Legislature(1995 - 1996)
04/25/1996 08:07 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 trimmed. 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 well. 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 equitably. 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 rule. 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" vote. 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 thousand. 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 committee. 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 example. 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 optional. 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 concluded. 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 cities" 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 established." 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 ideas. Number 2381 REPRESENTATIVE GREEN said his position would depend on what happened. CHAIR JAMES suggested Representative Green was not ready to vote on it. REPRESENTATIVE IVAN informed Chair James that he also had proposed amendments. 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 objection." 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.