HOUSE BILL NO. 35 "An Act extending the termination date of the Alaska regional economic assistance program; and providing for an effective date." Representative Austerman provided members with a sponsor statement. He observed that the Alaska Regional Development Organizations program was created in statute in 1988. Commonly referred to as ARDOR's, they are private, nonprofit corporations formed by local initiative to promote private sector economic development within their designated regions. The ARDOR program has led to the formation of 11 regional development organizations such as the Southwest Alaska 9 Municipal Conference, the Southeast Conference, the Lower Kuskokwim Economic Development Council and the Anchorage Economic Development Corporation. He maintained that the nearly two hundred representatives of local political, social and economic interests, who serve on ARDOR boards of directors, are working together to lead their regions to greater economic self-sufficiency. The original legislation had a sunset clause that ended the program in 1993, but was extended until the end of fiscal year 1997. He stated that it is in the best interest of the State of Alaska to continue the ARDOR program to ensure the ongoing economic viability of Alaska's various regions. Representative Austerman provided members with the Alaska Regional Development Organizations' Annual Report, March 1996 (copy on file). He noted that the last page shows funding sources generated by program. State funding was a little more than $600 thousand dollars in FY 97. The addition of private funds resulted in a total budget of $6,585 million dollars in FY 97. PAUL FUHS, ALASKA ARDOR ASSOCIATION spoke in behalf of HB 35. He pointed to the ARDOR program as an example of a successful private/public partnership. He emphasized the importance of local implementation and coordination of projects. He observed that state funding comes through Alaska Industrial Development and Export Authority (AIDEA) program receipts. The Governor has proposed $620 thousand dollars for the ARDOR program in FY 98. He observed that a local match is required. Representative Martin expressed his opposition to HB 35. He questioned what the ARDOR's do that cannot be done by local Chambers of Commerce and Rotary Clubs. Mr. Fuhs emphasized that ARDOR's provide a private/public cooperative effort to look for infrastructure on a regional level. He gave examples of ARDOR programs. He maintained that Chambers of Commerce would not provide coordinated services. He stated that the Alaska ARDOR Association would welcome a legislative audit. MARY STADUM, EXECUTIVE DIRECTOR, SOUTHWEST ALASKA MUNICIPAL CONFERENCE testified via the teleconference network in support of HB 35. She observed that the Conference was founded before the ARDOR program was established. She reviewed services provided by the Conference. She stressed that ARDOR's bring local Chambers of Commerce together with other organizations. (Tape Change, HFC 97-32, Side 1) 10 Ms. Stadum emphasized that ARDOR's allow people to work together and share resources. She noted that leaders in small communities wear many hats. She noted that the Conference passed two resolutions in expressing support for the ARDOR program. ALICE RUBY, COUNCIL MEMBER, CITY OF DILLINGHAM testified via the teleconference network in support of HB 35. She maintained that the program has allowed them to work on a grass roots level to provide information, networking, technical assistance and to serve as a catalyst for economic development and diversification. She gave examples of ARDOR activities. DONNA TOLLMAN, EXECUTIVE DIRECTOR, COPPER VALLEY ECONOMIC DEVELOPMENT COUNCIL, GLENNALLEN testified via the teleconference network. She urged support of HB 35. She observed the affects of reductions to the ARDOR program. She stressed that the Council, through a contract for welfare to work programs, helps to develop self efficiency plans for residents. The Council also helps small businesses to create development plans. She noted that the Council is involved in tourism and child care. Representative Martin maintained that activities performed by the Council should be done by government. Ms. Tollman emphasized the distance of the region from the Palmer office. In response to a question by Co-Chair Hanley, Ms. Tollman noted that the Council received its contract for the welfare to work program through the Department of Community and Regional Affairs. JAMES ELSON, CHAIRMAN, KENAI PENINSULA BOROUGH ECONOMIC DEVELOPMENT DISTRICT, KENAI testified via the teleconference network. He spoke in support of HB 35. He observed that he has served as a volunteer of the local ARDOR organization. He stressed that state funding has allowed them to obtain good professional staff. He pointed out that ARDOR's also receive private funding. He stressed that jobs have been created through economic development efforts. He recounted accomplishments of the Kenai Peninsula Borough Economic Development District. SHERRY BIGGS, KENAI PENINSULA BOROUGH ECONOMIC DEVELOPMENT DISTRICT, KENAI testified via the teleconference network in support of HB 35. She emphasized that Kenai has a very diversified economy. She stressed that there needs to be a regional approach. She maintained that ARDOR provides a bridge between government and private enterprise. 11 Mr. Elson observed that ARDOR's can contract directly with the State without going through the competitive bid process. JAMES WINCHESTER, EXECUTIVE DIRECTOR, PRINCE WILLIAM SOUND ECONOMIC DEVELOPMENT COUNCIL, testified via the teleconference network in support of HB 35. He maintained that the Council is about providing jobs. The Council has three main areas of activities, small business development, infrastructure development projects, and economic recovery projects. The Council has a $3.0 million dollar budget and 2 and half full time staff positions. PATRICIA DEMARCO, PRESIDENT, ANCHORAGE ECONOMIC DEVELOPMENT CORPORATION testified via the teleconference network in support of HB 35. She emphasized the importance of the ARDOR program as an integrating force across the State. She stressed efforts to provide year-round jobs. She noted that planning functions are not easily funded by private sector initiatives. She reviewed ARDOR projects implemented by the Anchorage Economic Development Corporation. IKE WAITS, ARDOR PROGRAM, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS observed that the program is a way to stretch state funds for regional economic development. He spoke in support of the ARDOR Program. BERNE MILLER, EXECUTIVE DIRECTOR, SOUTHEAST CONFERENCE testified in support of HB 35. He provided members with written testimony (copy on file). He stressed that the program relies on local and regional decision making about what is important. In response to a question by Co-Chair Hanley, Mr. Miller acknowledged that the Conference existed before it received state ARDOR funding. The Southeast Conference's total FY 97 budget is approximately $225 thousand dollars. Representative Kohring expressed concern with the State's participation. Mr. Miller stated that the Conference helps show organizations how to execute projects as quickly and economically as possible. Co-Chair Hanley clarified that ARDOR's are non-profit groups. Individual regional organizations administer the program. Co-Chair Hanley acknowledged the benefit of the ARDOR program. He pointed out that many of the regional organizations would continue to exist without state funding. 12 He emphasized that funding may be reduced. He clarified that each ARDOR receives $55.0 thousand dollars. He asked why all ARDOR's receive the same funding. Mr. Fuhs noted that the original appropriation to the ARDOR program was $1.6 million dollars. The Governor's FY 98 request is $620 thousand dollars. He maintained that equal funding is the most fair. The required local match varies based on capability. Representative Martin pointed out that $55.0 thousand dollars pays for one position per ARDOR. He spoke against continuing the program. Mr. Fuhs observed that private business does not want to be over regulated. He added that government working with business for economic development "makes all the difference in the world." Representative Foster MOVED to report HB 35 out of Committee with individual recommendations and with the accompanying fiscal note. Representative Martin OBJECTED. He stated that the ARDOR program should undergo an audit to determine if all eleven ARDOR's should be funded. A roll call vote was taken on the MOTION. IN FAVOR: Davies, Davis, Foster, Grussendorf, Kohring, Mulder, Therriault, Hanley OPPOSED: Martin Representative Kelly was absent from the vote. The MOTION PASSED (9-1). HB 35 was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Community and Regional Affairs, dated 2/5/97.