Legislature(2001 - 2002)

02/25/2002 01:59 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 25, 2002                                                                                          
                          1:59 PM                                                                                               
                                                                                                                                
TAPE HFC 02 - 31, Side A                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House Finance Committee meeting                                                                    
to order at 1:59 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Bill Williams, Co-Chair                                                                                          
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Carl Moses                                                                                                       
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Con Bunde, Vice-Chair                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator Gary Stevens; Mike Tibbles, Staff, Representative                                                                       
Williams; Kevin Ritchie, Alaska Municipal League                                                                                
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
There were no teleconference testifiers.                                                                                        
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 20     "An Act relating to state aid to municipalities                                                                       
          and certain  other recipients, and for  the village                                                                   
          public   safety   officer  program;   relating   to                                                                   
          municipal dividends;  relating to the public safety                                                                   
          foundation program;  and providing for an effective                                                                   
          date."                                                                                                                
                                                                                                                                
HOUSE BILL NO. 20                                                                                                             
                                                                                                                                
     "An  Act relating  to state  aid  to municipalities  and                                                                   
     certain  other recipients,  and for  the village  public                                                                   
     safety   officer   program;    relating   to   municipal                                                                   
     dividends;  relating  to  the public  safety  foundation                                                                   
     program; and providing for an effective date."                                                                             
                                                                                                                                
Co-Chair  Mulder  MOVED  to  ADOPT   proposed  committee                                                                        
substitute    work    draft     22-LS0008\J,    2/22/02.                                                                        
Representative  John   Davies  OBJECTED.  He   stated  a                                                                        
preference for the original legislation.                                                                                        
                                                                                                                                
Co-Chair Williams explained that  the proposed committee                                                                        
substitute  would simply  the legislation  by using  the                                                                        
existing laws.                                                                                                                  
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Foster,  Harris,  Hudson,   Lancaster,  Moses,                                                                        
Whitaker, Williams, Mulder                                                                                                      
OPPOSED: Davies                                                                                                                 
                                                                                                                                
Representatives  Bunde and  Croft were  absent from  the                                                                        
vote.                                                                                                                           
                                                                                                                                
MIKE TIBBLES,  STAFF, REPRESENTATIVE WILLIAMS  explained                                                                        
that the  intent was  to simplify  the legislation.  The                                                                        
committee substitute  utilizes three existing  programs:                                                                        
Tax   Resource   Equalization,   Revenue   Sharing   for                                                                        
Municipal  Services,   and  Revenue  Sharing   for  Safe                                                                        
Communities. The  legislation authorizes  appropriations                                                                        
to  these  three  programs  and  adds  capital  matching                                                                        
grants  and  payments  to municipalities  for  costs  of                                                                        
confinement  and  care  of  state  prisoners  (community                                                                        
jails). The per  capita amount was reduced from  $150 to                                                                        
$100.  This   would  result   in  an  estimated   annual                                                                        
appropriation  into the Fund  from the Earnings  Reserve                                                                        
Account of $59.3  million dollars, based on  last year's                                                                        
number of permanent fund dividend applicants.                                                                                   
                                                                                                                                
Co-Chair Williams acknowledged  that the sponsor did not                                                                        
support the reduction.                                                                                                          
                                                                                                                                
In response  to a question by Representative  Lancaster,                                                                        
Mr. Tibbles  explained that the  increase was  placed in                                                                        
the Municipal Services program.  The intent was to place                                                                        
the  money  in the  program  that  would give  the  most                                                                        
flexibility   to  municipalities.   It  is  derived   by                                                                        
formula.    Revenue Sharing  for  Safe  Communities  has                                                                        
priorities and statutory requirements.  The Tax Resource                                                                        
Equalization  Program  would   be  funded  at  the  FY02                                                                        
amount: $8.5  million dollars.  The Revenue Sharing  for                                                                        
Municipal  Services Program  would be  $14.0. The  total                                                                        
revenue sharing program would  be $22.5 million dollars.                                                                        
The Revenue  Sharing for Safe Communities  Program would                                                                        
be funded  at the  FY02 amount:  $16.8 million  dollars.                                                                        
Capital  Matching  grants  would   be  funded  at  $15.0                                                                        
million  dollars,  which  is slightly  more  than  FY02.                                                                        
Community Jails  would be funded at $5  million dollars,                                                                        
which is between the FY02 level  and the Governor's FY03                                                                        
request.                                                                                                                        
                                                                                                                                
     Representative  Hudson  asked  what  was left  out.  Mr.                                                                   
     Tibbles  noted that the  original legislation  created a                                                                   
     new  program  and  repealed   municipal  assistance  and                                                                   
     revenue  sharing.  The new  program  allocated funds  to                                                                   
     communities based on services  provided and allocated on                                                                   
     a per capita basis within the service provided.                                                                            
                                                                                                                                
     Representative   Hudson  observed   that  the   original                                                                   
     legislation  was   for  $89  million  dollars   and  the                                                                   
     committee   substitute  would   be  for  $59.3   million                                                                   
     dollars.  Mr. Tibbles  explained  that legislation  took                                                                   
     what  was  left  after  funding   the  new  program  and                                                                   
     allocated  it all  to capital  matching  grants. It  was                                                                   
     substantially  more than  the FY02  amount. He  observed                                                                   
     that the  FY02 amount [for capital matching  grants] was                                                                   
     $13  or  14  million  dollars.   Under  the  legislation                                                                   
     [capital  matching grants] would  have been  $28 million                                                                   
     dollars.   The  proposed   committee  substitute   would                                                                   
     allocate  $15 million dollars.  If there are  additional                                                                   
     funds the capital matching grants could be increased.                                                                      
                                                                                                                                
     Representative John Davies  noted that the sponsor spoke                                                                   
     to  the need  for flexibility.  He  questioned how  much                                                                   
     flexibility    exists   in   the   proposed    committee                                                                   
     substitute.   He   noted   that  the   Legislature   may                                                                   
     appropriate  to the  specific  programs, but  questioned                                                                   
     the communities'  flexibility to move the  money between                                                                   
     appropriations. Mr. Tibbles  clarified that each program                                                                   
     is a little difference. He  explained that the number of                                                                   
     road  miles  or  hospital   beds  within  the  community                                                                   
     determines  their funding  under the Municipal  Services                                                                   
     Program.   He  thought  that   communities  would   have                                                                   
     significant  flexibility  in  how  the money  is  spent.                                                                   
     Statutes   require   that   funding   under   the   Safe                                                                   
     Communities Program require  that the funding be used in                                                                   
     priority  of:  police,  fire, water  and  sewage,  solid                                                                   
     waste and other community priorities.                                                                                      
                                                                                                                                
     Representative  John Davies  concluded that within  each                                                                   
     specific  appropriation there  is a  variable amount  of                                                                   
     flexibility, but  that between the appropriations  there                                                                   
     no ability  to move funds.  Mr. Tibbles agreed  that the                                                                   
     funds could not be shifted within appropriations.                                                                          
                                                                                                                                
     In response  to a question by Representative  Lancaster,                                                                   
     Mr.  Tibbles  acknowledged   that  the  numbers  of  the                                                                   
     original   legislation   and  the   proposed   committee                                                                   
     substitute are significantly different.                                                                                    
                                                                                                                                
     KEVIN  RITCHIE, ALASKA  MUNICIPAL  LEAGUE observed  that                                                                   
     the  committee  substitute  would maintain  the  current                                                                   
     revenue sharing  structure. The Alaska  Municipal League                                                                   
     supports  any increase  to revenue  sharing. He  pointed                                                                   
out that  an advantage  of the  original legislation  is                                                                        
that  it  would   target  the  funding   formula  toward                                                                        
services, which  would be  an advantage creating  public                                                                        
support.  He  noted that  the  Alaska  Municipal  League                                                                        
strongly   supports  implementation   of  a   long-range                                                                        
financial plan.  The Alaska  Municipal League will  work                                                                        
to  support the  legislation  as  part of  a  long-range                                                                        
financial  plan and  additional  funding toward  revenue                                                                        
sharing,  even  if  it  is under  the  old  formula.  He                                                                        
emphasized  that even  though  the original  legislation                                                                        
would   create  a  new   program,  that   it  would   be                                                                        
understandable  for  communities.  The  current  funding                                                                        
formula is rather  obscure, but the plan proposed  by HB
20 would be  simple. Funding under the  original version                                                                        
of HB 20 would be tied to services.  He reiterated their                                                                        
support for a long-range fiscal plan.                                                                                           
                                                                                                                                
Representative  John  Davies   stressed  that  different                                                                        
communities have different priorities and needs.                                                                                
                                                                                                                                
Mr. Ritchie  agreed that  flexibility is desirable,  but                                                                        
emphasized the need for accountability.                                                                                         
                                                                                                                                
Representative  Harris  pointed  out  that  $15  million                                                                        
dollars  would  be  appropriated  for  capital  matching                                                                        
grants, which are fairly flexible.                                                                                              
                                                                                                                                
Co-Chair  Mulder  spoke  in  support  of  retaining  the                                                                        
structure  of the  committee substitute  and  emphasized                                                                        
its flexibility. He pointed out  that all communities do                                                                        
not use the money in the same  way. Some communities use                                                                        
their funds  for property tax  relief, local support  to                                                                        
education,  or basic  operations.  He acknowledged  that                                                                        
the funding level in the committee  substitute is not as                                                                        
great as contained in the original  but noted that it is                                                                        
a 20 percent  bump over FY02  (50 million to  60 million                                                                        
dollars).  He  observed  that  without  the  legislation                                                                        
municipalities  might  be facing  another  reduction  to                                                                        
municipal  assistance  and safe  communities.  It  would                                                                        
provide municipalities some relief  in an affordable way                                                                        
and builds  support for the  use of surplus earnings  of                                                                        
the  Permanent Fund  for essential  community  services,                                                                        
tax relief  or however  the community  sees fit. He  did                                                                        
not think  that $100 per  person would be  unreasonable.                                                                        
He stressed that the intent is  to pass legislation that                                                                        
can be enacted into law.                                                                                                        
                                                                                                                                
Representative Lancaster observed  that members that may                                                                        
agree  with the  committee substitute  are concern  that                                                                        
there might not be another opportunity  to amend another                                                                        
appropriation bill.                                                                                                             
                                                                                                                                
Co-Chair  Mulder  stated  his intention  in  pursuing  a                                                                        
revenue package.                                                                                                                
                                                                                                                                
     Co-Chair Mulder noted his intent to take up the                                                                            
     supplemental legislation on Friday, under bills                                                                            
     previously heard/scheduled.                                                                                                
                                                                                                                                
     HB 20 was heard and HELD in Committee for further                                                                          
     consideration.                                                                                                             
                                                                                                                                
     ADJOURNMENT                                                                                                              
                                                                                                                                
     The meeting was adjourned at 2:29 PM                                                                                       
                                                                                                                                
                                                                                                                                

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