Legislature(2023 - 2024)SENATE FINANCE 532
03/01/2023 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska's Municipalities - Post Covid Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 1, 2023
9:00 a.m.
9:00:31 AM
CALL TO ORDER
Senator Bishop called the Senate Finance Committee meeting
to order at 9:00 a.m.
MEMBERS PRESENT
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
ALSO PRESENT
Nils Andreassen, Executive Director, Alaska Municipal
League; Senator Cathy Giessel.
SUMMARY
PRESENTATION: ALASKA'S MUNICIPALITIES - POST COVID UPDATE
Senator Bishop discussed the agenda.
^PRESENTATION: ALASKA'S MUNICIPALITIES - POST COVID UPDATE
9:01:08 AM
NILS ANDREASSEN, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL
LEAGUE, introduced himself. He referenced a conversation he
had with a school principal the previous day regarding the
lack of housing and childcare. He pondered that most
communities were trying to determine how to meet the needs
of residents that positively contributed to the future. He
did not people to be in a position to have to go elsewhere
because of the lack of housing and childcare. He thought
the work in front of the government was to address the
issues and work together to make for a positive future.
9:03:07 AM
Mr. Andreasen discussed a presentation entitled
"Strengthening Local Governments" (copy on file). He looked
at slide 2, "Looking back," which showed a graphical
timeline. He relayed that he had been in his position for
five years, which had been eventful. He mentioned a court
case in his first year that had opened up the opportunity
for remote sales tax. [In 2018, the United States Supreme
Court ruled in South Dakota v. Wayfair that states can
mandate that businesses without a physical presence in a
state with more than 200 transactions or $100,000 in-state
sales collect and remit sales taxes on transactions in the
state.]
Mr. Andreassen continued that in 2018 AML worked with
others to establish the Alaska Remote Seller Sales Tax
Commission (ARSSTC). In 2019, local governments had
considered a proposed budget from the governor that cost-
shifted almost $1 billion back to communities. He mentioned
the Covid-19 pandemic in 2019, and the Coronavirus Aid,
Relief, and Economic Security (CARES) Act. The governor and
legislature had distributed $586 million to local
governments to make communities whole. He noted that local
governments were still reporting on and following
guidelines for the funds.
Mr. Andreassen cited that in 2021 the American Rescue Plan
Act (ARPA) was initiated, which had resulted in $1 billion
going to local governments around the state to continue to
respond to the economic effects of the pandemic. He noted
that AML had been supporting efforts in compliance with
reporting to the United States Treasury. He identified the
passage of Infrastructure Investment and Jobs Act (IIJA) in
2022. He explained that AML and partners had stood up the
ability to provide technical assistance to communities. He
thought the communities had to some extent gone through
economic recovery, and with the passage of IIJA were more
focused on the infrastructure deficit. He noted that two
years previously AML had identified the deficit to be about
$30 billion for local governments.
9:06:21 AM
Mr. Andreassen spoke to slide 3, "Remote Sales Tax
Implementation," which showed a bar graph depicting the
growth of the sales tax collected over the previous three
years. He mentioned ARSSTC and thought there had been a
substantial improvement since the start of the program. He
cited that 46 out of 106 communities participated. He
continued that AML provided the services to the ARSSTC to
collect the sales taxes on the communities behalf.
Mr. Andreassen noted that over $2 million had come in in
the previous month. He expected that more than $20 million
would come into communities over the year. He thought the
amount sounded like a lot and reminded that it was only a
portion of the over $240 million that was collected for
sales tax for local governments and the over $2.5 billion
that local governments collected for a variety of taxes and
other revenue streams. He thought the remote sales tax had
been important and had a replacement value during the
pandemic when sales taxes had declined. He noted that the
remote sales tax varied, constituting a 5 percent increase
for larger communities and as much as a 20 percent
increase.
Mr. Andreassen thought the remote sales tax was important
for many communities and would continue to grow. He cited
that other communities did not want to participate because
of not wanting to see additional tax on residents. He
considered the tax as leveling the playing field for
businesses in the community. He expected to see improvement
in the program.
9:09:36 AM
Co-Chair Stedman asked what the remote tax was.
Mr. Andreassen explained that he was discussing the remote
sales tax collection that was possible after the
consideration of the Wayfair case, in which the U.S.
Supreme court ruled and opened the opportunity of a remote
sales tax. The slide showed monthly collection for the 46
communities that participated in the program.
Co-Chair Stedman asked if the tax was on internet sales, or
other sales.
Mr. Andreassen explained that the tax was for mostly online
sales but could be for any sale in the community in which
the seller was not physically present. He noted that there
had been three key features in the Wayfair case that
allowed for the remote tax collection: streamlined, single-
level, and statewide. He explained that Alaska was unique
in the nation in not having a state tax but allowing
communities to tax. There was a single platform for sellers
to remit taxes, which was managed by AML. He continued that
AML remitted the taxes back to the participating
jurisdictions. He discussed the streamlined aspects of the
system.
9:11:57 AM
Senator Wilson asked if the ring fencing situation had
improved. He used the example of Palmer and Wasilla. He
thought some people that should not have been taxed were
being taxed.
Mr. Andreassen replied, to some extent. He noted that the
AML and ARSSTC provided all sellers with GIS-coded
jurisdictional boundaries that they were used. When sellers
used what was provided, there was appropriate ring fencing.
When the sellers used their own system and zipcode, it
could be problematic. He thought most of the issues had
been worked through for most communities. He noted that
ARSSTC had developed processes for refunding where
inappropriate taxation had occurred.
Mr. Andreassen referenced slide 4, "Federal Funding
Coordination," which showed the logos of organizations that
AML had partnered with in forming an Alaska infrastructure
coordinating committee in light of ARPA and IIJA. The
committee hosted the website akfederalfunding.org, which
was a clearinghouse for non-profits, businesses, tribal
governments, local governments, or anyone to find current
grant opportunities, compliance and reporting information,
and guidance on resources for infrastructure funding. There
was a tracking system for funds that had been identified
broadly for the state but not for distributed funds that
had come into the state upon award. He continued that
ultimately AML worked with partners to ensure maximized
benefit of federal benefits to Alaskan communities. He
highlighted that the group met every other week to discuss
barriers, opportunities, challenges, and ways to work
together to get information out to eligible recipients of
the funds.
Senator Bishop asked about the density of information that
was getting out to communities from the centralized
information website.
Mr. Andreassen thought there was still work to be done. He
noted that the website was originally designed to respond
to ARPA, and the group had really good density using the
website as a one-stop shop. He relayed that the group was
still going through ARPA compliance with the U.S.
Department of Treasury, with annual reports due in April.
The group would be reaching out to all communities to make
sure reports were in. He thought the two infrastructure
symposiums that the group had helped to cohost the previous
year had helped with the information density. He noted that
there were about 2,000 people that had signed up for weekly
email updates. He thought the second of the five years
would require being more intentional, particularly with
more disadvantaged communities and those that had not had
the resources to participate effectively in the program.
9:16:01 AM
Mr. Andreassen turned to slide 5, "Back to Baseline":
FY23
• Full funding of Community Assistance, including
recapitalization of the Community Assistance Fund.
• Full funding of School Bond Debt Reimbursement and
Harbor Debt Reimbursement.
• Back payments of Community Assistance and School
Bond Debt Reimbursement, which will allow for deferred
maintenance, avoided property tax increases, and
general support
• $3M increase to Community Jails, which helps with
continued services by these municipalities
• Harbor Matching Grants a great partnership between
the State and local governments.
• Funding for school construction and major
maintenance
FY23 a corrective for underfunded years
• Placed communities on firm footing for recovery
• Address deferred maintenance, workforce, capital
needs
• Enable consideration of matching funds for
infrastructure bill
"AML welcomes an FY23 budget that offsets the fiscal
constraint that Alaska has had to endure these last
few years, leverages federal funding for a robust
capital budget, saves for the future, and provides
relief to Alaskans. The UGF spending, on average over
these last four years, is below budgets from before
Alaska's fiscal crisis, as is total spending."
Mr. Andreassen thanked the committee and the legislature
for full funding for the Community Assistance Program,
including recapitalization. He mentioned school debt
reimbursement and harbor funding. The chart on the slide
was from the Legislative Finance Division (LFD) and showed
that there were ups and downs each year. He thought the
previous year was corrective for many years of
underfunding, and he hoped for improvements to ensure the
items were funded.
Mr. Andreassen considered slide 6, "Cross-Cutting Impacts"
which showed a pie chart depicting projects affected by
supply chain issues, and a line graph depicting annual
components of Alaska population change. He commented that
rather than the infrastructure funds being a windfall, the
state was addressing a long-term infrastructure deficit. He
thought it was true that inflation was cutting into the
ability to make the most of the benefit. He cited getting
weekly emails regarding increased costs for projects. He
mentioned supply chain issues, which impacted project
deployment, specifically for public transport, water and
wastewater and other basic infrastructure investments. He
mentioned the state's population and demographics, and how
outmigration was affecting education and the workforce.
Senator Bishop mentioned low birth rates.
9:19:40 AM
Mr. Andreassen displayed slide 7, "Economic Development,"
and mentioned challenges to communities. He mentioned the
importance of housing and childcare in the efforts of
maintaining a workforce. He informed that AML hosted a
housing taskforce, which had been looking at a variety of
things including data collection. The group had drafted
recommendations for potential local, state, and federal
actions, which he would touch on in a later slide. He
commented on lack of housing as a barrier to economic
development and wanted to ensure AML was at the forefront
of trying to address the matter. He continued that the same
was true for childcare and appreciated the work of the
Alaska Chamber of Commerce and United States Chamber of
Commerce had done in evaluating the impact of the
childcare desert in Alaska. He referenced $175 million
lost to the states economy because of the lack of
affordable childcare. He discussed impacts on families, and
summarized that housing and childcare were two significant
priorities for AML members.
Co-Chair Stedman discussed AML and the statewide municipal
processes. He asked if there was a discrepancy in municipal
codes.
Mr. Andreassen shared that AML was building a database to
track who was utilizing the powers for zoning and various
codes. He identified the goal of a comprehensive data set
to work to address with the legislature and others. He
noted that AML had not gotten to the level of detail of
codes, but was working on identifying which communities had
codes in place that were having an impact. He commented on
the incredible variety between communities. He shared that
AML was working with the Alaska Housing Finance Corporation
(AHFC) to list a suite of best practices for code
development to share with municipalities.
9:23:21 AM
Mr. Andreassen highlighted slide 8, "Land Use, Subdivision
Code, Economic Development," and noted that AML members had
been polled about experiences with housing including
rentals, sales, and affordability. An overwhelming majority
had identified with the topics as challenges. He continued
that AML was looking at whether current statute gave local
governments all the tools needed to address land use,
subdivision, access, development, and broader economic
development. He acknowledged differences between home-rule
governments and first/second class cities and boroughs. He
listed important topics for communities, such as blighted
properties, accessory apartments, density and rezoning, and
short-term rentals. A team of local government municipal
officials were exploring the subject further.
Co-Chair Stedman shared concerns related to University and
Alaska Mental Health Trust Authority (AMHTA) lands and
subdivisions. He thought there were added local
requirements for subdivisions that added costs. He
mentioned the transition of long-term rentals to short-term
rentals, which displaced Alaskans and created challenges
for incoming workers and made it difficult to hire and
retain employees. He identified Sitka, and local zoning and
planning issues.
9:26:57 AM
Senator Wilson wondered if AML was helping local
municipalities with property development impediments. He
wondered if AML was helping municipalities break away from
traditional models to help the housing situation. He
mentioned subdividing properties.
Mr. Andreassen thought that the Housing Task Force hoped to
address the ability for local governments to share
information. He relayed that AML had paid particular
attention to short-term rental issues, and mentioned
software partners and heat maps for multiple jurisdictions.
He thought most local governments did not have codes
developed to provide guidance and respond to short term
rental activity. He noted that AML was providing a
consultant to communities to advise on what was happening
nationally. He mentioned state versus local requirements in
reference to subdivisions in utilities and access. He
described that there was a period when the state changed
how it approached allowing local governments to require
utilities and access within a subdivision. He described
lowering of property values over time and disruption within
residences.
9:30:24 AM
Mr. Andreassen looked at slide 9, "State Action - Housing,"
and noted that the Housing Task Force had identified some
items for consideration. He noted that he would address
land conveyance at a later time. He thought maybe there
needed to be a different approach and available funds to
support local governments to address access and utilities.
He cited that most other states had a state special
committee on housing, and thought it was something that
could be recommended to the legislature. He mentioned AHFC
and ensuring it had all available tools to help address
housing shortages and affordability. He shared that AML was
happy to participate in further conversations to discuss
how the Housing Task Force had arrived at its
recommendations.
Senator Bishop handed the gavel to Co-Chair Stedman.
Mr. Andreassen addressed slide 10, "Economic Development,"
and discussed land conveyances. He thought there had been a
bill proposed by the governor to get Alaska lands into
Alaska hands. He thought there should be incentive for
economic development. The slide showed a table with some of
the larger communities with entitlement lands. He thought
there was still a significant gap in entitled lands and
what had been approved. The difference between patented and
approved lands was one of ownership. He cited survey costs
as a barrier.
Co-Chair Stedman asked if the chart showed acres.
Mr. Andreassen thought the table used acres. He offered to
come back with additional information.
Co-Chair Stedman referenced Mr. Andreassen's comment about
survey costs and thought sometimes surveys were redundant.
He mentioned a state land entitlement in Petersburg, the
perimeters of which had been surveyed by the United States
Forest Service. He thought going through the process could
identify some items for clarification.
9:34:12 AM
Senator Kiehl asked if there was a backlog or delay in
selection for land entitlements.
Mr. Andreassen relayed that all the information did not fit
on the slide. He offered to provide the additional
information at a later time. He identified that there was
still some issues with selection, and there were additional
layers of approval that were not demonstrated on the slide.
Mr. Andreassen addressed Co-Chair Stedman's point, and
explained that almost all of the land had been surveyed
originally. He thought that local governments were required
to survey prior to approval, which was duplicative. He
acknowledged that surveys were incredibly expensive and
were adding to the barrier of the lands being developed.
Co-Chair Stedman pondered that if there was a survey good
enough to transfer the lands to the state, the same survey
would be good enough to transfer the lands to the
community.
Co-Chair Stedman handed the gavel to Senator Bishop.
Mr. Andreassen advanced to slide 11, "Workforce Recruitment
and Retention," which showed three graphs with data sets
relating to Public Employees' Retirement System (PERS)
employees and rates of pay for state and local government
workers compared with private industry. The graph on the
upper right looked at the reduction in Alaska public sector
workers since 2012. An additional graph considered active
PERS and Teachers Retirement System (TRS) employees since
FY 11, that found roughly 2,000 public sector employees
reduced over the period. He reminded that the reduction
also impacted birth rates and lower contribution rates to
retirement programs.
Mr. Andreassen referenced an Institute of Social and
Economic Research (ISER) study reflected in the chart on
the right, which indicated that generally Alaska kept pace
in the public sector versus private sector. For most cases
for most types of employees, the public sectors benefits
matched up with the private sectors ability to compensate
except in two areas. He looked at the number of vacancies
experienced by local governments, which averaged 15 percent
to as much as 50 percent in the areas of management and
professional services. The two areas of local government
employment did not compete with the public sector for
compensation or benefits.
9:38:13 AM
Co-Chair Stedman asked if Mr. Andreassen could provide more
information on employee retention issues in the state. He
thought the state was struggling with employee retention
throughout the state and in schools, as well as competing
with private enterprise.
Mr. Andreassen agreed to follow up with additional
information.
Mr. Andreassen looked at slide 12, "Pension System
Considerations":
• Update to 2008 floor: move forward / rolling average
• Termination studies for State and by employee (+
evaluate vacancy rates)
22% a cap not a floor - $10 million for 1% (non-
State employers) - Increase additional state
contribution
• Retiree hiring ability without accrued liability
• Exit strategy for small or stressed employers
• Five-year audit of terminated employer net pension
liability
• Adjust high interest rate (11-15%) on past due
payments
• Locked in net pension liability option, ability to
pay down, and exit date
Mr. Andreassen summarized that any changes to the PERS
system should address system, employer, and employee needs.
He mentioned that actuaries were looking at a four-year
time horizon for catching up the pension system, and cited
that two years previously the 2008 floor was costing non-
state employers more than $1.5 million. He thought it
seemed like the system should be responsive enough to a
rolling average to reduce the employer burden. He discussed
termination studies, which he thought made much more sense
for all employers and could be tracked by employees. He
thought it was important to think about how vacancy rates
impacted projections. He cited that AML members had passed
a resolution the previous year that encouraged the
legislature to consider the 22 percent as a cap but not a
floor.
Mr. Andreassen considered that for every $10 million, the
state could buy down the 22 percent by one percent for non-
state employers. He specified that the calculation was
based on the chart at the bottom of the slide, which
reflected the ARM Board having a choice to put $60 million
into the health plan, with 2.5 percent added to the overall
actuarial rate. The board had recommended zero percent. He
calculated that if one took out the states 64 percent of
payroll, it was possible to buy down 3 percent and make the
contribution 19 percent for non-state employers. He
reminded that the state had the ability to do so currently
and mentioned the state having its own rate after passing
SB 55 [legislation passed in 2021 that removed the 22
percent cap on payroll contributions to PERS]. He mentioned
an additional state contribution.
9:42:19 AM
Mr. Andreassen continued to address slide 12 and shared
concerns about the ability of employers to hire retirees
without carrying accrued liability, as well as other
challenges. He relayed that AML had advocated for many
years for an exit strategy for small or stressed employers.
He mentioned that of the total number of employers, 77
employers made up 1 percent of the overall annual payroll.
The employers were generally those that requested
termination studies, were delinquent on payments, had
arrearages, and could not afford to get out of the system.
Mr. Andreassen addressed the last three bullets on slide
12. He mentioned a high interest rate on past due payments.
He reiterated the challenge for employers to exit the
system. He noted the original date of 2030 for paying down
pension liability, which had been extended to 2039. He
cited that just for one jurisdiction, the nine-year change
resulted in a cost of $25 million extra, even while it
reduced the states obligation by $300 million. As long as
there was a net pension liability, there would be
additional contributions borne by all employers.
9:45:11 AM
Co-Chair Stedman thought there were many issues to address
on slide 12. He referenced ongoing discussions regarding
the 22 percent funding cap for municipalities. He thought
if the state could move its unfunded liability down, it
would be possible to move the cap down to 20 percent or
lower and provide relief for communities. He thought it
would be nice to set a goal to work on over the following
few years.
Co-Chair Stedman discussed termination studies and thought
without the studies, the outmigration would cause immense
liability for the state. He referenced payments for the
defined benefit plans extending throughout the century.
Senator Bishop acknowledged that there was a lot of
information on the slide. He thought it was a good overview
of defined benefits.
9:47:56 AM
Mr. Andreassen showed slide 13, "Defined Benefit," and
commented that AML members were divided on the question and
expressed concern about additional risk that led to net
pension liability. He shared thoughts that if the liability
was specific to an employer group, there should be an opt-
in at the employer level. He thought it would be important
for employers to have an ability to ring fence the
liability. He knew the committee had discussed how the
defined benefit measured up against defined contribution
plans. He cited a yearly AML salary survey that indicated
that of 64 PERS-employer respondents, 42 had Social
Security or the Supplemental Benefits System (SBS) and 35
had an additional deferred compensation program.
Co-Chair Stedman noted that there were some groups around
the state that were in state defined contribution systems
but were not in Social Security nor the state's SBS (which
was put in place of Social Security. He opined that the
employees were left at a disadvantage without the
additional benefit. He thought the situation was an unfair
position for employees, and suggested that AML query local
governments as to why there was not participation in one or
the other additional systems.
Mr. Andreassen offered that AML could work to gain
understanding the scale of the issue could be identified to
get a better sense of what was offered.
9:51:24 AM
Mr. Andreassen referenced slide 14, "Fiscal Policy,"
Mandatory Exemptions
• Reimbursement according to statute, or -
• AARP (national) "Property tax relief should be
equitable, cost-effective, and targeted to homeowners
with low and moderate incomes burdened by their
property tax bill."
Presumption Trust
• Unfunded State-level workers comp presumptions
• $4.6 million in claims since 2011, premiums for
which did not include or account for later
presumptions.
• Provide State reimbursement fund
Mr. Andreassen discussed mandatory exemptions and noted
that the property tax relief had been increasing. He cited
that Petersburg recently doubled the number of
participants, which cost an estimated tax collection of
about $500,000. He noted that the graph on the right showed
how the exemption affected communities differently. The
total exemptions were in blue, with Anchorage as the
highest. The moving orange line denoted the ratio to
revenues. He mentioned an increased number of worker's
compensation presumptions. He thought since premiums were
not collected for the employees prior to the presumption,
there were not enough assets to address the claims. He
suggested a presumption trust put forward by the state
would support the employees.
Mr. Andreassen turned to slide 15, "Fiscal Policy
Community Assistance," and commented that AML continued to
see an erosion of purchasing power of the Community
Assistance Program (CAP). He calculated an inflation-
adjusted change of 984 percent difference from today and 30
years ago. He identified that when CAP went away for a few
years, there were sales tax increases and extreme
challenges. He noted that the funding was not re-
capitalized in the currently proposed budget, and AML
advocated for recapitalization. He cited that it was also
true that the fund did not accrue a return on investments
and was capped at $90 million.
Mr. Andreassen argued that CAP was a good way to support
local governments, and if it were not recapitalized in the
current year or the following year, it would reduce the
funding to $20 million going out in FY 25. He thought it
was important to know that some communities were affected
to a greater degree than others.
9:57:02 AM
Co-Chair Stedman thought the committee had been supportive
of CAP, and had fought hard for it over the years. He
anticipated the topic would come back to the table.
Mr. Andreassen appreciated Co-Chair Stedman's comments and
the fact that the committee and others had worked to help
communities.
Mr. Andreassen considered slide 16, "Education":
• Increase the BSA and adjust for inflation
• Evaluate statewide required local contribution
• Replace school bond debt reimbursement program
• Implement base allocation for school construction
and major maintenance
• Support ability for districts to reduce number of
schools without penalty
Mr. Andreassen noted that AML had a resolution supporting
an increase to the Base Student Allocation (BSA), and the
resolution included reference to inflation. He considered
the required local contribution, which was inflation
proofed. He explained that the contribution increased as
property values increased, and local governments were
making up 4 percent more of total education funding than in
previous years, while the states contribution had been
flat. He cited more competition within the school
construction and major maintenance programs. He mentioned
projects in urban districts and greater urban/rural, and
Regional Educational Attendance Area (REAA) conflict.
10:00:14 AM
Senator Bishop referenced major maintenance, deferred
maintenance, and the capital list for new schools. He
supported more education funding, whether inside or outside
the BSA. He mentioned schools in his district that were
only able to fund maintenance workers for five hours per
day, and questioned how major maintenance would not become
further deferred. He mentioned the need to take care of
educational assets, which could not be done within the BSA.
Co-Chair Stedman thought the committee had been a staunch
supporter of school bond debt reimbursement, even when
vetoed by the administration. He mentioned major
maintenance, which the committee had funded substantially
the previous year before it was reduced by $70 million. He
recognized the challenge with keeping up with the major
maintenance funding. He asserted that the committee had
avidly supported school bond debt reimbursement and
maintaining the states schools.
Senator Wilson asked what AML's proposed number was for the
BSA. He thought the slide indicated that it was a little
over $600, which was different than other proposed numbers.
Mr. Andreassen relayed that AML did not have a proposed
number for the BSA, and the graph on the slide demonstrated
the change in required local contribution. He shared that
15 percent of school district funds were going towards to
maintenance and operations, 15 percent of the BSA was $894.
He expressed that he was looking for solutions to help
address deferred maintenance and maintenance issues.
Senator Wilson asked if AML would be more supportive of a
group to rewrite the formula. He thought some would say the
educational formula was more complicated than the state's
oil and gas tax system.
Mr. Andreassen relayed that AML did not have a position on
the matter. He agreed that the formula was complicated. He
thought the issues were symptomatic of a formula and system
that needed to be better addressed.
10:04:14 AM
Senator Kiehl thought the formula roughly funded each
school based on its costs and thought the flip side was
that closing a school resulted in a loss of the funded cost
and did not offer great savings. He questioned how to fund
schools at its rough cost but get a windfall after closing
a school. He thought there was a mathematical difficulty.
Mr. Andreassen commented that he had hoped he would not be
asked the question, but offered to get back to the
committee with further information. He knew that
communities had had looked at repurposing schools for
different purposes, perhaps with public benefit.
Senator Bishop commented that there had been schools in
rural districts that had closed and later reopened when
more people moved back to the community.
Mr. Andreassen displayed slide 17, "Transportation," and
explained that AML had been working on infrastructure
recently, and specifically transportation. He summarized
that AML was focused on federal infrastructure funding, but
there were matters that needed to be addressed between
local governments and the state regarding transportation.
He mentioned looking at efficiencies and more effective
systems for deploying funds for transportation needs,
including leveraging local assets to reduce budget
estimates. He continued that AML wanted to avoid, at a
local level, state requirements that added ownership or
maintenance when funding was available. He thought there
should be negotiated processes that resulted in savings for
all parties.
Mr. Andreassen continued that state indirect rates on
public transit pass-through dollars remained an issue that
many communities were challenged by. He mentioned that
communities doing transportation projects had seen the need
for higher contingency, which had increased budgets
overall. He mentioned the Municipal Harbor Matching Grants,
which he thought was a great partnership. He discussed work
on regional planning and mentioned two and a half
metropolitan planning organizations, and the potential for
regional transportation planning organizations (RTPOs). He
thought it would require a change in statute to allow for
RTPOs, and mentioned an RTPO light that AML and the
Department of Transportation and Public Facilities were
pursuing.
Senator Wilson asked if AML had considered creating a port
authority since most communities were reliant on one port
and one municipality.
Mr. Andreassen relayed that AML had considered best
practices in relation to port authorities, and had also
discussed the need for an Alaska port strategy with the
maritime administration. He shared that he would love to
see a more cohesive understanding of how ports intersected
and how ports would develop in the future.
10:08:35 AM
Mr. Andreassen highlighted slide 18, "Energy":
1. Renewable Energy Fund
Ensure adequately funded for community-level
projects
2. PCE
• Reimburse municipal investments that bring down
cost below PCE subsidy threshold
3. Bulk Fuel Loan
• Increasing cap and lowering rates
4. Grid Resilience
• State funding from IIJA to support local
utilities
Mr. Andreassen thanked the legislature for looking at ways
to reduce the costs of energy in many communities,
including recent changes to the Power Cost Equalization
(PCE) Fund. He noted that AML had a resolution in support
of increasing funding in the Community Energy Fund to make
funds available for community -level projects. He mentioned
bond debt that was not reimbursable below the PCE subsidy
threshold. He mentioned the current bulk fuel loan cap of
$750,00 and quantified that the same purchase two years
prior would now need $1 million.
Senator Bishop noted that the Senate was working on the
issue of energy as well, and was glad to see that the
governor had put together a working group.
10:11:13 AM
Mr. Andreassen looked at slide 19, "Strengthening Local
Governments," showed a screenshot of the states 'Operations
and Maintenance Best Practice Dashboard, which reflected
some of the smaller communities that could be considered
rural or disadvantaged. He wanted to see communities
improve overall in terms of best practices, and he did not
think the dashboard reflected the improvement everyone
hoped for. He did not think there had been a real
difference in best practices scores in the last decade,
which he thought was concerning. He wanted better
partnerships with AML, the state, and communities in order
to improve conditions of governance and fiduciary
responsibilities. He mentioned the test scores that related
to water and wastewater improvements and state funding, and
thought the information spoke broadly to the communities
that were struggling even before the pandemic and also
after. He relayed that working to improve the condition of
communities and the ability to meet state standards was a
priority of AML.
Senator Wilson thought that with $2 billion in IIJA funds
to address the issue, the slide might not reflect the best
metrics to continue to use as the funds were disbursed.
Senator Bishop thought the slide was a reflection of the
193 communities. He represented communities that had
wastewater and water treatment plants that had been built
pre-oil and were in as good of condition as when first
built. He pondered systems being built that were not
requested and were over-built.
10:14:27 AM
Mr. Andreassen addressed slide 20, "AML Pulling
Together":
• Increasing collaboration with State agencies:
• Agreement in place to facilitate greater
intergovernmental cooperation and benefits
• DOT&PF planning support implementation of
regional planning organizations
• Investment into direct support for strengthening
governance and financials
• Build out model of providing shared services
for communities
• More attention to revenue collection and compliance
with local codes and law
• Sales tax code updates and management, short
term rentals, etc.
• Proactive support for funding needs of
disadvantaged communities
• Bundled applications for heavy equipment,
public safety capital needs
• Grant writing and technical assistance
• Shared procurement of services for project
management, quality improvements
• Health insurance, retirement, investment,
unemployment, leadership development, liquidity
analysis, federal compliance, etc.
Mr. Andreassen mentioned AMLs work on the ARSSTC. He
mentioned a memorandum of agreement with DOT to work on
transportation issues and support local government
engagement, which he thought was a model for all state
agencies. He relayed that AML wanted to see communities
that were successful in revenue collection and compliance.
He asserted that AML was a different kind of partner than
it was five years previously and could support the state in
meeting the needs of communities.
Senator Bishop thanked Mr. Andreassen and AML for working
to connect communities and keep from leaving grant funds on
the table.
Senator Bishop discussed the agenda for the following day.
ADJOURNMENT
10:18:03 AM
The meeting was adjourned at 10:18 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 030123 SenFin - Local Government Priorities.pdf |
SFIN 3/1/2023 9:00:00 AM |