Legislature(1993 - 1994)

02/23/1994 01:40 PM Senate JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 SENATOR TAYLOR introduced SB 164 (MUNICIPAL INCORPORATION-                    
 RECLASSIFICATION-DISSOLUTION), sponsored by the Senate Community &            
 Regional Affairs Committee chaired by SENATOR RANDY PHILLIPS, and             
 invited him to testify.  SENATOR PHILLIPS deferred to DARROLL                 
 HARGRAVES, Chairman of the Local Boundary Commission.                         
                                                                               
 SENATOR TAYLOR announced there was a work draft for a committee               
 substitute for SB 164, and he called on MR. HARGRAVES, who                    
 introduced two members and a staff person present from the Local              
 Boundary Commission: TONI SALMEIER from Anchorage, FRANCES HALLGREN           
 from Sitka, and Commission Staff, DAN BOCKHORST.                              
                                                                               
 MR. HARGRAVES began by urging the legislature to pass the bill this           
 year, and he praised the hard work by sponsors and staff.  He                 
 explained the bill makes some technical amendments to the law that            
 are needed by the boundary commission and are detailed on pages 38            
 and 39 of this year's report from the commission.                             
                                                                               
 Number 058                                                                    
                                                                               
 MR. HARGRAVES reviewed the main provisions in the bill beginning              
 with (1) Establishes mechanism for first class and home rule cities           
 to reclassify as second class cities.  (2) Provides State oversight           
 concerning all municipal reclassification.  He gave some examples             
 of the need for this provision.  (3) Permits direct incorporation             
 of home rule cities and unified municipalities, and confirms that             
 home rule cities and home rule boroughs may be created through                
 merger and consolidation.  (4) Confirms the discretion of the Local           
 Boundary Commission in approving, denying or amending petitions.              
 (5) Confirms that the Local Boundary Commission has legislative               
 authority to adopt regulations for incorporation and dissolution.             
                                                                               
 MR. HARGRAVES explained it was vital to have the legislation                  
 because of events that will be coming forth in the next few months.           
 He called attention to the work draft, Section 22 on page 8, to               
 suggest a change to Sec. 29.06.520 by deleting TO ASSETS AND                 
 LIABILITIES. and leave the title as SUCCESSION.  He explained the     e    
 section dealt with quite a few "rights, powers, and duties."                  
                                                                               
 SENATOR TAYLOR asked for a motion to adopt for discussion purposes            
 the proposed committee substitute prepared by the Judiciary                   
 Committee.                                                                    
                                                                               
 Number 104                                                                    
                                                                               
 SENATOR DONLEY asked for an assessment of the differences in the              
 work draft with the original SB 164.  MR. HARGRAVES asked that MR.            
 BOCKHORST from the boundary commission staff reference the changes.           
                                                                               
 MR. BOCKHORST explained the difference between the Judiciary work             
 draft and the CS FOR SENATE BILL NO. 164(CRA) is the addition of              
 Section 22 on page 8.  He further explained Section 22 restores               
 some language that was in the statute in 1988, prior to a change in           
 the law that was to make it easier for certain dissolutions to                
 occur.                                                                        
                                                                               
 MR. BOCKHORST  continued to explain the powers, duties, rights had     d    
 been eliminated from the section, which, he thought created some              
 unintended circumstances, where the state or successor municipality           
 could be burdened with the responsibility of paying off debts, but            
 may not have the power, the right, or the duty to collect revenues            
 to pay those debts.                                                           
                                                                               
 SENATOR DONLEY questioned the difference between the powers and               
 duties when a municipality down grades from a first class to a                
 second class.  He asked if the municipality down grades, do they              
 keep the same powers, duties, and rights, and why would they down             
 grade?                                                                        
                                                                               
 MR. BOCKHORST explained Section 22 deals only with dissolution and            
 has nothing to do with reclassification from first to second class            
 status.                                                                       
                                                                               
 SENATOR DONLEY suggested a municipality could dissolve and be                 
 recreated as a second class entity.  He thought the municipality              
 would be recreated with all of the rights, powers, and duties as              
 when they were a first class.                                                 
                                                                               
 Number 156                                                                    
                                                                               
 MR. BOCKHORST continued to explain Section 22 only applies to a               
 dissolution, and he reiterated the state of Alaska or another                 
 municipal government is going to be burdened with the assets and              
 liabilities.                                                                  
                                                                               
 MR. BOCKHORST claimed the language suggests, that if the State or             
 another municipal government is going to be burdened with the                 
 liabilities of a dissolved government, then the successor needs to            
 have the powers, duties, and rights owned by the former municipal             
 government in order to collect revenues and pay off the debts.                
                                                                               
 MR. BOCKHORST said reclassification was a separate issue, and under           
 current law, if a first class city wanted to reclassify to second             
 class status, there is no direct way to do so.  He used the cities            
 of Dillingham and Galena as an example of first class cities in an            
 unorganized borough, both operate school districts.  He said there            
 was an interest, because of the financial burden faced by the                 
 communities to provide schools, or to dissolve or reclassify into             
 second class status.  If they dissolved under the present system              
 the responsibility for education would be transferred to the State            
 of Alaska to be operated as a school district under the regional              
 education attendance area system.                                             
                                                                               
 SENATOR LITTLE said the city of Seldovia has been used as an                  
 example in the backup material, and she posed the hypothetical that           
 Seldovia has petitioned to dissolve.  If the Kenai Peninsula                  
 Borough refused to establish a service area to take care of the               
 services previously accepted by the city of Seldovia, she asked how           
 the bill would influence that situation.                                      
                                                                               
 Number 202                                                                    
                                                                               
 MR. BOCKHORST explained if, under Section 22, the Kenai Peninsula             
 Borough refused to act as a successor to a dissolved city of                  
 Seldovia, the law as it currently exists says all those assets and            
 liabilities will be transferred from Seldovia to the State of                 
 Alaska.  Without the language in Section 22, he further explained             
 the state gets saddled with debt without the assets to collect                
 taxes to pay for Seldovia's obligation bonds.                                 
                                                                               
 SENATOR LITTLE clarified that Section 22 would allow the state to             
 assume the rights, powers, and duties for Seldovia.  MR. BOCKHORST            
 said she was correct, and he further explained what happened when             
 these powers were eliminated in the 1988 law.  He said Section 22             
 was restorative language in the statute that existed previously.              
                                                                               
 In a discussion with MR. BOCKHORST, SENATOR LITTLE received some              
 historical information on the proposed changes and on the expressed           
 statutory authority for the state to continue to levy taxes                   
 previously levied by Seldovia.                                                
                                                                               
 SENATOR TAYLOR picked up on the hypothetical of Seldovia where the            
 borough succeeded to Seldovia's assets, and added the factors of              
 the borough having limited powers and Seldovia being a home rule              
 city with general powers.  He quoted SENATOR DONLEY'S question if             
 the borough would inherit through Section 22 those powers which it            
 doesn't otherwise have, or would it only be to the extent that it             
 impacts rights, powers, and duties needed regarding liabilities.              
 He gave the example of a police department in Seldovia and no                 
 police authority in the Kenai Peninsula Borough.                              
                                                                               
 There was a short discussion among the committee members with MR.             
 BOCKHORST on what Section 22 really says.  MR. BOCKHORST explained            
 in the dissolution process there would have to be a transition plan           
 prepared, and the borough would be required to establish a service            
 area to assume the powers and duties of Seldovia.                             
                                                                               
 Number 255                                                                    
                                                                               
 SENATOR LITTLE said she was hopeful Seldovia would not dissolve               
 itself.                                                                       
                                                                               
 SENATOR DONLEY asked SENATOR PHILLIPS whether he thought Section 22           
 was a good amendment, and SENATOR PHILLIPS said it was done in a              
 draft after leaving his committee.  SENATOR DONLEY also asked why             
 the provisions in Section 22 were taken out in 1988.                          
                                                                               
 MR. BOCKHORST thought it was because the Local boundary Commission            
 denied the petition for the dissolution of the city of Akiachak               
 using the law as written prior to the 1988 amendments.  He said, at           
 that time, REPRESENTATIVE LYMAN HOFFMAN prepared a series of                  
 amendments to eliminate what was perceived as road blocks causing             
 the commission to deny the petition for the dissolution of                    
 Akiachak.                                                                     
                                                                               
 MR. BOCKHORST explained that Section 5 of the bill adopted by the             
 legislature in 1988 was intended to eliminate any question that a             
 successor to a dissolved municipal government would allow the State           
 of Alaska to contract with an Indian Reorganization Act village or            
 traditional council, but doing so would not grant any recognition             
 of governmental powers in the course of entering into a contract              
 between the State of Alaska and a village council.  He indicated a            
 copy of the text of the 1988 amendment was in the bill packet.                
                                                                               
 SENATOR DONLEY asked how the amendment addressed that concern,                
 which he considered a legitimate one.                                         
                                                                               
 MR. BOCKHORST thought the intention was to insure, for a native               
 village council, it would not be recognized as a governmental                 
 entity with governmental powers.  He explained Section 22 clearly             
 says the powers, right, and duties of a former municipal government           
 would only succeed to another municipality or to the State.  He               
 thought the intent by REPRESENTATIVE HOFFMAN was retained.                    
                                                                               
 SENATOR DONLEY now felt the legislation was acceptable, but asked             
 MR. BOCKHORST if he had talked to REPRESENTATIVE HOFFMAN.  He                 
 suggested, out of curtesy, it should have been done, since MR.                
 BOCKHORST was attempting to amend a bill written by a current                 
 legislator.                                                                   
                                                                               
 Number 305                                                                    
                                                                               
 MR. HARGRAVES said he would pay close attention to SENATOR DONLEY'S           
 advice and would be visiting REPRESENTATIVE HOFFMAN'S office.                 
                                                                               
 SENATOR TAYLOR restated the amendment to delete on page 8, line 22            
 the words TO ASSETS AND LIABILITIES.  Without objections, so                
 ordered.                                                                      
                                                                               
 SENATOR JACKO moved to pass CS FOR SENATE BILL NO. 164(JUD) as                
 amended (MUNICIPAL INCORPORATION/RECLASSIFICATION/DISSOLUTION)                
 from committee with individual recommendations.  Without                      
 objections, so ordered.                                                       

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