Legislature(2025 - 2026)BELTZ 105 (TSBldg)
01/28/2025 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Overview and History of Municipalities in Alaska from the Division of Community and Regional Affairs | |
| Presentation(s): Leaning Local,strengthening Local Governments, | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
January 28, 2025
1:30 p.m.
MEMBERS PRESENT
Senator Kelly Merrick, Chair
Senator Forrest Dunbar, Vice Chair
Senator Elvi Gray-Jackson
Senator Robert Yundt
MEMBERS ABSENT
Senator Donald Olson
COMMITTEE CALENDAR
PRESENTATION(S): OVERVIEW AND HISTORY OF MUNICIPALITIES IN
ALASKA FROM THE DIVISION OF COMMUNITY AND REGIONAL AFFAIRS
- HEARD
PRESENTATION(S): LEANING LOCAL, STRENGTHENING LOCAL GOVERNMENTS,
STRENGTHENING ALASKA FROM THE ALASKA MUNICIPAL LEAGUE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
SANDRA MOLLER, Director
Division of Community and Regional Affairs (DCRA)
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Delivered a presentation titled "Overview
and History of Municipalities in Alaska."
NILS ANDREASSEN, Executive Director
Alaska Municipal League
Juneau, Alaska
POSITION STATEMENT: Delivered a presentation titled "Leaning
Local, Strengthening Local Governments, Strengthening Alaska."
ACTION NARRATIVE
1:30:36 PM
CHAIR MERRICK called the Senate Community and Regional Affairs
Standing Committee meeting to order at 1:30 p.m. Present at the
call to order were Senators Gray-Jackson, Dunbar, Yundt and
Chair Merrick.
^PRESENTATION(S): OVERVIEW AND HISTORY OF MUNICIPALITIES IN
ALASKA FROM THE DIVISION OF COMMUNITY AND REGIONAL AFFAIRS
PRESENTATION:
OVERVIEW AND HISTORY OF MUNICIPALITIES IN ALASKA
FROM THE DIVISION OF COMMUNITY AND REGIONAL AFFAIRS
1:31:25 PM
CHAIR MERRICK announced a presentation by Sandra Moller,
Director, Division of Community and Regional Affairs.
1:31:50 PM
SANDRA MOLLER, Director, Division of Community and Regional
Affairs (DCRA), Department of Commerce, Community and Economic
Development, Anchorage, Alaska, delivered a presentation titled
Overview and History of Municipalities in Alaska.
1:32:34 PM
MS. MOLLER moved to slide 2, the Alaska State Constitution
(ASC):
[Original punctuation provided.]
The Constitution of the State of Alaska
Article 10, Section 14:
"An agency shall be established by law in the
executive branch of state government to advise and
assist local governments. It shall review their
activities, collect and publish local government
information, and perform other duties prescribed by
law." That's DCRA!
Article 10, Section 1:
"? maximum local self-government with a minimum of
local government units? A liberal construction shall
be given to the powers of local government units."
MS. MOLLER shared her interpretation of these articles, stating
that the founders of the constitution believed strong
communities were essential to the success of the state. She said
DCRA takes this principle seriously. She emphasized that DCRA's
role is not to dictate how communities should fix their
problems, but to support locally driven problem solving.
1:33:37 PM
MS. MOLLER moved to slide 3, Mission:
[Original punctuation provided.]
Mission
DCCED Mission
Promote a healthy economy, strong communities, and
protect consumers in Alaska.
DCRA Mission
Helping Alaska's communities build sustainable
economies and a means of self-governance.
MS. MOLLER stated that DCRA collaborates with city councils to
support communities in self-governance. The agency fosters
sustainable economies by assisting communities in the following
ways:
- The Made in Alaska program. It directly benefits small
businesses that produce goods within the state.
- Supports strong local government for business success. She
noted that in her experience, weak governance has often
hindered economic activity. While DCRA may not administer
traditional economic development programs, the agency believes
that strengthening local governments is a vital component of
economic growth statewide.
1:34:46 PM
MS. MOLLER moved to slide 4, Program Groups. The slide provides
an overview of all the division's programs. She divided the
programs into the following groups and noted that this is not
exhaustive of every program DCRA oversees.
[Original punctuation provided.]
Program Groups
Mapping Analytics, and Data Resources
Community Database Online (CDO)
Mapping & GIS
Made in Alaska
Alaska Product Preference
MS. MOLLER said the Mapping Analytics, and Data Resources (MADR)
team of six collects and publishes community information. The
database is a wealth of information about Alaskan communities.
This database is a resource to people who work with communities.
It is updated with populations, elected officials, etc...
Local Government Assistance
Rural Utility Business Advisor (RUBA)
Community Resilience (Risk MAP and NFIP)
Office of the State Assessor
ANCSA Municipal Land Trust (MLT)
1:35:53 PM
MS. MOLLER said DCRA has about 57 employees, with 20 assigned to
the Local Government Assistance group. She explained that the
Environmental Protection Agency funds the RUBA program, which
assists communities with water and sewer utility management.
Risk Mapping, Assessment, and Planning (Risk MAP) and the
National Flood Insurance Program (NFIP) have been active
recently, particularly in Juneau.
MS. MOLLER said the Office of the State Assessor compiles the
annual Alaska Taxable Report using self-reported data collected
from communities. DCRA oversees real and personal property taxes
and collects bed tax and marijuana tax information if reported.
DCRA administers the Alaska Native Claims Settlement Act (ANCSA)
Municipal Land Trust (MLT) program. She noted that the
legislature introduced a joint resolution in 2024 to encourage
federal legislation that would sunset the MLT program.
Grants and Funding
22 programs; $1.2 Billion
Addition of 6 new programs; $1 Billion
MS. MOLLER said the Grants and Funding Section has 12 staff. The
new programs and funding are primarily due to the broadband and
digital equity programs.
Commissions
Local Boundary
Minerals
Serve Alaska
1:38:32 PM
MS. MOLLER moved to slide 5, Municipalities in Alaska:
[Original punctuation provided.]
Municipalities in Alaska
Cities: Boroughs:
Unified Home Rule 4
First Class 17 Non-unified Home Rule 7
Second Class 117 First Class 1
Home Rule 11 Second Class 7
Total 145 Total 19
MS. MOLLER said that DCRA works with other entities like tribes,
utilities, and nonprofit community organizations in addition to
municipalities. She said that the Local Boundary Commission
approved Hoonah's proposal to become a borough and is in the
final stages of reconsideration. While the process is not yet
complete, the next step is for the Division of Elections to hold
a local election to determine whether the borough will be
ratified.
1:39:32 PM
MS. MOLLER moved to slide 6, The Unorganized Borough:
[Original punctuation provided.]
"The entire State shall be divided into boroughs,
organized and unorganized."
Article 10, Section 3, Constitution of the State of
Alaska
MS. MOLLER said that DCRA works with communities in the
Unorganized Borough too.
1:39:48 PM
MS. MOLLER moved to slide 7, Local Government Assistance. She
said that DCRA's local government specialists are more like
"generalists" and listed the wide-ranging topics they work on:
[Original punctuation provided.]
Local Government Assistance
Elections
Title 29 Compliance
Financial Management
Utility Management
Personnel Management
Power Cost Equalization
Local Alcohol Availability Laws (Title 4)
Regional Training Workshops
Ordinances, Resolutions, Codes
Disaster Response
... whatever crosses their desk ...
MS. MOLLER said local government specialists are based in seven
field offices across the state: Fairbanks, Kotzebue, Nome,
Bethel, Dillingham, and Juneau. In Anchorage, specialists cover
all regions of the state. She explained that DCRA aims to
position its resources within the regions they serve, allowing
staff to work directly with communities. She reiterated that
these staff are actually generalists, actively involved in a
wide range of local government functions. She said staff are
busy in October assisting communities with election
administration to ensure the process is conducted properly and
efficiently.
1:40:46 PM
MS. MOLLER moved to slide 8, Rural Utility Business Advisor
(RUBA):
[Original punctuation provided.]
Rural Utility Business Advisor (RUBA)
Utility Management Assistance
• EPA funded
• Support for communities operating water/wastewater
utilities
• Remote & on-site assistance
Best Practices Scoring
• 32-hour trainings on utility management
• Workers' compensation coverage
• Payroll liability compliance
• Meetings of the governing body
• Financial management practices:
• Budgeting
• Financial reporting
MS. MOLLER said DCRA works in partnership with the Department of
Environmental Conservation (DEC) on three best practices
categories. DCRA oversees management and financial aspects,
including verifying minutes are recorded, budgets are approved
and followed, and ratemaking, while DEC handles technical
components.
MS. MOLLER said that training is a key component of the RUBA
program. DCRA conducts eight annual training sessions and offers
a weekly Local Government Informational Tutorial (LGIT), which
focuses on specific topics such as workers' compensation.
1:41:49 PM
MS. MOLLER moved to slide 9, Grants 2025 Fast Facts:
[Original punctuation provided.]
Grants 2025 Fast Facts
12 Grants Administrators
2 Program Coordinators
22 Programs
771 Active Grants
Total Value $1.2B
1:42:15 PM
MS. MOLLER moved to slide 10, Grants and Funding, which outlines
DCCED's authority and the entities the department provides
grants to:
[Original punctuation provided.]
Grants and Funding
AS Title 37 Public Finance,
Chapter 5 Fiscal Procedures Act
AS 44.33.020 (18) & (20) 2 CFR 200
Provide oversight and implementation of federal and
state funded financial assistance programs & grants.
Monitor and ensure statutory and regulatory compliance
of recipient entities including:
Municipalities Tribes Non-profit State Agencies &
Community Other Entities
Associations
MS. MOLLER said DCRA's approach to grants and funding is to
focus on providing oversight and to ensure grant compliance with
state and federal funding requirements.
1:42:45 PM
MS. MOLLER moved to a graphic on slide 11, DCRA Grants and
Funding Sources. The chart lists the following federal funding
sources along the top of the slide and state funding along the
bottom:
[Original punctuation provided.]
DCRA Grants & Funding Sources
Federal Grants & Revenue Sharing
U.S. Department of Housing and Urban Development (HUD)
Community Development Block Grants (CDBG)
U.S. Department of Health and Human Services (DHHS)
Office of Community Services (OCS)
Community Services Block Grant (CSBG)
U.S. Department of Agriculture (USDA)
U.S. Forest Service
National Forest Receipts (NFR)/
Secure Rural Schools (SRS)
U.S. Treasury
Coronavirus Relief Fund
American Rescue Plan
U.S. Department of Interior (DOI)
Payment in Lieu of Taxes (PILT)
U.S. Environmental Protection Agency (EPA)
Targeted Airshed Grant (TAS)*
U.S. Department of Justice (DOJ)
Emergency Law Enforcement Assistance (ELEA)**
U.S. Economic Development Administration (EDA)
Statewide Planning Grants
U.S. Department of Agriculture (USDA)
Marketing Service
Seafood Processor Grants
1:43:00 PM
MS. MOLLER continued slide 11:
State Grants & Revenue Sharing
Designated Legislative Grants
Community Assistance Program (CAP)
NPR-A Impact Mitigation Grants
Shared Fisheries Business Tax (SFBT)
Local Government Lost Revenue Relief
DCRA Grants & Funding Snapshot (Sept 2022)*
Total Active Value - $1,575,568,311
Total Active Grants 1,351
Number of Core Programs 18
Ad Hoc Programs Varies Annually
Number of Staff 6 (plus 2 vacancies)
[*MS. MOLLER indicated this information is outdated.]
1:43:30 PM
MS. MOLLER moved to a pie chart on slide 12, Typical Grant
Lifecycle, which depicts the grant process flow from start to
finish:
[Original punctuation provided.]
Typical Grant Lifecycle
1. Develop & Implement Programs
2. Solicit Applications & Make Awards
3. Conduct Negotiations & Execute Grant Agreements
4. Track in DCRA eGrants Database
5. Provide Technical Assistance
6. Administer Grant & Monitor Compliance
7. Final Reporting & Grant Closeout
1:43:42 PM
MS. MOLLER stated DCRA helps communities and entities throughout
the grant process by streamlining steps and setting internal
deadlines.
MS. MOLLER said that designated legislative grants receive the
most inquiries. She described the process which occurs after the
legislature adjourns: the DCRA team assembles to determine which
grants were approved and which survived the veto process; team
members are assigned specific grants; and a timeline is
developed for dispatching grants to grantees.
MS. MOLLER emphasized that the process is more complex than
simply receiving an award notice and immediately disbursing
funds. DCRA must first determine the scope and deliverables,
which can take time.
MS. MOLLER drew attention to item 4 of the grant lifecycle,
stating that it refers to the internal database. She noted there
is also an external component where communities provide the
status updates on grants. This applies to all grant programs,
not just designated legislative grants.
MS. MOLLER said DCRA is modernizing its grant management system,
which will benefit the end-user. This is the typical grant,
application-based, lifecycle wherein an entity applies and DCRA
approves it.
1:45:31 PM
MS. MOLLER moved to slide 13, Typical Revenue Sharing Cycle. She
said this is sometimes referred to as the pass-through grant.
DCRA is rebranding the term pass-through, explaining that it is
not truly a pass-through because DCRA is required to follow
specific steps, not simply distribute checks to communities.
[Original punctuation provided.]
Typical Revenue Sharing Cycle
1. Solicit Applications to Eligible Communities
2. Outreach to Non-Responsive Communities
3. Review Applications Received
4. Confirm Eligibility & Final Funding Amounts
5. Track in DCRA eGrants Database
6. Review & Process Required Documents
7. Distribute Funding & Close Out
1:45:55 PM
MS. MOLLER said once DCRA is notified that funding is available,
the division ensures it has the right applicant, proper
documentation, and eligibility requirements are met. Other
conditions may apply depending on the grant. Financial
statements for CAP are required, either audited or certified,
which can delay the process from notification to distribution.
MS. MOLLER said the slide provides an overview of the revenue-
sharing process, which also applies to National Forest Receipts
and other grants. She said that DCRA offers technical assistance
for all grants as needed. Sessions are held with grantees to
ensure projects are well-developed, funds are utilized
effectively, and all requirements are met.
1:46:38 PM
MS. MOLLER moved to slide 14, Technical Assistance. DCRA
provides the following types of technical assistance for all
grants, as needed, to ensure grantees utilize funding according
to the required rules:
[Original punctuation provided.]
Technical Assistance
Environmental Civil Labor Site
Review Rights Standards Control
Insurance Procurement Project Budget
Requirements Standards Management
Reporting Audit
Requirements Requirements
1:46:55 PM
MS. MOLLER moved to slide 15, Community Database Online:
[Original punctuation provided.]
Community Database Online
• Digital Datasets
• Maps
• Interactive Reports
• Dashboards
• Community Profiles
1:48:11 PM
MS. MOLLER moved to slide 16, Made in Alaska:
[Original punctuation provided.]
Made in Alaska
• Promoting State guaranteed Alaskan made products
since 1992
• > 1,100 permitted products
• > 850 Alaskan businesses
• 4K Facebook Followers; 1.6K Instagram Followers
• 82.1% report that MIA membership helps promote their
product
• $0.63 of every dollar you spend on MIA products is
invested back into Alaska
MS. MOLLER said Made in Alaska is membership based. She
expressed her belief the fee is $25 per year to become a member.
Members receive stickers to promote their products, which helps
to identify local businesses. Made in Alaska has over 1,000 in
its database. She said Made in Alaska just added a presence in
the Ted Stevens Anchorage International Airport. In concourse B,
there is a section in one of the stores dedicated to Made in
Alaska products. She said Made in Alaska also has a presence in
the governor's Washington, D.C. office. She said permit holders
are loyal to this program.
1:49:47 PM
MS. MOLLER moved to slide 17, Alaska Product Preference Program:
[Original punctuation provided.]
Alaska Product Preference Program
• Alaska products for State of Alaska work
• 3 percent, 5 percent, or 7 percent bid preference
for Alaskan made products in State procurement
• State spending going back to the local economy
1:50:00 PM
MS. MOLLER moved to slides 18 and 19, Community Database Online
(CDO):
[Original punctuation provided.]
Community Database Online
Community-Driven Data
• Detailed StoryMaps for over 400 communities in
Alaska
• Community Profile maps with parcel, infrastructure,
and utility data
• Community Photo Library
• Community Plans Library
1:50:40 PM
MS. MOLLER moved to slide 19, Community Database Online
(continued):
[Original punctuation provided.]
Community Database Online (continued)
Data-Driven Solutions
• Topical webpages and StoryMaps
• Longitudinal datasets presented for yearly
comparison
• Detailed dashboards to track key metrics
1:50:55 PM
MS. MOLLER moved to slides 20 and 21, AmeriCorps, ServeAlaska
Commission:
[Original punctuation provided.]
AmeriCorps, ServeAlaska
The purpose of the Commission is to engage Alaskans of
all ages and backgrounds in community-based service
and volunteerism as a means of community and state
problem solving and promoting participation in the
National AmeriCorps Program.
ServeAlaska State Service Commission
In partnership with AmeriCorps brings national service
programs to Alaska.
The Serve Alaska sub-grantees operate in almost every
state, bringing much needed support and training to
rural and urban Alaska.
1:51:13 PM
MS. MOLLER moved to slide 21, stating that ServeAlaska operates
on an application basis. DCRA collaborates with grantees to plan
work goals and support them through development and
implementation. The grantees are listed below:
[Original punctuation provided.]
AmeriCorps, ServeAlaska (continued)
2023-2024 FUNDED PROGRAMS
Alaska Public Defenders Agency's SAME Justice Program
Members provide direct assistance to low-income,
justice-involved Alaskans to address non-legal
barriers to success and access to services in their
communities.
Student Conservation Association
Members provide conservation stewardship to publicly
accessible lands in Alaska.
Alaska Afterschool Network
Members support students in after-school programming.
Providing structured STEM activities to meet their
social emotional needs.
RurAL CAP, Resilient Alaska Youth
Members engage Alaska Native youth using experiential
based learning and cultural activities in rural
communities across Alaska.
Sitka AmeriCorps
Members serve to increase children's resilience and to
reduce the impact of high Adverse Childhood Experience
scores in Sitka.
1:51:31 PM
MS. MOLLER expressed her belief that an investment of $300,000
or less in State funds generates approximately $4 million in
federal and local match, making ServeAlaska a high-return
investment for delivering services statewide.
1:52:05 PM
CHAIR MERRICK thanked Ms. Moller for the presentation.
1:52:17 PM
At ease.
^PRESENTATION(S): LEANING LOCAL,STRENGTHENING LOCAL GOVERNMENTS,
STRENGTHENING ALASKA FROM THE ALASKA MUNICIPAL LEAGUE
PRESENTATION(S): LEANING LOCAL, STRENGTHENING LOCAL GOVERNMENTS,
STRENGTHENING ALASKA
FROM
THE ALASKA MUNICIPAL LEAGUE
1:53:28 PM
CHAIR MERRICK reconvened the meeting and announced a
presentation from the Alaska Municipal League.
1:53:38 PM
NILS ANDREASSEN, Executive Director, Alaska Municipal League
(AML), Juneau, Alaska, delivered a presentation titled Leaning
Local, Strengthening Local Governments, Strengthening Alaska.
MR. ANDREASSEN requested the chair permission to go off topic
to give an update on the recent federal grant pause that is
affecting communities around the state.
CHAIR MERRICK granted permission.
MR. ANDREASSEN said a federal executive order placed a pause on
all grants and loans associated with the Bipartisan
Infrastructure Investment and Jobs Act (IIJA) and the Inflation
Reduction Act. He noted that the [White House Office of]
Management and Budget (OMB) issued two memos. One memo offered
clarity by indicating the pause applies to projects related to
the Green New Deal. The other memo complicated the criteria
Alaska agencies must use to evaluate thousands of federal awards
received by Alaska communities over the past three years related
to those two Acts. He said this has created uncertainty and
local governments, nonprofits, and tribal entities are now
unsure about the financial impacts and potential project
stoppages. He concluded his remarks on the federal grant pause
and began his presentation with slide 3.
1:57:25 PM
MR. ANDREASSEN moved to slides 3 and 4, Introduction to Local
Government:
[Original punctuation provided.]
Introduction to Local Government
Constitutional Basics Maximum Local Self-Government
The delegates to the state's Constitutional Convention
wanted to avoid overlapping local government
jurisdictions and ensure local control. A guiding
principle was that they did not want to force a
particular form of government on any community or
region of the state. At the same time, delegates
placed an emphasis on maximizing local self-
government, which is the purpose of Article 10 of the
Constitution.
The Constitution articulates a system of local
government that would be flexible enough to allow
local decision-making, while providing ways in which
greater regional cooperation might occur. Thus, while
the Constitution does not mandate the incorporation of
local or regional governments, it requires the
establishment of organized and unorganized boroughs
that are consistent with geography, economies and
common interests.
The Constitution also mandates that an agency be
included within the executive branch to advise and
assist local governments.
1:57:40 PM
MR. ANDREASSEN said this presentation provides committee members
with baseline information to support their overall understanding
and awareness of local government. The intention is to discuss
classifications and authorities of local government. It is
important to recognize how the roles and responsibilities of
different types of local governments vary across the state.
MR. ANDREASSEN said AML looks to the Alaska Constitution for
guidance on the meaning of "maximum local self-government." The
Constitutional Convention minutes explained that "maximum local
self-government" means "geographic extent." He remarked that
this is a compelling concept when considering how local
governments are constructed in Alaska.
1:58:51 PM
MR. ANDREASSEN said the Alaska Constitution supports a broad,
liberal interpretation of local government powers, enabling
cities and boroughs to exercise the greatest degree of decision-
making authority permitted by law. He said AML looks to the
Alaska Constitution in its approach to local government.
MR. ANDREASSEN said statutes inform how local governments are
constructed and what they are permitted or prohibited from
doing. He explained that Title 29 governs local governments. He
noted that the two big differentiators of how local governments
are constructed are whether they are general law or home rule.
Alaska is one of the few states that have both.
2:00:26 PM
MR. ANDREASSEN said home rule municipalities operate under a
liberal construction of power, meaning they may take any action
not expressly prohibited by State statute and as long as it
aligns with what citizens allow through the local charter. He
said home rule offers broad authority. In contrast, general law
municipalities, which include the majority of Alaska's cities
and many boroughs, such as second class boroughs and cities, may
only exercise powers specifically granted by the legislature. He
expressed it can be challenging to make law that is specific
enough to provide clarity for one group without restricting the
authorities of another group.
1:59:28 PM
MR. ANDREASSEN continued the Introduction to Local Government on
slide 4:
[Original punctuation provided.]
Statutory Authorities Title 29
Title 29 is State law that describes the
classification, roles, responsibilities and other
aspects of local government in Alaska. Classifications
occur both for boroughs (home rule, first, and second
class) and cities (home rule, first, and second
class).
All local governments have certain fundamental duties
such as conducting elections, holding regular meetings
of the governing body, and taxation. Beyond that, the
duties of a municipality in Alaska vary greatly based
on their classification, inclusion or not in a
borough, population size and geographic area.
Title 29 is prescriptive in its delegation of powers
to first and second class cities and boroughs. Home
rule cities and boroughs have all legislative powers
that their residents have agreed to, except for those
prohibited by law.
While a home rule municipality adopts a charter,
subject to voter approval, a general law municipality
is often unchartered (a general law city or borough
may adopt a charter) and its powers are granted by
state law. There are two active classes of general law
cities and boroughs first and second class. The
difference between the two classes of cities include
taxing authority, responsibility for schools, and the
powers and duties of the mayor. The differences
between the two classes of boroughs are the manner in
which they adopt additional powers.
2:02:16 PM
MR. ANDREASSEN moved to slide 5, Boroughs and Unified
Municipalities. He stated that there are at least 19 boroughs
and unified municipalities across the state, each bringing
different types of requests to the legislature and decision-
makers. He explained that home rule governments typically seek
to preserve their existing powers and prevent further
preemption, while second class boroughs and cities often
advocate for additional authority to meet local needs. A map
shows which cities are categorized within a city and borough, an
incorporated borough, and an unincorporated borough. The slides
serve as a reference on the powers and duties of boroughs and
unified municipalities:
[Original punctuation provided.]
Boroughs and Unified Municipalities
Organized boroughs are also municipal corporations and
political subdivisions of the State. There are four
classifications of organized boroughs:
• Unified Home Rule (3) may exercise all legislative
powers not prohibited by law or charter
• Non-Unified Home Rule (8) - may exercise all
legislative powers not prohibited by law or charter
• First Class (1) may exercise any power not
prohibited by law on non-area wide basis
• Second Class (7) must gain voter approval for
authority to exercise non-area wide powers
2:03:14 PM
MR. ANDREASSEN moved to a chart on slides 6 - 8, Powers and
Duties of Boroughs. He explained that boroughs have three core
responsibilities: funding education; conducting planning,
platting, and land use regulation; and levying taxes to support
those responsibilities. Beyond these, statute outlines
additional duties based on whether the borough is home rule or
general law. He noted that the chart serves as a reference,
organizing boroughs into three classifications: Unified
Municipality and Home Rule Borough, First Class Borough, and
Second Class Borough, and outlines their respective
responsibilities in the following areas:
- Public Education
- Planning, Platting & Land Use Regulation
- Provide Transportation Systems, Water & Air Pollution Control,
Animal Regulation
- License Day Care Facilities
2:04:05 PM
MR. ANDREASSEN continued on slide 7:
- Regulate Fireworks, provide solid & septic waste disposal,
housing rehabilitation, eco-nomic development, roads & trails,
EMS communications, and regulate motor vehicles and
development projects
- Hazardous Substance Control
- Other Powers Not Prohibited
- Property Tax
MR. ANDREASSEN pointed out that not all boroughs levy a property
tax. Some rely on fish taxes to offset what would otherwise be
collected through property taxation. Others utilize a payment in
lieu of taxes (PILT) structure, where the tax base is configured
differently. He stated that while the mechanisms vary, all are
equivalent to a property tax in that they fund the
responsibilities the State has assigned to boroughs.
2:04:31 PM
MR. ANDREASSEN continued on slide 8:
- Sales Tax
MR. ANDREASSEN said some boroughs may have a sales tax. Sales
and property taxes are the two primary forms of taxation used to
fund most borough responsibilities. He added that boroughs may
also receive support through community revenue sharing or
community assistance programs, when available.
- Assembly composition and apportionment
- Election and term of Mayor
- Veto Power of the Mayor
- Ability to attain Home Rule status.
2:04:53 PM
MR. ANDREASSEN moved to slide 9, Cities:
[Original punctuation provided.]
Cities
A city can be within an organized borough or within
the unorganized borough. All cities are municipal
corporations and political subdivisions of the State.
Typically, cities do not include large geographical
regions or unpopulated areas. Classifications of
cities include:
• Home Rule 400+ permanent residents; legislative
powers not prohibited by law or charter
• First Class 400+ permanent residents; state law
defines powers, duties and functions
• Second Class 25+ permanent residents; state law
defines powers, duties and functions
Powers and Duties
Important city powers described under Title 29 include
(see classification table for more information):
• Public education (Unorganized Borough)
• Planning, platting, land use (Unorganized Borough)
• Property and sales tax authority
• Composition of council
• Election and term of officers
• Eminent domain
2:04:54 PM
MR. ANDREASSEN explained that cities in Alaska are structured
similarly to boroughs. To qualify as a home rule city, a
community must have at least 400 residents and be organized by
charter. A city may also choose to incorporate as a first class
city, which has comparable powers but operates under general
law, or as a second class city, which requires a minimum of 25
residents. He noted that when considering local control and
decision-making, it is important to recognize that, for most
local governments in Alaska, the State defines their powers,
duties, and functions. Home rule governments have the greatest
freedom to make decisions for their residents.
MR. ANDREASSEN stated that the powers and responsibilities of
cities mirror those of borough governments in many ways. Where a
home rule or first class city exists outside of an organized
borough, in the unorganized borough, it assumes borough-level
responsibilities such as funding education. Cities and boroughs
also have similar taxing authority. He remarked that this
structure differs from many other states, where county and city
governments operate in distinct lanes to avoid overlap,
duplication of effort, or taxation.
2:06:41 PM
MR. ANDREASSEN moved to slide 10, which displayed communities
organized by their respective classifications:
[Original punctuation provided.]
Home Rule
Cordova • Fairbanks • Kenai • Ketchikan • Kodiak •
Nenana • North Pole • Palmer • Seward • Soldotna •
Valdez
First Class
Craig • Dillingham • Galena • Homer • Hoonah •
Hydaburg • Kake • King Cove • Klawock • Nome • Pelican
• Saint Mary's • Sand Point • Seldovia • Unalaska •
Utqiagvik • Wasilla
Second Class
Adak • Akhiok • Akiak • Akutan • Alakanuk • Aleknagik
• Allakaket • Ambler • Anaktuvuk Pass • Anderson •
Angoon • Aniak • Anvik • Atka • Atqasuk • Bethel •
Bettles • Brevig Mission • Buckland • Chefornak •
Chevak • Chignik • Chuathbaluk • Clark's Point •
Coffman Cove • Cold Bay • Deering • Delta Junction •
Diomede • Eagle • Eek • Egegik • Ekwok • Elim •
Emmonak • False Pass • Fort Yukon • Gambell • Golovin
• Goodnews Bay • Grayling • Gustavus • Holy Cross •
Hooper Bay • Houston • Hughes • Huslia • Kachemak •
Kaktovik • Kaltag • Kasaan • Kiana • Kivalina • Kobuk
• Kotlik • Kotzebue • Koyuk • Koyukuk • Kupreanof •
Kwethluk • Larsen Bay • Lower Kalskag • Manokotak •
Marshall • McGrath • Mekoryuk • Mountain Village •
Napakiak • Napaskiak • New Stuyahok • Newhalen •
Nightmute • Nikolai • Nondalton • Noorvik • Nuiqsut •
Nulato • Nunam Iqua • Nunapitchuk • Old Harbor •
Ouzinkie • Pilot Point • Pilot Station • Platinum •
Point Hope • Port Alexander • Port Heiden • Port Lions
• Quinhagak • Ruby • Russian Mission • Saint George •
Saint Michael • Saint Paul • Savoonga • Saxman •
Scammon Bay • Selawik • Shageluk • Shaktoolik •
Shishmaref • Shungnak • Stebbins • Tanana • Teller •
Tenakee Springs • Thorne Bay • Togiak • Toksook Bay •
Unalakleet • Upper Kalskag • Wainwright • Wales •
Whale Pass • White Mountain • Whittier
Organized Under Federal Law
Metlakatla Indian Community
2:06:46 PM
MR. ANDREASSEN noted that one local government, the Metlakatla
Indian Community, is organized under federal law and is also a
member of the Alaska Municipal League (AML). He stated that all
cities and boroughs in Alaska are members of AML and remarked
that the list illustrates the diversity of local governments
across the state.
MR. ANDREASSEN observed that, generally, home rule and first
class cities tend to have larger populations or more substantial
tax bases. However, this is not always the case. For example,
Bethel appears on the second class list, but its population is
comparable to that of a first class or home rule city.
2:07:30 PM
CHAIR MERRICK sought clarification about slide 10. She asked
whether the list includes all locations in their respective
classification or does the list only include AML members.
MR. ANDREASSEN replied that the list includes all locations that
fall under these classifications and are all members. He
explained that membership includes both dues-paying and non-
dues-paying members, and AML does not differentiate between them
on the list.
2:07:56 PM
SENATOR GRAY-JACKSON asked why Anchorage is not on the list.
MR. ANDREASSEN drew attention to slide 5, replying that
Anchorage is classified as unified home-rule.
SENATOR GRAY-JACKSON sought clarification about the omission of
Anchorage from the "home rule" category on slide 10.
MR. ANDREASSEN replied that AML listed cities that are within a
unified borough under "Boroughs and Unified Municipalities." For
example, the City and Borough of Sitka appears under that
category on slide 5. Similarly, Skagway and Anchorage are listed
as boroughs, not as separate cities. He clarified that slide 5,
encompasses unified city and borough governments.
2:09:10 PM
CHAIR MERRICK asked him how municipalities fit within the
classifications.
MR. ANDREASSEN replied that municipalities such as Anchorage and
Skagway are treated as unified home rule governments. These two
municipalities are both a city and borough. Although the term
"municipality" can be confusing, the treatment is as a borough.
For example, the Municipality of Anchorage and the Municipality
of Skagway are unified, they have unified cities within their
borders, so this is how they are categorized.
2:10:06 PM
MR. ANDREASSEN moved to a chart on slides 11 - 13, Powers and
Duties of Cities. He stated that city powers and duties are very
similar to those of boroughs and the chart outlines their
relevant statutory cites. He noted that Title 29 applies equally
to communities of 25 residents as it does to communities of
30,000 and the way laws are constructed are not necessarily
based on population, but on community classification. A first
class city with 25 residents that is required to have seven
council members, is the same as a first class city with 30,000
residents that has seven council members. He pointed out that in
a 25-person community, nearly one-fifth of the population must
serve on the city council, whereas in a larger city the council
represents a much smaller proportion of residents. He suggested
this highlights the importance of considering how laws affect
different-sized communities under the same classification. The
chart serves as a reference and organizes cities into three
classifications: home rule city, first class city, and second
class city, outlining their respective responsibilities in the
following areas:
- Public Education
- Planning, Platting & Land Use Regulation
- Property Tax
- Sales Tax
- Other Powers
- City Council Composition
- Election and Term of Mayor
- Vote by Mayor
- Veto Power of Mayor
- Power of Eminent Domain
- Ability to Attain Already has Home Rule Status
2:11:37 PM
MR. ANDREASSEN moved to slides 14 - 15, Economic and Social
Impact of Municipal Government in Alaska:
[Original punctuation provided.]
Alaska has 165 municipalities; 145 cities, 19
boroughs, and one federally incorporated reservation.
In all, 97% of Alaskans live within an organized
municipality.
2:11:54 PM
MR. ANDREASSEN stated that the unorganized borough refers to
areas not formally organized as boroughs, but this does not mean
that residents in those regions lack local government
representation. He said only about three percent of Alaskans
live outside any form of local government.
MR. ANDREASSEN said the majority of boroughs levy a property
tax, and some cities do as well. He explained that there is no
differentiation between the two in this regard. However, it is
more likely that a borough would levy a property tax since its
school funding is tied to that tax. He continued discussing
slide 14:
Fifteen of the nineteen organized boroughs levy a
property tax, and some cities levy a property tax (12
within organized boroughs, 9 within the unorganized
borough). Total property tax revenue in FY23 was
$1,653,725,306.
The majority of municipalities have implemented a
sales tax. Nine boroughs and 95 cities have a sales
tax, with a total revenue of $328,976,720 in FY23.
Additional taxes include alcohol and tobacco, raw
fish, car rental, and hotel and bed taxes, amounting
to $216,517,939 in FY23.
Municipal governments also receive revenue sharing and
PILT funds from the State and Federal government, as
well as grant funding from a variety of sources.
2:12:55 PM
MR. ANDREASSEN pointed out that in the context of State revenue
sharing, it is important to understand how community assistance
impacts local governments differently based on their population
size and tax base. He stated that community assistance means
something different to each community. For some, it accounts for
as much as 80 percent of their budget; for others, it represents
a smaller share but remains meaningful and purposeful.
MR. ANDREASSEN observed that as revenue sharing has declined and
has not been adjusted for inflation, the result is a reduction
in the purchasing power of local governments. He continued
discussing slide 14:
In FY21, the total expenditures by local governments
in Alaska was $2,362,933,130.
Municipalities contribute over 24% of direct education
expenditures, totaling $508,869,961 in FY23.
Municipalities contributed an additional $230 million
more that year than required.
Municipalities employ approximately 39,000 Alaskans.
2:14:22 PM
MR. ANDREASSEN continued the discussion of Economic and Social
Impact of Municipal Government in Alaska" on slide 15:
Alaska has the nation's five largest county-
equivalents (boroughs). Our largest is equal to the
next six largest non-Alaskan counties. Our smallest is
bigger than three US states.
In Alaska, municipalities are filling in where gaps
appear in federal and state engagement and investment.
The services provided by local governments run the
gamut from public safety and emergency response to
transportation and fisheries management.
2:14:45 PM
MR. ANDREASSEN highlighted that local governments in Alaska are
responsible for emergency response across an area comparable in
size to California or Oregon. He emphasized that in many
regions, local governments fill critical gaps where there are no
state troopers or federal and state agencies present.
The contributions of our municipal government can also
be thought of in terms of area served with more than
half the state organized, local government is serving
an area of 252,333 square miles. That's almost 100,000
more than Alaska State land ownership.
The North Slope Borough has more emergency response
assets in the Arctic than the State of Alaska and the
U.S. Federal government combined.
2:15:43 PM
SENATOR YUNDT referred to slide 14, noting it states that
municipalities employ approximately 39,000 Alaskans. He asked
whether that figure includes teachers, firefighters, state
troopers, Wasilla police, and essentially all public employees.
MR. ANDREASSEN replied yes, that is correct, all forms of
political subdivision employees.
MR. ANDREASSEN continued with slide 15, stating that many years
ago, the State transferred the majority of its ports and harbors
to local governments. As a result, despite the State's heavy
reliance on fisheries and maritime traffic, it is local
governments that support and maintain that sector of the
economy.
Alaska's municipal ports are some of the busiest in
the nation, capturing six of the top ten spots in
annual commercial fishery landings.
There are 37 municipal-owned public power utilities.
Municipalities operate 47 public libraries in Alaska.
Municipalities own and operate over 30 swimming pools
across the state.
Municipalities provide many services that support the
visitor industry, and in turn receive revenue through
sales and bed taxes, moorage fees, and other sources.
During the COVID-19 pandemic, local governments in
Alaska lost nearly $80 million in revenue from the
visitor industry.
2:16:35 PM
MR. ANDREASSEN said local governments are, in many ways, the
backbone of communities, particularly where the private sector
does not provide services such as libraries or recreational
opportunities. He described these as full-service cities and
boroughs that meet residents' needs on many levels. He
emphasized that it is in everyone's interest to retain a
thriving community. Local governments play a central role in
making sure there are opportunities to live, work, and enjoy
life, helping residents benefit from their time in Alaska.
2:17:17 PM
SENATOR DUNBAR said the partnership and shared costs between
State and local government are interesting. He said that it used
to be that nearly 40 percent of Anchorage's budget was covered
by the State government, whereas that figure is now less than
one percent. He noted this represents a significant cost shift
onto local governments. He pointed to a recent news story about
Delta Junction, where an emergency service provider stated that,
due to nonpayment, the service would cease. He said that the
community seems to have made the choice that it would not pay
for that service. He asked whether some smaller communities view
it as a viable option to fall back on the State by, for example,
reclassifying from a first class to a second class city. He
flagged this as a concern, stating the State does not have the
financial capacity to absorb additional responsibilities if
communities choose to step back in that way.
2:18:38 PM
MR. ANDREASSEN replied that a principle of AML is local control
and local decision making. He stated that AML would not direct
its members to take specific actions regarding local governance
matters, as those decisions are left to the discretion of each
community.
MR. ANDREASSEN expressed his belief that the structure of the
Constitution and statutes governing general law versus home rule
cities place relatively few obligations on those cities. He
explained that it is up to them to determine their own tax
rates, identify available resources, and decide which powers to
implement based on the will of their residents. In areas where
there is no tax base or where residents have not requested
certain services, those responsibilities revert to the State. He
explained in the Unorganized Borough, where there is no borough
government, responsibilities such as education and public safety
fall to the State.
MR. ANDREASSEN acknowledged that if communities are devolving
themselves of services, the State is likely not well positioned
to assume services it did not originally intend to provide. He
emphasized that the State still holds constitutional
responsibilities and must be able to deliver those services
across Alaska, regardless of whether a city or borough steps in
to help meet those obligations.
2:20:34 PM
CHAIR MERRICK commented that it is important to note that there
are areas in our State with a tax base that do not fund their
own public safety.
2:20:45 PM
MR. ANDREASSEN moved to slide 16, Power in Partnership:
[Original punctuation provided.]
Power in Partnership
State and local government are intertwined and
interdependent, dating back to statehood. The Alaska
Statehood Act and the Alaska Constitution recognize
that the state's unique size, geography, isolation,
distance from markets, and low population necessitated
State provision of public education, public safety,
public health, public welfare, a unified court system,
infrastructure, and more.
Local government spending falls into a few categories:
- Public Safety 30 percent
Police, fire, and emergency response
- Schools 35 percent
Required contribution, respond to district needs, 75
percent of schools
- Utilities 25 percent
Roads, landfills, water and sewer
- Quality of Life 10 percent
Libraries, museums, rec center, parks, playgrounds
MR. ANDREASSEN stated that this slide is intended to foster
conversation about where partnerships exist, where overlap
occurs, and where opportunities for cooperation can be found. He
noted that there are local governments assuming
responsibilities, so that the State does not have to.
MR. ANDREASSEN said when reviewing local government budgets,
most spending falls into four key categories: public safety,
education, utilities, and quality of life. He commented that
some local governments are not providing these services while
other are. Delivery of these services varies. He emphasized that
the variation is not consistently tied to borough
classifications or to whether a community is urban or rural.
Those are not the differentiators, rather, the most significant
factors are local decisions, local choices, and the strength of
the local tax base.
2:21:33 PM
MR. ANDREASSEN moved to slide 17, Alaska's Local Governments. He
explained that AML reviewed key service areas, or "buckets" that
local governments are responsible for. He posed a question: when
considering any of these systems, such as public safety, how
does the State want to approach its role? The State could choose
to provide public safety entirely on its own, using state
trooper and village public safety officers. However, under
Alaska's current structure, local governments also have the
authority to assume these powers.
2:22:05 PM
MR. ANDREASSEN moved to slide 18, Alaska's Local Governments.
[Original punctuation provided.]
Education
34 municipal school districts
4 greater than State contribution
Transportation/Public Works
Road Miles = DOT&PF
37 Electric Utilities
72 Ports and Harbors
112 Water/Wastewater
Public Safety
70 with police powers
40 with combined budgets $75 million more than DPS
Quality of Life
47 Public Libraries
Parks and Recreation
Community Pools
MR. ANDREASSEN noted that 70 local governments in Alaska have
police powers, and 40 of them collectively operate on a combined
budget that exceeds the Department of Public Safety's by
$75 million. He pointed out that the Municipality of Anchorage
alone employs more law enforcement officers than the State has
troopers. This illustrates that public safety in Alaska is
delivered through a hybrid model that combines both State and
local efforts.
2:22:26 PM
MR. ANDREASSEN emphasized that this arrangement is neither
uniform nor equally distributed. It is not a system where each
entity clearly handles distinct responsibilities. Instead, the
division of duties reflects a series of negotiations and
decisions between the State and local governments. He stated
that this flexible structure lies at the heart of ongoing
debates and discussions that continue to resurface whenever
questions arise about who is doing what and who should be paying
for it.
2:23:02 PM
CHAIR MERRICK referred to slide 18, which indicated that Alaska
has 34 municipal school districts. She stated that there are
constituents who believe there are too many school districts in
the state. She asked whether he had any comment on that.
MR. ANDREASSEN clarified that there is now one fewer school
district than indicated. He expressed his belief that Alaska has
one fewer school district because the city of Tanana
reclassified from a first to a second class city recently, so it
became part of a Regional Education Attendance Area (REAA).
MR. ANDREASSEN responded that while he did not believe there are
too many school districts at this time, he did not see the
question as whether there are too few or too many. He expressed
his belief that the more important question is whether the
districts are adequately resourced and whether they have what
they need to fulfill their obligations. He said the number of
school districts does not necessarily determine outcomes. More
districts could result in the same outcomes, or fewer could
result in no change at all. What matters, he said, is whether
each district has the resources required to meet the
expectations placed upon them. He emphasized the need to examine
whether State funding is adequate, equitable, and evenly
distributed. In some areas, local governments contribute more to
their district budgets than the State does, despite public
education being a State constitutional obligation. In other
areas, local contributions are far less. He stated that how much
is being funded is just as important a question as how many
school districts exist. He referenced the Constitutional
Convention minutes, noting they emphasized maximum local self-
government and raised questions about how much power a local
area holds within its geographic boundaries.
2:25:34 PM
CHAIR MERRICK expressed her belief that while some people think
of economies of scale, that concept is not always practical.
2:25:41 PM
MR. ANDREASSEN moved to slides 19 - 33, which show a series of
color-coded Alaska maps. Data from individual maps overlay one
another, providing a visual representation of organized
boroughs, organized cities, and the Unorganized Borough. He
remarked that it is interesting to view these maps in relation
to whether the area is a home rule or second class borough.
Second class boroughs are more likely to contain home rule
cities, which often have more authority than the borough itself.
The maps also provide a visual representation of which organized
local governments participate in or have the following:
- Sales Tax
- Property Tax
- Alaska Marine Highway System (AMHS) Port
- Public Employees Retirement System (PERS)
- Municipal Hospitals
- Petroleum Property Tax
- Fisheries Taxes
- School Contribution
- School Bond Debt
- Power Cost Equalization (PCE)
- Police Powers
2:29:07 PM
SENATOR DUNBAR commented that some local governments are not
part of PERS. He asked whether that meant that some local school
districts are not part of TRS.
MR. ANDREASSEN replied that all school districts are part of
TRS.
2:29:48 PM
MR. ANDREASSEN continued his brief overview of the map series on
slides 27 - 33. He said the point of the geographic maps is to
illustrate who is doing what across the state. It shows that not
all issues affect all local governments, and even when they do,
the impact is not equal. He stated that throughout the
legislative session, AML will provide resources to help
illustrate how specific issues affect local governments, such as
the percentage of tax revenue, exemptions involved, and the
decisions a local government might make in response to State
policy.
2:32:38 PM
MR. ANDREASSEN moved to slide 34, the final subsection of his
presentation, Local Government Challenges & Priorities.
2:32:40 PM
MR. ANDREASSEN moved to slide 35, AML Member Principles:
[Original punctuation provided.]
AML Member Principles
• Support the Alaska Constitution's mandate "to
provide for maximum local self-government."
• Support policies that reduce tax burdens on local
government and reimburse for State-mandated
exemptions.
• Support State revenue-sharing as an investment in
and support for municipal governance.
• Support adequate State funding for basic public
services and infrastructure, such as: education,
public safety, health, emergency services, and
transportation that is necessary for strong and
vibrant communities.
• Oppose unfunded and underfunded State or Federal
legislative and administrative mandates.
• Oppose any efforts to reduce local revenues and
local revenue authorities.
• Oppose State or Federal policies that shift
responsibilities to local governments without a
negotiated agreement that includes adequate and full
annual funding.
2:32:43 PM
MR. ANDREASSEN reviewed where the AML organization derives its
direction. He said it begins with the Constitution, followed by
Title 29, and then from its members, who articulate a list of
principles to guide the organization's response to State budgets
and legislation affecting local governments. He noted that AML
maintains a municipal impact dashboard so that, for every bill
before the legislature, AML can show the extent to which it
impacts local governments. He said AML members vote each year on
principles, priorities, resolutions, and a policy statement. He
said the following slides highlight some of the priorities
raised by local governments participating in the process over
the past few years.
2:33:40 PM
MR. ANDREASSEN moved to slide 36, Municipal Governance.
[Original punctuation provided.]
Municipal Governance
State statutes regarding municipal governance should
reflect the Constitution's intent to maximize local
self-governance, understood to mean strengthening the
capacity and effectiveness of local governments.
Further, decision-making at the local level is most
responsive to Alaskans' interests. To this end, AML:
• Supports increased capacity within and
professionalization of State tax assessment.
• Supports improvements to records retention, public
records access, and public notice.
• Supports issuance of a municipal impact fiscal note
within proposed legislation.
MR. ANDREASSEN said AML is continually developing ways to
strengthen local governments. AML works to provide members with
technical assistance and support, and to adjust policy in ways
that increase member decision-making and local control in
cooperation with DCRA. This includes working closely with tax
assessors, promoting clarity around records retention and
access, ensuring proper public notice, and helping to ensure the
legislature is informed when introducing legislation that may
have a fiscal impact on communities.
2:34:38 PM
MR. ANDREASSEN moved to slide 37, Strengthening Local
Governments. He said that efforts to strengthen local
governments often reference DCRA's best practices portal, which
assesses how some communities are performing. He clarified that
this does not apply to all local governments, but specifically
to those eligible for the Village Safe Water program and similar
State funding. A best practices score of 60 is the threshold:
communities scoring below 60 are not eligible for funding, while
those scoring above are. He noted that over the past decade,
there has been little improvement in helping communities move
above that threshold. Many continue to struggle with governance
and financial documentation. He suggested this stagnation likely
reflects the impact of declining community assistance and other
forms of State revenue support that, in the past, helped improve
these conditions.
2:35:43 PM
MR. ANDREASSEN moved to slide 38, Community Assistance and
Revenue Sharing. He stated that when the program began in 1969,
it recognized that all communities are different and that
Alaska's obligations as a State differ from those of other
states. The State created an avenue to distribute funds to local
governments, but that support has eroded over time.
[Original punctuation provided.]
Community Assistance and Revenue Sharing
Revenue sharing was originally conceived as a way in
which to share state resource wealth with local
government, thereby ensuring that all areas of the
state have basic public services and reasonably
equitable and stable local tax rates. While Alaska has
had a revenue sharing program since 1969, it has had
numerous changes over the years, including in 2017 to
rename the program Community Assistance. Funding has
been inconsistent over the years but is a priority for
Alaska's municipalities. To ensure its continued
inclusion in the budget, AML:
• Supports a baseline floor of $60 million annually,
and encourage a long-term, sustainable solution.
• Supports a method to waive debt, forgive loans, or
otherwise bolster "stressed" communities whose
revenue sharing funds are withheld.
2:36:07 PM
MR. ANDREASSEN moved to slide 39, History of Revenue Sharing:
[Original punctuation provided.]
History of Revenue Sharing
• 1970 State Revenue Sharing Reimburse for
Services
• 1985 Community Revenue Sharing $140M
• 1997 Safe Communities, focus on public
health/safety
• 2003 Community Assistance zeroed out
• 2009 - $180M fund with $60M distribution
• 2016 - $90M fund with $30M distribution
• 2020 Vetoed recapitalization results in
distribution of $20m, or base.
• 2024 Vetoed recapitalization.
2:36:08 PM
MR. ANDREASSEN pointed back to the history of revenue sharing in
1985 when the program distributed $140 million. Adjusted for
inflation, that amount would now exceed $300 million.
MR. ANDREASSEN said the distribution floor to local governments
was $60 million in 2009. He speculated that the best practices
scores probably have something to do with the funding being cut
in half during that period.
MR. ANDREASSEN recalled that when community assistance was
eliminated in the early 2000s, some communities closed their
doors, unincorporated, and never reopened. The result was
increased taxation and other challenges. He said AML knows that
without State support, local governments across Alaska face
serious consequences. [A chart on slide 39 showed the following
Alaska communities at risk:]
Table 2: Alaska Communities at Risk
Communities That Have Discontinued Municipal Operation
Ahkiok, Ambler, Holy Cross, Kiana, Kivalina, Kobuk,
Kupreanof, Kwethluck, Mekoryuk, Nikolai, Noatak,
Platinum, Quinhagak, Russian Mission
Communities with Significant Financial Problems
Allakaket, Buckland, Chevak, Ekwok, Goodnews Bay,
Grayling, Hydaburg, Lower Kalskag, Napaskiak, Numan
Iqua, Pilot Point, Point Hope, St. George, Shageluk,
Shishmaref, Toksook Bay, Upper Kalskag, Wales
Communities at Risk
Akiak, Alakanuk, Anaktuvuk Pass, Angoon, Atquasuk,
Brevig Mission, Chignik, Chuathbaluk, Clark's Point,
Deering, Diomede, Eek, Emmonak, Gambell, Golovin,
Hooper Bay, Kaktovik, Kotlik, Koyuk, Koyukuk, Mountain
Village, Napakiak, New Stuyahok, Nighmute, Nondalton,
Noorvik, Nuiqsut, Nulato, Old Harbor, Pelican, Pilot
Station, Port Heiden, Port Lions, Ruby, St. Michael,
Savoonga, Scammon Bay, Selawik, Shaktoolik, Shungnak,
Stebbins, Tanana, Teller, Tenakee Springs, Togiak,
Wainwright
2:37:02 PM
MR. ANDREASSEN moved to slide 40, PERS/TRS:
[Original punctuation provided.]
PERS/TRS
In recognition of the State's responsibility for the
majority of the unfunded pension and health benefit
liability, in 2008 the State amended its statues
regarding employer contributions to PERS and TRS,
placing a cap on employer contributions at 22 percent
of payroll and TRS contributions at 12.56 percent of
payroll, with the State accepting responsibility for
any costs in excess of this amount (the "on behalf"
payment). For municipalities, many have become
"prisoners of PERS" unable to leave without a costly
termination study and still the unfunded liability to
address. AML:
• Supports amendments to termination studies and
penalties for leaving PERS/TRS.
• Supports the development of a pathway to decrease
overall unfunded liability.
• Opposes any cost shift of the State "on behalf"
payment over 22 percent.
2:37:05 PM
MR. ANDREASSEN stated that only a portion of local governments
participate in the PERS and TRS. AML has long supported
amendments related to termination studies and penalties for
leaving PERS. He noted that some local governments are
"prisoners of PERS," unable to afford participation, yet unable
to exit the system. For local governments with a limited tax
base or those reliant on community assistance, a 22 percent
payroll contribution is unaffordable. This level of obligation
limits their ability to fund services, such as emergency
response or fire departments. He emphasized that PERS
contributions have knock on effects that impact local government
decision making and must be considered carefully.
MR. ANDREASSEN said that a systemic approach to addressing PERS
must meet these goals: meet the needs of employees; support
employers by reducing the 22 and 12.56 percent payroll burden,
most which goes toward net pension liability; and strengthen the
system overall. He noted that the system is only 64 percent
funded, and the majority of contributions from local governments
are being used to pay down that liability.
MR. ANDREASSEN commented that although this issue may fall under
the jurisdiction of another committee, he flagged it due to its
significant implications for local decision making.
2:38:43 PM
MR. ANDREASSEN moved to slide 41, Workforce Recruitment and
Retention. He stated that, just as retirement benefits matter,
wages matter. He said it is increasingly difficult for local
governments, school districts, and others to compete with the
private sector for professional employees. He attributed recent
federal investments as a factor in rising wages, which is
exacerbating the recruitment and retention challenge. As a
result, local governments are facing the same recruitment and
retention struggles as the State.
MR. ANDREASSEN expressed his belief that collaboration is key.
He said AML passed a resolution underscoring the importance of
working together to address workforce recruitment and retention.
The goal is to avoid cannibalizing one another's employees or
competing across levels of government. He said AML and its
members have made it a top priority to support a state that
delivers adequate services and maintains a strong workforce
capable of responding to inquiries, navigating regulatory
matters, and acting as a reliable partner.
2:40:05 PM
MR. ANDREASSEN moved to slide 42, Fiscal Policy. He stated that
much of workforce recruitment and retention depends on fiscal
policy. AML has identified fiscal policy as an area that
significantly impacts local government.
[Original punctuation provided.]
Fiscal Policy
Municipal fiscal health is often a direct reflection
of state fiscal health. If the state reduces its
overall budget or revenue sharing, or shifts costs or
responsibilities to municipalities, local governments
either must draw from savings, raise local taxes, or
become unable to deliver essential public services.
Therefore, it is imperative that the state approach
its fiscal policy with the utmost concern for impacts
to the economy and political subdivisions of the
state. If there is no capital budget, then
infrastructure and economic development suffers.
Reductions in the state's budget cannot come at the
expense of local government, and AML:
• Supports agency and programmatic efficiency and
right-sizing but opposes cost-shifting to
municipalities and eliminating essential services.
• Supports the development of a broad-based tax or
other mechanisms to increase state revenue.
2:40:20 PM
MR. ANDREASSEN moved to slide 43, Mandatory Exemptions:
[Original punctuation provided.]
Mandatory Exemptions
Mandatory exemptions reduce the available tax base of
local governments by as much as 20%. Most importantly,
it is worth recognizing that exemptions benefit the
few at the expense of the many, shifting the tax
burden and increasing costs elsewhere.
The Senior Exemption at right demonstrates magnitude
of impact by jurisdiction, with a value last year of
$100 million that by law is supposed to be reimbursed.
MR. ANDREASSEN stated that part of fiscal policy includes the
State's ability to impose mandatory exemptions, with the senior
exemption being the most significant. He said the current value
of that exemption exceeds $100 million statewide. Because it is
a State-mandated exemption, the financial burden shifts to other
taxpayers within each jurisdiction. He noted that the graph on
slide 43 illustrates not just the total dollar amount, but the
proportion of that amount relative to local revenue. For
example, while the Municipality of Anchorage shows the largest
total dollar exemption, the Kodiak Island Borough experiences a
much higher ratio of lost revenue. He emphasized that this issue
affects communities differently, and it is important to be
mindful of that variation when revisiting or considering future
policy adjustments.
2:41:25 PM
MR. ANDREASSEN moved to slide 44, Public Safety:
[Original punctuation provided.]
Public Safety
Municipal governments play an essential role in
delivering public safety to Alaskans. The majority of
first responders are municipal employees and
volunteers, and municipalities spend more on public
safety than the state. The partnership between the
federal, state and local governments must be strategic
and responsive to threats to public safety, emergency
response and the long-term well-being of Alaskans. AML
encourages the state to:
• Increase officer recruitment and retention.
• Support and strengthen the VPSO program.
• Decrease access to and impacts from opioids.
2:41:28 PM
MR. ANDREASSEN reiterated his earlier point that public safety
functions as a system, and suggested it is a topic the committee
could revisit. While community jails are not explicitly listed
on the slide, he noted they will likely surface in budget
discussions. He emphasized that local governments are absorbing
a significant portion of what might otherwise be State
responsibility through their investments in jails, police
departments, village police officers, and so on.
MR. ANDREASSEN shared an account from a small rural mayor who
spoke at AML's December conference. She described being the
first point of contact when residents are threatened, explaining
that without a state trooper, village police officer, or village
public safety officer, it is her duty to respond. He recalled
her saying she was under 30 years old, approximately five foot
one, and tasked with detaining individuals on behalf of the
State, without support or contribution from the State to address
those needs. He said her story highlights the burden placed on
some local governments and the absence of State support in
certain areas. He added that AML has identified substance abuse,
particularly opioids, as a fairly high concern.
2:43:10 PM
CHAIR MERRICK commented that the intention is to bring the
Department of Public Safety before the committee to discuss some
of the issues just mentioned.
2:43:19 PM
MR. ANDREASSEN moved to slide 45, Economic Development. He said
public safety, education, transportation, public works, and
quality of life are all forms of economic development when
considered in terms of reducing transactional costs for
businesses and families in communities.
[Original punctuation provided.]
Economic Development
Local governments are often at the heart of economic
development in a community, providing an employee base
as well as programmatic and infrastructure
investments. Many municipalities have economic
development arms, as well, which foster economic
activity and support innovation and entrepreneurship.
AML:
• Supports increased investment in diversification and
small business development.
• Supports increased investment in training and
workforce development.
• Supports state responsiveness to local economic
development planning.
2:43:44 PM
MR. ANDREASSEN moved to slide 46, Access to Land:
[Original punctuation provided.]
Access to Land
Municipal Lands
• Entitled by law AS 29.65.010, 020, 030
• Patented - deed secured
• Local government can subdivide, sell, develop
• Approved = no deed but planning can begin
Barriers to development
• Survey costs
• Utilities and access
Municipality Entitlement Patented Approved Ownership
Aleutians East Borough 7,633 451 7,223 5.91%
Municipality of Anchorage 44,893 21,122 3,596 47.05%
City of Anderson 1,182 912 349 77.16%
City of Cordova 235 169 76 71.91%
Denali Borough 49,789 5,212 43,302 10.47%
Fairbanks NorthStarBorough 112,000 97,246 15,697 86.83%
Haines Borough 5,967 2,562 2,424 42.94%
City and Borough of Juneau 19,584 17,190 2,993 87.78%
Kenai Peninsula Borough 155,780 100,429 41,994 64.47%
Ketchikan Gateway Borough 11,593 9,606 2,080 82.86%
Kodiak Island Borough 56,500 21,033 10,426 37.23%
Lake and Peninsula Borough 125,000 1 99,785 0.00%
Mat Su Borough 355,210 271,903 79,722 76.55%
North Slope Borough 89,850 4,489 8,360 5.00%
Northwest Arctic Borough 285,438 45,815 233,850 16.05%
Petersburg 14,666 458 3.12%
Municipality of Skagway 7,977 4,358 3,536 54.63%
City and Borough of Sitka 10,500 7,464 2,526 71.09%
City of Valdez 7,593 6,182 1,492 81.42%
City and BoroughofWrangell 9,006 2,029 7,205 22.53%
City and BoroughofYakutat 21,500 366 22,298 1.70%
MR. ANDREASSEN stated that part of economic development is
access to land. He noted that the State still has a long way to
go in transferring land to local governments, with survey costs
being the primary impediment. If those costs could be addressed,
and the transfer of State lands came with investments in
utilities and access, the result would be meaningful land
availability and economic development. He added that both
elements would also help address the housing crisis faced by
many communities.
2:44:24 PM
MR. ANDREASSEN moved to slides 47 and 48, Education, State and
Local Funding. He stated that beyond making the required local
contribution, the primary intersection between local governments
and school districts is school facility ownership. Approximately
75 percent of all schools in Alaska are owned or maintained by
local governments. He explained that the main program available
to assist with school construction and major maintenance is
significantly underfunded. In some cases, it may not be worth
submitting an application when only about 14 percent of awards
are expected to be funded each year.
MR. ANDREASSEN emphasized that school construction and major
maintenance remain a high priority. He pointed out that while
the dollar amount of local contributions is important, what is
more significant is the proportion of that contribution relative
to a local government's overall budget. For example, in places
such as the Lake and Peninsula Borough, Denali Borough, and
Ketchikan Gateway Borough, more than 50 percent of their total
budgets are directed toward public education.
2:45:39 PM
CHAIR MERRICK sought confirmation that those items have not been
included in the Governor's budget.
MR. ANDREASSEN replied, right.
2:45:47 PM
MR. ANDREASSEN moved to slide 49, Coastal Resilience:
[Original punctuation provided.]
Coastal Resilience
Alaska's port and harbors represent critical
transportation links and economic drivers for the
state, as well as public safety assets. The state
transferred ownership of the majority of these
facilities to municipalities, who have assumed the
operational costs but for whom the maintenance and
improvements are challenging. At the same time,
Alaska's coastal communities are dependent on an
active and well-managed commercial fishery. AML:
• Supports appropriately funded DF&G and increased
investment in fisheries research and outreach.
• Supports continued investment in port and harbor
infrastructure.
• Supports an active role in federal fisheries
management, and clean water, as well as
transboundary negotiations.
2:46:12 PM
MR. ANDREASSEN moved to slide 50, Energy. He stated that it is
encouraging to see the attention the legislature and governor
have placed on energy. He emphasized that local governments are
willing partners in advancing energy projects that reduce energy
costs. He cautioned that actions such as adding exemptions or
preempting local control do not reflect a partnership. He
underscored the need to avoid placing additional burdens on
communities, even when pursuing well-intentioned goals related
to energy, food security, or otherwise.
[Original punctuation provided.]
Energy
The high costs of heat and power in most of Alaska
presents a burdensome transactional cost to doing
business or providing public services. While Power
Cost Equalization (PCE) is a reliable effort to
stabilize and bring down costs for residents, there
remains an incredible challenge to increase affordable
energy in Alaska. Most local governments have
identified the cost of energy as a primary detrimental
influence affecting quality of life and economic
expansion within their communities. AML:
• Supports vetting of and investing in energy
projects, processes and programs that decrease
energy costs
2:46:41 PM
MR. ANDREASSEN moved to slide 51, Transportation. He said
transportation, and water and wastewater fall under core public
works and utility responsibilities managed by local governments.
[Original punctuation provided.]
Transportation
Alaska's transportation infrastructure is pivotal to
the state's economy and facilitates access to markets,
supplies, and most of all, resources. Improving and
investing in Alaska's air, marine, and ground
transportation system will enhance the global
competitiveness of Alaska business and economic
opportunities for its people. Alaska needs new
transportation infrastructure development to provide
access to resources, reduce barriers for communities
to participate in the economy, allow for safe and
efficient transportation for all Alaskans, and to
dramatically improve Alaskan's quality of life
statewide. It is equally important to ensure the
maintenance of our existing infrastructure. AML:
• Supports the establishment of an Alaska
Transportation Fund that can be used to match or
supplement federal funding and invest in multimodal
transportation infrastructure.
2:46:42 PM
MR. ANDREASSEN moved to slide 52, Water and Wastewater:
[Original punctuation provided.]
Water and Wastewater
The delivery of water, wastewater and sanitation are
the responsibility of many municipalities, and while
improvements have been made in much of the state, more
than 30 rural communities have no centralized water or
wastewater systems. These are essential functions of
local government and are supplemented by state
investment and efforts. AML:
• Supports increased State investment in maintenance
and infrastructure upgrades.
2:46:52 PM
MR. ANDREASSEN moved to slide 53, Alaska Municipal League's
Role. He closed by describing AML's role. He noted that AML's
members guide its mission and articles of incorporation, which
outline the range of responsibilities dedicated to supporting
and strengthening local government. He emphasized that AML takes
this role seriously, not only advocating for the interests of
local governments but also considering how State and other
decision-making affects Alaska residents.
[Original punctuation provided.]
Alaska Municipal League's Role
The purpose of the Alaska Municipal League is to:
• Safeguard the interests, rights, and privileges of
Alaskan municipalities as they may be affected by
Federal and State governmental actions.
• Secure cooperation among municipalities of the State
in a thorough study of local problems and in the
application of efficient methods of local
government.
• Provide means whereby municipal officials may
interchange ideas, experiences, and obtain expert
advice.
The objectives of the Alaska Municipal League are to:
• Perpetuate and develop the League as an agency for
the cooperation of municipalities in the state of
Alaska for the practical study of municipal affairs.
• Promote application of the best methods in all
branches of municipal service by holding at least
one conference annually for the discussion of
problems of administration.
• Gather and circulate information and experience
concerning the most approved methods of municipal
administration.
• Secure general and municipal legislation at the
state and federal levels which will be beneficial to
the municipalities and inhabitants thereof, and to
oppose legislation injurious thereto.
• Engage in the study and preparation of uniform
ordinances, resolutions, and practices; and to do
any and all other things necessary and proper for
the benefit of the municipalities of Alaska.
• Develop appropriate membership services and programs
that strengthen Alaskan local governments' ability
to govern their own affairs and improve.
2:47:31 PM
CHAIR MERRICK thanked the presenter and stated that she looks
forward to working with him over the course of the session.
2:47:38 PM
There being no further business to come before the committee,
Chair Merrick adjourned the Senate Community and Regional
Affairs Standing Committee meeting at 2:47 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Alaska Municipal League Presentation SCRA 1.28.25.pdf |
SCRA 1/28/2025 1:30:00 PM |
Alaska Municipal League Presentation |
| DCRA Presentation SCRA 1.28.25.pdf |
SCRA 1/28/2025 1:30:00 PM |
Division of Community & Regional Affairs Presentation |