SB 136 APPROP: FY 96 CAPITAL PROJECTS BUDGET  Number 310 SENATOR TORGERSON brought SB 136 before the committee as the next order of business and stated it was his intention to only take testimony on sections relating to the Capital Matching Grants Program. He then invited Jack Fargnoli to the table to respond to questions regarding the program that were directed to the Office of Management & Budget in a memo dated March 23, 1995. JACK FARGNOLI, Senior Policy Analyst, Office of Management & Budget, said the program has been existence since 1993. Essentially, there are two programs: one addresses municipalities in the Department of Administration and the other addresses unincorporated communities in the Department of Community & Regional Affairs. They are referred to collectively as the Matching Grant Program, but there are two separate funds, one in each department to which money is appropriated. From OMB's perspective, the program is running well. The few main concerns they've had from municipalities and unincorporated communities they've been able to address, and the feedback has been mainly positive with little on the negative side. Speaking to the equity issue, OMB believes that the program is functioning as it was intended to function. The two groups of grantees in the two programs are treated differently from other. The municipalities have a much more elaborate set of criteria and a set of factors that influence the distribution of money. The unincorporated communities basically divide up whatever amount of money is funded to the program. For the municipalities, all grantees in both programs are subject to a maximum percentage match of 30 percent. For the unincorporated communities, it is a flat 5 percent. So for the municipalities there is some shifting, by policy in the legislation, that shifts more money to smaller municipalities and provides less of a burden in terms of the match required for them. The larger and more wealthy the municipality is the higher their match tends to be. Mr. Fargnoli said OMB is not aware of any equity concerns or problems. Number 400 Mr. Fargnoli said there has been a question of a policy call nature before them and before the legislature the last couple of years which involves unincorporated communities lying within boroughs. Under the current legislation those entities are not grantees. The unincorporated community program that's in place only addresses those located in the unorganized borough. The rationale for treating them this way is not to establish any inequity between unincorporated communities lying within and without of boroughs so much as to not supplant the capital project planning authority that is set out through a constitutional basis for boroughs. OMB feels that the boroughs are the proper planning authority for capital project planning, so they are "happy" with the program the way it stands now. Further, Mr. Fargnoli said part of the operational problem or difficulty they would have in making amendments to change the program in this regard is the definitional problem of trying to identify unincorporated communities located within a borough. Number 431 Addressing the future of the program, Mr. Fargnoli stated the new administration is finding its own level of comfort with the program. It has been communicated to him that the program will go forward and the Governor's capital budget is proposing to fund the program at the same $20 million level as it has been funded in the past. Number 437 SENATOR R. PHILLIPS recalled that a 10 percent administrative cost for doing a project had been added to the statute, and he asked Mr. Fargnoli how that was working out. JACK FARGNOLI said he is not aware of there being any problem with the provision. Number 445 SENATOR KELLY questioned 1993 population figures being used for a program that is going into effect in 1996. He said he thought the Anchorage figure was considerably higher than what was shown on the chart. JACK FARGNOLI responded that it was a footnote mistake on the chart and should read July 1, 1994. The numbers in the model are taken each year and certified by the commissioner of the Department of Community & Regional Affairs. That has been done again for this year so those are the correct figures. SENATOR KELLY commented that he would have staff check with the municipality on those figures for the Anchorage area. Number 511 SENATOR TORGERSON stated public testimony would be taken on SB 136. TOM ARMOUR, Administrator, City of Pelican, voiced his strong support for the Capital Matching Grants Program, encouraged its continuation, and stated its works particularly well for the smaller communities like Pelican. Number 549 SENATOR KELLY informed the committee he had received the updated population figures from the Municipality of Anchorage, and the unofficial figure for 1994 is 250,006. The state will come out with the official 1994 figures in September. Number 561 SCOTT STERLING, a member of the Mat-Su Borough Assembly, stated the Capital Matching Grants Program works well for the Mat-Su Borough. He noted they are the fastest growing municipality in the State of Alaska and have more road miles to take care of and the program helps them in that way. Number 583 WALT WREDE, Manager of the Lake & Peninsula Borough, stated the borough likes the program and agrees with it in principle, but they have an equity issue. The borough has 17 villages, five of them are incorporated and twelve of them are not. They feel there is an equity issue in that regard because part of those villages are not guaranteed the $25,000 that unincorporated villages receive. TAPE 95-10, SIDE B Number 001 As an example, Mr. Wrede pointed out that in this year's Governor's budget the Lake & Peninsula Borough would receive $44,000 for 12 communities. He noted that they tried to rectify this inequity last year with legislation, but it failed to pass the legislature. However, it is their intent to have legislation reintroduced again this session. Number 020 AL RIOG, a resident of Kenny Lake testifying via the teleconference network, stated his support for the Capital Matching Grants Program and encouraged its continued funding. Number 566 There being no further witnesses to testify on SB 136, SENATOR TORGERSON asked for the will of the committee. SENATOR ZHAROFF moved that SB 136 be passed out of committee with individual recommendations. Hearing no objection, it was so ordered.