Legislature(2001 - 2002)
02/25/2002 01:59 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 25, 2002
1:59 PM
TAPE HFC 02 - 31, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:59 PM.
MEMBERS PRESENT
Representative Eldon Mulder, Co-Chair
Representative Bill Williams, Co-Chair
Representative Eric Croft
Representative John Davies
Representative Richard Foster
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Carl Moses
Representative Jim Whitaker
MEMBERS ABSENT
Representative Con Bunde, Vice-Chair
ALSO PRESENT
Senator Gary Stevens; Mike Tibbles, Staff, Representative
Williams; Kevin Ritchie, Alaska Municipal League
PRESENT VIA TELECONFERENCE
There were no teleconference testifiers.
SUMMARY
HB 20 "An Act relating to state aid to municipalities
and certain other recipients, and for the village
public safety officer program; relating to
municipal dividends; relating to the public safety
foundation program; and providing for an effective
date."
HOUSE BILL NO. 20
"An Act relating to state aid to municipalities and
certain other recipients, and for the village public
safety officer program; relating to municipal
dividends; relating to the public safety foundation
program; and providing for an effective date."
Co-Chair Mulder MOVED to ADOPT proposed committee
substitute work draft 22-LS0008\J, 2/22/02.
Representative John Davies OBJECTED. He stated a
preference for the original legislation.
Co-Chair Williams explained that the proposed committee
substitute would simply the legislation by using the
existing laws.
A roll call vote was taken on the motion.
IN FAVOR: Foster, Harris, Hudson, Lancaster, Moses,
Whitaker, Williams, Mulder
OPPOSED: Davies
Representatives Bunde and Croft were absent from the
vote.
MIKE TIBBLES, STAFF, REPRESENTATIVE WILLIAMS explained
that the intent was to simplify the legislation. The
committee substitute utilizes three existing programs:
Tax Resource Equalization, Revenue Sharing for
Municipal Services, and Revenue Sharing for Safe
Communities. The legislation authorizes appropriations
to these three programs and adds capital matching
grants and payments to municipalities for costs of
confinement and care of state prisoners (community
jails). The per capita amount was reduced from $150 to
$100. This would result in an estimated annual
appropriation into the Fund from the Earnings Reserve
Account of $59.3 million dollars, based on last year's
number of permanent fund dividend applicants.
Co-Chair Williams acknowledged that the sponsor did not
support the reduction.
In response to a question by Representative Lancaster,
Mr. Tibbles explained that the increase was placed in
the Municipal Services program. The intent was to place
the money in the program that would give the most
flexibility to municipalities. It is derived by
formula. Revenue Sharing for Safe Communities has
priorities and statutory requirements. The Tax Resource
Equalization Program would be funded at the FY02
amount: $8.5 million dollars. The Revenue Sharing for
Municipal Services Program would be $14.0. The total
revenue sharing program would be $22.5 million dollars.
The Revenue Sharing for Safe Communities Program would
be funded at the FY02 amount: $16.8 million dollars.
Capital Matching grants would be funded at $15.0
million dollars, which is slightly more than FY02.
Community Jails would be funded at $5 million dollars,
which is between the FY02 level and the Governor's FY03
request.
Representative Hudson asked what was left out. Mr.
Tibbles noted that the original legislation created a
new program and repealed municipal assistance and
revenue sharing. The new program allocated funds to
communities based on services provided and allocated on
a per capita basis within the service provided.
Representative Hudson observed that the original
legislation was for $89 million dollars and the
committee substitute would be for $59.3 million
dollars. Mr. Tibbles explained that legislation took
what was left after funding the new program and
allocated it all to capital matching grants. It was
substantially more than the FY02 amount. He observed
that the FY02 amount [for capital matching grants] was
$13 or 14 million dollars. Under the legislation
[capital matching grants] would have been $28 million
dollars. The proposed committee substitute would
allocate $15 million dollars. If there are additional
funds the capital matching grants could be increased.
Representative John Davies noted that the sponsor spoke
to the need for flexibility. He questioned how much
flexibility exists in the proposed committee
substitute. He noted that the Legislature may
appropriate to the specific programs, but questioned
the communities' flexibility to move the money between
appropriations. Mr. Tibbles clarified that each program
is a little difference. He explained that the number of
road miles or hospital beds within the community
determines their funding under the Municipal Services
Program. He thought that communities would have
significant flexibility in how the money is spent.
Statutes require that funding under the Safe
Communities Program require that the funding be used in
priority of: police, fire, water and sewage, solid
waste and other community priorities.
Representative John Davies concluded that within each
specific appropriation there is a variable amount of
flexibility, but that between the appropriations there
no ability to move funds. Mr. Tibbles agreed that the
funds could not be shifted within appropriations.
In response to a question by Representative Lancaster,
Mr. Tibbles acknowledged that the numbers of the
original legislation and the proposed committee
substitute are significantly different.
KEVIN RITCHIE, ALASKA MUNICIPAL LEAGUE observed that
the committee substitute would maintain the current
revenue sharing structure. The Alaska Municipal League
supports any increase to revenue sharing. He pointed
out that an advantage of the original legislation is
that it would target the funding formula toward
services, which would be an advantage creating public
support. He noted that the Alaska Municipal League
strongly supports implementation of a long-range
financial plan. The Alaska Municipal League will work
to support the legislation as part of a long-range
financial plan and additional funding toward revenue
sharing, even if it is under the old formula. He
emphasized that even though the original legislation
would create a new program, that it would be
understandable for communities. The current funding
formula is rather obscure, but the plan proposed by HB
20 would be simple. Funding under the original version
of HB 20 would be tied to services. He reiterated their
support for a long-range fiscal plan.
Representative John Davies stressed that different
communities have different priorities and needs.
Mr. Ritchie agreed that flexibility is desirable, but
emphasized the need for accountability.
Representative Harris pointed out that $15 million
dollars would be appropriated for capital matching
grants, which are fairly flexible.
Co-Chair Mulder spoke in support of retaining the
structure of the committee substitute and emphasized
its flexibility. He pointed out that all communities do
not use the money in the same way. Some communities use
their funds for property tax relief, local support to
education, or basic operations. He acknowledged that
the funding level in the committee substitute is not as
great as contained in the original but noted that it is
a 20 percent bump over FY02 (50 million to 60 million
dollars). He observed that without the legislation
municipalities might be facing another reduction to
municipal assistance and safe communities. It would
provide municipalities some relief in an affordable way
and builds support for the use of surplus earnings of
the Permanent Fund for essential community services,
tax relief or however the community sees fit. He did
not think that $100 per person would be unreasonable.
He stressed that the intent is to pass legislation that
can be enacted into law.
Representative Lancaster observed that members that may
agree with the committee substitute are concern that
there might not be another opportunity to amend another
appropriation bill.
Co-Chair Mulder stated his intention in pursuing a
revenue package.
Co-Chair Mulder noted his intent to take up the
supplemental legislation on Friday, under bills
previously heard/scheduled.
HB 20 was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 2:29 PM
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