Legislature(2005 - 2006)BELTZ 211
03/10/2006 01:30 PM COMMUNITY & REGIONAL AFFAIRS
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SB 248-ADMINISTRATIVE BOROUGHS/BOROUGH GRANTS/ 2:51:40 PM CHAIR BERT STEDMAN announced SB 248 to be up for consideration. 2:52:03 PM SENATOR GARY STEVENS explained that since the first borough was formed in 1962, 15 additional boroughs have been established so that 43 percent of the land and 87 percent of the population in Alaska falls within the 16 boroughs. Meanwhile, he said, 57 percent of the land and 83,000 people live outside of organized boroughs. An advisory commission on local government was appointed last session and SB 248 is the result of that commission's recommendations. It creates a new class of borough government called administrative boroughs and it encourages borough formation. Administrative boroughs would provide an elected assembly that would have powers for planning, platting, and land use regulation. They would also have the power to levy sales taxes, use taxes and fees, but they wouldn't have the power to levy property tax or to provide education. Any other powers the assembly might adopt would have to be in accordance with Title 29. To cover organizational expenses, SB 248 would provide grants of $250,000 for the first three years. The money would be used to elect an assembly, establish ordinances and organize an administrative office. The advisory commission recognizes that a lack of available land, which helps to sustain borough government, is a major hindrance to new borough formation. Therefore, SB 248 would allow boroughs that are unable to select a minimum of 15,000 acres the ability to receive a $15 million grant and boroughs that do have the ability to select 15,000 acres or more could receive a $12.5 million grant. Grant funds would only be available to new boroughs that are formed within four years of the effective date. Furthermore, only the interest could be used to run the government; none of the principle could be spent. Forming an administrative borough is completely voluntary, but doing so would offer the opportunity for sustainability into the future. 2:56:24 PM MIKE BLACK, Director of the Division of Community Advocacy, Department of Commerce, Community & Economic Development, stated support for the concept embodied in SB 248 because it's in the state's interest to have regional governments. He advised that borough formation is a voluntary process and in recognition of that, SB 248 provides incentives. The responsibilities associated with this new form of government are minimal, but the department believes that administrative boroughs will provide a first step or bridge to a higher level of responsibility embodied in 2nd class, 1st class or home rule boroughs. The department further believes that the benefits to the state will far outweigh the costs of the financial incentives offered in SB 248. He noted that administrative boroughs would be prohibited from providing education, but they would have limited powers to tax. The department believes that SB 248 will remove much of the consistent objection to borough formation that has been seen in the past and will promote formation of regional governments, he concluded. 3:00:30 PM SENATOR GARY STEVENS asked Mr. Black if he knows of any region that is considering this transitional phase. MR. BLACK replied more areas have expressed interest in borough formation since the advisory commission began meeting, but he isn't sure what class of borough the various areas are considering. SENATOR GARY STEVENS remarked movement toward forming any class of borough would be a step in the right direction. 3:02:53 PM ALAN LeMASTER, Gakona, testified that he lives in the unorganized borough and is happy to have the Legislature sit as the assembly. He suggested that SB 248 offers a brighter light than has been seen in the past, but residents of the Copper Valley will probably continue to oppose borough formation at this time. 3:04:45 PM SENATOR GARY STEVENS reiterated this is voluntary. SB 248 offers an opportunity and no one will be forced to take advantage of it. MR. LeMASTER responded there is some apprehension that at the end of the four-year period areas would be forced to form a borough. A major problem in this area, he said, is how to support a borough even with the grant money that's offered. He said the idea that the school board would act as the borough commission is a little scary. SENATOR GARY STEVENS said he certainly couldn't promise that the area wouldn't be forced into becoming a borough at some time. Many areas were forced into boroughs under the Mandatory Borough Act, but SB 248 doesn't deal with that. With regard to the school board he clarified that the responsibilities of the REAAs wouldn't change under SB 248. 3:07:26 PM JOHN HOZEY, City Manager for the City of Valdez, testified as a representative of the Alaska Municipal League (AML) task force on borough formation. He explained that the idea for the task force stemmed from community frustration at not gaining headway in efforts to incorporate. He listed the following communities that have been unsuccessful in their various attempts to incorporate: City of Toksook Bay, City of Hoonah, City of Valdez, City of Wrangell, City of Petersburg, City of Thorne Bay, City of Cordova, Municipality of Anchorage, Denali Borough, City of Coffman Cove, City of Emmonak, City of Skagway, and City of Klawock. On behalf of the task force he asked that the committee consider an amendment to SB 248 to address the "stranglehold on the process called the model borough boundaries." The amendment would require that each petition to incorporate be reviewed on merit. It would also expand the authority of the Local Boundary Commission (LBC) to modify petitions to act in the state's best interest. He asked the committee to keep the amendment language in mind for incorporation in other appropriate legislation in the event that SB 248 doesn't move forward. 3:11:18 PM SENATOR GARY STEVENS advised that the commission carefully considered the comments and recommendations that came from the task force and as a result there will be an amendment to SB 248. 3:12:13 PM DAVE TRANTHAM, Council Member for the City of Bethel, stated that there is little support for SB 248 in his area. Model borough boundaries don't meet the needs of the people in the area and offer no flexibility, he said. As currently proposed 25 small communities in the Bethel area fall within the model borough boundary and the closest state land is off the road system and about 50 miles away. In this area, he said, it's unlikely that there will ever be a tax base to support an additional tier of government. 3:15:39 PM SENATOR GARY STEVENS responded one bill can't solve every problem. SB 248 is optional and it will solve problems for some areas and therefore move the state forward. Perhaps, he said, the discussion of the LBC and model boroughs should take place in another bill. 3:16:45 PM KEVIN RITCHIE, Executive Director for the Alaska Municipal League (AML), thanked the legislative members of the advisory commission for the important work that was done. He stated that AML believes that government that is closest to the people is best because it empowers people at the local level to solve problems and provide self-regulation. As the representative of the task force mentioned, there have been a number of changes to the economy and patterns in Alaska since the model borough boundaries were formed in 1989 so it makes sense to take another look at those boundaries. He said his final point is that the provision for the $12.5 million and $15 million grants is truly sustainable revenue sharing. If the money is managed to allow a 4-5 percent annual withdrawal it will naturally adjust for inflation. 5 percent of $15 million would provide $750,000 per year and that would be a significant base for providing adequate public services for an area. CHAIR STEDMAN announced he would hold SB 248 in committee.