Legislature(1995 - 1996)
04/03/1996 09:25 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 280(CRA)
"An Act relating to the mandatory incorporation of
certain boroughs in the unorganized borough."
Senator John Torgerson and staff aide, Deb Davidson were
invited to join the committee. He presented a short review
of the bill. It encompassed the equalization of rights and
taxation especially concerning education in order to conform
unorganized areas of the boroughs. The initial legislation
said proposed borough boundaries were only for setting the
order of incorporation and were based upon the state
assessor's estimation of the evaluation of REAA's in 1994.
The local boundary commission must approve the incorporation
proposals or requests. Appropriate revisions to them would
be acceptable within six months of receipt and within thirty
days after approval of the incorporation proposal by the
local boundary commission the division of elections must be
notified and the division shall order an election to be held
on proposed borough boundaries within ninety days. Senator
Zharoff asked about the public vote and Senator Torgerson
said it is not a question of wanting to be a borough or not.
Senator Zharoff said his concern that depending on where one
is in the state there is support to have mandatory borough
formation and likewise support not to have this type of
mandate imposed on regions because in some areas where there
already boroughs formed it does change some of the
boundaries and people seem to like it the way it is. There
are current discussions going on either the formation of new
boroughs or annexing into an existing borough. Borough
formations has to come from the people. The argument that
seems to come to the surface as the impetus for this is for
equity and education funding. Most of the unincorporated
areas of the state generate federal dollars that actually go
into the general fund and are then dispersed to all school
districts throughout the state. Those districts, in a
sense, are paying their own way. Senator Torgerson
responded regarding a fiscal note from the Department of
Education showing there is no impact on the PL 874 funds.
As far as annexation, this bill would not control any
annexation or any particular existing petitions by a borough
to incorporate other areas of the unorganized borough. That
decision is one strictly for the local boundary commission
and the Legislature would not have authority for annexation.
He said he had an amendment #1 and reviewed it for the
committee. It would change the mandatory borough to the
formation of boroughs and unorganized boroughs. This
amendment would direct that there would be an election held
on the same time line as presented earlier, based on the
assessed value of the districts. The first vote would be up
or down as to whether they wanted to incorporate. If the
incorporation vote was upheld then there would be a
discussion as to what powers the new proposed area would
want to take on. If the vote was not to incorporate then it
sets a time line for the state assessor to start assessing
the area at a mill rate levy of six mills. The money
collected from the mill rate level would be deposited in the
general fund. This amendment does recognized the testimony
heard in C&RA.
Senator Phillips referred to the sales tax and other forms
of taxation to get to the equivalent of six mills. Can the
legislature allow for this? Senator Torgerson said
currently it could not be allowed for without an effective
vote of the people in the affected area. Currently there
are four boroughs and their education dollars are on
equivalency and they do not have property tax. They have
fish tax, sales tax or resource tax. He said his amendment
did not allow for that. It has to be a mill rate because
they did not have authority to do equivalencies. Co-
chairman Halford asked if that was a constitutional
provision or if it was a Title 29 provision. He asked if
Title 29 could be amended in the way Senator Phillips
suggested. Senator Torgerson said funds could not be
collected and dedicated to a school without a vote for a
dedicated fund which is a constitutional amendment to allow
that. The legislature has the power to put in
equivalencies. Senator Rieger said he would support this
bill if the sponsor supported allowing sales tax revenues on
an equivalency basis to go up to six mills. That would seem
reasonable. Senator Torgerson said the goal here is to
collect an equivalency for education. Senator Phillips said
there should be some flexibility because in some areas there
would not be much property to be taxed. A tax burden should
not be put on a few for the enjoyment of others around them.
Senator Torgerson said this bill sets up second class
boroughs so an assembly would sit as a second class borough
and the sales tax provision would require a vote of the
people. Co-chairman Halford said that when this is limited
to property taxes there are small local communities where a
great deal of the residential property is federally exempt
from taxation. Sales tax would include non-residents paying
part of the bill and it would be equally allocated based on
expenditures of residents. That might be an important
feature to investigate. Senator Torgerson concurred.
Senator Zharoff suggested the assessor may be able to impose
a sales tax on incorporated areas as well. Senator Zharoff
noted that there would be some existing borough line changes
and referred to pages 14 and 15, the Juneau borough would be
extended and also the Ketchikan Gateway borough would be
extended. He did not think the communities would want to be
mandated to expand their borough boundaries to incorporate
areas that they would then have responsibility for. Senator
Torgerson said this bill did not address any annexation. It
is not under the authority of the legislature to mandate
that an existing borough annex lands outside of its'
boundaries.
Lamar Cotten, Department of Community and Regional Affairs
was invited to join the committee. He said the department
supported the concept of the bill and that it would bring
positive benefits to rural Alaska. It would encourage
enhancement of school funding and promote economic
development. This bill would provide for 34 school
districts instead of 54 and the department felt there would
be administrative savings by this reduction. Second class
boroughs have three powers, tax & assessment, planning and
education which are positive benefits. He referred to the
property tax schedule and said there was such a checker
board of who owns what property in rural Alaska and possibly
a lot of resentment would be fostered and therefore from a
practical point of view this would not work. Some
consideration should be given two a possible 2 mill levy or
stretched out to six years. Further consideration should be
given to allowing for third-class boroughs which presently
are not allowed with the exception of Haines. A third class
borough is able to provide for education. There are no pots
of gold outside of the pipeline in the unorganized borough.
The department felt the net effect of taxing oil and gas
line properties needed to be recognized.
Eddy Jeans, Department of Education was invited to join the
committee. He said that Senator Torgerson's office was
provided information assuming all the boroughs were fully
incorporated and up to the minimum four mills and that the
boroughs were contributing over the four mill requirement
and what is seen is a shift in the amount of impact aid that
the state would consider. The foundation formula would
decrease approximately $14 million while local effort goes
up approximately $14 million once the full implementation is
taken over by the borough. The department was continuing
with further analysis. Senator Zharoff asked about
movements being made by the school districts. Mr. Jeans
advised that curriculum services were provided as needed.
Denny Weathers, Marla Adkins, Eric Weathers and one
unidentified individual testified briefly via teleconference
from Cordova in opposition to this bill. All parties
testified that they did not want to have a borough forced
upon them and they felt they would only have to pay more
taxes.
Senator Phillips said that the possibility of a third-class
borough as an option would be studied seriously. Senator
Torgerson said he had no objection to a third-class borough
either. Senator Zharoff asked for a map of the state
showing the large unincorporated areas. Senator Torgerson
said the map would show currently what was available for
taxation in 1994. He further stated that land was not
taxable until developed. Co-chairman Halford said he
thought the equity question in rural communities is not the
corporate lands or the large parcels, but rather the
allotments that are right in town. Everyone is criss-
crossed in land ownership. Much of the land is exempt from
taxation right in the middle of the same services. Some
communities choose a sales tax to avoid that question
otherwise recipients of the services are not necessarily the
people who are paying for the service.
Deb Davidson related her conversation with Tam Cook and said
the legislature has never acted as an assembly for the
unorganized borough. The presumption is the legislature
could enact a statute that contained a type of tax scheme
for the unorganized borough and could include sales or use
tax in that not requiring a vote of the people. Presently
incorporated boroughs under current statute may not enact a
tax by ordinance unless it is ratified by a vote. Since
different classes of boroughs are treated differently it is
not necessarily clear that the unorganized borough could be
treated as yet another matter.
Patrick Dalton, P.R. Miller and Patrick Schlichting
testified briefly via teleconference from Delta Junction in
opposition to this bill. They mirrored the same thoughts as
the previous individual that testified from Cordova saying
that this bill was bad legislation.
Dan Billman and John Kunik testified briefly via
teleconference from Glennallen in opposition to this bill.
They said the taxes should be taken from the pipeline and
the necessary services be provided to the community.
Co-chairman Halford said the question that comes to mind is
regarding education funding and that is something that is
unequally funded across the state.
Carl Rose, Alaska School Board was invited to join the
committee and said the school board association was opposed
to mandatory borough. There were a number of concerns
specifically in an unorganized borough, the ability to
identify, survey and assess the value of the land. The
issue is not one of taxation. Most people will pay the tax
but do not want an organized borough. The concern is for
those forced to borough but do not have the resources. He
referred to the Aleutian Region including the Sandpoint City
School District and King Cove. When the three districts
were consolidated, as could be expected, when time came to
negotiate which salary would be adopted, the highest salary
was chosen. This is an issue when speaking of consolidation
and he said this example reinforced why the association was
against mandatory borough.
Co-chairman Halford referred to amendment #1 and said making
an alternative tax and third-class borough an option would
address most problems. Senator Torgerson said he could use
his amendment with a few conceptual amendments and it should
suffice the concerns of the committee. He suggested
deleting "second-class" borough and inserting "third-class".
This would not preclude organized areas from adopting home
rule charter or whatever they would like. On the amendment
itself, page 2, line 11, the annual tax of "six mills" could
be deleted and "or equivalency" be inserted. Co-chairman
Halford wanted this indicated that it was to go to the
REAA's or a match for the local shares of the REAA's.
Senator Torgerson felt that some intent language could be
written up.
Senator Phillips moved the conceptual amendment to amendment
objection of Senator Zharoff being noted it was adopted.
Senator Rieger discussed his amendment #2. Following
discussion by the committee co-chairman Halford asked that
he submit a new draft of this amendment including his
proposed changes.
ADJOURNMENT
Co-chairman Halford adjourned the meeting at approximately
11:00 A.M. to reconvene again at 1:45 P.M. today.
| Document Name | Date/Time | Subjects |
|---|