Legislature(1999 - 2000)
02/24/2000 03:37 PM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE STATE AFFAIRS COMMITTEE February 24, 2000 3:37 p.m. MEMBERS PRESENT Senator Jerry Ward, Chairman Senator Lyda Green Senator Randy Phillips Senator Kim Elton MEMBERS ABSENT Senator Gary Wilken COMMITTEE CALENDAR CS FOR HOUSE BILL NO. 133(FIN)(efd fld) "An Act relating to municipal service areas and providing for voter approval of the formation, alteration, or abolishment of certain service areas." -MOVED SCS FOR CS FOR CSHB 133 (STA) OUT OF COMMITTEE Legislative confirmation hearing for Andrea Jacobson of Ketchikan to Alaska Public Offices Commission (APOC) -SCHEDULED BUT NOT HEARD SENATE BILL NO. 262 "An Act relating to motor vehicle license plates for disabled persons." -HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION CSHB 133 (FIN)(efd fld) - No previous Senate action SB 262 - No previous Senate action WITNESS REGISTER Representative Con Bunde Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of CSHB 133 (FIN)(efd fld). Mr. Chuck Hosack Deputy Director Division of Motor Vehicles Department of Administration 3300 B Fairbanks Anchorage, AK 99503 POSITION STATEMENT: Opposes SB 262. Mr. Scott Sell P.O. Box 111949 Anchorage, AK 99511 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. Brook Chandler P.O. Box 263 Girdwood, AK 99587 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. Randy Clendaniel North Pole Road Commissioner 3045 Taxi Lane B North Pole, AK 99705 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. Mike Prax Fairbanks North Star Borough Assembly 1015 Meadow Rue North Pole, AK 99705 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. Mike Craft 1391 Pickering Drive Fairbanks, AK 99709 POSITION STATEMENT: Mr. Ladd McBride Chairman Cripple Creek Road service area P.O. Box 83567 Fairbanks, AK 99708 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. Larry Soden P.O. Box 61328 Fairbanks, AK 99706 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. Tim Biggane P.O. Box 53274 North Pole, AK 99705 POSITION STATEMENT: Opposes SCS CSHB 133 (FIN)(efd fld). Ms. Nadine Hargesheimer Fairbanks North Star Borough Mayors Office P.O. Box 71267 Fairbanks, AK 99707 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Ms. Nancy Webb Fairbanks North Star Borough Assembly 469 Panorama Drive Fairbanks, AK 99712 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. Jack Brown Kenai Borough Assembly P.O. Box 7073 Nikiski, AK 99635 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. Daniel Gregory P.O. Box 8508 Nikiski, AK 99635 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. Preston Williams General Delivery Kenai, AK 99611 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mayor John Williams City of Kenai 210 Fidalgo Street, Suite 200 Kenai, AK 99611 POSITION STATEMENT: Supports CSHB 133 (FIN)(efd fld). Mr. William Green Deputy Municipal Attorney Municipality of Anchorage Anchorage, AK 99501 POSITION STATEMENT: Opposes CSHB 133 (FIN)(efd fld). Ms. Loretta Brown Chief of Staff, Senator Ward Alaska State Capitol Juneau, AK 99801 POSITION STATEMENT: Presented SB 262. ACTION NARRATIVE TAPE 00-03, SIDE A Number 001 CHAIRMAN WARD called the Senate State Affairs Committee to order at 3:37 p.m. Present were Senators Green, Phillips, Elton, and Ward. The first order of business to come before the committee was CSHB 133 (FIN)(efd fld). CSHB 133 (FIN)(efd fld)-VOTER APPROVAL OF SERVICE AREA CHANGES REPRESENTATIVE BUNDE, sponsor of CSHB 133 (FIN)(efd fld), explained there are people in Alaska who want smaller government, more efficient government, less expensive government, more local control, and value privatization. CSHB 133 (FIN)(efd fld) states that service areas that will be absorbed or combined with another service area require a majority vote from both entities. Some larger entities might try to takeover a smaller entity, and the service area being absorbed doesn't have a vote in the process. This will have a serious impact on road service areas that are paid for by the public who want an increase in service. The public willingly taxes itself so it can have increased service. They hire private contractors, they get better service and quicker response because they go through a private contractor. Another portion of CSHB 133 (FIN)(efd fld) addresses more efficiency in government. Fairbanks would like to consolidate its service areas to achieve administrative savings. CSHB 133 (FIN)(efd fld) will allow Fairbanks to consolidate service areas and allow its residents to tax themselves at differential rates. He gave some different examples of service areas around the Fairbanks area. Number 372 MR. RANDY CLENDANIEL, North Pole Road Commissioner, stated since 1982 the total raised has been close to 1.25 mills. There is a new subdivision going in on the south side, different materials have been used in that subdivision. Both service areas should be using the same type of materials. The new service area should have additional mill rate to offset the cost for a period of time. REPRESENTATIVE BUNDE asked if he was in support of CSHB 133 (FIN)(efd fld). MR. CLENDANIEL replied yes. SENATOR PHILLIPS asked if 1.25 mills was for operating and maintenance costs, or for capital and maintenance. MR. CLENDANIEL stated the 1.25 mills was used for capital and maintenance. MR. MIKE PRAX, Fairbanks North Star Borough Assembly, stated it supports CSHB 133 (FIN)(efd fld). CSHB 133 (FIN)(efd fld) gives citizens the right to their own destiny. If a service area is compelled to accept another service area without the ability to vote, its recourse is to object to the Assembly. People are willing to pay for a service if they can see they will receive the service they pay for. Some State areas are so large that maintenance takes twice as long than in service areas. CSHB 133 (FIN)(efd fld) protects existing service areas, gives the service areas the ability to set differential rates within a service area and maintains fairness. Number 726 MR. MIKE CRAFT, developer in Fairbanks, asked why property owners who are levied a tax rate don't have the ability to vote on service areas. The Borough has a problem with road power issues that no one wants to confront. The Borough could assist service areas in the acquisition of rights of way. There are places in Fairbanks where the road rights of way were not wide enough, or grades were not good. Service areas and developers can't do anything about those situations because of the right of way issues. Smaller service areas are paying a much higher rate to the Borough for administrative fees relative to the budget. When combining service areas, tax rates are uneven, so all service areas don't share the same financial burden. SENATOR PHILLIPS stated most of those issues need to be settled at local government levels. Senator Phillips gave statistics on Chugiak and Eagle River community councils. Senator Phillips told Mr. Craft he could use the Chugiak/Eagle River Road Board as a model. MR. LADD MCBRIDE, Chairman of Cripple Creek Road service area, stated he does support CSHB 133 (FIN)(efd fld). Larger service areas don't always mean cheaper costs. It may mean keeping a separate set of accounting books. People need to know if the contractors hired will be able to handle the amount of work given to them. MS. NANCY WEBB, Fairbanks North Star Borough Assembly, stated CSHB 133 (FIN)(efd fld) is a good idea. Consolidation would help Fairbanks work out difficulties. Passing CSHB 133 (FIN)(efd fld) and a revenue sharing component for a gas tax increase (CSHB 59) would provide tools for the assemblies to encourage constituents to work together and have larger service areas. Service areas are the closest Fairbanks has to community councils. SENATOR PHILLIPS stated people in his area are willing to tax themselves because they see the service. Senator Phillips offered to talk with Ms. Webb at a later time about those issues. Number 1226 MR. WILLIAM GREEN, Deputy Municipal Attorney for the Municipality of Anchorage, stated CSHB 133 (FIN)(efd fld) adversely affects the Municipality of Anchorage as a home rule municipality. In 1998 this same type of bill was before the legislature SB 208 and CSHB 365. The Anchorage municipal assembly passed a resolution strongly opposing both bills. CSHB 133 (FIN)(efd fld) is a mandatory imposition of restrictions on local home rule powers. Fairbanks is a second class borough and has restrictions that the Municipality of Anchorage does not. CSHB 133 (FIN)(efd fld) reduces the constitutional purpose of maximizing local self government. If the voters in the Municipality of Anchorage wish to change the system, they have the power to do that. SENATOR PHILLIPS asked if the Municipality of Anchorage voted on SB 208 and CSHB 365 in 1998. MR. GREEN replied yes. SENATOR PHILLIPS stated the Chugiak/Eagle River assembly members voted "no" on the resolution. The greater part of Anchorage is mandating what Chugiak and Eagle River can do. Chugiak and Eagle River assemblies are requesting self determination. REPRESENTATIVE BUNDE said this is going to be an area where reasonable people disagree. CSHB 133 (FIN)(efd fld) does limit the power of assemblies and gives the power to the people who are being taxed, the concept of limiting these powers is not new. It is already in statute under home rule limitations. SENATOR ELTON asked what happens to police protection if CSHB 133 (FIN)(efd fld) passes. MR. GREEN stated if CSHB 133 (FIN)(efd fld) passes nothing would happen to police protection, it is now a single service area. REPRESENTATIVE BUNDE said that was correct. SENATOR ELTON asked if there were new powers being given to service areas. REPRESENTATIVE BUNDE said there are no new powers being given. SENATOR PHILLIPS stated Chugiak and Eagle Rivers fear that the greater part of Anchorage is mandating certain services. Chugiak and Eagle River need self determination. SENATOR ELTON asked if this battle needs to be fought between the voters and the borough, instead of the State stepping in. SENATOR PHILLIPS said the State is just being the referee, because Chugiak and Eagle River only represent 15 percent of the population. Number 1610 MR. SCOTT SELL, Board Supervisor for Birchtree/Elmore Limited Road Service Area and Vice President of Rabbit Creek Community Council, stated they support CSHB 133 (FIN)(efd fld). In Anchorage, some assembly members want to get rid of limited road service areas, and charge those people a higher tax for less service. MR. PRESTON WILLIAMS stated he supports CSHB 133 (FIN)(efd fld). But stated objection to Section 3 of CSHB 133 (FIN)(efd fld) pertaining to fire service protection areas. Mr. Williams is a board member of a fire service area. At one time there were five service areas, the assembly voted to create one large service area, with one appointed board without a vote from the public. Fire departments have been neglected, there are many fire departments within service areas that are located in boroughs. CHAIRMAN WARD said he has a proposed amendment that will address that issue. MR. BROOK CHANDLER, Chairman of Girdwood Board of Supervisors, said Girdwood is a service area for road maintenance, fire protection services, and for parks and recreation services. Girdwood supports CSHB 133 (FIN)(efd fld) as a community. CSHB 133 (FIN)(efd fld) allows a greater degree of protection from Anchorage to decide who maintains roads. Girdwood enjoys the degree of independence it has as a service area, and the discretion it has to request amounts to be included in the Girdwood budget to give the level of services it wants to have. People thought that if Girdwood was unified with Anchorage, Girdwood would never be required to accept services from outside the community without Girdwood's consent by way of vote. Mr. Chandler also wanted the last sentence in Section 3 of CSHB 133 (FIN)(efd fld) deleted. MR. LARRY SODEN, Road Commissioner for Edanella Heights service area, stated support for CSHB 133 (FIN)(efd fld). His service area was to merge with another service area. The other service area didn't want to merge with the Edanella Heights service area because the roads in Edanella were unpaved. The people are very happy with the level of service provided, they tax themselves approximately one mill. The tax paid is enough to cover costs of services. Giving road service areas the maximum flexibility to decide about their futures will be a step forward. Number 2024 MR. DANIEL GREGORY, Nikiski Fire Department, supports CSHB 133 (FIN)(efd fld) but opposes the last sentence in Section 3. Fire departments that lie within service areas need the same protection as those that are not in service areas. MR. TIM BIGGANE, Fire Chief of Fairbanks North Star Borough, was in support of CSHB 133 (FIN)(efd fld) until the Senate amendment was proposed. MS. NADINE HARGESHEIMER, Fairbanks North Star Borough Mayor's Office, said the Borough supports CSHB 133 (FIN)(efd fld) along with the exemption of fire service areas. Deleting the last sentence within Section 3 would be problematic for the Fairbanks North Star Borough. Number 2199 MR. JACK BROWN, Kenai Borough Assembly Member, said within the district there are five service areas that all support CSHB 133 (FIN)(efd fld). CSHB 133 (FIN)(efd fld) allows people to have the level of service they want. CSHB 133 (FIN)(efd fld) allows people to support consolidation if they choose. Mr. Brown stated support for the proposed amendment. REPRESENTATIVE BUNDE, the sponsor of CSHB 133 (FIN)(efd fld), stated that the police protection issue has been addressed. The Municipality of Anchorage opposes CSHB 133 (FIN)(efd fld) because, from its perspective, it believes local assemblies should determine decisions by ordinance. Most people testifying believe if the local governments are going to tax people for service, those people should have a vote. REPRESENTATIVE BUNDE said CSHB 133 (FIN)(efd fld) strengthens a statute that describes a voting mechanism. If a local assembly wants to abolish a service area, it will require a majority vote of those people within the service area. If a local assembly wants to alter the boundaries it requires a vote of the people affected, and the majority surrounding the area. If a local assembly wants to combine a service area it requires a majority vote from both entities involved. He acknowledge that people in Fairbanks expressed concern about the fire service issue. TAPE 00-03, SIDE B Number 2343 REPRESENTATIVE BUNDE continued. Road service has high operational and maintenance costs but fire service is a matter of serving two or three more homes, so it will not have the local tax impact that will be caused by absorbing 20 miles of road. Nikiski and Fairbanks have different views than his district. Nikiski needs a vote before fire service areas can be changed. CHAIRMAN WARD asked if the Anchorage Assembly or Anchorage Caucus had a position on CSHB 133 (FIN)(efd fld). REPRESENTATIVE BUNDE said not to his knowledge. SENATOR PHILLIPS moved to adopt Amendment number 1, that would delete the last sentence in Section 3 of CSHB 133 (FIN)(efd fld). Without objection, Amendment number 1 was adopted. Number 2230 MAYOR JOHN WILLIAMS, City of Kenai, replied the State is always looking for better ways for local government to handle its own concerns. Mayor Williams said he is uncertain about the amendment and how it will effect Kenai. SENATOR PHILLIPS moved SCS for CS for HB 133 (STA) out with individual recommendations. SENATOR ELTON objected. The motion carried with Senators Phillips, Green, and Ward voting "Yea," and Senator Elton voting "Nay." SB 262-DISABLED PLATES FOR LEASED VEHICLES Number 2085 MS. LORETTA BROWN, aide to the Senate State Affairs Committee, presented SB 262 for the sponsor, Senator Ward. At this time leased vehicles are considered owned by a commercial entity. Aplicants for handicap and/or disabled veterans plates are exempted from paying both the registration fees and taxes; therefore the free plates may not be used in conjunction with a commercially owned vehicle. SB 262 adds the words "or leased" and "owned or leased" to Section 1 of AS 28.10.181 (d) and to Section 2 of AS 28.10.421 (d)(3). Adding this language will allow handicapped and/or disabled veterans to place their license plates on a leased personal vehicle. In DMV's analysis, the fiscal note claims 5500 vehicles are registered to disabled persons throughout the State. 20 percent of new vehicles are leased, so 20 percent of those were applied to the disabled population. Ms. Brown said she disagrees with that calculation, but explained that is how the fiscal note was written. CHAIRMAN WARD stated when he spoke with a disabled person who leased a vehicle, he was under the assumption that he had ownership in the vehicle. CHAIRMAN WARD said the fiscal note was of great concern to him. Number 1891 MR. CHUCK HOSACK, Deputy Director of Division of Motor Vehicles, replied under Alaska statute, responsibility for paying registration fees and taxes is placed on the owner of the vehicle. Leased vehicles are owned by a commercial company that makes a profit through letting others use its vehicles. The owner pays commercial fees like for any other vehicle; rental cars, taxis, etc. A commercial vehicle is often overlooked when people lease a vehicle and use it for personal use. The person leasing the vehicle has no ownership rights or interest in the vehicle. The vehicle is registered in the name of the leasing company. The State does not place any requirements on that person to pay fees, and the State does not charge that person any fees or taxes. In a lease all costs are negotiated just like a sale. It is normal practice in a lease agreement to let the lessee pay the registration fees for the leasing company. This is a contract arrangement between the company and the lessee. SB 262 is directing Division of Motor Vehicles (DMV) to eliminate a fee that is not charged to the individual. SB 262 exempts the leasing company from paying the registration fees, and this creates an inequity in fees between the company and other commercial vehicles. DMV opposes SB 262. If the disabled individuals want the handicapped license plates on the vehicle for parking privilege, there is a handicapped parking permit available at no charge. In the fiscal note Mr. Hosack did not list operating costs, since the vehicles are listed through the State in another form. If SB 262 passed there would be added complexities to the registration system. The vehicles would have to be identified separately from all other commercial vehicles. There will be a revenue loss if these companies are exempted from paying the higher fees. The number of leased vehicle leaving the showroom floor is growing, however the fiscal note was calculated with a conservative amount. CHAIRMAN WARD stated people forget the handicapped tag that hangs from the mirror. Could disabled plates be put on a leased vehicle they will own? Is there no ownership with the lessee and a leased vehicle? MR. HOSACK stated during the lease they have no ownership in the vehicle, that comes after the lease term is up and then the option to buy comes into play. SENATOR GREEN said the ability to turn the vehicle back unilaterally is what distinguishes the vehicle from being purchased. SENATOR ELTON stated if you lease a vehicle it is not your asset, as opposed to a purchased vehicle becoming your asset. CHAIRMAN WARD asked how that works with a leased vehicle. SENATOR ELTON stated it comes into play at the end of the lease agreement. SENATOR GREEN asked if there is a different level of liability for persons leasing a vehicle from persons buying a vehicle. MR. HOSACK stated the handicapped tag placed on the mirror can be recognized in any state within the U.S. SENATOR ELTON asked if the tag could be taped to the windshield. MR. HOSACK said just as long as the tag is displayed in the windshield, taping may solve some of the problems. SENATOR PHILLIPS suggested that a bulletin be sent to car dealers throughout the State asking them to explain the leasing agreement more clearly so people will not get confused about ownership. Number 1328 MR. HOSACK stated that DMV contributes to the dealer association quarterly newsletter this is one way of putting the bulletin out. CHAIRMAN WARD announced the bill would be held in committee. The meeting was adjourned a 4:50 p.m.