Legislature(1999 - 2000)
03/21/2000 08:10 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE March 21, 2000 8:10 a.m. MEMBERS PRESENT Representative Jeannette James, Chair Representative Joe Green Representative Bill Hudson Representative Beth Kerttula Representative Hal Smalley MEMBERS ABSENT Representative Jim Whitaker Representative Scott Ogan OTHER HOUSE MEMBERS PRESENT Representative Carl Moses COMMITTEE CALENDAR HOUSE BILL NO. 330 "An Act establishing Prisoners of War and Missing in Action Recognition Days and Women Veterans Day; and providing for an effective date." - MOVED HB 330 OUT OF COMMITTEE SENATE BILL NO. 236 "An Act establishing Prisoners of War and Missing in Action Recognition Days and Women Veterans Day; and providing for an effective date." - WAIVED SB 236 OUT OF COMMITTEE HOUSE BILL NO. 331 "An Act relating to payment, allowances, and benefits of members of the Alaska National Guard and Alaska Naval Militia in active service; relating to computation of certain benefits for members of the Alaska State Militia; and providing for an effective date." - MOVED CSHB 331(MLV) OUT OF COMMITTEE HOUSE BILL NO. 137 "An Act relating to the municipal dividend program; and providing for an effective date." - HEARD AND HELD PREVIOUS ACTION BILL: HB 330 SHORT TITLE: POW/MIA DAY & WOMEN VETERANS DAY Jrn-Date Jrn-Page Action 2/02/00 2065 (H) READ THE FIRST TIME - REFERRALS 2/02/00 2065 (H) MLV, STA 2/02/00 2065 (H) ZERO FISCAL NOTE (DMVA) 2/02/00 2065 (H) GOVERNOR'S TRANSMITTAL LETTER 2/24/00 (H) MLV AT 4:30 PM CAPITOL 120 2/24/00 (H) Moved Out of Committee 2/24/00 (H) MINUTE(MLV) 2/28/00 2330 (H) MLV RPT 5DP 2/28/00 2330 (H) DP: KOTT, PORTER, CROFT, CISSNA, 2/28/00 2330 (H) MURKOWSKI 2/28/00 2330 (H) ZERO FISCAL NOTE (DMVA) 2/2/00 3/16/00 (H) STA AT 8:00 AM CAPITOL 102 3/16/00 (H) Scheduled But Not Heard 3/21/00 (H) STA AT 8:00 AM CAPITOL 102 BILL: SB 236 SHORT TITLE: POW/MIA DAY & WOMEN VETERANS DAY Jrn-Date Jrn-Page Action 2/02/00 2157 (S) READ THE FIRST TIME - REFERRALS 2/02/00 2157 (S) STA 2/02/00 2157 (S) ZERO FISCAL NOTE (DMVA) 2/02/00 2157 (S) GOVERNOR'S TRANSMITTAL LETTER 2/22/00 Text (S) STA AT 3:30 PM BELTZ 211 2/22/00 Text (S) Scheduled But Not Heard 3/02/00 Text (S) STA AT 3:30 PM BELTZ 211 3/02/00 Text (S) Moved Out of Committee 3/02/00 Text (S) MINUTE(STA) 3/03/00 Text (S) RLS AT 11:30 AM FAHRENKAMP 203 3/03/00 Text (S) MINUTE(RLS) 3/03/00 2508 (S) STA RPT 4DP 3/03/00 2508 (S) DP: WARD, ELTON, GREEN, PHILLIPS 3/03/00 2508 (S) PREVIOUS ZERO FISCAL NOTE (DMVA) 3/06/00 2530 (S) RULES TO CALENDAR 3/6/00 3/06/00 2531 (S) READ THE SECOND TIME 3/06/00 2531 (S) ADVANCED TO THIRD READING UNAN CONSENT 3/06/00 2531 (S) READ THE THIRD TIME SB 236 3/06/00 2531 (S) PASSED Y17 N- E2 A1 3/06/00 2531 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 3/06/00 2531 (S) DONLEY NOTICE OF RECONSIDERATION 3/07/00 2549 (S) RECON TAKEN UP - IN THIRD READING 3/07/00 2550 (S) PASSED ON RECONSIDERATION Y20 N- 3/07/00 2550 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 3/07/00 2551 (S) TRANSMITTED TO (H) 3/08/00 2442 (H) READ THE FIRST TIME - REFERRALS 3/08/00 2442 (H) STA BILL: HB 331 SHORT TITLE: ALASKA NATL GUARD/NAVAL & STATE MILITIA Jrn-Date Jrn-Page Action 2/02/00 2067 (H) READ THE FIRST TIME - REFERRALS 2/02/00 2067 (H) MLV, STA, FIN 2/02/00 2067 (H) ZERO FISCAL NOTE (DMVA) 2/02/00 2067 (H) GOVERNOR'S TRANSMITTAL LETTER 2/24/00 (H) MLV AT 4:30 PM CAPITOL 120 2/24/00 (H) Heard & Held 2/24/00 (H) MINUTE(MLV) 2/29/00 (H) MLV AT 4:30 PM CAPITOL 120 2/29/00 (H) Moved CSHB 331(MLV) Out of Committee 2/29/00 (H) MINUTE(MLV) 3/03/00 2394 (H) MLV RPT CS(MLV) NT 5DP 3/03/00 2394 (H) DP: CROFT, PHILLIPS, JAMES, CISSNA, 3/03/00 2394 (H) MURKOWSKI 3/03/00 2394 (H) ZERO FISCAL NOTE (DMVA) 3/16/00 (H) STA AT 8:00 AM CAPITOL 102 3/16/00 (H) Scheduled But Not Heard 3/21/00 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 137 SHORT TITLE: MUNICIPAL DIVIDEND PROGRAM Jrn-Date Jrn-Page Action 3/15/99 454 (H) READ THE FIRST TIME - REFERRAL(S) 3/15/99 454 (H) CRA, STA, FIN 2/03/00 (H) CRA AT 8:00 AM CAPITOL 124 2/03/00 (H) Moved CSHB 137(CRA) Out of Committee 2/03/00 (H) MINUTE(CRA) 2/04/00 2085 (H) CRA RPT CS(CRA) 1DP 4NR 1AM 2/04/00 2085 (H) DP: KOOKESH; NR: MURKOWSKI, HALCRO, 2/04/00 2085 (H) DYSON, JOULE; AM: HARRIS 2/04/00 2085 (H) 2 ZERO FISCAL NOTES (DCED, REV) 2/04/00 2085 (H) REFERRED TO STATE AFFAIRS 2/17/00 (H) STA AT 8:00 AM CAPITOL 102 2/17/00 (H) Heard & Held 2/17/00 (H) MINUTE(STA) 3/16/00 (H) STA AT 8:00 AM CAPITOL 102 3/16/00 (H) Scheduled But Not Heard 3/21/00 (H) STA AT 8:00 AM CAPITOL 102 3/21/00 (H) MINUTE(STA) WITNESS REGISTER CAROL CARROLL, Director Administrative Services Division Department of Military and Veterans Affairs 400 Willoughby Avenue Suite 500 Juneau, Alaska 99811 POSITION STATEMENT: Provided department's position and answered questions regarding HB 330. LADDIE SHAW, Coordinator Veterans Affairs Department of Military and Veterans Affairs PO Box 5800 Ft. Richardson, Alaska 99505-0800 POSITION STATEMENT: Provided department's position regarding HB 330. CLEM BOUCHER PO Bo 258 Glennallen, Alaska 99588 POSITION STATEMENT: Testified in support of HB 330. TOM WESTALL, General Alaska State Defense Force PO Box 5800 Ft. Richardson, Alaska 99505 POSITION STATEMENT: Provided information on HB 331. CRAIG CHRISTENSEN, Colonel Chief of Staff Alaska Army National Guard PO Box 5800 Ft. Richardson, Alaska 99505 POSITION STATEMENT: Testified on HB 331. MIKE SCOTT, Manager Matanuska-Susitna Borough POSITION STATEMENT: Commented on HB 137. KEVIN RITCHIE, Executive Director Alaska Municipal League 217 Second Street, Suite 200 Juneau, Alaska 99801 POSITION STATEMENT: Provided information on HB 137. ACTION NARRATIVE TAPE 00-22, SIDE A Number 0001 CHAIR JEANNETTE JAMES called the House State Affairs Standing Committee meeting to order at 8:10 a.m. Members present at the call to order were Representatives James, Green, Hudson, Kerttula, and Smalley. Representatives Whitaker and Ogan were absent. HB 330-POW/MIA DAY & WOMEN VETERANS DAY Number 0086 CHAIR JAMES announced the first order of business is HOUSE BILL NO. 330, "An Act establishing Prisoners of War and Missing in Action Recognition Days and Women Veterans Day; and providing for an effective date." CAROL CARROLL, Director, Administrative Services Division, Department of Military and Veterans Affairs, deferred to Laddie Shaw, Coordinator for Veterans Affairs. Number 0215 LADDIE SHAW, Coordinator, Veterans Affairs, Department of Military and Veterans Affairs, testified via teleconference from Anchorage. He said the Department of Military and Veterans Affairs supports HB 330. He has met with former prisoners of war and has attended meetings with women veterans from around the state, and HB 330 is supported by those two groups. He asked that the committee move HB 330 forward. Number 0331 CLEM BOUCHER testified via teleconference from Glennallen. He said he fully supports HB 330 except for the Women Veterans Day part. He commented that he felt that women are being doubly recognized for Veterans Day, and he feels that one day should take care of all veterans. He explained that he is not opposed to women having a day [but not two days]. Number 0411 CHAIR JAMES mentioned that she tended to agree with Mr. Boucher; however, she does support HB 330. CLEM BOUCHER acknowledged that a Veterans Day already exists, but having another Women Veterans Day gives women double recognition for their work. He indicated he is not disputing their work but he is just pointing out that women are getting two days of recognition. Number 0491 REPRESENTATIVE HUDSON made a motion to move HB 330 out of committee with individual recommendations and the attached zero fiscal note; he asked for unanimous consent. There being no objection, HB 330 moved from the House State Affairs Standing Committee. SB 236-POW/MIA DAY & WOMEN VETERANS DAY Number 0560 CHAIR JAMES announced the next order of business is SENATE BILL NO. 236, "An Act establishing Prisoners of War and Missing in Action Recognition Days and Women Veterans Day; and providing for an effective date." CHAIR JAMES informed members that she wanted to waive SB 236 because it is identical to HB 330 and it does not seem necessary to hear SB 236. There being no objection, SB 236 was waived out of committee. HB 331-ALASKA NATL GUARD/NAVAL & STATE MILITIA Number 0628 CHAIR JAMES announced the next order of business, HOUSE BILL NO. 331, "An Act relating to payment, allowances, and benefits of members of the Alaska National Guard and Alaska Naval Militia in active service; relating to computation of certain benefits for members of the Alaska State Militia; and providing for an effective date." [Before the committee was CSHB 331(MLV).] CAROL CARROLL, Director, Administrative Services Division, Department of Military and Veterans Affairs, said she has online Colonel Craig Christensen, Rick Turcic, and General Westall to answer questions. She explained that HB 331 proposes three amendments to current statute. The first is to change the name of the Alaska State Militia to the Alaska State Defense Force. Therefore, Sections 1-4 and Section 11 merely change the name. She explained that in statute now there is something called the Organized Militia, made up of the National Guard, the Naval Militia, and the Alaska State Militia (to be called Alaska State Defense Force). MS. CARROLL explained that second, HB 331 streamlines the process for calculating pay for the National Guard and the Naval Militia section of Alaska's Organized Naval Militia when they are called to state active duty. She mentioned that the governor does that for search and rescue, an emergency or a disaster. In the [legislators'] packet she had provided a two-page description of current calculations used to calculate both pay and allowances for members of the National Guard and the Naval Militia. She informed the committee that HB 331 will allow the department to multiply the minimum base pay by 200 percent to arrive at active duty pay. The first page shows how many steps the department must perform now to accomplish payment, and the second page shows how much the process would be streamlined by HB 331. MS. CARROLL remarked that the third thing that HB 331 does is institute a statutory method of paying the Alaska State Defense Force when called to state active duty. She added that about a year ago the department was notified by the Department of Law that the Department of Military and Veterans Affairs had been paying the Alaska State Defense Force in error. She recognized that her department was paying them the same way as the Naval Militia and the National Guard. Since that time the department has been bringing members of the Alaska State Defense Force on active duty and paying them as non-permanent state employees. That does cause some problems because the Alaska State Defense Force is a military unit under military command structure and discipline. The Alaska State Defense Force also has the protection of statute in that the members have other jobs; therefore, they have a protection from their employers to go back to that job after they have fulfilled their service for the state. She said that the fact that the department hires Alaska State Defense Force members as state employees causes some confusion in the [payment] process. She noted that the third section of HB 331 would fix the confusion because Alaska State Defense Force members would be paid as if they were state employees using state employee pay scales, but they would still be under military command discipline. Number 0955 REPRESENTATIVE GREEN asked how National Guard members are compensated now. Number 0964 MS. CARROLL replied that they are paid federal wages. REPRESENTATIVE GREEN asked at what [pay scale] they work, and how that is established. MS. CARROLL answered that all National Guard and Naval Militia people are paid based on their federal pay level and housing allowance, rations allowance and other factors. REPRESENTATIVE GREEN asked if the federal pay level and allowance are higher or lower for a Naval Militia captain who is temporarily placed into a National Guard unit. MS. CARROLL replied that the National Guard and the Naval Militia will still be paid. Number 1006 REPRESENTATIVE GREEN asked if Alaska State Defense Force members are compensated upon being called to active duty at the same rate as National Guard members when National Guard members have replaced the Alaska State Defense Force at the scene of a disaster or emergency. He further asked if the formula as written in HB 331 compensates the Alaska State Defense Force at a rate comparable to the [National] Guard. MS. CARROLL answered that the method of payment is different, but she cannot say if pay rates are different. She said the National Guard and the Naval Militia will be paid a daily rate. Number 1061 REPRESENTATIVE GREEN asked if HB 331 pays a higher rate than National Guard pay. CHAIR JAMES pointed out that there is a zero fiscal note for HB 331. Number 1092 TOM WESTALL, General, Alaska State Defense Force, testified via teleconference from Anchorage. He said that Alaska State Defense Force soldiers, since they are in state military formations, would get pay commensurate with whatever job they happen to take in an emergency situation. During an emergency the Alaska Division of Emergency Services or [Alaska State] Troopers would have to hire civil employees anyway, and certain tasks would be assigned. He explained that to pay Alaska State Defense Force members by rank is cumbersome when coming in under emergency capacity because the first one on the scene may be an individual with the rank of major, but the job needing attention may be a telephone receptionist or telephone coordinator. He commented that the major would not be paid by his rank but would be paid by the classified job description of whatever job that major was performing. He indicated this method of payment is beneficial, economically manageable for the state, and provides an immediate service. Number 1223 GENERAL WESTALL mentioned that the Defense Force can call up 100 soldiers within 24 hours at any given moment. This [capability] provides an excellent utility for the Division of Emergency Services to go into operation in any emergency without having to stop to do outside hiring to fill all those positions needed for a 24-hour operation. In 72 hours, the current staffing of Emergency Services would be exhausted without some augmentation. The State Defense Force supplies the force multiplier that can make the organization operate for 24 hours a day and provides immediate emergency response. The Defense Force has had much experience since 1983 in emergency response; therefore, the utility aspects are very advantageous to the state, plus the pay is appropriate to the job being performed instead of paying a high-ranking person to do an ignominious task. He added that the jobs are already classified in the personnel management system; therefore, the department is not changing any pay scale or pay rate but merely providing a service that is already a known quantity. Number 1311 REPRESENTATIVE GREEN said it seems the pay system could be a nightmare if the major came on duty in an ignominious position for three hours and then went to another job and over a period of 24 hours he had seven different jobs. He asked if the major in such an instance would fill a timecard in for seven different positions. GENERAL WESTALL replied that such a scenario does not usually happen. He noted that he has one battalion already pre-trained to go into emergency services in their state emergency coordination center. He explained that those jobs have already been pre-[assigned] and those personnel know exactly what they are going to do so the emergency center can [start] operating very quickly. He mentioned that pre-trained personnel are staffed appropriate to their rank and so most of them receive minimum daily pay anyway but there will be some supervising officers that would naturally take a supervisory position. He indicated that the scenario as described by Representative Green happens when soldiers are rapidly deployed into the field and end up performing a variety of jobs. He agreed that in those cases there is some mismatch of Defense ranks versus the job being performed and occasionally a switch from one job title to another. He remarked that Emergency Services staff keep track of the payroll and try to minimize administrative nightmares, but he acknowledged that what Representative Green had described does occur occasionally. Number 1459 REPRESENTATIVE GREEN said he is concerned because if the department has established an emergency team and then replaces them with soldiers from the Naval Militia, for example, then the second group should receive comparable pay. It seems much easier to him that the department would pay like [duties] for like [duties] instead of going through extra work to figure pay rates. REPRESENTATIVE HUDSON inquired as to what was the basis for the 200 percentile. He asked if the percentile was supposedly going to hold everybody on par with the position that they are replacing. Number 1577 CRAIG CHRISTENSEN, Colonel, Chief of Staff, Alaska Army National Guard, testified via teleconference from Anchorage. He said he has become familiar with the pay system by reason of his senior position. He noted that National Guard officers are federally recognized. He added that they have a federal promotion system that requires years of service and determining factors that require education, which system is totally separate from the Alaska State Defense Force. He explained that Alaska State Defense Force individuals are promoted under a different system, are appointed and can be appointed with no military service based on their civilian experience, so the department is talking about two totally separate systems. He commented that the Alaska State Defense Force also is a cadre outfit, meaning that it is top-rank heavy and has many officers in the cadre leadership. He mentioned that the Alaska State Defense Force waits for mobilization before filling its enlisted ranks. Number 1714 COLONEL CHRISTENSEN informed the committee that the department had reviewed pay rates from colonel down to private and found that it required 345 hand calculations across pay tables to start with basic pay entry date, years of service, how many dependents, ration allowances, cost of living allowance (COLA), and many other calculations to produce payroll. He emphasized that the department was seeking a simple, equitable way to pay individuals according to their rank and benefits they were already receiving. He remarked that the department made two schedules wherein a captain's pay was calculated using the current method of 345 steps and then captain's basic military pay using the 200 percentile was calculated. He said that 200 times the basic pay for a captain was $18 less than he/she would have received if pay had been calculated with the 345 steps; therefore, the pay rate is very close. He added that for first lieutenant pay, the calculations happened to be equal, and a second lieutenant makes a little more using the 200 percentile. He stated that the 200 percentile initiative has been offered to the Alaska National Guard Officer's Association and Enlisted Associations, and there has been no objection from either one of those associations. Number 1776 REPRESENTATIVE GREEN made a motion to move CSHB 331(MLV) out of committee with individual recommendations and the attached zero fiscal note; he asked for unanimous consent. There being no objection, CSHB 331(MLV) moved from the House State Affairs Standing Committee. HB 137-MUNICIPAL DIVIDEND PROGRAM Number 1807 CHAIR JAMES announced the next order of business, HOUSE BILL NO. 137, "An Act relating to the municipal dividend program; and providing for an effective date." Number 1860 REPRESENTATIVE GREEN made a motion to adopt the proposed committee substitute (CS), version 1-LS0591\K, Cook, 3/15/00, as a work draft. There being no objection, proposed CSHB 137, Version K, was before the committee. CHAIR JAMES said Version K uses excess earnings of the permanent fund (PF) after full dividends and inflation proofing. She explained that the amount of the municipal dividend is calculated by multiplying $125 times the number of permanent fund dividends (PFD) paid in the previous fiscal year. Last year there were 570,000 PFDs, so it would yield a total of $71.25 million for fiscal year (FY 2001) if the legislature passed HB 137. CHAIR JAMES commented that the proposed CS also changes the current way of supporting municipal assistance and revenue sharing. She mentioned that the change is designed to encourage boroughs and municipalities to provide services identified under this revenue sharing program. She indicated that the identified services are police protection, fire, emergency medical services (EMS) and roads. The proposed CS also provides a $25,000 basic amount and raises it to $45,000 for small communities. Number 2061 CHAIR JAMES reminded the committee that one advantage of adopting the municipal dividend system is simplicity. If a [community] did not have police [protection], it would not receive $17 per person for police; the same is true for lack of any other identified service under the revenue sharing plan. She recognized that there is encouragement in the proposed CS for an area to provide identified services. The proposed CS also sets aside $21 million for a municipal capital matching grants program, which would replace any general funds designated for that purpose. CHAIR JAMES noted that a spreadsheet in committee packets illustrates what the proposed CS would do for municipalities. She said that in order to review a particular municipality to find net result in comparison to what that municipality is receiving now, look under the title Total New PS Found., fourth to last column, FY 2000 Current column, and Compare FY 2000 column. She noted that the last column shows the percent of increase that each municipality would receive under the proposed CS. CHAIR JAMES commented that one other good selling point is that there would be $46.9 million in reduction to general fund spending under the proposed CS. She mentioned that the proposed CS is a much simpler way of distributing money. Number 2240 REPRESENTATIVE SMALLEY said he understood that the calculation is not a simple "$125 times population" but must also be accountable to the other criteria listed on the spreadsheet. He noted that Kenai then would receive $606,086 under the proposed CS. CHAIR JAMES explained that under the proposed CS, Kenai would receive $278,203 more revenue sharing than it had received last year. She commented that there is no relationship between the number of dividends that may be allocated to an area and municipal revenue sharing for that area. She mentioned that the dividends are figured statewide and the $125 for each PF is used only to establish a fund. She indicated that the fund is distributed in the manner illustrated on the spreadsheet. Number 2299 MIKE SCOTT, Manager, Matanuska-Susitna Borough, testified via teleconference from Palmer. He said he was speaking today on behalf of the Alaska Municipal League's legislative committee of which he is co-chair. He noted that the proposed CS is consistent with what the Municipal League has been speaking to for the last four years both as a priority in its overall platform as well as policy statement in support of a community dividend. He commented that it is clear that the proposed CS does some things that would be beneficial for municipalities and local taxpayers. He observed that revenue sharing and safe communities funding have been reduced over the past several years whereas property taxes have risen. He stated that in the Mat-Su Borough revenue sharing goes to pay for roads, fire service areas, and libraries but does not go to support general government. Therefore, he added, as funds are reduced, taxes in road and fire service areas rise, and then the borough reduces payments to Palmer and Wasilla. In turn, he stated, Palmer and Wasilla have to come up with local tax revenues to offset those losses. MR. SCOTT reiterated that the proposed CS would hopefully set up an endowment that would allow for funding in the long term and help the state meet its goal of a long-range fiscal plan. He said that when the Municipal League has met during the last four years there is no higher issue than setting a course for long range fiscal health of both state and municipality. He noted that the proposed CS is a huge step in the right direction, and from that standpoint, it concurs with the Municipal League's legislative committee. Number 2452 MR. SCOTT said in committee packets there is a letter from the Municipal League's Revenue and Finance Committee. From the Municipal League's point of view, the proposed CS is consistent with the people's vote last November. He commented that there is a property tax cap due up for vote in November , and the proposed CS is a way for municipalities to advise the people that there is a way to backfill revenue losses. He cannot stress enough the importance of how consistent the proposed CS is with the Municipal League's top legislative effort. Number 2460 CHAIR JAMES said the proposed CS does not affect the way the current PFD system is calculated and would have very minimal affect on the PFD in future years. She acknowledged that it is true that the PFD is calculated on total income of the PF plus earnings, and if $71.25 million is deducted from PF earnings, PFD calculation will be affected to a small degree. She added that no matter what long term plan is chosen, the proposed CS could still be calculated and continued alongside any long-term plan that is implemented. CHAIR JAMES noted that stress has been heightened by the 83 percent vote on September 14, 1999, which said no to any use of PF earnings. After speaking with many folks, she believes that the people voted no because they did not like the plan. Therefore, the plan is being scrapped. It is her opinion that people would be willing to allow use of PF earnings if the money was benefiting their communities, as the proposed CS does. She commented that distributing PF earnings money to local government is more palatable to people than giving the money to the legislature because people do not necessarily trust the legislature. She envisioned that if a pot of money is set up and sent back to local governments for expenditure decisions then people would be more inclined to use of PF earnings. Number 2596 MR. SCOTT agreed with Chair James. He said that when taxpayers understand that a reduction in revenue sharing means a reduction in their services and increase in local taxes, two thirds of property tax payers say they do not want to see further reduction in revenue sharing and municipal assistance. He noted that the proposed CS provides an opportunity to assist local taxpayers without impacting the PFD because out in the Mat-Su the PFD is in fact a big part of the economy. There is much support for the PFD, but there is also much angst about increasing pressure on property taxes. Number 2650 KEVIN RITCHIE, Alaska Municipal League, said revenue sharing has had an impact on local taxes and now a property tax-cap initiative is in place, partly in response to what people perceive as a rise in taxes. He said if there were small cuts to revenue sharing obviously they could be absorbed by municipalities. However, over the past 13 years revenue sharing has been cut from $140 million a year down to the current amount of $28 million, which is a $112 million cut per year. When cuts of that magnitude are made, it has to affect services, assuming that municipalities are still doing about the same types of things. The proposed CS would set up a way of permanently fixing revenue sharing, taking a huge step toward stabilizing local property taxes. He explained that the proposed CS is not the long-range financial plan, as Chair James has already said. Nevertheless, he has learned in 25 years of government service that nothing happens in government except incrementally. The old saying that "the longest journey begins with a single step" is absolutely true in government, and this looks like a single step to him - one that he can understand as a citizen and would probably endorse. Number 2753 MR. RITCHIE said that the impact of the proposed CS on the PFD is somewhere between zero and very small, as Chair James had said. However, the dollar impact is $125 per person spread to municipalities where local taxpayers can control the use of that money. He said that the proposed CS shifts funding from the state general fund to the new program for both revenue sharing and capital matching grants. He noted that the Alaska Municipal League's number one priority is a long range fiscal plan, number two is revenue sharing, number three is education, number four is deferred maintenance, and number five is power cost equalization. He commented that the proposed CS would provide the ability to meet some or all of those needs to a certain extent and still maintain a reduction in overall general fund spending. Therefore, the proposed CS seems like a win on a few fronts. He emphasized that the spreadsheet under discussion is not a legal document but is the best estimate available right now so those numbers might go up or down as the Municipal League talks with municipalities about what municipalities actually do and how the money is distributed. Number 2845 CHAIR JAMES said she thinks that in order to have control over government funding, it is better to distribute money to local governments. She explained that she thinks the proposed CS might even encourage some districts to incorporate and start providing services for themselves. She commented that she believes that if money is sent to local government to perform many services that the state now does statewide, local government could perform for much less than the state. Also, it would lessen aggravation of local citizens because they can attend their borough assembly meetings and be heard. Being heard at a borough assembly meeting is much more real to people than arguing to get money from the state for state expenditures; the proposed CS is the first step. She mentioned that the proposed CS establishes $125 per dividend, and it is very likely that the amount could be increased when additional services are identified as being provided by the state [when they could be provided just as well by local government]. Number 2961 MR. RITCHIE reminded the committee that local taxes are not low. For example, Juneau has a five percent sales tax and some places in Alaska have a seven percent sales tax. Alaska is the leader in the United States of increasing property taxes as a percentage of the entire state budget; the reason for that is because the state budget has been going down. Property taxes are providing a bigger portion of money that runs government, and the whole issue is money. The proposed CS is a very reasonable approach to showing local taxpayers that they can still maintain local taxes at a reasonable rate and provide more services. TAPE 00-22, SIDE B Number 2914 REPRESENTATIVE GREEN said he is concerned that legislative prerogative to spend state money being committed to the proposed CS is very similar to a dedicated fund which is unconstitutional. He explained he is not saying that the proposed CS is unconstitutional, but it is right on the borderline; the committee needs to find out for sure if the proposed CS is constitutionally correct. He noted that he thinks PF earnings are ultimately going to be needed, which was intended when the PF was initiated. He suggested that the proposed CS be modified to become one of the budget categories to be approved by the legislature every year; then he could accept the proposed CS, but right now he has a real problem with it. Number 2846 CHAIR JAMES said the committee can get a reading on the constitutionality issue. She explained that she would agree in part to what Representative Green stated. She agreed that when a fund is set up, such as dedicated program receipts, though the legislature is not bound to abide by the intent, it is expected that the legislature will fulfill the intent. She commented that dedicated program receipts identifies money coming in, and the legislature has allowed the state to dedicate those receipts for a certain program without suffering unconstitutional repercussions. The legislature has to appropriate the funds for dedicated program receipts, and the legislature would also have to appropriate funds for the proposed CS; so she does not see any difference between the two. She mentioned that the legislature has the option to change the dollar amount [$125] and can change the allocation because the proposed CS is a statutory scheme completely under legislative control. She stated she does not believe that the proposed CS sets up a dedicated fund. CHAIR JAMES announced the HB 137 would be held for further discussion. ADJOURNMENT There being no further business before the committee, the House State Affairs Standing Committee meeting was adjourned at 9 a.m.