SENATE COMMUNITY & REGIONAL AFFAIRS February 22, 1994 9:10 a.m. MEMBERS PRESENT Senator Randy Phillips, Chairman Senator Robin Taylor, Vice Chairman Senator Loren Leman Senator Fred Zharoff MEMBERS ABSENT Senator Al Adams COMMITTEE CALENDAR Briefing: Alaska Local Boundary Commission, 1994 Annual Report to the Legislature SENATE BILL NO. 291 "An Act relating to including all regions in the state in an organized borough or unified municipality; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 291 - No previous senate committee action. WITNESS REGISTER Darrol Hargraves, Chairman Alaska Local Boundary Commission 333 W. 4th Ave., Suite 220, Anchorage, AK 99501-2341¶269-4500 POSITION STATEMENT: testified on the LBC & SB 291 Dan Bockhorst, Staff Supervisor Alaska Local Boundary Commission Department of Community & Regional Affairs 333 W. 4th Ave., Suite 220, Anchorage, AK 99501-2341¶269-4500 POSITION STATEMENT: testified on the LBC & SB 291 Shelley Dugan, Commissioner Alaska Local Boundary Commission 333 W. 4th Ave., Suite 220, Anchorage, AK 99501-2341¶269-4500 POSITION STATEMENT: testified on the LBC & SB 291 Frances Hallgren, Commissioner Alaska Local Boundary Commission 333 W. 4th, Ave., Suite 220, Anchorage, AK 99501-2341¶269-4500 POSITION STATEMENT: testified on the LBC & SB 291 Myrtle Johnson, Commissioner Alaska Local Boundary Commission 333 W. 4th Ave., Suite 220, Anchorage, AK 99501-2341¶269-4500 POSITION STATEMENT: testified on the LBC & SB 291 H. Toni Salmeier, Commissioner Alaska Local Boundary Commission 333 W. 4th Ave., Suite 220, Anchorage, AK 99501-2341¶269-4500 POSITION STATEMENT: testified on the LBC & SB 291 Alexis Miller, Aide Senator Donley State Capitol, Juneau, AK 99801-1182¶465-3892 POSITION STATEMENT: prime sponsor of SB 291 ACTION NARRATIVE TAPE 94-16, SIDE A Number 001 The Senate Community & Regional Affairs Committee was called to order by Chairman Randy Phillips at 9:10 a.m. DARROL HARGRAVES, Chairperson, Local Boundary Commission (LBC), says the boundary commission is in attendance to report the activities of the LBC for the past year, and to report on possible future developments for the LBC. Chairman Hargraves introduces other members of the LBC: Commissioner Shelley Dugan, Commissioner Myrtle Johnson, Commissioner Frances Hallgren, and Commissioner H. Toni Salmeier. CHAIRMAN RANDY PHILLIPS invites the commissioners of the LBC to the committee table. Number 020 CHAIRMAN HARGRAVES reads from a prepared statement that was submitted to the Community & Regional Affairs Committee. Chairman Hargraves introduces Dan Bockhorst, staff support for the LBC in the Department of Community & Regional Affairs (DCRA). Number 187 DAN BOCKHORST, Staff, Department of Community & Regional Affairs (DCRA), states the 1964 earthquake caused some land on the boundary of King Cove to subside, which was then filled in and developed. This land was considered part of King Cove, though it was not actually within the boundary of the city. Number 200 CHAIRMAN RANDY PHILLIPS notes the existence of a letter from the city manager of Seldovia stating there was no problem with annexation, but he sees that in the report by the LBC, there was a protest against the annexation. Number 212 CHAIRMAN HARGRAVES says there was testimony in opposition to the annexation, but it was confined to the people in the area being annexed and the native corporation in the area. Since that time nothing has come back to the LBC other than rumors that some people would like to dissolve the city or reclassify it. Chairman Hargraves continues his review of the 1993 LBC annual report. Number 245 CHAIRMAN HARGRAVES states SB 164 will make technical amendments to the law, and the LBC has submitted a one-page summary and a three- page sectional analysis of the bill to the legislature. Chairman Hargraves reads from these prepared documents. CHAIRMAN RANDY PHILLIPS notes that SB 164 is currently in the Senate Judiciary Committee. CHAIRMAN HARGRAVES says the LBC thinks this legislation is vital, and he hopes the legislature will give it consideration. Chairman Hargraves continues his prepared remarks. Chairman Hargraves states his support for HB 427, which would compensate LBC commissioners. Number 320 CHAIRMAN HARGRAVES lists the prospective activities for the LBC in the coming year. It includes boundary work in Dillingham, North Pole, Wrangell, Petersburg, Kake, Glacier Bay, Portage Pass, and Susitna. Borough annexation is being considered by the Ketchikan Gateway Borough. Borough detachments are being considered in the Matanuska-Susitna Borough, the Municipality of Anchorage, the Kodiak Island Borough, and the Fairbanks North Star Borough. SENATOR ZHAROFF asks what a borough detachment is. CHAIRMAN HARGRAVES replies that is removing a slice of land from a borough. CHAIRMAN RANDY PHILLIPS ask which areas are being considered for detachment in the Municipality of Anchorage. Someone replies Girdwood is one of the areas. CHAIRMAN HARGRAVES says people always want to incorporate and unincorporate and detach- the grass is always greener phenomenon. CHAIRMAN RANDY PHILLIPS asks how an area can detach. Number 340 MR. BOCKHORST replies the law permits an area to be detached from an organized borough if it meets certain standards. The intent of the constitution is that there be flexibility in borough boundaries. There have been detachments from the Fairbanks North Star Borough, the North Slope Borough, the Matanuska-Susitna Borough, and from the Sitka Borough. Number 355 SENATOR TAYLOR asks if the LBC can force a detachment, or if the detachment must be voluntary. MR. BOCKHORST responds that detachment can come through a legislative review process. It does not need to have a vote of the people. The process involves the LBC making a recommendation to the legislature, and so long as the legislature does not adopt a resolution rejecting the LBC recommendation within 45 days, the recommendation stands. SENATOR TAYLOR recommends that the LBC investigate dissolving the community of Kupreanof. Number 380 MR. BOCKHORST states there are several options under which a city may be dissolved. One is if a city is inactive, DCRA must investigate the city. Also, the state legislature, commissioner of DCRA, and others, may petition the LBC to dissolve a city. There are about five different ways dissolution may occur under the current laws. SENATOR TAYLOR says he would appreciate it if Mr. Bockhorst would meet with Senator Taylor's staff to discuss that. Senator Taylor is ready to dissolve Kupreanof. CHAIRMAN HARGRAVES continues his prepared remarks, and says he thinks the LBC is seeing so many small communities dissolving because they are simply becoming inactive and disenfranchised with their small local governments. MR. BOCKHORST says he thinks declining state revenues are also behind some of the small communities wanting to dissolve. SENATOR ZHAROFF states that when communities become organized, they fall into a different classification and fall under a whole new realm of regulations, and some of the smaller communities simply cannot afford to keep up with those additional responsibilities. Number 425 CHAIRMAN HARGRAVES concludes his prepared remarks and announces that some of the commissioners would like to make brief statements. Number 430 MYRTLE JOHNSON, Commissioner, Alaska Local Boundary Commission, says she also served on the LBC under Governor Miller. One of the things she likes about serving now, is the LBC's use of teleconferences to conduct business. It makes it easier for her to serve on the LBC, because she does not have to take leave from her job. Commissioner Johnson comments on state fiscal matters and education. Number 458 H. TONI SALMEIER, Commissioner, Alaska Local Boundary Commission, thanks the committee for the opportunity to appear before it. SHELLEY DUGAN, Commissioner, Alaska Local Boundary Commission, says she is concerned about SB 291, because the boundary commission does not advocate forming mandatory boroughs. The LBC spent a lot of time working on the model boundaries project, assuring people that it was not the goal of the LBC to form mandatory boroughs. The model boundary project came about as a result of three petitions that were filed in 1989, which were basically boroughs attempting to reach out to areas outside their current boundaries, primarily to enhance revenues by expanding their tax base. The LBC saw a trend developing, whereby municipalities would simply attempt to expand their boundaries to increase revenue. So the purpose of the model boundaries project was to take a comprehensive look at the state, overall. The LBC was concerned that existing boroughs not be able to reach out and take all the revenue, leaving nothing to form boroughs in the future. The LBC studied the state overall, and came up with the model borough boundaries map, to use as a tool for future boundary planning. SB 291 references a model boundary study, so people then think the LBC's model boundaries project was just a part of SB 291, which it is not. That is why the LBC tries to take a position of neutrality. That neutrality and objectivity is crucial to the success of the LBC. For this reason the LBC will not take a stand on SB 291. CHAIRMAN RANDY PHILLIPS says it is a coincidence that SB 291 was introduced recently, and the committee was able to schedule it at the same time it scheduled the briefing from the Local Boundary Commission. Number 501 FRANCES HALLGREN, Commissioner, Alaska Local Boundary Commission, says SB 291 is a foreshadowing of things to come, and people in the unorganized borough know that things are going to change. Commissioner Hallgren concurs with the statements made by Commissioner Dugan, and also thinks there are some portions of SB 291 that will have to be changed before consideration of passage. One, regarding means to eliminate or reduce disincentives and enhance incentives for the formation of boroughs, Commissioner Hallgren thinks disincentives for not forming organized boroughs would be more effective in getting citizens to organize local governments. Another point, SB 164 needs to be thoroughly considered, and mandatory boroughs should come after a system is organized. We cannot mandate boroughs without having guidelines in place. Number 520 CHAIRMAN RANDY PHILLIPS asks what the annexation in Haines involves. MR. BOCKHORST says it is his understanding that, in the case of the Haines annexation, the land involved is only one or two lots, and regards extending some water utilities. CHAIRMAN RANDY PHILLIPS asks if the Fairbanks annexation involves taking in part of the pipeline. He recalls Fairbanks' effort to annex that area several years ago, but residents of the area objected, saying they wanted to form their own borough. Since that time, residents of the area have made no effort to form their own borough, and Chairman Phillips encourages the Fairbanks North Star Borough to try again to annex the area north-east of Fairbanks. COMMISSIONER DUGAN says she is glad to hear Senator Phillips comments, because she supported Fairbanks' annexation of that area also. That area is now included in the model borough boundaries study as being a possible area for future annexation by Fairbanks. CHAIRMAN HARGRAVES says Alyeska pipeline pump stations are popular, and almost every region in the state would like to annex a pump station. Number 560 SENATOR ZHAROFF asks why, in the King Cove annexation, more area wasn't included in the annexation. CHAIRMAN HARGRAVES says the annexation is based on the petition from the community, so he cannot answer that question. He says there may be geographic reasons for particular boundaries. TAPE 94-16, SIDE B Number 572 CHAIRMAN RANDY PHILLIPS, hearing no further comments, announces the Senate Community & Regional Affairs Committee will now take up SB 291 (BOROUGH INCORPORATION & ANNEXATION). The chairman calls the representative from the sponsor's office to come to the committee table and give a brief analysis of the bill. Number 566 ALEXIS MILLER, Aide to Senator Dave Donley, says she appreciates comments from commissioners of the LBC on SB 291. Ms. Miller says she will dispel any rumors that she or Senator Donley communicated with any LBC commissioners regarding SB 291 before its' introduction. Since the introduction of SB 291 she has spoken with Mr. Bockhorst. CHAIRMAN RANDY PHILLIPS notes it was advantageous to be able to schedule the bill while commission members were in town, so that they would be able to comment and answer questions. MS. MILLER says Senator Donley introduced SB 291 as a direct response to the LBC's report on model borough boundaries. He had read the report, and there was a particular section in which he saw some inequities. Approximately 60% of the land mass of the state and between 13%-20% of the population of the state is not within an organized borough. Senator Donley saw it as those people (within the unorganized area) were receiving services from the state they were not paying for. He thought it would be more fair to have those persons residing in unorganized areas paying for some of the services they receive. Number 538 COMMISSIONER SALMEIER asks, since SB 291 requests the LBC to conduct a study, if the study the LBC just did on model borough boundaries was adequate or not. MS. MILLER says she has not looked at the model borough boundaries study and is not sure whether it would be adequate or not. It could possibly be used. Number 527 COMMISSIONER HARGRAVES says there may be one technicality that needs to be clarified: the model borough boundaries study is a study of an area today. If a petition is made to the LBC, the LBC would study the petition all over again. It would not simply follow the model borough boundaries study. Number 521 SENATOR TAYLOR asks if there is an assumption that the boroughs created through SB 291 would have certain home-rule power, or would they be created for the sole purpose of taxation. MS. MILLER says she cannot answer that question. SENATOR TAYLOR says he asks in relation to the Hillside area in Anchorage. He wonders if the state would be walking into a myriad of problems if SB 291 was passed. Would the state then be required to provide state trooper coverage for all these areas? What other services would be required? Number 510 CHAIRMAN RANDY PHILLIPS asks if the LBC sees any technical problems with SB 291. MR. BOCKHORST says DCRA has not carefully reviewed SB 291. He believes there is less of a need for some services in more rural areas of the state. Many boroughs do not have police protection in any sense. The cities within a borough may have protection, but the boroughs do not. Number 500 SENATOR TAYLOR says SB 291 attempts to prevent overlapping of service districts, and other problems. If it is not going to do that, if these new boroughs will be allowed to pick and choose the services and those powers they wish to utilize, we will continue to have overlapping of service districts. CHAIRMAN RANDY PHILLIPS asks Senator Taylor about the situation in Ketchikan. The chairman asks Senator Taylor to clarify if he thinks service areas should be area-wide. SENATOR TAYLOR confirms that is his belief. He does not think local areas should be able to pick and choose which services they should have. Senator Taylor describes some of the problems communities in his district have had with local governments deciding which services they would offer to its' residents. Senator Taylor is concerned that under SB 291, citizens in rural areas would be taxed, but not receive services. Apparently, organized areas have the option of taxing residents, while at the same time choosing not to provide certain services, such as police protection and road maintenance, so the state is then required to provide those services. If the unorganized areas of the state are organized into one borough, will that borough be able to pick and choose, as are the other organized boroughs? Some of the organized boroughs that pick and choose which services they provide are Petersburg, Wrangell, Juneau, and Fairbanks. Number 448 CHAIRMAN RANDY PHILLIPS says the previously mentioned problems have got to be changed. Chairman Phillips says the Eagle River area of the service area he is in works fine. Number 430 COMMISSIONER SALMEIER thinks SB 291 will raise so many problems for the state. She foresees formidable problems with SB 291. Number 415 CHAIRMAN HARGRAVES says organization at the local government levels have political overtones and implications, and those do sometimes guide the process. He recommends the committee get the LBC's ten standards for what should be considered in an incorporation. Perhaps if SB 291 is measured against those standards, it would help you see whether or not it would work. MS. MILLER says that was going to be her question: what would the LBC recommend. If it is the model boundary, if there is something specific. Because, as she said, Senator Donley read the LBC model borough boundaries report, and she says she quotes a paragraph from Senator Donley's press release, talking about the inequities, the borough concept, 80% of Alaska's population. All of that came from the LBC's report. That is where Senator Donley got his information. That is why Senator Donley introduced SB 291. Ms. Miller thinks Senator Donley is introducing it on behalf of the LBC. CHAIRMAN RANDY PHILLIPS asks Ms. Miller if Senator Donley has seen the LBC's ten standards for analyzing a petition to the LBC. MS. MILLER says she does not know. CHAIRMAN RANDY PHILLIPS asks Ms. Miller to have Senator Donley look at the LBC's ten standards, because Chairman Phillips is interested in the concept of SB 291. Number 400 CHAIRMAN HARGRAVES clarifies that the LBC's position on SB 291 is one of neutrality. Chairman Hargraves would like the record to reflect that neutrality. MS. MILLER states SB 291 is not a new concept, and the provisions contained in the bill have been discussed and proposed since statehood. Number 377 SENATOR ZHAROFF asks what happens to municipalities that want to dissolve part of their borough under SB 291. Would the part being detached from the rest of the borough become part of another organized borough, or would it become part of the borough organized under SB 291, or would it not be attached to any sort of organized borough? (Committee members and LBC commissioners discuss this question, but no conclusion is reached.) CHAIRMAN RANDY PHILLIPS asks if there is any other area in the world where there is unorganized area that is not taxed, as there is in the unorganized areas of the State of Alaska. (The committee members and commissioners of the LBC come to general agreement that there is, at any rate, no area in the rest of the United States or Canada where areas remain untaxed.) An unidentified female LBC commissioner says it is her personal opinion that people in the State of Alaska have gotten used to getting something for nothing. CHAIRMAN RANDY PHILLIPS says he is preparing his community to start paying for the benefits it receives. Some areas are not prepared for that, however. Number 286 COMMISSIONER HALLGREN says 164 will make it a little bit easier for some places to do home-rule municipalities without having to go through a three-step process. CHAIRMAN RANDY PHILLIPS says that since the legislature is the "assembly", so to speak, for unorganized areas, perhaps it could tax the unorganized areas through a sales tax, property tax, or some other tax. CHAIRMAN HARGRAVES states that with the advent of the REAA's (Rural Education Attendance Areas), the legislature's position as the assembly for those areas was made very clear. COMMISSIONER JOHNSON says if SB 291 passes, LBC commissioners will need trooper protection to go to some villages. (There is discussion of times when LBC commissioners needed police protection during community meetings.) (There is discussion of an arrest in Palmer in which local authorities did not have jurisdiction, so state troopers participated in the arrest.) Number 260 COMMISSIONER JOHNSON feels the public needs to be educated as to the process for petitioning with the Alaska Local Boundary Commission. CHAIRMAN HARGRAVES says Ms. Johnson has been recommending, in the spirit of religious missionaries of times past, that there be financial missionaries sent out to villages and communities. Number 198 SENATOR ZHAROFF states he does not want people to leave the committee meeting with the feeling that people in rural areas are not paying their way. A lot of the small communities do have a tax base from which they try to support their community, they do attempt to do this. When one looks at some of the urban areas that do not have a sales tax, you see a lot of free loaders there who are not paying their own way. Proportionally, it is probably a much larger percentage than the situations which exist in many of the rural areas. Unidentified female LBC commissioner says 164 will help those places which are trying to shoulder their share of the fiscal burden. COMMISSIONER DUGAN comments that the City of Fairbanks is a prime example of a city where the infrastructure is falling apart, yet the citizens of the city have voted down a sales tax seven times in the last two years. It is the old "something for nothing". CHAIRMAN HARGRAVES says he has another speech on sales tax which he plans to give to the city council in Ketchikan. The sales tax in Ketchikan is currently 5%, and some people get the glory of paying that twice. He won't give the details at this time, but if people want to come to the Ketchikan city council meeting in the next few weeks, they can hear his speech. Number 175 MS. MILLER states SB 291 might not be politically correct, but it is a political reality, and sometimes these tough decisions must be made. CHAIRMAN RANDY PHILLIPS says the committee will bring SB 291 up again, perhaps on Tuesday, March 1, 1994, so the committee can focus in on it. CHAIRMAN RANDY PHILLIPS adjourns the Senate Community & Regional Affairs Committee at 10:25 a.m.