HOUSE FINANCE COMMITTEE January 17, 1994 1:35 P.M. TAPE HFC 94 - 3, Side 2, #000 - end. TAPE HFC 94 - 4, Side 1, #000 - end. TAPE HFC 94 - 4, Side 2, #000 - #344. CALL TO ORDER Co-Chair Larson called the House Finance Committee meeting to order at 1:35 P.M. PRESENT Co-Chair Larson Representative Foster Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Grussendorf Representative Therriault Representatives Hoffman, Brown and Parnell were not present for the meeting. ALSO PRESENT Nancy Slagle, Director, Division of Budget Review, Office of Management and Budget, Office of the Governor; Shelby Stastny, Director, Office of Management and Budget, Office of the Governor; Representative John Davies; Representative Cliff Davidson; Representative Irene Nicholia; Representative Jeannette James; Representative Con Bunde; Representative Carl Moses; Senator Suzanne Little; C. E. Swackhammer, Deputy Commissioner, Department of Public Safety. SUMMARY OFFICE OF MANAGEMENT & BUDGET - FY 95 BUDGET OVERVIEW HB 18 An Act relating to police protection service areas in municipalities. HB 18 was HELD in Committee for further discussion. OFFICE OF MANAGEMENT AND BUDGET - FY 95 BUDGET OVERVIEW SHELBY STASTNY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, provided the Committee with a copy of the State Agency General Fund increases. [Attachment 1 the line" and was the same in nominal dollars as that proposed in FY 94. There are some proposed increases with equal reductions taken to balance the budget. Mr. Stastny advised there is additional money available in the proposed budget to cover added emphasis costs. Those targetedbudget areas will be included in the Department of Public Safety (DPS) for Wildlife Protection Officers; Department of Law (DOL) for new prosecuting attorneys; and the Department of Transportation and Public Facilities (DOTPF) for highway maintenance. All other departments have been encouraged to keep their request level parallel to the FY 94 budget. Although, he added, there can be adjustments made to the Formula Program areas. These proposals could affect reduction to municipal sharing, reduction to senior property tax exemption, and a reduction for additional funding to school districts anticipating a greater enrollment. Mr. Stastny concluded, itemizing revenue raising measures which would include adding an increase to fuel tax $.08 cents to $.25 cents per gallon; addition of an alcohol and cigarette tax of a proposed fifty percent increase; adding a royalty charge to resources used within the State, from two percent increasing to five percent within five years; and an additional employment tax of $100 dollars ofeach employed person in Alaska. Co-Chair Larson discussed the spending plan as proposed by the Office of Management and Budget with the recommended increases. NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained the increases would cover federal mandates necessary to generate additional federal funding to the State. Committee members proceeded to discuss concerns regarding budget cuts to education, university costs and the public safety and welfare. Co-Chair Larson provided the Committee with a summary of increments and decrements from each department proposed to cover the costs in FY 95 budget in order to accommodate the Department of Revenue's projected price of oil at $15.04 per barrel. (Tape Change, HFC 94-4, Side 1). Co-Chair Larson noted that the Legislative Budget and Audit Committee shows the State with $295 million dollars 2 unencumbered appropriations. Mr. Stastny understood that the Administration and the Legislature would address that information during FY95 fiscal discussions. The Office of Management and Budget (OMB) is not seeking unencumbered funds in order to balance the budget. Representative Martin introduced discussion regarding the Governor'a hiring freeze. Co-Chair MacLean asked for specific information addressing deleted and added positions during the past four years. Mr. Stastny commented, one thousand twenty positions have not been funded since the beginning of the administration. He offered to provide further information to the Committee. Co-Chair Larson provided the Committee with a list of specific programs which would need to be eliminated in order to balance the $106 million dollar deficit. The Committee agreed it will be a difficult process to provide the necessary measures to compensate for the current budgetary situation. HOUSE BILL 18 "An Act relating to police protection service areas in municipalities." REPRESENTATIVE CON BUNDE explained that the bill would authorize residents within a borough or municipality to petition for the formation of a service area with defined boundaries, for the purpose of police protection. Police services would be provided by the Department of Public Safety. Property owners within service areas would be assessed for the contract amount by their local governments, who would in turn reimburse the Department of Public Safety (DPS). He added, the possibilities for police protection service areas within boroughs under HB 18 are practically limitless. Residents in any geographical location within a borough could petition for a service area, and if the majority of residents within the area voted favorably on the measure, they would get the police service. Representative Bunde continued, residents of boroughs that already provide police protection on an area-wide basis could presumably take advantage of the opportunity created by the bill, on the grounds that they want more or less police protection than the borough is providing. Most residents of municipalities and boroughs that are currently without a local police department are currently serviced by the State Troopers at no cost to the residents. There is always the possibility that enactment of HB 18 would create 3 an incentive for the DPS to hasten the process of withdrawing from areas without local police service that have property tax resources. That is, in response to budgetary belt-tightening, the Department might reduce services to areas with property tax resources with the expectation of obtaining a reimbursement contract with a new service area. Many communities will probably want to compare the costs and benefits of forming a local police force with that of trooper service through a service area. HB 18 would give DPS the opportunity to shift the cost of services it now provides from its general fund appropriation to the beneficiaries of its services. If that were to happen, more service areas might be formed that would otherwise be the case. Representative Bunde added, the fiscal note that accompanies the packet is highly questionable. The Department of Public Safety has ignored the statewide ramifications of the legislation, and has chosen to direct the fiscal note at only the Hillside area in Anchorage. There would be less than 10,000 residents in that area effected by the legislation although Girdwood currently has a trooper both patrolling and living in the area. The Department would assume a level of service that has not been requested in any agency. The Department would be unable to statistically support the number of additional personnel they would deem necessary to accommodate the fiscal note. Discussion followed amongst the Committee members regarding options of residents of specific areas and those increased costs associated with the services which would be made available through the legislation. (Tape Change, HFC 94-4, Side 2). C.E. SWACKHAMMER, DEPUTY COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY, advised that the Department of Public Safety would not support the proposed legislation. HB 18 would allow residents of a municipality to form a police protection service area in which the Department would provide a specified level of police protection funded by assessments upon the residents. He added, it has been the position of the Governor and the Commissioner of Public Safety to withdraw Troopers from urban areas which are authorized to provide police protection on their own, and then concentrate the Department's resources in rural and unorganized areas of the State. The proposed legislation would run counter to that position, allowing residents of organized municipalities to require police protection from Troopers. The areas forming 4 service areas would have a contractual right to a certain level of service from Troopers that rural citizens would not share. Many rural communities have never had a local Trooper, and other communities have lost the Trooper Posts as budget cuts have forced the Department to reduce services. The Department is concerned by potential problems raised by HB 18: 1. The process for establishing a service district, including the requirements that such contracts may impose on the Department to hire employees by passes the Legislature; 2. The bill would not provide any information on what happens if the assessment accepted by the voters is insufficient to fund the level of service contracted; 3. There would be a loss of local control over police protection as there would be no local setting of policies, and no enforcement of local ordinances; 4. The Department could experience a highly variable demand for Troopers as municipalities adopt and reject service areas, requiring hiring and training efforts in some years and layoffs in others; 5. Individual Troopers could find that employment with the Department was less predictable, less stable, and therefore less desirable due to the uncertainty that any given service area contract would be extended; 6. Because of the long lag time in selecting, hiring, and training Troopers, adoption of service area contracts could mean reduced services to the rest of citizens served by the Department. Deputy Commissioner Swackhammer continued, the Task Force on Governmental Roles, formed under SCS CS HCR 17 (CRA) by the 17th Legislature examined the functions of state, federal and local governments and made recommendations as to the appropriate roles and relationships of the different levels of government with respect to several governmental functions. The Task Force was composed of House and Senate members, representatives of the executive branch, representatives from the Municipal League, and a representative from the unorganized borough. In their final report the Task Force made the following recommendation: 5 "....To encourage and facilitate the implementation of police protection and to generate economies of scale, the Task force advocates a change in Title 29 to permit assemblies of unified municipalities and home rule boroughs to establish service areas for police protection, not withstanding charger provisions that place restrictions on the service area formation process. Authority to form service areas for police protection should also be given to general law boroughs. This would resolve the Hillside problem and prevent similar situations in other municipalities....." The Department accepts the approach recommended by the Task Force as better public policy, which would avoid several of the potential problems raised by HB 18. Mr. Swackhammer reiterated that the Department opposes the proposed legislation. HB 18 was HELD in Committee for further discussion. ADJOURNMENT The meeting adjourned at 3:30 P.M. HOUSE FINANCE COMMITTEE January 17, 1994 1:35 P.M. TAPE HFC 94 - 3, Side 2, #000 - end. TAPE HFC 94 - 4, Side 1, #000 - end. TAPE HFC 94 - 4, Side 2, #000 - #344. CALL TO ORDER Co-Chair Larson called the House Finance Committee meeting to order at 1:35 P.M. PRESENT Co-Chair Larson Representative Foster Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Grussendorf Representative Therriault Representatives Hoffman, Brown and Parnell were not present for the meeting. ALSO PRESENT 6 Nancy Slagle, Director, Division of Budget Review, Office of Management and Budget, Office of the Governor; Shelby Stastny, Director, Office of Management and Budget, Office of the Governor; Representative John Davies; Representative Cliff Davidson; Representative Irene Nicholia; Representative Jeannette James; Representative Con Bunde; Representative Carl Moses; Senator Suzanne Little; C. E. Swackhammer, Deputy Commissioner, Department of Public Safety. SUMMARY OFFICE OF MANAGEMENT & BUDGET - FY 95 BUDGET OVERVIEW HB 18 An Act relating to police protection service areas in municipalities. HB 18 was HELD in Committee for further discussion. OFFICE OF MANAGEMENT AND BUDGET - FY 95 BUDGET OVERVIEW SHELBY STASTNY, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, provided the Committee with a copy of the State Agency General Fund increases. [Attachment the line" and was the same in nominal dollars as that proposed in FY 94. There are some proposed increases with equal reductions taken to balance the budget. Mr. Stastny advised there is additional money available in the proposed budget to cover added emphasis costs. Those targetedbudget areas will be included in the Department of Public Safety (DPS) for Wildlife Protection Officers; Department of Law (DOL) for new prosecuting attorneys; and the Department of Transportation and Public Facilities (DOTPF) for highway maintenance. All other departments have been encouraged to keep their request level parallel to the FY 94 budget. Although, he added, there can be adjustments made to the Formula Program areas. These proposals could affect reduction to municipal sharing, reduction to senior property tax exemption, and a reduction for additional funding to school districts anticipating a greater enrollment. Mr. Stastny concluded, itemizing revenue raising measures which would include adding an increase to fuel tax $.08 cents to $.25 cents per gallon; addition of an alcohol and cigarette tax of a proposed fifty percent increase; adding a royalty charge to resources used within the State, from two 7 percent increasing to five percent within five years; and an additional employment tax of $100 dollars ofeach employed person in Alaska. Co-Chair Larson discussed the spending plan as proposed by the Office of Management and Budget with the recommended increases. NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained the increases would cover federal mandates necessary to generate additional federal funding to the State. Committee members proceeded to discuss concerns regarding budget cuts to education, university costs and the public safety and welfare. Co-Chair Larson provided the Committee with a summary of increments and decrements from each department proposed to cover the costs in FY 95 budget in order to accommodate the Department of Revenue's projected price of oil at $15.04 per barrel. (Tape Change, HFC 94-4, Side 1). Co-Chair Larson noted that the Legislative Budget and Audit Committee shows the State with $295 million dollars unencumbered appropriations. Mr. Stastny understood that the Administration and the Legislature would address that information during FY95 fiscal discussions. The Office of Management and Budget (OMB) is not seeking unencumbered funds in order to balance the budget. Representative Martin introduced discussion regarding the Governor'a hiring freeze. Co-Chair MacLean asked for specific information addressing deleted and added positions during the past four years. Mr. Stastny commented, one thousand twenty positions have not been funded since the beginning of the administration. He offered to provide further information to the Committee. Co-Chair Larson provided the Committee with a list of specific programs which would need to be eliminated in order to balance the $106 million dollar deficit. The Committee agreed it will be a difficult process to provide the necessary measures to compensate for the current budgetary situation. HOUSE BILL 18 "An Act relating to police protection service areas in municipalities." 8 REPRESENTATIVE CON BUNDE explained that the bill would authorize residents within a borough or municipality to petition for the formation of a service area with defined boundaries, for the purpose of police protection. Police services would be provided by the Department of Public Safety. Property owners within service areas would be assessed for the contract amount by their local governments, who would in turn reimburse the Department of Public Safety (DPS). He added, the possibilities for police protection service areas within boroughs under HB 18 are practically limitless. Residents in any geographical location within a borough could petition for a service area, and if the majority of residents within the area voted favorably on the measure, they would get the police service. Representative Bunde continued, residents of boroughs that already provide police protection on an area-wide basis could presumably take advantage of the opportunity created by the bill, on the grounds that they want more or less police protection than the borough is providing. Most residents of municipalities and boroughs that are currently without a local police department are currently serviced by the State Troopers at no cost to the residents. There is always the possibility that enactment of HB 18 would create an incentive for the DPS to hasten the process of withdrawing from areas without local police service that have property tax resources. That is, in response to budgetary belt-tightening, the Department might reduce services to areas with property tax resources with the expectation of obtaining a reimbursement contract with a new service area. Many communities will probably want to compare the costs and benefits of forming a local police force with that of trooper service through a service area. HB 18 would give DPS the opportunity to shift the cost of services it now provides from its general fund appropriation to the beneficiaries of its services. If that were to happen, more service areas might be formed that would otherwise be the case. Representative Bunde added, the fiscal note that accompanies the packet is highly questionable. The Department of Public Safety has ignored the statewide ramifications of the legislation, and has chosen to direct the fiscal note at only the Hillside area in Anchorage. There would be less than 10,000 residents in that area effected by the legislation although Girdwood currently has a trooper both patrolling and living in the area. The Department would assume a level of service that has not been requested in any agency. The Department would be unable to statistically 9 support the number of additional personnel they would deem necessary to accommodate the fiscal note. Discussion followed amongst the Committee members regarding options of residents of specific areas and those increased costs associated with the services which would be made available through the legislation. (Tape Change, HFC 94-4, Side 2). C.E. SWACKHAMMER, DEPUTY COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY, advised that the Department of Public Safety would not support the proposed legislation. HB 18 would allow residents of a municipality to form a police protection service area in which the Department would provide a specified level of police protection funded by assessments upon the residents. He added, it has been the position of the Governor and the Commissioner of Public Safety to withdraw Troopers from urban areas which are authorized to provide police protection on their own, and then concentrate the Department's resources in rural and unorganized areas of the State. The proposed legislation would run counter to that position, allowing residents of organized municipalities to require police protection from Troopers. The areas forming service areas would have a contractual right to a certain level of service from Troopers that rural citizens would not share. Many rural communities have never had a local Trooper, and other communities have lost the Trooper Posts as budget cuts have forced the Department to reduce services. The Department is concerned by potential problems raised by HB 18: 1. The process for establishing a service district, including the requirements that such contracts may impose on the Department to hire employees by passes the Legislature; 2. The bill would not provide any information on what happens if the assessment accepted by the voters is insufficient to fund the level of service contracted; 3. There would be a loss of local control over police protection as there would be no local setting of policies, and no enforcement of local ordinances; 4. The Department could experience a highly variable demand for Troopers as municipalities adopt and 10 reject service areas, requiring hiring and training efforts in some years and layoffs in others; 5. Individual Troopers could find that employment with the Department was less predictable, less stable, and therefore less desirable due to the uncertainty that any given service area contract would be extended; 6. Because of the long lag time in selecting, hiring, and training Troopers, adoption of service area contracts could mean reduced services to the rest of citizens served by the Department. Deputy Commissioner Swackhammer continued, the Task Force on Governmental Roles, formed under SCS CS HCR 17 (CRA) by the 17th Legislature examined the functions of state, federal and local governments and made recommendations as to the appropriate roles and relationships of the different levels of government with respect to several governmental functions. The Task Force was composed of House and Senate members, representatives of the executive branch, representatives from the Municipal League, and a representative from the unorganized borough. In their final report the Task Force made the following recommendation: "....To encourage and facilitate the implementation of police protection and to generate economies of scale, the Task force advocates a change in Title 29 to permit assemblies of unified municipalities and home rule boroughs to establish service areas for police protection, not withstanding charger provisions that place restrictions on the service area formation process. Authority to form service areas for police protection should also be given to general law boroughs. This would resolve the Hillside problem and prevent similar situations in other municipalities....." The Department accepts the approach recommended by the Task Force as better public policy, which would avoid several of the potential problems raised by HB 18. Mr. Swackhammer reiterated that the Department opposes the proposed legislation. HB 18 was HELD in Committee for further discussion. ADJOURNMENT The meeting adjourned at 3:30 P.M. 11