Legislature(2001 - 2002)
03/25/2002 09:17 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE CS FOR CS FOR SS FOR HOUSE BILL NO. 16(JUD)
"An Act relating to cities incorporated under state law that
are home rule communities; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE FRED DYSON, sponsor, requested the Committee to
"raise the threshold" for home rule communities from 25 to 100
residents, which he stated Tam Cook of the Division of Legal and
Research Services as deemed appropriate.
Representative Dyson reminded that the Alaska Constitution requires
the Legislature to provide for maximum self-determination for
communities.
Representative Dyson read Appendix C: Home Rule as a Native Self-
Governance Option produced by the Economic Resource Group, The
Institute for Social and Economic Research, University of Alaska,
Anchorage into the record as follows. [Copy on file includes source
references.]
Alaska's constitution establishes a policy of maximizing local
self-government. This also is the goal of the Native peoples
of Alaska have for themselves. As shown in this report, Native
communities have pursued different paths toward this goal of
self-government, many participating in the state system,
others staying outside it. Home rule for rural Native
communities is a largely unexplored self-governance option.
Implementing home rule in most Native communities would
require some changes in home rule requirements, but in
general, anything that state can do to facilitate the
development of self-governing instructions will benefit not
only Alaska's Natives but the state's overall system of
governance and would come closer to realizing the state's
constitutionally expressed self-governance objective.
The second-class city status of many Native villages in Alaska
does not carry with it any significant measure of local
autonomy and control. Under this status, city governance and
operations are carried out in accordance with state general
law, with no leeway for adaptation to traditional values or
local circumstances. The main benefits of this status have
come from higher state revenue sharing payments and greater
access to other state assistance programs than are possible
for unincorporated areas. However, the state constitution
provides the means to create local governments that could be
far more adaptable and appropriate for rural Alaska than the
existing municipal system.
Alaska's home rule provision is the most extensive in the
United States. It provides that "a home rule borough or city
may exercise all legislative powers not prohibited by law or
by charter." Exercising "legislative powers" essentially means
that a home rule jurisdiction can have any powers that the
Alaska state legislature has, subject only to limitations of
the state constitution, state statutes, and the municipality's
own charter. The legislature has enumerated a number of
specific limits on home rule organization and powers, but
beyond these, the community itself can determine how to design
its own government.
Under current law, first class cities and communities with a
permanent population of over 400 people can attain home rule
by an affirmative vote of the people and their adoption of a
charter. However, there is no particular reason to retain
these classification and size constraints on this particular
form of self-government. The constitution allows home rule to
be extended to other classes of cities. It would take only an
act of the legislature to allow other communities in Alaska to
adopt home rule charters.
Making home rule available to rural communities would be a
significant step toward more effective local government. This
is especially the case where Natives constitute a clear
majority of the population and can expect continued control of
the local government, and where tribal institutions and
village corporations work together. Instead of having to
follow everything that is spelled out in general law, as is
now required in second class cities, a home rule community
would be able to design its own government to meet its own
needs, circumstances, and objectives. Along with the ability
to create a more appropriate municipal governance structure,
home rule could provide tools for the effective exercise of
law enforcement and other police powers, management of land
and resources, protection of subsistence habitat and
environmental quality, and for carrying out other public
responsibilities.
To accomplish some of these objectives, home rule city
boundaries would need to include sufficient land, water, and
subsistence resources to protect the community and its ways of
making a living, and the state would need to remove existing
statutory obstacles to effective local control and adaptation
to local ways of self-governing. Finally, the state would need
to abide by the constitutional directive that "A liberal
construction shall be given to the powers of local government
units."
Representative Dyson expressed, "These are really the marching
orders that we've been working at nearly six years on this
project."
Senator Ward asked the "floor" population level for a second-class
city.
Representative Dyson replied the amount is currently 25, although
he recommends increasing the number to 100.
Representative Dyson pointed out that the Alaska Municipal League,
the Southeast League and a number of communities have endorsed this
legislation and plan to organize into local governments if it
passes into law. He assured there would not be a significant
difference in the amount of funds allocated to the communities.
However, he stressed, the "far more official and recognized" manner
in which to receive those funds.
Senator Ward shared that with the exception of the identified large
groups of Bethel, Goldbelt, Sitka, etc., the Alaska National
Interest Lands Conservation Act (ANILCA) required village
corporations have at least 24 shareholders. Otherwise, he pointed
out, the village was classified as a "group". He asked the number
of ANILCA-certified groups.
Representative Dyson did not know the number.
Co-Chair Kelly remarked that statutes governing a second-class city
exist and are almost identical to the proposed home rule community
structure. He asked why this legislation is necessary, as
interested communities could opt to form second-class cities.
Representative Dyson replied this legislation allows the potential
cities to write their own charter, to "tailor" it to the cultural
background of the community, and to determine the type of
government and scope of responsibilities desired.
Co-Chair Kelly stated second-class cities do not write their own
charter.
Representative Dyson furthered that a second-class city must follow
the Alaska State General Law Provisions, which he characterized as
a model municipal charter, and is often not appropriate for rural
communities or Native communities.
Co-Chair Kelly asked if second-class cities are audited every five
years and whether the home rule communities established under this
legislation would also require audits.
Representative Dyson replied audits would not be required of home
rule communities but could be performed. Instead, he stated, these
governments would be required to submit an authorized version of
their records.
Senator Wilken expressed several concerns with this legislation
although he appreciated Representative Dyson's intent.
Senator Wilken asserted, "This bill flies in the face of our
constitution." He cited Article X, Section 1 of the Alaska
Constitution, "The purpose of this Article is to provide for
maximum local self government," as discussed, but noted the
sentence continues, "…with a minimum of local government units". He
opined the State should be organizing into more efficient
governments rather than more inefficient governments.
Senator Wilken next read from Section III of Article X, "…the
standards shall include population, geography, economy,
transportation and other factors.
Senator Wilken asked how home rule communities would relate to the
organization of Alaska into local governments. To answer, he
pointed out that only the language, "or a home rule community" is
added to existing law.
Senator Wilken directed attention to a spreadsheet, "Standards for
Borough Incorporation" and to charts he had distributed [copies on
file], one showing the relationship of local governments and
boroughs that serve several communities, and the other showing the
autonomy home rule communities would have under this legislation.
He noted the sixteen criteria listed on the spreadsheets must be
met before a borough could be incorporated. He opined that rather
than "working toward the good of a common unit" as specified in the
State constitution, the home rule community proposal would create
local governments within an area each with their own self-
interests.
Senator Wilken mentioned there are 11 ways to organize a community
in Alaska, referencing the spreadsheet, "Structures of Local
Government in Alaska" [copy on file]. He pointed out the proposed
home rule communities would be identical to second-class cities
with the exception that the home rule communities would be powered
by a charter.
Senator Wilken remarked that a charter is "organic law" and equates
to a constitution for a municipality. He stressed these charters
are very powerful, but are difficult to write and require
expertise. He spoke to a proposed city charter rejected the year
prior that would have overruled actions of the State Legislature.
Senator Wilken noted this legislation would allow up to 200
different charters across the state and the Legislature would have
no input into the powers granted by those charters. He suggested
the charters could be written with no consideration for "their
neighbors down the street, down the river or across the mountain."
Senator Wilken stated this legislation allows rural communities to
continue, "shirking their responsibility for local education." He
explained the bill provides that home rule communities are not
required to contribute to education costs. He compared organized
communities in the state and the $269 million total amount of funds
they contributed to education, to unorganized communities, which
contributed no funds. He ascertained that this bill allows the
continuation of "a major problem in this State today."
Senator Wilken commented that this legislation is contrary to the
goals of the Alaska Municipal League of maximum local governance
with minimal governing units. He relayed that although he has been
told the organization supports the bill, he has yet to see written
confirmation of such.
Representative Dyson responded by agreeing with Senator Wilken
regarding the State constitutional "encouragement" of a minimum
number of governments. Representative Dyson furthered that
requiring multiple villages that are separated by distance to
operate as one city, is unreasonable, although he predicted a
pattern whereby each community would organize as one government
with several communities collaborating into a borough. He expected
that allowing communities to organize under State law would
encourage the process of the aggregation "that we all want." He
also anticipated several second-class cities would convert to home
rule communities for the purpose of writing a charter that most
accurately reflects their culture and needs.
Representative Dyson referenced communities organizing under the
proposed home rule method, and disputed that this "does anything to
make them more selfish." He predicted the self-interests would not
change remarkably, although the formation of self-government would
give residents a broader interest and a means for communicating
with other communities. He shared his experiences of working in
approximately 20 villages on power plants and wastewater treatment
plants. He told of the multiple governing bodies in the unorganized
communities and the lower esteem granted to the State government.
Representative Dyson remarked there would be no "down side" to the
addition of home rule communities to the options of municipal
government.
Representative Dyson disagreed with Senator Wilken and with the
Local Boundary Commission that writing charters would not be too
difficult for communities. He shared that two former members of the
Local Boundary Commission recently formed a private company to
consult with communities on these matters. He also noted the
governments of Native communities in Canada could be used as a
model. He disputed the claim that writing a charter would place a
burden on communities forming a home rule government, expressing it
is an "elitist attitude" that the State must protect the local
residents in the event they "mess it up" or are "mischievous". He
stated that people could make their own decisions, and mistakes,
and learn from them. He expressed that to deny communities the
ability to organize because of these concerns, "is absolutely
against every concept I know in the whole movement of freedom and
democracy and constitutional government in our world. I am not
afraid of freedom. I'm not afraid of giving everyone out there the
chance to make their own decisions write their own constitution and
to make mistakes." He compared this situation to that of being a
parent and allowing children to make their own decisions.
Representative Dyson agreed with Senator Wilken's assertion that
the issue of contributions to local education costs is important
and must be addressed.
Representative Dyson expressed his intent is to provide further
incentive for local communities to organize local governments.
Co-Chair Kelly spoke of a construction company no longer in
business that was instructed by certain government representatives
that the company would be required to conduct business in a
specific manner.
SFC 02 # 41, Side B 10:05 AM
Co-Chair Kelly informed that this company was cautioned that
permits for projects located in some organized communities "might
not be forthcoming" if the company "didn't play ball". He noted the
company did not conform to the requirements and subsequently did
not receive the necessary permits. He asserted this practice, which
he characterized as extortion, might be continuing, although it
could not be proven.
Co-Chair Kelly questioned whether creating this new form of local
government could potentially establish 200 organizations with the
ability to issue permits based on criteria greater than that of the
State. He asked if this would place small groups of people in a
position of significant power in determining how funds are spent in
private industry. He summarized his concern that this process could
create "an entirely new permitting regime that could be used to
leverage dollars in the private sector or otherwise."
Representative Dyson responded this is a danger, and that there is
always concern that when granting power, it could be misused. He
predicted in the next five years that 12 communities would become
organized under the proposed home rule provisions, rather than 200.
However, he assured that because these communities would be
organized under State law, there would be more opportunity to
address problems. He reminded, "Illegal activity is still illegal".
He reiterated he is willing to the take the risk that some
communities would "do it wrong" to allow more communities to
organize.
Senator Ward commented that both Representative Dyson and Senator
Wilken have described a problem. Senator Ward suggested including a
provision in this bill that would allow a community to write a
charter but would impose certain restrictions relating to taxation
for education. He surmised that a significant number of residents
of unorganized communities would contribute to education funding
although there is currently no method for them to do so.
Representative Dyson replied that "major discussion" on this matter
has occurred over the past three years. However, he expressed his
intent to create the home rule community system independently to
funding and specifically, taxation. He spoke to legislation passed
by the House of Representatives that includes taxation for
education funding and other governmental services.
Representative Dyson anticipated several communities would utilize
their current Indian Reorganization Act (IRA) structure and convert
to home rule communities. He clarified that no "racial component"
would be allowed under State law relating to who could vote or hold
office.
Senator Wilken pointed out that other legislation, SB 48,
establishes a system to analyze whether communities are "ready" for
self-government. He noted that audits are not required for second-
class cities currently. This underscored to him that there is no
difference between the proposed home rule community and second-
class city structures, with the exception of the charter. He
stressed the state would have no oversight for the charter of a
home rule community. This was "important" and "troublesome" to him.
Senator Green expressed the need to consider this matter carefully.
She asked if a recognized sovereign community, or IRA, must have a
racially defined component or characteristic.
Senator Olson answered no; there is no stipulation that a certain
percentage of the residents of such a community must be of a
specific ethnic background.
Senator Ward countered that the US Secretary of the Interior must
certify a community for it to be recognized under IRA, and that the
Secretary would not certify if the residents were not Native
American. Therefore, he stated there is a racial component.
Senator Olson agreed, but clarified that a community of 100
residents could still qualify if 25 residents are white and 25 are
Native.
Senator Ward acquiesced and specified that the "overriding
government" of an IRA must be a Native organization.
Senator Green next asked if there are other methods, beside IRA, to
qualify as a recognized sovereign community by the federal
government.
Senator Olson responded no.
Senator Ward explained there are there is a real difference between
an IRA and a sovereign nation
Co-Chair Kelly asked for clarification of IRA.
Senator Ward explained that the IRA was developed to address the
situation of Native Americans in the Lower 48 and their ability to
self-govern. He stated that when the Native Claims Settlement Act
was adopted in 1971, it was established there would be no
recognized sovereign Native nations in Alaska with the exception of
some existing nations including Metlakatla, Tyonek and Arctic
Village. He noted that communities attempted to become certified as
sovereign nations after this date due to funding opportunities and
because of these efforts, it was decided that all 214 villages are
equivalent to an IRA. However, he qualified, not all villages are
certified as IRA.
Co-Chair Kelly asked the number of IRA villages.
Senator Olson explained that the IRA passed the US Congress in 1936
with the goal to grant additional self-determination to Native
community members. He stated that federal funding has since
provided further incentive for communities to organize under the
IRA.
Senator Ward responded to Co-Chair Kelly's question that there are
approximately 50 recognized IRA communities. He stressed there is
significant effort required to become recognized.
Senator Austerman commented there is an IRA village located on
Kodiak Island, which is ineligible to receive State municipal
matching grants.
KEVIN RITCHIE, Alaska Municipal League, testified that the League's
Local Government Subcommittee/Legislative Committee reviewed the
legislation and provided conceptual support. However, he emphasized
the group did not consider the "significant change in the powers of
communities" and instead considered the options of allowing a
community to determine the type of government.
Mr. Ritchie appreciated the Committee's discussion, asserting that
the future of municipal governments in Alaska is important.
Senator Green asked the League's definition of municipality.
Mr. Ritchie replied the League follows the State's definition: a
local government created under the rules and regulations of the
State of Alaska. He understood that a home rule community would be
defined as a city under this legislation, although it was not
specifically stated as such in the bill title.
Senator Green asked about population perimeters.
Mr. Ritchie responded that statute establishes population
perimeters for the different types of municipalities.
Senator Wilken asked the League's position on the bill.
Mr. Ritchie reiterated the League has supported the bill
conceptually, but qualified the Committee has discussed different
issues, which could impact the position. He informed that when the
subcommittee reviewed the legislation, it was under the impression
that there would be no significant change to municipal powers.
Senator Ward asked the relationship between the League and IRA
communities.
Mr. Ritchie replied there is no formal relationship at present.
Senator Ward asked if the League would oppose this legislation if a
provision were added to require a mandatory contribution for
education funding.
Mr. Ritchie stated he would pose the question to the League.
Representative Dyson remarked he has made no effort to encourage
those parties in support of this legislation to contact the
Committee. He stated, "I have naively assumed, and it has been true
all through the committee process, that this thing is so self-
evidently valuable and we have such widespread support within the
legislative body for self-determination and removing barriers and
making it attractive."
Representative Dyson opined this discussion has identified that the
"crux of the issue" relates to philosophical differences between
Senator Wilken and himself. He stated, "Senator Wilken sees that
giving the folks the right to, and the opportunity, to write their
own constitution and not have State supervision, as long as they do
it within our constitutional framework and the legal framework. He
sees that as an issue of grave concern. I see that as an issue of
great celebration: giving folks the freedom to do whatever the heck
they darn well do within constitutional boundaries, not having
State government, Big Brother, looking over their shoulder, is a
marvelous opportunity and a cause for great celebration."
Co-Chair Kelly commented that if the Legislature were "working
under the assumptions of a Bill of Rights, where all people are
equal, maybe we wouldn't be afraid; but in this state, all people
are not equal. Adding the power of a government to those who
already are throwing around incredible economic weight might just
scare them. I don't see this as a liberty issue because the roles
are scrambled in Alaska anymore; you can't talk about liberty
anymore. If you were to apply this in a situation of complete
equality, like the Founding Fathers had assumed, I'd buy into it.
We don't have that. We don't have anywhere that in this State right
now."
Co-Chair Kelly announced he would hold the bill in Committee and
that he had conveyed such to Representative Dyson before the
hearing was scheduled.
DAN BOCKHORST, Staff, Alaska Local Boundary Commission, testified
via teleconference from Anchorage, to inform that the Commission
has the responsibility under State law to act on petitions for
incorporations of city and borough governments, city
reclassification, municipal annexation, merger, consolidation,
detachment and disillusion. He stated the Commission reviewed this
legislation at a meeting held March 9, 2002, and authored a letter
to the Committee on the matter [copy on file.] He summarized the
contents of the letter, noting the Commission recognizes that HB 16
is "well intended" and that the Commission formally commended the
sponsor for "seeking ways to enhance local government in Alaska."
Mr. Bockhorst pointed out, however, two "fundamental concerns"
detailed in the correspondence, the first questioning the need for
a new type of local government as the Commission concludes that
existing options are available for flexibility and adaptability for
self-governance. He detailed the options currently available for
local governments and noted the similarities of the second-class
city structure to the proposed home rule community structure.
Mr. Bockhorst listed the second concern as relating to the
requirement that the community develop a legally sound charter. He
informed that currently only boroughs and first-class city
governments could develop charters, which also have statutory
restrictions. He spoke to difficulties encounters by communities
attempting to draft charters.
Senator Leman shared that 38 years ago, when he was in the eighth
grade, he studied the Alaska Constitution and anticipated that all
Alaska communities would be organized by this time. He shared some
of Senator Wilken's concerns on this matter. Senator Leman
expressed his intent that Alaska residents in unorganized
communities should "be participating". He asked whether this
legislation provides a "better mechanism" for this to occur, and he
surmised it would.
Senator Leman addressed the concern regarding granting of
construction permits and noted state and federal laws define
illegal activities.
Senator Leman expressed, "Within the broader context, I believe
that giving communities and people the opportunities for some self-
determination… is probably a good thing to do and will advance us
toward the goal that many of us have."
Co-Chair Kelly ordered the bill HELD in Committee.
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