Legislature(1999 - 2000)

04/08/1999 08:05 AM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
        HOUSE COMMUNITY AND REGIONAL AFFAIRS                                                                                    
                 STANDING COMMITTEE                                                                                             
                   April 8, 1999                                                                                                
                     8:05 a.m.                                                                                                  
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Representative Andrew Halcro, Co-Chairman                                                                                       
Representative John Harris, Co-Chairman                                                                                         
Representative Carl Morgan                                                                                                      
Representative Lisa Murkowski                                                                                                   
Representative Fred Dyson                                                                                                       
Representative Reggie Joule                                                                                                     
Representative Albert Kookesh                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
*HOUSE JOINT RESOLUTION NO. 23                                                                                                  
Proposing amendments to the Constitution of the State of Alaska                                                                 
relating to the community development fund, the permanent fund, and                                                             
the budget reserve fund.                                                                                                        
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
*HOUSE BILL NO. 155                                                                                                             
"An Act relating to municipal assembly forms of representation and                                                              
apportionment."                                                                                                                 
                                                                                                                                
     - MOVED OUT OF COMMITTEE                                                                                                   
                                                                                                                                
(* First public hearing)                                                                                                        
                                                                                                                                
PREVIOUS ACTION                                                                                                                 
                                                                                                                                
BILL: HJR 23                                                                                                                    
SHORT TITLE: COMMUNITY DEVELOP FUND/PFD/BUD RESERVE                                                                             
SPONSOR(S): REPRESENTATIVES(S) DAVIS                                                                                            
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 3/05/99       366     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 3/05/99       366     (H)  CRA, JUDICIARY, FINANCE                                                                             
 4/08/99               (H)  CRA AT  8:00 AM CAPITOL 124                                                                         
                                                                                                                                
BILL: HB 155                                                                                                                    
SHORT TITLE: MUNICIPAL ASSEMBLY APPORTIONMENT                                                                                   
SPONSOR(S): REPRESENTATIVES(S) SMALLEY, Davis, Phillips                                                                         
                                                                                                                                
Jrn-Date    Jrn-Page           Action                                                                                           
 3/24/99       555     (H)  READ THE FIRST TIME - REFERRAL(S)                                                                   
 3/24/99       555     (H)  CRA, JUD                                                                                            
 3/29/99       606     (H)  COSPONSOR(S): DAVIS                                                                                 
 4/07/99       679     (H)  COSPONSOR(S): PHILLIPS                                                                              
 4/08/99               (H)  CRA AT  8:00 AM CAPITOL 124                                                                         
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
REPRESENTATIVE DAVIS                                                                                                            
Alaska State Legislature                                                                                                        
Capitol Building, Room 513                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-2693                                                                                                      
POSITION STATEMENT: Testified as Sponsor of HJR 23.                                                                             
                                                                                                                                
DEB DAVIDSON, Legislative Administrative Assistant                                                                              
     for Representative Davis                                                                                                   
Alaska State Legislature                                                                                                        
Capitol Building, Room 513                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-2693                                                                                                      
POSITION STATEMENT:  Answered questions on HJR 23.                                                                              
                                                                                                                                
TAMARA COOK, Director                                                                                                           
Legislative Legal and Research Services                                                                                         
Legislative Affairs Agency                                                                                                      
130 Seward Street, Suite 409                                                                                                    
Juneau, Alaska 99801-2105                                                                                                       
Telephone:  (907) 3867                                                                                                          
POSITION STATEMENT:  Answered questions on HJR 23 and HB 155.                                                                   
                                                                                                                                
KEVIN RITCHIE                                                                                                                   
Alaska Municipal League                                                                                                         
217 Second Street                                                                                                               
Juneau, Alaska 99801                                                                                                            
Telephone:  (907) 586-1325                                                                                                      
POSITION STATEMENT:  Testified on HJR 23.                                                                                       
                                                                                                                                
REPRESENTATIVE SMALLEY                                                                                                          
Alaska State Legislature                                                                                                        
Capitol Building, Room 428                                                                                                      
Juneau, Alaska  99801                                                                                                           
Telephone:  (907) 465-3779                                                                                                      
POSITION STATEMENT:  Testified as sponsor of HB 155.                                                                            
                                                                                                                                
LINDA MURPHY, Borough Clerk                                                                                                     
Kenai Peninsula Borough                                                                                                         
144 North Binkley Street                                                                                                        
Soldotna, Alaska 99669                                                                                                          
Telephone:  (907) 262-4441                                                                                                      
POSITION STATEMENT:  Urged passage of HB 155.                                                                                   
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 99-23, SIDE A                                                                                                              
Number 0001                                                                                                                     
                                                                                                                                
CO-CHAIRMAN called the House Community and Regional Affairs                                                                     
Standing Committee meeting to order at 8:05 a.m.  Members present                                                               
at the call to order were Representatives Halcro, Harris, Murkowski                                                             
and Dyson.  Representatives Morgan, Joule and Kookesh arrived at                                                                
8:10 a.m.                                                                                                                       
                                                                                                                                
HJR 23 - COMMUNITY DEVELOP FUND/PFD/BUD RESERVE                                                                                 
                                                                                                                                
Number 0030                                                                                                                     
                                                                                                                                
CO-CHAIRMAN HALCRO announced that the first order of business                                                                   
before the committee would be HOUSE JOINT RESOLUTION NO. 23,                                                                    
Proposing amendments to the Constitution of the State of Alaska                                                                 
relating to the community development fund, the permanent fund, and                                                             
the budget reserve fund.                                                                                                        
                                                                                                                                
REPRESENTATIVE DAVIS, Sponsor of HJR 23, Alaska State Legislature,                                                              
noted that House Finance has zeroed out municipal assistance, safe                                                              
communities, and revenue sharing.  There are efforts to determine                                                               
if there is money available to place in that account, but it does                                                               
not look good.  This resolution, HJR 23, creates an endowment for                                                               
safe communities and revenue sharing to all municipalities in the                                                               
state.  The endowment would be created with a $750 million deposit                                                              
from the Constitutional Budget Reserve Fund (CBR) which would be                                                                
placed into an account which would draw interest.  Payments would                                                               
be made to municipalities each year from the earnings of that                                                                   
account.                                                                                                                        
                                                                                                                                
REPRESENTATIVE DAVIS expressed the desire for this account to grow                                                              
in order for municipalities to become less dependent on state                                                                   
government.  He explained that to help the account grow, HJR 23                                                                 
would take two percent of the earnings of the permanent fund each                                                               
year for 20 years.  A spreadsheet in the committee packet                                                                       
illustrates the impact of that on the permanent fund dividend.  The                                                             
endowment would replace municipal assistance and revenue sharing                                                                
payments from the general fund which is the current practice.                                                                   
                                                                                                                                
Number 0354                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI noted that prior to this hearing                                                                       
Representative Davis had mentioned that the Alaska Municipal League                                                             
(AML) is supportive of this.  She inquired as to whether AML had                                                                
reviewed HJR 23 specifically.                                                                                                   
                                                                                                                                
REPRESENTATIVE DAVIS replied yes.  He noted that this legislation                                                               
was submitted in the last legislature in which the endowment was                                                                
called the community dividend fund which has been changed to the                                                                
community development fund.  Representative Davis said that he                                                                  
spoke with AML last fall in Fairbanks which had already determined                                                              
that the name change should occur.  The AML, per their brochures,                                                               
has given this a high priority for their organization.                                                                          
                                                                                                                                
REPRESENTATIVE MURKOWSKI pointed out the ever present concern that                                                              
if the permanent fund is not utilized specifically for a public                                                                 
purpose there would be federal tax implications.  Would the two                                                                 
percent of earnings alleviate the concerns regarding the                                                                        
possibility of federal tax implications on the fund?                                                                            
                                                                                                                                
REPRESENTATIVE DAVIS commented that there have been discussions                                                                 
that the Internal Revenue Service (IRS) has reviewed how Alaska has                                                             
spent the earnings of the permanent dividend fund.  There were also                                                             
hearings in Washington, D.C. regarding flat-based taxes and                                                                     
changing the entire IRS structure.  However, all that discussion                                                                
dwindled.  Representative Davis said he did not know what the IRS                                                               
is thinking.                                                                                                                    
                                                                                                                                
CO-CHAIRMAN HALCRO pointed out that Representative Davis' proposal                                                              
calls for an initial deposit of $750 million from the CBR which                                                                 
would take effect 30 days after the general election, if approved                                                               
in the year 2000.                                                                                                               
                                                                                                                                
REPRESENTATIVE DAVIS said he believed that to be correct.                                                                       
                                                                                                                                
CO-CHAIRMAN HALCRO inquired as to what would happen if there is not                                                             
$750 million in the CBR; from where would the funding come?                                                                     
                                                                                                                                
REPRESENTATIVE DAVIS stated that he was convinced that by the end                                                               
of this session, $750 million would still be in the CBR.  He                                                                    
believed the balance of the CBR was currently at $3.5 million.                                                                  
Representative Davis did not want to spend down the large amounts                                                               
such as this unless the funds offset other expenses which would be                                                              
the case here.                                                                                                                  
                                                                                                                                
CO-CHAIRMAN HALCRO asked if the community development fund would be                                                             
entrusted to someone to invest.                                                                                                 
                                                                                                                                
REPRESENTATIVE DAVIS acknowledged that there are many questions                                                                 
that relate to details regarding the administration of this                                                                     
proposal.  Those details have been left open.  Representative Davis                                                             
hoped that AML would develop a group to develop the details and                                                                 
regulations of this proposal.  The current formula for distribution                                                             
of funds for safe communities and revenue sharing is complicated.                                                               
He envisioned that the AML and the Department of Community &                                                                    
Regional Affairs (DCRA) would work out the details.                                                                             
                                                                                                                                
Number 0845                                                                                                                     
                                                                                                                                
CO-CHAIRMAN HARRIS inquired as to whether HJR 23 would fall under                                                               
the proposed All-Alaska Plan.                                                                                                   
                                                                                                                                
REPRESENTATIVE DAVIS said that it had not been considered in the                                                                
All-Alaska Plan.                                                                                                                
                                                                                                                                
CO-CHAIRMAN HARRIS referred to Section 18(b) which states that,                                                                 
"Section 13 of this article does not apply to distributions under                                                               
this subsection."  He asked why Section 13 does not apply.                                                                      
                                                                                                                                
DEB DAVIDSON, Legislative Administrative Assistant for                                                                          
Representative Davis, Alaska State Legislature, explained that                                                                  
Section 13 of the constitution deals with the requirements                                                                      
regarding appropriations and that appropriations cannot force                                                                   
future legislatures to do this.  Ms. Davidson said, "So, by saying                                                              
that Section 13 of the constitution does not apply, it then allows                                                              
the prior section to say that that income will automatically go to                                                              
the local governments based on whatever statutes are implemented to                                                             
layout how that works."  The legislature normally has the power to                                                              
determine the amount of any appropriation.  By not applying Section                                                             
13, the legislature would appropriate whatever the income is and                                                                
that amount would automatically be distributed.                                                                                 
                                                                                                                                
CO-CHAIRMAN HARRIS stated, "Then Section 7 under dedicated                                                                      
funds--I'm going to guess that having this as a constitutional                                                                  
amendment, it binds all legislatures from now on as long as the                                                                 
constitutional amendment stays in effect.  Then Section 7 under                                                                 
dedicated funds, then where does it play into that because the                                                                  
constitution also says that the state may not dedicate funds?"                                                                  
                                                                                                                                
Number 1080                                                                                                                     
                                                                                                                                
MS. DAVIDSON noted that since dedicated funds are prohibited in                                                                 
statute the community development fund would be created in the                                                                  
constitution as was the permanent fund.  When the permanent fund                                                                
was created it was allowed to be a dedicated fund, but it was not                                                               
exempted from expenditures which is Section 13 that allows the                                                                  
legislature the ability to spend the income in any manner desired.                                                              
The community development fund would be created as a dedicated                                                                  
fund, but it is exempted from the expenditures section in order to                                                              
further specify that all of the income will go to a specific                                                                    
purpose and will not be lowered.                                                                                                
                                                                                                                                
REPRESENTATIVE KOOKESH referred to Section 18(b) which only refers                                                              
to organized boroughs and cities.  That would leave out many rural                                                              
communities.                                                                                                                    
                                                                                                                                
REPRESENTATIVE DAVIS informed the committee that the intent is to                                                               
be similar to the existing municipal assistance and revenue sharing                                                             
in order to include all groups currently included.                                                                              
                                                                                                                                
REPRESENTATIVE KOOKESH wanted to ensure, for the record, that the                                                               
language is understood to include those to which Representative                                                                 
Davis alluded.  Representative Kookesh said that if the language of                                                             
HJR 23 is followed to the letter of the law, it would make him                                                                  
uncomfortable.                                                                                                                  
                                                                                                                                
REPRESENTATIVE DAVIS said that it was his understanding that all                                                                
those recipients of the existing safe communities and revenue                                                                   
sharing funds are probably acknowledged under Title 29 as                                                                       
recognized state municipalities.  Representative Davis understood                                                               
Representative Kookesh's concern and agreed closer scrutiny could                                                               
occur.                                                                                                                          
                                                                                                                                
Number 1344                                                                                                                     
                                                                                                                                
REPRESENTATIVE JOULE inquired as to whether dissolved communities                                                               
or unincorporated communities would be excluded under HJR 23.                                                                   
                                                                                                                                
REPRESENTATIVE DAVIS stated that he believed state law prohibits                                                                
the distribution of funds to organizations not recognized under                                                                 
state law.  He agreed that the language probably needs to be                                                                    
clarified.  Perhaps, someone from the Department of Law could                                                                   
clarify the language.  Representative Davis reiterated his intent                                                               
to include all municipalities currently under the municipal                                                                     
assistance and revenue sharing provisions.                                                                                      
                                                                                                                                
REPRESENTATIVE DYSON commented that the House Community & Regional                                                              
Affairs Standing Committee began a year ago to attempt to make it                                                               
easier for small communities to organize under state law in order                                                               
to have a mechanism for the distribution of these type programs.                                                                
He noted that not much progress has been made in that area.                                                                     
Representative Dyson said that DCRA desperately attempts to get                                                                 
funds to communities that have chosen not to organize under state                                                               
law.  More should be done to address the problem.                                                                               
                                                                                                                                
CO-CHAIRMAN HARRIS referred to Section 2 of Tamara Cook's opinion                                                               
which is included in the packet.  He asked if the two percent taken                                                             
from the permanent fund earnings each year until the year 2020                                                                  
would be placed into the $750 million that created the fund.                                                                    
                                                                                                                                
REPRESENTATIVE DAVIS replied yes and clarified that the two percent                                                             
would be placed in the principle of the endowment.                                                                              
                                                                                                                                
CO-CHAIRMAN HARRIS asked if that was on top of the interest accrued                                                             
on the $750 million.                                                                                                            
                                                                                                                                
REPRESENTATIVE DAVIS replied yes and clarified that it would be the                                                             
interest that accrued on the amount remaining in the fund after                                                                 
annual distributions.  Representative Davis stated that was a                                                                   
concern.  As previously indicated, Representative Davis wants to                                                                
see the principle grow which would probably require that 100                                                                    
percent of the earnings would not be distributed each year.  He                                                                 
reiterated that would be left up to those who would benefit from                                                                
working out the details of the proposal.                                                                                        
                                                                                                                                
Number 1655                                                                                                                     
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked if Representative Davis envisioned                                                               
the AML and DCRA being involved in the investment of the fund.                                                                  
                                                                                                                                
REPRESENTATIVE DAVIS informed the committee that his intention was                                                              
for AML and DCRA to select the investment organization whether that                                                             
investment organization be the Permanent Fund Corporation or the                                                                
Department of Revenue.                                                                                                          
                                                                                                                                
CO-CHAIRMAN HALCRO pointed out that if another agency administers                                                               
the fund, then there would be a management fee.  Would the                                                                      
management fee be paid from the fund itself?                                                                                    
                                                                                                                                
REPRESENTATIVE DAVIS said that the management fee would be paid                                                                 
from the earnings from the fund which is the current practice in                                                                
the Permanent Fund Corporation.                                                                                                 
                                                                                                                                
REPRESENTATIVE JOULE noted that the next committee of referral for                                                              
HJR 23 is the House Judiciary Committee.  Representative Joule                                                                  
suggested that the House Judiciary Committee could address the                                                                  
issue of discrimination.  The constitution prohibits                                                                            
discrimination, although by statute discrimination is allowed to                                                                
occur by not sharing fiscal resources with certain communities on                                                               
the basis that the community is not a municipality under state                                                                  
code.                                                                                                                           
                                                                                                                                
REPRESENTATIVE KOOKESH commented that those in rural areas do what                                                              
works with regard to their government.  Furthermore, Representative                                                             
Kookesh emphasized that those in rural areas are Alaskan residents.                                                             
                                                                                                                                
CO-CHAIRMAN HALCRO reiterated the concern with the language in                                                                  
subsection (b) of HJR 23 which only refers to organized boroughs                                                                
and cities; where does this leave unorganized boroughs, communities                                                             
and villages.  Co-Chairman Halcro understood Representative Davis'                                                              
intent was to mirror the distribution of the current municipal                                                                  
revenue sharing assistance.                                                                                                     
                                                                                                                                
Number 1944                                                                                                                     
                                                                                                                                
TAMARA COOK, Director, Legislative Legal and Research Services,                                                                 
Legislative Affairs Agency, recalled that there was no mechanism in                                                             
HJR 23 to distribute money to unorganized areas of the state.  This                                                             
is a municipal funding source.  The current revenue sharing and                                                                 
municipal assistance statutes also provide the bulk of their money                                                              
to organized municipalities.  However, there is a small grant that                                                              
is made under revenue sharing to unincorporated communities.                                                                    
Additionally, some money is distributed to volunteer fire                                                                       
departments which are not in organized areas.                                                                                   
                                                                                                                                
REPRESENTATIVE KOOKESH commented that Ms. Cook's statements seem                                                                
different than the sponsor's stated intent.  He understood                                                                      
Representative Davis' intent to be that HJR 23 would follow the                                                                 
current municipal aide guidelines used to distribute funds from the                                                             
state to municipalities.  Representative Kookesh reiterated his                                                                 
concern that the language is very narrow, specifying only organized                                                             
boroughs and cities.  Representative Kookesh expressed the need to                                                              
ensure that all municipalities under the current system be included                                                             
as the sponsor indicated was the intent.  Representative Kookesh                                                                
noted that the sponsor had indicated the willingness to work with                                                               
the language to convey the aforementioned intent.                                                                               
                                                                                                                                
MS. COOK stated that there would not be any drafting difficulty                                                                 
expanding this.  As a constitutional provision, there is not much                                                               
detail in the amendment, which leaves the legislature open to                                                                   
develop how the money would be distributed on a formula basis.  As                                                              
drafted, distributions to unincorporated areas are not allowed.                                                                 
Ms. Cook said that a slight expansion of the language is all that                                                               
is necessary to allow distribution to unincorporated communities.                                                               
Therefore, the legislature would be allowed to do what is currently                                                             
done under revenue sharing and municipal assistance.  Ms. Cook                                                                  
reiterated that as drafted HJR 23 would only apply to organized                                                                 
municipalities under the state laws not those municipalities                                                                    
organized under federal law.  She noted that if the phrase, "and to                                                             
unincorporated communities" was included in HJR 23, the legislature                                                             
would be left to define that term.  Ms. Cook acknowledged that the                                                              
definition of unincorporated community could be included in HJR 23,                                                             
but if that definition is included in the constitution there is no                                                              
flexibility as the state grows.                                                                                                 
                                                                                                                                
Number 2180                                                                                                                     
                                                                                                                                
CO-CHAIRMAN HALCRO inquired as to how the distribution of current                                                               
municipal revenue sharing assistance is determined.                                                                             
                                                                                                                                
MS. COOK noted that the municipal revenue sharing statutes                                                                      
typically refer to a collection of statutes of which a large                                                                    
portion goes through the tax equalization formula.  The tax                                                                     
equalization formula is based on local tax effort and population.                                                               
Therefore, a municipality which taxes itself per capita higher than                                                             
another actually can come out ahead under the tax equalization                                                                  
formula.  Another portion of those collective statutes provide                                                                  
municipal assistance for road maintenance which is based on the                                                                 
number of miles of road a municipality maintains.  There is also a                                                              
portion of statute that takes into account the number of hospital                                                               
beds.  The municipal assistance program, which is outside of                                                                    
revenue sharing, is a system that is more closely based on                                                                      
population.                                                                                                                     
                                                                                                                                
Number 2289                                                                                                                     
                                                                                                                                
CO-CHAIRMAN HALCRO asked how the sponsor would envision that the                                                                
community development fund would be distributed.                                                                                
                                                                                                                                
MS. DAVIDSON said that the sponsor recognized that there are a                                                                  
number of ways distribution could be determined.  Therefore, he                                                                 
preferred developing the fund and leaving the determination of how                                                              
best to distribute the fund up to the legislature.  She believed                                                                
that Representative Davis discussed a type of population                                                                        
distribution or a combination of population and land mass.  Ms.                                                                 
Davidson informed the committee that Representative Davis was                                                                   
concerned that the actual distribution formula could become more of                                                             
an issue than whether the fund itself was a good idea.  Therefore,                                                              
the legislation was set up to allow the legislature to determine                                                                
the best way to distribute the fund.                                                                                            
                                                                                                                                
REPRESENTATIVE JOULE inquired as to how many communities would not                                                              
be eligible to participate in the fund created by HJR 23.                                                                       
                                                                                                                                
MS. DAVIDSON offered to provide him with that information, but she                                                              
did not have a specific number at this time.  Further, she pointed                                                              
out that there are several unincorporated communities that are                                                                  
within a borough.  While the community itself may not receive                                                                   
actual funds, the funds the borough receives would take into                                                                    
account that the community is within the borough.  She reiterated                                                               
that she did not have an exact number of the unincorporated                                                                     
communities, but she offered to inquire with DCRA on this matter.                                                               
                                                                                                                                
Number 2432                                                                                                                     
                                                                                                                                
KEVIN RITCHIE, Alaska Municipal League, informed the committee that                                                             
the AML has discussed this issue several times with the various                                                                 
groups interested in a long-term financial plan for the state which                                                             
would allow a permanent revenue sharing process between the state                                                               
and its municipalities.  Mr. Ritchie stated that the community                                                                  
development concept has been a part of AML's platform and                                                                       
therefore, AML is interested in working with this and other ideas                                                               
to provide long-term support for all municipal governments.  He                                                                 
acknowledged that the general fund is a major issue with a                                                                      
long-term financial plan.  Originally, statehood was based on a                                                                 
sharing of natural resource revenues because the Congress and the                                                               
people of Alaska did not feel that everyone could support                                                                       
themselves on local taxes alone.  Mr. Ritchie indicated that this                                                               
legislation is a furtherance of that concept.                                                                                   
                                                                                                                                
CO-CHAIRMAN HALCRO announced that HJR 23 would be held.  He                                                                     
encouraged clarification in the following areas:  identification of                                                             
the administrator and investor of the fund, tighter language                                                                    
regarding organized and unorganized boroughs, and projected                                                                     
distribution.  Co-Chairman Halcro expressed concern that leaving                                                                
the disbursement of the fund up to future legislatures would result                                                             
in the short changing of some communities.                                                                                      
                                                                                                                                
REPRESENTATIVE MURKOWSKI asked if Co-Chairman Halcro was suggesting                                                             
that language defining the distribution process be included in                                                                  
HJR 23 or is the desire just to have that information on the                                                                    
record.                                                                                                                         
                                                                                                                                
CO-CHAIRMAN HALCRO agreed that he wanted the information on the                                                                 
record.  As Ms. Cook indicated, this is a constitutional amendment                                                              
and should not be cluttered with specifics which would not provide                                                              
flexibility to changes in the future.                                                                                           
                                                                                                                                
MS. DAVIDSON said that she would be happy to do that.  She                                                                      
reiterated that this amendment was crafted following the creation                                                               
of the permanent fund.  It is envisioned that, as with the                                                                      
permanent fund, the voters approve the fund and in the following                                                                
years statutes would be enacted regarding who would invest the                                                                  
fund, how the fund would be invested, and how the fund would be                                                                 
distributed.  She noted that the first distribution is restricted                                                               
for the first two years in order to allow adequate time for the                                                                 
legislature to enact the statutes.  Subsequent changes to the                                                                   
statutes would be done through the amendment.                                                                                   
                                                                                                                                
CO-CHAIRMAN HALCRO stated that he would be more comfortable passing                                                             
HJR 23 out of committee with the knowledge of how the fund would be                                                             
distributed as well as ensuring the aforementioned concerns are                                                                 
addressed.                                                                                                                      
                                                                                                                                
HB 155 - MUNICIPAL ASSEMBLY APPORTIONMENT                                                                                       
                                                                                                                                
Number 2765                                                                                                                     
                                                                                                                                
CO-CHAIRMAN HALCRO announced that the final order of business                                                                   
before the committee would be HOUSE BILL NO. 155, "An Act relating                                                              
to municipal assembly forms of representation and apportionment."                                                               
                                                                                                                                
REPRESENTATIVE SMALLEY, Sponsor of HB 155, Alaska State                                                                         
Legislature, explained that HB 155 would allow borough governments                                                              
and municipalities to have the state reapportionment plan in place                                                              
before the borough draws up its election districts.  This would                                                                 
eliminate confusion for voters with regard to what precinct the                                                                 
voter belongs.  He informed the committee that the committee packet                                                             
includes a letter from the Alaska Municipal League.  Representative                                                             
Smalley said, "...it says that if there's a determination that                                                                  
existing apportionment fails to meet standards set forth in Alaskan                                                             
statute, the assembly must adopt an ordinance providing                                                                         
reapportionment and present it to the voters within six months of                                                               
its determination under that statute."  He pointed out that it is                                                               
practically impossible for the Kenai Peninsula Borough to develop                                                               
and adopt the state precinct lines since the new lines are unknown,                                                             
yet by law the borough's plan must be in place.  Therefore, it                                                                  
would seem appropriate to require the assembly to adopt its                                                                     
reapportionment plan and bring it to the voters after the state's                                                               
plan has been approved and put in place.                                                                                        
                                                                                                                                
LINDA MURPHY, Borough Clerk, Kenai Peninsula Borough, testified via                                                             
teleconference from Kenai.  She explained that municipalities with                                                              
districted seats on the assembly and city council must determine                                                                
whether existing apportionment meets state standards within two                                                                 
months of receiving the federal decennial census.  If the                                                                       
determination is that the city is malapportioned, the assembly must                                                             
go before the voters with a reapportionment plan within six months.                                                             
At that time, there is no way to know what the state plan will be.                                                              
Ms. Murphy pointed out that often, the assembly districts are set                                                               
by the then current precinct lines which are changed by the state                                                               
within one to two years.  Currently, the Kenai Peninsula Borough                                                                
has one precinct which has portions of four different assembly                                                                  
seats which causes much confusion for qualifying the candidates for                                                             
those assembly seats.                                                                                                           
                                                                                                                                
TAPE 99-23, SIDE B                                                                                                              
                                                                                                                                
MS. MURPHY informed the committee that there could be three                                                                     
different ballot types; one with no assembly seat, and then two                                                                 
different ballot types with different assembly seats.  Furthermore,                                                             
confusion is caused in the borough office with absentee ballot                                                                  
requests by mail.  This would simplify the process and reduce costs                                                             
since fewer ballot types would have to be produced.  Ms. Murphy                                                                 
also felt that the possibility of a contest of an election based on                                                             
a voter potentially receiving an incorrect ballot would be reduced.                                                             
In conclusion, Ms. Murphy urged passage of HB 155.                                                                              
                                                                                                                                
Number 2900                                                                                                                     
                                                                                                                                
CO-CHAIRMAN HARRIS indicated that state reapportionment laws are                                                                
different than municipality and borough reapportionment.  For                                                                   
example, the state must take into account such things as ethnic                                                                 
diversity during reapportionment.  Co-Chairman Harris noted that                                                                
portions of Anchorage are represented into areas within the                                                                     
borough, but not located within Anchorage itself.                                                                               
                                                                                                                                
MS. MURPHY said that she was not qualified to speak on the state's                                                              
reapportionment requirements.  She reiterated that she is                                                                       
interested in knowing where the state draws its precinct lines in                                                               
order that borough apportionment can follow the state precinct                                                                  
lines as closely as possible which lessens confusion at the polls.                                                              
In response to Representative Murkowski, Ms. Murphy informed the                                                                
committee that she has been the Kenai Peninsula Borough Clerk for                                                               
the past two years, prior to that she was the City of Seward Clerk                                                              
for 17 years.                                                                                                                   
                                                                                                                                
REPRESENTATIVE MURKOWSKI expressed interest in whether Ms. Murphy                                                               
was in the clerk's office during the last census and if so, were                                                                
there problems or confusion.                                                                                                    
                                                                                                                                
MS. MURPHY specified that she was the clerk in Seward during the                                                                
last census.  Seward does not have districted seats, but is part of                                                             
the Kenai Peninsula Borough.  Ms. Murphy was aware of the problems                                                              
the borough was having due to the joint elections meetings with all                                                             
the clerk's in the borough.  The borough was having difficulties                                                                
establishing a plan without knowing what the state's plan would be.                                                             
                                                                                                                                
Number 2744                                                                                                                     
                                                                                                                                
CO-CHAIRMAN HARRIS stated that HB 155 would effect all communities                                                              
that have more than one Representative or Senator in their district                                                             
as well as multiple assembly or council members.  How would HB 155                                                              
effect areas such as Fairbanks or Anchorage?  Such areas have more                                                              
House and Senate districts and members than assembly districts and                                                              
members.                                                                                                                        
                                                                                                                                
MS. MURPHY clarified that HB 155 would not have any impact on                                                                   
Senate or House seats, that is dealt with in the state's                                                                        
reapportionment plan.  Furthermore, the Fairbanks Northstar Borough                                                             
would not be effected because that borough does not have districted                                                             
seats.  Ms. Murphy explained that HB 155 would allow those areas                                                                
with districted seats, such as the Kenai Peninsula Borough and the                                                              
Municipality of Anchorage, to base the plan on state precinct lines                                                             
when possible. She acknowledged that there may be times the state                                                               
precinct lines could not be followed, however there would be the                                                                
opportunity to have a better plan than now.                                                                                     
                                                                                                                                
CO-CHAIRMAN HARRIS believed that this tries to mirror the state                                                                 
precinct lines.  He was unsure as to whether HB 155 would require                                                               
following the state precinct lines or merely provides that as an                                                                
option.                                                                                                                         
                                                                                                                                
MS. MURPHY specified that HB 155 merely provides the option of                                                                  
following state precinct lines.  This would allow the knowledge of                                                              
the state precinct lines during the borough planning process.                                                                   
Additionally, HB 155 would allow the borough to offer the voters a                                                              
new plan if an approved state plan was set aside for some reason                                                                
and state precinct lines change.  Currently, the borough can only                                                               
go to the voters following a census or any time apportionment is                                                                
found not to meet those standards specified in state statute.                                                                   
                                                                                                                                
REPRESENTATIVE DYSON understood that the desire is to allow borough                                                             
redistricting after the state has reapportioned.  He informed the                                                               
committee that he had sat on a local assembly and had his seat                                                                  
sued.                                                                                                                           
                                                                                                                                
REPRESENTATIVE MURKOWSKI referred to page 2, lines 24 through 26                                                                
which states, "The assembly may provide, by ordinance, for a change                                                             
in an existing apportionment of the assembly whenever a final state                                                             
redistricting plan is changed as a result of federal or court                                                                   
action."  Is there an opportunity to change it after the adoption                                                               
of a final plan and is there the possibility of court action                                                                    
subsequent to that?                                                                                                             
                                                                                                                                
Number 2448                                                                                                                     
                                                                                                                                
TAMARA COOK, Director, Legislative Legal and Research Services,                                                                 
Legislative Affairs Agency, informed the committee that as a                                                                    
drafter she had a dilemma.  The request was to set up a system                                                                  
which would enable an assembly to become reapportioned only after                                                               
the state was reapportioned which is technically impossible.  Ms.                                                               
Cook explained that Sections 1 and 2 of HB 155 refer to the final                                                               
state redistricting plan adopted under the constitution.                                                                        
Currently, the amended constitution requires that after a federal                                                               
census, members be appointed to a reapportionment board within 30                                                               
days.  After the board members are appointed, the board has 90 days                                                             
in which to declare the final state plan.  She explained that                                                                   
existing law directs assemblies to start this process,                                                                          
reapportionment, two months after a census.  With regard to the                                                                 
constitutional provisions, the assembly action has been delayed by                                                              
two more months under HB 155.  Once there is a state final plan,                                                                
the Department of Justice reviews the plan.  The Department of                                                                  
Justice must respond to the state within about 90 days, but the                                                                 
response can be a request for more information.  There is no                                                                    
specific time period in which the state must gather its information                                                             
in which to justify its plan.  Once the state has provided its                                                                  
justification, there is another period in which the Department of                                                               
Justice must act.  Therefore, the state must deal with an uncertain                                                             
length of federal justice review.  Only after that review, can the                                                              
question of an individual litigate occur.                                                                                       
                                                                                                                                
MS. COOK explained that she created a system in which the assembly                                                              
responds to the final plan adopted by the redistricting commission                                                              
without considering the appeal process which could be another two                                                               
years.  Therefore, the assembly has four months within which to                                                                 
respond to the federal census.  At that time, the state proposal is                                                             
known.  Ms. Cook emphasized that the assembly has the option to                                                                 
consider the state final plan, but there is no requirement to do                                                                
so.                                                                                                                             
                                                                                                                                
MS. COOK stated that the change in Section 3 accommodates the                                                                   
possibility of the state plan being thrown out in court or by a                                                                 
decision of the Department of Justice review.  Another layer of                                                                 
flexibility is provided to the assembly.  If the assembly has                                                                   
chosen to follow the state plan, and the state plan is then thrown                                                              
out or adjusted, the assembly may elect to provide a different                                                                  
assembly apportionment plan in an effort to follow the revised                                                                  
state plan.  She  reiterated that this is merely an option.                                                                     
Currently, the assembly has the power to present a new plan any                                                                 
time the assembly determines the current plan is out of                                                                         
apportionment.  However, the current system does not allow the                                                                  
assembly to present a new plan when there is a determination that                                                               
the plan is in apportionment, although not practical.  There is                                                                 
also the consideration of a new plan per voter petition.  Ms. Cook                                                              
clarified that Section 3 of                                                                                                     
HB 155 provides an additional reason, that the state plan has                                                                   
changed, for the assembly to provide a new plan.  In response to                                                                
Representative Murkowski, Ms. Cook specified that the only thing                                                                
mandatory is that an assembly determination must be provided within                                                             
about four months.                                                                                                              
                                                                                                                                
Number 2138                                                                                                                     
                                                                                                                                
CO-CHAIRMAN HARRIS moved that HB 155 be reported from committee                                                                 
with individual recommendations and the attached zero fiscal note.                                                              
There being no objection, it was so ordered.                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
There being no further business before the committee, the House                                                                 
Community & Regional Affairs Standing Committee meeting was                                                                     
adjourned at 9:10 a.m.                                                                                                          
                                                                                                                                
                                                                                                                                

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