Legislature(2005 - 2006)BELTZ 211


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Bills Previously Heard/Scheduled
Moved CSSB 193(CRA) Out of Committee
Moved CSSB 291(CRA) Out of Committee
Moved CSSB 247(CRA) Out of Committee
Moved CSSB 246(CRA) Out of Committee
Heard & Held
         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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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                                                               
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.                                                                      

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