SB 29 STATE AID TO MUNICIPALITIES & UNORG. BOR.  CHAIRMAN MACKIE called the Senate Community & Regional Affairs Committee meeting to order at 1:32 p.m. He noted all committee members were present with the exception of Senator Donley who was unable to return to Juneau from Anchorage due to inclement weather. He then brought SB 29 before the committee as the only order of business. SENATOR TORGERSON , prime sponsor of SB 29, thanked the chairman for scheduling the hearing on the bill, which, he said, coincided with meetings being held in the capital city by the Alaska Municipal League Board of Directors and the Council of Mayors. Senator Torgerson said SB 29 is practically identical to SB 20, which passed both bodies in 1996 but failed to come up for a concurrence vote on its return from the House to the Senate, with the exception of omitting nonprofit entities being recognized corporations of the state of Alaska. He also noted there was a proposed amendment which would add the word "safe" before the word "communities" throughout the bill. Senator Togerson outlined the following elements of SB 29: - It renames the Municipal Assistance fund to Priority Revenue Sharing for Municipal Services. - It requires money received from the Communities Fund be spent on police protection, fire protection and emergency services, water and sewer services not offset by user fees, solid waste management, and other services deemed to be of the highest priority. - It requires municipalities to list on the notice to taxpayers the amount received from the Communities Fund. - It removes the hold harmless provision from the base amount and allows it to be proportionately reduced in the event of future reductions in appropriations. He pointed out the hold harmless provision was the amount that was set aside in 1978 for the 30 percent Business License Tax withheld, and that particular amount of money has not be prorated since 1979. - It raises the minimum entitlement to smaller communities to $40,000. It changes the date of payment so that communities receive entitlements from both Priority Revenue Sharing and the Communities Fund on July 31. Senator Torgerson related that moving the date forward on municipal assistance payments from February 1, to July 31 has been discussed extensively with the Department of Revenue, and the department says there might be as much as $1 million in investment money lost if that date is moved forward. He suggested the committee may want to reduce that time limit backwards from the February date. Number 100 SENATOR PHILLIPS pointed out SB 29 has a Finance Committee referral, and he suggested the date of payment question should be addressed in that committee. Number 120 CHAIRMAN MACKIE invited the representatives of the Alaska Municipal League and the Council of Mayors to join the committee at the table. ROSEMARY HAGEVIG , a member of the City of Borough of Juneau Assembly serving on the Alaska Municipal League Board of Directors, said the safe communities bill targets funds for public safety and health services, and AML believes it will go a long way towards making neighborhoods safer. She noted that in the past 10 years municipal assistance and revenue sharing have seen a 70 percent decrease in funds transmitted from the Legislature back to local communities, and in the last two years 15 percent of those funds have been reduced. She added the bill has received a wide range of support throughout the state. Number 190 GEORGE WUERCH , a member of the Municipality of Anchorage Assembly serving on the Alaska Municipal League Board of Directors, said there are four principal elements to SB 29 that AML has highlighted, and it is their belief that it takes all four of these elements to keep the bill in its present consensus form. AML believes the first concept of the term "safe communities" conveys one of the commitments to Alaska that the majority of the 10th Legislature has identified when it speaks to safe neighborhoods. He said the listed priorities in the bill are essential for building a safe community. One very important element of the bill is that it is not to be construed that a local authority would have to meet every requirement. The second concept is the minimum entitlement to communities being increased to $40,000, and AML views it is essential that there be some sense of commitment to continued fair funding to prevent the development or continuation of dissolutions of local governments. This will mean the larger communities will have to give up a piece of their pie to make that $40,000 minimum. Number 250 JEROME SELBY , Mayor of the Kodiak Island Borough, speaking to the remaining two principal elements to SB 29, said removal of the hold harmless clause will ensure that all communities are treated equally. Mayor Selby said advancement of the payment date to July 31 will allow communities to invest some of the money and earn interest on it, which will help offset what they are taking in terms of a cash reduction from the actual appropriation. Also, the advancement of the payment date is important to the really small communities that have no other funding source and need that money to pay their monthly bills. Mayor Selby urged not prorating the $40,000 down and to stabilize the funding for the program. Number 291 SENATOR PHILLIPS inquired how many communities are in the $40,000 category, and KEVIN RITCHIE , Executive Director of the Alaska Municipal League clarified there are 40 communities. Number 300 JOE MERDY , a members of the Municipality of Anchorage Assembly serving on the Alaska Municipal League Board of Directors, reminded the committee the same legislation had overwhelming support last year, that it is a nonpartisan issue, and the main purpose is to stabilize funding so that the taxpayers don't have to eat the cost of any more cuts. He emphasized the need to find a way of helping the small communities so that they do not continue to dissolve, and he urged passage of SB 20. Number 318 MS. HAGEVIG thanked the committee for making the opportunity available to the Alaska Municipal League and the Council of Mayors to appear before the committee to testify on SB 29. Number 320 CHAIRMAN MACKIE asked what population number was used to define a small community. MR. SELBY responded it wasn't based on a population criteria. It was based on a formula of how much funding they were going to receive under the program. Number 335 CHAIRMAN MACKIE directed attention to Senator Torgerson's amendment and asked for a motion for its adoption. SENATOR PHILLIPS moved adoption of the following Amendment No. 1: Amendment No. 1 Page 2, line 15: Following "FOR" insert "SAFE" Page 3, line 2: Following "FOR" insert "SAFE" Page 4, line 19: Following "Sec. 29.60.350." delete "Communities" and insert "Safe communities" Page 4, line 20: Following "for" insert "safe" Page 4, line 21: Following "department the" insert "safe" Page 4, line 23: Following "the" insert "safe" Page 4, line 29: Following "the" insert "safe" Page 5, line 3: Following "the" insert "safe" Page 5, line 9: Following "for" insert "safe" Page 6, line 9: Following "the" insert "safe" Page 6, line 31: Following "the" insert "safe" Page 7, line 17: Following "to the" insert "safe" Hearing no objection to Senator Phillips' motion, the Chairman stated the amendment was adopted and would be incorporated into a C&RA committee substitute. Number 350 LAMAR COTTEN , Deputy Commissioner, Department of Community & Regional Affairs, noted Bill Rolfzen, who has run the department's program for municipal assistance and revenue sharing, was present to respond to questions from committee members. Mr. Cotten stated the department supports the bill conceptually. The department does not object to the movement of the date, but he cautioned that each month the date is moved up it costs roughly $160,000, and it is an issue that should be put on the table. The department's only concern is the $40,000 minimum with respect to future cuts. DCRA's position is that the $40,000 should be a cutoff, that if there are cuts, the amount of money to go to the smaller communities would go no lower than $40,000. He pointed out these smaller communities are not afforded the same ability to tax as other communities. Number 415 There being no further testimony on SB 29, CHAIRMAN MACKIE stated it was his intention to move the bill out of committee. SENATOR PHILLIPS moved CSSB 29(CRA) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. There being no further business to come before the committee, the meeting was adjourned at 2:02 p.m.