Legislature(1995 - 1996)

04/25/1996 08:07 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 SB 280 - MANDATORY INCORP OF CERTAIN BOROUGHS                               
 Number 0565                                                                   
 CHAIR JAMES brought SB 280 before the committee and noted the                 
 teleconference was continuing from the previous meeting.  She                 
 invited Senator Torgerson, sponsor of SB 280, to join the committee           
 at the table.                                                                 
 Number 0620                                                                   
 BRIDGET WRIGHT, Acting Vice Mayor, City of Coffman Cove, testified            
 via teleconference in opposition to SB 280.  She said 80 percent of           
 Coffman Cove landowners had no children and were against the bill,            
 which seemed one-sided.                                                       
 Number 1114                                                                   
 MISSY BURROUGHS testified via teleconference, saying she was                  
 chairman of the village council in Wiseman.  She believed the bill            
 was unfair and that forming boroughs would ultimately cost the                
 state more money.  "Many of the businesses in the northern region             
 generally lease them from the state," she said.  "So, they're going           
 to escape these ... property taxes.  The burden will fall on people           
 who do own their land, and many of ... local people who do own land           
 generally don't necessarily run businesses."                                  
 Number 0870                                                                   
 MS. BURROUGHS indicated her school district was the size of                   
 Washington state.  She said Representative Terry Martin had                   
 suggested combining school districts to "squeeze out some of the              
 administration" for savings.  She indicated that was entirely up to           
 local school boards, which could reduce costs by trimming fat.                
 She suggested areas such as Ketchikan and Sitka formed boroughs               
 because it brought in more state revenue.  She said the state                 
 chipped in, anyway, whether to a borough or rural area.                       
 MS. BURROUGHS stated she would almost rather pay property tax than            
 wind up in a borough.  She emphasized that forming boroughs would             
 cost money through creating bureaucracy.  Unless a borough could              
 tax pump stations or tourists, for example, it was unfair for rural           
 landowners with seasonal jobs to pay property tax, she said.                  
 Number 1081                                                                   
 CHAIR JAMES asked if Ms. Burroughs was aware that although the                
 state gave money to all schools in the state, people in boroughs              
 paid an education tax not paid by those outside of boroughs.  She             
 asked if Ms. Burroughs would be willing to pay a tax, not                     
 necessarily on property, to cover the same fair share of education            
 expenses that the organized areas paid.                                       
 Number 1114                                                                   
 MS. BURROUGHS restated that she would almost rather pay a property            
 tax than to try to have a borough.                                            
 CHAIR JAMES asked if it was accurate to say Ms. Burroughs opposed             
 formation of a borough, rather than opposing taxes to apply to her            
 area's portion of the cost of schools.                                        
 MS. BURROUGHS thought the state portion would probably cover the              
 cost of education in a borough.  However, property tax supported              
 additional administrative demands in a borough.  She believed once            
 a borough formed, the cost of education would rise, whereas rural             
 areas ran education on just the state portion.  She also believed             
 that if taxes were levied for education, the amounts would be                 
 excessive and would be squandered.  She thought costs could be                
 Number 1261                                                                   
 ALAN LEMASTER testified via teleconference from Gakona, saying he             
 opposed a property tax to support the school system and thought he            
 would oppose an income tax for that purpose.  However, he would               
 support a school tax assessed against every citizen of the                    
 unorganized borough.  He said a great number of people in the                 
 unorganized borough neither worked on a steady basis nor owned                
 land.  Therefore, the entire burden was placed on a relatively                
 small portion of the population.                                              
 Number 1389                                                                   
 CHRISTOPHER COOK testified via teleconference from Slana, saying he           
 found SB 280 onerous.  Most people in his region, the northeast               
 Copper River Basin, lived a subsistence lifestyle, supplemented by            
 seasonal work in developed areas.  Services were unavailable.  Many           
 residents lived some distance from the road.   Mr. Cook referred to           
 SB 280 as "Pandora's box."   He suggested dispensing with property            
 tax-based funding of districts and, instead, implementing a                   
 statewide income, school or sales tax to make up for oil revenue              
 shortfalls, decided by a vote of the people.                                  
 MR. COOK offered to fax to the committee an article written by                
 Juneau-based economist David Reaume, who contended the state had no           
 funding shortage for services.                                                
 CHAIR JAMES informed Mr. Cook the committee had the article.                  
 Number 1548                                                                   
 REPRESENTATIVE SCOTT OGAN quoted his father as saying, "If it                 
 sounds too good to be true, it usually is."                                   
 GEORGE MIDVAG testified via teleconference from Slana, saying he              
 was a guide and business owner.  He opposed SB 280.  "If it isn't             
 Washington telling us how to run our game and run our lives, then             
 it's somebody from the big city," he said.  "They always seem to              
 look to us."  He suggested cutting back, not increasing spending.             
 Number 1625                                                                   
 CHAIR JAMES noted the committee had been hearing that people were             
 not interested in creating a borough but were willing to pay a tax            
 to help support their schools.  She asked Mr. Cook and Mr. Midvag             
 if they were willing to do that.                                              
 MR. MIDVAG said he would pay a tax that would apply equally to                
 everyone, rather than having a few people pay property taxes.  He             
 suggested a statewide income tax or sales tax might be the most               
 fair way to raise money.  "But still, cut back," he added.                    
 CHAIR JAMES mentioned that residents of larger areas currently paid           
 tax to support schools.  She herself paid almost $1,000 of property           
 tax that went directly to Fairbanks schools, whereas people in the            
 unorganized boroughs paid nothing.  "So, what we're trying to do is           
 establish a plan that would make it fair so that everyone that does           
 have schools and education in their area pays something for that,             
 as well as getting money from the state," she explained.                      
 Number 1735                                                                   
 MR. COOK suggested it would compound the problem to implement                 
 statewide the taxation formula currently used by boroughs.  He                
 believed property tax should be removed from the equation.                    
 Number 1816                                                                   
 IRENE ANDERSON, Sitnasuak Native Corporation, testified via                   
 teleconference from Nome, saying the corporation had corresponded             
 with the committee the previous week in opposition to SB 280.                 
 CHAIR JAMES acknowledged that the committee had that letter.                  
 MS. ANDERSON noted that people in Nome already paid tax for their             
 schools.  In addition, there were fund-raisers to help with the               
 band, swim team, or other activities.  "In a lot of places, we                
 might not see taxation, but we see that the community supports the            
 school," she said.                                                            
 MS. ANDERSON referred to page 4, line 9, which said "Money from               
 taxes levied under this section may be appropriated", and pointed             
 out it did not specify the money would go towards schools.  She               
 agreed that everyone should pay the same amount for schools.  She             
 also suggested consideration of a ten dollar school tax, such as              
 the one that used to be levied.                                               
 Number 1915                                                                   
 JUNE REAKOFF testified via teleconference from Wiseman, saying she            
 was a long-time resident of the area.  She did not want a borough,            
 which was another layer of government that would not meet people's            
 education needs.  She believed there was already excessive                    
 government and too much administration in the school system.  Ms.             
 Reakoff said many people in the area were very poor.  If the                  
 borough were incorporated, it would be a hardship on residents.               
 She said the people hired their own tutors and had to make their              
 own community building because there was so much spent on                     
 administrative costs that no money trickled down.  "We feel                   
 deprived and we think that a borough government would deprive us              
 even more," she concluded.                                                    
 Number 2023                                                                   
 REPRESENTATIVE OGAN suggested if people were not interested in                
 paying for schools, they were not losing anything.  If the school             
 district was top-heavy and people were paying taxes to support                
 those schools, they would show up at meetings and demand changes,             
 like they did in his own borough.                                             
 Number 2064                                                                   
 TERRY HOEFFERLE, Bristol Bay Native Association, testified via                
 teleconference from Dillingham, saying he would address tax                   
 equalization.  He questioned the numbers distributed with regard to           
 the existing tax base in the unorganized borough and said, "I think           
 that I can unequivocally say that those areas that have a tax base            
 have formed a borough, and primarily for the purpose of providing             
 a better education for their kids.  Areas of the state that remain            
 in the unorganized borough are not populated by a bunch of                    
 shirkers, as some would have us believe, but they're populated by             
 a bunch of concerned parents and other people that simply have no             
 tax base and have not formed a borough because they haven't been              
 able to afford to do it."                                                     
 Number 2136                                                                   
 MR. HOEFFERLE commented on huge differences in costs and services             
 in Alaska.  This made it hard to apply taxation legislation, he               
 said.  In the unorganized borough, there was no tax base.  "I think           
 that the nature of property and the costs in Alaska make any                  
 attempts to draw an equalized value meaningless," he stated,                  
 suggesting that some rural houses, for example, valuable as a place           
 to live, would be practically worthless in an urban setting.  He              
 believed there was an inflated valuation of comparable properties             
 in rural Alaska.  Furthermore, the high cost of tax collection                
 might outweigh the value of a tax.  Mr. Hoefferle thought the                 
 implication that rural people paid nothing for their children's               
 education was nonsense.  In Dillingham, Kids Count, for example,              
 raised all the money to send children to spelling bees and sports             
 events, he said, with none of it coming from the school budget.               
 Number 2320                                                                   
 GARY MOORE, Director of Planning, Tanana Chiefs Conference,                   
 testified via teleconference from Fairbanks.  Tanana Chiefs                   
 Conference generally opposed formation of boroughs statewide and              
 believed it was being pushed down people's throats.  Mr. Moore                
 advocated more public participation and indicated there were other            
 sources of funding.  The conference offered to participate in                 
 finding solutions but believed that insufficient income existed in            
 rural areas to provide for education in the manner the state was              
 considering, he said.                                                         
 Number 2392                                                                   
 KEN ROBERSON testified via teleconference from Glennallen, saying             
 he opposed SB 280.  He referred to SB 35 (1976), which created 19             
 REAAs that were to be culturally and geographically similar.  "Tok            
 and Delta at that time were combined for convenience, due to DCRA,            
 as were Copper River and Chugach," he stated.  "Some of us went to            
 Juneau and petitioned to split those districts, which are, in one             
 case here, proposed to combine again...."  He said SB 280 violated            
 the intent of that 1976 legislation.                                          
 MR. ROBERSON believed a school tax that would include itinerant               
 workers and non-property-holders would raise significant money.  "I           
 heard a complaint from the sponsor the other day that that would              
 put a burden on the organized areas," he said.  "All they have to             
 do is reduce their mill rate accordingly, and then it will be                 
 balanced thoroughly across the state, if they choose to do so.  The           
 organized areas maintain, however, that they have swimming pools,             
 tracks, football fields and programs that are funded by that mill             
 rate, which the unorganized areas don't have programs that even               
 begin to approach that level."                                                
 MR. ROBERSON maintained that even schools within Anchorage were               
 unequal and added, "To say that the unorganized areas and the                 
 organized areas are the only imbalance is totally inappropriate."             
 Mr. Roberson concluded by stating agreement with most of the                  
 previous testimony and saying he favored a school tax.                        
 TAPE 96-59, SIDE B                                                            
 Number 0004                                                                   
 ALFRED LEE testified via teleconference from Glennallen,                      
 congratulating the committee for their work and saying "we stand              
 ready, willing and able to pay our fair share."  He said people               
 living in the area could forfeit their permanent fund dividends to            
 the state or the school.  He suggested a gasoline tax could also be           
 used.  Troopers could be self-supporting through user fees, as                
 Number 0068                                                                   
 ROY EWAN, President, Ahtna Incorporated, a Native regional                    
 corporation, testified via teleconference from Glennallen.  Having            
 traveled extensively throughout the state, he believed he                     
 understood the needs and concerns of rural Alaska.  He opposed SB
 280 and did not believe there was a tax base in the Copper River              
 Basin, which had no economic development.  Nor did he not believe             
 the borough's funding should be based on taxing the pipeline,                 
 because those revenues were declining.                                        
 MR. EWAN said the state should consider building the infrastructure           
 of rural Alaska, including roads and cheaper power, to stimulate              
 economic development.  He favored a school tax and strongly opposed           
 SB 280.                                                                       
 Number 0103                                                                   
 MATTHEW KRINKE testified via teleconference from Glennallen,                  
 stating he was a Republican opposed to SB 280, which was against              
 the party platform.  He said most people in his area could not pay            
 those taxes.  He asked organizations to contact the Copper River              
 Residents Against the Borough (CRAB) at 822-5515 (telephone) or               
 822-5520 (fax).                                                               
 Number 0184                                                                   
 DAVE DENGEL, Assistant City Manager, City of Valdez, testified via            
 teleconference that Valdez was a home rule city in the unorganized            
 borough.  As such, they served as their own school district, he               
 said.  In 1995, Valdez taxpayers paid $4.5 million to support                 
 education, or about 5.2 mills.  Mr. Dengel referred to Section 6              
 and said it looked like Valdez, and other first-class or home rule            
 cities in the unorganized borough, would be required to pay an                
 additional 6-mill tax.  Furthermore, money collected may be                   
 appropriated to the regional educational attendance areas, of which           
 Valdez was not a part.  It therefore appeared that Valdez and                 
 similarly situated municipalities would be paying twice for                   
 education, he said.                                                           
 MR. DENGEL indicated at the previous Tuesday's meeting, the sponsor           
 mentioned a provision to exempt home rule and first-class cities.             
 Mr. Dengel could not find that in the bill.  He noted that the                
 Prince William Sound area had $1.2 billion in assessed valuation.             
 "If you just pull out Valdez and Cordova, it leaves about $34                 
 million of assessed valuation ... for Prince William Sound," he               
 said.  At six mills, roughly $200,000 would be generated, he said.            
 He suggested an amendment to exempt home rule and first-class                 
 municipalities that already contributed to education.                         
 CHAIR JAMES noted that a representative of the sponsor would be               
 available to address concerns after testimony was taken.                      
 Number 0291                                                                   
 JEFF SEWING testified via teleconference, saying SB 280 was poorly            
 written and targeted private property owners and businesses.                  
 "Because the bill encourages a property tax levy but has as its               
 goal to collect money for education, I also see this as an end-run            
 to circumvent the issue of education, so that private property can            
 be targeted in the future for whatever reason government, be it               
 local or state, should decide to tax," he stated.  "Otherwise, a              
 bill that specifically addressed education would have been written            
 whereby all peoples would share the burden for a specifically                 
 identified purpose.  And this certainly is not the case."                     
 MR. SEWING concurred with earlier testimony.  He suggested newly              
 formed boroughs would be potential targets for penalty taxation by            
 agencies such as the Environmental Protection Agency.  He said more           
 money did not correlate with better education.  A registered                  
 Republican, Mr. Sewing concluded by expressing disappointment that            
 SB 280 came from a Republican senator, as he thought Republicans in           
 the '90s represented less government intrusion and taxes.                     
 Number 0427                                                                   
 WAYNE STOUT testified via teleconference from Tok, saying he was              
 against SB 280 "because of its poor judgment."  He said the state             
 and federal government had disposed of land cheaply to get people             
 to move into the low-economy areas of the unorganized borough,                
 where economic conditions were very different from other parts of             
 the state.  His area could not support a doctor at the clinic and             
 had no year-round jobs except for with the government, schools, the           
 post office, and some services.                                               
 Number 0539                                                                   
 ROGER JACOBSON testified via teleconference from Tok.  He found it            
 hard to believe a Republican created SB 280 and said the sponsor              
 had made a name for himself, which was "mud".  He emphasized that             
 people in the unorganized borough were not looking for a free ride.           
 He referred to Article IX, Section 4, of the Alaska Constitution              
 and suggested looking at the list of properties exempted from                 
 taxation.  Mr. Jacobson asked if this was equality.  He proposed              
 exempting primary dwellings of all Alaskans from taxation.  He                
 believed sales tax and income tax could replace property tax more             
 Number 0661                                                                   
 PATRICIA HUTCHINSON testified via teleconference from Tok, saying             
 the bill had several flaws.  According to the constitution, SB280             
 violated Article I, Section 1, because it did not treat citizens in           
 boroughs and unorganized boroughs equally, she said.  She referred            
 to Article II, Section 13, and asked if it was a tax bill or a                
 borough bill.  She referred to Article II, Section 19, and said               
 that was not complied with in two areas.  First, a general tax                
 could accomplish the same end.  And second, it did not provide for            
 approval by the voters.                                                       
 MS. HUTCHINSON questioned the integrity of the author, saying the             
 bill did not comply with Article IX, Section 7.  She said there               
 were boundaries established for the Upper Tanana Basin that did not           
 meet borough guidelines.  "The Delta and Tok areas are dissimilar,            
 and this would be an undesirable union for both, economically and             
 culturally," Ms. Hutchinson stated.  She questioned how                       
 establishing 19 more bureaucracies could be an efficient use of tax           
 money.  Referring to Article II, Section 21, she said it might                
 become expensive in the future.                                               
 Number 0771                                                                   
 RICHARD DENTZ testified via teleconference from Tok, saying SB 280            
 was trying to tax people before they had the ability to pay.  He              
 suggested rejecting or shelving the legislation until economic                
 development provided a tax base.                                              
 Number 0849                                                                   
 JANE BROWN testified via teleconference from Glennallen that she              
 was a member of Copper River Residents Against Boroughs (CRAB),               
 whose 463 members opposed the bill.  She referred to Article I,               
 Section 1, of the Alaska constitution and said in 1980, the                   
 legislature repealed the state personal income tax, based on equal            
 protection.  She questioned how that same article could be used to            
 impose a mandatory mill rate on a minority of rural Alaskans.  She            
 referred to Article II, Section 13, and said SB 280 had been                  
 amended to include four distinctly separate issues under the                  
 umbrella of one bill, which she alleged violated the single-subject           
 MS. BROWN referred to Article IX, Section 1, and said the                     
 legislature was within its constitutional boundaries to choose to             
 let the unorganized borough remain untaxed, as they frequently                
 granted tax exemptions and related inducements to locate within the           
 state.  She referred to Article IX, Section 7, and said the                   
 proceeds of any state tax or license were not to be dedicated to a            
 specific purpose, except as provided in Section 15, the Alaska                
 permanent fund.  Therefore, she said, it was unconstitutional to              
 dedicate a state tax specifically to educational funding.                     
 MS. BROWN referred to Article X, Section 3, and emphasized that the           
 state was to be organized into boroughs, organized or unorganized,            
 with "or" being the key word.  She said Chair James appeared to be            
 the only voice of reason left in the Alaska Republican party.  Ms.            
 Brown called SB 280 "the bureaucracy bill" and asked for a "no"               
 Number 1012                                                                   
 STEVE MAILLY testified via teleconference from Glennallen, saying             
 he had heard a lot of good testimony with which he was aligned.  A            
 strong supporter of the Republican majority, he was nonetheless               
 strongly against SB 280, which he considered poorly thought-out.              
 He lived two miles from a public school and had seven children.               
 Theirs was a home schooling family.  He said the majority of                  
 delegates at the Republican caucus would oppose the bill.  "Many of           
 them, like myself, were home schooling families," he added.                   
 Number 1079                                                                   
 FREDERICK HEINZ testified via teleconference from Gakona, saying it           
 was not a money issue but a power issue that could result in lands            
 being taken away.  He quoted his father, who said, "When                      
 politicians get into politics, they get addicted to money."                   
 Number 1162                                                                   
 PATRICK DALTON testified via teleconference from Delta Junction,              
 saying the real issue was the principle of where the money was                
 being appropriated to.  He said the bill represented a misguided              
 philosophy where citizens gave up rights for the common good.  He             
 did not want the bill and said, "If you can't live within your                
 budget, just cut your spending."  He suggested finding out the will           
 of the people in the unorganized borough.                                     
 Number 1277                                                                   
 PATRICK SCHLICHTING testified via teleconference from Delta                   
 Junction, saying he aligned himself with all the testimony against            
 SB 280.  He did not think a property tax was fair for anyone,                 
 either in organized or unorganized areas, the latter of which did             
 not have the wealth.  Unorganized areas contributed greatly to                
 metropolitan areas, as everything was brokered through those larger           
 areas.  "They have the spin-off," he said.  "They have high-paying            
 jobs.  And it feeds their economy and, thus, their school                     
 system...."  Mr. Schlichting pointed out that many people were                
 willing to contribute but likened paying property tax to paying               
 rent on one's own land.  "The notion that the state of Alaska is              
 running out of money is contrived," he said, asking where else the            
 government paid people to be residents.  He agreed an income tax or           
 sales tax would be more fair.  He also said permanent fund                    
 dividends could be used to fund state operations.                             
 Number 1445                                                                   
 JACK REAKOFF testified via teleconference from Wiseman in                     
 opposition to SB 280.  He indicated rural Alaskans generally had              
 low incomes.  He suggested the infrastructure of setting up a                 
 borough government would far outweigh potential tax revenues.  He             
 said residents had funded millions of dollars in service to the               
 non-resident work force in tourism and other industries, using oil            
 money.  He felt the legislature should first address non-resident             
 revenues lost in wages.                                                       
 Number 1516                                                                   
 JEANNE SPITLER testified via teleconference from Northway, saying             
 she opposed SB 280.  She thought an income tax or sales tax would             
 be more fair.  She asked what six mill equalled in dollars per                
 CHAIR JAMES replied that six mill is .006 times the value.                    
 Number 1634                                                                   
 GLEN MARUNDE testified via teleconference from Tok, saying he                 
 opposed SB 280, which he believed was misguided.  Having testified            
 the previous Tuesday, he now wanted to comment on the process.  "A            
 legislator learns that the unorganized borough is not paying                  
 property tax and wonders why," he said.  "He assumes that this is             
 simply an unfair situation that has somehow slipped through the               
 cracks of the floor of our democracy and attempts to change the               
 laws and chink the crack."                                                    
 MR. MARUNDE believed the constitution's framers were concerned                
 about the survival and well-being of the unorganized boroughs.  He            
 referred to Article X, Section 6, and said it made the legislature            
 the watch dog and provider for the unorganized borough.  "In the              
 second sentence, they put a chain around the neck of the watch dog            
 when they proclaimed the legislature may exercise any power or                
 function in an unorganized borough which the assembly may exercise            
 in an organized borough," Mr. Marunde stated.  He contended that              
 the framers specifically spelled out how the legislature could                
 provide government services in the unorganized borough to prevent             
 them from moving the unorganized borough by legislative decree.               
 "Here we go again," he said.  He asked that SB 280 be held in                 
 committee for further study and comment.                                      
 Number 1955                                                                   
 JOHN KUNIK read a statement from Deborah Johnson, Mendeltna, whose            
 address is HC-1, Box 2566, Glennallen, Alaska 99588, telephone                
 (907) 822-3177.  The statement, dated April 24, 1996, provided in             
 writing to the committee, indicated Ms. Johnson served on the board           
 of directors for the Nelchina/Mendeltna Community Corporation.  Ms.           
 Johnson suggested an overwhelming majority of people in her area do           
 not support formation of a borough at this time.  However, she                
 indicated many residents acknowledge that continued growth and                
 increased demands for resources would eventually dictate the need             
 to form a borough.  She wrote, "I personally envision our children            
 someday CHOOSING to take that route."  Ms. Johnson proposed that              
 the community be involved in finding solutions, indicating SB280              
 was an inappropriate one.                                                     
 Number 2204                                                                   
 MARK SPRINGER, Administrator, City of Hooper Bay, testified via               
 teleconference in opposition to SB 280.  Hooper Bay, with a                   
 population of 1,000, was located within what would conceivably be             
 the Lower Yukon Borough, which contained little if any state land.            
 Surrounded by the Yukon Delta Wildlife Refuge, the predominant                
 private property was owned by Native corporations.  One-half of the           
 residential land was federally restricted townsite land, not                  
 subject to taxation.  Therefore, at least 50 percent of the private           
 property in the community was nontaxable.  Mr. Springer suggested             
 that was the case in many other rural communities, as well.                   
 MR. SPRINGER did not believe the region currently had the technical           
 or professional capability of operating a property tax operation              
 with a regional government.  He said the bigger municipalities were           
 beginning to evolve in a positive way, delivering a scope of                  
 services in the communities.  Hooper Bay, for example, charged a 2            
 percent sales tax.  Mr. Springer indicated the seat of a borough              
 government would be isolated to many residents of the borough.                
 TAPE 96-60, SIDE A                                                            
 Number 0016                                                                   
 MR. SPRINGER responded to Representative Ogan's suggestion that               
 people who paid property taxes would attend school board meetings.            
 Mr. Springer said in rural Alaska, school boards may meet monthly,            
 but at a different site each month.  "Here in Hooper Bay, we see              
 our regional school board once a year," he explained.  "If you want           
 to attend a school board meeting, or if you wanted to attend a                
 borough assembly meeting, you would have to catch an airplane or              
 charter an airplane."                                                         
 MR. SPRINGER concluded by saying, "As far as resource development,            
 ... when the legislature decides it's time to revamp the DNR                  
 statutes and DNR regulations, and take away the statewide                     
 unitization of petroleum exploration rights, and start breaking out           
 some smaller opportunities for resource development across Alaska,            
 that will be a show of good faith on the part of the legislature              
 that will be responded to by people in rural Alaska."  He indicated           
 that as soon as rural Alaska could develop a tax base, communities            
 would respond to the idea of borough development.                             
 Number 0166                                                                   
 REPRESENTATIVE OGAN addressed Mr. Springer's last point, saying,              
 "We are doing that with the shallow gas bill, House Bill 394.  It's           
 exactly what it does, with resource development and breaking out              
 unitization, and allowing resource development of natural gas above           
 3,000 feet."                                                                  
 Number 0194                                                                   
 CHAIR JAMES incorporated the following into the record:  a letter             
 from Kawerak, Inc. (Nome), dated April 17, 1996, in opposition to             
 SB 280; a handwritten message dated April 25, 1996, from Danny                
 Grangaard (Tok), who provided oral testimony the previous Tuesday;            
 handwritten memos, faxed April 23, 1996, from Ed Weathers and Denny           
 Kay Weathers (Cordova), both of whom testified the previous                   
 Tuesday, opposing SB 280 and suggesting a flat school tax for                 
 anyone employed in Alaska who is at least 18 years old; a                     
 handwritten memo from Dagmar J. Davis (Cordova), faxed April 23,              
 1996, opposing SB 280 and suggesting reinstatement of a school tax            
 for all employed people in Alaska who are at least 18 years old;              
 and the letter from Deborah Johnson, dated April 24, 1996, and read           
 into the record by Mr. Kunik.                                                 
 CHAIR JAMES concluded the teleconference and closed public                    
 testimony.  She called upon Deb Davidson from Senator Torgerson's             
 office to respond and make summary comments.                                  
 Number 0308                                                                   
 DEB DAVIDSON, Legislative Assistant to Senator John Torgerson,                
 sponsor of SB 280, stated, "I believe there are still                         
 misconceptions about the legislation as it exists now, about the              
 fact that boroughs are required.  The bill was changed to where               
 residents would have a vote.  The concerns of the property tax are            
 understood, which was why the section was added to give a time                
 frame to allow the department to do some studies and propose                  
 different methods to the legislature of generating that revenue, if           
 they needed to.  And as to the economic bases of the areas, I                 
 believe that that is better left up to people other than me to be             
 able to agree or disagree with.  I think the senator outlined his             
 views on Tuesday, and I would just say that I believe the comments            
 he made then would probably apply today, as well."                            
 CHAIR JAMES asked if there were comments or questions from the                
 Number 0411                                                                   
 REPRESENTATIVE ED WILLIS asked Chair James how she thought the                
 committee should proceed.                                                     
 CHAIR JAMES indicated she had hoped to hear from the committee                
 before expressing her concerns.  She agreed the thrust of the issue           
 was the great division between people who live in urban areas and             
 organized boroughs and those who do not.  "We have been, over the             
 last few years, suffering that division much more intensely, over             
 the subsistence issue, over school funding issues, and also over              
 the tribal status issue," she said.  "Those are all issues that are           
 not going to go away, and I am not willing to put any more darts              
 and any more wedges in that issue.  I wish to have an agreement               
 with the rural people in our area to some sort of conclusion that             
 we can all buy into.  It is reasonable to believe that those people           
 in the urban areas, especially when it comes to budget time and we            
 find that we pay more money for schools, with less participation in           
 the rural areas, that the urban people would be distressed.  I'm              
 distressed about it.  I think that what we heard in the testimony             
 is that those people are willing to pay something.  I'm not sure              
 how much they can pay, or how is the best way for them to pay it."            
 CHAIR JAMES continued, "I don't believe that mandatory boroughs is            
 the way to go, and I think that as a Republican, which I am and               
 some of the rest of us around this table are, we are for less                 
 government and this bill does more."  She was not opposed to having           
 the large, unorganized borough remain in operation, with the                  
 legislature sitting as a borough assembly and deciding that those             
 people must pay some tax toward education.  However, she wanted to            
 work out an agreement with the sponsor to obtain a more palatable             
 bill, and she wished to hear the ideas of the committee.                      
 Number 0593                                                                   
 REPRESENTATIVE IVAN IVAN said this was the heaviest legislation he            
 had ever come across.  By perception, it was a divisive issue for             
 rural Alaska.  He said a miscommunication exists between rural and            
 urban Alaska.  Consensus-building and more input were needed.                 
 Representative Ivan indicated many people in small villages did not           
 understand this legislation.   Some 30 communities were affected,             
 a majority of them in the unorganized borough.  Some communities,             
 near resources and with good economic opportunities such as fishing           
 or mining, could contribute.  However, he said, "I represent some             
 villages that have nothing at all, that are just trying to live               
 their life.  And right now, I represent one of the poorest areas."            
 REPRESENTATIVE IVAN suggested doing it by phases.  For example,               
 during the interim, legislators could touch base with those who               
 would be affected.  He noted that his area was looking at mining              
 opportunities, for example, which would provide a tax base.  "We've           
 got to find a way that's equitable," he said.  "So, I would push              
 for an interim committee, if necessary, to consider such a landmark           
 legislation that's affecting people that live in this great state             
 of ours."                                                                     
 Number 0880                                                                   
 REPRESENTATIVE WILLIS indicated agreement with Chair James's                  
 approach.  "I'm really torn with this legislation," he said, adding           
 that he lived through the mandatory borough acts 30-35 years                  
 before, residing in an area considered rural at the time.  "At that           
 particular time, the mandatory borough act of that day was really             
 resisted by people who lived outside of the organized areas, in our           
 case, the city of Anchorage," he said.  "And the same testimony               
 that I've sat here the last two days, listening [to], coming in               
 from the rural areas, is the same testimony that we used to offer             
 to the legislature."                                                          
 REPRESENTATIVE WILLIS said although he hated to see something                 
 forced on people, now that he was living in an urban area where               
 taxes were paid for schools, his constituents felt the rural areas            
 should contribute.  "But having said that, I'm not sure that this             
 is the precise bill to do it," he stated.  "Maybe, for the first              
 time in our history, we should sit as a borough assembly of the               
 unorganized borough and discuss what I think is the bottom line of            
 the bill, ... the unorganized borough making some type of a                   
 contribution towards schools, and leaving ... implementing the                
 borough government out of it at this time."  He suggested working             
 out a solution palatable to everyone concerned.                               
 Number 1132                                                                   
 CHAIR JAMES welcomed Senator Torgerson back to the meeting.  She              
 expressed that the issue needed to be addressed and reiterated that           
 the divisiveness needed to be removed, so people were working                 
 together for the same goal.  "And we have not been doing a very               
 good job of that," she said, indicating the issue had been                    
 festering in people's minds in urban areas.  She thanked Senator              
 Torgerson, as had Representative Willis, for bringing the                     
 legislation forward.                                                          
 Number 1207                                                                   
 REPRESENTATIVE CAREN ROBINSON agreed with committee members who had           
 spoken, also expressing appreciation for Senator Torgerson's                  
 efforts.  However, she believed the bill warranted more work from             
 the affected groups.  She suggested taking the issue to the rural             
 areas and working towards a consensus on a solution residents could           
 buy into.  "I very much object to forcing something down people's             
 throats, because I don't think it will work," Representative                  
 Robinson said.  She suggested the bill be put into an interim                 
 committee to obtain input from the Alaska Municipal League and                
 other groups.                                                                 
 CHAIR JAMES replied the committee could do that, setting time                 
 lines.  She indicated she had ideas to discuss with the sponsor, as           
 well, and said, "So, I'm not willing to say we're not going to pass           
 this bill.  I'm not willing to say that we're going to pass this              
 bill like it is.  I think it needs to have a lot of adjustment."              
 Number 1367                                                                   
 REPRESENTATIVE PORTER commented that although he represented mid-             
 town Anchorage, when he arrived 45 years before, most people he               
 knew in Anchorage felt precisely like the people who had testified.           
 "So, there is an understanding of the concerns of rural Alaska," he           
 said.  However, Anchorage residents made a lot of contributions to            
 their services, paying for their own law enforcement; misdemeanor             
 prosecution, defense and corrections costs; and streets, for                  
 REPRESENTATIVE PORTER said, "There's in my mind, and in the mind of           
 a lot of my constituents, and I think we heard that from the                  
 testimony today, and these rural Alaskans with British accents or             
 Georgia accents, this isn't the rural Alaskan that most other                 
 Alaskans recognize have a right to indigenous lifestyles and                  
 support.  Many of these people live in rural Alaska by their own              
 individual election, but are benefitting from the court decisions             
 and other policies that have developed over the years when we had             
 a lot of money to throw at individual needs throughout the state.             
 I, too, would like to thank the senator for bringing a very                   
 contentious issue to the table and would pledge to work with the              
 committee and the senator or anybody else to come up with a                   
 resolution."  Representative Porter concluded by pointing out that            
 while the title referred to mandatory boroughs, the provision was             
 Number 1548                                                                   
 CHAIR JAMES proposed an analogy that while urban Alaska had mass              
 production, rural areas had only basic production.  She related a             
 personal experience with mass production.  "Anything that we do as            
 a massive bunch of people to make things better for the whole,                
 whatever it is, there's going to be some that fall off of the                 
 belt," she said.  "We have to be sure, I think, in Alaska, that we            
 don't irresponsibly push people off of the belt."  She believed               
 people ought to be willing to pay for education and noted that many           
 were home schooling their children, which still cost some amount of           
 money.  She reiterated that something needed to be done but that it           
 should be constructive, not destructive.                                      
 Number 1638                                                                   
 REPRESENTATIVE OGAN suggested owners take better care of property             
 than renters do.  He suggested the bill might be premature, in                
 light of the tenure bill relating to school districts.  "The cost             
 of education keeps going up," he said.  "The fiscal notes keep                
 going up."  He said he did not mind paying for public education and           
 that his district was interested in this bill being passed.  "I               
 guess the parts I'm wrestling with is the parts about less                    
 government and no new taxes, the commitments I made to my                     
 constituents that I would not incorporate new taxes," he stated.              
 Representative Ogan indicated his wish to keep working on the bill.           
 He said the bottom line was that people had something they did not            
 have to pay for, and they did not want to pay any more.                       
 Number 1812                                                                   
 CHAIR JAMES responded to Representative Ogan's comment about                  
 renters, saying, "It's my perspective, from being a renter and also           
 from being a landlord, that renters do pay property tax, and they             
 do pay for maintenance and all the other issues that it costs to              
 keep up a property, and it's factored into the rent.  So, there is            
 that presumption that renters don't even pay property tax.  But, in           
 fact, they do.  So, when we're talking about a property tax, it               
 affects everyone, because when property taxes go up, the cost of              
 everything else goes up to pay for it."                                       
 Number 1847                                                                   
 SENATOR JOHN TORGERSON apologized for missing the earlier                     
 discussion.  He said, "We don't have to adjourn and stick another             
 label on us to say we're a borough assembly.  As a legislature, we            
 have full force and effect on the unorganized borough, as an                  
 assembly would do, and we do that constantly."                                
 SENATOR TORGERSON explained the original bill title had `mandatory'           
 in it, which was long-since gone.  "I agree with the people in                
 rural Alaska about having another layer of government," he said.              
 "That's why it's not in this bill.  But I also believe, in the                
 local autonomy, that they should have an opportunity to vote on               
 it."  He said the bill called for a time line of public hearings,             
 not all in one summer.  He urged the committee to hold hearings in            
 all districts.                                                                
 SENATOR TORGERSON emphasized that his intent was to equalize the              
 local effort for education.  He noted that local municipalities               
 often were above a four-mill rate for education, with amounts added           
 above the cap for items such as sports.  "There really is no                  
 incentive, unless we put it in, for people to pay a tax," he                  
 Number 2032                                                                   
 CHAIR JAMES noted there had been no testimony supporting passage of           
 the bill and said people statewide had every opportunity to                   
 participate.  She offered Amendment 1, which read:                            
      Page 4, line 9, following "borough""                                     
           Insert "that is outside of home rule and first class                
 Number 2065                                                                   
 REPRESENTATIVE PORTER moved Amendment 1.                                      
 REPRESENTATIVE JOE GREEN objected for the purpose of discussion.              
 SENATOR TORGERSON explained the amendment was offered to remove               
 confusion over double taxation in certain areas.  He referred to              
 Nome, which he believed paid tax at the maximum rate possible.                
 "This bill is not intended to double tax anyone for education," he            
 said.  "This bill is intended to capture the $3.1 billion that's              
 out there that is currently not being taxed from any jurisdiction."           
 He stated that all home rule and first-class cities in the                    
 unorganized borough had, automatically, city school districts.                
 Number 2131                                                                   
 REPRESENTATIVE GREEN said his concern was whether, if home rule and           
 first-class cities were excluded from some boroughs, there would be           
 anything left.  "And yes, I know there's the evaluation of the                
 amount of money there," he said.  He noted there had been                     
 indications that evaluation and collection would be a problem.                
 REPRESENTATIVE GREEN said, "It's awkward that this bill has only              
 been introduced two weeks ago. ... I think it would be a horrible             
 travesty to react too quickly to something that is as significant             
 as this.  And so, I think this amendment, as well as the bill                 
 itself, probably is to the point that, if we're going to pass it,             
 we should have some `hangy-ons' that says that it's advisory or               
 it's going to come back, or it's going to be reviewed in summer,              
 some process of going through this that isn't just to pass it and             
 then kind of let it languish.  I think there should be  a process             
 Number 2204                                                                   
 REPRESENTATIVE GREEN noted that committee members had agreed to               
 work on it in the interim.  Although he saw merit, he was unsure              
 what methods should be applied.  He recalled that there had been              
 discussions in Anchorage for years about the inequality of using              
 property values to determine whether there should be police                   
 protection.  He stated, "My concern is that, if we put this in, are           
 we then, after the study, going to want to take it back out."                 
 CHAIR JAMES agreed that was a valid concern.                                  
 Number 2272                                                                   
 SENATOR TORGERSON responded, "No matter what kind of study you did            
 on this bill, you would not come back with a recommendation to tax            
 people twice for education."  He stated, "Contrary to what some of            
 the school districts have been saying, the single site, they do               
 have kids from outside their jurisdiction come into that school,              
 and it is a problem for them.  Now, they get paid ... educational             
 unit value for that, which, again, is basic need.  But the local              
 districts are footing the bill for people that are outside their              
 taxing jurisdictions."                                                        
 CHAIR JAMES asked if there was further discussion on Amendment 1.             
 Number 2340                                                                   
 REPRESENTATIVE GREEN replied, "If we are intending to move this               
 bill out, I would maintain the objection because that presumes, I             
 think, then, that we are going to continue taxing the same way we             
 are now for future use of schools, whether they're in incorporated            
 boroughs or unincorporated boroughs.  And if we are thinking that             
 we are going to review this over the interim, then I would remove             
 my objection because it will be reviewed then."                               
 CHAIR JAMES pointed out that decision had not been made.                      
 REPRESENTATIVE GREEN said he knew that.                                       
 CHAIR JAMES clarified that she was not saying whether she wanted to           
 move it or not.  She wanted to speak with the sponsor about other             
 Number 2381                                                                   
 REPRESENTATIVE GREEN said his position would depend on what                   
 CHAIR JAMES suggested Representative Green was not ready to vote on           
 REPRESENTATIVE IVAN informed Chair James that he also had proposed            
 CHAIR JAMES acknowledged that and said Senator Torgerson had                  
 another one, as well.  "I passed this out earlier only because I              
 thought it was so innocuous that it might make some people out                
 there in teleconference land a little more happy to think that if             
 we do go forward with this, that this will be in there and they'll            
 feel more comfortable," she said.  "That doesn't mean that we're              
 going to be passing the bill out in its current form or an amended            
 form.  It doesn't mean that we're going to hold it.  It just means            
 that we're telling those people out there that we're not going to             
 double tax them, which ... they're fearful of."                               
 REPRESENTATIVE GREEN said, "On that basis, I'll remove the                    
 Number 2420                                                                   
 CHAIR JAMES asked if there was any other objection.  There being              
 none, Amendment 1 passed.  Chair James concluded the hearing and              
 thanked all participants.                                                     

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