JOINT MEETING SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE HOUSE COMMUNITY & REGIONAL AFFAIRS COMMITTEE February 11, 1998 1:35 p.m. SENATE COMMITTEE MEMBERS PRESENT Senator Jerry Mackie, Chairman Senator Gary Wilken, Vice Chairman Senator Dave Donley Senator Randy Phillips Senator Lyman Hoffman HOUSE COMMITTEE MEMBERS PRESENT Representative Ivan Ivan, Chairman Representative Fred Dyson Representative Reggie Joule Representative Scott Ogan Representative Jerry Sanders Representative Joe Ryan HOUSE COMMITTEE MEMBERS ABSENT Representative Albert Kookesh COMMITTEE CALENDAR -- PRESENTATION BY LOCAL BOUNDARY COMMISSION ACTION NARRATIVE TAPE 98-3, SIDE A Number 001 CHAIRMAN MACKIE called the joint meeting of the Senate Community & Regional Affairs Committee and House Community & Regional Affairs Committee to order at 1:35 p.m. All members of the joint committee were present with the exception of Representative Kookesh. CHAIRMAN MACKIE introduced Mr. Waring of the Local Boundary Commission (LBC) and invited him to the table to begin his presentation. Number 025 KEVIN WARING, Chairperson of the Local Boundary Commission from Anchorage, introduced the following Commission members who were in attendance: Kathleen Wasserman, Vice-Chairperson, from Pelican; Nancy Cannington, from Unalakleet; and William Walters, from Fairbanks. Allan Tesche, who is from Anchorage, was out of state and unable to attend the meeting. He also introduced Dan Bockhorst and expressed his appreciation for his staff support to the Commission. He also recognized Marjorie Vandor, an assistant attorney general in the Department of Law, who provides legal support to the Commission. Mr. Waring made the following presentation to the joint committee: "The Local Boundary Commission filed its annual report to the Legislature on January 21 of this year. The Commission provided each member of the House and Senate with a copy of the report at the time it was filed. The Commission's report addresses four major topics: 1. an overview of the Commission; 2. activities concerning the Commission in 1997; 3. significant developments concerning the structure for delivery of municipal services in Haines; and 4. policy issues involving matters of concern to the Commission. I will briefly address the high points of the report on each of those topics. Overview of the Commission: Alaska's constitution established the LBC to ensure that proposals to create and alter cities and boroughs would be dealt with objectively and from a statewide perspective. The LBC is one of only five state boards and commissions mandated by Alaska's constitution. Municipal matters that come before the LBC include proposals for: incorporation; annexation; detachment; dissolution; merger of municipalities; consolidation of municipalities; and city reclassification. The Commission consists of five members. One is appointed from each of Alaska's four judicial districts, with the fifth appointed at-large. Members serve at the pleasure of the Governor. They are appointed for overlapping five-year terms. Commission members volunteer their services. They receive no compensation. The Department of Community and Regional Affairs provides staff support to the Commission. 1997 Activities of the Commission: The Commission met 21 times in 1997. The five members of the Commission spent a cumulative total (that is, all 5 members combined) of 84 days traveling and conducting its business. Members of the Commission volunteered thousands of hours reviewing and analyzing documents filed in the proceedings, traveling, and conducting the business of the Commission. Specifically, during 1997 the Commission addressed: z the petition for incorporation of Lake Louise as a city of the second class; z the petition for incorporation Gustavus as a city of the second class; z the petition by the Denali Borough to detach 992.5 square miles from the Matanuska-Susitna Borough and annex the same territory to the Denali Borough; z the petition by the City of Haines to annex 6.5 square miles; and z reconsideration of the 1991 petition for incorporation of Pilot Point as a city of the second class. Several other proposals are currently pending before the Commission or are expected to be filed shortly. These include petitions for: z annexation to the City of Palmer; z annexation to the City of Thorne Bay; z annexation to the Lake and Peninsula Borough; z annexation to the Ketchikan Gateway Borough; z consolidation of the City of Haines and the Haines Borough; z incorporation of Talkeetna as a home rule city. A number of other proposals now under consideration by municipalities and voters throughout Alaska are also noted in the report. Developments Concerning the Structure for Delivery of Municipal Services in Haines: Since statehood, the Commission has filed 119 recommendations with the Legislature to alter the structure or boundaries of municipal governments in Alaska. All but three of those recommendations have been approved. One of the three involved a 1984 annexation to the City of Haines. Last November, the Commission approved another petition for annexation by the City of Haines that was very similar to the annexation the Legislature rejected in 1984. Ordinarily, the Commission's recommendation on the recent annexation would now be before the Legislature. Instead, on January 21 of this year, the Commission voted to defer submittal of its recommendation for the City of Haines annexation to the Legislature for one year. This action by the Commission was highly unusual and deserves explanation. At the time of our November decision, four of the five Commission members voted to approve the annexation by the City of Haines. However, all five members of the Commission expressed support for governmental consolidation by local initiative as a preferable alternative to annexation. In the aftermath of the commission's November decision, local government officials and local citizens quickly renewed earlier discussions to explore consolidation as the more comprehensive solution to city and borough governmental issues. These discussions were productive, thanks to the outstanding leadership of local government officials and citizens and their legislative representatives. Throughout these local discussions, Senator Mackie and Representative Kookesh encouraged local leaders to take a positive, forward-looking approach to long-standing local governmental issues. Officials of the City of Haines, the Haines Borough, and the local group Haines Borough Citizens Against Annexation demonstrated courage and civic leadership in determining to work together to resolve these issues. These local discussions resulted in a joint request by all principal parties in the annexation - the City of Haines, the Haines Borough, and the Haines Borough Citizens Against Annexation - that the Commission defer its annexation recommendation to the Legislature for one year. They wanted an opportunity to pursue immediately consolidation of the first class City of Haines and the third class Haines Borough, undistracted by the diversion of annexation. If their efforts were successful, the outcome, would be consolidation of the first class City of Haines and the third class Haines Borough into a consolidated home rule municipal government. If, however, consolidation were not locally approved before the next Legislature meets, the Commission's recommendation for annexation would move forward - unopposed by the local parties - to the 1999 Legislature. The Commission met to consider the request for deferral on January 21 of this year. Based on the unity shown by the local parties and evidence of their good-faith commitment to seek consolidation, the Commission agreed to defer its annexation recommendation for one year. Matters are now in the hand of the local governments and local citizens. Consolidation of the local governments in Haines by the end of this year will take great commitment and effort on the part of all concerned. Local officials sought and have accepted the challenge. Together, they are moving ahead with purpose and energy and their progress to date is impressive. Within days of the agreement to defer the annexation, the mayors of the City of Haines and the Haines Borough appointed a 13-member commission to prepare the consolidation petition and home rule charter. The Haines consolidation commission has already held five formal meetings. They plan two weekly meetings until the petition is completed. The two local governments have pledged in-kind support, including staff time, meeting supplies and facilities. The City of Haines and the Haines Borough have donated $10,000 to the cause. A local citizen has donated an additional $2,000. The media in Haines - KHNS radio, the Chilkat Valley News, and the Eagle Eye Journal - are serving the public effort by extensive reporting of the consolidation effort. For example, KHNS is broadcasting all meetings of the Haines consolidation committee and plans to broadcast public forums on the matter. DCRA has also extended its full support to the effort. At the invitation of the Haines consolidation commission, DCRA staff attend each of the consolidation commission meetings either in person or by telephone. To date, DCRA's assistance has included: z $5,000 in financial aid, matching the individual financial contributions of the City of Haines and the Haines Borough; z providing consolidation petition forms and model materials, including 10 home rule borough charters, sample transition plans, model assembly apportionment plans, and sample briefs; z providing information about the schedule, procedures, and standards for consolidation; z analysis of the financial impacts of consolidation of the local government in Haines; z development of technical papers on matters such as areawide, nonareawide, and service area provisions; z preparing research papers on matters such as optional structures for a home rule borough planning commission. Tentative plans call for the Haines consolidation petition to be filed with the Local Boundary Commission no later than April 2 of this year. The Local Boundary Commission would then hold hearings on the matter this summer. That schedule will allow an election on consolidation to be held on November 3, 1998. POLICY ISSUES AND CONCERNS: I will conclude my prepared remarks by calling your attention to three policy issues addressed in the Commission's report. First, the report notes that the Commission plans to undertake a comprehensive review of its regulations during 1998 to address any unduly burdensome provisions, resolve ambiguities, and make other improvements. Second, the report notes again the Commission's belief that various disincentives to borough formation are inhibiting the voluntary incorporation of new boroughs, even though several unorganized regions of the State have resources that are superior to those of some organized boroughs. Prominent among these disincentives is the current system that funds local education in the unorganized borough. Lastly, the report concludes by addressing the concern that greater compliance with the Common Interests Clause of Article X, Section 3 of Alaska's Constitution could be achieved with respect to the unorganized borough if AS 29.03.010 were amended to divide the single unorganized borough into multiple unorganized boroughs, with each embracing an area and population with common interests to the maximum degree possible. The foundation for such an effort already exists in the form of model borough boundaries established by the Commission a few years ago. That concludes my prepared remarks. If you have questions, I and other members of the Commission will do our best to respond." Number 278 CHAIRMAN MACKIE explained that the reason Mr. Waring gave detailed information in regards to Haines is because the Commission made a departure from its normal policy and held off on an annexation in Haines which was very controversial. He said it was likely that the Legislature would have been drug into that battle and this was an effort by all parties involved to avoid that and to do what's best for the overall community in the long run. He expressed his personal thanks to Mr. Waring, the other Commission members, and Mr. Bockhorst for taking the time to address and listen to the concerns of the Haines community. Number 295 SENATOR WILKEN referred to page 12 of the LBC report and asked the motivation for the cities of Newtok, Tuluksak, Tununak and Ekwok to dissolve. MR. WARING said he thought that in each case it was dissatisfaction with the effectiveness of municipal government framework compared to the alternative of traditional councils or other councils, and their preference was to use that structure for local governments rather than continue to use the municipal government structure. SENATOR WILKEN referenced page 18 of the LBC report and asked Mr. Waring if he would discuss the proposed Lake and Peninsula annexation. MR. WARING explained that it is a pending petition and it has not been formally submitted to the department. He said it appears that a number of communities to the west of the existing Lake and Peninsula Borough are interested in annexing themselves to that borough. Number 321 REPRESENTATIVE DYSON observed that the Lake and Peninsula Borough has apparently been doing an excellent job of using the borough's resources to be a real asset to the small communities. He thinks that because it is working so well within the borough, others are wanting to be part of that borough. SENATOR WILKEN referenced page 53 and the discussion on issues relating to disincentives for borough incorporation and annexation. He asked if legislation is required to enable unorganized areas to organize solely for the purpose of paying their fair share of education. MR. WARING replied that the Commission is concerned about the interplay between the method of financing the schools and the REAAs and the effect that it has on incorporating. The Commission is concerned that whatever the Legislature would do does not aggravate the problem of disincentives to incorporate because of suddenly having to take on substantial expenses for service delivery. CHAIRMAN MACKIE asked if Commission has specific recommendations on how the Legislature may be able to provide more incentives to areas to incorporate versus disincentives which currently exist. MR. WARING responded that they haven't had an opportunity as a commission to focus on that issue. Number 360 REPRESENTATIVE RYAN referred back to the petition for a proposed annexation to the Lake and Peninsula Borough, and he questioned if that population increase would shift the power base from the present Lake and Peninsula area to the Dillingham area in as much as that area has a larger population. MR. WARING responded that it would rebalance it, but because that petition hasn't been filed yet, he wasn't sure of the number of persons that would be involved in this annexation. DAN BOCKHORST added that the population of the Lake and Peninsula Borough is probably around 1,800 people while the City of Dillingham alone has around 2,200 people. He estimated that the population of the area proposing to annex is around 4,000 people. Number 386 REPRESENTATIVE IVAN expressed his appreciation to the Commission for the process they utilized in Akiak when it was contemplating dissolution, although the community's final decision was to remain incorporated. He also spoke to the frustrations experienced by small communities and villages in the rural areas when they take on the responsibilities of finances, police protection, fire protection, etc. Number 415 SENATOR HOFFMAN agreed with Representative Ivan, and said the frustration was that there were city councils organized under state statutes and then traditional councils that were organized under federal statutes, so, in many cases, they didn't know where the jurisdiction was. Many of them feel that they have a better working relationship with the federal government than with the services and powers that are provided when organizing Native tribal organizations. He thinks the cities' decisions to dissolve is to simplify the level of government and establish under federal law. Number 425 SENATOR PHILLIPS questioned if Metlakatla could ever become part of a borough under any circumstances. DAN BOCKHORST replied that there was nothing to prohibit Metlakatla from forming a borough. However, Metlakatla, because of its reservation status, has little or no assessed value or taxable value of property, so there would be very little if any required local contribution Number 440 REPRESENTATIVE RYAN commented that in the interior villages of the state he has seen our municipal form of government imposed upon places that want a governmental structure as being the only alternative. He has seen communities where they had liquor stores raise the money to operate the government, much to the detriment of the citizens of the community. He asked Mr. Waring if the formation of traditional councils, IRAs, etc., is a prelude to having an entity in place in case sovereignty were to come about. MR. WARING replied that the Commission's experiences don't span all of the localities and all of the communities where this might be going on, and it has not come to their attention. Number 454 REPRESENTATIVE JOULE spoke to the high sales tax residents in some communities have to pay in order to have needed services, and he said as the financial involvement decreases from the state, it drives many of these communities to consider dissolution of their municipal governments. He added that we've got to be careful that we don't continue to disenfranchise people from rural areas, because they do pay their fair share. Number 514 CHAIRMAN MACKIE asked Mr. Waring if he had comments on the Commission's funding. MR. WARING said their concern is that there be adequate resources to enable them to do their business. CHAIRMAN MACKIE thanked Mr. Waring for his presentation, and there being no further business to come before the joint committee, he adjourned the meting at 2:12 p.m.