Legislature(1993 - 1994)
04/24/1993 06:00 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
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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