SB 247-REVENUE SHARING PROGRAM  2:56:44 PM CHAIR STEDMAN announced SB 247 to be up for consideration. He asked Senator Gary Stevens to provide introduction. SENATOR GARY STEVENS explained that SB 247 stems from work done by the Advisory Commission on Local Government and comes in response to local governments requesting that revenue sharing be reinstated. The bill creates the Revenue Sharing Program to help local governments and unincorporated communities meet their financial obligations. It authorizes the Legislature to appropriate money from the Alaska Capital Fund [Amerada Hess] to the Revenue Sharing Fund established by SB 246. Revenue sharing will be appropriated as follows: $300,000 for each unified municipality; $150,00 for each borough; $75,000 for each city; and $25,000 for each community. If the amount appropriated exceeds that which is needed, the remaining funds will be distributed to municipalities on a per capita basis. Revenue sharing in Alaska began in 1969 and at that time it was a larger part of the state budget than community PERS/TRS assistance and community energy assistance was last year. In 1979 the municipal assistance program was created to replace the municipal share of the Gross Business Receipts Tax. Until that time the state shared 20 percent of the business tax generated in each municipality. When the state repealed the tax on January 1, 1979 there was an implied obligation to replace the lost revenue. Revenues were distributed with a hold-harmless amount based on the amount each municipality had received in 1978 plus a per capita distribution. In 1980 the per capita revenue sharing program was repealed and replaced with an equalization revenue sharing program. In 1997 the municipal assistance program was changed to the Safe Communities Program. In 2004 all revenue sharing programs were eliminated and since then many communities have had to reduce or eliminate key municipal services. According to the Alaska Municipal League, ten small communities closed their doors last year. He noted that the packets held examples of letters of support for some sort of revenue sharing. 3:00:46 PM CHAIR STEDMAN remarked he could attest to the statewide interest in revenue sharing. 3:01:21 PM KEVIN RITCHIE, Executive Director of the Alaska Municipal League (AML) testified in support of SB 247. He said he had two points to make. First, the allocations per city, community, and borough are critical if small communities are to remain viable. Many have no property tax base and sales tax does little in terms of generating revenue. Because small communities purchase goods from the larger urban areas, much of the economic benefit they generate goes to those large communities. A point in fact is that the Anchorage Economic Development Corporation has indicated that small communities fund about one in every eight jobs in the urban areas. The second point is to suggest adding to the proposed funding amount. Although $28 million will help small communities it won't have a significant impact on tax relief or helping large communities with their particular issues. 3:03:39 PM WAYNE STEVENS, Alaska State Chamber of Commerce, stated support for the legislative effort to implement a sustainable community dividend program through an endowment management scheme. The need is critical statewide and if relief doesn't come this year it will be too late for some communities. 3:04:34 PM LEO RASMUSSEN testified as a private citizen from Nome. After reviewing his long and illustrious public career he suggested looking back 50 years to when the Alaska State Constitution was created. A sort of partnership growth between municipalities and the state government was envisioned and a division of the state's resource income was mandated for the purpose of running municipal governments. That used to be one of the most important parts of government in our state, Mr. Rasmussen emphasized. With that in mind, he suggested the committee seriously consider going back to a simple distribution of natural resource income to municipal governments rather than the proposed $75,000 per municipality. Mr. Rasmussen endorsed both bills and concluded that this program could turn the state around. 3:09:45 PM JOHN COMBS, Mayor for the City of Palmer, testified in support of using Amerada Hess funds for municipal sharing. He informed members that the City of Palmer has a population of 5,400 and encompasses just 5.4 square miles, but it services an area that has about 21,000 people so some sort of sustained municipal [revenue] sharing would be most welcome. 3:11:10 PM DAVE TALERICO, Mayor of the Denali Borough and President of the Alaska Municipal League, testified in support of both SB 246 and SB 247. He thanked the advisory commission for its work and said he particularly likes the minimum provision to support small municipalities because their health and welfare are vital to the state. He described the bill as a confident and important municipal investment. 3:11:59 PM JEFF CURRIER, Lake and Peninsula Borough, testified in strong support of SB 247. In the last several years people have been leaving the area because of the lack of an economic base. The borough shares fish and bed tax revenue with its small communities, but because of fuel and other emergencies some of communities have had to draw down next year's revenue sharing. "Let's get this thing going," he said. 3:13:22 PM MITCH CHOCKNOK, City Administrator for the City of New Stuyahok, testified in support of SB 247. The city is on the verge of shutting down due to high fuel, insurance, and other costs so the money would keep New Stuyahok alive. This is vital to this community and others like it across the state, he said. 3:14:38 PM KARL SHORT, Finance Director of the Kodiak Island Borough, stated that he previously testified in support of SB 246, but he wanted to emphasize the importance of having a way to distribute state income to the communities to keep them viable so they can continue to perform essential community services. Responding to Chair Stedman, he added that boroughs around the state are taking on a larger share of school expenditures and at the same time they aren't getting state revenue sharing or funding for senior citizen taxes. This is to the detriment of other borough services such as health, planning, and assessing. 3:16:09 PM ELAINE PRICE, Projects Manager for the City of Coffman Cove, stated support for the package to keep city doors open and the community viable. 3:16:37 PM DAVE TRANTHAN, JR., Alaska Municipal League Representative for District 9, stated support for SB 246 and SB 247. Anything that can be done to reinstate revenue sharing would be greatly appreciated by all communities. 3:17:54 PM DORIS BAILEY, Assembly Member for the City and Borough of Sitka, stated unequivocal support for revenue sharing and therefore both SB 246 and SB 247. The assembly passed a resolution to that effect. 3:18:36 PM SENATOR GARY STEVENS advised that there are other bills that deal with revenue sharing that draw from other fund sources. Although he'd like to see more money going to communities, this bill proposes using funds from the Amerada Hess account and in his view it's a bottom line minimum amount. It's more difficult to get money from other sources such as the Earnings Reserve because it affects the dividend and the Constitutional Budget Reserve because of the high standards for using those funds. Amerada Hess is a good beginning, he said, and I hope people support it. CHAIR STEDMAN held SB 247 in committee and recessed the meeting to the call of Chair at 3:19:43 PM.