HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE February 22, 1994 1:00 p.m. MEMBERS PRESENT Representative Harley Olberg, Chairman Representative Con Bunde Representative Cynthia Toohey Representative Ed Willis Representative John Davies Representative Bill Williams MEMBERS ABSENT Representative Jerry Sanders OTHER LEGISLATORS PRESENT None COMMITTEE CALENDAR ALASKA LOCAL BOUNDARY COMMISSION ANNUAL REPORT PRESENTATION *HB 427: "An Act relating to compensation for members of the Local Boundary Commission." PASSED FROM COMMITTEE WITH INDIVIDUAL RECOMMENDATIONS *HB 393: "An Act relating to the unincorporated community capital project matching grant program; and providing for an effective date." PASSED FROM COMMITTEE AS COMMITTEE SUBSTITUTE (* First public hearing) WITNESS REGISTER DARROLL HARGRAVES, Chairperson Local Boundary Commission 3343 Denali Ketchikan, AK 99901 Phone: 225-8090 POSITION STATEMENT: Provided information on the Local Boundary Commission and HB 427 DAN BOCKHORST, Supervisor Local Boundary Commission Staff Department of Community and Regional Affairs 333 W. 4th Avenue, Suite 220 Anchorage, AK 99501-2341 Phone: 269-4559 POSITION STATEMENT: Provided information on the Local Boundary Commission H. TONI SALMEIER Local Boundary Commission P.O. Box 141345 Anchorage, AK 99514 Phone: 333-7692 POSITION STATEMENT: Provided information on the Local Boundary Commission MYRTLE JOHNSON Local Boundary Commission P.O. Box 608 Nome, AK 99962 Phone: 443-2842 POSITION STATEMENT: Provided information on the Local Boundary Commission FRANCES HALLGREN Local Boundary Commissioner 403 Lincoln Street Sitka, AK 99835 Phone: 646-6909 POSITION STATEMENT: Provided information on the Local Boundary Commission SHELLEY DUGAN Local Boundary Commission, Vice Chairperson 219 Kody Fairbanks, AK 99701 Phone: 453-8950 POSITION STATEMENT: Provided information on the Local Boundary Commission KAREN BRAND, Staff Representative Carl Moses State Capitol, Room 204 Juneau, AK 99801-1182 Phone: 465-4451 POSITION STATEMENT: Staff to Prime Sponsor of HB 393 MICHAEL CUSHING, Research Analyst Department of Community and Regional Affairs P.O. Box 112100 Juneau, AK 99811-2100 Phone: 465-4890 POSITION STATEMENT: Provided information on CSHB 393 CHRYSTAL SMITH Alaska Municipal League 217 Second Street, Suite 200 Juneau, AK 99801 Phone: 586-1325 POSITION STATEMENT: Opposed CSHB 393 LAMAR COTTEN, Lobbyist Lake and Peninsula Borough P.O. Box 103733 Anchorage, AK 99801 Phone: 258-7143 POSITION STATEMENT: Supported CSHB 393 PREVIOUS ACTION BILL: HB 427 SHORT TITLE: COMPENSATION; LOCAL BOUNDARY COMMISSION SPONSOR(S): COMMUNITY AND REGIONAL AFFAIRS BY REQUEST JRN-DATE JRN-PG ACTION 02/02/94 2219 (H) READ THE FIRST TIME/REFERRAL(S) 02/02/94 2220 (H) CRA, FINANCE 02/22/94 (H) CRA AT 01:00 PM CAPITOL 124 BILL: HB 393 SHORT TITLE: UNINCORPORATED COMMUNITY CAP PROJECT GRAN SPONSOR(S): REPRESENTATIVE(S) MOSES JRN-DATE JRN-PG ACTION 01/21/94 2125 (H) READ THE FIRST TIME/REFERRAL(S) 01/21/94 2125 (H) CRA, STATE AFFAIRS, FINANCE 02/08/94 (H) CRA AT 01:00 PM CAPITOL 124 02/08/94 (H) MINUTE(CRA) ACTION NARRATIVE TAPE 94-8, SIDE A Number 000 CHAIRMAN HARLEY OLBERG called the meeting to order at 1:03 p.m. He noted for the record Representatives Toohey, Bunde, Davies and Willis were present and noted that a quorum was present. Representative Bill Williams joined the committee at 1:04 p.m. Number 034 HB 427 - COMPENSATION; LOCAL BOUNDARY COMMISSION DARROLL HARGRAVES, CHAIRMAN, LOCAL BOUNDARY COMMISSION, stated, "The Local Boundary Commission acts on petitions for city and borough incorporation, annexation, detachment, dissolution, merger and consolidation. The commission's role is to objectively consider arguments for and against such proposals, taking areawide and statewide needs into consideration. The commission is one of five boards or commissions with origins in Alaska's Constitution. The commission consists of five members. One is appointed from each of Alaska's four judicial districts; the fifth member is appointed at large. Procedures used by the Commission are designed to secure the reasonable, timely and inexpensive determination of municipal boundary proposals. These procedures include extensive public notice and opportunity for comment, thorough study, public informational meetings, public hearings, a decisional meeting of the commission and opportunity for reconsideration. A summary of these procedures is provided on pages two through five of the commissions's January 19, 1994, report to the legislature. (A copy of this report is on file.) Decisions of the commission are based upon criteria or standards set out in statutes or regulations. The Department of Community and Regional Affairs (DCRA) provides staff support to the commission. During 1993, the commission held 20 meetings. Annexations were implemented or approved in Cordova, Palmer, Hoonah, Haines, Fairbanks, Seldovia, Soldotna, Thorne Bay and King Cove. The commission also denied one annexation proposal." MR. HARGRAVES continued, "The commission filed three formal recommendations for annexation with the legislature on January 19, 1994. Under provisions of the Constitution and statutes, the legislature has 45 days to consider the proposed annexations, or until the end of the session, whichever occurs first. If the legislature takes no action, the annexations gain automatic legislative approval 45 days after the recommendations were filed by the commission. In this case, the 45-day review period expires Saturday, March 5, 1994. Alternatively, the legislature may deny any one or more of the annexations by adopting `a resolution concurred in by a majority of the members of each house' on or before March 5. The three recommendations for annexation are addressed in moderate detail on pages 18 through 37 of the commission's report to the legislature. However, I will discuss them very briefly here. The first involves the proposed annexation of 21 square miles to the city of King Cove. King Cove is located 1,100 miles southwest of here in the Aleutians East Borough. While the area proposed for annexation is inhabited by only eight residents, it holds substantial development. The area includes all of one subdivision and part of another, the community's airport, a portion of the city's landfill and the city's hydroelectric project, currently under construction. The area also includes sites proposed for the construction of a new port facility and a new water utility system." Number 179 REPRESENTATIVE JOHN DAVIES asked why two regions were excluded in the city of King Cove annexation. DAN BOCKHORST, SUPERVISOR, LOCAL BOUNDARY COMMISSION STAFF, DEPARTMENT OF COMMUNITY & REGIONAL AFFAIRS, replied, "Those areas were originally included within the petition. The city did concur with the DCRA recommendation that those areas not be included within the action taken by the commission. They didn't really meet the standards for annexation so they accepted the exclusion of that territory." MR. HARGRAVES said, "Oftentimes the hearing process, the petition process does bring out factors that cause some reconsideration of what the municipality first wanted. I think, that was the case here." He then proceeded with his presentation saying, "Seldovia, the second and third recommendations involve the proposed annexation, respectively of 42.8 acres and 1.8 acres to the city of Seldovia. Seldovia is a community located 650 miles west of here in the Kenai Peninsula Borough. Most of the territory proposed for annexation consists of that portion of the Seldovia airport not presently within the boundaries of the city. Because the city's boundaries bisect the community's airport, confusion and uncertainty exist with respect to the levy of city sales taxes and property taxes at the airport. The same holds true for the extension of municipal services and other jurisdictional issues at the airport. The remaining area proposed for annexation contains 13 enclaves or holes in the area under the city's jurisdiction. Until recently, those enclaves were believed to have been formally included within the corporate boundaries of the city as such those have traditionally been taxed by the city of Seldovia. So it came as a surprise to them when they realized those areas weren't in their boundaries. For the past 25 years or so, the city has taxed those properties and has extended full services to them. The enclaves are reportedly inhabited by three individuals. Again, the third recommendation proposes a separate annexation of 1.8 acres to the city of Seldovia. That area consists of a segment of the airport that the city had inadvertently omitted from its petition. The commission filed a separate recommendation for the annexation of that property for procedural reasons. If the committee desires additional details concerning any of the three recommended annexations, I can provide you with a copy of the appropriate decisional documents..." Number 255 REPRESENTATIVE CON BUNDE asked, "Why didn't you include the area around the runway which, of course, would be developable land at one time or another?" MR. HARGRAVES said, "I think the original boundary that you're looking at, that they requested, tailed off into kind of a slough. This had to be filled and really there was nothing that's going to be developed in those wetlands. You're point's well taken. In many instances, we don't like to see things shoot off like that, but in this instance I guess there was an exception made for the airstrip." Number 276 REPRESENTATIVE DAVIES asked, "In this case, is the city of Seldovia basically in support of these two actions?" MR. HARGRAVES replied, "We have substantial support for that. We did have opposition out there and there have been subsequent actions, which no doubt have been launched because of the prior actions..." He then continued with his presentation, "There is legislation pending right now in this legislative session that we'd like to call your attention to. CSSB 164 makes technical amendments to the law that has been sought by the Local Boundary Commission (LBC) for the past several years. This bill is vital to the mission of the Local Boundary Commission, we would appreciate this committee's support in the House if that bill gets to you. SB 291 is an Act whose express purpose is, `to eliminate the unorganized borough by including all regions of the state in an organized borough or unified municipality.' The commission recognizes that there are legitimate arguments on both sides of that very thorny issue. In the commission's view, this matter is a political issue to be addressed by the legislature. The commission feels that a neutral stance is critical to maintaining the integrity of its mission - to objectively consider arguments for and against the establishment or alteration of specific municipal boundaries. We went through the long process of the Model Borough Boundary creation. That was never, and we always went on record as saying, that was not in any way our way to step into mandatory boroughs. Since that bill has been introduced this year, there's been some attachment of it to the actions of this commission and we just want that in the record. HB 427 is one that's been before you in prior years, introduced by your committee, provides compensation for the commission. While the commission recognizes that today's economic climate is less than ideal for such a proposal, it feels strongly that the measure deserves serious consideration. Some of us just happen to be at a point in time in our life when we're able to do this kind of work, so we volunteer and do it, but there are some ramifications of not paying this commission anything. One of things is simply that sometimes we may not be able to get the people that have to leave a days work so they can serve on it. The DCRA has issued a position paper in support of the measure...you have the fiscal note." MR. HARGRAVES proceeded, "I will end my prepared remarks with a brief summary of proposals currently being contemplated for presentation to the LBC. These are based upon reports from the DCRA. In nearly all cases, the reports stem from direct contact between the department and local officials or residents. However, in a few cases, the accounts may stem from unsubstantiated reports. While it is not possible to accurately predict how many of these proposals will be formally presented to the commission, the length and diversity of the list suggest that 1994 will be another active and interesting year for the commission. The list of prospective activities includes proposals for incorporation of eight boroughs, and six cities, annexation to one borough and eight cities, detachment from four boroughs and two cities, dissolution of twelve cities and one borough, and merger or consolidation of municipal governments in three regions." Number 412 CHAIRMAN OLBERG asked, "Is there presently the ability to incorporate a city and borough as a single entity?.. to city-boroughize an existing city? I'm thinking of my hometown, Delta Junction, which is a third class city. Does it have the capacity to become the City and Borough of Delta Junction?" MR. BOCKHORST said, "It does not under current law however, SB 164, would provide for the incorporation of a unified municipal government, so that would facilitate or allow that to occur." REPRESENTATIVE CYNTHIA TOOHEY asked, "What is a city dissolution?" MR. HARGRAVES said, "You simply dissolve the city, municipal government and it just becomes a nonentity. In some cases, there could be a group of people on the side of a borough that would want to break off and dissolve." REPRESENTATIVE TOOHEY asked, "Why is Seldovia doing that, is there any reason, other than they don't want to pay city taxes?" MR. HARGRAVES said, "Keep in mind, that we haven't seen a petition from those folks. There have been inquiries..." Number 451 MR. HARGRAVES introduced the other LBC Commissioners, who spoke briefly. TONI SALMEIER introduced herself, and MYRTLE JOHNSON spoke briefly. FRANCES HALLGREN said, "One thing we have seen as necessary, is the passage of (CSSB) 164. It's going to enable some of these communities to reclassify, to go from second class into home rule in a one step process, rather than having to be this, dissolve that, form this, do the whole works, and it addresses several other different reclassification type issues. The second thing I'd like to address is (SB) 291. It's putting the fear into the hearts of those and they're scrambling to put together single city boroughs and things like that. Until (CSSB) 164 is addressed, I definitely think that SB 291 is premature." Number 545 REPRESENTATIVE TOOHEY said, "The City of Girdwood which I used to be a resident in, they were a first class city of their own, and they were incorporated into the Municipality of Anchorage against their wishes and against their will. The vote in Girdwood was `No, we don't want it.' Does any of this 164 address that?" MR. BOCKHORST said, "No, it does not. That occurred through the process of unification. Girdwood, under the law does have the opportunity to detach from the Municipality of Anchorage, so the option exists." CHAIRMAN OLBERG asked about the minimum population of a borough. MR. BOCKHORST said, "There is no statutory standard that governs incorporation of boroughs, with respect to population. The commission has what's called a rebuttable presumption that there would be at least a thousand people in any area in order to form a borough. However, it is a rebuttable presumption and upon a showing of good cause, the commission can allow an area that has area fewer than a thousand people to incorporate." Number 580 SHELLEY DUGAN, COMMISSIONER, LBC, said, "In the process of doing the Model Borough Boundary study, one of the biggest issues that we had to deal with up front, before we could even get people to participate in the process, was to assure them that we were not out to do any mandatory boroughs. What we were doing in 1989, there were three petitions that were filed fairly close together, all reaching outside their existing boundaries fairly obviously to enhance their revenue base, and what that made us aware of is that there was going to be a trend as state revenues declined, we were going to see more and more of this sort of thing, and we could see ourselves getting into a situation where we needed to stop the process, take a look at the state comprehensively and we did that. And, so the only thing I want to make clear today, is that the language in SB 291 that references about boundary study has nothing to do with it, there is no connection with (SB 291 and) the boundary study that we have already done. They're not connected in any way. And we think it's real important for the public to know that we did that study for exactly the reasons that we said we did it. We, the commission wanted that to be on the record." Number 638 There was discussion regarding the Constitution and whether it prescribes boroughs for the purpose of taxation. There was discussion as to the motives behind municipal dissolutions. MR. HARGRAVES said, "One of the things that I've observed since I've been on this commission is that, it appears that whatever it is today the grass will be greener on the other side of the fence tomorrow, and this hopping back and forth and trying to reconfigure and seek advantage through the different options that are available." REPRESENTATIVE BUNDE asked, "Is there a statute of limitations, so that if they were actually able to dissolve a city can they next year now petition to reform the city?" MR. HARGRAVES said, "You could have a petition going forward to dissolve and you could have another group running a petition to reconstitute at the same time, and we'll listen to petition from any source or group." REPRESENTATIVE BUNDE said, "Perhaps there's a need to address that. These folks are having to meet 25 times a year now, and if you've got three different factions in a community, maybe there's some sort of `you change now, you don't get to change for the next five years'." CHAIRMAN OLBERG asked, "Is any of this addressed in SB 164?" MR. BOCKHORST said, "No it is not. The commission has adopted it's own regulations kind of in that same sense, that if somebody comes before the commission with a petition and either the voters reject it or the state legislature...they reject it, then they're precluded from coming back to the commission for a period of 24 months. But there's no provision if you dissolve, and then you are permitted to reincorporate. Obviously you couldn't have concurrent petitions to dissolve and incorporate. If you dissolve, you have to have a city government to exist already. Certainly there is a potential of these overlapping, interrelated proposals coming quickly upon one another, but I don't really see that as a problem in a practical sense." REPRESENTATIVE BUNDE clarified, "If a city petitions for some boundary change of some kind and it's denied, they cannot petition for another 24 months. If it's approved however, they can repetition immediately?" MR. BOCKHORST said, "There are threshold standards that have to be met in order for people to qualify as petitioners. I don't want to leave the impression that there's opportunity for frivolous petitions. There are standards that have to be met and there's a lot of work that's put into petitions." TAPE 94-8, SIDE B Number 000 REPRESENTATIVE TOOHEY asked, "Is there any sharing of costs on this?" MR. BOCKHORST said, "Yes, there is. The petitioner is required to pay for a portion of the cost of the notices. The expense to the petitioner could be as high as $600 for publicational notices." REPRESENTATIVE BUNDE asked about other costs incurred by the petitioners. MR. BOCKHORST said, "The petitioner is totally responsible for publication of the notice of the filing of the petition, which is required at least three times. They have to pay for production of copies of the petitions to go to the LBC, as well as copies of the petitions to be sent out to interested parties that are designated to the department. So they are responsible for notice and preparation of documents upon the filing of the petition and our acceptance of the petition. So they pay...probably a third of the cost." Number 080 There was discussion regarding state monies in dissolutioned cities. CHAIRMAN OLBERG clarified, "I think perhaps Representative Bunde was just sending a message that we wouldn't necessarily encourage dissolutions at a time when there's obviously a movement afoot to organize everybody and I think he's right...people see dissolutionment as a means of avoiding payment of something. I don't think anybody sees it as revenue enhancement. All communities will be treated the same under the Constitution and the statutes. There's no penalty for dissolving a city government." Number 100 MS. SALMEIER asked, "Isn't there paperwork to keep (the cities) in the proper line of being a city?" MR. BOCKHORST said, "There is a requirement for annual elections, and five of the eleven communities listed there who are being considered for dissolutionment are, in DCRA's view, inactive cities. And under the statutes our agency has the duty and responsibility, the mandate to investigate inactive city governments. We're doing that now." REPRESENTATIVE BUNDE said, "The point I was trying to make is, when you dissolve local government, I think you should expect a decrease in services. The state's not going to pick up the tab entirely." REPRESENTATIVE DAVIES pointed out that there are some incentives for not incorporating as a city. Number 162 MR. HARGRAVES brought up HB 427, "We're talking less than $15,000. I know that some of these folks have lost days of work. We had a professional person on here in times past, he billed for his services at a rate of $120 an hour, so maybe he could afford it; but the point is being away from his job cost him dearly and he was a good commissioner. I think that's the kind of people you need on this commission." CHAIRMAN OLBERG formally brought HB 427 before the committee and reminded the committee of the fiscal note amount and the committee's sponsorship. REPRESENTATIVE BUNDE said, "I support the idea of compensation, obviously these people are meeting 25 times a year, and to expect them to do it totally as volunteers is expecting too much. They...have a thankless task as it is and it shouldn't have to cost them. It still may cost them money, but at least this would, in part, reimburse them for their cost. Having said that, I support the idea; however, facing the fiscal realities we're facing, I would also then express my intent that the $15,000 come out of current DCRA budget and not be additional general funds." CHAIRMAN OLBERG said, "My position is the same as yours, up until that last part where...I am perfectly willing to support HB 427 and carry it to Finance and see if somewhere within the system there isn't $14,805. But your point is well taken. It is a tight year, but why didn't we do this while we had money is always the question." Number 248 REPRESENTATIVE TOOHEY moved that HB 427 be passed from committee with individual recommendations with the fiscal note attached. There were no objections. HB 393 - UNINCORPORATED COMMUNITY CAP PROJECT GRAN CHAIRMAN OLBERG called an at ease from 2:00 p.m. to 2:06 p.m when HB 393 was brought forth. He said, "I think there was some degree of consensus that perhaps all small communities, similarly situated within the state, be treated the same and there was some reading of the original HB 393 that it was treating similarly situated communities somewhat differently, because they're connected to the rest of us by road versus the not connected by road aspect," and he asked if the amendments provided to the committee address this. Number 298 KAREN BRAND, STAFF TO REPRESENTATIVE MOSES, SPONSOR OF HB 393, stated, "Amendment number one...there was talk about having the borough sign off on or approve any projects that unincorporated communities within them wanted. So that is addressed in amendment number one. All it says is that the borough has to sign off the project. And amendment number two simply omits the sections that we had included in the bill that would make the requirement contingent on being off of the road system. So that just omits that part. In fact, what it does is simply open it to now 60 eligible communities instead of the 24 that used to be just off the road system. Between those two amendments, I think the concerns that were brought up in the last meeting are probably addressed. The other concern that Representative Davies brought up regarding the population data on the last page of the bill, we had written a memo to Representative Davies simply explaining that to add a qualifier...that would simply be redundant because that section is already referring to statute that says that DCRA has authority over the population data that's used." REPRESENTATIVE DAVIES clarified that the determination of population is found somewhere else in statute. CHAIRMAN OLBERG said, "There's a fiscal impact. Not by way of a fiscal note so much as a redelineation of who gets what." MICHAEL CUSHING, RESEARCH ANALYST, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS, testified, "With regard to the fiscal impact, basically we're looking at three situations under the current law there are 68 eligibles and if the program were fully funded we would have $1.7 million for that program. With the amendments that we have before us here, we're estimating our best conservative guess would be, we'd have 60 new eligible unincorporated communities. If the funding in that unincorporated account would remain the same at $1.7 million, there are provisions in the current law that provide for prorating. So that you'd now have 128 communities sharing $1.7 million and instead of getting the $25,000 each per community, each would get about $13,281. The other option would be to fully fund the unincorporated account. It would require a funding level of $2.2 million, an additional $1.5 million what's currently in the account." CHAIRMAN OLBERG said, "So it will have the effect of diluting but, what we're trying to do is make sure that small unincorporated communities within boroughs are treated the same as incorporated cities. And I don't see anything wrong with doing that, but we do need to recognize that the incorporated cities within boroughs and the boroughs themselves are going to supply the funds for this to happen in theory." MR. CUSHING said, "In theory, it could happen a number of ways: If the overall capital match funding levels were to remain the same, say $20 million, then you have the choice of either funding the unincorporated account out of the municipal account or leaving it at its current level and prorating it. But in theory you could add, you could have a $21.5 million program and everybody could be pretty much in status quo." CHAIRMAN OLBERG agreed. MR. CUSHING continued, "But given a fixed funding level, your choices are either to prorate the unincorporateds or to fully fund the unincorporated and take it out of the municipal account." REPRESENTATIVE DAVIES asked, "Do we know which ones of these are the new eligibles? It seems to me the one possibility is that, if you looked at this thing at kind of a borough basis, that adding the new eligibles might not necessarily increase the total amount of money that would go into that borough. It would simply allocate it differently." MR. CUSHING said, "It's a case by case situation; in the Lake and Peninsula Borough for instance, that borough is...(getting) $35, $40 thousand, and when it's divided up amongst the unincorporates, they're getting three, four thousand dollars apiece, which is how they're appropriating it out there now. Under the new scenario, they'd be getting $25,000 per each of those ten communities. So you'd be looking at $250, $300, thousand going into that borough as opposed to the $35 or $40 (thousand) that's going into there now." CHAIRMAN OLBERG said, "I'm inclined to think that perhaps it might be worthy of considering lowering the minimum. But I'm not sure that's something we want to do... the dollar minimum." REPRESENTATIVE DAVIES said, "I would agree that probably the appropriate committee to deal with that issue would be the Finance Committee. Perhaps this committee should just flag that as an issue, that they think they ought to consider as to what the effects are in redistribution under these various plans." CHAIRMAN OLBERG said, "An accompanying memo of intent from Community and Regional Affairs perhaps to (the Finance Committee), State Affairs is also a committee of referral. Number 443 REPRESENTATIVE BUNDE said, "To reflect my wishes, it would be for reallocation rather than additional money. Reallocation of the money that's available, rather than additional money." CHAIRMAN OLBERG said, "I think we're all thinking that way...I don't think we're thinking of increasing the funding of the Capital Matching Grants project as much as we are reallocating." MS. BRAND said, "I just want to put on the record that Representative Moses would also like to see the same thing. His intention was to suggest that the money simply be reallocated, not necessarily an addition to the program." Number 457 REPRESENTATIVE DAVIES moved to adopt amendment number one. There was no objection. REPRESENTATIVE TOOHEY moved to adopt amendment number two. There was no objection. CHAIRMAN OLBERG stated, "We are now dealing with committee substitute of HB 393." CRYSTAL SMITH, DIRECTOR OF MEMBER SERVICES, ALASKA MUNICIPAL LEAGUE, testified, "I feel that the Municipal League needs to go on record at this point, since you have indicated an interest in this committee of reallocating the funds. Apparently the total amount of funds which would cause a definite negative impact on organized municipalities. The Municipal League, and in fact I believe it's the basic principal of many parts of the state government, are committed to encouraging the incorporation of municipalities. The Municipal League as an organization has a commitment to making sure that there are incentives to incorporation and incentives to organizing to provide basic services at the local government level, so that the state doesn't have to come in and provide a lot of services. I would just like to say, that if, in fact you are to take the entire pot, whatever size it is and spread it out to an additional 60 communities and give those the same $25,000 minimum entitlement, then we're looking at additional disincentives to incorporation." REPRESENTATIVE BUNDE said, "I think you did also mention that you were encouraging looking at reducing the minimum entitlement." CHAIRMAN OLBERG said, "That's one way it could be addressed, and I agree with Representative Davies that probably Finance is best equipped to do the actual nuts and bolts. But we should certainly send on our thoughts about not adding to the overall cost, and perhaps looking at a reduced minimum as a way to more fairly treat the organized municipalities at this point." LAMAR COTTEN, LOBBYIST, LAKE AND PENINSULA BOROUGH, testified via teleconference, saying, "We concur with the comments made by Representative Moses's staff on this issue. The other comment I would make is that, with reference to Chrystal Smith's comment, I understand her concerns about the incentives and disincentives for municipal organizations. I would take it from a little different tack, and that is we're talking about unorganized communities within a borough. I think the fact that boroughs that have unorganized communities within them, that are treated differently than unorganized communities outside a borough, is a disincentive for areas to organize as a borough. So, I realize that's a small point, but I think it's an important one with respect to other regional areas of the unorganized borough that are looking at future organization in the years ahead." Number 534 REPRESENTATIVE BUNDE moved CSHB 393 out of committee with individual recommendations and an accompanying intent memo. There were no objections. CHAIRMAN OLBERG adjourned the meeting at 2:27 p.m.