SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE April 7, 1995 1:40 p.m. MEMBERS PRESENT Senator John Torgerson, Chairman Senator Randy Phillips, Vice Chairman Senator Tim Kelly Senator Lyman Hoffman MEMBERS ABSENT Senator Fred Zharoff COMMITTEE CALENDAR SPONSOR SUBSTITUTE FOR SENATE JOINT RESOLUTION NO. 18 Relating to establishment of an Arctic council. SENATE JOINT RESOLUTION NO. 21 Proposing amendments to the Constitution of the State of Alaska creating a special fund related to the use of federal mineral revenue sharing payments due the state from certain federal leases on the coastal plain of the Arctic National Wildlife Refuge. SENATE BILL NO. 124 "An Act relating to the human services community matching grant program; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SJR 18 - No previous action to record. SJR 21 - No previous action to record. SB 124 - No previous action to record. WITNESS REGISTER Senator Drue Pearce State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Prime Sponsor of SJR 21 Charles McKee P.O. Box 143452 Anchorage, AK 99514 POSITION STATEMENT: Testified on SJR 18, SJR 21 & SB 124 Brad Pierce, Senior Policy Analyst Office of Management & Budget P.O. Box 110020 Juneau, AK 99811-0020 POSITION STATEMENT: No position on SJR 21 Kevin Ritchie, Executive Director Alaska Municipal League 217 Second St., Suite 200 Juneau, AK 99801 POSITION STATEMENT: Supports concept of SJR 21 Cheryl Davis, Staff to Senator Al Adams State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on SJR 18 Teresa Sager, Staff to Senator Mike Miller State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on SB 124 Cheryl Keepers Fairbanks North Star Borough P.O. Box 71267 Fairbanks, AK 99707 POSITION STATEMENT: Testified on SB 124 Nadine Winters Fairbanks North Star Borough P.O. Box 71267 Fairbanks, AK 99707 POSITION STATEMENT: Available to respond to questions on SB 124 ACTION NARRATIVE TAPE 95-11, SIDE A Number 001 SJR 21 ANWR SPECIAL REVENUE FUND  CHAIRMAN TORGERSON called the Senate Community & Regional Affairs Committee meeting to order at 1:40 p.m. and introduced SJR 21 as the first order of business. SENATOR DRUE PEARCE, prime sponsor of SJR 21, said members of the Senate and House were in Washington, D.C. the past weekend and she came away from Washington feeling like this is the year that Congress is going to act on allowing exploration and what is hoped will then be eventual development on the coastal plain of the Arctic National Wildlife Refuge. She added there is a sense of urgency because this is the "window of opportunity year," and she has been thinking for a period of time about how to deal with the revenues that will come in from ANWR when the time comes. SJR 21 proposes placing before the voters of the state at the next general election an amendment to the Constitution that would create a special revenue fund of the revenues coming in from the Arctic National Wildlife Refuge. These are the royalties from any future development except for the 50 percent share that's already required by Alaska's Constitution to go in the Alaska Permanent Fund. The resolution does not get into the question of whether there should be a 90/10 royalty split with the federal government, or whether there should be a 50/50 royalty split with the federal government. Senator Pearce said it is her personal belief that 50 percent of something is a lot better than 90 percent of nothing, but that is a decision that Congress will have to make. Senator Pearce said the legislature could appropriate the money that's in the fund only for assistance or aid to a municipality under a program of aid to local governments that would be established by law in Title 29, or, secondly, for the support of school construction and school major maintenance programs as is currently embodied in Title 14. She acknowledged that this is a dedication of funds, but she believes that it is a dedication of a special stream of funds. Senator Pearce said if ratified by the citizens of the state, there would be a mechanism in place before ANWR is explored and before development is a reality. She believes that being able to go back to Congress and letting them know how the state plans to use any revenues that the state receives will help get some teetering back at the Congressional level. Senator Pearce spoke to the funding problems municipalities have been facing in the last 10 years and the increased financial responsibilities they are being required to take on because of falling oil revenues. Number 095 SENATOR TORGERSON opened the meeting to public comment. CHARLES MCKEE, testifying from Anchorage, stated his opposition to SJR 21 because he believes it takes revenues away from the permanent fund and the state treasury and places them in the control of a very large municipality in the Arctic that has run up a very large debt burden. Number 125 BRAD PIERCE, Policy Analyst, Office of Management & Budget, stated there is no official Governor's position on SJR 21 except that it is "an interesting concept." Mr. Pierce said Governor Knowles is squarely behind the development of ANWR and has repeatedly expressed his strong support for full funding of education, as well as working out an equitable partnership with municipalities. However, linking these three concepts via a constitutional amendment is where the concerns arise. The basic concern is with dedicated funds, and the basic problem is that the particular interests of the education community and municipalities are elevated over other public service responsibilities. As much as the public education, they question whether it is in the state's interest to put it above everything else. Mr. Pierce believes this will run into the same kind of opposition that Governor Cowper's education endowment did when people begin to seriously examine the implications of giving school construction and maintenance a higher priority than road maintenance, village sanitation facilities, etc. Number 215 KEVIN RITCHIE, Executive Director, Alaska Municipal League, expressed the appreciation of the 118 member communities in the League for the introduction of SJR 21. He stated their support for the concept and the long-range planning process as one method of bringing municipalities to the table and talking about the long- term stability of the communities. Number 235 There being no further testimony on SJR 21, SENATOR TORGERSON asked for the will of the committee. SENATOR R. PHILLIPS moved that SJR 21 be passed out of committee with individual recommendations. SENATOR KELLY objected and stated he has never voted for a dedicated fund in 18 years and he is not going to start this year. A roll call was taken with the following result: Senators Phillips, Hoffman & Torgerson voted "Yea" and Senator Kelly voted "Nay." The Chairman stated the motion carried. SSSJR 18 CREATION OF ARCTIC COUNCIL  Number 247 SENATOR TORGERSON brought SSSJR 18 before the committee as the next order of business. CHERYL DAVIS, staff to Senator Al Adams who is the prime sponsor of the resolution, read the following sponsor statement into the record: "Senator Adams supports the formation of an Arctic Council. This Arctic Council would be a permanent, intergovernmental policy forum. It would involve citizens from the northern region to discuss issues that affect them directly. The countries that would participate are: the United States, Denmark, Finland, Iceland, Norway, Russia, Sweden and Canada. This forum would provide a broader and coordinated voice in response to critical issues facing the Arctic countries." "Over the past few years, there has been a growing awareness of the needs and the mutual concerns of Arctic countries and their indigenous people. Organizations have been established to look at specialized needs affecting the northern countries. The purpose of the Arctic Council is not to duplicate or replace the specialized organizations but to serve as an umbrella body. This forum would ensure greater efficiency and effectiveness by provide focus and policy direction to existing Arctic related organizations." "The Arctic Council would provide a mechanism or mandate to address the full range of Arctic issues. It would be the singular international entity to direct better coordination and interaction among the Arctic governments." "The Arctic Council would operate on a consensus basis. The relationship between the Arctic Council and other existing organizations would be defined more precisely as part of the process of the establishment of the Arctic Council. This forum would strengthen circumpolar initiatives to contribute to international cooperation to meet the new challenges of sustainable development." "Senator Adams urges your support for this resolution." Number 280 SENATOR TORGERSON directed attention to his proposed amendment to SSSJR 18 and asked Mr. Davis if Senator Adams has a position on it. CHERYL DAVIS responded that Senator Adams does not have a problem with the proposed changes and believes they will help clarify the establishment of the council. Number 285 CHARLES MCKEE, testifying from Anchorage, voiced his opposition to SSSJR 18. Number 330 SENATOR R. PHILLIPS moved the following amendment offered by Senator Torgerson: Amendment No. 1 Page 1, lines 6 - 7: Delete "political energy and" and insert "a" Page 1, lines 12 - 14: Delete "Canada, the Clinton administration, and the administration of the State of Alaska have indicated that they support creation of the council;" Page 2, line 5: Following "appropriate," and insert "recommending" Page 2, line 6: Delete "Arctic-related organizations" and insert "agencies with authority over Arctic-related issues" Page 2, line 15 - 16: Delete "the Honorable Strom Thurmond, President Pro Tempore of the U.S. Senate;" Hearing no objection to the adoption of Amendment No. 1, SENATOR TORGERSON stated it was adopted and would be incorporated into a Community & Regional Affairs CS. Number 360 SENATOR HOFFMAN moved that CS SSSJR 18(CRA) be passed out of committee with individual recommendations. SENATOR KELLY objected and stated he thinks it is reflective of the Northern Forum which he thinks has been very successful in getting these Arctic governments together. A roll call vote was taken with the following result: Senators Phillips, Hoffman & Torgerson voted "Yea" and Senator Kelly voted "Nay." The Chairman stated the motion to move the resolution out of committee carried. SB 124 HUMAN SERVICES COMMUNITY MATCHING GRANTS  Number 370 SENATOR TORGERSON brought SB 124 before the committee as the final order of business. TERESA SAGER, staff to Senator Mike Miller, the prime sponsor of SB 124, explained that the legislation would permanently set the local match rate for the Human Services Community Matching Grant Program. The local match would be 30 percent and the state portion would be 70 percent. Ms. Sager said the program, when created a few years ago, was intended to start out at a 10 percent local match, increase the following fiscal year to a 30 percent match, and then in the third and subsequent years the local match would be 50 percent. Unfortunately, the 50 percent match would become difficult for the municipalities to meet due to declines in federal funds that they receive, as well as declines in municipal assistance and revenue sharing. Ms. Sager noted that similar legislation passed the Senate and House last session but was vetoed by the Governor. She also pointed out that this legislation would bring the Human Services Matching Grants program in line with other matching grant programs which are set at 30 percent. Number 395 SENATOR TORGERSON voiced concern with the Fairbanks North Star Borough applying for a large share of these grants when according to a municipal population figure there are only 47,000 in the municipality instead of the 65,000 figure stated in the definition of a "second class borough." However, he added that he realizes they are including the population of the City of Fairbanks Number 406 CHARLES MCKEE, testified from Anchorage on SB 124, but did not state a position on the legislation. Number 440 CHERYL KEEPERS, an employee of the Fairbanks North Star Borough, stated their population is closer to 82,000 so they do meet the minimum of 65,000. SENATOR TORGERSON said he made the point that they are including the City of Fairbanks to reach that 82,000 figure, but the borough itself is at 47,000 and he considers that double dipping with the program. MS. KEEPERS clarified that the City of Fairbanks is no longer applying for the grants and FY 94 was the last year they did so. Number 465 NADINE WINTERS, an employee of the Fairbanks North Star Borough, stated she was present to respond to questions, and she urged the passage of SB 124 out of committee. Number 469 There being no further witnesses to testify on SB 124, SENATOR TORGERSON asked for the will of the committee. SENATOR R. PHILLIPS stated he was not in support of SB 124. SENATOR KELLY stated that although he knows that this would benefit his community and some of the larger municipalities, it is not a responsible position for the State of Alaska to be taking when looking at a $500 million deficit at the state level, so he will continue to oppose the bill. Number 484 SENATOR TORGERSON stated that due to the lack of a motion, SB 124 would be held over until the next committee meeting. There being no further business to come before the committee, the meeting was adjourned at 2:13 p.m.