Legislature(2021 - 2022)
01/25/2022 11:30 AM House WAYS & MEANS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Fiscal Policy Impacts | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
January 25, 2022
11:33 a.m.
MEMBERS PRESENT
Representative Ivy Spohnholz, Chair
Representative Adam Wool, Vice Chair
Representative Andy Josephson
Representative Calvin Schrage
Representative Andi Story
Representative Mike Prax
MEMBERS ABSENT
Representative David Eastman
COMMITTEE CALENDAR
PRESENTATION(S): FISCAL POLICY IMPACTS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
PAT BRANSON, Mayor
City of Kodiak
Kodiak, Alaska
POSITION STATEMENT: Provided comments about future fiscal
policy impacts to local governments.
KEN CASTNER, Mayor
City of Homer
Homer, Alaska
POSITION STATEMENT: Provided comments about future fiscal
policy impacts to local governments.
NILS ANDREASSEN, Executive Director
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Provided a PowerPoint presentation, titled
"Planning for the Future."
ALICIA MALTBY, President and CEO
Association of Builders and Contractors
Anchorage, Alaska
POSITION STATEMENT: Testified on the need for a capital budget.
ACTION NARRATIVE
11:33:39 AM
CHAIR IVY SPOHNHOLZ called the House Special Committee on Ways
and Means meeting to order at 11:33 a.m. Representatives
Josephson, Schrage, Wool, and Spohnholz were present at the call
to order. Representatives Story and Prax arrived as the meeting
was in progress.
^PRESENTATION(S): Fiscal Policy Impacts
PRESENTATION(S): Fiscal Policy Impacts
11:34:17 AM
CHAIR SPOHNHOLZ announced that the only order of business would
be a presentation on fiscal policy impacts.
11:35:24 AM
PAT BRANSON, Mayor, City of Kodiak, expressed the opinion that
local governments need the [Community Assistance Program] to
provide residents with basic services; otherwise, shifting costs
to local municipalities hurts Alaskans. With only 50 percent of
school bond debt reimbursement, he argued that local taxes will
need to increase to cover this. He said that Kodiak's 7 percent
sales tax barely covers city operations. He continued that
local governments have no way to pay for deferred maintenance
and capital needs. For example, he said Kodiak needs $18
million for a new firehouse and $23 million for a new harbor.
He maintained that education should be fully funded at all
levels, as this helps to create and retain Alaskan
professionals, and he insisted that school bond debt promises by
the state need to be upheld. Concerning the jail in Kodiak, he
said, the state has obligations which are not being met, and the
city is expected to pick up the tab. He concluded by pointing
out workforce issues which result from the lack of day care. He
argued that day care is an essential service to help parents
work, which in turn improves Alaska's economy.
11:43:14 AM
KEN CASTNER, Mayor, City of Homer, in response to the previous
testifier's comments concerning jail funding, explained that the
cities absorb the cost of increased jail operations because of
the current flat rate of state funding. He pointed out that
constituents are complaining about state road conditions.
Concerning harbors, he stated that the Municipal Harbor Facility
Grants Program is continually underfunded. He explained that
because of overcrowding, Homer has a new harbor project;
however, the state closed the coastal engineering department, so
the city must contract with private engineering firms for
services. He continued with other issues, stating that the
Community Assistance Program is funded below traditional levels;
grants for the emergency services have gone from an 80/20 split
between state and local governments to a 10/90 split; and a
reduction in funding for the Department of Public Safety has led
to fewer opportunities for training and reduced the number of
state fire marshal inspections. He explained that when the city
helps emergencies outside its boundaries, troopers are not
always available. He argued that in the next 10 years the
relationship needs to be clarified between the state and local
governments, so local governments will know what to expect from
the state. He suggested that currently the ability of local
governments to absorb more responsibilities has been exhausted.
He concluded that a lasting and stable relationship between
state and local governments is needed to accommodate municipal
and state needs.
11:53:21 AM
NILS ANDREASSEN, Executive Director, Alaska Municipal League
(AML), provided a PowerPoint presentation, titled "Planning for
the Future," [hard copy included in the committee packet]. He
advised that evaluating lost revenue should be based on average
revenue growth, which is at 4.2 percent. He stated this is
twice as much as any assumptions made by the administration's
10-year plan. He explained that the inflation rate in the 10-
year plan is only applied to certain programs, excluding
transfers to local governments, nonprofits, and school
districts. He pointed out a graph showing a reduction in the
grants for the Community Assistance Program. He said that local
governments would have to do "less with less." He suggested
that this would result in local tax increases and deferred
maintenance. He argued that deferred maintenance would cause
municipalities to fall behind, and residents would leave the
area. He pointed out that the state's revenue is not tied to
population or economic development; rather, it is tied to the
volatility of resource development and investment revenue.
12:00:37 PM
MR. ANDREASSEN pointed out that, according to statute, the 10-
year plan must balance sources and uses of funds, while
providing for essential state services and protecting the
economic stability of the state. He emphasized that the 50
percent repayment of school bond debt reimbursement [as written
in the 10-year plan] would not fully capitalize the Community
Assistance Program and rural school construction. For a more
robust 10-year plan, he argued for increasing revenues and
creating new revenues, recognizing cost growth, and planning for
economic growth. He suggested that municipal governments could
propose statutory changes to achieve goals, such as tying
funding for education to the education system's goals. He
listed some suggested changes to the 10-year plan: funding for
school construction and major maintenance; increased funding for
the Alaska Public Employees' Retirement System and Teachers'
Retirement System; port and harbor debt reimbursement; harbor
facility matching grants; funding for the Division of Community
and Regional Affairs; funding for road and rural airport
maintenance beginning at $10 million; and funding for village
police officers.
MR. ANDREASSEN, in response to Representative Prax, acknowledged
that the relationship between local and state government is
continually evolving. He said that the constitution defines
state obligations for public education, public welfare, public
health, the university system, a unified court system, and the
management of lands and resources. He reasoned that for local
governments to function well they must be able to rely on the
stability of the state; when the state does not follow laws and
statutes, it increases complexity and uncertainty at the local
level. He remarked that current state programs, which directly
fund local government efforts, ensure care for each unique
community. For example, he said that public radio and
television are important services for small communities, and
removing these community programs would increase
destabilization.
MR. ANDREASSEN offered to provide a rubric on behalf of AML. In
response to Representative Wool, he stated that some local
governments have had to cease operations, including landfill
management, animal control, election support, and city council.
12:26:03 PM
MR. ANDREASSEN, in response to Representative Story, said that
AML fully supports funding education. He stated that local
governments fund maintenance and construction projects in areas
with municipal school districts.
12:30:05 PM
MR. ANDREASSEN resumed the presentation on slide 5 and said that
there is a $21.9 billion list of infrastructure needs. He
stated that some of the infrastructure needs, such as broadband,
water, and wastewater, will be met by the Infrastructure
Investment and Jobs Act, so this could allow the state to focus
on school construction and major maintenance and jails.
MR. ANDREASSEN displayed the chart on slide 6 which shows the
state is projecting that the current debt from school bond
reimbursement will go away in the next few years. He stated
that, since the moratorium, municipalities are more likely to
request funds under municipal grant programs instead of using
funding from the Regional Education Attendance Area. Relative
to the school district needs, he said, the average amount funded
is only 14 percent. He expressed the opinion that the
Department of Education and Early Development has been
underfunded for decades.
12:36:20 PM
MR. ANDREASSEN suggested that local governments want to be a
part of a process which strengthens Alaska's communities. He
stated that by identifying priorities, local governments can
increase economic development, improve quality of life, reverse
outmigration, and more. He continued that the lack of a revenue
structure addressing economic growth makes a positive feedback
loop between economic activity and state spending difficult.
This creates challenges in a 10-year plan projection.
MR. ANDREASSEN encouraged strengthening partnerships between the
state and local governments. He suggested that this would
create negotiated agreements the state could uphold, and, as a
result, work at local levels would be enhanced. He suggested
that collaborations should also extend to tribal governments.
For a sense of how different state programs impact local
governments, he referred the committee to the website,
akfiscalfutures.com. He added that some programs could be
delivered by the private sector.
12:47:05 PM
ALICIA MALTBY, President and CEO, Association of Builders and
Contractors (ABC), stated that the Alaska Chapter of ABC
represents 123 companies and operates the largest apprenticeship
program in the state. She said ABC supports thoughtful, long-
term planning for a capital budget which focuses on meeting
Alaska's infrastructure needs. She said that offering
consistent funding in the budget would allow for growth to adapt
to rapidly changing markets. She said that the construction
industry is inherently unstable, so adopting a plan for
reliable, sustained investments into capital budgets would
provide more stability. She cautioned the committee from taking
on large investments to stimulate the economy in the short-term.
She encouraged making sustainable and flexible investments over
time. She explained that large influxes of money into the
economy in the short term could create an inefficient market
because this would drive up project costs and require an
increased need for workers from the Lower 48. She stated that
ABC encourages the state to adopt a consistent, stable,
reliable, and flexible plan for reinvestment in the state's
capital infrastructure.
12:53:58 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
12:54 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 10-year Fiscal Plan Presentation, Alaska Municipal League, 1.25.22.pdf |
HW&M 1/25/2022 11:30:00 AM |