HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE January 15, 1997 8:00 a.m. MEMBERS PRESENT Representative Ivan Ivan, Chairman Representative Fred Dyson Representative Scott Ogan Representative Joe Ryan Representative Reggie Joule MEMBERS ABSENT Representative Al Kookesh Representative Jerry Sanders COMMITTEE CALENDAR Overview: Department of Community & Regional Affairs Commissioner's Office - Division of Community and Rural Development PREVIOUS ACTION No previous action to record WITNESS REGISTER MIKE IRWIN, Commissioner Department of Community & Regional Affairs P.O. Box 112100 Juneau, Alaska 99811-2100 Telephone: (907) 465-4700 POSITION STATEMENT: Gave overview of the Department of Community & Regional Affairs ACTION NARRATIVE TAPE 97-1, SIDE A Number 000 CHAIRMAN IVAN IVAN called the House Community and Regional Affairs Standing Committee meeting to order at 8:03 a.m. Members present at the call to order were Representatives Dyson, Ogan, Ryan and Joule. Members absent were Representatives Sanders and Kookesh. CHAIRMAN IVAN first reviewed a prepared list of procedural guidelines which the Community and Regional Affairs Committee (CRA) would follow and introduced the committee aide, Mr. Tom Wright and the committee secretary, Ms. Jamie Foley. He noted that the CRA Committee would meet Monday, Wednesday and Friday of each week at 8:00 a.m. and discussed how the committee would conduct business when considering bills before it and what documents are required. Number 390 MIKE IRWIN, COMMISSIONER, DEPARTMENT OF COMMUNITY & REGIONAL AFFAIRS came forward to testify and initially introduced members of his staff who were present including Deputy Commissioner Lamar Cotton; Administrative Services Director Remond Henderson; Pat Poland, Director, Municipal & Regional Assistance Division; Percy Frisby, Director, Division of Energy; Kim Metcalfe-Helmar, Special Assistant; and Yvonne Chase, Director, Division of Community & Rural Development. COMMISSIONER IRWIN referenced the overview documents he provided to the committee members which included flow charts and other information to help synthesize what the department does. He then gave a CRA historical overview. At its inception the department was established to assist the legislature under its constitutional mandate to sit as the assembly for the unorganized borough. Commissioner Irwin noted that the department now principally specializes in providing services and needed technical assistance for the more remote communities in Alaska and it has slowly evolved into providing a more holistic approach to community and economic development in rural Alaska. Number 710 COMMISSIONER IRWIN noted the Division of Energy specifically and its purpose of helping communities produce affordable energy at the most efficient level. He also outlined that the division has helped rural communities with bulk fuel facilities from an economic standpoint as well as from a safety perspective. Commissioner Irwin then mentioned some organizational charts which align the department's programs to the mission that they have come to understand they're aspiring to, more especially, a decision was made to move what some would believe the department's economic development functions into their Municipal and Regional Assistance Division. Number 890 COMMISSIONER IRWIN continued that there were two reasons for this change. Firstly, economies in rural Alaska are difficult to apply programs toward and he harkened back to his experience as Executive Director of the Alaska Natives Commission when he was responsible for assisting communities to have sustained true economies. He said this was the one nut they never really cracked. Commissioner Irwin said when he came to the department he felt that he needed to try and align as best he could the various programs which they provide to try and make sure the most strategic applications of their different resources were available at the community level and the regional level; i.e. grants, economic development loans, etc., including technical assistance. COMMISSIONER IRWIN outlined as the second reason for this change was welfare reform. In rural Alaska, he noted, it will be difficult to help move people from welfare to work simply because of the non-availability of jobs and in some instances because of the training which will be needed, child care assistance which will be necessary, etc. He felt as though these programs needed to run efficiently in order to dovetail these resources to the effort that the legislature and the governor have undertaken in respect to welfare reform. Number 1044 REPRESENTATIVE FRED DYSON asked if the department was involved in Health and Public Safety issues. Number 1058 COMMISSIONER IRWIN stated that the department's main involvement with this subject matter is through the department's energy division and he went on to note the emergency electrical service which the department provides to rural communities. He also noted the environmental public health area of bulk fuel and how many of these facilities don't meet Coast Guard standards. The department works with the communities and the Coast Guard on these types of issues. COMMISSIONER IRWIN continued that the department does have a role in regards to waste water treatment and clean drinking water issues. The village safe water program is run out of the Department of Environmental Conservation. The Department of Community and Regional Affairs, under the Rural Utility Assistance Program, makes sure that these utilities are run cost effectively and managed as capably as possible in order that communities have safe sanitation and water systems in place. Number 1224 REPRESENTATIVE SCOTT OGAN referred to a bill which he introduced last session which would allow for shallow natural gas exploration. This legislation was targeted primarily at rural communities to help off-set the declining power cost equalization (PCE) and the tremendous problem which rural communities face with leaking fuel tanks. Representative Ogan asked if the commissioner had an idea of how extensive the leaking storage tank problem is and how much money it's going to take to rectify this situation. Number 1266 COMMISSIONER IRWIN stated that the best data which the department has reflects a cost of $200 million for reclamation and the installation of upgraded systems for each community. REPRESENTATIVE OGAN stated that he has been frustrated by the lack of response to draft regulations pertaining to the previously referenced bill and he asked for the commissioner's help in encouraging the Department of Natural Resources to get to work on this issue. He went on to state why this legislation would be good for the state. COMMISSIONER IRWIN added that the Department of Natural Resources under their capital appropriations received $300,000 to conduct further study and exploration on coal bed methane. The Department of Community and Regional Affairs, working with the federal Department of Energy, has been conducting exploration in the Upper Kuskokwim and on the Alaska Peninsula. He also added that the Doyon Unlimited Regional Native Corporation in the interior has also explored coal bed methane technology. Commissioner Irwin committed to supplying whatever information he had regarding this exploration to Representative Ogan. Number 1467 REPRESENTATIVE JOE RYAN stated that he was interested in the Day Care Assistance Program. He asked what the total budget of this program is and how the money is distributed. COMMISSIONER IRWIN noted that the state's Day Care Assistance Program's general fund was in the $10 million to 12 million range. This money is distributed out to 24 different communities throughout the state via the Local Administrator System. Half of this money goes into the Anchorage area. Commissioner Irwin said that he would provide information on how the remaining money is distributed. Number 1546 REPRESENTATIVE RYAN referred then to the Block Grant Program and said he understood that this department has fallen on hard times. He then asked what the Governor's proposal would be to make up this division's shortfall. COMMISSIONER IRWIN stated that last year the funding for this program, the Rural Development Assistance Grant program, was done through the capital budget under the Alaska Industrial Development and Export Authority. He believed that something along this same lines would be implemented this year. Commissioner Irwin also noted that there was a net decrease in this budget of $800,000 which reflects a 40 percent decrease in the last two years. Number 1600 REPRESENTATIVE DYSON noted that several construction trade unions have represented to him that they are working on some pilot programs for regional training and construction trades in rural Alaska. He asked if the commissioner was familiar with what they were doing and also asked if these types of efforts were supported by the department. COMMISSIONER IRWIN responded that he was peripherally aware of some of these types of programs. He noted that he was one of the commissioners who, under statute, sits on the Alaska Human Resource Investment Council. The gentleman hired to be the executive director of this council comes from the painters union and has many connections with various unions and apprenticeship programs. This director is working closely to see how they can partner better with these unions. Number 1748 REPRESENTATIVE DYSON wondered why most rural communities he's worked with have such layered forms of local government. He asked what the commissioner's perspective on this layering of government was. Representative Dyson went on to note that some folks he had spoken to recommended that the section of state law which deals with government might be revisited in relation to local communities so the communities could have exactly the sort of government they see fit. COMMISSIONER IRWIN responded that the department addresses this issue just about every day. Many of Alaska's communities are functioning municipalities since there are advantages of being organized as such under Title 29. At the same time, some choose to have active tribal governments, whether under the Indian Reorganization Act or traditional councils, which allows access to federal resources. Commissioner Irwin also noted that a few of the communities have their own school districts as single sites and/or are situated under regional organizations. He summed up by stating that these various forms of government can be confusing to people and strain the natural leadership of any community. The department seeks to aid communities to function within these overlays of government. Number 1948 CHAIRMAN IVAN referred to the handout materials provided by the commissioner regarding job training programs. He asked the commissioner to give examples of what these programs are comprised of in the interior communities. COMMISSIONER IRWIN stated that these programs do hinge on the form of government in place for each community. All of the regional non-profit corporations administer federal funds and they respect the right of first refusal to provide services. Usually because the federal government is closer to this clientele they provide many of the basic types of training. The state does their best to supplement these programs with additional training. COMMISSIONER IRWIN continued that the state is trying to work with the Community Development Quota Groups which take in 60 Western Alaska villages under the expanded pollock allocations. The department will follow their lead on the types of training programs the state should provide. Generally, the Knowles administration has as one of it's rural employment and economic development initiatives, a pilot program to work with the entre-processors throughout coastal Alaska to try and get more Alaska residents hired. Certain areas have been targeted, initially the Bethel region and surrounding villages, and an attempt has been made to put teams of workers together in a group setting within different fish ladder facilities. He also noted the fire fighter crews which have been put together in Western and Northwestern Interior Alaska. COMMISSIONER IRWIN added that these types of a group approach to export labor works in many parts of rural Alaska because of the inherent social connections which people have. Number 2135 CHAIRMAN IVAN pointed out that mining companies are beginning to show interest in Alaska projects and said he'd like to see the department provide this training opportunity to individuals in order to obtain entry level positions in this industry. He mentioned Fort Knox specifically. Chairman Ivan also mentioned the lack of jobs in rural areas and further noted that when the department attempts to realign their department programs and possibly relocate their employees he wondered how this affects rural area jobs. He asked if this eliminated jobs in rural areas. COMMISSIONER IRWIN responded that physically the department has not moved one human being from anywhere even in their central office in Juneau or in their offices in Anchorage. He then gave a run down of all the department's office locations and noted procedural changes such as, who works more closely with whom. One point he neglected to make in his initial presentation was how the department responds to community needs in light of sudden downturns in economies, such as Wrangell, Sitka and Ketchikan with their pulp mill closures as well as with Delta Junction which is loosing Fort Greely. The department, through a process called the Coordinated Community Response Partnership, a Knowles initiative, takes the lead in directing state resources and assets strategically into these communities in order to assist with the changes that take place there. COMMISSIONER IRWIN stated that in trying to figure out how to crack the nut of economic development in many parts of the state he felt as though the same logic should apply to clusters of communities which have never had an economy which could go into a downturn, namely, rural communities. He noted that essentially these communities have been in the equivalent of a downturn economy for decades. He stated that the department doesn't have enough resources to do the best job possible in all 200 plus communities in the unorganized borough, but certainly they are closer to understanding how communities are situated resource wise by applying the Coordinator Response Partnership structure. TAPE 97-1, SIDE B Number 006 REPRESENTATIVE DYSON asked if there was anything to be gained by working to consolidate the levels of government in rural villages. COMMISSIONER IRWIN responded that this was a tough issue because there were so many legal and political considerations to take into account. He stated that the department doesn't presume to try to tell any community how they should go about governing themselves. He supposed there would be some advantages to consolidation, mainly there wouldn't be the over-taxation of the local leadership. REPRESENTATIVE DYSON asked if federal law precluded an organization from receiving federal funds as well as whether federal regulations preclude the same group of people from serving another function of government. He wondered if these same people could meet the requirements of three different jobs and used the example of a village with three different buildings, three different sets of staff, all involved in the government of that village. He said he didn't blame residents for wanting to create jobs, but he said it seemed like there was duplication. COMMISSIONER IRWIN noted that the problem was not so much with duplication of responsibilities, but perhaps, duplication of activities. In order for the state to give grants to tribal governments, including revenue sharing to unincorporated communities, the department must require that a particular tribal council (if there is no municipal government in place) sign a waiver of sovereign immunity. This requires that the tribal council must not discriminate against any citizen in the application and benefits of a grant. This essentially stands politically in the way of a good working relationship and is a result of the state constitution as well as subsequent case law which dictates this process. Taking this particular example in mind, it's more efficient for the state to work with municipal governments, but, again, it's not within the state's purview to require them to form a municipal government if they don't want to. Commissioner Irwin then explained what is required of a community to dissolve a municipal corporation. Number 188 REPRESENTATIVE DYSON asked if any of the training programs provided by the state include tourism industry jobs. COMMISSIONER IRWIN responded affirmatively. REPRESENTATIVE DYSON asked if the department gets involved in identifying needed capital project infrastructure to facilitate a village's economic development. COMMISSIONER IRWIN again responded affirmatively and added that the department works with local communities at many levels including planning and through the department's Division of Energy, they have technical staff to work with local communities to help design the best electrical infrastructures. He also noted that the department advocates for roads under certain circumstances, for example, in the King Cove area the department has worked to assist this community. The department doesn't go into a community and recommend that a road should be built for any reason. Number 303 REPRESENTATIVE OGAN stated that the house majority has a plan to reduce the budget by $60 million this year. He said that it will be tougher this year because before they hadn't made such significant cuts in the operating budget as they will have to do this session. He asked the commissioner if there was anything he could see such as a program which could be eliminated or statutes which needed revision to let the committee know. COMMISSIONER IRWIN responded that the department would work with the committee and noted that the department's internal budget dictates where they will attempt to respond to the climate of downsizing. He then generally noted the small size of CRA's budget which was within an $8.5 million to 9 million range. They expect to take about an additional 7 to 8 percent cut. He generally outlined the department's efficiency based on how it is now organized and the benefits which their programs bring to the state. Number 538 REPRESENTATIVE OGAN referred again to the storage tank situation in Alaska. He noted that if a community has a multi-million liability because of a leaking storage tank and they're aware that power cost equalization's days are numbered, he thought it would be worthwhile to invest money in alternative fuel sources. He noted natural gas as an alternative. He asked the department to start thinking in this vein. COMMISSIONER IRWIN stated that the department does look at these alternatives for rural communities since they administer the PCE program. He mentioned the wind energy project located in Kotzebue and Deering as a viable alternative for some communities. Number 676 REPRESENTATIVE RYAN inquired about the Human Resources Development Council and how it mimics a federal program. He felt as though it was a very effective program, although the legislature set up a committee to oversee it which seems very unwieldy and asked for any recommendations from the commissioner to rectify this situation. COMMISSIONER IRWIN noted that the council is more efficient now since three councils were combined to form it and gave an overview of what these were; i.e., the State Job Training Council, the Governor's Council on Vocational Education and the Employment Security Council, all of which were large governing bodies themselves. What the legislature attempted to do was to consolidate these and in so doing, obviously, there were a lot of different constituencies which needed to be recognized. He stated that they were trying to make this council run more efficiently through an executive committee structure. Number 855 REPRESENTATIVE RYAN referenced three villages in the interior, Venetie, Artic Village, and Chalkyitsik which have problems with alcohol. These three villages have gone dry and have had a good success ratio, but unfortunately Fort Yukon, which as an organized city needs to raise revenue supports a liquor store. If these villages were allowed to operate with tribal councils along with elders making decisions, they would probably do a better job than the governments imposed on them presently. He asked if there were any efforts made in the department to allow these people, if they choose, to get rid of the burdens of organized government. COMMISSIONER IRWIN said he was very familiar with these villages since he is from Nenana and worked for native corporations in the area. He said historically, the Fort Yukon liquor store had been an issue. As for disassembling a municipal form of government, under state statute, communities have a fundamental right to dissolve their municipal corporations if they so choose. Community and Regional Affairs is tasked with helping them manage the dissolution process. Number 1175 REPRESENTATIVE IVAN asked the commissioner to state what the department has accomplished in the last two years and what plans would the commissioner forecast for the department in light of budget constraints COMMISSION IRWIN stated he was proud of the fact that the department has been able to continue to provide essential technical assistance to rural communities in a very professional and organized way, while at the same time keeping their people energized in the field. He mentioned that many of their employees spend lots of time on the road. The commissioner also mentioned regulation changes for the Day Care Assistance Program. Initially, there was some distrust by the day care providers concerning how the state was implementing the previous regulations. Through face to face discussions the parties were able to change the regulations which met the needs of all the different constituencies as well as address their concerns. COMMISSIONER IRWIN added that these changes enabled the department to provide better service in the face of welfare reform. The Day Care Assistance Program is another guarantee that the working poor don't slip into the welfare rolls. The commissioner felt as though the department had a good program altogether, yet, they don't have nearly enough resources to get what needs to be done. He also mentioned what the department's been able to accomplish in addressing the bulk oil storage situation. Number 1525 REPRESENTATIVE REGGIE JOULE noted that coming from a district where he is able to observe what DCRA contributes to a community with the personnel on staff, the state is certainly getting "the bang" for their dollar. He commended the staff for traveling to remote sites in order to provide services which go "above and beyond" to meet the needs of communities. Representative Joule also commended the department on their efforts in training for mining operations in Alaska. He stressed that this effort develops a local qualified work force. REPRESENTATIVE IVAN noted that there would be some forthcoming overviews from the department during the next scheduled committee meeting. ADJOURNMENT REPRESENTATIVE IVAN adjourned the House CRA meeting at 9:25 a.m.