SB 304-MUNICIPAL DIVIDEND PROGRAM MR. RITCHIE, AML, stated SB 304 provides permanent stable funding for municipal revenue sharing, capital matching grants, and the Village Public Safety Officer (VPSO) program. Mr. Ritchie referred to graphs given to the committee. The reason for the change in the municipal revenue sharing formula is that very few municipalities know why they receive the money that they do. The allocation of general funds to a municipality causes problems when the legislature has to appropriate the money. With the new revenue sharing formula everyone will understand why they are receiving money and where it is being allocated. The new formula creates an allocation for roads, similar to what currently exists. Every mile of road maintained by a municipality would receive $2,000 per mile and $10 per capita for its use volume. SB 304 allocates funds for three different services in public safety. If a municipality provides fire safety, the program would get $20 per capita served, EMS would get $20 per capita served, and police would get $20 per capita served. It maintains the existing formula for hospitals and health facilities. It also provides a base minimum funding for power services for municipalities and allocates $45,000 for municipalities. SB 304 allows $10,000 for unorganized communities; currently they receive $5,000. The program reached the amount of $85.9 million for fiscal year 2001. The allocation formula transfers money from the excess earnings of the PFD and is based on $150 multiplied by the number of people who received dividends the previous year, allowing for a population sensitive formula. SB 304 uses the excess Permanent Fund earnings after full dividends have been paid and after the fund has been fully inflation proofed. Mr. Ritchie referred to graphs given to the committee. The impact on the dividend would be negligible for the first five years, during which time the public would receive, in addition to a PFD, $150 in a local tax offset per person. This could be an additional dividend program that could put more money into the pockets of Alaskans. CHAIRMAN KELLY explained the Alaska Permanent Fund Corporation (APFC) has projected amounts for the dividend for the next 10 years as follows: 2000 - approximately $1,960 2001 - approximately $1,980 2002 - approximately $1,980 2003 - approximately $1,900 2004 - approximately $1,840 2005 - approximately $1,880 2006 - approximately $1,950 2007 - approximately $2,020 The dividend will level off in the year 2007. SB 304 will make an insignificant change to the growth of the dividend check as Alaskans know it. MR. RITCHIE agreed. SENATOR PHILLIPS asked if SB 304 requires a vote of the people. MR. RITCHIE answered no. SENATOR PHILLIPS stated SB 304 will affect everyone so the public should have the right to vote. CHAIRMAN KELLY asked what the result will be on property tax owners throughout the State. MR. RITCHIE stated SB 304 will provide municipalities with a higher level of support. Over time, SB 304 will stabilize revenue sharing and property taxes. Mr. Ritchie referred to a poll taken by Representative Jeanette James with significant support for SB 304. SENATOR PHILLIPS stated he would not support SB 304 without an advisory vote. Tape 00-04, Side B  MR. DUANE UDLAND, Chief of the Anchorage Police Department, stated a long-term ability for cities to plan a budget would be beneficial. Mr. Udland stated support for SB 304. MS. NADINE HARGESHEIMER, Fairbanks North Star Borough, stated support for SB 304. SB 304 would create a stabilized funding source that Fairbanks views as an asset. SB 304 would help all the service areas around Fairbanks. MR. LEN MALMQUIST, Fire Chief of Soldotna Fire Department, stated support for SB 304. Three small volunteer fire departments adjacent to the Soldotna Fire Department also cooperate, they have no regular source of funding and SB 304 would provide stability for them. MR. SCOTT WALDEN, Assistant Fire Chief for the City of Kenai, stated support for SB 304. MR. ADAMS stated support for SB 304 and for a vote of the public. CHAIRMAN KELLY asked how the funding would be split so both homerule and municipalities receive funding. MR. RITCHIE stated it would be divided by the population of those service areas. SENATOR PHILLIPS asked Mr. Scott if the Mat-Su Borough would support a vote for SB 304. MR. SCOTT stated if the legislature could maintain that the PFD would stay intact, then there would be no problem with a vote of the people. Number 501 MS. LORRAINE DERR, Executive Director of the Alaska State Hospital & Nursing Home Association, stated SB 304 would create a stabilized funding base. Ms. Derr stated support for SB 304. MR. CRAIG DUNCAN, City and Borough of Juneau (CBJ), stated support for SB 304. CBJ is making budget reductions because of the continued State shared municipal assistance reductions from last year. CBJ is trying to make decisions on what budget to reduce. CBJ doesn't want to see taxes increase, and is concerned that the 10 mill tax cap may pass. SB 304 would help fund education and emergency services. CHAIRMAN KELLY stated that because concerns about SB 304 have been expressed, it will be held in committee.