02/28/2006 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB391 | |
| HB478 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 391 | TELECONFERENCED | |
| *+ | HB 478 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 28, 2006
8:05 a.m.
MEMBERS PRESENT
Representative Kurt Olson, Co-Chair
Representative Bill Thomas, Co-Chair
Representative Gabrielle LeDoux
Representative Mark Neuman
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
Representative Pete Kott
COMMITTEE CALENDAR
HOUSE BILL NO. 391
"An Act relating to a limit on the amount by which the assessed
value of property may be increased for purposes of municipal
property taxation."
- HEARD AND HELD
HOUSE BILL NO. 478
"An Act relating to the municipal harbor facility grant program;
and providing for an effective date."
- MOVED CSHB 478(CRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 391
SHORT TITLE: LIMIT ANNUAL INCREASE OF MUNI PROP ASSESS
SPONSOR(s): REPRESENTATIVE(s) STOLTZE
01/25/06 (H) READ THE FIRST TIME - REFERRALS
01/25/06 (H) CRA, FIN
02/28/06 (H) CRA AT 8:00 AM CAPITOL 124
BILL: HB 478
SHORT TITLE: MUNICIPAL HARBOR FACILITY GRANTS
SPONSOR(s): REPRESENTATIVE(s) THOMAS
02/13/06 (H) READ THE FIRST TIME - REFERRALS
02/13/06 (H) CRA, FIN
02/28/06 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
REPRESENTATIVE BILL STOLTZE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HB 391.
RON LONG
Seward, Alaska
POSITION STATEMENT: Expressed concerns with HB 391.
JOHN HOLST
Sitka, Alaska
POSITION STATEMENT: Expressed concerns with HB 391. Speaking
as a member of the Assembly of the City & Borough of Sitka,
characterized HB 478 as a good bill.
SHANE HORAN, Assessor
Kenai Peninsula Borough;
President, Alaska Association of Assessing Officers
Soldotna, Alaska
POSITION STATEMENT: Expressed concerns with HB 391.
STEVE VAN SANT, State Assessor
Division of Community Advocacy
Department of Commerce, Community, & Economic Development
Anchorage, Alaska
POSITION STATEMENT: During hearing of HB 391, informed the
committee of a volunteer group that he has formed to review the
issues associated with the municipal property assessment.
MARTY MCGEE, Assessor
Municipality of Anchorage (MOA)
Anchorage, Alaska
POSITION STATEMENT: Characterized HB 391 as far too simplistic
and in need of a stringent legal review with regard to
consistency with other parts of law.
KEVIN RITCHIE, Executive Director
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: Identified the basic problem with the
construct of HB 391 to be its inequity.
LISA VON BARGEN, Community and Economic Development Director
City of Valdez
Valdez, Alaska
POSITION STATEMENT: Related the City of Valdez' opposition to
HB 391.
IAN FISK, Staff
to Representative Thomas
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 478 on behalf of the sponsor,
Representative Thomas.
SCOTT RANSOM, Harbormaster
City of Seward
Seward, Alaska
POSITION STATEMENT: Testified in support of HB 478.
ALAN SORUM, Port Director/Harbormaster
City of Valdez
Valdez, Alaska
POSITION STATEMENT: Encouraged the committee's support for HB
478.
MARTY OWEN, Harbormaster
City of Kodiak
Kodiak, Alaska
POSITION STATEMENT: Characterized HB 478 as a good bill that
will help all of Alaska.
JIM STROMDAHL, Harbormaster
City of Petersburg
Petersburg, Alaska
POSITION STATEMENT: Testified in support of HB 478.
JOHN STONE, President
Alaska Association of Harbormasters and Port Administrators
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 478.
JOHN MACKINNON, Deputy Commissioner of Highways & Public
Facilities
Office of the Commission
Department of Transportation & Public Facilities
Anchorage, Alaska
POSITION STATEMENT: Characterized HB 478 as good legislation.
ACTION NARRATIVE
CO-CHAIR KURT OLSON called the House Community and Regional
Affairs Standing Committee meeting to order at 8:05:41 AM.
Representatives Olson, Thomas, Neuman, and Salmon were present
at the call to order. Representatives LeDoux and Cissna arrived
as the meeting was in progress.
HB 391-LIMIT ANNUAL INCREASE OF MUNI PROP ASSESS
CO-CHAIR OLSON announced that the first order of business would
be HOUSE BILL NO. 391, "An Act relating to a limit on the amount
by which the assessed value of property may be increased for
purposes of municipal property taxation."
8:06:03 AM
REPRESENTATIVE BILL STOLTZE, Alaska State Legislature, sponsor,
explained that HB 391 is a vehicle to address the rising cost of
property taxes through the assessment side. He related that
many of his constituents have no desire to sell their home, and
therefore the increased assessments are an increased cost of the
privilege of living in one's home. Representative Stoltze said
although the assessments may be an accurate reflection of the
increased property values, it's within the power of the
legislature to address the escalating costs of owning one's
home. In fact, in many of the state's larger municipalities,
property taxes are the sole taxpayer funding a broad range of
government services. He acknowledged that there are questions
with regard to how this legislation will impact school funding.
He then noted that he had meant to include in the legislation
that at the point of sale there is an automatic reassessment
ability.
REPRESENTATIVE STOLTZE related that this legislation is partly
borne out of frustration. He recalled that some older
constituents who have lived in his community since the 1950s are
struggling to stay in their home. Representative Stoltze
concluded by relating that he wants people to be able to afford
to live in their homes and this legislation offers a "blunt
instrument" to address the matter.
8:10:41 AM
REPRESENTATIVE NEUMAN, in regard to the point of sale problem,
asked if the sponsor would consider language specifying that
property will be reevaluated prior to the point of sale.
REPRESENTATIVE STOLTZE answered that Representative Neuman's
suggestion would be his intent, but the lending communities and
the municipalities would know how to address the matter
appropriately. He said he didn't want to address the matter "on
the fly," but the intent is for the city to be able to reassess
the property and catch up [with regard to its value in the
current market] before the house is sold.
CO-CHAIR OLSON announced that it is not his intent to move HB
391 from committee today.
REPRESENTATIVE STOLTZE commented that HB 391 is serious policy
that requires a deliberative process.
8:12:28 AM
CO-CHAIR THOMAS asked if the primary target of HB 391 is to help
seniors. He related his belief that in a growing community,
people move to an area for a reason.
REPRESENTATIVE STOLTZE replied that the seniors have been one of
the more vocal groups on this matter, although he offered that
escalating property values hits all groups of property owners.
8:13:46 AM
RON LONG clarified that the opinions he presents today are his
own. He remarked that this legislation needs some serious work
because it turns on its head the current state mandate that
local governments assess properties at their full and true
value. Furthermore, the legislation doesn't recognize the
reality of the market in which real estate values have increased
rather rapidly, which is outside the control of local or state
government. Moreover, as the assessed value/real value of
property increases, so does the owner's wealth. Therefore, the
levy is the problem rather than the assessment, he surmised. He
suggested that if the desire is to constrain local government
and deny it the ability to tax sufficiently to provide the
necessary services, then the amount the levy could increase
would be limited. For those younger and middle-aged families,
the [assessment] is an instrument that's negotiable at the bank
as a leverage that could be used for various things, including
for a vacation, college tuition, et cetera.
MR. LONG then turned attention to the senior exemption. In some
municipalities, all senior properties are exempt beyond the
$150,000 state mandate. Relief for the local governments and
the taxpayers could be for the state to reimburse the
municipalities for the revenue not received due to the mandated
senior property tax exemption. Furthermore, the legislation
doesn't recognize the different assessment methods, such as the
income approach. The legislation, he said, places
municipalities "behind the eight ball," and creates an
inequality amongst taxpayers if those living in areas in which
the property appreciates rapidly are given a "free ride" while
the others bear a disproportionate burden of the taxes necessary
to support the services delivered to everyone. Mr. Long
concluded by stating that HB 391 needs much work. He suggested
that more relief could be provided in the form of a community
dividend and trusting local governments to live up to the state
mandates required.
8:18:27 AM
CO-CHAIR OLSON inquired as to how much [Seward] is losing to the
senior property tax exemption.
MR. LONG responded that [Seward] is losing a little over $2.5
million.
8:18:35 AM
REPRESENTATIVE LEDOUX asked if Mr. Long said that if HB 391
passed, it would be more difficult for folks to obtain loans for
high values on their homes.
MR. LONG replied no, adding that it makes no difference to the
lenders. He explained that he merely pointed out that the
increase in the assessed value reflects the true market forces.
Therefore, folks could obtain the loan because the property is
truly worth the assessed value, but the local municipality
couldn't tax it.
8:19:19 AM
REPRESENTATIVE SALMON asked if Mr. Long believes there should be
a difference between business and residential taxes.
MR. LONG said he didn't know. He noted that although both
commercial and residential property is taxed at the same mill
rate, the methodology to arrive at the assessed value is
sometimes different. He related his belief that there probably
should be a difference between business and residential taxes
because the structure of the business is being taxed rather than
its earning potential.
8:20:23 AM
CO-CHAIR THOMAS inquired as to the cities that allow higher
property exemptions than state law provides.
MR. LONG answered that the Kenai Peninsula Borough currently
exempts all senior and disabled veterans.
8:20:51 AM
MR. LONG, in response to Representative Salmon, said that if
property sells for lower than assessed, then there has been a
poor assessment and that methodology should be reviewed. He
opined that property shouldn't be taxed beyond what it is worth.
He noted that there are appeal processes available for those who
believe their property has been assessed too high.
8:22:11 AM
JOHN HOLST reminded the committee that the [proposal embodied in
HB 391] was voted down by the electorate because they recognized
the inequities created by such a change would be far reaching
and difficult to unravel in the future. Therefore, he expressed
surprise that it is before the committee. Mr. Holst then
expressed concern with regard to the impact on school funding,
especially for those communities operating at the cap because
this legislation would further exacerbate the problem those
communities face. He suggested that by the way of solutions,
the already specified $150,000 exemption is where the changes
should occur. He further suggested that it be done in a way in
which the money is being given from the legislature to the
communities to offset the exemption. Mr. Holst opined that [HB
391] is an unfunded mandate with which he disagreed because such
decisions should be made at the local level. He suggested that
if the desire is to give a break to homeowners, then the
$150,000 exception could be increased and the money given to the
municipality to pass on the benefit. He concluded by informing
the committee that although he sits on the City & Borough of
Sitka's Assembly, he is speaking today as an individual.
8:24:47 AM
REPRESENTATIVE CISSNA related that in her travels throughout the
state she has been struck by the different challenges various
communities face, which doesn't seem to be considered in HB 391
because it refers to all communities [in the same fashion].
REPRESENTATIVE STOLTZE recognized that there are differences
between communities. He reiterated that there are some issues
that need to be fine tuned with this legislation.
REPRESENTATIVE CISSNA characterized "this" as a survival issue
for the community.
REPRESENTATIVE STOLTZE commented that it's often a survival
issue for those who are struggling to live in their homes. He
further commented that a stable population makes for a more
stable community, whether young or old.
8:28:04 AM
REPRESENTATIVE STOLTZE, referring to the 2000 vote on this
matter, acknowledged the comments that the voters have spoke on
this matter and thus the legislature shouldn't tinker with this
issue again. He questioned whether the same standard would
apply to legislation regarding the use of the permanent fund
dividend.
8:28:49 AM
SHANE HORAN, Assessor, Kenai Peninsula Borough; President,
Alaska Association of Assessing Officers, said that HB 391 could
have substantial and far-reaching impacts on the taxing scheme,
bonding, and school funding of all municipalities throughout the
state. Furthermore, HB 391 could lead to a substantial and
significant rewrite of the full and true value assessment law as
it currently exists in AS 29.45.110. He offered the assistance
of the Alaska Association of Assessing Officers to work with the
legislature on this matter. He then related the following 10
points in HB 391 that should be addressed or clarified: what
constitutes an improvement; what increases by 2 percent; if an
improvement is made, would the total assessed value be increased
to current market value; how do market value fluctuations
interact with the 2 percent increase; would HB 391 promote full
disclosure at the point of sale; at what point is there a base
year for HB 391; local funding for schools requires such be
based on full and true value; what impact does the 2 percent
increase have on the municipalities' ability to bond; and how
would a municipality make assessment corrections when the
assessments are only tied to a 2 percent [increase].
8:32:27 AM
REPRESENTATIVE STOLTZE acknowledged that Mr. Horan made some
good points that should be considered during the process of HB
391.
8:33:05 AM
REPRESENTATIVE LEDOUX posed a situation in which HB 391 exists
without a cap on property tax rates, and inquired as to how it
would accomplish what the sponsor desires.
REPRESENTATIVE STOLTZE opined that local public officials are
cautious with regard to increasing mill rates due to what he
characterized as voter control. Furthermore, a large number of
the charters of the community require voter approval of mill
rate increases or tax increases. He related his experience that
the political pressures placed on public officials will be the
prevailing force.
8:35:30 AM
STEVE VAN SANT, State Assessor, Division of Community Advocacy,
Department of Commerce, Community, & Economic Development
(DCCED), informed the committee that the Kenai Peninsula Borough
senior citizen property tax exemption amounts to about $3.5
million for the $150,000 exemption that currently exists. He
then pointed out that municipalities do have the authority to
increase the exemption beyond the $150,000 for senior citizens.
The aforementioned is utilized by the Kenai Peninsula such that
all personal property [of senior citizens] is exempt. Other
municipalities have that opportunity as well. He opined that
one of the primary issues is that some assessments do increase
more than average, most of which he attributed to mistakes [in
the original assessment] that needed to be corrected. Mr. Van
Sant informed the committee that he has gathered an unofficial
group of experts in the tax field, including several assessors
and municipal attorneys across the state, to work on ideas to
propose to policymakers. One of the problems is that
municipalities probably need a tool to assist with the large and
rapid increases in values such that an increase could be limited
to no more than the average increase in a given municipality.
He expressed the hope that the group would have some
alternatives that it could bring forward for review. In
response to Co-Chair Olson, Mr. Van Sant related that there is
no timeline for this group since it consists of volunteers.
8:39:57 AM
MARTY MCGEE, Assessor, Municipality of Anchorage (MOA), pointed
out that the actual tax revenue is very restricted in MOA by the
municipal tax cap, and therefore the idea that the municipality
wouldn't tax to the cap isn't a valid idea. Looking
historically at limiting the value growth with no limit on the
mill rate would result in a mill rate of about 19 for the MOA if
this was implemented in 2000. Therefore, such a concept merely
shifts the reason for the increase in tax and doesn't limit the
amount of growth in the tax. Furthermore, it could potentially
limit MOA's ability to fund local services. Mr. McGee said that
MOA recognizes the disconnect in the community such that
individual taxpayers are burdened by increasing valuations and
taxes. Furthermore, MOA also recognizes that the intent of the
entire system of taxation is not to move people out of their
homes or property but rather to fund local government in an
equitable manner. To that end, Mr. McGee opined that the
property tax is as stable and predictable as the real estate
market upon which it's built. He related that in principle,
Anchorage would support HB 391 in order to recognize that rapid
increases in value and growth place a burden on those with fixed
means in a way that wasn't intended nor anticipated. Mr. McGee
informed the committee that he is involved with the group to
which Mr. Van Sant referred. He characterized HB 391 as far too
simplistic and in need of a stringent legal review with regard
to consistency with other parts of law. Mr. McGee concluded by
informing the committee that Anchorage has lost almost $19
million in taxes related to the senior and veteran exemptions
and both face an exponential growth from the current 9,000
participants. In response to Co-Chair Olson, Mr. McGee
confirmed that the cap is [$150,000].
8:44:32 AM
KEVIN RITCHIE, Executive Director, Alaska Municipal League
(AML), agreed with Representative Stoltze in regard to the
following: that people should be allowed to stay in their
homes, rising property taxes should be addressed, and people
shouldn't have to sell their homes due to taxes. However, HB
391 is part of the tax cap proposition issue that was heavily
rejected by voters in 2000. He acknowledged that people and
views can change. Mr. Ritchie identified the basic problem with
the construct of HB 391 to be its inequity. If this legislation
were in place in 2000, Anchorage's mill rate would need to be 19
in order to provide enough money for schools. The
aforementioned would potentially place a heavier burden on
business or people whose property [value] had not risen as fast.
MR. RITCHIE surmised that municipalities would be very
interested in working with the state assessor in order to
develop ways in which to reduce mistakes that happen in
assessments that create undue impact to individuals. He then
suggested really reviewing why property taxes have increased,
which is related in AML's letter included in the committee
packet. Mr. Ritchie highlighted that revenue sharing has been
eliminated statewide and the amount lost to the senior exemption
is $39 million. He then turned to the shift between school
funding at the local level versus the state level over the last
15 years or so. According to the records from the Department of
Education and Early Development (EED), in 1986 municipalities
paid 28 percent of the cost of schools while now they pay 36
percent. Therefore, the increased local contribution amounts to
about $89 million. Furthermore, there has been a significant
decrease in various municipal programs, ranging from community
jails to community schools. He then highlighted the PERS
increase prior to last year that amounted to about $20 million.
Last year, the state provided $20 million to offset the
aforementioned additional increase. Summing all of the
aforementioned, the cuts since 1986 just about equal the cuts in
property taxes. Therefore, a community dividend or some sharing
of the oil revenues is necessary in order to create permanent
property tax relief for all taxpayers.
CO-CHAIR OLSON clarified that, depending upon the city, part of
the $20 million to which Mr. Ritchie referred went to property
tax rather than PERS/TRS.
MR. RITCHIE noted that a number of communities paid the 5
percent increase. However, the letter from the Division of
Retirement & Benefits specified that the desire was to keep
cities from paying the 5 percent increase and thus the funds
could be used elsewhere. He recalled that 20 communities kept
paying the 5 percent increase, assuming that they had enough
money to buy down the debt. He characterized it as a choice.
8:51:44 AM
REPRESENTATIVE NEUMAN related that over the last several years
school funding has increased over 30 percent. He asked if AML's
school funding chart includes all the money spent on the Public
Employees' Retirement System and Teachers' Retirement System
(PERS/TRS) for schools, which will amount to almost $160 million
a year for 20 years to cover the $6 billion loss. He asked if
all the money that goes toward repairs in schools that were
funded by the legislature was included in the school funding.
With regard to references to a stable revenue source, he asked
if that includes spending the permanent fund dividend (PFD) on
state government.
MR. RITCHIE clarified that the chart only includes operation
funds. He said that it's well recognized that the state has
been putting extra funds into schools. He explained that he was
merely referring to the cost increases that local taxpayers have
had to bear. The state, he opined, has been a great partner
with regard to repairs and consistently sharing funding with
municipalities for new schools. He emphasized that this isn't a
criticism of current or past legislatures because they have to
address issues as they arise. The point is that local
communities have faced significant pressures in terms of the
money that has been reduced over the last several years. In
further response to Representative Neuman, Mr. Ritchie said that
AML does favor spending PFD monies as one of its options for
funding as well as the other options that are being brought
forward for funding with community dividends. The options, he
specified, would be sharing some of the state's current oil
revenue, the Amerada Hess funding, funding placed in the general
fund, and using part of the earnings reserve or constitutional
budget reserve.
8:55:20 AM
MR. RITCHIE, in response to Representative Stoltze, clarified
that in terms of AML's standpoint, AML as a body hasn't taken a
position on the meaning of the 2000 vote.
8:56:55 AM
LISA VON BARGEN, Community and Economic Development Director,
City of Valdez, related that the City of Valdez concurs with the
prior testimony. She informed the committee that the City of
Valdez passed resolution 06-16 in opposition to HB 391 due to
many of the aforementioned reasons, such as funding to the cap
for schools, assessment contracts, the contradiction between HB
391 and AS 29.45.110, and the rising cost of service delivery.
8:58:10 AM
CO-CHAIR OLSON, upon determining no one else wished to testify,
closed public testimony and announced that HB 391 would be held
over.
HB 478-MUNICIPAL HARBOR FACILITY GRANTS
8:58:33 AM
CO-CHAIR OLSON announced that the final order of business would
be HOUSE BILL NO. 478, "An Act relating to the municipal harbor
facility grant program; and providing for an effective date."
8:58:56 AM
IAN FISK, Staff to Representative Thomas, Alaska State
Legislature, pointed out that the committee packet should
include a proposed committee substitute.
8:59:22 AM
REPRESENTATIVE NEUMAN moved to adopt CSHB 478, Version 24-
LS1694\G, Cook, 2/24/06, as the working document. There being
no objection, Version G was before the committee.
MR. FISK informed the committee that HB 478 is a companion to SB
291 sponsored by Senator Stedman. He explained that for about
the past 15 years the Department of Transportation & Public
Facilities (DOT&PF) has been transferring harbor ownership from
the state to the municipalities. In so doing, the state has
provided grants to the municipalities in order to address some
of the deferred maintenance issues that were transferred as
well. The legislation was brought forward by the Alaska
Association of Harbor Masters and Port Administrators and is
supported by municipal government officials who recognize the
deferred maintenance needs for the harbors. He explained that
the legislation proposes a 50:50 matching grant and creates the
municipal harbor facility grant fund into which the legislature
can appropriate money from whatever source it sees fit. The
legislation spells out the watercraft fuel tax account. The
change embodied in Version G is located on page 1, lines 9-11.
The legislation, he added, would allow [the state] to take
appropriations from the fisheries business tax revenue after the
municipalities have been addressed through the sharing program.
Furthermore, DOT&PF is established as the agency that would
administer grants from the fund. The legislation specifies
eligibility criteria for grant applications, such as the
criteria that the grant has to be for capital improvement
projects not preventative maintenance. Furthermore,
municipalities would have to demonstrate that they hold adequate
insurance for their harbor facilities and have a preventative
maintenance plan in place. The legislation also specifies the
criteria for the award of grants. The intent, he explained, is
to prioritize, repair, and [perform] major maintenance versus
new projects. However, once much of the deferred maintenance
needs have been addressed, new projects can be considered
eligible for grants under this proposed program. The
legislation also specifies that a harbor can only receive one
grant per year in an amount [not to exceed] $5 million.
Furthermore, the legislation specifies that municipalities must
operate independent of state aid in the future. Mr. Fisk
highlighted further criteria for the award of grants such as
public safety needs, the amount spent by the municipality on
maintenance of the harbor. Moreover, DOT&PF may make
suggestions and changes to the grant applicants.
9:02:56 AM
REPRESENTATIVE LEDOUX asked if there is any money attached to
the mechanism that HB 478 seems to provide.
MR. FISK agreed that the legislation provides a mechanism to
which the legislature may make appropriations, which is why the
legislation has a zero fiscal note.
9:03:44 AM
REPRESENTATIVE NUEMAN inquired as to how much money would be
available to the harbors. Therefore, he asked if there are any
guidelines with regard to how much money would be distributed to
the municipalities/harbors. He inquired as to how it's
determined where the need is the greatest.
MR. FISK pointed out that the committee packet should include a
list of the existing deferred maintenance needs, which are
considerable. He suggested that DOT&PF could assess/prioritize
the needs on a case-by-case basis.
9:05:50 AM
REPRESENTATIVE CISSNA asked if any ways have been identified to
obtain funding without state revenues.
MR. FISK noted that for certain harbor projects federal dollars
are available. He suggested that all three levels of government
could be utilized. In further response to Representative
Cissna, Mr. Fisk clarified that the notion with HB 478 is to
look at the large picture in a comprehensive approach.
9:07:58 AM
CO-CHAIR THOMAS moved that the committee adopt Conceptual
Amendment 1, which read [original punctuation provided]:
p. 2, Line 17: after "grant;" and: "state funds shall
not be used by municipality as their matching funds
for grants under this program"
REPRESENTATIVE NEUMAN objected, and opined that "it" seems to
tell the municipalities how to spend their funds. He further
opined that [the legislation] seems to place a restriction on a
municipality using state money on a grant.
CO-CHAIR THOMAS explained that Conceptual Amendment 1 would
address the double dipping concern and encourage municipalities
to put their own money forward.
REPRESENTATIVE NEUMAN withdrew his objection.
There being no further objection, Conceptual Amendment 1 was
adopted.
9:10:06 AM
SCOTT RANSOM, Harbormaster, City of Seward, informed the
committee that the City of Seward and its council support HB
478. He further informed the committee that Seward faces over
$6 million in deferred maintenance for its original floats. Mr.
Ransom noted that the city has funded new floats. He also noted
that Seward has already had two rate increases as well as a
passenger fee increase as a means to help take care of the
harbor facility.
9:11:30 AM
ALAN SORUM, Port Director/Harbormaster, City of Valdez, informed
the committee that he became very involved with the issues of
deferred maintenance and harbor transfers during his two years
as president of the Alaska Association of Harbor Masters and
Port Administrators. He noted that many communities have
supported efforts to support the fund established in HB 478 in
cooperation with DOT&PF. Mr. Sorum related his impression that
many communities have simply been overwhelmed with the prospect
of repairing their facilities. Since there has been no
maintenance funding for the state-owned harbors for many years,
renovation of these facilities is a major undertaking. He
discussed the increased costs, specifically in relation to
construction itself. He highlighted that harbors represent a
valuable and important transportation link for the state's
coastal communities, tourism, commercial and recreational
fishing, and subsistence gathering and hunting; and therefore,
he encouraged the committee's support for HB 478.
9:13:34 AM
JOHN HOLST, Member, Assembly, City & Borough of Sitka, began by
characterizing HB 478 as good legislation in that it provides a
vehicle for funding local municipalities with large amounts of
deferred maintenance. He reviewed some of the major projects in
Sitka. He related that the Ports & Harbor Commission of Sitka
has already recommended a $.25 per foot increase in moorage
rates each year for the next five years. The aforementioned
will practically double Sitka's moorage rates, which will be
very problematic for much of the local fishing fleet. He
related his fear that if moorage fees increase too fast, it will
cause local fishermen to leave and at the same time folks from
down South may come in since they are accustomed to paying much
more. Therefore, it could result in a situation in which the
local fishing fleet is displaced, which isn't desirable. This
legislation would help the local communities pay for some of the
capital improvements because without it the struggle will be
borne by local fishermen, he opined.
9:16:12 AM
MARTY OWEN, Harbormaster, City of Kodiak, said that he would
discuss the economic benefits of harbors across the state. Mr.
Owen characterized harbors as economic lifeboats in coastal
communities because initially a high percentage of the wealth in
a coastal community is created by harbor users, especially by
commercial fishermen and tourism-related businesses, who are the
economic foundation for almost every business. However, without
modern docks and floats, businesses and fishing can't grow.
Furthermore, economic activity becomes stagnate and populations
decline. Mr. Owen highlighted that most of Alaska's harbors
were built over 25 years ago, and since then the vessels have
become longer, heavier, and wider and need more electrical
support. To remain competitive in a global seafood market,
commercial fishermen upgraded their vessels, however the state's
harbors haven't kept pace.
MR. OWEN then turned attention to the future and how the various
rationalization schemes will impact harbor use and development.
He explained that to some degree the fleets have consolidated
and more [consolidation] seems inevitable. Still, fishing isn't
going away. Therefore, Alaska needs to support and sustain the
fleet as it matures and modernizes. He characterized the
current period as an adjustment period, which state and local
governments can help by supporting harbors to meet the needs of
the modern fleet in order to stabilize the coastal economies.
He then used Kodiak as an example. Just a few a years ago,
DOT&PF offered Kodiak $7.5 million and the deed to its two
harbors. With the aforementioned funds, the smaller and older
of the two harbors was replaced. He related that it will cost
over $14 million to replace the remaining harbor. He noted that
although Kodiak's moorage fees were some of the highest in the
state for many years, they barely covered operating and
maintenance costs and nothing was left to set aside for major
replacement projects. Since Kodiak has taken over ownership of
the harbors, moorage rates have increased three times and two
more increases have been authorized by the city council. He
informed the committee that for the larger vessels, the moorage
rate increased over a five-year period from $25 per foot per
year to nearly $100 per foot per year, which is a 400 percent
increase. In conclusion, Mr. Owen opined that HB 478 is good
legislation that will be good for all of Alaska.
9:22:10 AM
JIM STROMDAHL, Harbormaster, City of Petersburg, spoke in
support of HB 478. He related that since the City of Petersburg
has taken over operation of its harbors, moorage rates have
increased by 50-70 percent as well as an additional 10 percent
in 2007 and 2008. Furthermore, the City Council of Petersburg
has allocated a portion of the raw fish tax. The City of
Petersburg plans to utilize the aforementioned for its 50
percent match to the proposed grant in HB 478. He opined that
the funding [that can be leveraged] under HB 478 will help keep
operations running in the future.
9:23:57 AM
JOHN STONE, President, Alaska Association of Harbormasters and
Port Administrators (AAHPA), noted that his prepared statement
is included in the committee packet. He informed the committee
that AAHPA represents 27 harbor systems throughout the state and
is in strong support of HB 478, which will help fulfill the
original intent of the transfer of the harbors to the
municipalities.
9:25:07 AM
JOHN MACKINNON, Deputy Commissioner of Highways & Public
Facilities, Office of the Commission, Department of
Transportation & Public Facilities (DOT&PF), characterized HB
478 as good legislation. He commented that the use of the
marine fuel tax and the fisheries business tax is almost a user
fee, which is appropriate.
9:26:13 AM
CO-CHAIR OLSON, upon determining that no one else wished to
testify, closed public testimony.
9:26:21 AM
CO-CHAIR THOMAS thanked everyone for helping put this together
because it has taken a year to get this far.
9:27:08 AM
REPRESENTATIVE NEUMAN moved to report CSHB 478, Version 24-
LS1694\G, Cook, 2/24/06, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 478(CRA) was reported from the
House Community and Regional Affairs Standing Committee.
9:27:27 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:27 a.m.
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