Legislature(2003 - 2004)

05/06/2003 09:01 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     HOUSE BILL NO. 79                                                                                                          
     "An Act extending  the termination date of the  Alaska regional                                                            
     economic  assistance program;  and providing  for an  effective                                                            
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken explained  that this  bill sponsored  by the  House                                                            
Community  and Regional  Affairs  Committee would  reauthorize  "the                                                            
Alaska  Regional  Economical  Assistance  Program, better  known  as                                                            
ARDOR [Alaska  Regional  Development Organization],  for five  years                                                            
until July 1, 2008. He  announced he prepared a committee substitute                                                            
that would change the extension date to one year.                                                                               
                                                                                                                                
REPRESENTATIVE  CARL  MORGAN, Chair,  House Community  and  Regional                                                            
Affairs Committee,  read talking points into the record  as follows.                                                            
                                                                                                                                
     The Alaska  Regional Development Organizations  (ARDOR) Program                                                            
     is  the  State's  contribution   to regional   initiatives  for                                                            
     developing Alaska's economy.                                                                                               
                                                                                                                                
     There are currently 13 ARDORS statewide.                                                                                   
                                                                                                                                
     The Legislature first created the ARDOR Program in 1988.                                                                   
                                                                                                                                
     The ARDOR  Program provides a network of organizations  to plan                                                            
      and support economic development at the regional level.                                                                   
                                                                                                                                
     Board members participation reflects a local commitment.                                                                   
                                                                                                                                
     Each  ARDOR, with 15-20  members, constitutes  150 plus  local,                                                            
     civic minded individuals  who volunteer their time to achieve a                                                            
     stronger economic base in their region.                                                                                    
                                                                                                                                
     The  ARDOR  Program  is  providing  a return  for  the  State's                                                            
     investment.                                                                                                                
                                                                                                                                
     The State provides $620,000 in grant funds. The ARDORs [have]                                                              
     used these grant funds to leverage over $3 million in other                                                                
     funds.                                                                                                                     
                                                                                                                                
     House Bill 79 extends this successful program to July 1, 2008.                                                             
                                                                                                                                
Representative  Morgan  noted each  ARDOR receives  over $47,000  in                                                            
State funding.                                                                                                                  
                                                                                                                                
Co-Chair Wilken  spoke to a proposed committee substitute  to extend                                                            
the commission  for one year instead  of the five years provided  in                                                            
the bill.                                                                                                                       
                                                                                                                                
Co-Chair  Green  moved  for adoption  of  HB  79, 23-LS0493\D  as  a                                                            
working draft.                                                                                                                  
                                                                                                                                
Co-Chair  Wilken objected to  speak to the  changes proposed  in the                                                            
committee substitute. He  pointed out the $620,000 cost to the State                                                            
to fund this program. He  indicated the 2003 annual report submitted                                                            
to the Legislature by ARDOR  [copy not provided], is unclear whether                                                            
each regional  organization  is successful.  He noted the  Southeast                                                            
Regional Conference  demonstrates success and an ability  to measure                                                            
that success;  however, he commented  that others are "a  little lax                                                            
as to where  and what they're  spending their  money on and  whether                                                            
indeed there's any results."                                                                                                    
                                                                                                                                
Co-Chair  Wilken  referenced  a letter  dated  April 11,  2003  from                                                            
himself to  Commissioner Blatchford  of the Department of  Community                                                            
and Economic Development  [copy on file], suggesting  elimination of                                                            
the ARDOR  Program in FY  05. However, rather  than eliminating  the                                                            
program, Co-Chair Wilken  informed the Committee of his intention to                                                            
review the  matter during  the legislative  interim to ensure  funds                                                            
allocated to the program are used wisely.                                                                                       
                                                                                                                                
Co-Chair  Wilken next directed  attention to  a letter to the  House                                                            
Community and  Regional Affairs Committee from the  Alaska Municipal                                                            
League, dated  February 20,  2003 [copy on  file]. He informed  this                                                            
letter also requests implementation of performance measures.                                                                    
                                                                                                                                
Co-Chair  Wilken  surmised  the  Department  is  agreeable  to  this                                                            
intent. Therefore, he suggested  extending the program only one year                                                            
to  allow for  review  of the  findings  the  following legislative                                                             
session. He assured that  if no problems are identified, the program                                                            
could be extended further.                                                                                                      
                                                                                                                                
Senator  Olson  requested  the  opinion  of  sponsor  regarding  the                                                            
proposed committee substitute.                                                                                                  
                                                                                                                                
Representative  Morgan  qualified  that  he  had  not  reviewed  the                                                            
proposed committee  substitute and  that he had no control  over the                                                            
will of the Senate Finance Committee.                                                                                           
                                                                                                                                
Senator Olson  shared the co-chair's concerns about  accountability;                                                            
however  he  attributed   this  to  the  maturing   process  of  the                                                            
participants.  He questioned the "wisdom" of a one-year  termination                                                            
date.                                                                                                                           
                                                                                                                                
Co-Chair  Wilken  reiterated  this  change  would  focus  effort  on                                                            
"developing  the worth of  the $650,000  expenditure." He  suggested                                                            
all or  a portion of these  funds might  be better spent  elsewhere.                                                            
Regardless,  he said  the expenditures  should be  reviewed and  the                                                            
findings "embodied" in the FY 05 budget.                                                                                        
                                                                                                                                
Senator Olson  asked the amount of  federal funding involved  in the                                                            
program.                                                                                                                        
                                                                                                                                
Representative  Morgan replied that the State appropriation  garners                                                            
over $13 million annually.                                                                                                      
                                                                                                                                
There was no  objection and the committee  substitute, Version  "D",                                                            
was ADOPTED as a working draft.                                                                                                 
                                                                                                                                
KEVIN  PEARSON,  Anchorage  Economic  Development  Corporation,  and                                                            
ARDOR  Director,  testified  via teleconference  from  Anchorage  in                                                            
favor of  extending the  ARDOR Program. Although  the ARDOR  Program                                                            
provides a small percentage  of the funding for economic development                                                            
activities  in Anchorage, he emphasized  the sole reliance  on these                                                            
funds  by outlying  communities.  He  was  also concerned  with  the                                                            
"message" an extension  of only one-year would portray to investors.                                                            
                                                                                                                                
Mr. Pearson charged  that the onus is on the Legislature  as to what                                                            
information is  needed to measure the program's success  and justify                                                            
the expenditure.  He furthered  that the  program is successful  and                                                            
information is available to demonstrate this.                                                                                   
                                                                                                                                
SUE COGSWELL,  Price William  Sound Economic  Development  District,                                                            
testified via teleconference  from Anchorage about the participation                                                            
in the  ARDOR  program since  1991 and  as an  economic development                                                             
district  since  2001.  She told  of  projects  to build  a  seafood                                                            
processing plant  in Valdez, an economic development  summit held in                                                            
Cordova and the hope for additional economic growth.                                                                            
                                                                                                                                
WANETTA  AYERS,  Executive  Director,  Southwest   Alaska  Municipal                                                            
Conference (SWAMC),  testified via teleconference  from Anchorage in                                                            
favor of reauthorization  of the ARDOR  Program on behalf  of the 54                                                            
communities  and 131 members  of the Conference.  She informed  that                                                            
the Conference  was formed in 1986  and earned ARDOR designation  in                                                            
1989. She reported that  State funding comprises 22 to 25 percent of                                                            
the  Conference's  budget during  the  past several  years;  federal                                                            
funding comprises  approximately 25 percent; and over  50 percent of                                                            
the funding  is  derived from  earned income.  She noted  that  as a                                                            
designated   economic   development   district,   SWAMC  saves   the                                                            
communities  of  Southwestern   Alaska  "hundreds  of  thousands  of                                                            
dollars,  if not  millions"  annually by  reducing  the local  match                                                            
requirement for  federally funded projects.  She furthered  that the                                                            
SWAMC allows area communities  to be more efficient and in a "better                                                            
position to take advantage of market opportunities".                                                                            
                                                                                                                                
Ms. Ayers told  the Committee that  in FY 02, SWAMC was selected  by                                                            
the  US Congress  to  administer  a  $30 million  stellar  sea  lion                                                            
mitigation  fund. She noted  that little  direction was provided  in                                                            
the  enabling  legislation,  although  review  of  other  mitigation                                                            
programs,  the SWAMC  board  established  three goals:  achieve  the                                                            
soonest  possible distribution  of fund to  those directly  impacted                                                            
but  federal  fisheries  closures  and  restrictions,   to  minimize                                                            
administrative   costs  to  one  percent  or  less,  and  develop  a                                                            
negotiated settlement  process that has widespread  support from the                                                            
communities, businesses  and individuals most impacted. She reported                                                            
that all  three objectives  were achieved.  She  stated this  is one                                                            
example of accomplishments ARDOR groups could realize.                                                                          
                                                                                                                                
Ms. Ayers opined  that a one-year extension rather  than a four-year                                                            
extension  of the program  would be  "an indication  of the  State's                                                            
lack of commitment  to economic development." She  stressed the need                                                            
for an on-going commitment.                                                                                                     
                                                                                                                                
Co-Chair  Wilken  assured  that  if  review  of  the  ARDOR  Program                                                            
determines that  the expenditures are justifiable,  he would support                                                            
increased funding for the program.                                                                                              
                                                                                                                                
JANET  DAVISON,  Community  Research Center,  Fairbanks  North  Star                                                            
Borough, testified  via teleconference from Fairbanks  about her job                                                            
duties in monitoring economic  development activities in the Borough                                                            
and measuring  "gains and  losses" in the  community. She  suggested                                                            
the Entrepreneurial  Statement  report she  produces is a  "starting                                                            
place" for  measuring the success  of economic development  efforts.                                                            
She stressed that  the funds allow for economic development  efforts                                                            
is  rural communities.   She spoke  to  the benefits  of  the  ARDOR                                                            
Program and the  economic development opportunities  it continues to                                                            
provide in both urban and rural communities.                                                                                    
                                                                                                                                
KATHRYN  DODGE, Economic  Development Coordinator,  Fairbanks  North                                                            
Star  Borough,  testified via  teleconference  from  Fairbanks  that                                                            
economic  development   is a  long-term   commitment  and  does  not                                                            
demonstrate  results  overnight.   She  remarked  that  a  five-year                                                            
extension of the  ARDOR Program would send a message  of commitment.                                                            
She  expressed  that  the  Fairbanks  ARDOR  Program  "compels"  the                                                            
community  to  focus on  economic  development  and  encourages  the                                                            
development  of public and private  partnerships in the "pursuit  of                                                            
future economic development for the Borough and for the State."                                                                 
                                                                                                                                
Ms.  Dodge   described  the   local  program's   development   of  a                                                            
comprehensive  economic  development  strategy  and  the  subsequent                                                            
increased momentum  and prioritization  of projects. She  stated the                                                            
local  ARDOR  Program  obtained  $331,000  in economic  development                                                             
grants  secured using  the $44,000  State appropriation  during  the                                                            
past  year.  She gave  examples  of  expenditures  of  these  funds,                                                            
including  assistance  commercial  fish  processors in  the  region,                                                            
hosting  public  safety regional  training  ranges  and development                                                             
efforts to create a cold weather testing industry.                                                                              
                                                                                                                                
DEB  HICKOK,  President  and  Chief  Executive  Officer,   Fairbanks                                                            
Convention  and Visitors Borough,  and member, Economic Development                                                             
Commission  of  the Fairbanks  North  Star  Borough,  testified  via                                                            
teleconference  from Fairbanks that  she understood the hard  budget                                                            
decisions  faced  by  the  Committee,  but  stressed  that  economic                                                            
development  is important. She spoke  to the opportunity  for "grass                                                            
roots"  or "bottom  up" economic  development. She  attested to  the                                                            
success  of  the  ARDOR  Program  in  Fairbanks  and  the  resulting                                                            
"heightened climate of  economic development" since inception of the                                                            
program.  She  described  the  history   of the  organization,   now                                                            
operating  under  the direction  of  professionals  and receiving  a                                                            
larger percentage  of funding from  the Borough. She disagreed  with                                                            
Co-Chair Wilken's  proposal for one-year  extension, as this  is too                                                            
short a goal for measurement.                                                                                                   
                                                                                                                                
JIM  DODSON,  Chair, Fairbanks  Economic  Development  Corporation,                                                             
testified via teleconference  from Fairbanks that the Corporation is                                                            
a recipient  of funding from  the Fairbanks  North Star Borough.  He                                                            
encouraged  support of  original version  of the  bill. He spoke  to                                                            
measurable  results in economic  development  and stressed  the need                                                            
for economic  development  opportunities in  the State.  He  pointed                                                            
out  that  additional  funds  would  be needed  in  the  future.  He                                                            
supported a five-year extension of the ARDOR Program.                                                                           
                                                                                                                                
Senator Olson  asked the potential  increase or decrease  of federal                                                            
funds received  if the Program  were extended  one year rather  than                                                            
five.                                                                                                                           
                                                                                                                                
Co-Chair Wilken suspected no impact.                                                                                            
                                                                                                                                
LOREN GERHARD,  Southeast Conference  testified in Juneau,  that the                                                            
$47,000  appropriation to  the ARDOR Program  provides one-third  of                                                            
unencumbered   funding  for  the  Conference,  which   is  leveraged                                                            
approximately  ten-to-one to receive  federal funds and other  grant                                                            
program  funding.  He stated  that all  of the  funds  are used  for                                                            
improving  economic   opportunities  in  the  Southeastern   region.                                                            
Outside   Juneau,  he   pointed  out,   the   region  is   suffering                                                            
economically,  and  remarked  that  the  ARDOR Program  is  a  cost-                                                            
effective  way  to  ensure  that  regions  are addressing   economic                                                            
development specific to each region.                                                                                            
                                                                                                                                
Co-Chair  Wilken opined that  the report  prepared by the  Southeast                                                            
Conference is  superior to the reports submitted by  the other ARDOR                                                            
Programs. He expressed  that this report would be used as an example                                                            
in efforts to improve the Program.                                                                                              
                                                                                                                                
Senator  Olson asked  the impact  a shorter  termination date  would                                                            
have on the Southeast Conference.                                                                                               
                                                                                                                                
Mr. Gerhard  replied that  it would not affect  the Program  and the                                                            
receipt  of federal  funds, although  it could  effect planning  for                                                            
future  projects.  He emphasized  the  benefits  of the  ability  to                                                            
utilize the  State appropriation as  unencumbered funds to  leverage                                                            
federal funding.                                                                                                                
                                                                                                                                
Senator Taylor  offered a motion to  report HB 79, 23-LS0493\D  from                                                            
Committee with  individual recommendations  and accompanying  fiscal                                                            
note.                                                                                                                           
                                                                                                                                
Without objection, SCS  HB 79 (FIN) with the $650,000 fiscal note #2                                                            
from the  Department of  Community and  Economic Development,  MOVED                                                            
from Committee.                                                                                                                 
                                                                                                                                

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