HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE January 26, 1995 1:05 p.m. MEMBERS PRESENT Representative Ivan Ivan, Co-Chairman Representative Alan Austerman, Co-Chairman Representative Al Vezey Representative Pete Kott Representative Kim Elton Representative Jerry Mackie MEMBERS ABSENT Representative Irene Nicholia COMMITTEE CALENDAR Organization Meeting Overview of the Department of Community and Regional Affairs by Commissioner-Designate Mike Irwin WITNESS REGISTER MIKE IRWIN, Commissioner-Designate Department of Community and Regional Affairs Community Building, Room 217 Juneau, AK 99811-2100 Telephone: 465-4700 POSITION STATEMENT: Presented overview of the Department of Community and Regional Affairs REMOND HENDERSON, Director Division of Administrative Services Department of Community and Regional Affairs Community Building, Room 216 Juneau, AK 99811-2100 Telephone: 465-4708 POSITION STATEMENT: Commented on the Department of Community and Regional Affairs ACTION NARRATIVE TAPE 95-1, SIDE A Number 000 CO-CHAIRMAN Ivan called the meeting to order at 1:05 p.m. He noted for the record that Representatives Austerman, Vezey, Kott, Elton and Mackie were present. Representative Nicholia was absent. CO-CHAIR IVAN noted rules and regulations and introduced committee staff members: Tom Wright, committee aide; Cliff Stone, committee aide; and Vera Griffin, committee secretary. CO-CHAIR IVAN went on to explain that he will be chairing the committee this session and hand it over to Representative Alan Austerman, Co-Chair, during the next legislative session. He also stated the weekly schedule for the Community and Regional Affairs committee meetings would be Tuesdays and Thursdays, respectively at 1:00 p.m. ending at 3:00 p.m. and at 1:00 p.m. on Saturdays, if necessary. CO-CHAIR IVAN requested that committee members remain present in the committee room upon the signing of committee reports to save on the hassles of having to be tracked down. The rules dictated that a quorum is necessary to vote to take any final committee action and declared that a quorum of four members is necessary for the Community and Regional Affairs (C&RA) committee. Requests for a hearing by the committee must be submitted before noon on Thursday and all packet material must be submitted by 9:00 a.m. of the day before a scheduled hearing. Packets will be available for viewing by noon, but if the packet materials are delivered late, between 9 a.m. and noon, then ten copies of the packet must be delivered to Co-Chair Ivan's committee aide. However, if the packets are not ready for viewing by noon, the bill in question will be rescheduled until the next date allowed under the notification rules. CO-CHAIR IVAN then went on to disclose items that needed to be included in the packets: Sponsor statement; section analysis, if necessary, due to length and complexity; fiscal note(s); position papers from effected agencies or departments; any additional supporting material; committee substitutes will be requested through the co-chairs only. Substantive amendments will require an additional public hearing and major amendments must be submitted to the chair at least 24 hours before the bill is scheduled to be heard. Teleconferences will be scheduled upon the request of committee members or from the public, if enough interest is presented in regards to a particular bill. The committee aide should be contacted for teleconference requests. CO-CHAIR IVAN said committee packets will be available at least 24 hours prior to a hearing. For each committee member, a file drawer is available in the C&RA committee file cabinet located at the back of the committee meeting room. Co-Chair Ivan also mentioned that bills will be heard in the order scheduled and bills may be requested to be scheduled for a specific time. Notice requirements would follow the Uniform Rules of which the 5-day rule applies and the previous 3rd rule also applies. Subcommittees would be assigned by the chair as needed and the sponsor of a bill would NOT be the chair of a subcommittee on that individual bill. Co-Chair Ivan noted that questions should be directed to Tom Wright, legislative staff to Co-Chair Ivan and C&RA Committee aide at extension 4942. Co-Chair Ivan then invited all the committee members to introduce themselves and provide comments. Number 098 CO-CHAIR ALAN AUSTERMAN introduced himself as the Representative of District 6, Kodiak Island, and again reiterated that Co-Chair Ivan will lead the committee meetings during this first session and he would chair during the second session. He requested all inquiries pertaining to the C&RA committee be directed to Representative Ivan and his staff during this session while Representative Austerman would assume the role of just another committee member. Co-Chair Austerman then proceeded to explain that he had no perceived plans or agenda items that he's looking at other than the fact that he would like to see privatization take place in the state of Alaska and to get the government out of some of what the C&RA committee would be doing and where the committee was at on several issues. Co-Chair Austerman then described the rural location that he represents and he stated that many of the issues that the committee will be facing pertain to rural areas and he's pleased to be a part of this committee. Number 125 REPRESENTATIVE AL VEZEY took the floor next and introduced himself and expressed his pleasure at being part of the committee. Number 128 REPRESENTATIVE PETE KOTT, District 24, presented himself as being from the area including the south part of Eagle River and east Anchorage. Representative Kott also stated that he had no particular agenda, and he's confident that the committee will offer some great opportunities to address some of the controversial and much needed ideas and issues that the committee has faced over the past few years. He said he was aware that there are a lot of problems out there. Number 142 CO-CHAIR AUSTERMAN introduced another member from his staff, Sandy Perry-Provost. Number 144 REPRESENTATIVE KIM ELTON, from District 3, described his district which encompasses the metropolitan Juneau area and the rural Douglas area. He said he was looking forward to working with the other committee members and the issues that will invariably crop up during the rest of the session. REPRESENTATIVE JERRY MACKIE described his district which encompasses the 37 small communities in the Southeast. Representative Mackie also stated that during his first two years with the legislature, he chaired the C&RA committee and was quite familiar with the types of issues that will be discussed. He also stated that the Department of Community and Regional Affairs (DCRA) is one of the most important agencies and departments in all of the state government as it related to his constituents and to rural Alaska. He said there is always talk about the C&RA being expendable, but he is definitely not one that believed this. In his opinion, the programs, opportunities, and services that the program provided to municipalities statewide is one of the most important things that this committee could do. Representative Mackie said he was on the committee to participate and offer any services he can. Number 168 CO-CHAIR IVAN recognized Mike Irwin, commissioner-designate for the Department of Community and Regional Affairs. Number 172 MIKE IRWIN, COMMISSIONER-DESIGNATE, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS, introduced himself and explained how Governor Knowles had selected him as the commissioner of the DCRA. Commissioner Irwin went on to introduce two people that he'd brought with him: Remond Henderson, director of the DCRA Administrative Services Division; and Kim Metcalfe Helmar, Mike Irwin's special assistant who would be acting as his legislative liaison throughout the session. Commissioner Irwin confirmed that this meeting was an opportunity for him to give a Department of Community and Regional Affairs overview, but that other overviews of the smaller divisions were scheduled for upcoming meetings, giving the members more of an opportunity to get to know more about the specifics of the four divisions. He referred to the comments made by Representative Mackie, also confirming that the DCRA is looked at as a department that oversees a lot of rural issues, but that it wasn't the only thing done by the department. The Department of Community and Regional Affairs has about a $150 million budget and approximately 200 employees statewide including: Anchorage, Juneau, Kotzebue, Nome, Bethel, Fairbanks and Dillingham. Another duty Commissioner Irwin said Remond Henderson would be involved with would be as the department historian, helping to fill in the blanks for Commissioner Irwin. COMMISSIONER IRWIN then proceeded to comment on each of the four divisions, beginning with the Division of Administrative Services, which Remond Henderson oversees. This division covers finance, budgeting and ensures the protocol of the DCRA in terms of their expenditure of state dollars. He then listed the three divisions which deliver services. The first being the Division of Energy. According to Commissioner Irwin, this division is the rural component of the old Alaska Energy Authority (AEA). It currently employs about 32 people. Its purpose is to oversee the management and disbursement of the power cost equalization (PCE) dollars throughout rural Alaska. This AEA component also provides rural technical and engineering assistance in order to keep power going in the villages. It was the understanding of Commissioner Irwin, that it hasn't necessarily been an easy fit getting the Division of Energy moved into the bureaucratic structure of state government. Over the past year, however, Commissioner Irwin has done a bit of research and talked with several people, noticing that the division has settled down into the DCRA family and is now focusing on what it needs to be doing. COMMISSIONER IRWIN discussed the Division of Municipal and Regional Assistance (MRA) which is charged with the technical aspects of Title 29, helping municipalities, especially the rural ones, with their technical difficulties. This service is provided through the local governments and through specialists who travel to the villages on kind of a circuit rider basis, helping with basic administration within the municipality. This division also conducts and oversees the municipal assistance and revenue sharing programs where state dollars are shared back with the municipalities. Irwin said this was probably an issue everyone is hearing about and will continue to do so, since the municipalities have taken roughly a 55 percent cut in their municipal assistance and revenue sharing since 1986. Commissioner Irwin stated there wasn't a firm administration position on this, but the DCRA heard quite a bit about it. Within the MRA Division, the local boundary commission is also run, mainly dealing with municipalities and corporations in which several municipalities were attempting to unincorporate. COMMISSIONER IRWIN thought the most interesting division was the Division of Community and Rural Development. This is one place that he believed he brought some particular background knowledge. He also said this division would allow the Knowles Administration to go forward with its goals of economic development, creating jobs within the state and could be an important development of welfare reform. This division has state training programs, as well as child care and real economic development programs for rural small businesses. Commissioner Irwin said this will help start attacking the chronic problem of lack of jobs in rural Alaska and the lack of good paying jobs in all of Alaska, allowing the welfare recipients to move off of welfare through training, child care support and headstart programs. Commissioner Irwin asked Remond Henderson if he had anything more he would like to add. Number 307 REMOND HENDERSON, Director of Administrative Services, Department of Community and Regional Affairs, stated there hadn't been any significant restructures within the department. He said once Commissioner Irwin has had an opportunity to really get in depth into Governor Knowles' programs agenda, then we would see some changes. COMMISSIONER IRWIN stated that as far as the budget goes, the DCRA was participating in helping the Administration put together a supplemental budget. The department didn't have very much in the way of DCRA requests. The department was also doing its share in constructing the Knowles budget for 1996. Commissioner Irwin welcomed any specific questions from the committee concerning the department or what the roles and objectives might be. Number 330 REPRESENTATIVE KOTT asked about the budget and specifically what percentage of the budget was derived from federal monies. Number 334 COMMISSIONER IRWIN responded that he had no idea, but he indicated that Mr. Henderson would be the person to ask. Number 337 CO-CHAIR IVAN requested Remond Henderson to move to the witness table. Number 340 MR. HENDERSON answered the federal funds budgeted for FY 96 are about $27 million out of the $150 million budget. Number 347 CO-CHAIR AUSTERMAN expressed his appreciation at the presentation by Commissioner Irwin and his aides, recognizing that it's not easy to be "the new kid on the block" and that one could get easily frustrated. He again indicated that privatization is one of the big issues that he's going to continue to push, not only in the CRA committee, but in several other committees as well, hoping to get government out of some of the things the legislature was doing and getting the private sector in, which he believed would do it cheaper and probably better. He stated one of the biggest problems the DCRA is faced with is bulk fuel tanks and fuel storage out in the rest of the state. Co-Chair Austerman said he would appreciate a separate meeting regarding his hopes for growing telecommunication systems. He stated that monitoring bulk fuel tanks from regional areas such as Anchorage or Fairbanks can be accomplished and this system could solve continuing spillage into the ground if the private sector were to take over an operation like this. The DCRA would have some responsibility in terms of having to go back and clean up some of the existing problems, but if the DCRA were to react properly, with the private sector, the DCRA could stop the majority of the problems that are continuing to be generated by the leakage of fuel tanks. Co-Chair Austerman hoped this topic will appear on the agenda soon and that this committee can look toward the future. COMMISSIONER IRWIN expressed his appreciation at the remarks of Co- Chair Austerman and confirmed that it was an issue that has been facing him the past few weeks since he began his role as commissioner. He said he has been actively talking with several people including a meeting with the Coast Guard on this particular subject. Commissioner Irwin also related that he's met with one private corporation that has been looking to get into the business of consolidation of tank farms in specific communities. He stated it was not only looking at the long term goal of environmental safety, but also at how it can better become a money making business bringing affordable fuel to many of the communities. Commissioner Irwin explained that he was planning on meeting with a major fuel supplier on the Yukon River to find out the bargeline's views on this particular subject. The DCRA was contacting people and Commissioner Irwin met with the chairperson of the Bulk Fuel Task Force to get her ideas on this issue. Commissioner Irwin said the DCRA was working on it and agreed that it was a big, expensive problem that was going to take a lot of participation from the private sector. Number 407 CO-CHAIR AUSTERMAN also stated that it didn't have to be an expensive proposition for the state of Alaska if the private sector was willing to go in and help do some of this and solve some of the immediate problems. He again reiterated CRA's responsibility of having to go back to clean up the present mess. He agreed that it didn't have to be a big state problem or financial burden on the state, if the DCRA invites the private sector in to help with this issue. CO-CHAIR IVAN encouraged innovative ideas and public/private partnership solutions to address some of these issues. His example concerned the point brought up by Commissioner Irwin and the bulk fuel tank problem. He informed the committee that it was a $200+ million solution and that there are ways and means to get this solved. He encouraged the DCRA to come up with a way to solve it. Number 422 CO-CHAIR AUSTERMAN commented on power cost equalization tied with the circuit rider program in reference to repairing the generator sites in villages. He said he looked into this and talked with a few people involved in this program. He confirmed that he has two or three villages on Kodiak Island involved with this program and he met two of the villages during his campaign for election. Both these villages had nothing but absolute raves for how well this program worked. Karluk village had been having problems for years, with the Coast Guard flying barrels of oil in, and now has had no fuel problems thanks to the new circuit rider program. For the past two years, they have been able to claim that they have not been without electricity. Part of the program Karluk and Akhiok were involved in is called Powerstat, which is basically credit card electricity where you go buy electricity and punch it into a credit card first. When the credit card runs out then one is out of electricity. At that point, the card has to be renewed. This program has helped put these villages on more of a financial program than they've been on before. It made them more responsible for themselves and that was another positive aspect of the Powerstat program that Co-Chair Austerman suggested the DCRA take a look at. He again reiterated the slow workings of the AEA in the past; in terms of getting fuel, repairs and help out to the villages. The circuit rider program along with the private sector, things should become quite a bit more economical and convenient in terms of their reaction time. Number 460 REPRESENTATIVE KOTT spoke toward a comment made by Commissioner Irwin, that he brought expertise and knowledge to the table in response to looking at rural economic development programs. He asked Commissioner Irwin if he had any thoughts on how the department could create or instill job opportunities in the private sector in rural Alaska. Number 467 COMMISSIONER IRWIN replied that there was no easy answer, otherwise it would have been found a long time ago. The Alaska Native Commission (ANC) was asked by Congress to take a look at Alaska Native and rural issues and come up with some innovative means to address some of the longstanding problems. The ANC looked at all different areas and aspects of rural existence and of Native life in the 1990s and found that economic development was the toughest issue. Commissioner Irwin didn't know if he felt comfortable that the ANC even approached being able to come up with some good answers. Subsistence and some of the tribal governments and some other hot issues caused so much conflict within the state and was difficult to grasp and understand. Those, according to Commissioner Irwin, became fairly easy issues as compared to economic development. He stated that the Community Development Quota (CDQ) program, for which the DCRA is the lead agency, provided important economic development for the first time in the areas that really need the economic help the most. The DCRA was seeing economic infrastructure being put into place with a base around a resource extraction industry. Commissioner Irwin didn't know how applicable this program would be to industries and areas, but he thinks it might help the DCRA to find answers as modeling for other areas of the state. Commissioner Irwin said that jobs had to be looked at one at a time, at economic development one community at a time to the extent that the DCRA possibly could. He stated that rural Alaska is quite different once you start realizing the potential for economic development and the DCRA is trying to be more strategic in the resources available to the DCRA rather than sending off shotgun blasts all over rural Alaska. The department has been trying to look at those places where the rural communities have particular strengths and is trying to fashion its assets to meet those particular circumstances, whether it be tourism in some areas or resource development in other areas or possibly small businesses or cottage industries. It could be a combination of any number of approaches and it had to be focused on communities or clusters of them. Number 514 CO-CHAIR AUSTERMAN made an observation regarding economic development, in that he saw a little bit of duplicity in some of the economic development plans going on in the state government between the Department of Commerce and Economic Development and the DCRA. Co-Chair Austerman stated the tourism industry, as an example, was something that was probably going to grow at a much faster rate in the rural areas than in the urban areas because the urban areas have already pretty much developed. Co-Chair Austerman questioned whether the effort that the DCRA would be putting into tourism would be duplicated to some degree as to what is going on in the Division of Tourism. He said he was unsure as to whether or not the committee should look into this or whether the committee should ask the third floor to take a look to see if there wasn't something that couldn't be tied together that wouldn't create a duplicate effort. Number 530 COMMISSIONER IRWIN replied that the DCRA has been looking at this problem and it was one of the first charges that Governor Knowles gave Commissioner Irwin upon his appointment. He said he was to start working with the Commissioner of Commerce and Economic Development, Mr. Hensley, to see if there was the kind of situation described by Co-Chair Austerman. He said many people feel there is a problem with duplicity. They want to see what can be done to bring efficiencies to the programs and that perhaps there are reductions that could also happen, if the DCRA had better coordination, and by even combining some of those programs. Commissioner Irwin used the example of tourism by Co-Chair Austerman. He stated it was his understanding that the Department of Commerce and their tourism efforts are aimed more at marketing Alaska as a destination rather than helping in any kind of large way. Commissioner Irwin said that it might be good to get involved in the development of tourist destinations outside of the urban areas. He knew at one time, the DCRA had a plan they gave to communities for tourism development. He stated things can always be done better and more efficiently, and he has had two meetings with Commissioner Hensley to discuss this situation to try to resolve it because this issue has been longstanding. He didn't know from the research he has been doing that there is not so much duplication as there was a lack of coordination and cooperation. Commissioner Irwin stated this is where it needed to be attacked first and if there is duplication, those would be areas for savings in the state budget. Number 554 CO-CHAIR IVAN remarked on tourism and the DCRA's oversight. In his district, he cited Kwethluk as an example. The community was given an opportunity by the federal government where outside businesses could come in and raft down the river. However, this community was not prepared to deal with this proposal. Co-Chair Ivan said tourism is coming but the federal government cannot come in and shove this down a community's throat. He stated that on the other hand, his community of Akiak is looking at tourism and bringing in fishermen for a fee. Marketing is problem though. Akiak needs marketing assistance and to hook up with other lodges without the government infringing with the exception of providing marketing assistance, even for a fee if necessary. Number 579 COMMISSIONER IRWIN commented on another difficulty which was rural Alaska didn't all come under one definition. From the smallest, most traditional communities to larger, rural centers such as Kodiak, there were a lot of differences. The smaller the community, the greater the potential for lack of expertise, infrastructure, leadership and economic savvy and to be able to get it into those small businesses. He confirmed saying there are local issues, as in the Kwethluk situation, where people are torn between knowing they need to have a jobs-based economy, but at the same time, fearful of what development might do to their way of living and way of life. They knew what their current life stands for and not quite sure what changes or what ill effects changes through development might bring. People will be resistant to some of these ideas, even though they know that economic development means jobs for their children and better futures for their children. Commissioner Irwin said it was a real tricky balancing act that the local people have to play and the DCRA was there to assist. Number 600 CO-CHAIR IVAN invited the rest of the committee to ask questions or comment. Number 602 REPRESENTATIVE MACKIE commented that there will be a confirmation hearing scheduled sometime for Commissioner Irwin. He also wanted to say for the record that he appreciated the Commissioner on the fact that he's here and that he understood anytime you take on a new responsibility, especially a new department, that it does take some time to get familiar with all the programs. Representative Mackie stated there are good people in the DCRA. He was also appreciative of the fact that the committee has taken on this challenge and he looked forward to working with the Commissioner. Representative Mackie said many of the problems in rural Alaska is due to the fact some of the communities are so small and there is no market or ability for private companies to come in and take over, especially with the cleaning up of the old, deteriorating fuel tanks with their constant fuel leakage. He understood that there are a number of communities that the Coast Guard had threatened by saying they couldn't have their fuel delivered anymore due to the lack of facilities. However, Representative Mackie said there isn't a big enough market in those communities for a company to come in and make an investment in new tanks and all the regulations required, so it really is incumbent upon the DCRA to try to find a way to assist these small communities and give them what we all take for granted. He hoped that the DCRA would be mindful of many of these concerns. In the larger areas, many things could be sustained by private enterprise, such as in his home community of Craig. He reemphasized the help of the state in making such fuel trips to rural places like Akiak possible, because the cost of the transportation is quite high. Without this help, small communities could be without even the essentials. These are things that Representative Mackie said are really crucial and the job of the DCRA to continue to look after. Number 637 CO-CHAIR IVAN said he was sure that Commissioner Irwin and the CRA committee would grow together and he hoped that within several weeks, the committee will have a grasp of the issues in the different departments. He hoped the committee would progress at this level and was anxious to get a handle on the various programs and departments. He said he was confident the committee would get there at its own pace. The committee has a lot of work on its hands and will touch on issues that affect different parts of Alaska, be they big or small communities. He asked the committee members if there were any more questions or comments. Number 650 CO-CHAIR AUSTERMAN referred to Representative Mackie's comment, saying that he was not totally pushing privatization on every small community or issue since there was obviously going to be a lot of different places that just didn't fit into programs as far as privatization is concerned. He said the state should be helping but he said privatization isn't the only answer. In some cases it did work, as with the community of Karluk where they solved their problems. Number 658 CO-CHAIR IVAN announced the next scheduled committee meeting as well as the proposed agenda for Tuesday, January 31. HB 80 and HB 86 would be read and discussed. In the meeting scheduled for February 2, HB 20 would be heard and further hearings of bills would take place when necessary. Co-Chair Ivan announced that the next two meetings would be on teleconference and invited committee members to ask their district communities to participate. ADJOURNMENT There being no further business before the House Standing Committee on Community and Regional Affairs, Co-Chair Ivan adjourned the meeting at 1:49 p.m.