Legislature(1999 - 2000)

03/20/2000 01:45 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE                                                                                                         
March 20, 2000                                                                                                                  
1:45 P.M.                                                                                                                       
TAPE HFC 00 - 73, Side 1                                                                                                        
CALL TO ORDER                                                                                                                   
Co-Chair Therriault called the House Finance Committee                                                                          
meeting to order at 1:45 p.m.                                                                                                   
Co-Chair Mulder    Representative Foster                                                                                        
Co-Chair Therriault    Representative Grussendorf                                                                               
Vice Chair Bunde   Representative Moses                                                                                         
Representative Austerman  Representative Phillips                                                                               
Representative J. Davies   Representative Williams                                                                              
Representative G. Davis was absent from the meeting.                                                                            
ALSO PRESENT                                                                                                                    
Peter Torkelson, Staff, Representative Dyson; John Pearson,                                                                     
Economic Development Planner, Hyder.                                                                                            
TESTIFIED VIA TELECONFERENCE                                                                                                    
Pat Poland, Director, Division of Municipal and Regional                                                                        
Assistance, Department of Community and Economic                                                                                
Development; Dan Bockhurst, Local Boundary Commission,                                                                          
Department of Community and Economic Development.                                                                               
HB 255 "An Act relating to villages; and providing for an                                                                       
effective date."                                                                                                                
 CSHB 255 (CRA) was REPORTED out of Committee with                                                                              
a "do pass" recommendation and with fiscal impact                                                                               
note by the Department of Law, dated 2/25/00.                                                                                   
HB 361 "An Act relating to charges for state services;                                                                          
requiring that fees levied by resource agencies                                                                                 
for designated regulatory services be based on the                                                                              
actual and reasonable direct cost of providing the                                                                              
services, except in the case of certain negotiated                                                                              
or fixed fees; relating to negotiated or fixed                                                                                  
fees of resource agencies; relating to invoices                                                                                 
for designated regulatory services; establishing a                                                                              
petition process regarding fees charged by                                                                                      
resource agencies for regulatory services; and                                                                                  
providing for an effective date."                                                                                               
  HB 361 was postponed until 1:30 p.m., 3/21/00.                                                                                
CSSB 7(FIN) am                                                                                                                  
"An Act relating to the University of Alaska and                                                                                
university land, and authorizing the University of                                                                              
Alaska to select additional state land."                                                                                        
  SB 7 was held over to 8:30 a.m., 3/21/00.                                                                                     
HOUSE BILL NO. 255                                                                                                              
"An Act relating to villages; and providing for an                                                                              
effective date."                                                                                                                
REPRESENTATIVE FRED DYSON, SPONSOR explained that the intent                                                                    
of HB 255 is to make it easier for small communities to                                                                         
organize and stay organized. He observed that there is a                                                                        
constitutional mandate to encourage communities to organize                                                                     
under state law. He explained that the legislation extends                                                                      
second class cities the privilege of writing their own                                                                          
charter. Under existing law, a first class city can write                                                                       
their charter or constitution and do anything that is not                                                                       
precluded by state law. A second class city can only do that                                                                    
which is allowed by state law. The legislation gives a "home                                                                    
rule community" the ability to form their kind of government                                                                    
and define their scope of responsibilities. He observed that                                                                    
five communities have disorganized, while only 3 have                                                                           
organized in the last few years.                                                                                                
Vice Chair Bunde questioned what the downside of the                                                                            
legislation would be. Representative Dyson responded that                                                                       
some communities might have a false hope that they can                                                                          
organize before they are able.                                                                                                  
PETER TORKELSON, STAFF, REPRESENTATIVE DYSON noted that                                                                         
there are some critical distinctions between first class                                                                        
cities, second class cities and home rule communities, which                                                                    
might facilitate a small community to organize. All home                                                                        
rule cities are school districts. Second class cities are                                                                       
not school districts. Home rule cities are currently                                                                            
required to zone and plat their land as part of their                                                                           
formation. The legislation would make it permissive but not                                                                     
required for home rule communities. Financial reporting                                                                         
requirements also differ. Home rule municipalities are                                                                          
required to do a full financial audit each year. Second                                                                         
class cities are required to file a statement of accounts.                                                                      
Home rule communities would only be required to file a                                                                          
statement of accounts.                                                                                                          
Representative Grussendorf noted that there is a third class                                                                    
city that organized for the purpose of providing education.                                                                     
Mr. Torkelson reiterated that home rule communities would                                                                       
not have educational standing or responsibilities.                                                                              
Representative J. Davies asked if home rule communities                                                                         
would be eligible for municipal assistance and revenue                                                                          
sharing. Mr. Torkelson responded that they would be                                                                             
Vice Chair Bunde noted they would be included in municipal                                                                      
assistance and revenue sharing, but would not be required to                                                                    
have a local tax base. Mr. Torkelson noted that they would                                                                      
be able to tax and acknowledged that they would not have a                                                                      
requirement to tax.                                                                                                             
Representative Foster observed that there are seven villages                                                                    
in the Bethel area that dissolved their governments in favor                                                                    
of organizing as tribal governments under the Indian                                                                            
Reorganization Act (IRA).                                                                                                       
Representative Dyson observed that culturally based entities                                                                    
cannot be recognized as a state governmental entity. Mr.                                                                        
Torkelson stressed that nothing would prohibit a group of                                                                       
people living in an area from forming a home rule community.                                                                    
They would have to follow state guidelines.                                                                                     
Co-Chair Therriault observed that there is an upper limit of                                                                    
a 2 percent tax:                                                                                                                
Levy of an ad valorem tax by a  home rule community or                                                                          
second class city may not exceed two percent of the                                                                             
assessed value of the property taxed".                                                                                          
Representative Dyson clarified that this conforms to                                                                            
existing law and is consistent with current second class                                                                        
Representative Foster referred to an email from Richard                                                                         
Burton (copy on file.) He questioned if a village could form                                                                    
its own court. Mr. Torkelson explained that a home rule                                                                         
community would not have judicial power.                                                                                        
Representative J. Davies questioned if there is a limit on                                                                      
sales taxes. Co-Chair Therriault did not think that there is                                                                    
a limit on sales taxes.                                                                                                         
PAT POLAND, DIRECTOR, DIVISION OF MUNICIPAL AND REGIONAL                                                                        
ASSISTANCE, DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT                                                                    
testified via teleconference in support of the legislation.                                                                     
The legislation gives communities the maximum amount of                                                                         
flexibility to arrive at solutions to their problems. It                                                                        
also continues the second class city concept by extending                                                                       
Mr. Poland reiterated that all of the provisions, including                                                                     
tax limitations are consistent with existing law for second                                                                     
class cities. Municipalities can exceed the tax cap to pay                                                                      
off bonds. There is no limitation on sales tax.                                                                                 
Co-Chair Therriault asked what criticisms remain. Mr. Poland                                                                    
felt that the legislation had dealt with the majority of                                                                        
concerns. He noted that there are still some concerns in                                                                        
regards to education powers. The legislation clarifies that                                                                     
home rule communities and home rule cities are different                                                                        
In response to a question by Representative J. Davies, Mr.                                                                      
Poland explained that there was a strong desire to identify                                                                     
home rule communities as a separate entity. Any local                                                                           
government, particularly one that wants to have taxing                                                                          
authority has to be a municipal government. Municipal                                                                           
governments can only be called city or boroughs. The                                                                            
legislation conforms to existing law.                                                                                           
In response to a question by Representative Foster, Mr.                                                                         
Poland observed that the legislation does not change the                                                                        
taxing authority.                                                                                                               
Co-Chair Therriault questioned if there were a fiscal note                                                                      
from the Department of Community and Economic Development.                                                                      
Mr. Poland observed that the Department of Community and                                                                        
Economic Development did not feel that a fiscal note was                                                                        
necessary. He reiterated support by the Department of                                                                           
Community and Economic Development.                                                                                             
JOHN PEARSON, ECONOMIC DEVELOPMENT PLANNER, HYDER spoke in                                                                      
support of the legislation. Hyder is an unincorporated                                                                          
community of about 130 residents, located on the                                                                                
Alaska/British Columbia Border. Hyder shares the border with                                                                    
the Canadian community of Stewart British Columbia,                                                                             
population 700. He maintained that Hyder is Alaska's only                                                                       
real international border community and should be considered                                                                    
as Alaska's Front Door. The shortest distance between any                                                                       
point in Alaska and the Lower 48 is at Hyder.                                                                                   
Mr. Pearson observed that Hyder views HB 255 as a major step                                                                    
forward for the community and other small unincorporated                                                                        
communities around Alaska that want to expand their role and                                                                    
responsibility for services to local residents without                                                                          
having to "go broke".                                                                                                           
Hyder is not a school district. Students travel daily to                                                                        
Canada for school.                                                                                                              
Mr. Pearson emphasized that the Hyder Community Association                                                                     
has a good management record. The Community Association                                                                         
*The fire department and emergency services;                                                                                    
*Operation of a community library that is open five                                                                             
days per week;                                                                                                                  
*Operation of a summer operated community museum;                                                                               
*Provides snow removal on the side streets of the                                                                               
*Operates a summer visitor center;                                                                                              
*Oversees a community weatherization program;                                                                                   
*Oversees a community solid waste program;                                                                                      
*Oversees the State of Alaska small boat harbor and                                                                             
float plane facilities;                                                                                                         
*Contracts with the Department of Transportation and                                                                            
Public Facilities to maintain the state; and                                                                                    
*Handles the  application process and administration of                                                                         
grant opportunities.                                                                                                            
Mr. Pearson highlighted one of Hyder's accomplishments in                                                                       
stimulating economic growth. The past two years the                                                                             
community had an opportunity to get involved in the bottled                                                                     
water business. At the moment Hyder is building a bottled                                                                       
water plant in the community that will employ 41 year around                                                                    
positions. He emphasized that HB 255 would have helped Hyder                                                                    
provide the financial package. The project has the ability                                                                      
to bring Hyder's unemployment to zero in one year. He                                                                           
concluded that the legislation would help small communities.                                                                    
Vice Chair Bunde observed that the legislation would allow                                                                      
the community to be eligible for municipal revenue sharing.                                                                     
Mr. Pearson emphasized that the legislation would give Hyder                                                                    
the ability to secure loans and to bond. The ability to                                                                         
secure loans and bond would allow Hyder to work with other                                                                      
communities to develop ferry service. A number of programs                                                                      
are not available to Hyder as a Community Association.                                                                          
Representative Phillips questioned if the state of Alaska                                                                       
reimburses Canada for attendance of Hyder students in                                                                           
Canadian schools. Mr. Pearson stated that the state does                                                                        
reimburse Canada. The program has been in existence for a                                                                       
long time.                                                                                                                      
Mr. Pearson provided further information regarding the                                                                          
water-bottling project. Additional economic benefit would be                                                                    
derived through the local production of pallets used in                                                                         
shipping the water. Bottle production will also occur in                                                                        
Hyder and provide an additional 15 jobs.                                                                                        
In response to a question by Co-Chair Mulder, Mr. Pearson                                                                       
noted that the product would be called Alaska Chill.                                                                            
Co-Chair Mulder questioned if the bill's title should be                                                                        
Representative J. Davies questioned if there had been                                                                           
discussions regarding an upper limit on the number of                                                                           
persons in a home rule community. He expressed concern that                                                                     
areas with good economic opportunity to support local                                                                           
schools could forego those opportunities.                                                                                       
Mr. Torkelson observed that there have been discussions                                                                         
regarding population thresholds on the upper and lower                                                                          
levels. He noted that communities would not be able to have                                                                     
their own school districts until they step into the next                                                                        
level of responsibility by upgrading to a home rule first                                                                       
class city.                                                                                                                     
Co-Chair Therriault asked if Representative J. Davies' was                                                                      
concern that there may be some communities that would never                                                                     
take the step forward. Representative J. Davies agreed and                                                                      
pointed out that Delta Junction would be the second richest                                                                     
school district in the state if it chose to organize.                                                                           
Co-Chair Therriault stressed that the legislation would at                                                                      
least bring communities part way toward contributing to                                                                         
local government. Representative J. Davies noted that the                                                                       
Local Boundary Commission might have recommendations on ways                                                                    
to address the issue. He stressed that he supports the                                                                          
legislation. Representative Dyson stated that he would                                                                          
support a solution if one were found.                                                                                           
Representative Foster read from the sponsor statement:                                                                          
A new charter-base home rule community may be the best                                                                          
option for unincorporated areas that would not be                                                                               
viable under the second class city model.                                                                                       
He questioned if there were villages in western Alaska that                                                                     
were not already second class cities. Mr. Poland observed                                                                       
that there are 50 - 60 communities that have not                                                                                
incorporated (around the state). He gave examples of                                                                            
communities that have not incorporated. He thought that                                                                         
there was at least one village in Representative Foster's                                                                       
district that had not incorporated.                                                                                             
Co-Chair Therriault observed that there is a small fiscal                                                                       
impact note from the Department of Law.                                                                                         
Representative Foster MOVED to report CSHB (CRA) out of                                                                         
Committee with the accompanying fiscal note. There being NO                                                                     
OBJECTION, it was so ordered.                                                                                                   
CSHB 255 (CRA) was REPORTED out of Committee with a "do                                                                         
pass" recommendation and with fiscal impact note by the                                                                         
Department of Law, dated 2/25/00.                                                                                               
The meeting was recessed at 2:25 p.m. The meeting was                                                                           
scheduled to resume at 8:30 a.m.                                                                                                
House Finance Committee 6 3/20/00                                                                                               

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