Legislature(1999 - 2000)

04/21/1999 08:07 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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SENATE BILL NO. 147                                                                                                             
"An Act relating to local contributions under the                                                                               
village safe water program; and providing for an                                                                                
effective date."                                                                                                                
                                                                                                                                
                                                                                                                                
Senator Dave Donley spoke to the bill. This was a Senate                                                                        
Finance Committee bill that applied the same guidelines for                                                                     
the Municipal Matching Grants program to the Village Safe                                                                       
Water program.                                                                                                                  
                                                                                                                                
Co-Chair John Torgerson referred to the text in Section 2                                                                       
that determined the local municipality asking if that was                                                                       
currently in statute. Senator Dave Donley answered that                                                                         
used the same standards as were used in the Municipal                                                                           
Matching Grants program.                                                                                                        
                                                                                                                                
Co-Chair John Torgerson noted the committee did receive a                                                                       
$304,000 fiscal note from the department to implement the                                                                       
legislation. The costs would mainly cover the tests                                                                             
dictated in the bill on how to determine the required local                                                                     
effort.                                                                                                                         
                                                                                                                                
DAN EASTON, Director, Facilities Construction, Department                                                                       
of Environmental Conservation testified in opposition to                                                                        
the bill. He had seven concerns to bring before the                                                                             
committee.                                                                                                                      
                                                                                                                                
He began with saying there was nothing wrong with the idea                                                                      
of local communities contributing to the projects.  That                                                                        
was done currently in that they were asked to contribute                                                                        
based on what they had. This bill would create a "one size                                                                      
fits all," criteria and not all communities would be able                                                                       
to meet the requirement. The department was particularly                                                                        
concerned that some of the communities with more severe                                                                         
health and sanitation problems would be the ones that would                                                                     
have the most trouble meeting the standard match                                                                                
requirement.                                                                                                                    
                                                                                                                                
He stated the program would lose federal fund if this bill                                                                      
were implemented.                                                                                                               
                                                                                                                                
                                                                                                                                
Tape: SFC - 99 #102, Side B 9:07 AM                                                                                             
                                                                                                                                
                                                                                                                                
Of the 71 projects waiting to begin on July 1 if the                                                                            
funding was approved. Of those, 44 projects could be                                                                            
considered new projects and would be subject to the match                                                                       
requirement. The communities did not currently have any                                                                         
idea that they would have to meet a match requirement.                                                                          
While the Environmental Protection Agency funding could                                                                         
wait for communities to collect match funding, the US                                                                           
Department of Agriculture funding could not wait. Alaska                                                                        
was in competition with other states for those funds.                                                                           
                                                                                                                                
Senator Dave Donley wondered if the simple fix would be to                                                                      
change the effective date to July 1, 2000.  Dan Easton                                                                          
replied that the department would consider that a vast                                                                          
improvement.                                                                                                                    
                                                                                                                                
Senator Randy Phillips asked if the department would still                                                                      
oppose the bill.                                                                                                                
                                                                                                                                
Dan Easton listed the third concern was that the match                                                                          
calculations were complex. He recommended that an engineer                                                                      
reviews and simplifies the calculations.  He said the                                                                           
department oversaw other match programs that were more                                                                          
straightforward. The Municipal Water, Sewer and Solid Waste                                                                     
Matching Grant (AS 46.03.) program in statute was one of                                                                        
those simpler match programs.  This program was for larger                                                                      
communities.                                                                                                                    
                                                                                                                                
Co-Chair John Torgerson asked if the recommendation was to                                                                      
adopt the criteria for that program into this bill. Dan                                                                         
Easton suggested looking at those statutes and regulations                                                                      
as a guide for a simpler way to calculate matching                                                                              
requirements.                                                                                                                   
                                                                                                                                
The fourth concern was the proposed thirty-percent cap                                                                          
would actually exceed the match requirement in the                                                                              
Municipal Water, Sewer and Solid Waste Matching Grant                                                                           
program. The smaller communities served by this program                                                                         
could actually be required to provide a larger match than                                                                       
larger communities. Co-Chair John Torgerson assured him the                                                                     
committee would look at the formula.                                                                                            
                                                                                                                                
The fifth concern was that the proposed method for which                                                                        
the match requirements were calculated required an                                                                              
evaluation assessment for first and second class cities.                                                                        
Those assessments were not available from any communities,                                                                      
according to the state assessor, and they would have to be                                                                      
done. It was not a matter of compiling data at hand.  There                                                                     
was more to it than that.                                                                                                       
                                                                                                                                
He continued with the sixth concern. The legislation would                                                                      
increase operating costs for the program. He noted the                                                                          
fiscal note.  The changes would complicate the accounting                                                                       
process. Not only would the department have to track state                                                                      
and federal funds, it would also have to track local funds.                                                                     
                                                                                                                                
The department would also have to place values on the in-                                                                       
kind contributions. He felt it was a good thing that the                                                                        
state allowed such contributions done as part of the local                                                                      
match. However, the worth would have to be determined.                                                                          
                                                                                                                                
Finally, this would require the department to do an audit                                                                       
of every project to track local funds.  This was not                                                                            
normally done.                                                                                                                  
                                                                                                                                
Co-Chair John Torgerson asked how would this effect the                                                                         
next phases of ongoing projects.  Dan Easton interpreted                                                                        
the bill, as those projects under current construction                                                                          
would be exempt. However, that was a broad stipulation. If                                                                      
the original project was to build a road to a dump, what                                                                        
happens to the status of the project when the dump needed                                                                       
to be constructed? Would that be the same project?                                                                              
                                                                                                                                
Co-Chair John Torgerson repeated the question and wanted to                                                                     
know if those projects would proceed with no match. He                                                                          
asked how many current projects there were. Dan Easton                                                                          
answered 140. Co-Chair John Torgerson asked what percent                                                                        
would be as described as road/dump type projects. Dan                                                                           
Easton responded fifty percent.                                                                                                 
                                                                                                                                
Dan Easton gave another example of a project to put water                                                                       
pipe into a certain area of a town. Phase two would put the                                                                     
pipes into another area.                                                                                                        
                                                                                                                                
Co-Chair John Torgerson stated that the committee then                                                                          
needed to better define the on-going projects.                                                                                  
                                                                                                                                
Senator Al Adams referred to the formula on page two and                                                                        
wanted to know if the state assessor was going to testify                                                                       
on the assessment. He noted that many of the affected                                                                           
communities were in his district that had never been                                                                            
assessed. He wanted someone to walk through the process and                                                                     
explain it to the committee.                                                                                                    
                                                                                                                                
Co-Chair John Torgerson stated his intent was to have a                                                                         
simpler formula.  He didn't oppose a match requirement but                                                                      
did not want it to incur further expenses to calculate.                                                                         
                                                                                                                                
He also understood there were some areas of the state that                                                                      
could not afford any match.  The bill would have to apply a                                                                     
grant similar to that for the underground storage tank                                                                          
programs.                                                                                                                       
                                                                                                                                
Senator Loren Leman suggested simplifying the formula to a                                                                      
five-percent match requirement. He supported community                                                                          
investment into projects.  He felt the facilities would be                                                                      
better cared for.  However, he knew there were some that                                                                        
could not afford it and he wanted better flexibility. He                                                                        
talked about in-kind services.                                                                                                  
                                                                                                                                
He spoke to the stated need for audits. He wanted to know                                                                       
where that information came from.  If an audit were not                                                                         
required for every project under state and federal funding,                                                                     
why would it be required for a municipal match? Dan Easton                                                                      
said that was a good point. Internal audits would ensure                                                                        
the matches were made.  He felt it was a policy call.                                                                           
                                                                                                                                
Senator Loren Leman suggested the department engineer could                                                                     
place a value and make a reasonable assumption of in-kind                                                                       
services.                                                                                                                       
                                                                                                                                
Senator Dave Donley understood this was the same formula                                                                        
used by Department of Community and Regional Affairs for                                                                        
community matching grants.  How difficult could it be?  He                                                                      
did support the co-chair's efforts to simplify.  He felt                                                                        
there were strong incentives in the bill.  He was in favor                                                                      
of volunteer labor and material and donated land, etc.                                                                          
                                                                                                                                
Co-Chair John Torgerson noted that the Department of                                                                            
Community and Regional Affairs did not have a formula for                                                                       
unincorporated communities. That was were the difficulties                                                                      
would arise.                                                                                                                    
                                                                                                                                
Senator Al Adams added that those formulas did not go up to                                                                     
the thirty-percent necessary for this program. Until all                                                                        
communities were assessed, the formula won't work.                                                                              
                                                                                                                                
Senator Loren Leman asked what first class cities were                                                                          
eligible. Dan Easton answered that first class city with a                                                                      
population less than 600. Seldovia was one example. All                                                                         
second class cities were eligible.                                                                                              
                                                                                                                                
GREG CAPITO, Program Manager, Village Safe Water Section,                                                                       
Division of Facility Construction and Operation, Department                                                                     
of Environmental Conservation came to the table to say that                                                                     
Galena and St. Mary were two eligible first class cities.                                                                       
He had a list to hand out to the committee.                                                                                     
                                                                                                                                
Senator Loren Leman felt this matter would be an easy fix.                                                                      
                                                                                                                                
He then referred to page one lines 13 and 14 addressing                                                                         
local contributions required for each draw of monies. He                                                                        
thought that could be cumbersome and suggested that the                                                                         
match be required before the project was completed rather                                                                       
than for each draw.                                                                                                             
                                                                                                                                
Co-Chair John Torgerson requested Dan Easton draft language                                                                     
to incorporate the formula used for the other water and                                                                         
sewer program. He asked if the department would oppose any                                                                      
local contribution requirement or if they wanted the                                                                            
program to work right. Dan Easton felt the current system                                                                       
worked well and a more complicated formula would not                                                                            
benefit.                                                                                                                        
                                                                                                                                
Co-Chair John Torgerson requested match information for                                                                         
current projects for comparison.                                                                                                
                                                                                                                                
TOM COLLIDGE, Indian Health Service, Alaska Area Native                                                                         
Health Service, and Director, Office of Environmental                                                                           
Health and Engineering, testified via teleconference from                                                                       
Anchorage. He worked with the Village Safe Water program.                                                                       
He did not think the proposed changes would achieve the                                                                         
goal of the safe water projects for the following reasons.                                                                      
It would eliminate grants for some communities that could                                                                       
not afford the five-percent match. It would be hardest on                                                                       
small communities that the needed the sanitation                                                                                
improvements the most. The short timeframe for                                                                                  
implementation could delay existing and new projects. It                                                                        
would result in a loss of federal funds. It was unlikely to                                                                     
result in new additional federal funds. Likely no new local                                                                     
resources would be generated by this effort. It would                                                                           
increase the administrative hurdles on existing sanitation                                                                      
projects.                                                                                                                       
                                                                                                                                
It was already the practice of the Indian Health Service to                                                                     
require in-kind contributions from communities.  He saw                                                                         
little benefit of spending resources determine the value of                                                                     
in-kind contributions in detail.                                                                                                
                                                                                                                                
He saw no gain for the state at the expense of slowing                                                                          
rural health.  He suggested there could be higher costs in                                                                      
other areas.                                                                                                                    
                                                                                                                                
TINA LONG, Coordinator, Rural Alaska Sanitation Coalition,                                                                      
Member, Alaska Native Health Board testified via                                                                                
teleconference from Anchorage.  Speaking for the two groups                                                                     
and as an individual, she opposed the bill.  She detailed                                                                       
the missions and efforts of the organizations. She felt                                                                         
this would disenfranchise rural communities.                                                                                    
                                                                                                                                
SHEILA SELKREGG, Director for Rural Development, US                                                                             
Department of Agriculture, testified from Anchorage. She                                                                        
spoke to the federal funding available.  She worked to                                                                          
coordinate federal and state funding.  She warned of the                                                                        
risk of the funds being sent to other states. She stressed                                                                      
the contributions already made by the communities.                                                                              
                                                                                                                                
TIM GILMARTIN, Mayor, City of Metlakatla, testified via                                                                         
teleconference from Metlakatla. He spoke of the pending                                                                         
projects in his community and the state of the economy in                                                                       
Southeast Alaska that would prohibit them from coming up                                                                        
with matching funds.                                                                                                            
                                                                                                                                
GINNEY TIERNEY, City Administrator, City of Thorne Bay and                                                                      
Community Member, Governor's Rural Sanitation Council,                                                                          
testified via teleconference from Thorne Bay in opposition                                                                      
to the bill. She would hold the remainder of her comments                                                                       
until the revised version was release and she could review                                                                      
it.                                                                                                                             
                                                                                                                                
Co-Chair John Torgerson noted there would be a committee                                                                        
substitute for the bill.                                                                                                        
                                                                                                                                
PAUL ERHART testified via teleconference from Tanana.  He                                                                       
spoke of a sewage plant under construction. This bill would                                                                     
delay the project. He spoke about the slow economy in                                                                           
Interior Alaska due to a poor commercial fishing season.                                                                        
                                                                                                                                
BRENT URSEL, Mayor, City of McGrath, testified via                                                                              
teleconference from McGrath in opposition to the bill. The                                                                      
average family in the community paid $100 a month for water                                                                     
service. With cuts proposed to the Power Cost Equalization                                                                      
program and other services, they could not afford any other                                                                     
costs. He pointed out the efforts of the community in                                                                           
providing maintenance and operation of the facilities.                                                                          
                                                                                                                                
LORETTA LOLNITZ, Mayor, City of Koyikuk, Member, Governor's                                                                     
Council on Rural Sanitation, and Member, Rural Alaska                                                                           
Sanitation Coalition, testified via teleconference from                                                                         
Koyikuk. She opposed the bill. She told the committee about                                                                     
the current water facility and the need for improvements                                                                        
She also told about the hazards of honey buckets.                                                                               
                                                                                                                                
[Teleconference interrupted at the request of the co-                                                                           
chair.]                                                                                                                         
                                                                                                                                
JOANNE BECK, Second Chief, Eagle Village Council, testified                                                                     
via teleconference from Eagle Village. She opposed the                                                                          
bill. She didn't believe her community could meet the match                                                                     
requirements. She told of the difficulty for residents to                                                                       
earn a living.                                                                                                                  
                                                                                                                                
JAMES NATHANIEL, Environmental Coordinator for EPA/GAP                                                                          
Program, testified via teleconference from Chalkyitsik, in                                                                      
opposition of the bill. He told of problems with current                                                                        
water and sewer systems and the hazards of these.                                                                               
                                                                                                                                
Co-Chair John Torgerson said the bill would be worked on                                                                        
and some of the concerns voiced by the witnesses would be                                                                       
addressed.  He ordered the bill held in committee.                                                                              
                                                                                                                                

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