HCRA-260423-0800

Good morning. I call the House Community and Regional Affairs Committee meeting to order. Today is Thursday, April 23rd. And the time is 8:05 AM. Members present are Representative Kai Hollen, Representative Mike Prox, Representative Carolyn Hall, Representative Steve St. Clair, Representative Garrett Nelson is with us on the phone, Co-Chair Rebecca Himschute, and myself, Co-Chair Donna Mears.

We have a full house and forum to conduct business. Just a reminder, as the first committee of the day, please silence your cell phones. Oh, I should also notice we have Senator Mike Cronk in the audience today. For a bill coming up later. If you need to pass a note to committee members, please get the attention of my aide, Talia Ames.

Thank you, Talia, and thanks to Co-Chair Himschutz's committee aide, Thatcher Brower. Before we get started, I'd also like to thank our recording secretary, Sophia Tenney, and helping us out from the Juneau LIO is Chloe Miller. On today's agenda, we have two items. First, we will look to the committee for final action on SB 63, Local Boundary Commission. Sponsored by Senator Cronk.

This is the bill's second hearing and we received no amendments for the bill. And last, we will consider a committee substitute for House Bill 291, Municipal Property Tax Exemption, sponsored by Representative Calom. And this is the bill's third hearing. First, we will take up Senate Bill 63. Senator Cronk and staff, Paul Menke, please welcome to the committee this morning.

Please come to the table, put yourself on the record, and provide a quick recap of the bill.

Thank you, Chair Meyers and the committee here. Senator Mike Cronk for representing District R, which is about a third of the entire state of Alaska, and my staff Paul Menke. So we appreciate again hearing SB 63, which is the Local Boundary Commission, and providing for effective date. And if you like, Paul could go through just a quick review of what the bill does. Please do.

For the record, Paul Menke, staff to Senator Mike Cronk. So what Senate Bill 63 does is just a few things. Mainly, it adds one seat to the Local Boundary Commission and requires that at least one commissioner be from the unorganized borough. The bill also establishes the requirement in statute that commissioners appointed from the unorganized borough and their respective judicial districts actually live, reside in, and are registered to vote in the districts from which they are appointed. It makes the technical change to extend the length of their seats, or of their terms, from 5 years to 6 years, and that's so that each commissioner will be— or one commissioner will be up for appointment each year.

And this act becomes effective January 31st, 2027, and will not affect the terms of any sitting commissioner.

Thank you very much. Do we have questions from the committee? And I, I'd also like to note, uh, that we have, um, gotten some written testimony, uh, for folks. If you haven't looked at that, we did receive some written testimony. On the phone for questions, we have Sandra Mohler.

She's the Director, Division of Community and Regional Affairs, Department of Commerce, Community and Economic Development. Representative Hall. Thank you, Co-Chair Mears. I don't know if this is a question for the bill sponsor or for Ms. Mohler, but I'm curious how many unorganized boroughs there are, how many communities that might encompass.

For the record, Paul Menke, um, there— the unorganized borough is, is I think just a generally term for the entire state. There are a lot of communities from the northern Alaska, there's some communities in southeast Alaska. I apologize, but I do not have a, a record of the number of communities. I know there's, I want to say, more than 50 in our district. Yeah.

Yes. Through the chair, that might be a question for Ms. Moller. Thank you, Director Moller. Do you have an estimate or exact number for us on the number of communities that are involved in the unincorporated borough?

Yes, thank you, Chair Meyers. This is Sandra Moller. I am the director of DCRA in Commerce. Thank you for that question. I would have to get back to you on the exact numbers.

However, I do have a breakdown of population population per district, if that would be helpful.

Sure. Through the co-chair, Ms. Muller, that would be helpful. Sure. Yes, please. Sure.

Okay, thank you again. Sandra Muller. There are 4 judicial districts. The first one, District 1, has 70,233, and I could provide this in writing if you would like. District 2 has a population of 27,000.

1,384,000. District 3, most populous, is 504,206, and District 4 has 136,914 for approximate total state population of 739,000. If you look at the population within the unorganized borough, it is 74,448.

Or 10% of the population.

Thank you. Thank you very much. Representative Holland. Great, thank you, Chair Mears. While we're on this topic, it was a question that I was just pondering at our last hearing, but I thought I'd ask it before this thing moves on.

I'm interested in the role that this committee has as essentially, I think, kind of an assembly for the unorganized boroughs. And it's been a role that we have not spent a whole lot of time on, but I'm just curious to the bill sponsor, given the time that you have spent looking at this particular issue and the issues that I think have driven the need to look at this Boundary Commission, I'm just curious if you have any thoughts for us or observations about the role of this committee down the road in working with the unorganized boroughs and particularly perhaps the local boundary commission on issues that you think we should be watching for and spending more attention on in the future? And there may not be anything, but I just was curious about our role as kind of the assembly for these unorganized boroughs, and this is perhaps a place to ask that question. Thanks. [Speaker:COMMISSIONER DIXON] Yeah, through the Chair, obviously, the legislature is the kind of the overseer of unorganized areas, and I think we have to you know, look at the unorganized areas with a lot of common sense.

Because, you know, you hear— and, you know, I can look at, uh, where it is, uh, Article 10, Section 3 of the Alaska Constitution clearly states this entire state shall be divided into boroughs, organized or unorganized, right? There's no direction says everybody will be organized. And, and there's just a lot of places in Alaska that— and organized, whether it's a city or municipality or borough, doesn't make any sense. There's— it's really a burden upon the people there if you're going to create a system that is unaffordable. So I would hope that the legislature actually looks at that and realizes that there's just a lot of places you're not going to organize.

And we're really— a lot of our unorganized areas aren't asking for much more than the state's required to provide, right? We're not asking for, you know, swimming pools and all that stuff. We're just out there living. So I think that I would hope that the legislature, that's the view they take when they look at this. Thank you.

Thank you. Thank you, Senator Cronkite. I'm grateful that not anyone— everyone has the responsibility to be organized. Anyone else? I— because I was sweeping the room.

Uh, Representative Prox.

Thank you, Madam Chair. I'm just wondering, we use the word organized and unorganized and It's hard to tell the difference between boroughs that are incorporated and those that are unincorporated, if they're organized or unorganized. I don't know that we have organized anything. Never mind. All right.

We're all in jokes this morning. Representative Himschute. Thank you. Through the co-chair to Senator Cronk. I hear frequently about the Mandatory Burrow Act.

Can you speak to that in light of this bill?

In terms of organized and unorganized, and it feels like there is a tacit understanding in the state that everybody should be forced into a burrow. Okay, through the chair, yes. That is definitely something we've heard and stuff. And again, I would hope that we as a collective body understand that you could go out and visit some of these places and you'll understand that there's really no baseline that's going to produce a city or encompass a borough. And in some areas you could actually, you know, if you were forced into the borough, it actually would cost the state money.

So you have to realize like right now there's a big section of the Trans-Alaska Pipeline that the state gets all the tax mill rate off off of. And if you put— let's say you force those people into a borough, now that, that money that the state gets would no longer go to the state, that would go to your borough. So I, I think we, we just look at this with common sense and realize that if you're going to, you know, force smaller, really small places that may not have taxable— if you look at property taxes, or most, most of the villages are not going to be taxable— you're going to force them into creating an entity. And we've seen this across Alaska when they did ANCSA or stuff. People were forced into cities, and really those cities are not functioning because they just can't at this point.

So you— we've actually created a bigger problem of, of what's going on. And in fact, it's like in Tanana, they used to be a city of like 1,000 people. They had their own school district and stuff. And just a couple years ago, we, we basically passed legislation so we could remove that school, not even have a school district. They would assume into the Yukon-Kaika because they weren't functioning as a city.

So I just think, you know, we always have to have a bigger picture of Alaska is a big place and one size doesn't fit all. And, you know, forcing people into something that's really not financially possible is not a good thing to do. Thank you for the context, Senator Cronk, about TAPS. As the three of us on resources are talking about the gas pipeline, I believe it's a little north of 40% of the mileage of that is an unincorporated area. Quick follow-up.

[SPEAKING CHINESE] I just wanted to, for the committee's, I guess, information, share from the website of the LBC that the function of the commission is to act on petitions for incorporation, dissolution, merger, and consolidation of cities and boroughs. So that's— That's what they are there to do. And I think I am in support of trying to make sure that the decisions made by that commission are informed by voices from all the areas that could or would be impacted. [Speaker:DR. BRYAN SLINKER] If I could add one thing. You know, and I always look at it this way.

We shouldn't be forcing things from government down. We should be looking at things from the people up, right? And if those people are the ones that want to do that, I think that is a great idea. But if we are forcing it down upon them, I think that is a— you know, a situation for failure. Thank you.

You're not going to add a local control tagline on there?

Any further questions from the committee? Any final comments, Senator Cronk? No, I— you know, through the chair, I just appreciate the committee taking the time to listen to the bill, and we appreciate your hard work. Thank you. I'll look to Representative Hall for a motion.

I move to report SB 152 SB 6334-LS0422/A. Can I have an addy, please? Brief addy.

Back on the record. Representative Hall, would you please restate the motion? Co-chair Mears, I move to report SB 63 SB6334-LS0422/A.A out of committee with individual recommendations and the accompanying fiscal note and authorize legislative legal services to make any necessary technical and conforming changes.

Seeing no objection, SB6334-LS0422-A.A moves from committee with individual recommendations and attached fiscal note. We'll take a brief at ease to sign the paperwork.

We are back on the record with House Community Regional Affairs. Uh, we will now take up House Bill 291 to consider a committee substitute. Ms. Durfee, please come to the table. Uh, Representative Colon is unable to join us this morning. Uh, please put yourself on the record and provide a quick recap of the bill.

For the record— sorry, I think I'm catching a cold— um, I'm Emily Durfee, staff to Representative Colon. Uh, thank you for hearing this bill again. We appreciate the co-chairs of the committee working with us on a Essentially, um, this committee substitute addresses the primary concerns that were raised through committee discussions and discussions with different communities throughout Alaska. Specifically clarifies the distinction between real and residential property in the bill. It removes the $75,000 voter, voter approval threshold, reinstates the optional exemption for disabled veterans, and ensures that existing optional exemptions already in effect are preserved by including grandfathering language.

And in addition, um, we added some language to ensure that any ordinances that allow these optional exemptions for property taxes are developed and vetted through their local governing bodies. If it's helpful, I can walk you guys through the summary of changes. Otherwise I will do my best to answer any questions the committee may have. We'll make the motion to adopt the CS before the summary of changes, before the changes, please. Any questions before we move to adopt the CS?

Representative Paul. Oh, Chair Mears, I move that the Community and Regional Affairs Committee adopt the committee substitute for HB 162, work order number 34-LS1052/G, as a working document. And I will object for purposes of explanation. Ms. Durfee, please walk us through the changes with the CS. For the record, Emily Durfee.

Sections 1 and 2 of the CS are new sections added into the bill. This is the new language that places the power to manage the optional property tax exemptions in the hands of specifically the local governing body when speaking with some of the local communities, there was concern that by delegating this power to the municipalities, that then residents would be able to, by initiative or referendum, put these optional exemptions on a ballot without there having been a vetting process through the local governing body. So Section 1 and 2 ensure that the power to create these optional exemptions is held by the local governing bodies. Section 3 of the bill was Section 1 in the original version. It's copying and pasting the definition for deteriorated properties from the repeal section of our bill, the optional property tax exemptions currently in place in statute, and pasting that definition into the solid waste disposals section of statute.

We aren't changing anything with definition is copy and paste. Section 4, um, originally this section in the bill used the— created a change to real property instead of residential property. That change is on page 3, line 3. The original bill proposed a change that would make it real instead of residential. This reverts it back to the original statute.

Section 4 of this bill also has the $75,000 threshold to have exemptions be ratified by voters, and this new version would remove that language so that way municipalities and local governments can put that forward to their constituents at whatever point they choose to. We aren't mandating when they have to. They'll be able to choose.

And then Section 5 of the bill reinstates the optional property tax exemption for disabled veterans. And speaking with the communities and a couple of the members on the committee, we decided that it would be good to go ahead and add that back into statute. And then Section 8 of the bill is grandfathering language, uh, just ensuring that if a municipality or local government has opted into these exemptions before the act on this— I'm sorry, before the date on this bill, that they would still be able to use those exemptions, which was already the case. This just clarifies it and cements it for them. And that concludes the summary of changes.

Thank you. I've just been noted that we'd had a typo we have a typo in our script with the wrong bill number. So that motion is void. Representative Hall, could you please state a proper motion? I'm on a roll this morning.

Nope, that's on us. Co-chair Mears, I move that the Community and Regional Affairs Committee adopt the committee substitute for HB 291, work order number 34-LS1052, G as a working document. Would anybody like to object for discussion on the adoption?

Seeing none, that community substitute is adopted. We do have a couple of folks online if they're— if for discussion of the bill in general, we have Aaron Landvik, president of the Alaska Association of Assessing Officers, as well as Sandra And Mr. Moller is still with us, Director of the Division of Community and Regional Affairs, Department of Commerce, Community and Economic Development. Any questions from the committee?

Seeing and hearing none, we will set this bill aside. Thank you very much to Representative Colom and her office for the work on this. It's, it's, it's a big lift.

That concludes our business for today. This week's— next week's schedule will be sent out via email by the end of the day. Seeing no further business before the committee, this meeting is adjourned. It is 8:28 a.m.