Legislature(2003 - 2004)
05/06/2003 09:01 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.