM                                                                                                                    
CHAIR  GARY STEVENS  asked whether  she was  with SWAMC  when the                                                               
Bristol Bay salmon issue arose.                                                                                                 
WANETTA AYERS said  she's been involved a long time  and a number                                                               
of salmon issues have come up.                                                                                                  
CHAIR   GARY  STEVENS   clarified   he  was   referring  to   the                                                               
extraordinary situation  in which  funds were transferred  at the                                                               
eleventh hour and then had  to be distributed. That situation, he                                                               
said, was beyond  the scope of what an ARDOR  is usually expected                                                               
to do.                                                                                                                          
WANETTA AYERS agreed  then mentioned the $30  million Stellar Sea                                                               
Lion  mitigation  funds  referenced  earlier.  US  Senator  [Ted]                                                               
Stevens  helped them  get $30  million and  then Board  President                                                               
Wayne Stevens  helped devise  a way to  distribute the  funds and                                                               
mitigate the  losses. SWAMC took less  than a year and  used less                                                               
than one  percent for administrative costs.  "SWAMC is rightfully                                                               
proud of  its performance in  responding to that  challenge," she                                                               
1:45:01 PM                                                                                                                    
MURRAY WALSH, Southeast  Conference President, identified himself                                                               
as  a planning  consultant with  firsthand knowledge  of what  it                                                               
takes  to get  any development  started in  Alaska. He  described                                                               
ARDORs  as organizations  that  provide  important services  that                                                               
aren't a natural  function of local government.  He urged members                                                               
to maintain the services across the state.                                                                                      
He referred to the Southeast  Conference and pointed out that for                                                               
every $1  it receives in  ARDOR funds,  it receives $18  in other                                                               
funds   including   membership   contributions.   Board   members                                                               
volunteer their time and meet twice  a year. He reported that two                                                               
hundred people attended last year's Southeast Conference summit.                                                                
1:47:56 PM                                                                                                                    
CHAIR GARY STEVENS noted that  Robert Wells with the Mat-Su ARDOR                                                               
and  John  Parker  with  the  Kenai  Peninsula  Borough  Economic                                                               
Development District were in the audience.                                                                                      
1:48:18 PM                                                                                                                    
WAYNE STEVENS, President  and CEO of the Alaska  State Chamber of                                                               
Commerce,  stated for  the record  that  he is  related to  Vince                                                               
Stevens and no other Stevens in the state.                                                                                      
He expressed support  for the reauthorization and  funding of the                                                               
ARDOR  program  so  they could  engage  in  economic  development                                                               
planning,  strategizing,  and  implementation  through  effective                                                               
public/  private sector  collaboration  on  local, regional,  and                                                               
state  levels. He  advised  that he  also sent  a  letter to  the                                                               
committee stating support for SB 77.                                                                                            
He  told members  that  he  was SWAMC  board  chair in  2002-2003                                                               
during the Stellar Sea Lion  mitigation years and that US Senator                                                               
Ted Stevens was very helpful.                                                                                                   
He urged members to pass SB 77.                                                                                                 
1:50:02 PM                                                                                                                    
CHAIR  GARY STEVENS  asked him  to elaborate  on the  Stellar Sea                                                               
Lion  mitigation project  because  it was  such an  extraordinary                                                               
situation that went  far beyond what is typically  expected of an                                                               
1:50:15 PM                                                                                                                    
WAYNE STEVENS explained that at the  close of the 2001 session US                                                               
Senator Ted  Stevens inserted language  in a bill  awarding SWAMC                                                               
$30 million  to mitigate Stellar  Sea Lion issues related  to the                                                               
fishery that  closed as  a result  of the  lawsuits brought  in a                                                               
Seattle court.                                                                                                                  
The  board  had  to  make  fair  and  equitable  decisions  while                                                               
recognizing that hundreds  of millions of dollars  would never be                                                               
mitigated. The  board is justifiably  proud that it  received the                                                               
authorization and was  able to disburse $30 million  in just over                                                               
a year and used less than one percent for overhead.                                                                             
1:51:59 PM                                                                                                                    
CHAIR GARY STEVENS  stated that it's remarkable  that the program                                                               
was completed with so little cost.                                                                                              
1:52:20 PM                                                                                                                    
CHAIR GARY STEVENS asked Ms. Saddler to come forward.                                                                           
SALLY  SADDLER,   Legislative  Liaison  for  the   Department  of                                                               
Commerce,  Community and  Economic Development  (DCCED), reported                                                               
that the department is excited  about the partnership it has with                                                               
ARDORs  because  economic  development isn't  just  a  grassroots                                                               
function or a top down  function. Successful economic development                                                               
requires both  working together. ARDORs are  poised to coordinate                                                               
and  ensure a  coordinated economic  development strategy  around                                                               
the state.                                                                                                                      
DCEED is  well pleased with  the performance-based  system ARDORs                                                               
have developed.  Each is unique  and has  taken on the  flavor of                                                               
the  region it  serves to  fill a  niche and  to work  with other                                                               
partner organizations.                                                                                                          
She urged the committee to pass SB 77.                                                                                          
1:53:35 PM                                                                                                                    
CHAIR GARY  STEVENS called  for questions  and commented  that he                                                               
was sorry  Mayor Whitaker  wasn't available, but  he was  sure he                                                               
supports the program.                                                                                                           
SENATOR BERT  STEDMAN announced he  has concern  about stretching                                                               
the  authorization out  to 2013  and suggested  reining it  in to                                                               
address accountability.                                                                                                         
CHAIR  GARY STEVENS  asked Ms.  Ayers  to return  to the  witness                                                               
stand to justify the eight year extension.                                                                                      
1:54:32 PM                                                                                                                    
MS.  AYERS  told  members  that   Legislative  Budget  and  Audit                                                               
indicated eight year cycles are  cost effective and anything less                                                               
than that  for this level  of review wouldn't be  cost effective.                                                               
"You always have  the annual budget process as  a discipline tool                                                               
for any program you think is not performing," she said.                                                                         
The ARDOR  program received  a two  year authorization  last time                                                               
because Senator  Wilken had performance related  questions. Those                                                               
were addressed by initiating the tier formula.                                                                                  
In  conclusion she  said, "We  look  to your  leadership on  that                                                               
issue,  but  more  than  anything,  I think,  it  was  that  LB&A                                                               
recommendation that we had heard -  that eight years was what was                                                               
cost effective for the state."                                                                                                  
1:55:40 PM                                                                                                                    
CHAIR  GARY STEVENS  asked whether  Senator  Stedman had  further                                                               
SENATOR STEDMAN opined that eight years  is too long and he would                                                               
prefer  a  two  year  extension.     He  emphasized  that  he  is                                                               
comfortable  with the  program,  but he  doesn't  believe it's  a                                                               
burden to  return for  reauthorization every  two years.  "I just                                                               
hate to extend programs out that far," he said.                                                                                 
1:56:48 PM                                                                                                                    
CHAIR GARY STEVENS pointed out that it is a finance issue.                                                                      
SENATOR ELLIS stated that if  an amendment were offered, he would                                                               
like  Pat Davidson,  the  legislative auditor,  to  speak to  the                                                               
1:57:41 PM                                                                                                                    
CHAIR GARY  STEVENS said  he assumed  that the  Finance Committee                                                               
would look at  that issue and noted that Senator  Stedman sits on                                                               
that committee. He asked the committee their preference.                                                                        
1:58:10 PM                                                                                                                    
SENATOR STEDMAN said he didn't object to moving the bill forward                                                                
and he would address the extension at a later time.                                                                             
1:58:35 PM                                                                                                                    
SENATOR ELLIS stated that was his preference.                                                                                   
1:58:45 PM                                                                                                                    
CHAIR GARY STEVENS asked for a motion.                                                                                          
1:59:02 PM                                                                                                                    
SENATOR ELLIS motioned to move SB 77 from committee with                                                                        
individual recommendations and attached fiscal note. There being                                                                
no objection, it was so ordered.                                                                                                

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