SB 114-SERVICE AREAS IN SECOND CLASS BOROUGHS  2:27:50 PM  CHAIR GARY STEVENS announced SB 114 to be up for consideration. MELANIE LESH, Staff to Senator Gary Stevens, informed members the committee substitute (CS) \G version was adopted at the March 9, 2005 meeting. MS. LESH recapped the issue briefly explaining that a great number of road service areas were created when state revenue sharing was distributed by road mile. With the termination of revenue sharing, a number of road service areas have insufficient funding to conduct road maintenance. SB 114 was introduced to allow second-class boroughs to consolidate or dissolve such service areas that are nonfunctioning or functioning below standard under AS 29. Any service areas that are taxing themselves adequately to maintain safe roads are not affected. Local assemblies would make consolidation or dissolution decisions. CHAIR GARY STEVENS called a brief at ease from 2:29:54 PM to 2:31:18 PM CHAIR GARY STEVENS reconvened the meeting and asked Ms. Logan to give testimony. 2:31:37 PM ATHENA LOGAN, Local Government Specialist with the Department of Commerce Community and Economic Development (DCCED), reported that the department endorses measures to give local governments flexibility to provide an efficient delivery of services and SB 114 does so for second-class boroughs. She observed that the bill gives greater flexibility and authority to second-class boroughs than it does to home rule boroughs. Under the Alaska Constitution, home rule represents maximum self-governance. State law doesn't place a greater restriction on a home rule local government than it does on general law, local governments, but SB 114 does just that. This seems contrary to the intent of home rule local government, she said. She also observed that there is nothing unique about a second- class borough that would suggest that the measures in SB 114 are needed for that particular class of borough but not the other classes of boroughs. The Ketchikan Gateway Borough is a second-class borough and under this bill the local assembly would gain needed flexibility. However, a petition is currently pending before the Local Boundary Commission (LBC) that would convert the Ketchikan Gateway Borough into a home rule borough if approved by the commission and the voters. If that occurs and the bill passes as currently written, the Ketchikan Borough Assembly would lose the flexibility accorded to second-class boroughs. MS. LOGAN reiterated the department endorses measures that would give borough government flexibility needed to provide for the efficient delivery of services, but SB 114 does so only for second-class boroughs. She noted members had copies of a March 9, 2005 legal opinion from Marjorie Vandor, Assistant Attorney General, supporting DCCED's understanding of the bill. 2:33:46 PM CHAIR GARY STEVENS asked Ms. Broker to respond to Ms. Logan's comments regarding second-class and home rule boroughs. RENE BROKER, Attorney for the Fairbanks North Star Borough replied SB 114 addresses a problem that only second-class boroughs face. Home rule boroughs do have more powers than second-class boroughs, but with more power comes greater flexibility and ability to deal with problems that second-class boroughs don't have. Second-class boroughs don't have road powers in particular so they can only exercise road powers through service areas so second-class boroughs have an issue and problem that home rule municipalities aren't experiencing. 2:35:12 PM CHAIR GARY STEVENS said the issue might take more thought and announced he would hold SB 114 in committee.