"An Act relating to consolidating or abolishing certain road service areas in certain second class boroughs; and providing for an effective date. "

When the legislature established the state revenue sharing program residents of subdivision outside of the city limits that had no maintenance income for their area roads seized the moment. People formed local service area road commissions and collected revenue sharing money based on the mileage in their service area. Many service areas relied solely on revenue sharing income and chose not to levy a mil rate to maintain roads.

With the elimination of revenue sharing money, many service areas are beginning to run out of funding for road maintenance and many road commissions have become nonfunctional. As roads deteriorate, local governments are worried about their liability even though they have no road powers.

The Alaska State Supreme Court ruled in North Kenai Peninsula Road Maintenance Service Area v. Kenai Peninsula, 850 P.2d 636 (Alaska 1993) that a service area does not have the corporate status a borough has, therefore, the borough holds the civil liability. As a general rule, only independent legal entities may sue or be sued. Alaska law specifically gives cities and boroughs corporate status, and the right to sue and be sued.

The Fairbanks North Star Borough has over 100 service areas and they are concerned that when the money runs dry, roads could deteriorate to the point that the safe passage of school buses, fire trucks, and ambulances could be hindered. Under current law, they cannot dissolve the service areas without a vote of the residents, even though there is no legal entity, there are no revenues to maintain the roads, and the roads receive no service.

HB 121 is designed to enable the borough to dissolve or consolidate service areas that are nonfunctional or are functioning below minimum standards and that pose a financial risk to the borough. HB 121 is written in such a way as to protect those service areas that are taxing themselves adequately and doing a good job in maintaining their roads to insure safe passage on them.

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