HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE February 14, 1995 1:03 p.m. MEMBERS PRESENT Representative Ivan Ivan, Co-Chair Representative Alan Austerman, Co-Chair Representative Jerry Mackie Representative Kim Elton Representative Irene Nicholia MEMBERS ABSENT Representative Al Vezey Representative Pete Kott COMMITTEE CALENDAR Presentation by the Local Boundary Commission * HB 146: An Act relating to sled dog race classics." PASSED OUT OF COMMITTEE Confirmation hearing for Commissioner Designate Mike Irwin to the Department of Community and Regional Affairs. (* First public hearing) WITNESS REGISTER DARROLL HARGRAVES, Chairman Local Boundary Commission Department of Community and Regional Affairs 333 West Fourth Avenue, Suite 220 Anchorage, AK 99501 Telephone: (907) 269-4500 POSITION STATEMENT: Gave overview of the Local Boundary Commission DAN BOCKHORST Local Boundary Commission Department of Community and Regional Affairs 333 West Fourth Avenue, Suite 220 Anchorage, AK 99501 Telephone: (907) 269-4500 POSITION STATEMENT: Answered questions concerning the Local Boundary Commission BRYCE EDGMON, Legislative Aide to Representative Richard Foster Alaska State Legislature State Capital Building, Room 412 Juneau, Alaska 99811 Telephone: (907) 465-3789 POSITION STATEMENT: Gave sponsor statement for HB 146 MATT DESALERNOS, Chair Iditarod Trail Committee Board of Directors P.O. Box 1630 Nome, AK 99762-1630 Telephone: (907) 443-5555 POSITION STATEMENT: Testified in support of HB 146 JOHN HANDELAND, Mayor City of Nome P.O. Box 1630 Nome, AK 99762-1630 Telephone: (907) 443-5555 POSITION STATEMENT: Testified in support of HB 146 STAN HOULEY, Executive Director Iditarod Trail Committee 165 East Parks Highway, Suite 106 Wasilla, AK 99654-7035 Telephone: (907) 376-3704 POSITION STATEMENT: Testified in support of HB 146 JOANN POTTS, Director Iditarod Race 165 East Parks Highway, Suite 106 Wasilla, AK 99654-7035 Telephone: (907) 376-3704 POSITION STATEMENT: Testified in support of HB 146 JEFF PRATHER, Acting Director Charitable Gaming Division Department of Revenue P.O. Box 110440 Juneau, AK 99811-0440 POSITION STATEMENT: Answered questions on HB 146 MIKE IRWIN, Commissioner Designate Department of Community and Regional Affairs P.O. Box 112100 Juneau, AK 99811-2100 Telephone: (907) 465-4700 POSITION STATEMENT: Gave personal history and work background PREVIOUS ACTION BILL: HB 146 SHORT TITLE: SLED DOG RACE CLASSIC SPONSOR(S): REPRESENTATIVE(S) FOSTER, Phillips, Mulder, Navarre, Brice Grussendorf, Toohey, Ivan JRN-DATE JRN-PG ACTION 02/03/95 235 (H) READ THE FIRST TIME - REFERRAL(S) 02/03/95 235 (H) CRA, L&C 02/13/95 343 (H) COSPONSOR(S): IVAN 02/14/95 (H) CRA AT 01:00 PM CAPITOL 124 ACTION NARRATIVE TAPE 95-2, SIDE A Number 000 CO-CHAIR IVAN called the House Committee on Community and Regional Affairs to order at 1:03 p.m. He went over the meeting agenda and proceeded to introduce Darroll Hargraves, Chair of the Local Boundary Commission. Number 031 DARROLL HARGRAVES, Chair, Local Boundary Commission (LBC), noted the attendance by other commission members from around the state including Anchorage, Sitka, Nome, and Fairbanks. He then read the handout, given to all the committee members concerning an overview of the Local Boundary Commission beginning with the role and duties of the commission. The Local Boundary Commission was established under Alaska's Constitution to ensure that municipal boundary proposals would be considered objectively and with a statewide perspective. Of the 130 or so State boards and commissions, only the Local Boundary Commission and four others have origins in Alaska's Constitution. The duties of the commission include acting on proposals for municipal incorporation, annexation, detachment, dissolution, merger, consolidation, and reclassification of cities. The LBC consists of five members, each appointed from Alaska's four judicial districts and one appointed at-large. These members serve overlapping five-year terms during which they are not compensated. The Department of Community and Regional Affairs provides the staff support to the commission. Last year was a busy year for the commission which met 16 times and approve petitions for several communities including the incorporation of the City of Egegik, annexation to the City of Sand Point, and dissolutionment of the City of Atmautluak, City of Kasigluk, City of Newtok, City of Tununak, and City of Tuluksak. Incorporation of the City of Egegik remains subject to approval by the local voters. The Egegik incorporation election will be conducted at the end of next month and results are expected to be certified by April 10. Dissolution of the five cities is subject to review by the legislature. Formal recommendations for those dissolution proposals were filed with the legislature by the commission on January 25. Under the law, the recommendations receive automatic approval from the legislature unless the House and the Senate adopt concurrent resolutions rejecting the recommendations. The resolutions must be adopted by both houses within 45 days of the date the commission filed the recommendations. If not rejected by the legislature, the dissolutions will take effect upon the satisfaction of certain conditions. The conditions are intended to ensure that the cities' debts are paid, that their assets and liabilities are transferred to local successors and that other appropriate transition measures are carried out. At the present moment, there are a number of actions that are currently pending: reconsideration of the northwest boundary of the Lake and Peninsula Borough; dissolution of the City of Akiak; detachment of 5,400 square miles from the Fairbanks North Star Borough; incorporation of the 10,000 square mile North Pole Borough; and the reconsideration of the incorporation of the City of Pilot Point. The commission is not allowed, under state law, to discuss pending matter. In the commission's annual report to the legislature, they addressed several policy issues: Growing interest in borough detachment; growing interesting in dissolution of cities; the lack of limitation on the authority of municipalities to levy certain taxes; and the lack of compensation for the commission. In the first issue, the commission sees growing disenchantment with the status quo. Interest in detachment from boroughs is promoted in part by rising local taxes, due to some extent from declining state aid; and perceptions of inequities in the current regional government structure (organized boroughs vs. the unorganized Boroughs.) The interest in dissolving city governments is on the rise, particularly among communities in the Lower Kuskokwim Region. This appears to be the result of a desire to return to more traditional ways of governance. This potential exists, however, for communities in other parts of Alaska to seek dissolutionment of their cities as well. In many cases, there are few incentives to maintain municipal status. Communities that detach from boroughs or dissolve their city governments can enjoy a substantial level of services without the burdens and responsibilities of municipal government. Unincorporated communities may receive: State revenue sharing; capitol project matching grants; state-funded education; and police protection (Troopers or VPSO). These remarks aren't judgments, but observations. However, it is reasonable to expect the number of proposals for municipal detachment and dissolution to increase in the future. The commission offers two suggestions for legislation to enable the state to deal more effectively with dissolution of cities. The first is to permit tradition councils to hold title to real property. As outlined in our annual report, such will eliminate a major obstacle to the dissolution of cities in Native communities that lack IRA Councils. The commission notes that the legislature has previously enacted provisions to allow entities that lack corporate status to hold land. The second is to broaden the law concerning succession to assets, liabilities and duties of a dissolved municipality. Currently, the law provides that another municipality or the state will be the successor. The commission urges the legislature to consider expanding the law to permit a village council to succeed to a municipalities assets, liabilities and duties. Under the subject municipal authority to levy taxes, concerns continue to be expressed over the lack of limits on the authority of municipalities to levy sales taxes. Concerns were expressed recently over the proposed incorporation of the City of Egegik. Some municipalities, however, receive even higher per capita revenues from taxes than would the prospective City of Egegik. The commission offers no proposals to limit such authority, however, it wishes to ensure that the legislature is aware of the concerns being expressed. The last subject that Mr. Hargraves brought up concerned compensation for the members of the commission. He said that he and the other members are appreciative of the efforts of others to try to get compensation for the members of the commission. He wanted to point out that the commission members volunteered their time to respond to the duties of the commission often in remote locations. He also gave an estimate per member/per day of compensation stating it would not exceed $18,750 per year. He said that without the compensation, it would be difficult to find qualified Alaskans willing to stay on the commission. Mr. Hargraves again reiterated the complexity of the commission's schedule is based on the time-line posted at the back of the overview. Number 307 CO-CHAIR IVAN welcomed any comments or questions from the committee members. Number 310 MR. HARGRAVES invited Mr. Dan Bockhorst to come forward to help answer any questions. Number 315 CO-CHAIR ALAN AUSTERMAN asked about the compensation the commission had requested. He wanted to know whether the commission was receiving per diem, at the present moment, for travel. Number 319 MR. HARGRAVES confirmed that the commission received actual expenses based on receipts. Number 321 CO-CHAIR AUSTERMAN asked about the $150 per day and whether it would be in addition to the money given based on the receipts. He wondered how the compensated money would be projected. Number 324 DAN BOCKHORST, Local Boundary Commission, Department of Community and Regional Affairs, answered that the money would be given on the basis of board meetings in that the $150/day was per day of meetings. Number 327 MR. HARGRAVES said he was surprised to find out that other boards and commissions around the state receive compensation. He said he was unsure about how to support the commission's desire for compensation until he realized others around the state are compensated. Number 333 REPRESENTATIVE JERRY MACKIE asked to confirm the comment made by Co-Chair Austerman about the $150 per day. He wanted to clarify that this money would actually be compensation for food and lodging and not just another type of per diem. Number 339 REPRESENTATIVE KIM ELTON commented on the commission's desire for compensation in that if the legislature decided to award this board with the $18,750 requested, wouldn't another board put forth a good argument requesting compensation? He felt that if the money was given to this commission then the committee might feel compelled to answer to the demands of others as well. Number 350 REPRESENTATIVE MACKIE said that having chaired this committee before, this isn't the first time the compensation request has been brought before the committee. Number 364 MR. HARGRAVES also confirmed the fact that this issue has been around for a number of years. He has noticed that the commission's work load has increased significantly, in recent years. and it would be difficult to keep professional people on the job due to the lack of compensation. Number 376 CO-CHAIR AUSTERMAN asked about the reasons for dissolving some of the communities. He wanted to know what the commission had in mind in terms of how to look in the opposite direction and help the dissolutioned community keep from becoming insolvent or encourage them not to dissolve their corporations, rather than just looking at what to do with the assets derived from dissolutionment. Number 391 MR. HARGRAVES stated that he felt encouragement and motivation provided for a community would help them to stay organized. He's personally concerned with the community's ability to dissolve a local government. In some instances that he's witnessed, he's seen communities that haven't had an election in several years or have tried to keep their local government council running, so the commission is unsure as to how to motivate these communities to stay as a government. He also said that these communities witness the success of other non-government organized communities under the guidance of non-profit corporations receiving funds for their communities. Number 407 CO-CHAIR IVAN commented on his own community of Akiak which has been considering dissolutionment. He felt that improvement of communication and services between the communities and the state government could possibly prevent these communities from dissolving. Number 426 CO-CHAIR AUSTERMAN asked if this high number of dissolving communities was normal. Number 429 DARROLL HARGRAVES said that the commission hadn't seen this much dissolutionment before and he passed the comment on to be answered by Dan Bockhorst. Number 433 MR. BOCKHORST also agreed to this and said that it had become the responsibility of the state of Alaska to dissolve these local governments. This was due to the fact that the residents of these communities had just abandoned their city governments which they've been for the past six to eight years. The commission recommended to the legislature that the city governments in those communities be dissolved. He feels that it is an unusual amount of activity but he feels the commission foresees the interest in dissolutionment in other communities. Number 443 MR. HARGRAVES commented on the communities and their feelings concerning whether to form a government or to dissolve and their struggle to support their community's best interests. Number 449 CO-CHAIR AUSTERMAN wanted to know whether the representative from the Department of Community and Regional Affairs would be bringing anything before the legislature to help solve the problem of community government dissolutionment. Number 457 MR. BOCKHORST pointed out two issues that DCRA viewed as being important; one, the option to allow a village council to be a successor to a city government, rather than making it the responsibility of the state of Alaska; two, and allow a traditional council to receive conveyances of land. Dan felt that these would eliminate significant obstacles in the way the commission has been dealing with dissolutionment. Number 464 CO-CHAIR AUSTERMAN noted that this still didn't help the community stay whole but only supported the dissolutionment of a community. Is Community and Regional Affairs (CRA) looking at the opposite end of this issue and instead of figuring out how to dissolve the community governments but how to keep them together. Number 470 MR. BOCKHORST expressed the concern of the department, but he noted that when a community abandoned its city government, they gave up substantial revenues. The communities reasons for abandoning their governments could be because they want to return to more traditional ways of governance. Mr. Bockhorst stated that the department is interested in options other than dissolutionment, but the department didn't know how to compel a community to upkeep their state political subdivision if they don't want to operate it. He also noted that the department had supported and offered assistance to those communities and offered greater funding and revenue sharing and is willing to look at other options. Number 484 REPRESENTATIVE ELTON asked what happened to the match funds available to municipalities when the city government was inoperative. He wanted clarified the fact that when municipalities gave up their governments they also gave up their share of government funding. Number 491 MR. BOCKHORST agreed to this and stated that this was the worst position for these communities to be in because these municipalities don't qualify for state revenue sharing or municipal assistance. Upon their dissolutionment, these communities could at least receive a smaller level of revenue sharing and be eligible for capitol matching project grants. At the present moment, with their city governments not functioning, the state isn't giving out any money for programs outlined by Community and Regional Affairs. Number 499 REPRESENTATIVE MACKIE commented on the Local Boundary Commission. He's had both good and bad experiences working with the commission, and felt that the commission served a very important function in the state. He brought up a personal incident concerning his district that served to vary his opinion of the value of the Local Boundary Commission. This involved the annexation of the Green's Creek Mine into the City and Borough of Juneau. This mine was located in Representative Mackie's district, and the case concerning it stated that since Juneau people worked at the mine, it should be annexed for tax purposes. Representative Mackie stated how opposed he was to this decision, because during this same time, this revenue generating area was undergoing a survey to determine whether it could become a potential borough. He stated that if an area wished to become a borough they would have to have the financial means to do this successfully. In what he's seen, he felt that the big boroughs and municipalities, in drawing in these potential financial areas, have served to diminish the incentive of these rural boroughs in running their own local governments. He felt it was wrong of these big boroughs to try to take areas that would financially benefit them, and he hoped that the new and old commission members would look toward the future and keep in mind these small municipalities. Number 557 REPRESENTATIVE ELTON felt that the comments were important and that CRA should be in the position to encourage the formation of local governments. He also said that the removal of a substantial tax base from a rural area gets in the way of this formation. His only disagreement with this wasn't the fact that the city of Juneau approached the small community, but that the small rural area came to the big borough and asked to be taken. Number 567 CO-CHAIR IVAN thanked the commission for coming before the committee and presenting their overview. Number 573 REPRESENTATIVE MACKIE moved that the committee ask the co-chairmen to evaluate the recommendations put forth by the Local Boundary Commission and work directly with them to offer a piece of legislation that CRA could sponsor in dealing with the recommendations as well as with the compensation requests. He felt it was the duty of the committee to try to help this commission. Number 580 CO-CHAIR IVAN heard no objections, it was so ordered. He again thanked the Local Boundary Commission for attending. HCRA - 02/14/95 HB 146 - SLED DOG RACE CLASSIC CO-CHAIR IVAN then asked the person attending on behalf of Representative Richard Foster to come forward and introduce HB 146, pertaining to sled dog race classics. He also recognized those waiting on teleconference from Nome and Mat-Su to give testimony regarding this bill. Number 593 BRYCE EDGMON, Legislative Aide to Representative Richard Foster, sponsor of the measure, introduced HB 146 which would help the Trail Committee raise money. He gave some estimates in terms of the money loss faced this year and next; $390,000; and $175,000. This loss is due at large from the withdrawal of corporate sponsorships. He paralleled the race itself to the race to keep the Iditarod financially afloat. The only alternative to this would be that there wouldn't be an Iditarod Race in the future. The purpose of HB 146 would allow the Trail Committee to conduct a statewide raffle to guess the arrival time of mushers at various checkpoints. Mr. Edgmon stated that the bill wouldn't authorize the individual wagers on any particular musher. Number 624 CO-CHAIR IVAN welcomed any comments. He also commented on how important the Iditarod was to the state's economy and that he supported it. He then welcomed the testimony from Mr. DeSalernos in Nome. Number 630 MATT DESALERNOS, Chair, Iditarod Trail Committee Board of Directors, testified via teleconference from Nome. He strongly supports HB 146. He felt that this would help develop a sound financial future for the race. He also added that it gave Alaska tremendous exposure both nationwide and worldwide and was good for the marketing program for the tourist industry. He felt that HB 146 would serve its purpose of getting money for the race without the committee having to come to the state government asking for the money. It would give a firmer standing for the Iditarod Committee which would be a benefit for all Alaskans. Number 655 JOHN HANDELAND, Mayor, City of Nome, testified via teleconference. He stated that his council recently passed a unanimous resolution in support of HB 146. He said that over the last several years, he's been a volunteer for the Iditarod, and he's met with people from all over the world that follow the Iditarod on a regular basis. He felt that the Iditarod was a very important race, not just for the local community, but for the state of Alaska as a whole. The great tourism potential and outside funding was something Mayor Handeland felt couldn't be overlooked. HB 146 would provide another vital tool to base the Iditarod as self- sufficient. Number 681 REPRESENTATIVE MACKIE asked Mayor Handeland about the amount of money that could be raised from this classic based on estimates from other classics. Number 684 MAYOR HANDELAND replied that there are other authorized classics, and he hadn't looked through those estimates. He felt that this classic would bring in a substantial amount of money if marketed properly. He hoped that the raffle tickets would be available statewide to maximize the benefits from the program. Over the last year, funding has come from local communities throughout the state, and corporate sponsors but it's not expected for them to continue funding to the extent that they have recently. Number 700 REPRESENTATIVE MACKIE wanted to make a suggestion saying he was all for HB 146 and he wanted all of the funding to be from the state of Alaska. His suggestion concerned his desire for members of the committee to do a quick analysis for future hearings of this bill to come up with an estimate based on other classics. By coming up with an actual dollar amount, it would show others the substantial amount of money that could be raised by Alaskans. Number 712 MAYOR HANDELAND agreed with this suggestion, and he followed up by saying that he hoped there would be substantial interest raised on the national level by those visiting Alaska and who purchase a ticket and who actually follow the race. TAPE 95-2, SIDE B Number 000 CO-CHAIR IVAN welcomed the comments from Stan Houley, in Mat-Su, testifying in support of HB 146. Number 006 STAN HOULEY, Executive Director, Iditarod Trail Committee, felt that this bill would allow a diversity in the funding base. He estimated a monetary amount from the sale of the classics which he felt could be close to a million dollars. This was generated on the basis of looking at the amount raised for the Nenana Classic which ranged around $200,000. This classic is more regionalized than the iditarod, and he believes that the million dollar figure is achievable. He urged the committee to consider the benefit of giving the trail committee a tool with which to make itself more successful. Number 077 CO-CHAIR IVAN introduce Joann Potts testifying from Mat-Su. Number 080 JOANN POTTS, Director, Iditarod Race, said she's been involved with the race for the past twenty years and she felt that it was important for the race to be able to continue. She strongly endorsed the proposed bill. Number 094 CO-CHAIR IVAN welcomed comments and questions at this point. Number 095 REPRESENTATIVE ELTON asked for clarification in determining the difference between a sled dog race classic and a dog mushers contest. Number 099 MR. EDGMON called upon Jeff Prather to answer the question. Number 105 JEFF PRATHER, Acting Director, Charitable Gaming Division, Department of Revenue, stated that he didn't think there was a difference between the two. This bill would prevent any other charitable organization from conducting a dog mushers contest. Number 120 REPRESENTATIVE ELTON followed up with a comment stating that HB 146 would prevent the occurrence of other organizations reaping the benefits of such a raffle and would give exclusive right to the trail committee. Number 125 CO-CHAIR IVAN expressed his appreciation for all the testimony supporting the bill. Number 129 MR. EDGMON added that SB 66 was a companion bill that had passed out of the Senate Finance Committee that morning and was headed toward the Senate Resources Committee. He also stated his appreciation at the willingness of the committee to hear HB 146. Number 138 REPRESENTATIVE ELTON moved to pass HB 146 out of the House Community and Regional Affairs Committee with individual recommendations. Number 144 CO-CHAIR IVAN requested the committee to take a short break before the confirmation hearing of Commissioner Mike Irwin. Number 154 CO-CHAIR IVAN brought the committee back to order at 2:00 p.m. and invited Commissioner Designate Mike Irwin to come forward before the committee and give a brief history of his life. Number 158 COMMISSIONER MIKE IRWIN started with an introduction. He was born on the upper Kayakuk River, his mother's hometown. At the age of six, his family moved to Nenana where his father was a heavy equipment operator and his mother helped around the home as well as subsistence fished and hunted. He went through high school at Nenana and then went to the University of Alaska at Fairbanks for three semesters, after which he transferred to the Pacific Lutheran University. He got his undergraduate degree there and shortly thereafter got married and started his family. In 1982, he got his masters in public administration. Since then, he began his career working for several entities in the Native communities and with government. He worked for two of the state's largest regional non- profit Native corporations: Tanana Chiefs, and Tlinget and Haida Central Council. He also worked at two of the largest regional Native corporations: Doyon; and Sealaska. He worked various positions including vice-president at Doyon Limited for about four years. During the Cooper Administration, he worked for about 2 1/2 years as a special assistant on rural Native affairs. Before being appointed as Commissioner, he was executive director of the Alaska Natives Commission which was a joint federal/state commission funded by the two governments. He was instructed to look at the social and economic condition of Alaska Natives following the Alaska Native Claims Settlement Act (ANCSA) and bring forth recommendations on policy approaches and potential legislation that affect Alaska Natives both socially and economically. He ended by saying he had four sons. Number 213 CO-CHAIR IVAN again welcomed any comments from the committee. Number 216 CO-CHAIR AUSTERMAN asked Commissioner Irwin about the commission he was recently on and whether the report on it was finalized. Number 221 COMMISSIONER IRWIN said that the report was finished and that it was published in May of 1994, and it's a three volume set. He helped to construct it along with a staff of five and about six contract writers. He said the commission had 13 members, 7 appointed by Governor Hickel and the remaining by President George Bush. Number 233 CO-CHAIR IVAN commented on the number of issues that need to be attended to in rural Alaska. He stated that it would be a challenge for Commissioner Irwin, and he's interested to hear, in the future, of any remarks from Mr. Irwin on how he'd address the slowing down of the rural communities' dissolutionments. Number 245 COMMISSIONER IRWIN pointed out that 13 years ago, his college thesis covered the push/pull between municipal governments and more traditional governments in rural Alaska. His conclusion was that both equal tools for local people and that they should be encouraged to use them to the best of their advantage. In this regard, he felt that municipal governments do hold out the promise of being an important facet for communities throughout the state. He said one of the incentives of doing this would be to figure out how it is a viable tool that could be used. He felt it was incumbent upon CRA to answer this question for the rural communities while not forgetting that there are differences in lifestyle and geography. He also gave some figures concerning the amount of money given to the Alaska Natives by the federal government and he figured it was upwards of 1/3 of a billion dollars. For every dollar that the state poured into state programs, the federal government matched it with a dollar to help provide extra services toward Alaska Natives. Number 279 CO-CHAIR AUSTERMAN stated his pleasure at having Commissioner Irwin before the committee and also at being able to work with him over the next two years. He's pleased with the Governor's appointment of Mr. Irwin as someone with a varied background to head this department. Number 288 REPRESENTATIVE MACKIE commented on the long standing friendship between himself and Commissioner Irwin and he too, felt that Mr. Irwin's capabilities are wide and varied and he's also very pleased with the Governor's appointment. He moved that the committee forward to the joint session for consideration, Mike Irwin's name as the next commissioner. Number 300 REPRESENTATIVE IRENE NICHOLIA also supported the comments said by Representative Mackie. She noted that she'd known Commissioner Irwin for the past 20 years, and she felt he was a great individual to take on this job. Number 303 CO-CHAIR IVAN stated it was so ordered. He listed the agenda for next Thursday's meeting and closed the committee. ADJOURNMENT There being no further business to come before the House Standing Committee on Community and Regional Affairs, CO-CHAIR IVAN adjourned the meeting at 2:10 p.m.