Sponsor Statement for SB 30

The Alaska Constitution states:

"... that all persons are equal and entitled to equal rights, opportunities, and protection under the law; and that all persons have corresponding obligations to the people and to the State." (Article 1, Section 1)

Unfortunately, this is not the case today, particularly in regard to local efforts required for state programs. Education is but one example of where one part of the State does not have to contribute anything, while others are required to contribute large amounts.

The constitution also states that:

"The entire State shall be divided into boroughs, organized or unorganized." (Article X, Section 3).

It requires that boroughs embrace an area and population with common interests to the maximum degree. Alaska's Statutes further stipulate that the borough population be "integrated as to its social, cultural, and economic activities." The unorganized borough of Alaska fails to meet this criteria. It is recognized that it embraces an area that is greatly diverse in interests and activities.

SB 30 is the first step in resolving these concerns. It would:

• establish that an intent of the legislature in adopting this bill is to provide a more equitable process for local contribution for education

Residents living in incorporated areas are currently required to contribute for education, but residents in the unincorporated areas are not.

• 87% of Alaska’s population live in boroughs and are required to pay a local contribution--they receive 74% of State foundation formula;

• 8% of the population pay no taxes and receive 20% of the state’s foundation formula.

• require the Department of Community and Regional Affairs (DCRA) to estimate the value of taxable property in the areas defined by the Model Borough Boundary Report (MBBR) on or before January 1, 1998.

DCRA compiles the information based on the MBBR to comply with the bill.

• require filing petitions with the Local Boundary Commission (LBC) for the incorporation of boroughs in areas with taxable property of:

$550 million or more by July 1, 1998

$350 million to $549.9 million by July 1, 1999

$ 75 million to $349.9 million by July 1, 2000

$ 74.9 million or less by July 1, 2001

• allow the incorporation of additional third class boroughs and require DCRA to prepare third class borough incorporation petitions for each area defined by the MBBR; require the LBC to accept a petition when it determines that the proposal meets the incorporation standards; and allow the LBC to ask DCRA to alter a borough incorporation petition within 6 months of the filing of a petition

DCRA is directed to submit third-class borough incorporation proposals for all areas of the unorganized borough to the LBC. These proposals are to be based upon the MBBR issued by the LBC. The LBC is required to accept a petition when it meets the incorporation standards, but can ask DCRA to alter a petition within 6 months of the filing of the petition.

• require the Division of Elections to conduct a borough incorporation election 31 to 120 days after being notified that the LBC accepted a petition

Once a proposal is accepted by the LBC, elections are held in the regions to see if the residents wish to become incorporated. If so, an election for assembly members and the selection of borough powers is held and the boroughs are formed upon the certification of the election. If a region chooses not to incorporate, it becomes a separate unorganized borough.

• provide that if voters reject borough incorporation, the area becomes a separate unorganized borough; property that lies outside of homer rule and first class cities would be subject to a 6-mill State property tax (or the equivalent of such)

On January 1 of the year following certification of the election, an annual tax of six mills or the equivalent of such is levied on the full and true value of taxable property in that region. DCRA is directed to present proposed methods of levying and collecting taxes in the separate unorganized boroughs to the legislature by January 1, 1998.

This legislation differs from previous state attempts at incorporation in that it references a specific report as a starting point, sets a deadline for the boundary proposals to be submitted, provides a timeline for the process of borough incorporation, gives the residents the choice of incorporating, and allows for state taxation of the unorganized borough in the event residents choose not to incorporate.

The incorporation of the unorganized areas of the state into boroughs has many advantages both to the state and to the areas themselves. The formation of boroughs and the transfer of duties and responsibilities from the state allow greater local involvement in decision making that directly affects the residents. Currently these residents must depend on lawmakers to make these decisions for them.

While a certain amount of revenues, as well as costs, will be shifted to local governments, there can also be substantial savings realized by the consolidation of services that would occur through borough formation. In the long run, the organization of the entire state into boroughs is the most cost-effective way of providing comparable and equitable services to all the residents.

ss sb30: 1/27/97: mj