SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE April 7, 1997 2:00 p.m. MEMBERS PRESENT Senator Jerry Mackie, Chairman Senator Gary Wilken, Vice Chairman Senator Dave Donley Senator Randy Phillips Senator Lyman Hoffman MEMBERS ABSENT All members present COMMITTEE CALENDAR SENATE BILL NO. 139 "An Act relating to state aid to volunteer fire departments; and providing for an effective date." -- MOVED CSSB 139(CRA) OUT OF COMMITTEE SENATE BILL NO. 131 "An Act imposing a tax on employment, with the tax proceeds available to support public school construction and major maintenance; and providing for an effective date." -- HEARD AND HELD SENATE BILL NO. 135 "An Act relating to the participating share for school construction grants; and providing for an effective date." -- MOVED SB 135 OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION SB 139 - See Community & Regional Affairs minutes 3/19/97. SB 131 - No previous action to record. SB 135 - No previous action to record. WITNESS REGISTER Senator John Torgerson State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Prime Sponsor of SB 139 Ms. Mary Jackson, Staff to Senator Torgerson State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on CSSB 139(CRA) Mark Johnson, Chief, Community Health & Emergency Medical Services Division of Public Health Department of Health & Social Services P.O. Box 110616 Juneau, AK 99811-0616 POSITION STATEMENT: Testified in support of CSSB 139(CRA) Bill Rolfzen Division of Municipal & Regional Assistance Department of Community & Regional Affairs P.O. Box 112100 Juneau, AK 99811-2100 POSITION STATEMENT: Department supports CSSB 139(CRA) Deborah Vogt, Deputy Commissioner Department of Revenue P.O. Box 110400 Juneau, AK 99811-0400 POSITION STATEMENT: Offered information on FY Note for SB 131 Marla Berg, Staff to Senator Al Adams State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Presented overview on SB 135 Eddy Jeans, Manager, School Finance Section Education Support Services Department of Education 801 W. 10th St., Suite 200 Juneau, AK 99801-1894 POSITION STATEMENT: Offered information on FY Note for SB 135 ACTION NARRATIVE TAPE 97-14, SIDE A Number 001  SB 139 AID TO VOLUNTEER FIRE DEPARTMENTS  CHAIRMAN MACKIE called the Senate Community & Regional Affairs Committee meeting to order at 2:00 p.m., and noted all members were present. He then brought SB 139 before the committee as the first order of business. SENATOR TORGERSON , prime sponsor of SB 139, informed the committee that since the previous hearing on the legislation, his office did extensive research and came up with a proposed committee substitute which will expand the existing state funding program to include volunteer fire departments and EMS groups. Number 050 SENATOR WILKEN moved CSSB 139(CRA) be adopted. Hearing no objection, CHAIRMAN MACKIE stated the motion carried. Number 055 MARY JACKSON , staff to Senator Torgerson, explained the committee substitute takes the program out from under the municipal assistance program and makes it a stand-alone program. When the program is funded, it goes directly to volunteer fire departments and EMS groups in the amounts determined by the funding level appropriated by the Legislature. Also, the title in the committee substitute has been changed reflecting "volunteer services" because the program has been expanded to include EMS services. Both fire and EMS services are limited to communities with a population of 2,500 or under, and EMS is limited to those that provide ambulance services. Both volunteer services have to be certified or registered with the state of Alaska. Number 085 MARK JOHNSON , Chief, Community Health & Emergency Medical Services, Department of Health & Social Services, testifying in support of CSSB 139(CRA), said the department recognizes the difficulties that volunteer agencies across the state face to get appropriately trained and equipped, etc., to the provide these services. He pointed out that the vast majority of the people who are in need of EMS services are not local residents, especially when the service is provided in highway areas, tourist impact areas, or commercial fishing areas. Mr. Johnson directed attention to a document prepared by the department listing ambulance services that transport. He noted the list does not include organized first responder services that don't transport. Number 158 JERRY GENTILE , Division of Fire Prevention, Department of Public Safety, voiced the department's support for CSSB 139(CRA) and stated he would respond to questions from the committee. CHAIRMAN MACKIE asked Mr. Gentile if he thought that with the way this program is laid out it will give a lot more support to the small volunteer departments, and MR. GENTILE answered that he thinks it will have a positive impact on small volunteer departments that presently don't get enough money. Number 172 CHAIRMAN MACKIE commented that currently, when a municipality gets money under municipal assistance or revenue sharing for fire protection services, it doesn't necessarily mean it's passed on to the fire departments, so if this goes to the community specifically for EMS or fire services, then these services should have a little more leverage to make sure they get these funds. Number 195 BILL ROLFZEN , Division of Municipal & Regional Assistance, Department of Community & Regional Affairs, stated the department's support for CSSB 139(CRA). SENATOR DONLEY inquired how this legislation relates to the safe communities funding bill. SENATOR TORGERSON responded that this is a different program than the safe communities program and it wouldn't have an effect on that legislation. Number 236 SENATOR WILKEN moved that CSSB 139(CRA) be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. Number 240  SB 131 ANNUAL SCHOOL TAX  CHAIRMAN MACKIE introduced SB 131 as the next order of business. ROBERT NELSON , staff to Senator Al Adams, who is the prime sponsor of SB 131, explained the legislation imposes a school tax of $25 a year on persons 19 years of age and older, both employed and self- employed, resident and non-residents alike. The revenue collected from this annual tax would go into the general fund with the intent of the dollars going towards the School Construction Grant Fund and the Major Maintenance Grant Fund. Mr. Nelson said there is a definite need for the funding of school maintenance throughout Alaska, and with the state's decline in revenues and budget cut-backs, SB 131 would allow an alternative means of funding for Alaskan schools. Mr. Nelson noted that during 1995 the total number of people 19 and older in the work force was about 254,000, and with a $25 per person annual school tax, the state would stand to raise approximately $6.3 million in revenue. Included in these figures are the non-wage earners which comprise about 23 percent of total wage and salary workers in Alaska. The state could stand to gain approximately $2 million from the passage of SB 131 from non- resident workers alike. Number 280 DEBORAH VOGT , Deputy Commissioner, Department of Revenue, said the fiscal note prepared by the department is based on the idea that the Department of Revenue would directly enforce the tax against self-employed people, and that the tax would be collected and remitted to the general fund from employed people by the Department of Labor in conjunction with the unemployment tax. For that reason, the Department of Revenue fiscal note only shows $1.5 in income. The Department of Labor has estimated that the collections it would collect would be about $8.7 million. She noted the Department of Labor has estimated there are approximately 350,000 employees in the state. Ms. Vogt pointed out that the Long Range Fiscal Planning Commission considered reinstating the school tax as one of the tools for closing the revenue gap, but it was not adopted as a recommendation. Number 310 CHAIRMAN MACKIE inquired when the previous school tax was eliminated. SENATOR PHILLIPS advised that the school tax was repealed in 1980 for the same reason the state income tax was repealed, which was because the state had a lot of money coming in from oil revenues. SENATOR WILKEN stated that when running for the Senate, he pledged in his campaign that he wouldn't support any new taxes on Alaska residents so he would be opposing SB 131. Number 336 Following brief discussion by committee members, CHAIRMAN MACKIE stated SB 131 would be held in committee because it didn't appear that there were the votes to move it out. Number 340  SB 135 SCHOOL CONSTRUCTION GRANT PROGRAM  CHAIRMAN MACKIE brought SB 135 before the committee as the final order of business. MARLA BERG , an aide to Senator Adams, said SB 135 deals with the required local contribution for school construction projects. Ms. Berg explained the legislation substitutes a three-part means test for the existing waiver criteria. Under the provisions of this bill, a school district must meet all three criteria established in the bill to have their participating share waived. The three-part test consists of: (1) An assessed valuation per average daily membership of $200,00 or less; (2) An unemployment rate in the district of 10 percent or more; and (3) An average per capita income for residents in the district that is 85 percent or less of the statewide average per capita income. Ms. Berg said although each of these measurements has its own specific shortcomings, the combination of criteria provides the Commissioner of Education a pretty good idea of local economic circumstances. She said Senator Adams feels that school construction projects are badly needed throughout the state, and passage of SB 135 would allow school construction to proceed in an equitable and expeditious manner. Number 358 SENATOR WILKEN asked where the $200,000 assessed valuation of ADM come from. MS. BERG explained that it is in an existing law that passed in 1993. Number 365 EDDY JEANS , School Finance Manager, Department of Education, said in preparing its fiscal note, the Department of Education took the existing major maintenance list and capital improvement list, and using a list of districts that would be eligible under this program, went through and identified those projects that would be eligible for a waiver. Mr. Jeans said he did consider preparing the fiscal note based on the Governor's capital budget, SB 107, but as he reviewed the bill, the school construction grants are to named recipients and it would not fall under the same criteria as the school construction grants. SENATOR WILKEN commented he has a feeling that assessed values in unorganized areas are more of a reflection of a formula that generates a number rather than something having to do with the free market establishing value. He cautioned not to compare the two and count them as being equal. MS. BERG agreed with Senator Wilken's comments, and she added that for any community with a population of under 750, they don't go out and really assess the value of the area. There being no further testimony, CHAIRMAN MACKIE asked for the pleasure of the committee on SB 135. SENATOR WILKEN moved SB 135 and the accompanying fiscal notes be passed out of committee with individual recommendations. SENATOR DONLEY objected and stated he doesn't agree with the legislation. The roll was taken with the following result: Senators Wilken, Hoffman, Phillips, and Mackie voted "Yea" and Senator Donley voted "Nay." The Chairman stated the motion carried. There being no further business to come before the committee, CHAIRMAN MACKIE adjourned the meeting at 2:32 p.m.