01/25/2001 08:07 AM House CRA
| Audio | Topic |
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+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY & REGIONAL AFFAIRS STANDING
COMMITTEE
January 25, 2001
8:07 a.m.
MEMBERS PRESENT
Representative Kevin Meyer, Co-Chair
Representative Carl Morgan, Co-Chair
Representative Andrew Halcro
Representative Lisa Murkowski
Representative Gretchen Guess
Representative Beth Kerttula
MEMBERS ABSENT
Representative Drew Scalzi
COMMITTEE CALENDAR
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 13
"An Act relating to municipal service areas and providing for
voter approval of the formation, alteration, or abolishment of
certain service areas."
- HEARD AND HELD
HOUSE BILL NO. 16
"An Act relating to cities incorporated under state law that are
home rule communities."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 13
SHORT TITLE:SERVICE AREAS:VOTER APPROVAL/TAX ZONES
SPONSOR(S): BUNDE
Jrn-Date Jrn-Page Action
01/08/01 0027 (H) PREFILE RELEASED 12/29/00
01/08/01 0027 (H) READ THE FIRST TIME -
REFERRALS
01/08/01 0027 (H) CRA, FIN
01/10/01 0056 (H) COSPONSOR(S): KOHRING
01/12/01 0066 (H) SPONSOR SUBSTITUTE INTRODUCED
01/12/01 0066 (H) READ THE FIRST TIME -
REFERRALS
01/12/01 0066 (H) CRA, FIN
01/12/01 0066 (H) REFERRED TO CRA
01/25/01 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE CON BUNDE
Alaska State Legislature
Capitol Building, Room 501
Juneau, Alaska 99801
POSITION STATEMENT: Testified as sponsor of SSHB 13.
JEFF BUSH, Deputy Commissioner
Department of Community & Economic Development
PO Box 110800
Juneau, Alaska 99811-0800
POSITION STATEMENT: Testified that the Knowles Administration
strongly opposes SSHB 13.
DAN BOCKHORST, Local Boundary Commission
Division of Community and Business Development
Department of Community & Economic Development
550 W 7th Avenue, Suite 1790
Anchorage, Alaska 99501-3510
POSITION STATEMENT: Answered questions.
BILL GREENE, Attorney
Municipality of Anchorage Department of Law
PO Box 196650
Anchorage, Alaska 99519
POSITION STATEMENT: Expressed concerns with SSHB 13.
MERLE JANTZ
1077 Vincent Court
North Pole, Alaska 99705
POSITION STATEMENT: Testified in support of SSHB 13.
RANDY FRANK, Chairman
Viewpointe Service Area
PO Box 81109
Fairbanks, Alaska 99708
POSITION STATEMENT: Testified on SSHB 13.
MICHAEL GATTI, Attorney
Matanuska-Susitna Borough
350 E Dahlia
Palmer, Alaska 99645
POSITION STATEMENT: Testified on behalf of the Mat-Su Borough
Administration in opposition to SSHB 13.
OCIE ADAMS
HC30 Box 200
Wasilla, Alaska 99654
POSITION STATEMENT: Testified in support of SSHB 13.
JIM SWING, Director
Public Works
Matanuska-Susitna Borough
350 E Dahlia Ave.
Palmer, Alaska 99645
POSITION STATEMENT: Testified on SSHB 13.
JOHN LETTOW, Supervisor
Road Service Area
Matanuska-Susitna Borough
HC31 Box 5265BA
Wasilla, Alaska 99654
POSITION STATEMENT: Testified in support of SSHB 13.
ACTION NARRATIVE
TAPE 01-4, SIDE A
Number 0001
CO-CHAIR KEVIN MEYER called the House Community & Regional
Affairs Standing Committee meeting to order at 8:07 a.m.
Representatives present at the call to order were
Representatives Morgan, Meyer, Halcro, Murkowski, Guess, and
Kerttula.
HB 13 - SERVICE AREAS:VOTER APPROVAL/TAX ZONES
CO-CHAIR MEYER announced that the first order of business would
be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 13, "An Act relating to
municipal service areas and providing for voter approval of the
formation, alteration, or abolishment of certain service areas."
Number 0183
REPRESENTATIVE CON BUNDE, Alaska State Legislature, testified as
the sponsor of SSHB 13. Representative Bunde referred to SSHB
13 as a "good government" bill as it gives more power to the
people. He explained that SSHB 13 would not allow the
elimination or alteration of a limited road service area, and
one case of fire service areas, without a majority vote of those
affected. Under current law, 90 percent of the residents of a
city could gerrymander a small road service out of existence.
Such a situation does not seem fair. This legislation would
require a majority vote of both entities affected, the
surrounding community and the community that would be altered.
Representative Bunde explained that, basically, an area would
elect a representative who would contract with the public sector
for limited road maintenance such as snow plowing and basic
grading of unimproved roads. The area would assess itself for
the cost of this service and the assessing group, the
municipality that holds the election, would receive a service
fee.
Number 0411
REPRESENTATIVE BUNDE said [SSHB 13] is local government at its
most basic form. He noted that there is the desire to be able
to change these limited road service areas in order to achieve
economy in administration. Such is the case in the Fairbanks
area. He pointed out that SSHB 13 also allows for differential
taxation rates. Under current law, these areas couldn't combine
and have differential taxation. He explained that the
differential taxation may be desired because some areas may want
to maintain their roads at a higher level, while other areas may
not wish to have improvements and thus would assess the area at
a different rate. He pointed out that a majority vote of all
involved entities would be required in order for this
differential tax rate to occur.
Number 0550
REPRESENTATIVE BUNDE predicted that testimony would suggest that
the local assembly should determine this rather than [the
individual]. He said that the will of the people shouldn't be
feared but rather encouraged.
REPRESENTATIVE HALCRO asked if SSHB 13 differed from the
legislation that Representative Bunde introduced two years ago.
REPRESENTATIVE BUNDE stated that SSHB 13 differs slightly. Last
year's legislation did not include those in the Mat-Su Valley,
while SSHB 13 would include the Mat-Su Valley.
Number 0709
REPRESENTATIVE HALCRO turned to Governor Knowles' veto message
for SCS CSHB 133(CRA) am S, which alludes to concerns regarding
the constitutionality of SSHB 13. He asked if Legislative Legal
Services has reviewed that possibility.
REPRESENTATIVE BUNDE replied yes. He said that one of the
concerns is that SSHB 13 would create a new government entity.
However, it does not because a limited road service area is a
portion of an existing local government. He informed the
committee that the Alaska Supreme Court holds the position that
this legislation would not create more local government because
limited road service areas aren't independent government units.
Number 0787
REPRESENTATIVE GUESS asked if a community could choose not to
have basic services, which the surrounding areas would end up
paying. She identified the basic services as fire, ambulance,
or police.
REPRESENTATIVE BUNDE clarified that SSHB 13 is limited to local
road service, except for the portion of the bill that refers to
the Eagle River Volunteer Fire Department. Representative Bunde
acknowledged that, in the past, there was a concern about the
police service in his district. This legislation does not
address police service. The police service issue was settled by
the Alaska Supreme Court.
REPRESENTATIVE KERTTULA inquired as to what the Alaska Supreme
Court said regarding the police service issue.
REPRESENTATIVE BUNDE explained that the Anchorage Borough and
City combined and developed a charter, which specified that
existing service areas outside the city limits would be allowed
to continue. He said, "One of those existing service areas was
this police service issue and the [Alaska] Supreme Court said,
in layman's terms, ... that the charter was subservient to the
greater need and they said that the services that people
received, as far as police protection, were great enough that it
just basically aggregated that portion of the charter."
Number 0966
REPRESENTATIVE BUNDE requested that the tax differential be
explained.
REPRESENTATIVE BUNDE indicated that the tax differential would
mainly apply in the Fairbanks area, which has 117 different road
service areas. That many different road service areas is a
large administrative burden and many of these road service areas
would like to combine in order to have only one administrator.
He noted that these road service areas have vastly different
levels of service. He posed an example in which two entities
could decide to combine. In such a case, the greater area would
also get to vote and thus with a majority vote of all three
parties, the two road service areas could combine. Once the two
combine, the two road service areas could have different mill
rates and maintain that existing mill rate because of the level
of service that is maintained. However, the existing law would
require the two combining entities to choose either the higher
or the lower mill rate, not both.
REPRESENTATIVE KERTTULA said that is of concern to her.
Number 1079
REPRESENTATIVE HALCRO explained that when the city tried to
impose police protection on the Hillside in 1996, part of the
argument was that [those on the Hillside] benefited from police
protection. It was also argued that Hillside residents
basically live in town because [Anchorage] had grown and the
area was no longer as it was during the consolidation when 3,000
people lived on the Hillside. Representative Halcro said that
he didn't understand that argument because, historically, some
segments of the Hillside had voted to accept police protection
on their own free will. He returned to the argument that
Hillside residents benefited from the police protection and
pointed out that when the State Troopers couldn't respond to a
call from the Hillside then the Anchorage Police Department
would respond. Therefore, although [the Hillside residents]
weren't paying for that police service, they received it.
However, he indicated that SSHB 13 is a little different. He
asked if there is a chance that a Municipality of Anchorage
(MOA) plow would plow a street [in a road service area], if the
private contractor didn't plow.
REPRESENTATIVE BUNDE replied no. In regard to the police
protection issue on the Hillside, Representative Bunde said that
residents of the Hillside and other areas were assessing
themselves and paying for police protection. However, those
areas viewed the area as rural and preferred having the State
Troopers.
REPRESENTATIVE BUNDE returned to SSHB 13 and limited road
service areas. He said that if the contractor to plow snow in
his area doesn't provide service one day, then he has to wait or
the [road service area] has to hire someone new. Therefore,
the limited road service area's ability to hire someone new is
valued by the residents of the area.
Number 1301
REPRESENTATIVE MURKOWSKI directed attention to the last sentence
of Section 3(c), which refers to the exception applied to fire
protection service. She asked if fire areas are being treated
differently than road areas.
REPRESENTATIVE BUNDE replied yes. He said that fire service is
different than road service and he didn't intend for an area to
have an election every time a new house is built.
REPRESENTATIVE MURKOWSKI related her understanding that fire and
road service could be provided by different entities.
Therefore, she understood Representative Bunde to mean that he
didn't want there to have to be two separate elections, if there
are changes to the road area as well as the fire protection
area.
REPRESENTATIVE BUNDE replied yes and noted that [SSHB 13] speaks
to fire service areas that are served by volunteer fire
departments. He informed the committee that there must be a
substantive change in order to expand or change a fire service
area.
Number 1476
REPRESENTATIVE MURKOWSKI related her understanding that a spur
to a subdivision that is outside a road service area would not
qualify for this exemption, even when the [expansion of the
service area] is less than six percent or the population is
under 60,000.
REPRESENTATIVE BUNDE responded yes.
REPRESENTATIVE MURKOWSKI referred to a letter from the Alaska
Municipal League (AML), which is included in the committee
packet. The letter seems to imply that there could be
substantial local costs in creating a new form of election.
Therefore, she requested that Representative Bunde speak to the
cost of an election.
REPRESENTATIVE BUNDE said that he didn't believe that
implication is accurate because these elections would be held at
the next scheduled municipal election. In response to
Representative Murkowski, he indicated agreement that an area
would operate as it had been until the regularly scheduled
election. These issues do not require immediate attention and
can wait until the next election.
Number 1603
JEFF BUSH, Deputy Commissioner, Department of Community &
Economic Development, informed the committee that the [Knowles]
Administration strongly opposes SSHB 13 for many of the same
reasons identified in the governor's veto message last year. He
said that Governor [Knowles] has legal and constitutional
concerns with this legislation. More importantly, the governor
feels that SSHB 13 is a bad government bill because it hinders
the ability of local home rule boroughs to operate. Mr. Bush
explained that Alaska's system of government was designed so as
to maximize the authority and ability of home rule boroughs to
exercise power. However, SSHB 13 limits that authority and
ability, which is counter to Article X, Section 1 of the Alaska
Constitution.
MR. BUSH pointed out that, generally, the supreme court does not
view service areas as government units. However, SSHB 13
establishes service areas as something close to a government
unit and thus takes away authority from the borough and gives it
to the local service area unit. Furthermore, this legislation
would foster inefficiency in local government activities.
Number 1752
MR. BUSH turned to the exemption for second class boroughs with
a population of under 60,000. With respect to the Mat-Su
Borough, there are conflicting population counts. Therefore,
this legislation may or may not apply to the Mat-Su Borough.
Mr. Bush said that, as far as [the department] can tell, there
is no rational basis for a decision to place this exemption in
the bill. He indicated that this exemption would actually
empower small second class boroughs with more authority than
home rule boroughs, which is contrary to the constitution.
Therefore, there are legal and philosophical concerns.
REPRESENTATIVE HALCRO inquired as to what limitations this
legislation would place on home rule boroughs. He related his
understanding that SSHB 13 only stops home rule boroughs from
eliminating road service areas without a vote of the people in
those road service areas.
MR. BUSH said that SSHB 13 would stop [home rule boroughs] from
combining [road service areas] without local elections.
REPRESENTATIVE HALCRO related his understanding that a road
service area could make changes with a majority of the vote
within a service area. In regard to Mr. Bush's comment that
SSHB 13 would create inefficiency for local governments,
Representative Halcro was not convinced that limiting road
service areas causes inefficiencies. Representative Halcro said
he believes that road service areas are far more efficient than
the city having to worry about street maintenance in those
[service] areas.
MR. BUSH commented that SSHB 13 prevents the borough from making
such decisions based upon what is most efficient for the borough
as a whole.
Number 1983
REPRESENTATIVE KERTTULA remarked that different tax levels seems
confusing and thus she requested further clarification. She
went on to ask if Mr. Bush knew of any other example in which
one unit of government has a different tax level than another.
MR. BUSH deferred to Mr. Bockhorst.
DAN BOCKHORST, Local Boundary Commission, Division of Community
and Business Development, Department of Community & Economic
Development, testified via teleconference. Mr. Bockhorst
explained that presently, differential tax zones only exist in
city governments. He was not aware of a situation in which a
road service area had a differential tax zone.
REPRESENTATIVE KERTTULA asked if Mr. Bockhorst meant that within
a municipal area there could be areas that have different taxes
for the same service.
MR. BOCKHORST stated that current statutes allow for
differential tax zones in order to reflect different levels of
services and thus it would not be the same level of service with
a different tax. He noted the potential for confusion with
existing service areas that could have differential tax zones
within a service area.
REPRESENTATIVE KERTTULA said she believes there would be
potential constitutional problems as well.
MR. BOCKHORST deferred to Bill Greene, Attorney, Municipality of
Anchorage.
Number 2103
BILL GREENE, Attorney, Municipality of Anchorage Department of
Law, testified via teleconference. Mr. Greene pointed out that
the differential tax zones within a service area was considered
in 1975 when the Borough and the City of Anchorage were unified
into one local government. He explained that [this differential
tax zone] would allow one street in a service area to have a
different tax than another street in the same service area,
which creates a complex administration. Furthermore, he
indicated possible problems with the constitutional provision to
minimize the numbers of local taxing jurisdictions.
REPRESENTATIVE HALCRO inquired as to how this would relate to
the existing mill rate structure in Anchorage. He noted that in
his taxing district he pays a different mill rate for certain
services than those in the downtown taxing district. He asked
how that would compare to a limited road service area.
MR. GREENE stated that he would speak about Anchorage since he
has the most knowledge there. He informed the committee that
service areas are provided for in the state constitution, which
further states that the goal is to limit the number of taxing
jurisdictions. In Anchorage, a level of service is taxed at a
uniform rate throughout the service area. Anchorage's charter
requires that the rate of taxation within a service area be
uniform in order that everyone similarly situated pay the same
rate. However, that rate only applies to the service area. For
areawide services, those services are required to have a uniform
rate. Therefore, within a service area or for a particular
level of service the taxation rates are uniform.
Number 2273
REPRESENTATIVE HALCRO related his understanding that Mr. Greene
is concerned that within a limited road service area, the people
on one street could be forced to pay a higher tax rate than
those on another street. He asked if that is the concern.
MR. GREENE replied yes. He pointed out that the current
structure of SSHB 13 is such that a service area could be cut up
into a number of differential tax zones. Therefore, one side of
a street could have one mill levy and the other side another
mill levy. There was extensive discussion about such a concept
at the time of the municipal charter in 1975.
REPRESENTATIVE HALCRO asked if Mr. Greene's concern would be
addressed if SSHB 13 were amended to ensure uniform taxation
throughout the limited road service area.
MR. GREENE replied yes. In response to Representative Kerttula,
Mr. Greene agreed that different mill rates within a
municipality occur because different areas have different
services.
REPRESENTATIVE BUNDE remarked that the notion that service areas
would have block by block taxation [under SSHB 13] is not
accurate. This legislation allows consolidation of existing
service areas for the purposes of administration. Furthermore,
such a change would require a majority vote of all involved,
which would include those within the service areas and the
surrounding area. Representative Bunde noted his confidence in
the people not breaking this down to house by house taxation due
to the majority vote requirement.
Number 2427
REPRESENTATIVE HALCRO informed the committee of a situation in
his district in which there was a large cul-de-sac that had a
sink hole in the middle of the street. If the majority of the
area votes for the improvements, then even those who vote
against the improvement would have to pay. Therefore, even
those who vote against the improvement would agree that they are
part of "democracy in action."
MR. GREENE said he believes Representative Halcro's question
points to how assessment districts operate as opposed to road
service areas. In regard to a capital improvement to a
particular road, Anchorage, as do other municipalities, does
that by an assessment district, which would not be impacted by
SSHB 13. He noted that the present bill gives the assembly, not
the voters, the power to create differential tax zones within an
existing service area.
REPRESENTATIVE HALCRO remarked that his previous statement was
to simply make a comparison. He said that he was attempting to
address Mr. Greene's concerns regarding the different taxation
levels and ensure that everything is fair for everyone in the
limited road service area.
Number 2565
MR. GREENE clarified that he was merely pointing out that the
present bill would not allow voters to vote on a differential
tax zone within a service area because the voters are not
mentioned in that provision, Section 4, of the bill. Therefore,
SSHB 13 allows further balkanization and fracturing of the
taxing jurisdiction within the municipality, which could easily
create inequalities in taxation as well as administrative
problems.
REPRESENTATIVE KERTTULA related her understanding that a large
service area would have to agree with a smaller service area who
wishes to combine with it. However, at some point "they" could
go to the assembly to switch the taxes, although they previously
agreed on those taxes.
REPRESENTATIVE BUNDE said that [Mr. Greene] seems to be
presenting two different arguments. However, Representative
Bunde believes there are checks and balances. In response to
Representative Kerttula, Representative Bunde agreed that both
service areas would have to agree to combine.
Number 2666
MR. GREENE began his testimony and noted that this is the fourth
time in three years that the concepts presented in SSHB 13 have
been before this committee. [The Municipality of Anchorage] has
presented its legal views in 1998 on HB 365 and SB 208 and in
2000 on HB 133. Mr. Greene said, "Like its predecessors, [SS]HB
13 strikes and substantially erodes, we believe, the fundamental
nature of a unique, farsighted, and effective form of local
government. That form of local government has served this state
and its citizens very well for over 40 years." He informed the
committee that SSHB 13 is the 60th proposed limitation on the
home rule powers that were intended to be liberal and expansive
per the state constitution. This is a system that was put into
place by the voters of this state, voters who reside in the
local municipalities as well as service areas throughout the
state. This legislation appears to have a lack of confidence in
the wisdom, judgment, and ability of local governments to govern
themselves for their own benefit. He reiterated his belief that
SSHB 13 substantially erodes and impairs the unique system of
local government provided for in Article X of the Alaska
Constitution. Furthermore, this legislation raises [concern] as
to whether SSHB 13 is local and special legislation, which is
prohibited by the Alaska Constitution.
MR. GREENE pointed out that SSHB 13 is not limited to affecting
limited road service areas. He explained that limited road
service areas, which make up a large portion of Anchorage, are
limited in two ways. Firstly, limited road service areas are
limited to three years in duration, after which voters vote on
whether to continue the limited road service area. Secondly,
limited road service areas are limited in the type of service
the area is authorized to provide. Limited road service areas
are authorized to provide minimal road service areas for
maintenance. However, SSHB 13 is not limited to limited road
service areas as it also includes general service areas such as
the Anchorage roads and drainage service area and the
Chugach/Birchwood/Eagle River rural road service area.
Furthermore, SSHB 13 is not limited to the Eagle River volunteer
fire department service area but rather applies to fire service
areas generally.
Number 2845
MR. GREENE noted that SSHB 13 does not cover home rule cities,
other than unified municipalities, and exempts second class
boroughs with a population under 60,000. The legislation only
covers road and fire service areas rather than all service
areas. Furthermore, this legislation exempts a six percent of
the increase in a fire service area. Mr. Greene reiterated
earlier comments regarding the belief that SSHB 13 violates the
constitutional provision preventing local and special
legislation, which was noted in the governor's veto message for
HB 133 from last year. He also reiterated that SSHB 13
substantially increases the limitations on home rule powers,
which is contrary to the provisions of the state constitution.
MR. GREENE noted that Anchorage has a tax cap, which limits the
total amount of taxes that may be levied. He explained that
within that calculation, taxes levied within a service area are
included. He said, "To the extent that service areas control
their individual level of taxation, they limit or diminish the
level of taxation for the remainder of the municipality and
other service areas as well as areawide." Therefore, the
assembly's authority to allocate municipal assets amongst
competing needs throughout the municipality is limited. Mr.
Greene pointed out that there is much legislative history and
commentary [on this issue], not only from the Constitutional
Convention's original article on local governments, but also
from commentary by Vic Fischer, Chairman, Alaska Constitutional
Convention's Committee on Local Government.
MR. GREENE quoted the following from the "Final Report on
Borough Government":
Service areas will be under the jurisdiction of the
borough assembly. The borough assembly may establish
adversary or administrative agencies to a service
area. The levying of taxes, budgetary review
authority and the allocation of funds will rest with
the borough governing body. Thus, a "single-wide"
agency will be responsible for fiscal matters and will
ensure balanced taxation for the entire area.
MR. GREENE quoted the following portion of the "Final Report on
Borough Government":
Article X, Section 11 of the Alaska Constitution
allows municipal governments to take on home rule
status broader than those of any other state. It
being the intent of the constitutional delegate...
TAPE 01-4, SIDE B
MR. GREENE remarked that prior testimony by the then Department
of Community & Regional Affairs and the current Department of
Community & Economic Development all lend credence and support
to the proposition that SSHB 13 severely restricts local home
rule authority and the authority of voters to determine their
own destiny within the context of Alaska's efficient and
effective local government.
Number 2955
REPRESENTATIVE HALCRO asked Mr. Greene to expand his remarks
regarding how service areas limit the ability of the assembly,
with regard to taxation.
MR. GREENE explained that the calculation for the tax cap in
Anchorage includes the taxes levied in all service areas.
Therefore, the taxation level of a service area impacts the
level of taxation that can be levied in other service areas or
in the municipality, areawide, for services under the following
year's budget.
REPRESENTATIVE HALCRO related his understanding of Mr. Greene's
argument that since service areas can negotiate the service for
a lower price and thus tax those within the service area less
for the service, their contribution to the city is less. In
other words, because the service area is not taxing its people
enough the assembly is limited in its ability to determine the
taxation level.
MR. GREENE clarified that when local government is considered,
it must be viewed as a portion of the whole. He reiterated that
the level of taxation in a service area is directly related to
calculations regarding the limit of taxation permitted under the
municipal charter; in Anchorage's case, for the level of
taxation throughout the municipality. He said, "So, it's a
matter of allocating assets amongst competing needs and that is
traditionally, and by our state constitution, reserved to the
assembly."
REPRESENTATIVE HALCRO assumed that within a service area the
level of taxation is commensurate with the cost of the service.
For example, an individual in a limited road service area would
be taxed as much as it would cost to maintain the roads in that
individual's limited road service area.
MR. GREENE agreed that would be the case.
REPRESENTATIVE HALCRO said, then, he was not sure how that
negatively impacted the assembly. Therefore, he surmised [the
problem] to be that those in the limited service area would not
be taxed enough to support the rest of the city.
Number 2775
MR. GREENE clarified that he is merely saying that in the
consideration of how to allocate the resources within the
municipality, the tax in the service area is one of the
components. Therefore, the extent to which SSHB 13 restricts
the assembly from allocating resources according to areawide
needs, the bill would impair the assembly's ability to balance
the needs of competing interests. In response to Representative
Halcro, Mr. GREENE defined competing interests as all the
government services that compete for the local tax dollar.
REPRESENTATIVE HALCRO pointed out that there is a separate mill
rate for fire and police service. Therefore, an individual in a
limited road service area would still pay for fire and police,
areawide parks and recreation, schools, et cetera. The limited
road service area would just pay what the limited road service
area contractor costs.
MR. GREENE reiterated that when the assembly determines the
priorities that should be addressed when allocating funds, the
assembly must consider the taxes levied for schools, fire
service, roads, parks and recreation, and limited road service
areas. He restated, "To the extent that the assembly is
restricted or limited in any way in determining at what level to
provide those services, they are, by nature, limiting or
increasing services in another area within the tax cap."
Number 2637
REPRESENTATIVE KERTTULA posed a situation in which there was a
mill rate of ten and the service area decided to increase its
services, which resulted in a mill rate of three [for the
service area], then the city would only be able to have a mill
rate of seven for those in this particular service area.
MR. GREENE said that Representative Kerttula's concept is
correct. If a [service area] is taxed at the maximum levy
requested by the members of that service area and, for instance,
it is an increase of three mills for a given year, then [the
municipality] would have to calculate that increased three mills
into the tax cap. Therefore, if [the municipality] is at the
tax cap, [the tax] would have come from some other service in
order to stay underneath the tax cap.
REPRESENTATIVE GUESS inquired as to how SSHB 13 would change the
current practice and place more limitations on the assembly.
MR. GREENE answered that SSHB 13 limits the ability of the
majority of voters in a given area. He noted that this is not
just a consolidation of existing service areas because SSHB 13
would prohibit the alteration of an existing service area unless
the alteration is approved by people living outside the service
area, who are impacted by the alteration. Mr. Greene said:
What the bill would do is to limit the ability of both
the voters on the one hand, and the assembly in the
areas of consolidation to make more efficient use of
the service areas, either in consolidation or in
expansion unless they have the approval of a minority
of voters.
REPRESENTATIVE BUNDE remarked that the notion that a limited
service area would increase its taxes in order to eliminate the
municipality's ability to tax to the tax cap is a stretch for
him. Most limited road service areas have lower mill rates and
that is one of the reasons these limited road service areas want
to maintain a limited road service area.
REPRESENTATIVE BUNDE stated his belief that municipalities would
like to have power over local road service areas in order to
convert them to "cash cows." Therefore, the municipalities
could force the elimination of the limited road service area and
force people to pay a higher mill rate and thus the
municipalities can use the money where it feels most
appropriate.
Number 2405
MERLE JANTZ testified via teleconference. Mr. Jantz spoke in
favor of SSHB 13 and rejected the notion that local government
is more important than the people. He noted that he has been
involved in his road service area for over 20 years and has been
a road service area commissioner. He informed the committee
that his road service area has about six-tenths of a mile of
road with an assessed evaluation of about $1.2 million. A
couple of years ago, an adjoining area wished to have a road
service area. The Fairbanks North Star Borough policy is to
adjoin two existing areas. He explained that the new area had
1.7 miles of road with an assessed evaluation of $400,000. In
such a case three-quarters of the revenue would be generated in
the original road service area and two-thirds to three-quarters
would be used to support roads in the adjoining area.
Furthermore, the roads in the adjoining area were in poor
condition and thus that area wanted a road service area in order
to improve the roads. Mr. Jantz related his belief that such a
situation is taxation without representation because there was
not an opportunity to vote. If SSHB 13 passes, then there would
have been a vote.
MR. JANTZ informed the committee that he has been the chair of
an ad hoc committee that has addressed this issue for the past
two to three years. This ad hoc committee has yet to find any
individual in the [Fairbanks North Star] road service areas that
want to change their service or the level at which those
decisions are made. Mr. Jantz said that he has not found anyone
who can tell him the administrative advantages to reducing the
number of service areas. In most cases, when the number of
service areas are reduced, the voluntary labor is reduced and
[becomes] paid labor. The aforementioned situation is not
positive. However, work is still being done to determine
whether [consolidation] can be accomplished. Mr. Jantz
concluded by noting the importance of allowing everyone to vote
and allowing different mill levies, which would allow review of
ways to combine road service areas and improve those roads that
need such, while allowing different levels of service.
Number 2179
RANDY FRANK, Chairman, Viewpointe Service Area [in Fairbanks],
testified via teleconference. He informed the committee that he
has been involved with this issue for about 18 years. In
response to some of Mr. Greene's earlier comments, Mr. Frank
said that [the Viewpointe] service area taxes itself more than
the service area spends on maintenance costs in order to
establish a fund to pay for future capital improvements.
Furthermore, Mr. Frank remarked that the Fairbanks road service
areas have better service than the City of Fairbanks because the
road service areas use private contractors, who must respond and
complete the job within 24 hours of the call to service the
roads.
MR. FRANK said that in the past couple of years the Fairbanks
North Star Borough has been trying to merge service areas.
However, he didn't know if such a consolidation would be
possible because each service area has a different tax level.
Therefore, a vote of all merging service areas would be required
in order to establish one taxation level. Such a consolidation
would result in the consolidation of service areas with various
levels of roads, some paved and some unpaved. He predicted that
consolidation would be problematic unless SSHB 13 passes because
SSHB 13 would allow differing levels of taxation.
MR. FRANK noted that he wrote Representative Bunde a letter,
which is included in the bill packet. He echoed comments from
that letter regarding America's wealth redistribution. He noted
that the wealthy have always been able to vote in the process.
However, in the current situation, a service area that will be
joined by a new service area does not have the right to vote in
the process. Mr. Frank said that such a situation is very "un-
American" and should not be allowed to continue.
Number 1945
MICHAEL GATTI, Attorney, Matanuska-Susitna Borough, testified
via teleconference. He informed the committee that he is
present on behalf of the borough administration, who is opposed
to SSHB 13. The borough administration is opposed to SSHB 13
for many of the reasons expressed by Mr. Greene and Mr. Bush.
In the borough's opinion, SSHB 13 eliminates local control and
raises constitutional issues pertaining to maximum local self-
government with minimum local government units. Furthermore,
[this bill] would impact the supreme court decisions in the HALO
(Area G Home and Landowners Organization, Inc.(HALO) v.
Anchorage) case, the Hillside police protection case, and the
North Kenai case. In the North Kenai case, the Alaska Supreme
Court said that the consolidation of service areas is
permissible without a vote of the people.
MR. GATTI noted that the Mat-Su Valley is one of the fastest
growing boroughs in the state. Traditionally, the issue of
service areas is one that has been within the province of the
local assembly and administered through the local road service
area advisory boards, who have a substantial voice with regard
to what takes place with those road service areas. Mr. Gatti
indicated that the [Mat-Su] assembly is very responsive to the
concerns of the local road service area boards.
Number 1845
MR. GATTI said, "This bill is really a regressive bill because
it takes away from the liberal construction of municipal powers
and places you back in a situation that occurred years and years
ago and still occurs in some municipalities throughout the
state; that's based on the principle under a case called
Dillon(ph)." Under Dillon(ph), the rule is that municipalities
cannot do anything unless the legislature says so. However, in
Alaska the system is that municipalities can do anything not
prohibited by law. In the Mat-Su Borough, a second class
borough, there are a few more restrictions. However, service
areas are important and the question regarding the need for new
service areas will be debated by the Mat-Su Borough Assembly in
the future. If SSHB 13 is passed, the legislative authority of
the borough assembly could be limited. He pointed out that the
legislature often gets into arguments with the governor in
regard to executive versus legislative authority. He indicated
the need for the committee to carefully consider the principle
that local control requires local assemblies to make decisions
on local issues. Furthermore, SSHB 13 requires a dual majority
vote and would, in some cases, allow the minority to control
what the majority really wants. He pointed out that in America,
the majority rules.
MR. GATTI noted that Jim Swing, Director, Mat-Su Public Works,
is present and could address the practical consequences his
department may suffer if SSHB 16 passes. In regard to the
differential taxation, Mr. Gatti said he believes that
Representative Kerttula's concern is well taken because
differential taxation within a service area would pose some
substantial administrative problems. He informed the committee
of two Alaska Supreme Court cases that dealt with differential
taxation of oil and gas property; one case involved Valdez and
the other case involved Kenai. In both of those cases, under
the facts of those cases, the Alaska Supreme Court said that
differential taxation is unconstitutional due to its lack of
uniformity in regard to the taxation on property. He
acknowledged that cities do have differential taxation for
various services as they are merely large service areas. He
pointed out that service areas in the Mat-Su Valley do have
differential taxation rates based upon the recommendations on
the road service area supervisors. He doubted that the borough
assembly would disagree very often with the recommendations of
those supervisors regarding the rate of taxation for a
particular service area.
Number 1603
MR. GATTI turned to the issues of consolidation and abolishment
of road service areas. Once the assembly has acquired a power,
it is up to the local government to determine how best to
administer that power. If there should be a consolidation of
service areas that provide basically the same level of services,
that should be accomplished by ordinance rather than through
artificial prohibitions. This [belief is supported] by the
constitution and Title 29 as well as case law, Liberati v.
Bristol Bay Borough(ph). In conclusion, Mr. Gatti reiterated
that the Mat-Su Administration disagrees with SSHB 13. The
entire state shouldn't be impacted by a bill for a local
concern, which should be debated on the local level.
Number 1488
OCIE ADAMS testified via teleconference in support of SSHB 13.
He was depressed by the fact that the local government could so
easily rationalize why it is important to express the will of
the people. He remarked that the people where he lives [Knik]
are "definitely interested in seeing this bill supported." He
hoped that the Mat-Su Borough would be included in this
legislation.
Number 1400
JIM SWING, Director, Public Works, Matanuska-Susitna Borough,
testified via teleconference. Mr. Swing echoed earlier comments
regarding the Mat-Su Borough being one of the fastest growing
areas in the state. Much of the land in the Mat-Su Borough is
being subdivided extensively. He could foresee a subdivision
being proposed that would extend across road service areas or
even extend inside and outside of road service areas. He
pointed out that there are already requirements for road
construction in subdivisions. Therefore, a vote of an entire
service area seems to be burdensome and serves no practical
purpose.
MR. SWING informed the committee that when driving from Palmer
to Wasilla, one drives through three road service areas, which
have roads that are practically in the same condition and with
the same mill levies. He related his belief that combining
those three service areas should be left up to the assembly.
Number 1215
JOHN LETTOW, Supervisor, Road Service Area, Matanuska-Susitna
Borough, testified via teleconference. Mr. Lettow said that he
believes that local service areas provide the maximum
flexibility for individuals to choose what lifestyles to
participate in and fund. He pointed out that not everyone that
moves into the Mat-Su Valley does so for curbs, gutters,
sidewalks, and street lights. Some people move to the Mat-Su
Valley for the absence of those features. Mr. Lettow indicated
that consolidation of road service areas could result in areas
of lower assessed property values, who may prefer to have
ditches and darkness, having their monetary contributions
[taxes] be used to put in curbs and street lights in other
areas.
MR. LETTOW turned to the issue of differential taxation and
referred to Section 4(b). He informed the committee that
[differential taxation for different level of services] already
occurs due to areas that may be required to have public water
and sewer when subdivided. When that occurs, an assessment is
made and incorporated and would result in a different level of
assessment for those services in individual subdivisions. Mr.
Lettow indicated that the aforementioned situation is a
necessary remedy so that owners in those locations actually pay
for those improvements rather than spreading the cost to others
who do not benefit from those improvements.
MR. LETTOW noted his support of SSHB 13, although Section 3(d)
would seemingly impact the Mat-Su Borough. He acknowledged the
difficulty in putting things to a vote and suggested that
possibly there is a remedy between SSHB 13 and the encumbrance
stated by Mr. Swing.
Number 0883
JULIE KRAFFT, Director, Member Services, Alaska Municipal League
(AML), noted that the committee should have a letter from AML,
which states its opposition to SSHB 13. She also noted that
this issue has been discussed with AML's members several times
and thus a policy position has been established and is included
in the committee packet. The bottom line for AML is that this
is a local control issue. She said that issues regarding
service areas should be resolved at the local level and should
not be a statewide mandate. She pointed out that the 10 mill
tax cap election, a "one size fits all" solution does not work.
REPRESENTATIVE HALCRO said that he understood AML's concern that
this should remain a local issue. However, the folks that live
within these local road service areas are locals, who want to
retain local control. Representative Halcro emphasized that
[SSHB 13] protects the locals that live within the local road
service area. He pointed out, "It's not as if the state is
going to step in and be in charge of the operations of the
limited road service area. We're simply saying, the folks that
live in these areas ought to have local control."
MS. KRAFFT echoed earlier comments regarding the fact that the
municipal government, as set out in the constitution, is given
the authority to run the government. She indicated that local
government officials, who have been elected to be responsible
for the borough as a whole, aren't able to live up to those
responsibilities [under SSHB 13] because a small group is
allowed to prevent a possible consolidation that may be
appropriate for the government as a whole.
CO-CHAIR MEYER turned to the teleconference list and found that
Mr. Bockhorst, Local Boundary Commission, Division of Community
and Business Development, Department of Community & Economic
Development, and Mr. Poland, Director, Division of Community and
Business Development, Department of Community & Economic
Development, were available to offer information or technical
assistance.
Number 0551
REPRESENTATIVE MURKOWSKI agreed that there seem to be some
constitutional issues. From Representative Bunde's comments,
Representative Murkowski understood that a legal opinion on some
of these constitutional issues has been requested; however, she
has not seen it. Furthermore, she noticed that the next
committee of referral for SSHB 13 is the House Finance
Committee. Therefore, she felt that it is not the jurisdiction
of the House Community & Regional Affairs Standing Committee to
resolve legal issues and thus she asked if Representative Bunde
would object to having SSHB 13 referred to the House Judiciary
Standing Committee.
REPRESENTATIVE BUNDE informed the committee that Tam Cook,
Director, Legislative Legal Services, Legislative Affairs
Agency, has provided information [to the effect] that these
constitutional concerns are not germane. Representative Bunde
reminded the committee that this legislation was passed by the
legislature last year. He questioned some of the comments
embodied in the governor's veto message. Representative Bunde
assured the committee that he would request that these questions
be addressed in the House Finance Committee. Furthermore, this
legislation went through Legislative Drafting and Legal, both of
which did not find a constitutional problem.
Number 0227
REPRESENTATIVE MURKOWSKI asked if Representative Bunde had an
opinion from Ms. Cook that he would be willing to release.
[Representative Bunde indicated that an opinion is in the
works.]
CO-CHAIR MEYER asked if Representative Murkowski wanted to hold
SSHB 13 until she has reviewed the [opinion] from Ms. Cook.
REPRESENTATIVE MURKOWSKI answered that she would feel more
comfortable seeing that opinion or talking with Ms. Cook.
Although she appreciated Representative Bunde's offer to bring
these concerns to the House Finance Committee, she didn't
believe that [constitutional issues] fall under the jurisdiction
of the House Finance Committee either.
CO-CHAIR MEYER asked if Representative Bunde could provide the
committee with an opinion from Ms. Cook by the next meeting
REPRESENTATIVE BUNDE agreed to obtain written communication from
Ms. Cook, if the committee wishes.
TAPE 01-5, SIDE A
CO-CHAIR MEYER announced that SSHB 13 would be on next Tuesday's
agenda.
Number 0040
REPRESENTATIVE BUNDE began his closing remarks by saying that
SSHB 13 basically protects the status quo. Representative Bunde
noted that although the local government officials are not evil,
their job is made easier with more power. He said, "This is a
bill about the tyranny of the majority." Representative Bunde
then turned to the issue of home rule cities and noted that home
rule cities have 53 limitations. With regard to the notion that
this is merely a Hillside issue, it is not because good
government and local control is a statewide issue.
REPRESENTATIVE BUNDE pointed out that the definition of the term
"local control" has varied throughout the testimony. From one
point of view, local control is the power of the assembly. From
another point of view, local control refers to [the local
residents]. Representative Bunde noted that although the
argument that [an area] is not paying its fair share did not
come up, [it is not appropriate] because if the neighborhood
maintains its roads and the state maintains its roads, then it
will be a quid pro quo situation. In conclusion, Representative
Bunde said that one shouldn't fear the voters. He remarked that
the government's job is to allow people the greatest input in
the process.
Number 0367
REPRESENTATIVE MURKOWSKI returned the legal opinion and remarked
that if it is easier, Ms. Cook could merely be present at the
meeting.
CO-CHAIR MEYER requested Ms. Cook's presence at the next hearing
on SSHB 13.
REPRESENTATIVE KERTTULA expressed interest in Ms. Cook's opinion
addressing the executive versus the legislative functions of
municipalities.
Number 0450
REPRESENTATIVE HALCRO remarked that this a very fine line. He
noted that his district has a number of people that are on
septic and well systems. Due to [Anchorage's] expansion the
city has placed a water line down one of the main streets in his
district. Currently, the majority of the citizens in that area
have to vote in favor of hooking up to the [city's] water and
sewer. Representative Halcro said that he didn't want to have
the city impose hooking up to city water and sewer on those who
don't wish to hook up to it. He informed the committee that the
Municipality of Anchorage's Citizen Budget Book, which says,
"The Municipality of Anchorage operates under a service area
concept whereby taxpayers in different areas or taxing districts
of the municipality pay property taxes only for those services
which are either required by law or which they vote to receive."
Therefore, he surmised that the municipality [of Anchorage]
accepts that it operates under a service area concept and [this
legislation] is merely trying to protect that. Furthermore, the
[Alaska] Supreme Court has already ruled - on the police
protection issue - that it was for the greater good for police
protection to be imposed on the Hillside. Representative Halcro
understood that ruling in regard to police and fire protection.
REPRESENTATIVE HALCRO turned to Mr. Greene's testimony that
[SSHB 13] could limit the local assembly's ability to raise
taxes. Representative Halcro did not agree with Mr. Greene's
testimony. Furthermore, he said that the people in the road
service areas pay a commensurate [tax] for school districts,
areawide mill rate, and police [protection]. Therefore, he
believes that self-determination [by local residents] is the
ultimate "local control." In regard to the argument that
different taxation levels are unfair, Representative Halcro
pointed out that he pays the same tax for roads as someone
living in downtown Anchorage; however, Representative Halcro
lives on a gravel road. In conclusion, Representative Halcro
felt that [SSHB 13] protects the status quo and is important.
Number 0832
CO-CHAIR MEYER announced that public testimony would be closed
and SSHB 13 would be heard at the next meeting.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:52 a.m.
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