SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE March 29, 1995 1:40 p.m. MEMBERS PRESENT Senator John Torgerson, Chairman Senator Randy Phillips, Vice Chairman Senator Tim Kelly Senator Fred Zharoff MEMBERS ABSENT Senator Lyman Hoffman COMMITTEE CALENDAR SENATE BILL NO. 96 "An Act relating to municipal activities or services mandated by state statute." SENATE BILL NO. 136 "An Act making appropriations for capital project matching grant funds and to capitalize funds; making, amending, and repealing capital appropriations; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 96 - See Community & Regional Affairs minutes dated 3/8/95, 3/17/95, 3/22/95. SB 136 - No previous action to record. WITNESS REGISTER Josh Fink, Staff to Senator Kelly State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on amendments to CSSB 96(CRA) Charles McKee P.O. Box 143452 Anchorage, AK 99514 POSITION STATEMENT: Offered comments on CSSB 96(CRA) Scott Brandt-Erichsen Municipality of Anchorage P.O. Box 196650 Anchorage, AK 99519 POSITION STATEMENT: Supports amendments to CSSB 96(CRA) Mayor Jerome Selby Kodiak Island Borough 710 Mill Bay Road Kodiak, AK 99615 POSITION STATEMENT: Supports CSSB 96(CRA) Scott Sterling Matanuska-Susitna Borough Assembly Box 5 Wasilla, AK POSITION STATEMENT: Supports CSSB 96(CRA) & SB 136 Tom Armour, Administrator Box 737 Pelican, AK 99832 POSITION STATEMENT: Supports CSSB 96(CRRA) & SB 136 Kevin Ritchie, Executive Director Alaska Municipal League 217 Second St., Suite 200 Juneau, AK 99801 POSITION STATEMENT: Voiced support for CSSB 96(CRA) Jack Fargnoli, Senior Policy Analyst Office of Management & Budget P.O. Box 110020 Juneau, AK 99811-0020 POSITION STATEMENT: Offered information on Capital Matching Grants Program in SB 136 Walt Wrede, Manager Lake & Peninsula Borough Box 495 King Salmon, AK 99613 POSITION STATEMENT: Supports SB 136 Al Riog HC60, Box 277 Copper Center, AK 99573 POSITION STATEMENT: Supports SB 136 ACTION NARRATIVE TAPE 95-10, SIDE A Number 001 SB 96 UNFUNDED MANDATES ON MUNICIPALITIES  CHAIRMAN TORGERSON called the Senate Community & Regional Affairs Committee meeting to order at 1:40 p.m. He brought SB 96 before the committee and directed attention to proposed amendments to CSSB 96(CRA) , which was adopted as a working document at the March 22, 1995 meeting. Number 025 SENATOR KELLY moved the adoption of the following amendment: Amendment No. 3 Page 3, line 9: Delete "new" Page 3, lines 14 & 15: Delete ", and each regulation or other administrative order adopted after January 1, 1996," Page 3, line 17, after "division.": Insert "Each regulation or administrative order adopted under the authority of a bill enacted after January 1, 1996, that applies to municipalities must include findings regarding its effect on municipalities prepared by the Department of Community and Regional Affairs." Page 4, line 21, through page 5, line : Delete all material JOSH FINK, aide to Senator Kelly, addressing Amendment No. 3, explained that the current subsection (b) in Section 2 requires that Legislative Finance prepare findings on any bill, regulation or executive order that effects municipalities. The amendment provides that Legislative Finance prepare a finding on a bill, but on a regulation or executive order, the Department of Community & Regional Affairs would prepare the finding. As a result of this change, Section 3, the fiscal note section, was deleted from the committee substitute. Hearing no objection to the adoption of Amendment No. 3, SENATOR TORGERSON stated the motion carried. Number 058 JOSH FINK explained that Amendment No. 4 would delete the second half of the definition of "new funding" because it is not a workable definition and it is already covered by the mechanism set up in Section 2. SENATOR KELLY moved the adopted of Amendment No. 4: Amendment No. 4 Page 4, lines 26 - 27: Delete "it does not include transfers or reductions in another appropriation;" Hearing no objection, SENATOR TORGERSON stated the motion carried. Number 077 SENATOR TORGERSON, speaking to Amendment No. 5 explained he believes the first part of the amendment is necessary to further give explanation to the meaning of subsection (a) in Section 2. The second part of the amendment is clarifying language. SENATOR KELLY moved the adoption of the following Amendment No. 5: Amendment No. 5 Page 3, line 13: Delete "revoked" and insert "inoperative in its effect upon a municipality until significant state funds are available to pay the operational costs directly required for the actual performance of the activity, service or program." Page 4, line 30: After "$20,000 in" insert new language to read: "each of" Hearing no objection to the adoption of Amendment No. 5, SENATOR TORGERSON stated the motion carried. Number 185 SENATOR TORGERSON opened the hearing to public comment. CHARLES MCKEE, testifying from Anchorage, spoke to his financial duress because of the state having subservient action over the municipalities, as well as the bond debt that the residents of all municipalities are suffering under. Number 196 SCOTT BRANDT-ERICHSEN, representing the Municipality of Anchorage, stated he was present to respond to questions and further stated that the municipality agrees with the amendments to the bill. Number 215 JEROME SELBY, Mayor the Kodiak Island Borough, voiced their support for CSSB 96(CRA). They think it is positive legislation that creates a process whereby the people who live in the state at least can be assured that there will be thoughtful consideration given to them and the costs of government as bills are considered by the legislature in the future. Number 240 SCOTT STERLING, a member of the Mat-Su Borough Assembly, said although the assembly has not officially adopted a position on CSSB 96(CRA), he believes that it has their support. One way it effects his borough is that DEC regulations regarding operation of water and sewer systems require them to obey those regulations as does Anchorage or Fairbanks or the larger municipalities, and this tends to drive their costs up quite high. This legislation would help in a situation like that. Number 268 TOM ARMOUR, Administrator, City of Pelican, stated the city council has not adopted a position on CSSB 96(CRA), but he believes it will go a long way in helping administrators run their communities, as well as improving the legislature's credibility. Number 280 KEVIN RITCHIE, Executive Director, Alaska Municipal League, stated the League strongly supports the legislation as amended and urges it passage out of committee. Number 290 There being no further testimony on SB 96, SENATOR TORGERSON asked for the will of the committee. SENATOR R. PHILLIPS moved that CSSB 96(CRA) and its accompanying fiscal note be passed out of committee with individual recommendations. Hearing no objection, it was so ordered SB 136 APPROP: FY 96 CAPITAL PROJECTS BUDGET  Number 310 SENATOR TORGERSON brought SB 136 before the committee as the next order of business and stated it was his intention to only take testimony on sections relating to the Capital Matching Grants Program. He then invited Jack Fargnoli to the table to respond to questions regarding the program that were directed to the Office of Management & Budget in a memo dated March 23, 1995. JACK FARGNOLI, Senior Policy Analyst, Office of Management & Budget, said the program has been existence since 1993. Essentially, there are two programs: one addresses municipalities in the Department of Administration and the other addresses unincorporated communities in the Department of Community & Regional Affairs. They are referred to collectively as the Matching Grant Program, but there are two separate funds, one in each department to which money is appropriated. From OMB's perspective, the program is running well. The few main concerns they've had from municipalities and unincorporated communities they've been able to address, and the feedback has been mainly positive with little on the negative side. Speaking to the equity issue, OMB believes that the program is functioning as it was intended to function. The two groups of grantees in the two programs are treated differently from other. The municipalities have a much more elaborate set of criteria and a set of factors that influence the distribution of money. The unincorporated communities basically divide up whatever amount of money is funded to the program. For the municipalities, all grantees in both programs are subject to a maximum percentage match of 30 percent. For the unincorporated communities, it is a flat 5 percent. So for the municipalities there is some shifting, by policy in the legislation, that shifts more money to smaller municipalities and provides less of a burden in terms of the match required for them. The larger and more wealthy the municipality is the higher their match tends to be. Mr. Fargnoli said OMB is not aware of any equity concerns or problems. Number 400 Mr. Fargnoli said there has been a question of a policy call nature before them and before the legislature the last couple of years which involves unincorporated communities lying within boroughs. Under the current legislation those entities are not grantees. The unincorporated community program that's in place only addresses those located in the unorganized borough. The rationale for treating them this way is not to establish any inequity between unincorporated communities lying within and without of boroughs so much as to not supplant the capital project planning authority that is set out through a constitutional basis for boroughs. OMB feels that the boroughs are the proper planning authority for capital project planning, so they are "happy" with the program the way it stands now. Further, Mr. Fargnoli said part of the operational problem or difficulty they would have in making amendments to change the program in this regard is the definitional problem of trying to identify unincorporated communities located within a borough. Number 431 Addressing the future of the program, Mr. Fargnoli stated the new administration is finding its own level of comfort with the program. It has been communicated to him that the program will go forward and the Governor's capital budget is proposing to fund the program at the same $20 million level as it has been funded in the past. Number 437 SENATOR R. PHILLIPS recalled that a 10 percent administrative cost for doing a project had been added to the statute, and he asked Mr. Fargnoli how that was working out. JACK FARGNOLI said he is not aware of there being any problem with the provision. Number 445 SENATOR KELLY questioned 1993 population figures being used for a program that is going into effect in 1996. He said he thought the Anchorage figure was considerably higher than what was shown on the chart. JACK FARGNOLI responded that it was a footnote mistake on the chart and should read July 1, 1994. The numbers in the model are taken each year and certified by the commissioner of the Department of Community & Regional Affairs. That has been done again for this year so those are the correct figures. SENATOR KELLY commented that he would have staff check with the municipality on those figures for the Anchorage area. Number 511 SENATOR TORGERSON stated public testimony would be taken on SB 136. TOM ARMOUR, Administrator, City of Pelican, voiced his strong support for the Capital Matching Grants Program, encouraged its continuation, and stated its works particularly well for the smaller communities like Pelican. Number 549 SENATOR KELLY informed the committee he had received the updated population figures from the Municipality of Anchorage, and the unofficial figure for 1994 is 250,006. The state will come out with the official 1994 figures in September. Number 561 SCOTT STERLING, a member of the Mat-Su Borough Assembly, stated the Capital Matching Grants Program works well for the Mat-Su Borough. He noted they are the fastest growing municipality in the State of Alaska and have more road miles to take care of and the program helps them in that way. Number 583 WALT WREDE, Manager of the Lake & Peninsula Borough, stated the borough likes the program and agrees with it in principle, but they have an equity issue. The borough has 17 villages, five of them are incorporated and twelve of them are not. They feel there is an equity issue in that regard because part of those villages are not guaranteed the $25,000 that unincorporated villages receive. TAPE 95-10, SIDE B Number 001 As an example, Mr. Wrede pointed out that in this year's Governor's budget the Lake & Peninsula Borough would receive $44,000 for 12 communities. He noted that they tried to rectify this inequity last year with legislation, but it failed to pass the legislature. However, it is their intent to have legislation reintroduced again this session. Number 020 AL RIOG, a resident of Kenny Lake testifying via the teleconference network, stated his support for the Capital Matching Grants Program and encouraged its continued funding. Number 566 There being no further witnesses to testify on SB 136, SENATOR TORGERSON asked for the will of the committee. SENATOR ZHAROFF moved that SB 136 be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. SENATOR TORGERSON informed the committee it was his intent to introduce a bill on behalf of the committee similar to HB 185, which relates to the senior citizen property tax exemption. He said it basically lowers the limit to $75,000. He then adjourned the meeting at 3:30 p.m.