Legislature(1993 - 1994)

04/24/1993 06:00 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         APRIL 24, 1993                                        
                            6:00 P.M.                                          
                                                                               
  TAPE HFC 93 - 123, Side 1, #000 - end.                                       
  TAPE HFC 93 - 123, Side 2, #000 - end.                                       
  TAPE HFC 93 - 124, Side 1, #000 - #63.                                       
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair Ron Larson called the meeting of  the House Finance                 
  Committee to order at 6:00 P.M.                                              
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson               Representative Brown                           
  Co-Chair MacLean              Representative Foster                          
  Vice-Chair Hanley             Representative Grussendorf                     
  Representative Therriault     Representative Martin                          
  Representative Navarre        Representative Parnell                         
                                                                               
  Representative Hoffman was not present for the meeting.                      
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Shelby Stastny, Director,  Office of Management  and Budget,                 
  Office  of  the  Governor;  Jack   Fargnoli,  Senior  Policy                 
  Analysis, Office  of Management  and Budget,  Office of  the                 
  Governor;  Tamara Brandt Cook,  Director, Division  of Legal                 
  Services, Legislative Affairs Agency; Ken Swisher, Director,                 
  Alaska Municipal League, Juneau, Alaska.                                     
                                                                               
  SUMMARY INFORMATION                                                          
  HB 124    An Act relating to grants to municipalities, named                 
            recipients,   and   unincorporated    communities;                 
            establishing   capital   project   matching  grant                 
            programs  for  municipalities  and  unincorporated                 
            communities;    establishing    a    local   share                 
            requirement   for   capital   project  grants   to                 
            municipalities,     named      recipients,     and                 
            unincorporated communities; and  providing for  an                 
            effective date.                                                    
                                                                               
            HB  124   was  held  in   Committee  for   further                 
            consideration.                                                     
  HB 125    An Act making  appropriations for capital  project                 
            matching grant  programs;  and  providing  for  an                 
            effective date.                                                    
                                                                               
                                                                               
                                1                                              
                                                                               
                                                                               
            HB  125   was  held   in  Committee  for   further                 
            consideration.                                                     
  HOUSE BILL 124                                                               
                                                                               
       "An Act  relating to  grants  to municipalities,  named                 
       recipients,     and     unincorporated     communities;                 
       establishing  capital  project matching  grant programs                 
       for  municipalities  and   unincorporated  communities;                 
       establishing  a  local  share  requirement for  capital                 
       project grants to municipalities, named recipients, and                 
       unincorporated  communities;  and   providing  for   an                 
       effective date."                                                        
                                                                               
  Representative  Foster MOVED  that CS  HB 124  (FIN) be  the                 
  version before the Committee.  There  being NO OBJECTION, it                 
  was so ordered.                                                              
                                                                               
  SHELBY STASTNY,  DIRECTOR, OFFICE OF MANAGEMENT  AND BUDGET,                 
  OFFICE OF  THE GOVERNOR, explained  the changes made  to the                 
  finance work draft of the bill.   A ratio was determined  by                 
  adding community population and  the total State  population                 
  to create  the  weighted number  for  calculation  purposes.                 
  Under  the  proposed  program,  a  minimum of  $25  thousand                 
  dollars would be allocated to every community.                               
                                                                               
  He  added,  when  an  allocation  of  money  is  made  to  a                 
  community, an  account is  established.   That community  at                 
  that time can decide how to allocate those  funds.  There is                 
  much latitude given for the types of projects allowed in the                 
  match.  The bill is based entirely on population.                            
                                                                               
  Co-Chair MacLean added, that if the  funds are placed into a                 
  grant account and the  money had not been utilized  for five                 
  years, it would be  repaid and then returned to  the general                 
  fund.  Mr.  Stastny pointed  out the limit  placed on  funds                 
  allowed  to   go   to  administrative   expenses   for   the                 
  municipality.   For most  projects, the  limit would  be ten                 
  percent of the grant amount.                                                 
                                                                               
  Mr. Stastny continued, the legislative intention would be to                 
  allocate some portion of the capital  budget pro rata to all                 
  communities in the  State.   It is not  intended to  replace                 
  discretionary funding.                                                       
                                                                               
  Representative Brown  questioned how the  bill would improve                 
  the current process.   Mr. Stastny replied,  the legislation                 
  would insure that  every community receive some  funding and                 
  that  community  would  provide  a  portion  by  matching.                   
  Representative  Brown asked  what  "capital projects"  would                 
  cover.  She inquired if a municipality would  be able to use                 
  their share to maintain or rehabilitate an operation.                        
                                                                               
                                2                                              
                                                                               
                                                                               
  JACK FARGNOLI, SENIOR POLICY ANALYSIS, OFFICE  OF MANAGEMENT                 
  AND BUDGET, OFFICE OF THE  GOVERNOR, replied there would  be                 
  no requirements for  a municipality  to maintain a  facility                 
  being maintained  or operated by the State.  The legislation                 
  is  to   encourage   municipalities   to   take   over   the                 
  responsibility of their own operation  and maintenance.  The                 
  money would be used for the actual construction  of projects                 
  only.   Representative  Brown suggested  the  definition  of                 
  funds be expanded to include  the maintenance and operations                 
  of existing local  facilities.  Mr. Stastny  stated that was                 
  not the intention of the legislation.                                        
                                                                               
  Co-Chair Larson suggested  the weakness  of the  legislation                 
  would  be in  not  asking the  Legislature  to decide  which                 
  capital  projects  should  be  funded  by the  municipality.                 
  Representative Grussendorf  discussed discretionary  monies.                 
  Mr. Stastny reminded  the Committee that the  priorities are                 
  established by the  communities.   Lists would be  submitted                 
  before the money was appropriated  and projects would extend                 
  as   far   as   the   appropriated    money   would   allow.                 
  Representative Hanley recommended that  the appropriation be                 
  made after the amount has been determined.                                   
                                                                               
  TAMARA BRANDT  COOK, DIRECTOR, DIVISION  OF LEGAL  SERVICES,                 
  LEGISLATIVE AFFAIRS AGENCY, provided a sectional overview of                 
  the legislation.   She pointed  out that Section  #3 is  the                 
  heart  of  CS HB  124  (FIN) and  establishes  the municipal                 
  capital project  matching grant  program.   There is  a fund                 
  which   has   been   established   in   the  Department   of                 
  Administration which consists of an  appropriation.  Once it                 
  is placed in that  fund, the Department has a  formula based                 
  upon population that applies  to the amount of money  in the                 
  fund to  then allocate  that money  to individual  municipal                 
  accounts.  The money  appropriated does not lapse.   It sits                 
  in the fund for at least a five year period.                                 
                                                                               
  (Tape Change, HFC 93-123, Side 2).                                           
                                                                               
  Representative  Hanley  questioned  the discrepancy  between                 
  unincorporated  communities  consisting  of  less  than  one                 
  thousand persons who  receive an eight percent  match versus                 
  municipalities  under  one  thousand  population  who  would                 
  receive only a  five percent  match.  Ms.  Cook replied  the                 
  reference  is  to  the "step-up"  provision  which  has been                 
  modified in  the draft by  using language  "unincorporated".                 
  Mr. Stastny added,  the original "step-up" was  five percent                 
  rising to eight  percent, fifteen percent rising  to twenty-                 
  five percent  and thirty percent rising to  fifty percent of                 
  total project costs.                                                         
                                                                               
  Ms. Cook agreed  it would be  better to make the  percentage                 
                                                                               
                                3                                              
                                                                               
                                                                               
  uniform.  She  pointed out  that the draft  only allows  the                 
  "stair  stepping"  for the  larger  municipalities.   It has                 
  eliminated  "stair  stepping" for  the  other two  levels of                 
  population.                                                                  
                                                                               
  Mr. Stastny advised  that the  Governor feels strongly  that                 
  the appropriate match  should be  50/50 for communities  who                 
  have  taxing ability, going to ten  percent for the smallest                 
  unorganized  communities, although he  has indicated that he                 
  would be  willing to  compromise at  60/40.   Representative                 
  Parnell emphasized the arrangement was not fair.                             
                                                                               
  Representative Brown provided the Committee  with a xerox of                 
  Alaska Statutes regulations.  [Attachment #1].  She asked if                 
  the definition  would cover  renovations and  repairs.   Mr.                 
  Stastny  advised  that if  a major  repair costing  over $25                 
  thousand  dollars  was needed,  it  would be  allocated for.                 
  Representative  Brown   stressed  that  maintenance   is  an                 
  operational cost and  that the communities are  being pushed                 
  to  build  with this  legislation.    An adequate  level  of                 
  revenue sharing  should be  increased to  cover the  highest                 
  priorities which include maintenance.  Mr. Stastny noted the                 
  Foundation  Formula Program would  cover operating costs for                 
  schools.                                                                     
                                                                               
  Representative  Brown  asked if  it  was essential  that the                 
  match  be  "in-hand" when  the  list  was  submitted to  the                 
  Governor.   Mr. Stastny replied,  when the list is submitted                 
  the money  does not  have to  be in-hand  although when  the                 
  project is drawn, the  match must be in-hand.   Mr. Fargnoli                 
  added that the bill does not  specify the necessary level of                 
  detail.                                                                      
                                                                               
  Representative Navarre MOVED  a language  change to Page  8,                 
  Line 18,  deleting the remainder  of the page,  Lines 19-31.                 
  Co-Chair MacLean OBJECTED.   Representative Navarre WITHDREW                 
  the MOTION.                                                                  
                                                                               
  Representative Brown referenced Page 9, Line 7, stating that                 
  the  "source"  for the  municipalities  is the  State.   Mr.                 
  Fargnoli stated the  legislation would exclude  that source.                 
  He added, the  point is legitimate although  the language of                 
  the   bill  was   written   to   meet   specific   purposes.                 
  Representative Brown  recommended deleting the  $25 thousand                 
  dollar   limited  discretionary   money  for   the  smallest                 
  community.  Co-Chair MacLean suggested the  base be set at a                 
  $10 thousand dollar limit.   Representative Brown noted that                 
  a small computer would cost less than  $10 thousand dollars.                 
                                                                               
                                                                               
  KEN  SWISHER, EXECUTIVE  DIRECTOR,  ALASKA MUNICIPAL  LEAGUE                 
  (AML), JUNEAU, ALASKA, commented on  the draft overviewed by                 
                                                                               
                                4                                              
                                                                               
                                                                               
  the Committee.  He noted three items of concern:                             
                                                                               
       1.   Page 3, Line  21, the $25 thousand  dollar minimum                 
            grant amount.   The AML recommends that  amount be                 
            $50 thousand dollars.                                              
                                                                               
       2.   Page  4,  Lines  20-26,  questioned  if  the  cost                 
            surpasses the listed administrative costs.                         
                                                                               
       3.   Page 9, Lines  1-2, addressing  what is usable  as                 
            administrative   match.       Considerations   for                 
            management  of  the  project are  not  taken  into                 
            consideration  with  the   current  determination.                 
            These are real costs and should be incorporated.                   
                                                                               
  Representative Brown  referenced  AML's concern  on Page  4.                 
  Mr.  Stastny  replied  the language  had  been  suggested by                 
  Senator Phillips.   Representative Brown  requested Ms. Cook                 
  adjust the language to address the intent.                                   
                                                                               
  Representative Brown suggested a language  change to Page 9,                 
  Lines 1-2,  inserting "administration  of the  project as  a                 
  viable expense of the match".  Co-Chair MacLean objected.                    
                                                                               
  (Tape Change, HFC 93-124, Side 1).                                           
                                                                               
  Representative Brown asked Ms. Cook to include an amendments                 
  to address these concerns.                                                   
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 7:30 P.M.                                           
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         APRIL 24, 1993                                        
                            6:00 P.M.                                          
                                                                               
  TAPE HFC 93 - 123, Side 1, #000 - end.                                       
  TAPE HFC 93 - 123, Side 2, #000 - end.                                       
  TAPE HFC 93 - 124, Side 1, #000 - #63.                                       
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Ron Larson called the meeting of the House Finance                 
  Committee to order at 6:00 P.M.                                              
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Larson               Representative Brown                           
  Co-Chair MacLean              Representative Foster                          
  Vice-Chair Hanley             Representative Grussendorf                     
                                                                               
                                5                                              
                                                                               
                                                                               
  Representative Therriault     Representative Martin                          
  Representative Navarre        Representative Parnell                         
                                                                               
  Representative Hoffman was not present for the meeting.                      
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Shelby Stastny, Director, Office  of Management and  Budget,                 
  Office  of  the  Governor;  Jack  Fargnoli,   Senior  Policy                 
  Analysis, Office  of Management  and Budget,  Office of  the                 
  Governor; Tamara  Brandt Cook, Director,  Division of  Legal                 
  Services, Legislative Affairs Agency; Ken Swisher, Director,                 
  Alaska Municipal League, Juneau, Alaska.                                     
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  HB 124    An Act relating to grants to municipalities, named                 
            recipients,   and    unincorporated   communities;                 
            establishing   capital   project   matching  grant                 
            programs  for  municipalities  and  unincorporated                 
            communities;    establishing    a    local   share                 
            requirement   for   capital   project  grants   to                 
            municipalities,     named      recipients,     and                 
            unincorporated communities; and  providing for  an                 
            effective date.                                                    
                                                                               
            HB   124  was   held  in  Committee   for  further                 
            consideration.                                                     
                                                                               
  HB 125    An Act  making appropriations for  capital project                 
            matching  grant  programs;  and  providing for  an                 
            effective date.                                                    
                                                                               
            HB   125  was   held  in  Committee   for  further                 
            consideration.                                                     
                                                                               
  HOUSE BILL 124                                                               
                                                                               
       "An  Act relating  to  grants to  municipalities, named                 
       recipients,     and     unincorporated     communities;                 
       establishing  capital  project matching  grant programs                 
       for  municipalities  and   unincorporated  communities;                 
       establishing  a  local  share  requirement for  capital                 
       project grants to municipalities, named recipients, and                 
       unincorporated  communities;  and   providing  for   an                 
       effective date."                                                        
                                                                               
  Representative Foster  MOVED  that CS  HB 124  (FIN) be  the                 
  version before the Committee.  There being NO OBJECTION,  it                 
  was so ordered.                                                              
                                                                               
  SHELBY STASTNY,  DIRECTOR, OFFICE OF MANAGEMENT  AND BUDGET,                 
                                                                               
                                6                                              
                                                                               
                                                                               
  OFFICE OF THE  GOVERNOR, explained the  changes made to  the                 
  finance  work draft of the bill.   A ratio was determined by                 
  adding community  population and the total  State population                 
  to  create the  weighted  number for  calculation  purposes.                 
  Under  the  proposed  program,  a  minimum of  $25  thousand                 
  dollars would be allocated to every community.                               
                                                                               
  He  added,  when  an  allocation  of  money  is  made  to  a                 
  community, an  account is  established.   That community  at                 
  that time can  decide how to allocate those funds.  There is                 
  much latitude given for the types of projects allowed in the                 
  match.  The bill is based entirely on population.                            
                                                                               
  Co-Chair MacLean added, that if the  funds are placed into a                 
  grant account and the  money had not been utilized  for five                 
  years, it would be  repaid and then returned to  the general                 
  fund.  Mr.  Stastny pointed  out the limit  placed on  funds                 
  allowed   to  go   to   administrative  expenses   for   the                 
  municipality.   For most  projects, the  limit would be  ten                 
  percent of the grant amount.                                                 
                                                                               
   Mr. Stastny continued, the legislative intention would be to                
  allocate some portion of the capital  budget pro rata to all                 
  communities in the  State.   It is not  intended to  replace                 
  discretionary funding.                                                       
                                                                               
  Representative Brown questioned  how the bill  would improve                 
  the current process.   Mr. Stastny replied,  the legislation                 
  would insure that  every community receive some  funding and                 
  that  community  would  provide  a  portion  by  matching.                   
  Representative  Brown  asked what  "capital  projects" would                 
  cover.  She  inquired if a municipality would be able to use                 
  their share to maintain or rehabilitate an operation.                        
                                                                               
  JACK FARGNOLI, SENIOR POLICY ANALYSIS,  OFFICE OF MANAGEMENT                 
  AND BUDGET, OFFICE  OF THE GOVERNOR, replied there  would be                 
  no requirements for  a municipality  to maintain a  facility                 
  being maintained or operated by  the State.  The legislation                 
  is   to   encourage   municipalities   to   take   over  the                 
  responsibility of their own operation  and maintenance.  The                 
  money would  be used for the actual construction of projects                 
  only.    Representative Brown  suggested  the  definition of                 
  funds be expanded to include  the maintenance and operations                 
  of  existing local facilities.  Mr.  Stastny stated that was                 
  not the intention of the legislation.                                        
                                                                               
  Co-Chair Larson  suggested the  weakness of  the legislation                 
  would be  in  not asking  the  Legislature to  decide  which                 
  capital  projects  should  be  funded by  the  municipality.                 
  Representative Grussendorf  discussed discretionary  monies.                 
  Mr. Stastny reminded  the Committee that the  priorities are                 
  established by the  communities.   Lists would be  submitted                 
                                                                               
                                7                                              
                                                                               
                                                                               
  before the money was appropriated  and projects would extend                 
  as   far   as   the   appropriated   money    would   allow.                 
  Representative Hanley recommended  that the appropriation be                 
  made after the amount has been determined.                                   
                                                                               
  TAMARA  BRANDT COOK,  DIRECTOR, DIVISION OF  LEGAL SERVICES,                 
  LEGISLATIVE AFFAIRS AGENCY, provided a sectional overview of                 
  the legislation.   She pointed  out that Section  #3 is  the                 
  heart of  CS  HB 124  (FIN)  and establishes  the  municipal                 
  capital project  matching grant  program.   There is a  fund                 
  which   has   been   established   in   the   Department  of                 
  Administration which consists of an  appropriation.  Once it                 
  is placed in that  fund, the Department has a  formula based                 
  upon population that applies  to the amount of money  in the                 
  fund to  then allocate  that money  to individual  municipal                 
  accounts.  The money  appropriated does not lapse.   It sits                 
  in the fund for at least a five year period.                                 
                                                                               
  (Tape Change, HFC 93-123, Side 2).                                           
                                                                               
  Representative  Hanley  questioned  the discrepancy  between                 
  unincorporated  communities  consisting  of  less  than  one                 
  thousand persons who  receive an eight percent  match versus                 
  municipalities  under  one  thousand  population  who  would                 
  receive only a  five percent  match.  Ms.  Cook replied  the                 
  reference  is  to  the "step-up"  provision  which  has been                 
  modified  in the  draft by using  language "unincorporated".                 
  Mr. Stastny added,  the original "step-up" was  five percent                 
  rising to eight  percent, fifteen percent rising  to twenty-                 
  five percent and thirty percent  rising to fifty percent  of                 
  total project costs.                                                         
                                                                               
  Ms. Cook agreed  it would be  better to make the  percentage                 
  uniform.  She  pointed out  that the draft  only allows  the                 
  "stair  stepping"  for the  larger  municipalities.   It has                 
  eliminated  "stair  stepping" for  the  other two  levels of                 
  population.                                                                  
                                                                               
  Mr. Stastny advised  that the  Governor feels strongly  that                 
  the appropriate match  should be  50/50 for communities  who                 
  have taxing ability, going  to ten percent for the  smallest                 
  unorganized communities, although  he has indicated that  he                 
  would be  willing to  compromise at  60/40.   Representative                 
  Parnell emphasized the arrangement was not fair.                             
                                                                               
  Representative Brown provided the Committee  with a xerox of                 
  Alaska Statutes regulations.  [Attachment #1].  She asked if                 
  the definition  would cover  renovations and  repairs.   Mr.                 
  Stastny advised  that if  a  major repair  costing over  $25                 
  thousand  dollars  was needed,  it  would be  allocated for.                 
  Representative  Brown   stressed  that  maintenance   is  an                 
  operational cost and  that the communities are  being pushed                 
                                                                               
                                8                                              
                                                                               
                                                                               
  to build  with  this  legislation.   An  adequate  level  of                 
  revenue sharing  should be  increased to  cover the  highest                 
  priorities which include maintenance.  Mr. Stastny noted the                 
  Foundation Formula  Program would cover  operating costs for                 
  schools.                                                                     
                                                                               
  Representative  Brown  asked if  it  was essential  that the                 
  match be  "in-hand"  when  the  list was  submitted  to  the                 
  Governor.  Mr.  Stastny replied, when the list  is submitted                 
  the money  does not  have to  be in-hand  although when  the                 
  project is drawn, the  match must be in-hand.   Mr. Fargnoli                 
  added that the bill does not  specify the necessary level of                 
  detail.                                                                      
                                                                               
  Representative Navarre MOVED  a language  change to Page  8,                 
  Line 18, deleting  the remainder of  the page, Lines  19-31.                 
  Co-Chair MacLean OBJECTED.  Representative Navarre  WITHDREW                 
  the MOTION.                                                                  
                                                                               
  Representative Brown referenced Page 9, Line 7, stating that                 
  the "source"  for  the municipalities  is  the State.    Mr.                 
  Fargnoli stated the legislation  would exclude that  source.                 
  He added, the point  is legitimate although the language  of                 
  the   bill   was   written  to   meet   specific   purposes.                 
  Representative Brown recommended  deleting the $25  thousand                 
  dollar  limited   discretionary  money   for  the   smallest                 
  community.  Co-Chair MacLean suggested the  base be set at a                 
  $10 thousand dollar limit.   Representative Brown noted that                 
  a small computer would cost  less than $10 thousand dollars.                 
                                                                               
                                                                               
  KEN  SWISHER, EXECUTIVE  DIRECTOR,  ALASKA MUNICIPAL  LEAGUE                 
  (AML), JUNEAU, ALASKA, commented on  the draft overviewed by                 
  the Committee.  He noted three items of concern:                             
                                                                               
       1.   Page 3, Line  21, the $25 thousand  dollar minimum                 
            grant amount.   The AML recommends that  amount be                 
            $50 thousand dollars.                                              
                                                                               
       2.   Page  4,  Lines  20-26,  questioned  if  the  cost                 
            surpasses the listed administrative costs.                         
                                                                               
       3.   Page 9, Lines  1-2, addressing  what is usable  as                 
            administrative   match.       Considerations   for                 
            management  of  the  project are  not  taken  into                 
            consideration  with  the   current  determination.                 
            These are real costs and should be incorporated.                   
                                                                               
  Representative  Brown  referenced AML's  concern on  Page 4.                 
  Mr.  Stastny  replied  the language  had  been  suggested by                 
  Senator  Phillips.  Representative  Brown requested Ms. Cook                 
  adjust the language to address the intent.                                   
                                                                               
                                9                                              
                                                                               
                                                                               
  Representative Brown suggested a language  change to Page 9,                 
  Lines 1-2,  inserting "administration  of the  project as  a                 
  viable expense of the match".  Co-Chair MacLean objected.                    
                                                                               
  (Tape Change, HFC 93-124, Side 1).                                           
                                                                               
  Representative Brown asked Ms. Cook to include an amendments                 
  to address these concerns.                                                   
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 7:30 P.M.                                           
                                                                               
                                                                               
                               10                                              

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