SB 105-ROAD SERVICE AREA CONSOLIDATION  2:11:40 PM CHAIR MYERS announced the consideration of SENATE BILL NO. 105 "An Act relating to road service area consolidation." CHAIR MYERS stated that SB 105 was requested by the Fairbanks North Star Borough. 2:12:11 PM MICHAELLA ANDERSON, Staff, Senator Robert Myers, Alaska State Legislature, Juneau, Alaska, on behalf of the sponsor, paraphrased the sponsor statement: Senate Bill 105 provides second class boroughs with the ability to consolidate two or more road service areas (RSAs) if the boards representing those RSAs request consolidation and no new parcels are added to the single new service area. A road service area is a taxing jurisdiction established at the request of the voters within a geographical area to provide certain services within their specific area. Voters establish their boundaries, the maximum mill levy imposed on real property for the purpose of road maintenance services, and a board that determines the level of road maintenance services and directs contractors to perform these services. Members of the board are nominated by the mayor and confirmed by the borough assembly. Beginning in 1972, and in the years that followed, RSAs benefited from state shared revenues (SSR) for local road construction and improvements. SSR reductions through the 1990s prompted RSAs to hold elections to establish tax revenue caps to supplement the reduced state funding for local roads. Existing RSAs also resisted annexations of new parcels and roads to their service areas leading to the formation of new RSAs. Of the five second class boroughs in the State of Alaska that have RSAs (Fairbanks, Mat-Su, Kenai, Kodiak and Ketchikan), the Fairbanks North Star Borough has, by far, the most RSAs at 103. The next largest borough by RSAs is the Mat-Su Borough with 16. 2:13:01 PM MS. ANDERSON said municipalities currently do not receive any state-shared revenues for road service areas (RSAs). She explained that SB 105 would address an issue facing the vast majority of RSAs in the Fairbanks North Star Borough (FNSB) by adding a new exception to allow timely consolidation of two or more RSAs without a vote by their residents. Instead, it would enable the affected RSA boards to agree to the changes as long as no new parcels were added or removed. MS. ANDERSON continued to paraphrase the sponsor statement: While greater efficiencies and lower costs in maintaining local roads could be achieved through consolidating some RSAs, borough assemblies do not have the power to adjust service area boundaries without voter approval. Separate elections are required for each of the RSAs subject to consolidation, and these elections typically fail to turn-out voters. Consolidation efforts led by RSAs themselves, as proposed under SB 105, would lead to greater efficiency and reduced costs through economies of scale and less contract administration by borough administrators. MS. ANDERSON said this bill does not allow FNSB's mayor or assembly to consolidate RSAs without RSA boards requesting consolidation. 2:14:27 PM MICHAEL BREDLIE, Rural Services Manager, Fairbanks North Star Borough, Fairbanks, Alaska, spoke in favor of SB 105. His division manages the road service areas (RSAs) throughout the Fairbanks North Star Borough (FNSB). As a second-class borough, FNSB receives its road construction and maintenance powers through service areas. Currently, FNSB's 103 RSAs maintain a total of 498 road miles. He provided a brief history of RSAs in the borough. The borough's first RSA was established in 1965 and a second one was added in 1969. Between 1973 and 1979, 20 RSAs were established. All but two of the 67 RSAs were established between 1981 and 1986. In the 1990s, 13 RSAs were established, with the final one formed in 2002. This liaison could also provide information and guidance to the commissioner and the governor on the board's approach and rationale used to make board recommendations. During the mid- 1970s, the RSAs received $2,500 per mile for maintenance and operations (M&O). This became the majority, if not the entire revenue obtained by the service areas. By the 1990s, the M&O was reduced to $1,400 per mile, declining until 2003 or 2004, when state revenue sharing ended. At the time, the reduction in state revenue sharing prompted many RSAs to hold elections to establish revenue tax caps to supplement and replace their state revenue-sharing funds. From 1991 to 1997, 74 RSAs instituted revenue tax caps. MR. BREDLIE related his understanding that RSA commissions resisted annexing new parcels and roads to their service areas. In response, the administration decided to form new service areas. He said this increase in RSAs appears to correspond with state shared revenue that FNSB received from 1972 to 2004. He offered his belief that no other borough in the state has this issue. Alaska has five second-class boroughs with road service area powers. FNSB has 103 RSAs, the Mat-Su Borough (MSB) has 16, Ketchikan Gateway Borough (KGB) has 10, Kodiak Island Borough (KIB) has four and the Kenai Peninsula Borough (KPB) has one large RSA split into five regions. MR. BREDLIE explained that FNBS's RSA consolidation process was difficult. First, elections are required to consolidate two or more RSAs if the voters reside within the existing service areas. Next, the borough must hold open house meetings, the assembly must approve the election ordinance to authorize the RSA elections for residents in the service areas. Finally, holding an election to consolidate each service area is costly, he said. Currently, FNSB has 13 contractors who perform maintenance in its 103 RSAs. Some contractors maintain one RSA and others maintain from 10 to 20 service areas. 2:18:40 PM MR. BREDLIE explained that consolidating service areas would provide greater efficiencies and better prices for contractors, which could result in less contract administration. In terms of staff, consolidating RSAs could reduce contract administration costs and increase staff's presence to assess road conditions in RSAs. Concerning RSA commissions, consolidating RSAs would reduce the number of seats. He said that 266 of the 426 RSA commissioner seats are filled, which is a 38-percent vacancy rate. 2:19:34 PM CHAIR MYERS asked how much money FNSB would save by consolidating RSAs. MR. BREDLIE responded that he was unsure, but FNSB would save contractor and administrative costs. 2:20:12 PM SENATOR MICCICHE asked what problems FNSB encountered by adding RSA consolidations to the ballot for municipal elections. MR. BREDLIE answered that each RSA election would be held outside the municipal election because voters are located in different areas and separate taxing jurisdictions. He stated that FNSB's Clerk's Office incurs substantial time and costs to administer elections given the large number of RSAs. 2:21:34 PM SENATOR SHOWER recalled that a similar bill was previously introduced. He asked whether FNSB asked its residents whether they wanted to consolidate RSAs. MR. BREDLIE answered no. He acknowledged that former Senator Coghill introduced a bill during the last legislature, but it did not pass. SENATOR SHOWER asked whether the purpose of SB 105 was to provide FNSB with a method to consolidate its RSAs without obtaining sufficient support from residents. MR. BREDLIE responded that SB 105 would give the borough an additional tool to join two or more service areas without an election when the road commissions agree. He remarked that FNSB would still reach out to residents; that the process still requires approval by RSA commissions and the assembly. 2:24:36 PM SENATOR SHOWER asked who currently appoints the commissioners and whether this process would give the mayor additional authority. MR. BREDLIE responded that the mayor appoints commissioners and the assembly confirms them. SENATOR SHOWER said it seems as though this process will give the mayor additional power. 2:25:28 PM SENATOR BISHOP asked whether FNSB's Assembly supports SB 105. MR. BREDLIE responded that the request for SB 105 was initiated by FNSB's legislative committee, which is comprised of assembly members, the mayor, and legal representatives. He surmised that assembly members support SB 105 since the assembly passed a resolution. SENATOR BISHOP asked for a copy of the resolution. MR. BREDLIE agreed to provide it. 2:26:32 PM SENATOR MICCICHE stated that RSA members are elected in the Kenai Peninsula Borough (KPB). KPB regularly experiences problems with vacancies. He surmised that people would prefer to have elected officials make the final decisions although he agreed that would consolidate some power. He offered to consult with KPB on whether it supports the concept. 2:27:42 PM CHAIR MYERS asked if FNSB passed an ordinance earlier this year for all road commissioner terms to expire in June 2021. MR. BREDLIE responded that in 2019, an ordinance changed the commissioner's terms from two to three years to allow for staggered terms. In the meantime, FNSB will send out applications to all commissioners and draw to decide which ones are one, two or three year terms, he said. CHAIR MYERS offered his view that the mayor would appoint every commissioner if this bill were to pass. Given that the mayor would like to consolidate RSAs, the mayor could impose a litmus test for applicants. MR. BREDLIE explained that half of the commissions expire each year. He related that prefilled applications are sent to all commissioners by April. Once the applications are signed, the applications are forwarded to the mayor and to the assembly. He said he did not envision this process changing, but the terms will be staggered. 2:31:00 PM JILL DOLAN, Attorney, Fairbanks North Star Borough, Fairbanks, Alaska, in response to whether SB 105 would ultimately give more power to the mayor, said any boundary change must be made by ordinance. Although this bill would require that service area boards make recommendations and request to consolidate RSAs, the elected officials will make the ultimate decision. 2:31:51 PM MS. DOLAN explained that FNSB cannot run elections for service areas with the regular municipal election because the precinct boundaries do not align with the service area boundaries. The borough must determine voter eligibility for each service area. She explained that consolidated RSAs requires elections be held in each service areas being combined, which means that ballots are separately accounted for in each RSA election. 2:32:25 PM SENATOR SHOWER said the 2020 election included local, state, federal elections in Alaska. Thus, voters were handed multiple ballots. He was unsure why the RSA elections could not be given on the same day as municipal elections. MS. DOLAN responded that municipal and state election districts share the same precinct boundaries. She said FNSB's Clerk's Office runs the elections. Voters must first request their ballots for service area elections in person. The clerk must determine in which RSA area the person resides since the ballots for each service area must be counted separately. The municipal clerk advised that RSA elections should not be held at concurrent with municipal elections, she said. 2:34:37 PM SENATOR MICCICHE asked how many households comprise the largest service area. MR. BREDLIE answered that the College RSA maintains about 20 miles of road serving over 1,000 households. [SB 105 was held in committee.]