04/17/2007 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB3 | |
| SB136 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 136 | TELECONFERENCED | |
| += | SB 3 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 17, 2007
3:36 p.m.
MEMBERS PRESENT
Senator Donny Olson, Chair
Senator Albert Kookesh, Vice Chair
Senator Joe Thomas
Senator Thomas Wagoner
MEMBERS ABSENT
Senator Gary Stevens
COMMITTEE CALENDAR
SENATE BILL NO. 3
"An Act relating to the community dividend program; and
providing for an effective date."
MOVED SB 3 OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 136
"An Act relating to certain municipal service areas that provide
road services."
MOVED SSSB 136 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 3
SHORT TITLE: COMMUNITY DIVIDEND PROGRAM
SPONSOR(S): SENATOR(S) WILKEN
01/16/07 (S) PREFILE RELEASED 1/5/07
01/16/07 (S) READ THE FIRST TIME - REFERRALS
01/16/07 (S) CRA, JUD, FIN
02/13/07 (S) CRA AT 3:30 PM BELTZ 211
02/13/07 (S) Heard & Held
02/13/07 (S) MINUTE(CRA)
04/12/07 (S) CRA AT 3:30 PM BELTZ 211
04/12/07 (S) -- MEETING CANCELED --
04/17/07 (S) CRA AT 3:30 PM BELTZ 211
BILL: SB 136
SHORT TITLE: MUNICIPAL ROAD SERVICE AREAS
SPONSOR(S): SENATOR(S) THOMAS
03/23/07 (S) READ THE FIRST TIME - REFERRALS
03/23/07 (S) CRA, TRA
04/05/07 (S) CRA AT 3:30 PM BELTZ 211
04/05/07 (S) -- MEETING CANCELED --
04/10/07 (S) CRA AT 3:30 PM BELTZ 211
04/10/07 (S) -- MEETING CANCELED --
04/13/07 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
04/13/07 (S) CRA, TRA
04/17/07 (S) CRA AT 3:30 PM BELTZ 211
WITNESS REGISTER
SENATOR GARY WILKEN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 3 as sponsor.
KATHIE WASSERMAN, Executive Director
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: Spoke in favor of SB 3 and SB 136.
MIKE BLACK, Director
Division of Community Advocacy
Department of Commerce, Community & Economic Development
POSITION STATEMENT: Spoke in favor of SB 3.
RENEE BROKER, Attorney
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Spoke in favor of SB 136.
ED MAHONEY, Chair
Service District 1
Kodiak, Alaska
POSITION STATEMENT: Spoke against one provision of SB 136.
ACTION NARRATIVE
CHAIR DONNY OLSON called the Senate Community and Regional
Affairs Standing Committee meeting to order at 3:36:02 PM.
Senators Olson, Kookesh, Thomas, and Wagoner were present at the
call to order. Senator Stevens was excused.
SB 3-COMMUNITY DIVIDEND PROGRAM
CHAIR OLSON announced SB 3 to be up for consideration.
SENATOR GARY WILKEN, Sponsor of SB 3, said this bill was heard a
few months ago, and it is a revenue-sharing bill based on a per-
head allocation across Alaska. It would be $70 per person, but
an additional $30 would be given to municipalities meeting the
4-mill requirement in the foundation formula supporting their
schools. The funding source is flexible. If there isn't enough
money in the general fund, the funds could come from the CBR
[constitutional budget reserve], the Alaska capital income fund,
or the permanent fund earnings reserve. He said it will be
forward funded by one year to help municipalities plan ahead.
"In the bill there is no minimum…because I really didn't know
what to put in." He will leave it up to the body. He said this
bill will not go anywhere in the Senate, but it is important to
get the concept out there. The bill is sustainable, flexible,
debatable, and predictable, he stated. He added that he is
concerned that a general dip out of the revenue stream is a
slippery slope, but revenue sharing is the thing to do. It is
healthy to have the discussion every year. The fiscal note is
about $67 million, he told the committee.
3:40:32 PM
SENATOR WAGONER said the state has an unfunded mandate to every
organized area of $150,000 in real property tax forgiveness for
senior citizens. While the fiscal note seems large, "if you
figure up that unfunded mandate throughout the State of Alaska
just in the municipal areas, I think you will find well over 50
percent of that amount is already required of the local
governments in tax forgiveness for senior citizens." A past
legislature did that and then took the funding away, he added.
"I do believe we should have some revenue sharing. We are taking
a lot of responsibility on ourselves paying their PERS/TRS
requirements this year, but at the same time, I think this is
something really to consider and look at when we look at
unfunded mandates of that nature and allocate them into this
formula somewhere too."
CHAIR OLSON asked what other solutions he has.
SENATOR WAGONER said the state mandates the tax forgiveness and
should pay it. He said that is the simplest solution. There is
no bill to do that, and the committee should address it. "Either
eliminate the mandate…or fund the mandate you put out there
because they are not both fair."
3:43:02 PM
CHAIR OLSON asked how he came up with the 4-mill standard.
SENATOR WILKEN said the state's foundation formula requires
organized communities to come up with four tenths of one percent
of their full and true assessed value. It's the law, he said, so
he used it. There are some communities that have the ability to
pay less than that, "but I don't address that in this
legislation." Those doing that are paying for their schools. The
$30 could be claimed to support the schools, he said.
CHAIR OLSON asked how many communities will be left out [not
qualify for the extra $30].
3:44:10 PM
SENATOR WILKEN said it would be any school district run in
unorganized Alaska.
KATHIE WASSERMAN, Executive Director, Alaska Municipal League
(AML), said it used to be just the small communities that needed
financial help, but now larger communities also need money.
While they need help with PERS, revenue-sharing is still needed
because that money is what the communities use to provide basic
services or property tax relief. The AML has two bills on
revenue sharing, but the vehicle doesn't matter at this point.
"If we could get the legislature and the administration behind
Senator Wilken's bill, we're there." She said the AML prefers
the funding mechanism and the base amount in its own bill.
3:46:39 PM
MS. WASSERMAN said the large communities get the benefit of the
per capita funds, and the small ones make their money on the
base amount. She recommends a base of $25,000 for unorganized
communities, $75,000 for cities, and $250,000 for boroughs.
MIKE BLACK, Director, Division of Community Advocacy, Department
of Commerce, Community & Economic Development, said the division
supports revenue-sharing. Local governments are the primary
deliverers of services to Alaska residents, and they are facing
extraordinary costs. The legislature has tried to relieve some
of that through the PERS and TRS funding, but there are many
communities that have no PERS or TRS obligations but have higher
costs anyway. He said forward funding is a good idea, and he
supports base funding for the very small communities. This bill
is a place to start the conversation, he stated.
3:49:22 PM
CHAIR OLSON asked about the fiscal note.
MR. BLACK said the fiscal note is a reasonable starting point
but is "somewhat higher than what we had originally thought
about, but to tell you the truth, it's certainly a very
reasonable amount in my opinion."
CHAIR OLSON noted that the fiscal note is significantly more
than the governor's proposal and asked Mr. Black's opinion.
MR. BLACK said the amount that was included in the budget was
drawn from numbers provided by the previous administration, and
it was not a carefully thought-out process. The $64 million in
SB 3 is about $20 million more but still reasonable because of
the costs that local governments are facing, he opined.
3:51:12 PM
SENATOR WILKEN said the section regarding the 4 mills also
includes the 45 percent option. So Unalaska, Valdez, Skagway and
the North Slope would also qualify. He reiterated his earlier
testimony. "We can afford it and we owe it," he stated.
SENATOR THOMAS asked what he meant by saying "we owe it."
SENATOR WILKEN said Alaska's resources are on state land.
Revenue sharing started in 1970, and when things got good in
1980 "we started up with safe communities and added to that." He
said, "Things started to throttle itself back…so where we are
today is zero." Managing the state's wealth has led the state to
the point of helping the communities again. "We owe it because
we're the one that manages that wealth." His town will use the
money for tax relief, and others might use it for plowing roads.
3:54:19 PM
CHAIR OLSON asked about feedback from the administration.
SENATOR WILKEN said he has indications that the department is
supportive of the concept. It becomes an issue of money. The
governor had $48 million budgeted, and the bill is $64 million,
but that is the process going on for the next few weeks.
CHAIR OLSON said it sounds like the $48 million was proposed by
the last administration.
SENATOR WILKEN said that is the amount from the year before.
SENATOR KOOKESH moved to report SB 3 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, the motion carried.
The committee took an at-ease from 3:56:00 PM to 3:58:37 PM.
SSSB 136-MUNICIPAL ROAD SERVICE AREAS
CHAIR OLSON announced SSSB 136 to be up for consideration.
SENATOR THOMAS read the following statement to the committee:
Senate Bill 136 provides boroughs with a means of
altering existing road service area boundaries to
ensure taxpayer fairness among residents of service
areas. A service area is a taxing jurisdiction within
a borough that has been established to provide special
services such as road maintenance or fire protection.
These services are requested and approved by voters
residing within a specific area. State law permits
borough residents living outside a service area to use
service area roads for their sole or legally required
access. These residents derive a direct benefit equal
to residents within the service area, yet they can
refuse to contribute to the costs of construction or
maintenance of these roads by voting down any
annexation attempt. These state-mandated annexation
votes typically fail as individuals are reluctant to
join a service area when they can use these maintained
roads for free. SB 136 amends state law by allowing a
service area to annex property that uses its roads for
their sole or legally required access without a vote
by the owners of property to be annexed.
A second issue arises where residents of a service
area pay into a service area even though they do not
utilize the service area roads for access to their
property. Service areas, however, are often reluctant
to vote to remove property from the service area
because it effectively raises taxes on the remaining
property owners. SB 136 amends state law by allowing a
borough assembly to exercise its judgment to alter, by
ordinance, a service area boundary to exclude a
property that does not use service area roads as its
sole or legally required access.
4:01:10 PM
CHAIR OLSON asked if there is a problem the bill seeks to solve.
SENATOR THOMAS said there are areas where people have property
that is serviced but they are not contributing to it. And others
could not get out of a service area even if they were not using
the roads. It allows the borough to remove or add those people
to the service district. It is about fairness, he said.
SENATOR WAGONER said his borough has no problem with the bill.
SENATOR THOMAS said service districts are self sufficient, so it
will have no impact on state money.
SENATOR KOOKESH asked about the use of the word "annex," and if
it could mean being annexed into a borough.
SENATOR THOMAS said not a borough, just in or out of a service
district. He believes all service districts are in boroughs.
4:03:57 PM
RENEE BROKER, Attorney, Fairbanks North Star Borough, said SB
136 was unanimously supported by the borough. It allows local
governments to address an inequity in the road taxation system.
It is not just property owners using the roads for free.
Businesses also use the roads. A gravel-hauling business, for
example, can tear up roads but the businesses can refuse to
contribute to maintenance. She noted that Anchorage is having
similar problems. This bill establishes fair standards that
local governments can use to determine whether property should
be in or out of a road service area, she stated. If the
government can put property into a service area, then fairness
says property can also be excluded. The legislation doesn't
require that any property ultimately be placed in or out of a
service area. The decision will only be made by local
governments after input from people. This bill preserves the
right of the service area to vote on adding any property. It
would be the service area, not the assembly, doing the cost-
benefit analysis. It is a big step forward in fair taxation.
4:07:27 PM
SENATOR WAGONER asked about gravel pits in road service areas.
MS. BROKER said some gravel companies use the roads, but if the
pit is not in the service area they don't pay anything.
ED MAHONEY, Chair, Service District 1, Kodiak, said he has
numerous issues with the bill. Kodiak now exempts property that
doesn't rely on service district roads for access. He said it
seems like this is an urban problem. In Kodiak everyone drives
on the service district roads. By removing properties it would
look like hitting the map with buckshot; "it would punch holes
all through it." He said it isn't fair. The service area is an
advisory to the assembly, and has no power to annex any parcel;
it can only make a recommendation. He asked if the bill refers
to new areas or individual lots. The language is not very clear,
he stated. If a parcel has a back door access but the easy
access is through the borough-maintained road, then the bill is
not plugging any loopholes. He said to be cautious. He has been
working to get everyone in the service district to pay, so it is
ironic that this bill comes up now, he concluded.
4:10:58 PM
SENATOR THOMAS asked about his concern regarding exemptions.
MR. MAHONEY said Kodiak has an exemption for properties that are
in the service district but are accessed from the state road.
SENATOR THOMAS said the bill won't impact that. "If you have a
primary access that is not from the service district road, then
you are not affected by this."
MR. MAHONEY said he doesn't think it will be affected, given
what is on the books. The legality of right or wrong should be
considered, he stated.
SENATOR THOMAS said he is only talking about people whose
primary or only access is in a service district.
MR. MAHONEY said his problem is exempting parcels. A state road
runs through his service district, and if properties are all of
a sudden removed, it will have a huge impact.
SENATOR THOMAS said his intent is for people who do not use
those service district roads and cannot get out of that
district. He would like to read Kodiak's policy.
MR. MAHONEY, in response to Senator Olson, said he is speaking
as chair of his service district.
CHAIR OLSON asked what impact it would have to take those
parcels out of his service district.
MR. MAHONEY said the parcels are already exempted, and it
amounts to $51,000 this year. It is roughly a third of what is
collected. There is a lot of concern that that isn't right.
4:14:37 PM
SENATOR WAGONER suggested seeing if his borough ordinance
conflicts with state law. Senator Thomas is changing statute so
that conflict won't occur in Fairbanks.
MR. MAHONEY said Kodiak is probably the only borough with the
exemption and is probably out of compliance with state law. The
bill will bring Kodiak into compliance. The exemption allowance
has been on the books since the late 1990s. It forces others to
pay more. Everyone in Kodiak uses the service district roads,
whether they are going shopping or cutting across town. He said
he is confused on how to rectify it.
4:17:11 PM
SENATOR THOMAS said that was the situation; people were using
roads that they weren't paying for, and that's not fair.
Kodiak's exemption seems to be the same as is in the bill for
people who are not using such roads and could opt out of the
district. Kodiak may have a different process, but it serves the
same purpose, he surmised. The problem was that some people
didn't want to let the non-users out of the service district
because fees would go up for the remaining users.
MR. MAHONEY said he concurs, but in Kodiak, it is not just
access but daily runs to church and stores as a shortcut-
sometimes six to eight times each day. The dump trucks are tough
on the road, and it is unfair to those with the burden of paying
for maintenance. Regarding the bill, he is "for number 3 and
against number 4."
4:19:45 PM
KATHIE WASSERMAN, Executive Director, Alaska Municipal League
(AML), said AML is supportive. The bill gives boroughs the
discretion. The AML supports the entire bill, she stated.
CHAIR OLSON asked what the Department of Transportation and
Public Facilities (DOTPF) has said.
SENATOR THOMAS said there has been no comment from it. The bill
is an issue of fairness. "If you're using the roads, you pay, if
you're not using the roads, you have the opportunity to get out
of the service district."
SENATOR KOOKESH moved to report SSSB 136 from committee with
individual recommendations and attached fiscal note(s). There
were no objections and it was so ordered.
The meeting was adjourned at 4:23:26 PM.
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