HOUSE BILL NO. 431                                                                                                            
                                                                                                                                
     An Act relating to the municipal dividend program; and                                                                     
     providing for an effective date.                                                                                           
                                                                                                                                
ADAM BERG, STAFF,  REPRESENTATIVE MOSES, spoke  in support of                                                                   
HB 431,  which will  establish the  municipal dividend  fund.                                                                   
The bill proposes  to give every incorporated  municipality a                                                                   
set  amount of  money based  on  population.   It would  also                                                                   
empower  local officials  by allowing  them  to decide  where                                                                   
that money  would be best  spent in their local  communities.                                                                   
The  amount  would  be  $250   dollars  per  person  to  each                                                                   
municipality and would  pay a dividend to the  boroughs.  The                                                                   
formula is determined by the total  population of the borough                                                                   
minus   the    total   population    of   the    incorporated                                                                   
municipalities within that borough.   The appropriation would                                                                   
come from  the Earnings Reserve  Account after  dividends and                                                                   
inflation  proofing had  been accounted  for.   In the  event                                                                   
that  there is  not enough  money remaining  in the  Earnings                                                                   
Reserve Account,  municipal dividends  would be reduced  on a                                                                   
prorated basis.                                                                                                                 
                                                                                                                                
Mr. Berg  referenced the "2004  - Survey of Municipal  Fiscal                                                                   
Conditions" provided  by the Alaska Municipal  League.  (Copy                                                                   
on File).                                                                                                                       
                                                                                                                                
JON   BOLLING,    (TESTIFIED   VIA   TELECONFERENCE),    CITY                                                                   
ADMINISTRATOR,  CITY OF  CRAIG,  testified in  support of  HB                                                                   
431.  He identified the hardships  that the loss of municipal                                                                   
assistance  and  revenue  sharing  has  caused  many  of  the                                                                   
communities in Alaska.  He urged  the adoption of a mechanism                                                                   
that will provide annual funding.                                                                                               
                                                                                                                                
KEVIN RITCHIE, ALASKA MUNICIPAL  LEAGUE, JUNEAU, testified in                                                                   
support of the legislation.  He  stressed that municipalities                                                                   
across the State  are suffering from financial  loss and that                                                                   
bill  proposes  a  municipal   dividend.    The  public  does                                                                   
understand  the  concept,  as   it  essentially  would  be  a                                                                   
permanent fund dividend for communities,  resulting in leaner                                                                   
State government as municipalities  take on more issues.  The                                                                   
cost would  be approximately  $157 million  dollars.   If the                                                                   
previous revenue  sharing programs  had been maintained,  the                                                                   
cost would have been well over $200 million.                                                                                    
                                                                                                                                
Representative  Stoltze questioned  if unorganized  areas had                                                                   
been included  in  the concept.   Mr. Ritchie  did not  think                                                                   
unorganized communities were included.                                                                                          
                                                                                                                                
Representative   Joule   questioned  how   many   unorganized                                                                   
communities  would be left  out.  Mr.  Ritchie did  not know.                                                                   
Mr.  Berg  interjected  that   there  are  between  70  &  80                                                                   
unincorporated  communities  excluded.    In  response  to  a                                                                   
question by Representative  Croft, Mr. Berg  noted that under                                                                   
the  previous   program,   unincorporated  communities   each                                                                   
received $10 thousand dollars.                                                                                                  
                                                                                                                                
Co-Chair  Williams  stated  that  HB  431 would  be  HELD  in                                                                   
Committee for further consideration.                                                                                            
#                                                                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:51 P.M.