Municipality of Skagway Legislative Report Prepared May 14, 2010

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1 Municipality of Skagway Legislative Report Prepared May 14, 2010 General Issues: The Second Session of the 26 th Alaska Legislature adjourned, April 18 th, the 90 th day. Any legislation failing to pass both the House and the Senate before adjournment dies. When the 27 th Legislature convenes in January 2011 they begin without anything on the table from the previous session is an election year with the following seats open for consideration: US Senate (Murkowski), US Congress (Young), Office of the Governor (Parnell), Office of the Lt. Governor (Campbell), one-half the Alaska State Senate (not Kookesh) and all of the Alaska House of Representatives (Thomas). Additionally, there will be ballot initiatives on the August Primary ballot and Constitutional and General Obligation Bond Initiatives on the November General Election ballot. The filing deadline for candidates is June 1, is also the year of the decadal US Census. Following ratification of the federal census results, Alaska will undergo the reapportionment of election district boundaries as required by the Constitution. Currently, preliminary population estimates indicate that rural Alaska populations have not kept pace with the overall state population growth. Preliminary estimates suggest that House District 5 (Skagway) will be 4,361 residents less than the estimated 2010 average House District (assuming 40 House members). In addition, both Juneau House Districts are reflecting negative counts relative to a projected 2010 average House District requirement (-2,101 and - 2,161 for Districts 3 & 4 respectively). In order to bring the district to average, the boundaries would need to grow to include the additional residents. Quite likely, the Upper Lynn Canal could become an adjunct to House District 4 but this will depend upon the Reapportionment Review Board likely to be appointed in early 2011 by the successful gubernatorial candidate. The Legislature passed SJR21 which proposes to amend the Alaska Constitution so as to increase the size of the Legislature (+4 in the House of Representatives and +2 in the Senate). The measure must be ratified by the general public in the November 2010 General Election. Southeast Conference has expressed support for the proposal. The Alaska Department of Transportation (ADOT) has announced its intention to update the STIP criteria process that would be used for the STIP. This revision would allow project nominations every two years for consideration in the 4-year final STIP. Public comments are due June 7, The Assembly may wish to review the proposed changes and make comment. Go to:

2 Legislative Issues: A total of 739 bills were introduced during the 26 th Legislature in both the House & Senate, 183 passed both bodies over the 2 sessions. This year 65 House bills and 57 Senate bills passed through both bodies and will be forwarded to the governor for his action. I have included some of the legislation that may be of interest to the region. For a complete listing, proceed to the following link: HB74/SB4: Coastal Zone Management. After much deliberation and strategy, the coastal zone legislation did not advance in the Senate to a floor vote. HB74 did not move from the HRES Committee. The issue is clearly at the center of the radar and the governor has made commitments to address the matter over the summer, presuming a successful election, and bring the legislature a proposal for the next legislative session. HB273: Wrangell Land Entitlement. Following formation of the City & Borough of Wrangell, the Department of Natural Resources (DNR) recommended a total municipal entitlement of 1,952 acres. Representative Wilson successfully addressed the matter through introduction and passage of HB273 resulting in a municipal entitlement of up to 9,006 acres. Representative Thomas amended the bill as it passed through the process to increase the Haines Borough entitlement by 3,167 acres, up from the previous 2,800 acres. Given that the Skagway Municipal Entitlement is currently under appeal with DNR, Representative Wilson was reluctant to intervene by amending her legislation and perhaps diminishing its chance of passage due to negative reaction from DNR. Discussions with the Governor s office however did result in a written commitment from DNR that the Skagway appeal would be addressed by the agency by August HB306: State Energy Policy. Establishes a state priority to achieve 15% energy efficiency improvements per capita but 2020 and sets a 50% renewable and alternative energy production by Identifies the Power Project Fund as the key source of energy improvement funding and calls for public facility energy improvements (public buildings, schools, state facilities). HB363: AIDEA Membership. Expands the AIDEA board by adding 3 public members and reducing executive branch members from 3 to 2; total board would be 2 executive branch (Revenue & Commerce Commissioners) and 5 public members (bill language specifically refers to geographic diversity & business experience). HB424: General Obligation Bonds. Proposes nearly $400 million in education related bonds for public review and approval in the November 2010 general election. There are no projects specific to the Northwest Arctic region included in the proposal.

3 SB163: Fishermen s Fund. Established in 1951, the benefit limits in the Fishermen s Fund have not been adjusted since SB163 increases injury benefits for commercial fishermen from the current $2,500 to a new proposed $10,000. The fund is self sufficient and able to support the increased payout. Fishermen currently pay approximately 40% of their $50 annual license fee toward the Fund. In 2008 there were 13,706 licensees. SB171: Permanent Fund Dividend for Deceased Individual. Provides that the estate or personal representative of a person who deceased during the eligibility year is eligible to apply for the decedent s permanent fund dividend. SB217: AHFC Veteran s Bonds/AHFC Building. SB217 requests voter approval on the November 2010 ballot for $600 million in Veteran s Mortgage Loan Program bonds. Veteran s bonds offer eligible borrowers reduced rate mortgages compared to conventional mortgage rates. Historically, veteran s mortgage loans have been successful with extremely low default rates. The last veteran s mortgage loan bond proposal was 2002 and the availability of those funds is nearly exhausted. The legislation also allows AHFC to purchase their Anchorage office building at 4300 Boniface Parkway. SB220: Omnibus Energy. Referred to as the Alaska Sustainable Energy Act, SB220 establishes the Emerging Energy Technology Fund, an energy revolving loan fund and a SE Energy Fund. The bill allows for nuclear energy production in Alaska, subject to federal approval & compliance, requires a report to the legislature on how to coordinate/streamline energy related services delivered through the executive branch and pegs the Alaska Heating Assistance Program to the price of oil. The revolving loan program will be available to school districts, municipalities and state government. SB234/SB261: Alcohol Beverage Control Board. Extends the ABC Board termination date by one year, raises the issue of where the board should be situated (Department of Revenue or Department of Public Safety) and adds one rural seat to the board. SB269: Economic Stimulus Bonds. Under the American Recovery and Reinvestment Act (ARRA), Alaskan communities are eligible for $90 million in Recovery Zone Economic Development Bonds and $135 million in Recovery Zone Facility Bonds. The legislation allows the state to reallocate the state s allocation amongst communities so as to ensure optimal utilization before the expiration date. The interest rate on the bonds could be as much as -2% over conventional municipal bond financing.

4 SB300: AIDEA Loans. Makes technical changes to AIDEA s financing programs, allowing AIDEA options in considering appropriated interest rates on projects funded using AIDEA assets as opposed to bond proceeds; provides authority for AIDEA to consider interest rate rebates for job creation, rural development or other economic criteria; clarifies that AIDEA can consider partnership financing (joint ownership of a project); increases loan limits for Rural Development Revolving Loan loans ($100,000 to $150,000 for individual loans and from $200,000 to $300,000 for two or more person loans) and reduces the interest rate from 6% to 4% for RDIF loans. In addition, SB300 was successfully to make clear that AIDEA can consider, when exercising the powers listed in this section, the interests of local governments impacted by the authority's activities to share in the benefits of these activities, with appropriate consideration of the authority's ability to meet debt obligations, issue new debt, and fulfill the authority's purposes. SB312: Cruiseship Head Tax. SB312 reduces the passenger head tax by 25% and removes provisions enacted by the voter initiative relating to the Regional Cruiseship Impact Fund. Additionally, the measure nets back municipal taxes assessed upon passengers disembarking in Ketchikan and/or Juneau against the state take. The final version also provides the City of Ketchikan an additional $2.50 per passenger and the City & Borough of Juneau an additional $5.00 per passenger (above & beyond their existing municipal head tax assessments). Skagway continues to receive $5.00 per passenger under the new legislation. Addressing concerns that adding 2 additional ports of call to the revenue distribution stream would deplete the Cruiseship Passenger Vessel Account (the account from which communities secure funding for cruiseship related impacts), the legislature approved an amendment offered by Representative Austerman directing proceeds from the Large Passenger Vessel Gambling Tax to a subaccount within the CVPT account. Another element of the bill, highlighted by the Attorney General s office, requires a review every 3 years following passage by the Department of Commerce & Economic Development focusing specifically on projected community needs to safely and efficiently host passengers that pay taxes under the head tax requirement and summarizes the extent to which appropriations of the proceeds of the tax have been used to defray the costs of meeting the needs of passengers subject to the tax. Finally, the legislation also calls for a review of the changes made in SB312 and directs the Commissioner of the Department of Revenue to submit such a report by January 14, The cruise industry has agreed to withdraw their lawsuit upon final enactment of the originally drafted legislation. Changes to the original version of the legislation do not negatively impact the industry/state settlement agreement. The legislation becomes effective October 31, 2010.

5 Budget Issues: Skagway Traditional Council Completion of Public Utility Bldg. $ 200,000 Skagway Commercial Passenger Vessel Lightering & Harbor $ 4,000,000 Improvements Skagway Municipal Wastewater Treatment Facility $ 800,000 Skagway Land Purchase (DOT) $ 407,000 Dyea Road Washout Emergency Repair $ 101,561 Skagway Bridge Painting (DOT) $ 100,000 Skagway Airport Vegetation Control (DOT) $ 30,000 Municipal Harbor Grant Fund $10,000,000 Skagway submitted an application under this program and was ranked second. Both Juneau (ranked #1) and Skagway (ranked #2) requested $5.0 million each. If the appropriation is approved by Governor Parnell (not vetoed), Skagway would be eligible for a $5.0 million harbor construction grant. The grant requires a 50% non-state match (Cruiseship Passenger Vessel Tax proceeds are not considered eligible match funds). Preliminary FY11 Skagway Community Revenue Sharing $ 427,847 The capital budget included $12.5 million for 6 library projects statewide. Skagway is listed on the statewide list of proposed projects but is ranked below the cut-off. The fact that any projects were advanced suggests some cause for optimism although there is no certainty that a future legislature will make appropriations in the future. Governor Parnell has expressed strong concern that the proposed FY11 Capital Budget is simply unsustainable. Legislators expect cuts and encourage all potential beneficiaries to advocate in support of their projects. John Walsh