HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE March 20, 1998 8:00 a.m. MEMBERS PRESENT Representative Ivan Ivan, Chairman Representative Fred Dyson Representative Scott Ogan Representative Joe Ryan Representative Jerry Sanders Representative Albert Kookesh Representative Reggie Joule MEMBERS ABSENT All members present COMMITTEE CALENDAR SENATE BILL NO. 208 am "An Act relating to municipal service areas and providing for voter approval of the formation, alteration, or abolishment of certain service areas; and providing for an effective date." - MOVED HCSSB 208(CRA) OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: SB 208 am SHORT TITLE: VOTER APPROVAL OF SERVICE AREA CHANGES SPONSOR(S): SENATOR(S) PARNELL Jrn-Date Jrn-Page Action 1/12/98 2164 (S) PREFILE RELEASED 1/2/98 1/12/98 2164 (S) READ THE FIRST TIME - REFERRAL(S) 1/12/98 2164 (S) CRA, JUD 2/09/98 (S) CRA AT 1:30 PM BUTROVICH ROOM 205 2/09/98 (S) MINUTE(CRA) 2/10/98 2461 (S) CRA RPT 1DP 4NR 2/10/98 2461 (S) DP: PHILLIPS 2/10/98 2461 (S) NR: DONLEY, HOFFMAN, MACKIE, WILKEN 2/10/98 2461 (S) ZERO FISCAL NOTE (DCRA) 2/25/98 (S) JUD AT 1:30 PM BELTZ ROOM 211 2/25/98 (S) MINUTE(JUD) 2/26/98 (S) MINUTE(RLS) 2/26/98 2659 (S) JUD RPT 3DP 2NR 2/26/98 2659 (S) DP: PARNELL, MILLER, PEARCE 2/26/98 2659 (S) NR: TAYLOR, ELLIS 2/26/98 2659 (S) PREVIOUS ZERO FNS (DCRA) 2/27/98 2680 (S) RULES TO CALENDAR 2/27/98 2/27/98 2681 (S) READ THE SECOND TIME 2/27/98 2681 (S) ADVANCED TO THIRD READING UNAN CONSENT 2/27/98 2681 (S) READ THE THIRD TIME SB 208 2/27/98 2682 (S) PASSED Y16 N2 E2 2/27/98 2682 (S) SHARP NOTICE OF RECONSIDERATION 3/02/98 2702 (S) RECON TAKEN UP - IN THIRD READING 3/02/98 2702 (S) RETURN TO SECOND FOR AM #1 UNAN CONSENT 3/02/98 2702 (S) AM NO 1 ADOPTED UNAN CONSENT 3/02/98 2704 (S) AUTOMATICALLY IN THIRD READING 3/02/98 2704 (S) PASSED ON RECONSIDERATION Y17 N- E2 A1 3/02/98 2704 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 3/02/98 2706 (S) TRANSMITTED TO (H) 3/04/98 2489 (H) READ THE FIRST TIME - REFERRAL(S) 3/04/98 2489 (H) C&RA 3/11/98 (H) CRA AT 8:00 AM CAPITOL 124 3/11/98 (H) MINUTE(CRA) 3/18/98 (H) CRA AT 8:00 AM CAPITOL 124 3/18/98 (H) MINUTE(CRA) 3/20/98 (H) CRA AT 8:00 AM CAPITOL 124 WITNESS REGISTER SENATOR PARNELL Alaska State Legislature Capitol Building, Room 504 Juneau, Alaska 99801 Telephone: (907) 465-2995 POSITION STATEMENT: Sponsor of SB 208. OCIE ADAMS, Secretary Mat-Su Local Road Service Area Advisory Board HC 30, Box 200 Wasilla, Alaska 99654 Telephone: (907) 373-6690 POSITION STATEMENT: Testified in support of SB 208. WILLIAM LARKIN, Road Service Area Supervisor Road Service Area 25 P.O. Box 2067 Palmer, Alaska 99645 Telephone: (907) 745-3884 POSITION STATEMENT: Testified on SB 208. DAN LaSOTA, Assembly Member Fairbanks North Star Borough 693 Manchester Loop Fairbanks, Alaska Telephone: (907) 479-0650 POSITION STATEMENT: Testified in opposition to SB 208. ACTION NARRATIVE TAPE 98-19, SIDE A Number 0001 CHAIRMAN IVAN IVAN called the House Community and Regional Affairs Standing Committee meeting to order at 8:00 a.m. Members present at the call to order were Representatives Ivan, Dyson, Ogan and Sanders. Representative Joule arrived at 8:04 a.m., and Representatives Ryan and Kookesh arrived at 8:11 a.m., respectively. SB 208 am - VOTER APPROVAL OF SERVICE AREA CHANGES Number 0037 CHAIRMAN IVAN announced the first order of business would be SB 208 am, "An Act relating to municipal service areas and providing for voter approval of the formation, alteration, or abolishment of certain service areas; and providing for an effective date." He said he would entertain a motion for the adoption of the proposed committee substitute (CS). Number 0083 REPRESENTATIVE SCOTT OGAN made a motion to adopt the proposed CS, 0-LS0632\F, dated 3/18/98. There being no objection, HCSSB 208, Version F was adopted. SENATOR PARNELL, sponsor, told the committee the work draft, Version F, incorporates the changes, due to some of the concerns that were expressed at the last meeting. He referred to page 2, line 8, subsection (c), "If voters reside within a service area," and said that subsection is changed to allow those who live in the service area to vote, not the property owners who may live somewhere else outside the service area. He then referred to lines 18-19 of page 2 noting that there is an exemption for the fire service protection area. He stated that the last change is on page 2, line 21, is the effective date, July 1, 1998, was added because the title said, "and providing for an effective date." CHAIRMAN IVAN called on the next witness to testify. Number 0231 OCIE ADAMS, Secretary, Mat-Su Local Road Service Area Advisory Board, testified via teleconference from the Mat-Su Legislative Information Office (LIO). He commended the committee for their work on the bill. He said he feels the recent changes will allow this bill to go forward without the constitutional challenge that would have been a real possibility, had it gone as written. He commented he supports the committee's efforts. He referred to page 2, line 3, of HCSSB 208, the word "or," stating that the language as written is making this an optional event for voter approval (indisc.) city and borough approval of the city consolidation (indisc.) city to be brought into the service area or vice versa. He said he talked with the legal staff at the assembly and asked for their legal opinion and they said the word "or" in subsection (1) would eliminate subsection 2 on line 4, which states: "(2) approval is granted by a majority of voters residing in the city, and by a majority of voters residing inside the boundaries of the proposed service area but outside of the city." He said even if it was elected by the city and borough to go with option 1, they make the decisions. He expressed the word "or" in subsection (1) is the only problem they have with this legislation. He said he would again ask for a legal opinion on the word, if that prohibits the vote, if the city and borough elects not to have a vote. Number 0373 SENATOR PARNELL advised the committee they are not changing existing law in this area; this is existing law. He stated that he and the Senate chose not to use the word "and" on page 2, line 3, because they didn't want to get into the realm of annexing the cities and boroughs and to change that area of law in this piece of legislation. He said if they changed the word from "or" to "and," it would definitely make it tougher to bring (indisc.) include a city in a service area if, not only the city has to agree by ordinance but approval has to be obtained from the majority of the voters. He indicated he understands Mr. Adams' concerns but it is outside the scope of legislation. He stated that they are not changing existing law in that area. He noted he appreciates Mr. Adams' support of the bill. Number 0445 WILLIAM LARKIN, Road Service Area Supervisor, Road Service Area 25; Chairman, Road Service Advisory Board, testified via teleconference from the Mat-Su LIO. He said for the most part, he agrees completely with the bill. He said he feels what it does is to allow the people to make decisions that affect them in many ways. He said he knows that a number of municipalities, boroughs and assemblies are objecting to the bill because they believe that it infringes on their right to dictate to the public. He stated that the public should be able to make their own decisions on what effects them, not only in (indisc.), but also in the types and the kinds of service they want. He mentioned people in Talkeetna do not expect the same service as the people living in the (indisc.) areas and indicated they do not want to pay the same price as the people in the (indisc.). It allows them the freedom that was the intent of (indisc.). He said that this bill will allow the people a lot more control over their own destiny. He thanked the committee for their work on the bill. Number 0582 DAN LaSOTA, Assembly Member, Fairbanks North Star Borough, testified in opposition to SB 208. He said he has been working with the sponsor trying to come up with amendments but they have not been able to agree on a possible solution to the bill. He said all of the objections that have been raised from the Department of Community and Regional Affairs and municipalities still hold. One of their concerns is the cost of elections that will be incurred by the service area when an election is mandated upon them. He said the costs of those elections, whether or not they run the same time as a municipal election and to be able to run a fair and clean election they have to give proper notice to people. Notices need to be sent to property owners and maps of the area need to be displayed in a newspaper or public record which costs money. In Fairbanks, they are looking at a minimum cost, due to the display ads, of approximately $1,500. The "ramp up" cost for the mail out that is directly proportional to how many people would live in an area and on small service areas, it wouldn't be much more than approximately $1,500. He said in some of the mid-size service areas in Fairbanks, that cost would go up to about $2,000-3,000. In some of the larger service areas, that cost would be about $10,000. He pointed out his municipal court contacted the clerk in the Mat-Su Borough and asked to estimate, on some of their larger road service areas, what the cost would be to perform an election. The Mat-Su clerk estimated that that cost would be $20,000. He stated that that sum of money isn't large compared with the budgets the Fairbanks Assembly and legislature deals with but for a service area, those funds are large. Some of the service areas in Fairbanks don't have any money in their reserve account. He said the question then becomes how an election's going to be paid for. He noted that a member of the Road Service Area contacted the committee with their concerns and that they may be hesitant to offer support for this if they realize that performing an election will come out of their road service area funds and basically eat their operating expenses up. He said they will not be able to remove the snow from the roads or deliver proper service if they are performing these elections. Number 0791 REPRESENTATIVE FRED DYSON thanked Mr. LaSota for having enough interest to testify in person to work on this legislation, which he believes shows a level of commitment and responsibility. He said he would commit to working with Mr. LaSota during the interim to come up with some better solutions to fix the problems that Mr. LaSota has expressed. He said he suspects he will have a similar problem in his district. He said his guess is that this bill will pass and told Mr. LaSota not to think of it as the end of the world, that the committee will continue to work on the bill to shape it up. He encouraged Mr. LaSota to not put the cost of an election on the Road Service Advisory Board (indisc.) in the area. He remarked democracy is expensive and stated that the alternative might be cheap and efficient, but (indisc.). MR. LaSOTA commented that running an election is what government does as a normal course of business. He said running a clean and fair election in Fairbanks costs quite a bit of money, which the Fairbanks Assembly pays for. The alternative is not possible; you must run a fair and clean election and people must be notified. He noted that the reason why it hasn't been an issue with service area elections up to this point is because when you create an area or you annex an area, there is no entity to bill out. The new residents coming into an area or the new residents wishing to create an area in the first place, are members of the general borough. He said if the legislature mandates an election to occur within a service area, in his opinion, that money must come from the service area. It's not fair to charge residents outside of the service area for something that is going to benefit only the members of the particular service area. He said the whole concept of the service areas, as established in the constitution, was to limit the costs and charges associated with the service to the people who want to pay for it. Mr. LaSota said he thinks the residents of Salcha and North Pole are going to have a problem with paying for a service area charge that's being performed in Esther. He told the committee if they look in their own communities where there are different areas, people don't like to pay for things that they're not going to get. He said it might be nice if the bill addresses everyone; however, the legislature might find a legal challenge from the people who don't want to pay for it. Number 0992 REPRESENTATIVE JOE RYAN noted that the legislature still gives municipal assistance to the organized boroughs, granted it's not as much as they have given in the past, but that money is supposed to show up on their tax bill as to lowering the cost of their mill rates. To him, it seems that there's a management problem in places that have a problem finding funding, noting that they can use municipal assistance funds to take care of administrative costs in servicing those areas of that municipality. He said, that, of course, is a choice that is left up to the various governing bodies and that action of using those funds will preclude having to tax somebody else for another service. He indicated there is money available. Number 1053 REPRESENTATIVE DYSON made a motion to move HCSSB 208(CRA) out of committee with individual recommendations and the attached zero fiscal note(s). REPRESENTATIVE ALBERT KOOKESH objected to the motion. Number 1079 REPRESENTATIVE DYSON said he believes there are some interesting and fundamental principals involved, although it does make sense to have economies of scale. There's a lot of things that really go better with decentralization. He said the service area concept is one of those genius areas that when the Anchorage borough and city came together and united approximately two decades ago, the service area concept was negotiated and allowed the firmer areas of the borough to have control and tax themselves to a level they wanted (indisc.). He indicated it worked admirably well. He noted that his area started this politics business by being on the Road Service Area Advisory Board and they hired local contractors who were seeking employment in the off-season and pointed out that they have always plowed their roads a day and a half sooner than the rest of the area for about .70 on the dollar. He said their parks and recreation board was able to convince the voters to tax themselves to run their own parks, which worked admirably well. He stated that there's still the question, "Do you want everything centralized with economies of scale or do we want to have local control, local involvement?" noting that in this case, being able to give local people lots of work. Number 1182 REPRESENTATIVE DYSON said this legislation gets to the heart of two things: one is that you keep a deal. He said in Anchorage when they negotiated the relationship between the borough and the city, the city tried to break the deal for 15 years with people who reside in the South Anchorage area. As he understands the intent of this legislation, it would keep that from happening in the future without the will of the people. It would not allow the government to maneuver to break the deal. The other thing this legislation does is prevent shotgun marriages when you have one unwilling participant. He said he believes that is a fundamental principle in our form of government. He said he would encourage people to do this, for reasons mentioned, for local involvement and decentralization. He reiterated that we need to allow people to control their own destiny. He indicated he agrees with the critics of this bill stating that it's messy sometimes, but our form of government is messy. It takes a lot of negotiation and it takes time to come to a consensus. His view is that the legislature, as public policy makers and the population in general, will never do the right thing at the right time. He noted the few times that they've recognized what the right thing to do takes a while to get the public support. He added, "We muddle through and get there and we preserve something that's inordinately precious and that's the right to self determination with local control." CHAIRMAN IVAN asked for a roll call. Representatives Dyson, Joule, Ogan, Ryan, Sanders and Ivan voted in favor of HCSSB 208(CRA). Representative Kookesh voted against HCSSB 208(CRA). HCSSB 208(CRA) moved out of the House Community and Regional Affairs Standing Committee. Number 1304 CHAIRMAN IVAN said before the committee closes the bill before them, he wanted to make a disclosure, one that he did not appreciate, which was in the form of a fiscal note delivered to his office and committee staff. He noted that there are procedures for fiscal notes stating that his office did not accept that fiscal note, the committee did not order a fiscal note, and pointed out that the statute covers fiscal note procedures. He indicated he did not appreciate the action that occurred which he said was designed to slow down or hurt the (indisc.) process and he would not let that happen. CHAIRMAN IVAN then explained the agenda for the following week. Number 1371 CHAIRMAN IVAN adjourned the House Community and Regional Affairs Standing Committee at 8:22 a.m.