CS FOR HOUSE BILL NO. 461(STA) am "An Act relating to enhanced 911 surcharges and to 911 and emergency services dispatch systems." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken stated that this bill, CS HB 461(STA), Version 23- LS1633\E.A would allow "a local municipality, by ordinance to raise the surcharge and eliminate the current surcharge limit on telephone users for 911 emergency services. He noted that several fiscal notes accompany the legislation. MATT RUDIG, Staff to the bill's sponsor Representative Jim Holm, noted that this bill would: maintain public safety; increase local control; and implement 911 service in rural Alaska. He stated that changing current statutes would provide municipalities "the flexibility to charge what they need to charge to recover the costs" of Enhanced 911 emergency service, dispatches, and surcharges. He noted that there is "little debate" as to the necessity of this service, which is provided nationwide to assist in saving lives. Mr. Rudig explained that, currently, municipalities, with the exception of Anchorage which is limited to a 50-cent surcharge, are limited to charging a maximum 75-cent surcharge per month to telephone users to assist in funding a municipality's Enhanced 911 system. He clarified that the funds generated by this surcharge would be limited to providing for equipment costs and do not provide for any operational costs associated with the program. This bill, he advised, would allow municipalities to charge a single surcharge per phone line to provide funds for both the system and operational expenses including dispatch operations. Mr. Rudig stated that the current surcharge level has forced municipalities "to shift the burden of the cost directly onto property owners" through property taxation rather than spreading the assessment "to the actual users who demand the service." Mr. Rudig commented that while there has been some concern regarding the fact that the bill does not include a maximum level of which municipalities could charge, the bill clearly states that a municipality could not use the funds generated from the "surcharge for anything but the emergency services system or dispatch." SFC 04 # 115, Side A 07:32 PM Mr. Rudig continued that provisions of the bill specify that on an annual basis, a review and voter concurrence of the surcharge rate must be conducted, as specified in Section 4(a) on page four, lines 14 through 19 of the bill. He stated, therefore, that the amount of the surcharge would be governed by State statute and by local voter approval. Thus, he attested, the local governing body would not be able to institute an excessive surcharge fee. Furthermore, he noted that the State statute would allow the surcharge to be changed solely by ordinance as opposed to current language that requires both a resolution and an ordinance. In conclusion, he stated that because this legislation allows the proposed methodology to be optional, municipalities could choose to continue their current surcharge taxation method. REPRESENTATIVE JIM HOLM, the bill's sponsor, acknowledged the efforts exerted by Mr. Rudig in developing this legislation. Continuing, he pointed out that the comparison chart, titled "E-911 Dispatch Center Revenue and Costs Summary" [copy on file], prepared by Tim Rogers of the Alaska Municipal League substantiates the need for this legislation as it depicts that the operating costs associated with the Anchorage Call and Dispatch Centers amount to $7,652,280 as compared to the corresponding revenue of $2,066,944 currently generated by the City's 50-cent surcharge on 344,491 phone lines and cell phones. Continuing, he noted that the City of Fairbanks' Call and Dispatch Centers' operating costs amount to $4,680,000 with $436,293 of that being supported by the City's 65- cent surcharge. He opined that the people of a municipality, rather than the State, should establish a limitation on the surcharge, as they are the users of the service. Representative Holm calculated that in order to sufficiently collect funds to offset the total cost of providing the Enhanced 911 system in their community, a surcharge of $45 per month per line would be required. To that point, he understood that the City of Fairbanks has specified an upper surcharge limit of no more than three dollars per line and that the City of Anchorage is considering a surcharge fee of approximately $1.50 per line. Representative Holm noted that the Kenai Peninsula Borough currently has a 911 System shortfall of $1,819,328 and the City and Borough of Juneau has a shortfall of $1,094,544. Representative Holm pointed out that each area would be required to have a separate cost analysis conducted, as, he contended, one fee would not align with all communities' needs. Senator Bunde asked for further confirmation that the level of the surcharge would be authorized by a vote of the people, as he noted that this action is not specifically addressed in Section 4(a) of the bill. Mr. Rudig responded that the intent of the bill is to specify that any change to the surcharge would be by local ordinance. Senator Bunde declared that changing the surcharge level by ordinance is different that changing it by a vote of the people. He expressed, therefore, that the citizens of a municipality must be confident that their local governing body would act responsibly when addressing this issue via local ordinance. Co-Chair Wilken asked whether both the surcharge review and the adoption of the corresponding ordinance must occur annually. Mr. Rudig clarified that he had misspoken in this regard as a municipality's obligation regarding ordinance action is not specified in the bill. Co-Chair Wilken understood therefore that while an annual audit must be conducted, annual ordinance action would not be required. Representative Holm surmised that most municipalities conduct their budget process in a similar manner and therefore, concluded, that the E-911 system would be a budgetary line item. Therefore, he concluded that as such it would be reviewed on an annual basis by the municipality. Co-Chair Wilken understood earlier testimony to specify that an annual audit of the E-911 System must be conducted. Senator Bunde pointed out that this language is included in the bill in Section 4(a) on page four, lines 14 through 21. Co-Chair Wilken asked the sponsor to discuss this language; specifically in regards to which E-911 System expenses, as required by State law, would benefit from the surcharge. Representative Holm stated that language in Section 4(a) on page four beginning on line 18 specifies that the surcharge could provide "for the actual labor and equipment used to provide the emergency services dispatch." He stated that this language does not provide for "anything extra" or allow a municipality "to charge more than the service costs." Therefore, he declared, "this is the upper cap." He noted; however, that the language does not limit a municipality's ability to, as an example, charge property owners a tax to assist in covering the costs of the service. He reiterated that this legislation would allow municipalities to charge those who have phone lines in the community a per line surcharge. Co-Chair Wilken understood that the audit would be a local municipality function and that the local governing body would make the determination regarding the level of the local surcharge. He voiced that, absent a specified surcharge ceiling, language should be included to prohibit the local assembly from using the surcharge as a means through which to raise money. Representative Holm reiterated that an upper limit is dictated in the bill by the aforementioned Section 4(a) that specifies exactly what costs could be recouped by the surcharge: these being the exact labor and costs associated with providing the service. He opined that it would be inappropriate to specify a ceiling in the bill as the cost of providing the service varies by community. AT EASE 7:43 PM / 7:43 PM Co-Chair Green observed that the bill's language does not address matters regarding such things as duplication of services, efficiency, or competitive services, or "the breath of the service" that might be offered. Continuing, she voiced concern that, while a municipality would set the surcharge rate, the collection of that surcharge and any corresponding negative reactions from telephone line users would fall upon the shoulders of the local utility. She noted that while the utility has no say in the "open-ended" surcharge rate, the utility would receive the angry phone calls. In summary, she agreed with Co-Chair Wilken that a surcharge ceiling should be included in the legislation. Co-Chair Wilken understood that, while cell phones are not currently assessed an E-911 fee, this legislation would apply to them. Mr. Rudig affirmed that cell phones would be assessed the surcharge. Co-Chair Wilken asked, using the City of Fairbanks as an example, whether someone living outside of the city limits would be required to pay the E-911 surcharge. Representative Holm explained that every phone and cell phone in an E-911 service area would be required to pay the surcharge. He reiterated that currently, while every phone line is charged a surcharge, the revenue generated does not offset the cost of the service. In response to a question from Co-Chair Wilken, he noted that most of the Fairbanks North Star Borough is located within an E-911 service area and would therefore pay the surcharge. Co-Chair Wilken understood that the money raised by this legislation would increase, as cell phones would now be subject to the surcharge. Senator Bunde commented that consideration might be given to establishing a universal 911 service charge for someone who lives outside of a service area, but who receives 911 assistance through a local or long-distance call. In addition, he expanded on Co-Chair Green's concern that absent any "checks and balances" regarding the level of 911 service a utility might install, "a Cadillac" 911 enhanced service system might be implemented in an area when the community "only wants a Ford." This situation, he attested, would serve to increase the surcharge level required to pay for the system or would allow the utility to influence the rate. He noted that such things as 911 fees and universal service fees draw less public scrutiny than those aroused by such things as an increase in one's property tax assessment, which is currently the common method of collecting the 911 surcharge. Therefore, he stressed that the checks and balances portion of the bill should be further addressed. Senator Olson opined that the rationale against establishing a surcharge limit in the bill is not convincing. Representative Holm responded that the bill is necessary as demonstrated by the fact that a small number of property owners in Fairbanks are annually paying in excess of $4.2 million in property taxes to support E-911 service for all the people in that area. He characterized this as being "inappropriate." Senator Olson asked how this legislation would affect people in rural areas of the State. Mr. Rudig responded that, to address this concern, language located in Section 10, on page six, lines eight through 14 of the bill was incorporated during its passage through the House. Sec. 10. AS 42.05 is amended by adding a new section to read: Sec. 42.05.295. Routing 911 calls. Notwithstanding AS 42.05.711, to ensure statewide access by all residents to 911 wireline services, traditional or enhanced, each local exchange telephone company that provides wireline service to an area outside a municipality must route 911 calls originating from within its customer service base through a toll free number to a regional public safety answering point identified by the state. In this section, " municipality" has the meaning given in AS 29.35.137. Mr. Rudig explained that this language would specify that a toll free 911 number that would ring to a specified answering point "would be available throughout all of Alaska." Senator Olson stated that his primary concern is to whom the financial responsible for this service would fall; specifically whether it would be reflected on rural residents' phone bills. Mr. Rudig clarified that a municipality must have an established E- 911 service in order to implement a surcharge; therefore, he continued, most rural areas would be exempt from a fee. Senator Olson understood therefore that the bill would have no financial affect on rural citizens. Mr. Rudig expressed that this would be the case. Furthermore, he stated that while a community such as Bethel or Barrow might consider implementing an E-911 system in their municipality, the fact, as attested by the experiences of the cities of Fairbanks and Anchorage, that there is "no way to recover the cost" of the service would be a deterrent. Senator Olson concluded that this legislation would not financially affect rural residents. Co-Chair Wilken stated that the surcharges imposed by this legislation would be limited to those areas having an E-911 system. Representative Holm expressed that this legislation would not impose a surcharge on rural residents. Senator Olson acknowledged that this legislation would not affect rural residents. Co-Chair Wilken clarified that cell phone users in a place such as Barrow could be charged a 911 surcharge were their city to incorporate an Enhanced 911 system in their community. Senator Bunde stated that, currently, there are a multitude of areas, remote or otherwise, where people, when calling 911 would get an operator. He voiced that a Universal Service fee provides for the cost of providing this service on a Statewide basis; however, he clarified that the Enhanced 911 Service fee is a separate and local option issue. Co-Chair Green asked for clarification regarding the sponsor's remarks about the availability of 911 calls throughout the State. Mr. Rudig responded that, currently, in some parts of the State, calling 911 is a long distance call and is often answered by a recording. He noted that, as per Section 10 in this bill, 911 calls from throughout the State would be toll free and would be answered by a 911 call center. He stated that this provision would be limited to standard 911 services rather than Enhanced 911 service. Co-Chair Green asked for further information about the funding for this service. Representative Holm responded that, while he is unsure of the funding mechanism, federal law mandates statewide 911 service. He stated that within the State today, there is "a point of contention" regarding whether all telephone utilities were compliant with this order. He stated that language in Section 10 would align the State with federal law. Representative Holm commented that the Department of Public Safety is responsible for routing these calls. He exampled that were he near the community of North Way while driving en-route from Fairbanks to Juneau and used his cell phone to call 911 for assistance, his 911 call would be routed to the Department of Public Safety in Fairbanks who would, in turn, send assistance from North Way. Representative Holm noted that various regions of the State have different response systems and that some Enhanced 911 areas utilize Global Positioning Satellites (GPS) to assist in locating those in need. He declared that having a cell phone on your person is beneficial as it could be "a life-saving device." Amendment #1: This amendment deletes " may be imposed" and replaces it with "may not exceed $1" following "surcharge" in Section 4(a) on page four, line three. This language would read as follows. The [FOR A MUNICPALITY WITH A POPULATION OF 100,000 OR MORE, AN} enhanced 911 surcharge may not exceed $1 [MAY NOT EXCEED 50 CENTS PER] month for each wireless telephone number, or for wireline telephones, each [50 CENTS PER] month for each local exchange billing statement for a residential customer or for each access line for a commercial customer [FOR WIRELINE TELEPHONES. FOR A MUNICIPALITY WITH FEWER THAN 100,000 PEOPLE, AN ENCHANCED 911 SURCHARGE MAY NOT EXCEED 75 CENTS PER MONTH FOR EACH WIRLESS TELEPHONE NUMBER OR 75 CENTS PER MONTH FOR EACH LOCAL EXCHANGE ACCESS LINE FOR WIRELINE TELEPHONES]. New Text Underlined [BRACKETED TEXT DELETED] In addition, this amendment deletes all material in Section 4(a) beginning on page four, line 18 through line 21, following the word "system". This language currently reads as follows. The municipality may [ONLY] use the enhanced 911 surcharge for the enhanced 911 system and for the actual labor and equipment used to provide emergency services dispatch, but not for costs of providing the medical, police, fire, rescue, or other emergency service, or for any other purpose. Co-Chair Green moved to adopt Amendment #1 Co-Chair Wilken objected for discussion. Co-Chair Green explained that this amendment would limit a municipality's monthly E-911 surcharge to no more than one-dollar and would delete language in the bill that would allow the municipality to utilize these funds for labor and emergency medical dispatch, as she opined that someone would allot these surcharge funds to expenses beyond the cost of the system itself. She recalled that the original intent of implementing the surcharge was to offset the cost of the system. In summary, she voiced being opposed to the lack of a limit being placed on the surcharge as the cost might be inflated to provide for an elaborate operation as well, She also voiced concern regarding the fact that no definition of what the funds could be used for is included in the bill. In addition, she expressed concern regarding the apparent "discrepancy" in the costs of providing Enhanced 911 services as depicted in the aforementioned comparison costs for the cities of Fairbanks, Anchorage, Kenai and Juneau, as she stated, that were the systems similar, the revenues and expenses would be more comparable based on population." Senator Dyson asked Co-Chair Green for further information regarding the reason to delete language pertaining to medical, police, fire, and rescue, as the bill specifies that these items should not be included in the costs. Co-Chair Green responded that the bill should address the hard costs of the system itself rather than such things as personnel. Senator Dyson, Co-Chair Wilken, and Co-Chair Green discussed reworking the amendment to qualify that it be limited to providing funding for the equipment rather than for personnel and other costs. Senator Bunde spoke in favor of retaining the Amendment as presented. Co-Chair Wilken asked that, before further action is taken on the amendment, that the bill's sponsor meet with Committee staff to develop language to address Committee concerns. Senator B. Stevens voiced that defining the meaning of "emergency services dispatch system" would assist in clarifying the elements of the service. He also pointed out that language in Section 4 on page four, lines six and seven is confusing in regards to wireless phone surcharges. Co-Chair Wilken summarized that the concerns requiring further discussion include: whether a surcharge limit should be implemented; further defining the enhanced 911 system; and addressing the wireless surcharge language on page four, lines six and seven. Senator Dyson voiced that he is "not a fan" of establishing limits on what should be charged. Co-Chair Wilken understood that Co-Chair Green is in favor of establishing a surcharge limit. Senator Bunde also voiced support for the establishment of a surcharge limit as he declared that he does not have confidence in municipalities. He noted that while the bill specifies that an annual audit of the surcharge must be conducted, the bill does not clarify who would have access to those findings. Therefore, he asked that language pertaining to the disclosure of the findings be included. Co-Chair Green offered a motion to withdraw Amendment #1. There being no objection, the motion was WITHDRAWN. Co-Chair Green stated that public utilities "get the black eye." Therefore, she stressed that a municipality establishing the surcharge should conduct a campaign clarifying that the municipality rather than the utility is responsible for the forthcoming rate change. Co-Chair Wilken ordered the bill HELD in Committee for further review. RECESS TO THE CALL OF THE CHAIR 8:14 PM / 12:14 AM