Legislature(1993 - 1994)

04/08/1993 08:20 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SENATE BILL NO. 142                                                          
       An  Act  relating  to   the  Alaska  regional  economic                 
       assistance  program;  and  providing  for an  effective                 
  Co-chair  Pearce  directed that  SB  142 be  brought  on for                 
  Senator  Jacko explained  that the Alaska  regional economic                 
  assistance program was statutorily established  in 1988.  It                 
  currently includes  13 ARDORs  funded through  the Dept.  of                 
  Commerce and  Economic  Development.   ARDORs are  nonprofit                 
  organizations  that provide  a link  and effective  delivery                 
  system  between   private,  state,   and  federal   economic                 
  development   resources  for   local  residents   and  small                 
  The bill  effects three  changes in  the law.   The  current                 
  $50.0 maximum each ARDOR may receive is increased to $100.0.                 
  Present law also  requires a  dollar-for-dollar match.   The                 
  proposed   bill   provides   flexibility  in   state   match                 
  requirements based upon the  capability of each organization                 
  to  raise  matching funds.   Under  section  3 of  the bill,                 
  contracts between state agencies and  ARDORS are exempt from                 
  the state procurement process.  Language within secs. 1  and                 
  2 limits the civil tort liability of ARDOR board members and                 
  Senator  Jacko explained  that current  funding for  ARDORs,                 
  particularly  in  rural Alaska,  is  inadequate to  ensure a                 
  necessary level  of operation.   Hence  need for the  above-                 
  noted increase from $50.0 to $100.0.                                         
  A total of $1.4  million annually will be needed  for the 13                 
  designated ARDORs and the  new ARDOR being organized in  the                 
  Matansuka-Susitna  Borough.     There   is  $650.0   in  the                 
  Governor's FY 94 operating  budget.  The $750.0  fiscal note                 
  brings the total to $1.4 million.                                            
  Senator Jacko directed attention to a sectional analysis for                 
  the bill as well as accompanying letters of support.                         
  CHRIS  GATES,  Director, Division  of  Economic Development,                 
  Dept. of Commerce and Economic  Development, and TOM LAWSON,                 
  Business/Regional   Development,   Division    of   Economic                 
  Development,  Dept.  of Commerce  and  Economic Development,                 
  came before committee.   Mr. Gates  spoke in support of  the                 
  legislation,  advising that  it would  "help local  economic                 
  development organizations do  their job better in  rural and                 
  urban Alaska."                                                               
  Mr.  Gates  explained  that  the   13  existing  ARDORs  are                 
  functioning well.  He noted  potential for new organizations                 
  in Mat-Su and the Tanana area near Fairbanks.  Approximately                 
  93%  of  Alaska's  population is  presently  represented  by                 
  ARDORs.    It   is  the  only  "ground-up"   based  economic                 
  development  tool  between  the state  and  local  entities.                 
  There  are in excess of  200, local board members attempting                 
  to  create jobs  and  development within  their  areas.   He                 
  pointed to a listing of  projects and jobs and  specifically                 
  noted businesses and economic activity in rural communities.                 
  ARDORs  are  also involved  in  the schools,  teaching basic                 
  business fundamentals to students.                                           
  In  response to  a  request from  Senator  Jacko, Mr.  Gates                 
  explained that section  3 of  the bill allows  the state  to                 
  contract with ARDORs  "to do  specific projects or  specific                 
  economic development  things within the  communities without                 
  going  through the  normal competitive  bidding situations."                 
  He   then   presented   several   examples  of   contractual                 
  Speaking  to   limited  liability   provisions,  Mr.   Gates                 
  explained  that they  protect volunteer  board members  from                 
  liability relating  to hazards associated  with the physical                 
  Co-chair Frank voiced his belief  that ARDORs meet needs  in                 
  certain  areas  but  questioned   need  for  an   additional                 
  organization  in  Fairbanks  which  already  has  a  borough                 
  government,  city  government,   the  Fairbanks   industrial                 
  development corporation, small business assistance center at                 
  the University of  Alaska, etc.    He suggested that  ARDORs                 
  may well serve rural  and regional needs.  However,  it does                 
  not appear to  make sense to establish them within organized                 
  and developed municipalities.                                                
  Co-chair  Pearce attested  to beneficial  activities by  the                 
  Anchorage ARDOR which markets the international airport  and                 
  works  with  the  city  and   state  to  bring  industry  to                 
  Anchorage.    Co-chair Frank  questioned  whether the  state                 
  should  be  funding  well  organized  ARDORs  in  Anchorage,                 
  Fairbanks, and the  Southeast Conference.  Mr.  Gates voiced                 
  support for  the  organizations, stressing  that  the  small                 
  amount of state funding is a catalyst for federal grants and                 
  private moneys.  The state funds approximately 16% while the                 
  ARDORs garner federal and private moneys totalling 84%.  The                 
  Fairbanks ARDOR  has provided  technical  assistance to  472                 
  businesses and  nonprofits.  Mr.  Gates next listed  some of                 
  the projects in Fairbanks.  Both  Co-chair Frank and Senator                 
  Sharp  took  exception  to  the  claim  that  the ARDOR  had                 
  assisted  with the  hospital  expansion  project.   Co-chair                 
  Frank noted that the hospital foundation has been active for                 
  thirty years and probably did  not need assistance.  Senator                 
  Sharp suggested  that  ARDOR  connection  to  many  projects                 
  merely consists of an ARDOR representative on the board.  He                 
  questioned whether  the ARDOR  had actively participated  in                 
  economically beneficial aspects of the organizations.                        
  Senator Jacko agreed  that some  ARDORs are more  successful                 
  than others and that some regions of the state probably need                 
  them more than others.   He stressed need for  ARDOR efforts                 
  in rural areas.  Co-chair Frank agreed.                                      
  In response to  an inquiry from  Co-chair Pearce, Mr.  Gates                 
  directed attention  to language within section  4, requiring                 
  the department to  establish a  formula that determines  the                 
  amount of the  required match based  upon the capability  of                 
  each organization to generate  money from nonstate  sources.                 
  A  sliding scale would  allow rural ARDORs  easier access to                 
  funding.   Urban ARDORs that  can more easily generate match                 
  moneys would work on a one-to-one match.                                     
  Co-chair Frank  expressed  a  preference  for  reducing  the                 
  $750.0 fiscal  note and focusing  the program on  areas less                 
  capable of raising funds locally.                                            
  Discussion followed concerning  organization and  activities                 
  of  the  Fairbanks ARDOR.    Senator  Sharp  asked that  the                 
  department present a  list of  projects initiated by  ARDORs                 
  and that the  list indicate whether  the projects are "in  a                 
  profit making mode."  Mr. Gates advised  that Alaska derived                 
  $3.5 million in private and  federal economic development as                 
  a result of ARDORs.                                                          
  End, SFC-93, #55, Side 1                                                     
  Begin, SFC-93, #55, Side 2                                                   
  Co-chair Pearce suggested that language at section 4 specify                 
  that the department establish a formula for determining both                 
  the amount of  the match as  well as the maximum  amount for                 
  which each ARDOR could apply.  She expressed concern that as                 
  budgets become increasingly tight, $100.0 in funding for all                 
  15 ARDORs will  be more difficult  to obtain.  The  Co-chair                 
  further  suggested  that  a  $250.0   note  be  prepared  to                 
  accompany  the  bill, allowing  the conference  committee to                 
  determine the  level of funding during budget deliberations.                 
  Mr. Gates advised that a priority for assisting ARDORs could                 
  be  established  to  meet the  foregoing  intent.   Co-chair                 
  Pearce  stressed need to  have something on  paper to inform                 
  each  ARDOR of the  amount it is  eligible to  receive.  She                 
  then directed  attention to page  2, line 16,  and suggested                 
  that the following be added after "determines:"                              
       both the maximum an ARDOR can apply for and                             
  Mr.  Gates explained that both  the priority for funding and                 
  the match would  allow the  department to prioritize  scarce                 
  resources.  He then suggested  adding the following at  page                 
  2, line 17, following "match:"                                               
       both determines the amount of the  match required,                      
       and the priority for funding.                                           
  Senator Rieger voiced discomfort over  addition of the above                 
  new  language.    He  noted  that  the  legislative  opinion                 
  regarding  priorities may deviate  dramatically from that of                 
  the executive branch.                                                        
  Mr.  Gates  explained that  the  department views  ARDORs in                 
  terms of three types:                                                        
       1.   Urban (railbelt)                                                   
       2.   Suburban                                                           
       3.   Rural                                                              
  The  13 existing ARDORs  are broken  down into  those areas.                 
  The program  could specifically  target  suburban and  rural                 
  ARDORs.    Co-chair  Pearce  voiced reluctance  to  preclude                 
  railbelt ARDORs.   The department should be  able to respond                 
  to  ARDORs  that  help   those  who  are  willing   to  help                 
  Discussion followed  between Co-chair  Pearce and  Mr. Gates                 
  concerning the method of distribution  of moneys should full                 
  funding not be provided.                                                     
  Both Senators Rieger  and Jacko expressed a  preference that                 
  language within section  4 remain as  set forth in CSSB  142                 
  (CRA).    Senator Jacko  said  that  if the  fiscal  note is                 
  reduced   to  $250.0,   the   program   would  become   more                 
  competitive, and  ARDORs would  have to  bring forth  better                 
  proposals.  He said he had no problem with that.                             
  Senator Sharp asked  if any  of the 13  existing ARDORs  had                 
  experienced problems  coming up with the needed  match.  Mr.                 
  Gates explained that Bering Straits in Nome has had "quite a                 
  bit  of difficulty  . .  ."   He stressed  that the  private                 
  sector base does not generally exist in  rural areas.  It is                 
  thus difficult to  raise private matches without  an economy                 
  to draw from.   The department has thus endeavored  to allow                 
  in-kind,  airline tickets,  etc., to  serve as  part  of the                 
  Co-chair Pearce called for additional questions or comments.                 
  None  were  forthcoming.    Co-chair  Frank MOVED  that  the                 
  committee prepare a  new fiscal note to  accompany the bill,                 
  reducing funding from $750.0 to $250.0.  No objection having                 
  been raised, IT WAS SO ORDERED.                                              
  Co-chair  Pearce called  for  additional testimony  from the                 
  public.   None was  forthcoming.   She then  queried members                 
  regarding disposition  of the  bill.   Co-chair Frank  MOVED                 
  that  CSSB  142 (CRA)  pass  from committee  with individual                 
  recommendations and the  $250.0 fiscal  note.  No  objection                 
  having  been raised,  CSSB  142 (CRA)  was  REPORTED OUT  of                 
  committee with a  $250.0 SFC  fiscal note for  the Dept.  of                 
  Commerce  and Economic  Development.   Co-chairs  Frank  and                 
  Pearce  and Senator Jacko signed the committee report with a                 
  "do pass" recommendation.  Senators Kelly, Sharp, and Rieger                 
  signed "no recommendation."                                                  

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