Legislature(2003 - 2004)
05/10/2004 09:51 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
CS FOR HOUSE BILL NO. 461(STA) am
"An Act relating to enhanced 911 surcharges and to 911 and
emergency services dispatch systems."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that this bill, CS HB 461(STA), Version 23-
LS1633\E.A would allow "a local municipality, by ordinance to raise
the surcharge and eliminate the current surcharge limit on
telephone users for 911 emergency services. He noted that several
fiscal notes accompany the legislation.
MATT RUDIG, Staff to the bill's sponsor Representative Jim Holm,
noted that this bill would: maintain public safety; increase local
control; and implement 911 service in rural Alaska. He stated that
changing current statutes would provide municipalities "the
flexibility to charge what they need to charge to recover the
costs" of Enhanced 911 emergency service, dispatches, and
surcharges. He noted that there is "little debate" as to the
necessity of this service, which is provided nationwide to assist
in saving lives.
Mr. Rudig explained that, currently, municipalities, with the
exception of Anchorage which is limited to a 50-cent surcharge, are
limited to charging a maximum 75-cent surcharge per month to
telephone users to assist in funding a municipality's Enhanced 911
system. He clarified that the funds generated by this surcharge
would be limited to providing for equipment costs and do not
provide for any operational costs associated with the program. This
bill, he advised, would allow municipalities to charge a single
surcharge per phone line to provide funds for both the system and
operational expenses including dispatch operations.
Mr. Rudig stated that the current surcharge level has forced
municipalities "to shift the burden of the cost directly onto
property owners" through property taxation rather than spreading
the assessment "to the actual users who demand the service."
Mr. Rudig commented that while there has been some concern
regarding the fact that the bill does not include a maximum level
of which municipalities could charge, the bill clearly states that
a municipality could not use the funds generated from the
"surcharge for anything but the emergency services system or
dispatch."
SFC 04 # 115, Side A 07:32 PM
Mr. Rudig continued that provisions of the bill specify that on an
annual basis, a review and voter concurrence of the surcharge rate
must be conducted, as specified in Section 4(a) on page four, lines
14 through 19 of the bill. He stated, therefore, that the amount of
the surcharge would be governed by State statute and by local voter
approval. Thus, he attested, the local governing body would not be
able to institute an excessive surcharge fee. Furthermore, he noted
that the State statute would allow the surcharge to be changed
solely by ordinance as opposed to current language that requires
both a resolution and an ordinance. In conclusion, he stated that
because this legislation allows the proposed methodology to be
optional, municipalities could choose to continue their current
surcharge taxation method.
REPRESENTATIVE JIM HOLM, the bill's sponsor, acknowledged the
efforts exerted by Mr. Rudig in developing this legislation.
Continuing, he pointed out that the comparison chart, titled "E-911
Dispatch Center Revenue and Costs Summary" [copy on file], prepared
by Tim Rogers of the Alaska Municipal League substantiates the need
for this legislation as it depicts that the operating costs
associated with the Anchorage Call and Dispatch Centers amount to
$7,652,280 as compared to the corresponding revenue of $2,066,944
currently generated by the City's 50-cent surcharge on 344,491
phone lines and cell phones. Continuing, he noted that the City of
Fairbanks' Call and Dispatch Centers' operating costs amount to
$4,680,000 with $436,293 of that being supported by the City's 65-
cent surcharge. He opined that the people of a municipality, rather
than the State, should establish a limitation on the surcharge, as
they are the users of the service.
Representative Holm calculated that in order to sufficiently
collect funds to offset the total cost of providing the Enhanced
911 system in their community, a surcharge of $45 per month per
line would be required. To that point, he understood that the City
of Fairbanks has specified an upper surcharge limit of no more than
three dollars per line and that the City of Anchorage is
considering a surcharge fee of approximately $1.50 per line.
Representative Holm noted that the Kenai Peninsula Borough
currently has a 911 System shortfall of $1,819,328 and the City and
Borough of Juneau has a shortfall of $1,094,544.
Representative Holm pointed out that each area would be required to
have a separate cost analysis conducted, as, he contended, one fee
would not align with all communities' needs.
Senator Bunde asked for further confirmation that the level of the
surcharge would be authorized by a vote of the people, as he noted
that this action is not specifically addressed in Section 4(a) of
the bill.
Mr. Rudig responded that the intent of the bill is to specify that
any change to the surcharge would be by local ordinance.
Senator Bunde declared that changing the surcharge level by
ordinance is different that changing it by a vote of the people. He
expressed, therefore, that the citizens of a municipality must be
confident that their local governing body would act responsibly
when addressing this issue via local ordinance.
Co-Chair Wilken asked whether both the surcharge review and the
adoption of the corresponding ordinance must occur annually.
Mr. Rudig clarified that he had misspoken in this regard as a
municipality's obligation regarding ordinance action is not
specified in the bill.
Co-Chair Wilken understood therefore that while an annual audit
must be conducted, annual ordinance action would not be required.
Representative Holm surmised that most municipalities conduct their
budget process in a similar manner and therefore, concluded, that
the E-911 system would be a budgetary line item. Therefore, he
concluded that as such it would be reviewed on an annual basis by
the municipality.
Co-Chair Wilken understood earlier testimony to specify that an
annual audit of the E-911 System must be conducted.
Senator Bunde pointed out that this language is included in the
bill in Section 4(a) on page four, lines 14 through 21.
Co-Chair Wilken asked the sponsor to discuss this language;
specifically in regards to which E-911 System expenses, as required
by State law, would benefit from the surcharge.
Representative Holm stated that language in Section 4(a) on page
four beginning on line 18 specifies that the surcharge could
provide "for the actual labor and equipment used to provide the
emergency services dispatch." He stated that this language does not
provide for "anything extra" or allow a municipality "to charge
more than the service costs." Therefore, he declared, "this is the
upper cap." He noted; however, that the language does not limit a
municipality's ability to, as an example, charge property owners a
tax to assist in covering the costs of the service. He reiterated
that this legislation would allow municipalities to charge those
who have phone lines in the community a per line surcharge.
Co-Chair Wilken understood that the audit would be a local
municipality function and that the local governing body would make
the determination regarding the level of the local surcharge. He
voiced that, absent a specified surcharge ceiling, language should
be included to prohibit the local assembly from using the surcharge
as a means through which to raise money.
Representative Holm reiterated that an upper limit is dictated in
the bill by the aforementioned Section 4(a) that specifies exactly
what costs could be recouped by the surcharge: these being the
exact labor and costs associated with providing the service. He
opined that it would be inappropriate to specify a ceiling in the
bill as the cost of providing the service varies by community.
AT EASE 7:43 PM / 7:43 PM
Co-Chair Green observed that the bill's language does not address
matters regarding such things as duplication of services,
efficiency, or competitive services, or "the breath of the service"
that might be offered. Continuing, she voiced concern that, while a
municipality would set the surcharge rate, the collection of that
surcharge and any corresponding negative reactions from telephone
line users would fall upon the shoulders of the local utility. She
noted that while the utility has no say in the "open-ended"
surcharge rate, the utility would receive the angry phone calls. In
summary, she agreed with Co-Chair Wilken that a surcharge ceiling
should be included in the legislation.
Co-Chair Wilken understood that, while cell phones are not
currently assessed an E-911 fee, this legislation would apply to
them.
Mr. Rudig affirmed that cell phones would be assessed the
surcharge.
Co-Chair Wilken asked, using the City of Fairbanks as an example,
whether someone living outside of the city limits would be required
to pay the E-911 surcharge.
Representative Holm explained that every phone and cell phone in an
E-911 service area would be required to pay the surcharge. He
reiterated that currently, while every phone line is charged a
surcharge, the revenue generated does not offset the cost of the
service. In response to a question from Co-Chair Wilken, he noted
that most of the Fairbanks North Star Borough is located within an
E-911 service area and would therefore pay the surcharge.
Co-Chair Wilken understood that the money raised by this
legislation would increase, as cell phones would now be subject to
the surcharge.
Senator Bunde commented that consideration might be given to
establishing a universal 911 service charge for someone who lives
outside of a service area, but who receives 911 assistance through
a local or long-distance call. In addition, he expanded on Co-Chair
Green's concern that absent any "checks and balances" regarding the
level of 911 service a utility might install, "a Cadillac" 911
enhanced service system might be implemented in an area when the
community "only wants a Ford." This situation, he attested, would
serve to increase the surcharge level required to pay for the
system or would allow the utility to influence the rate. He noted
that such things as 911 fees and universal service fees draw less
public scrutiny than those aroused by such things as an increase in
one's property tax assessment, which is currently the common method
of collecting the 911 surcharge. Therefore, he stressed that the
checks and balances portion of the bill should be further
addressed.
Senator Olson opined that the rationale against establishing a
surcharge limit in the bill is not convincing.
Representative Holm responded that the bill is necessary as
demonstrated by the fact that a small number of property owners in
Fairbanks are annually paying in excess of $4.2 million in property
taxes to support E-911 service for all the people in that area. He
characterized this as being "inappropriate."
Senator Olson asked how this legislation would affect people in
rural areas of the State.
Mr. Rudig responded that, to address this concern, language located
in Section 10, on page six, lines eight through 14 of the bill was
incorporated during its passage through the House.
Sec. 10. AS 42.05 is amended by adding a new section to read:
Sec. 42.05.295. Routing 911 calls. Notwithstanding AS
42.05.711, to ensure statewide access by all residents to 911
wireline services, traditional or enhanced, each local
exchange telephone company that provides wireline service to
an area outside a municipality must route 911 calls
originating from within its customer service base through a
toll free number to a regional public safety answering point
identified by the state. In this section, " municipality" has
the meaning given in AS 29.35.137.
Mr. Rudig explained that this language would specify that a toll
free 911 number that would ring to a specified answering point
"would be available throughout all of Alaska."
Senator Olson stated that his primary concern is to whom the
financial responsible for this service would fall; specifically
whether it would be reflected on rural residents' phone bills.
Mr. Rudig clarified that a municipality must have an established E-
911 service in order to implement a surcharge; therefore, he
continued, most rural areas would be exempt from a fee.
Senator Olson understood therefore that the bill would have no
financial affect on rural citizens.
Mr. Rudig expressed that this would be the case. Furthermore, he
stated that while a community such as Bethel or Barrow might
consider implementing an E-911 system in their municipality, the
fact, as attested by the experiences of the cities of Fairbanks and
Anchorage, that there is "no way to recover the cost" of the
service would be a deterrent.
Senator Olson concluded that this legislation would not financially
affect rural residents.
Co-Chair Wilken stated that the surcharges imposed by this
legislation would be limited to those areas having an E-911 system.
Representative Holm expressed that this legislation would not
impose a surcharge on rural residents.
Senator Olson acknowledged that this legislation would not affect
rural residents.
Co-Chair Wilken clarified that cell phone users in a place such as
Barrow could be charged a 911 surcharge were their city to
incorporate an Enhanced 911 system in their community.
Senator Bunde stated that, currently, there are a multitude of
areas, remote or otherwise, where people, when calling 911 would
get an operator. He voiced that a Universal Service fee provides
for the cost of providing this service on a Statewide basis;
however, he clarified that the Enhanced 911 Service fee is a
separate and local option issue.
Co-Chair Green asked for clarification regarding the sponsor's
remarks about the availability of 911 calls throughout the State.
Mr. Rudig responded that, currently, in some parts of the State,
calling 911 is a long distance call and is often answered by a
recording. He noted that, as per Section 10 in this bill, 911 calls
from throughout the State would be toll free and would be answered
by a 911 call center. He stated that this provision would be
limited to standard 911 services rather than Enhanced 911 service.
Co-Chair Green asked for further information about the funding for
this service.
Representative Holm responded that, while he is unsure of the
funding mechanism, federal law mandates statewide 911 service. He
stated that within the State today, there is "a point of
contention" regarding whether all telephone utilities were
compliant with this order. He stated that language in Section 10
would align the State with federal law.
Representative Holm commented that the Department of Public Safety
is responsible for routing these calls. He exampled that were he
near the community of North Way while driving en-route from
Fairbanks to Juneau and used his cell phone to call 911 for
assistance, his 911 call would be routed to the Department of
Public Safety in Fairbanks who would, in turn, send assistance from
North Way.
Representative Holm noted that various regions of the State have
different response systems and that some Enhanced 911 areas utilize
Global Positioning Satellites (GPS) to assist in locating those in
need. He declared that having a cell phone on your person is
beneficial as it could be "a life-saving device."
Amendment #1: This amendment deletes " may be imposed" and replaces
it with "may not exceed $1" following "surcharge" in Section 4(a)
on page four, line three. This language would read as follows.
The [FOR A MUNICPALITY WITH A POPULATION OF 100,000 OR MORE,
AN} enhanced 911 surcharge may not exceed $1 [MAY NOT EXCEED
50 CENTS PER] month for each wireless telephone number, or for
wireline telephones, each [50 CENTS PER] month for each local
exchange billing statement for a residential customer or for
each access line for a commercial customer [FOR WIRELINE
TELEPHONES. FOR A MUNICIPALITY WITH FEWER THAN 100,000 PEOPLE,
AN ENCHANCED 911 SURCHARGE MAY NOT EXCEED 75 CENTS PER MONTH
FOR EACH WIRLESS TELEPHONE NUMBER OR 75 CENTS PER MONTH FOR
EACH LOCAL EXCHANGE ACCESS LINE FOR WIRELINE TELEPHONES].
New Text Underlined [BRACKETED TEXT DELETED]
In addition, this amendment deletes all material in Section 4(a)
beginning on page four, line 18 through line 21, following the word
"system". This language currently reads as follows.
The municipality may [ONLY] use the enhanced 911 surcharge for
the enhanced 911 system and for the actual labor and equipment
used to provide emergency services dispatch, but not for costs
of providing the medical, police, fire, rescue, or other
emergency service, or for any other purpose.
Co-Chair Green moved to adopt Amendment #1
Co-Chair Wilken objected for discussion.
Co-Chair Green explained that this amendment would limit a
municipality's monthly E-911 surcharge to no more than one-dollar
and would delete language in the bill that would allow the
municipality to utilize these funds for labor and emergency medical
dispatch, as she opined that someone would allot these surcharge
funds to expenses beyond the cost of the system itself. She
recalled that the original intent of implementing the surcharge was
to offset the cost of the system. In summary, she voiced being
opposed to the lack of a limit being placed on the surcharge as the
cost might be inflated to provide for an elaborate operation as
well, She also voiced concern regarding the fact that no definition
of what the funds could be used for is included in the bill. In
addition, she expressed concern regarding the apparent
"discrepancy" in the costs of providing Enhanced 911 services as
depicted in the aforementioned comparison costs for the cities of
Fairbanks, Anchorage, Kenai and Juneau, as she stated, that were
the systems similar, the revenues and expenses would be more
comparable based on population."
Senator Dyson asked Co-Chair Green for further information
regarding the reason to delete language pertaining to medical,
police, fire, and rescue, as the bill specifies that these items
should not be included in the costs.
Co-Chair Green responded that the bill should address the hard
costs of the system itself rather than such things as personnel.
Senator Dyson, Co-Chair Wilken, and Co-Chair Green discussed
reworking the amendment to qualify that it be limited to providing
funding for the equipment rather than for personnel and other
costs.
Senator Bunde spoke in favor of retaining the Amendment as
presented.
Co-Chair Wilken asked that, before further action is taken on the
amendment, that the bill's sponsor meet with Committee staff to
develop language to address Committee concerns.
Senator B. Stevens voiced that defining the meaning of "emergency
services dispatch system" would assist in clarifying the elements
of the service. He also pointed out that language in Section 4 on
page four, lines six and seven is confusing in regards to wireless
phone surcharges.
Co-Chair Wilken summarized that the concerns requiring further
discussion include: whether a surcharge limit should be
implemented; further defining the enhanced 911 system; and
addressing the wireless surcharge language on page four, lines six
and seven.
Senator Dyson voiced that he is "not a fan" of establishing limits
on what should be charged.
Co-Chair Wilken understood that Co-Chair Green is in favor of
establishing a surcharge limit.
Senator Bunde also voiced support for the establishment of a
surcharge limit as he declared that he does not have confidence in
municipalities. He noted that while the bill specifies that an
annual audit of the surcharge must be conducted, the bill does not
clarify who would have access to those findings. Therefore, he
asked that language pertaining to the disclosure of the findings be
included.
Co-Chair Green offered a motion to withdraw Amendment #1.
There being no objection, the motion was WITHDRAWN.
Co-Chair Green stated that public utilities "get the black eye."
Therefore, she stressed that a municipality establishing the
surcharge should conduct a campaign clarifying that the
municipality rather than the utility is responsible for the
forthcoming rate change.
Co-Chair Wilken ordered the bill HELD in Committee for further
review.
RECESS TO THE CALL OF THE CHAIR 8:14 PM / 12:14 AM
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