Legislature(1995 - 1996)
04/29/1996 09:25 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 136 - ESTABLISH ALASKA RAILROAD COMMISSION CHAIR JEANNETTE JAMES announced the first order of business was HB 136. She noted that public testimony had been closed at the previous hearing, but she would re-open public testimony for the purpose of allowing those individuals to testify who didn't have an opportunity to speak at the previous hearing. She had a long list of people who had signed up to testify in opposition to HB 136 and she had agreed to read their names into the record. CHAIR JAMES said the committee would be discussing a committee substitute. She asked Governor Hickel to present his testimony and confirmed he had received a copy of the committee substitute. Number 274 GOVERNOR WALTER HICKEL testified from Anchorage that he is a great supporter of the Alaska Railroad. He said when the Railway Act was passed in 1914, it was a simple Act that authorized the President of the United States to build not to exceed 1,000 miles of railroad for the primary purpose of opening up the country; it didn't have anything to do with profits. The intention of the railroad in those days is still the intention of it today. It states that it's basically a governmental operation and has a lot of governmental responsibilities which it still has. Governor Hickel noted the legislature was going to do this study as to if and when the railroad should be sold, but he had another thought he wanted to share with the committee; that being expanding the railroad instead of selling it. He pointed out the vast country in the Arctic and the hundreds of millions of tons of coal which is useless unless there is a way to get it to tidewater. He suggested extending the railroad to the Red Dog area, the Brooks Range down to the south of Nome to a year-round port. He believed the study should take into consideration not only the "if and when" but also what can be done to enhance the railroad. Governor Hickel said the railroad is making money; it is not a drain on the state. He thought maybe everyone should take a look at this great asset Alaska has. He invited questions from the committee. Number 601 CHAIR JAMES said there were two additional people to testify, but asked Governor Hickel to stand by for questions. Number 630 JOE USIBELLI, JR., wanted to address a couple of specific points in HB 136. He said as committee members are aware, the coal that comes from the Usibelli Coal Mine in Healy represents something between 20 and 25 percent of the total transportation revenues the Alaska Railroad receives, which makes them the second largest customer. He expressed concern with the provision that specifies that the railroad be operated for 20 years. Usibelli Coal is 53 years old and another 20 years of life isn't all that long. He is making business plans that extend beyond 20 years and would like some assurance the railroad will be available for transportation for longer than that. A second area of concern for Mr. Usibelli was the representation of the commission; that is only one member being among the major customers of the railroad. He felt that major customers should have more representation on the commission. He thought a 5-member committee was a small committee and perhaps should be expanded. Additionally, he believed the November 1, 1996, submittal to the Governor and to the Legislative Budget & Audit Committee was an unattainable goal. Finally, he expressed concern regarding the mandate that the Alaska Railroad Corporation pay for the evaluation. Those funds are necessary for the continued maintenance and up keep of the railroad itself. The Alaska Railroad has very little access to outside capital and their internal generation of funds are needed for their ongoing operations. He said overall, he doesn't necessarily disagree with some sort of assessment of the Alaska Railroad Corporation as far as what the assets mean to the corporation, to the public and to the customers that currently utilize the railroad system. He would like to see it assessed on that basis first and then decide whether or not it should be sold. He tended to think it was an asset of the state of Alaska that the state should continue to hold control over for some additional period of time. He thanked the committee for the opportunity to testify. Number 900 CHAIR JAMES thanked Mr. Usibelli for his testimony and asked him to stand by for questions. Number 913 JOHNE BINKLEY testified that it had been almost 100 years ago that his grandfather came to Alaska and began piloting rafts on the upper Yukon River helping the gold rush folks get down the upper stretches of the Yukon River. Since that time, his family has been involved in the river transportation business in almost all the major rivers of Alaska. In those early days, Fairbanks was completely dependent on the large, steam powered paddle-wheelers which hauled freight 1250 river miles which was ice bound in the winter. There was only about 100 days in which to get all the freight required in the Interior hauled up that river system. All of that changed in 1923 when the Alaska Railroad was completed and all of a sudden, Fairbanks unlike all the other boom towns of that era, had a year round rail link to the ice free tidewater port of Seward. That fundamentally changed Fairbanks and distinguished it from many of the other boom towns in the Interior which eventually went bust. His purpose was not to re-live history, but to simply impress upon the committee how critical that link is - that transportation corridor from ice free tidewater to the Interior. It's what keeps them going and what was so critical to the development of the Interior over the years and it's just as critical today as it was 75 years ago when it was completed. MR. BINKLEY said he has had the privilege over the last year of serving on the Board of the Directors for the Alaska Railroad. He and his family have always been in the private sector, but over the last year he's been impressed how well the Alaska Railroad Corporation is run. He said it's a good organization, people in the organization are dedicated and look out for the assets of the corporation, it's not run on politics and the board makes sound management decisions. Since it's not run on politics, occasionally there may be some political toes that are stepped on. He didn't know if that was the source of this legislation or if there was some political concern that was driving this legislation. He noted, however, that is not their primary focus. The board never loses sight of who their shareholders are; the 600,000 people in Alaska and the board strives to protect their assets. He said the Alaska Railroad is financially sound, it's never been subsidized by the state general fund, they have a vision for the future and he thought it was an asset that all Alaskans can and should be proud of. MR. BINKLEY pointed out he has not seen the proposed committee substitute so he didn't know the details of it. For the concern of Interior constituents, he urged the committee to kill the bill. If this is such a critical idea, he suggested taking some time to review the issue and allow the public to get involved in the discussion. He thanked the committee for the opportunity to participate. Number 1223 CHAIR JAMES announced that concluded the list of individuals who had signed up to testify but did not get the opportunity to testify the previous Saturday. She had a list of people who wished to testify today if time allowed but she had previously closed public testimony. She read their names for the record: Lou Dickinson, David Thompson, Ernie Brannon from Palmer, Tom Dow from Seattle, Mayor Lute Cunningham from North Pole, Mayor Jim Hayes from Fairbanks, Mayor Jim Sampson from the Fairbanks North Star Borough, Frank Chapados former board member of the Alaska Railroad, Dick Knapp, Ron Majors, Susie Keller, Jeff Benz (sp), John Harlow, Gordon Evans, Randy Jordan, Steve MaHay (sp), Joe Josephson, Charles Krompacky, Ted Rogers, a delegate from Princess Tours, Tom Tougas of Kenai Fjords, Herb Lange, Paul Ross of Wilder Construction, R.C. Collin, Frank Withey, Bruce Gough, B.J. Bjorgan, Don Sherwood, Steve VanGoor, Ken Brovold, Stan Bissentte, Phil Todd and Pat Durand. She asked Representative Martin to comment on the committee substitute and noted that Governor Sheffield was on-line to answer any questions. Governor Sheffield pointed out that Mayor Don Gillman's name had been omitted from the list of individuals that Chair James read for the record. Number 1340 REPRESENTATIVE TERRY MARTIN said he was surprised and almost overwhelmed by the negativeness of former Senator Binkley and others who testified. He noted that he along with the others addressing the problem were very optimistic about the future of the railroad; no one was trying to get rid of it. He pointed out the source of the legislation was his commitment 10 years ago when the railroad was purchased from the federal government for $20 million. The railroad was running down and the federal government was no longer able to handle the cost, so the state purchased it and made a 10-year commitment to keep it going. He remarked he wouldn't mind a 10 million year commitment to keep it going and hoped that people would get more optimistic. It's the 10-year anniversary of the railroad and that's the reason why he introduced legislation in December 1994. He noted that some background work had been done and with the 10-year commitment having been fulfilled, he felt they could begin in an orderly way to transfer the land to the state of Alaska that was promised. His thought was to look at the possibilities that exist. He had nothing against the corporation, but he believed that when this was brought out in the light, the public would recognize the tremendous future of the railroad. He had no problem with users of the railroad joining in the discussion regarding the future of the railroad. He asked people not to limit the opportunities. Number 1600 CHAIR JAMES noted there were additional individuals who had wished to testify and read the names for the record: John Harlow was on- line in Seattle, Sean Lambnen (sp), Carol Brown and Kevin Shaffer (sp). Number 1626 CHAIR JAMES said she would go through the proposed committee substitute and note the changes that were made from the draft R accepted as a working draft by the committee on Saturday. She said the title had been changed to read, "To determine whether a sale of the Alaska Railroad is in the best interest of the state" as opposed to evaluating the sale of the Alaska Railroad. Also, the language in Section 1 had been changed from, "The Alaska Railroad Commission is established as an agency or under the Legislative Budget & Audit..." to "an agency of the Legislative Branch." She noted that a whole new paragraph Section 1(b) was added which says specifically that the $250 a day for each member of the commission is only for the public members and if any of the members on the commission are legislators, state employees or railroad employees and are already on a state payroll, they will not get any extra. It also states that public members would be entitled to travel and per diem as is outlined for other commission members by the Board of Commissions. Those state employees, legislators or employees of the Alaska Railroad would be entitled only to the travel and per diem their employment provides for them. She pointed out the language in Section 1(d) had been changed from the payment of the costs for this commission and this evaluation process would be paid from the working capital of the Alaska to read "from the corporate receipts of the Alaska Railroad" which she believed would be a more appropriate designation. Section 1(e) was added which includes another date of September 1 and November 1 when the Alaska Railroad Commission would submit a report to the Legislative Budget & Audit Committee. The Legislative Budget & Audit Committee requested they be able to see the progress on September 1 before the "drop dead" date of November 1 when the evaluation process is to be completed. She noted the sections following had been renumbered. CHAIR JAMES explained the language "or convenient" was deleted in the renumbered Section (f)(1) so it now reads, "(1) identify all assets, real and personal and tangible and intangible, of the Alaska Railroad corporation and classify those assets as necessary for the operation of the railroad or as other assets of the corporation;". In all cases reference in the bill to "the sale of the Alaska Railroad" had been changed to "a sale of the Alaska Railroad". She believed that was more responsive because otherwise the language sounded like there was a sale in mind. A new Section (1)(k) was added which reads, "The Alaska Railroad Commission may not expend more than a total of $250,000 to perform the commission's functions under this section." Those were the sideboards that were the subject of discussion in the hearing held the previous Saturday. She wanted to know exactly how much money was going to be expended because she didn't want to put the railroad in any kind of position with a huge expenditure that would totally devastate their cash flow. She asked for comments from the committee on the committee substitute. She noted that no decision could be made because a quorum was not present, but Representative Ogan was available and had been notified that his presence was necessary to make a decision. Number 1820 REPRESENTATIVE MARTIN said that a number of people had expressed concern about the commission being limited to five members. He noted that at one time the committee was made up of 15 members but people thought that 15 was too many. His belief was that any commission would be open and there would be ample opportunity for anyone wishing to give testimony including all the users, employees and individuals concerned about the future of the Alaska Railroad to express their concerns. He expressed enthusiasm about the people of Alaska having an opportunity to see what they have and the future of the Alaska Railroad. He felt that five members on the commission was more than enough for this short period of time. Number 1900 CHAIR JAMES said Representative Martin's enthusiasm pleased her even though his approach to the issue was totally different than hers. She noted the legislation states that the commission would hold open meetings, its limits as to what they could do in executive session and that public testimony would be taken. CHAIR JAMES said she had just gotten notice that Governor Hickel had to leave. She thanked him for his testimony. Number 1930 GOVERNOR HICKEL commented that he liked Representative Martin's idea of letting the public know what the Alaska Railroad is and what a great benefit it is to the state. Number 1945 CHAIR JAMES said a lot of the information was available now and she wasn't totally convinced that an organization like this was needed but if this would get the job done, she was willing to let the bill go forward. She would have felt better if this had been just a dictate to the railroad to do this rather than having a commission put together to do it. She thought that a lot of the testimony heard by the committee was very valid and she believed there were a number of people in the Interior that were very concerned about the future of the railroad. She noted that her district is a very industrious district. For example, MAPCO is one of the biggest users of the Alaska Railroad, Eielson Air Force Base and Usibelli Coal Mine, Princess Tours and Denali Park also are all users of the railroad. Thus it is not surprising that she is extremely sensitive about the future of the railroad. She agreed with Governor Hickel that the railroad should be expanded. She believed the railroad was the most environmentally sound way to access the state. CHAIR JAMES noted for the record that Representatives Green, Ogan, Robinson and Willis had arrived and a quorum was now present. Number 2049 REPRESENTATIVE PORTER said he was quite happy with the changes reflected in the new committee substitute. He shared the concerns of not wanting to give the appearance of wanting a bill that would generate the sale of the Alaska Railroad. He said generally, being of the philosophy that the private sector is quite often in a better position to have success at business than government, he thought that private ownership of these kinds of assets was certainly worthy of consideration, but most certainly the idea should not be that we will sell, but rather we are interested in determining whether that sale would be in the best interest of the state because of all the things the committee has heard, not the least of which is the control that we now have with the ownership in expansion. He said one of the things that is unique about the railroad, among the many, is that it has been a quiet functioning entity that has not been a problem to the legislature, it has not been a drain on the revenues of the state and it has just plugged along improving its position and its service and perhaps now getting in a position where expansion is a viable consideration for that organization. All that having been said, he still thought it was worthwhile to take a look but not with any preconceived notions. Number 2118 REPRESENTATIVE JOE GREEN said that Representative Porter had summed up his concern and that his first reaction was that this was step one of a few steps to sell the railroad and he has found that is not the case at all. He felt the evaluation was a worthwhile process. Number 2143 REPRESENTATIVE SCOTT OGAN said the proposed committee substitute was a much improved version. He had expressed concern in the last hearing of this being just another study that would gather more dust on the shelf. He said he was willing to let this bill go forth because it has set some parameters. He didn't know how he would vote when this piece of legislation reached the House floor, but he thought their votes on the floor should reflect whether or not they believed the Alaska Railroad should sell. If they believed it should sell, they should vote to study it; if they believed it shouldn't be sold, they should vote not to study it because again it will be another government study. Number 2190 REPRESENTATIVE IVAN IVAN apologized for missing the work session on Saturday, but expressed his appreciation for the hard work done by the committee on the committee substitute. He thought the committee substitute would address the concern expressed in much of the testimony that had been given. Number 2226 REPRESENTATIVE CAREN ROBINSON said she felt strongly this bill shouldn't move because of the existence of a corporation and commission that could do the work. She personally believed the right direction would be a resolution or a letter from both the House and Senate Leadership setting out what should be accomplished instead of passing legislation. She thought the existing board should do the evaluation instead of setting up another commission that would cost more money. She shared Representative Ogan's concern about having just another study instead of having a real decision one way or another. Number 2268 REPRESENTATIVE ED WILLIS concurred with the remarks of Representative Robinson. He said he honestly didn't see any reason why there should be a study; he hadn't heard any testimony indicating the railroad should be sold. The board of directors and the employees have done a good job; they're headed in the right direction and making a profit. He said we have a railroad that is well managed with about 550 very dedicated Alaskans working for the railroad who have expressed concerns about their pensions and their lives. He felt very strongly this was unnecessary and the railroad should be allowed to continue operating as it has been. He expressed disappointment that everyone who wanted to testify has not had that opportunity, especially given the new committee substitute. He is vehemently opposed to the direction the committee was going and made a motion to table the whole issue. Representative Green objected to the motion. CHAIR JAMES asked for a roll call vote. Voting in favor of the motion were Representatives Willis and Robinson. Voting against the motion were Representatives Ogan, Green, Ivan, Porter and James. The motion to table was defeated by a vote of 5 to 2. Number 2400 CHAIR JAMES agreed with many of the comments that had been expressed. She noted the committee had heard three hours of testimony on Saturday and there had been testimony in the Transportation Committee which was the first committee of referral. She apologized to those individuals who did not get to testify, but public testimony had to be closed at some point. She agreed this was an important issue to a lot of people and she personally would like to have heard everyone's testimony. She stated she was willing to accept a motion to move this bill out of committee with individual recommendations. She asked Representative Martin for his closing statement. Number 2438 REPRESENTATIVE MARTIN said this railroad is extremely important to the people of Anchorage, also.... TAPE 96-63, SIDE B Number 001 REPRESENTATIVE MARTIN continued that this legislation has been in the committee process for the last two years. Number 012 CHAIR JAMES said this was not the first time and probably not the last time in this legislative session that she would have to vote for the Interior against Anchorage. She noted the committee had heard from Anchorage legislators who have similar concerns as hers. She didn't think this should be a regional issue, but rather it was a statewide issue. Number 034 REPRESENTATIVE PORTER made a motion to pass CSHB 136, Version W, dated 4/28/96, out of the House State Affairs Committee. Representative Willis objected. CHAIR JAMES requested a roll call vote. REPRESENTATIVE OGAN wished to make a statement before he voted. He said he was going to vote to pass this bill out of committee. He thought it was an issue that should be settled on the House floor. It was not a motion to sell the railroad; it was simply a motion to look at the options. Number 068 CHAIR JAMES said this issue of whether or not to sell the railroad is not going to go away if we don't pass this bill out or if we do pass this bill out. It is an issue that must be dealt with and any time there is an issue that is controversial, it must be dealt with. Whether she agrees that this is necessary or not, there are sufficient numbers of people in the state who want to deal with it and the legislature must deal with it. She stated there was a motion to move CSHB 136, Version W, out of committee and asked for the roll call vote. Voting in favor of the motion were Representatives Ogan, Green, Ivan, Porter and James. Voting against the motion were Representatives Robinson and Willis. CHAIR JAMES announced that CSHB 136(STA) had passed out of the House State Affairs Committee. HB 136 - ESTABLISH ALASKA RAILROAD COMMISSION Number 492 REPRESENTATIVE PORTER moved that Chair James prepare an appropriate fiscal note to reflect the new committee substitute for HB 136. CHAIR JAMES said a motion was before the committee to prepare a new fiscal note in the amount of $250,000 for CSHB 136(STA). Hearing no objection, the motion passed.
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