SB 323-MANDATORY INCORPORATION OF BOROUGHS    SENATOR GARY WILKEN sponsor of SB 323 read the following sponsor statement into the record: The Mandatory Borough Act of 2002 recognizes that there are six regions in Alaska that meet most, if not all, the standards for borough incorporation, and sets in motion a procedure to create six new boroughs by January 1, 2005. The identified areas have the financial capability and stable populations needed to provide a local government with the power to plan, support local schools, and levy and collect taxes. Senate Bill 323 allows the residents in the identified six locations to initiate borough incorporation proposals, hold extensive public hearings, and work closely with the Local Boundary Commission to determine the desired borough structure until the January 1, 2005 deadline. However, if a borough is not incorporated within each of the six regions by the stated timeframe, the following areas will be incorporated as second- class boroughs: Copper River Basin Region Glacier Bay Region Prince of Wales Island Region Prince William Sound Region Upper Tanana Basin Region Wrangell/Petersburg Region Through the formation of these six boroughs, local residents, many for the first time, will be able to financially support their neighborhood schools. In addition, several school districts will be consolidated to enhance efficiencies and economies of scale. Alaska's K-12 public education system will benefit from the additional financial help and thus Alaska's students will benefit. The best government is the government closest to the people. Senate Bill 323 continues what the framers of the Alaska State Constitution commenced over forty years ago, and by forming these six boroughs, it provides a way for local area residents to help with their children's education. I respectfully request your consideration and support for this legislation. SENATOR WILKEN called member's attention to the chart in their packets titled, "Standards for Borough Incorporation." [A copy of the chart is available in the committee file.] The chart lists 11 standards that need to be met for borough incorporation and he believes the six areas have already fulfilled 9 of those standards. The process that starts with the committee meeting will answer the questions regarding the final two standards, which are "Financial/Human Resources" and "Similar Geography." Next he noted the "Model Borough Boundaries" pamphlet found in committee packets. Maps of the six areas referred to above are shown with current Rural Education Attendance Area (REAA) Boundaries and the model or proposed boundaries. [A copy of the pamphlet can be found in the bill file.] For a year he has been asking the unorganized area whether they can help with K-12 education thereby relieving some of the burden placed on organized Alaska. Three areas of the state have stepped forward to do just that, but many areas of the state have chosen to ignore his request. This legislation asks those areas why they can't help. Given the amount of data available, he believes there is no reason not to start the process to analyze whether these six areas have the capability and capacity for government. He asked members to examine the State of Alaska Local Boundary Commission January 2001 booklet titled, "The Need to Reform State Laws Concerning Borough Incorporation and Annexation." [A copy can be found in the bill file.] In particular, he asked members to read pages 7-20 then refer to page 10 and match the seven bulleted paragraphs to the appendix. It says that since 1963 Alaska has grown in population and wealth and it is time to revisit the idea of incorporations of local government and bring back the concept that the best government is the one that is closest to the people. According to their annual publication, the Alaska Municipal League supports this concept and each year the Local Boundary Commission issues a report that talks about organization of unincorporated areas and how the Legislature might be able to eliminate some of the disincentives of incorporation and bring government close to the people. He closed by saying this is the start of a very important piece of legislation and his office is ready to work on it and discuss it with all people that are affected. SENATOR PHILLIPS said there is another way of accomplishing the same thing. Instead of passing bills, the Legislature can sit in joint session and act as the Assembly for the unorganized areas. Because this bill has several more committees of referral and it might not pass, he asked whether they shouldn't pursue this other avenue. SENATOR WILKEN thought that was a good question, but his approach has been to have the patience to do the work correctly. Obviously, there are areas of the state that have the capacity to fund education and have a minimal second-class borough level of government whereby they are able to choose the degree to which it affects the population. This hasn't worked very well so this is another step. His problem with the full Legislature sitting as the Assembly is that it doesn't recognize the capacity of different areas of the state and is therefore an unfair approach. He isn't after those areas that aren't able to support government, rather he wants those areas that are capable of helping themselves to step forward and help themselves. It's better to take a reasoned analysis, through the parts of the law that says, "Can you help yourselves?" That is what this bill suggests. SENATOR LINCOLN informed Senator Wilken that the individuals in her district don't necessarily feel that having a borough actually creates a government that is closer to them and would therefore change how they do business in their area. She keeps hearing people ask, "How are we going to pay for that?" When she looks at some of the six target areas she doesn't see how they can afford government. There is an ongoing discussion, and she has confidence that the people will create new boroughs when they feel they have the economy to support one. She doesn't want to say, "You shall…" because that isn't necessarily the best form of government either. With talk of budgetary cuts and considering the current fiscal gap, she asked how the cost of the bill could be justified. SENATOR WILKEN replied the concept of saying, "You shall…" is not quite correct. There are 11 standards in law that an area must qualify under in order to become a borough. Few people would ever vote to become a borough but he believes that borough incorporation has increased the quality of life in the state. He knows Interior Alaska is better off with the Fairbanks North Star Borough than without because "Overall, 84% of the people have benefited by borough incorporation." The push for incorporation began with education reform. In his area, they ask the people for a 4-mil tax equivalent so they can get education dollars from the state. This year the people in organized Alaska are paying $154 million to have the benefit of incoming state money for their education. Because unorganized Alaska is paying nothing, he can safely say the people he represents are subsidizing education in the unorganized areas of Alaska. This is acceptable for those areas that are not able to pay, but it is not acceptable for those areas that can pay but won't. The fiscal note is not important when you consider that this has more than a one or two year focus. It is a generation issue that will, over time, improve certain unorganized areas in the state just as it has in the North Star Borough. SENATOR LINCOLN had difficulty with the criteria used and took issue with the term "mandatory" that was used in the title. She said there was a resources meeting the previous day that discussed mining and approximately 90 percent of the presenters presented the development of resources in Bush Alaska. That is a form of payment for services to education and other state programs. The statement that they aren't paying anything is in error. SENATOR WILKEN disagreed that the resources in a particular area belong to the people that live in that area. He believes that the resources in the state are the property of all the people of Alaska. That the resources come from a particular area provides no claim to that area of the state when you're talking about a local contribution to match people that are paying a property tax. Areas that are not incorporated by 2005 will then be incorporated as second class boroughs under this Act but they must first come before the Legislature and they must also satisfy the best interest standard. "It is top down, but it brings people to the table to talk about what is in their best interest and today, that is very difficult to do." CHAIRMAN TORGERSON asked whether he thought he could accomplish this by 2005. SENATOR WILKEN said he doesn't know. He's comfortable with the fact that it will take time. It's important to get the process started. CHAIRMAN TORGERSON said his point goes to ensure that due diligence is done before the deadline. There was no further testimony. The bill was held in committee.