Legislature(2015 - 2016)CAPITOL 17

03/31/2016 01:00 PM TRANSPORTATION

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Audio Topic
01:06:07 PM Start
01:06:28 PM HB292
01:52:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 292 MUNI CONTRIBUTIONS TO AK MARINE HWY TELECONFERENCED
Heard & Held
-- Public & Invited Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
           HB 292-MUNI CONTRIBUTIONS TO AK MARINE HWY                                                                       
                                                                                                                                
1:06:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER announced  that the only order  of business would                                                               
be HOUSE  BILL NO.  292, "An  Act relating  to the  Alaska marine                                                               
highway system fund."                                                                                                           
1:004 PM                                                                                                                      
                                                                                                                                
REPRESENTATIVE KITO,  Alaska State Legislature, as  prime sponsor                                                               
of HB 292, explained that  the proposed legislation would provide                                                               
statutory authority for  municipalities to voluntarily contribute                                                               
to a  fund that would  go towards  support for the  Alaska Marine                                                               
Highway System (AMHS).   In its one-line simplicity,  he said the                                                               
bill seeks, via Section 1, to add  a line to the AMHS fund (fund)                                                               
to include money contributed to the  fund by a municipality.  The                                                               
Department  of Transportation  &  Public  Facilities (DOTPF)  has                                                               
expressed concern that  there would not be an  expectation that a                                                               
community  would provide  revenue in  order to  guarantee certain                                                               
levels  of  transit  service,  he  reported  and  said  that  any                                                               
community could  provide contributions in acknowledgement  of the                                                               
importance for state  ferry service; not only  those being served                                                               
by AMHS.  He opined that this  was an opportunity for DOTPF to go                                                               
out  and work  with communities.   He  explained that  a specific                                                               
project  or role  for the  funding is  not anticipated;  however,                                                               
DOTPF will relied on to identify areas of need.                                                                                 
                                                                                                                                
1:08:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO shared that  the Southeast Conference [formed                                                               
in 1958 with  a mission to undertake and  support activities that                                                               
promote  strong  economies,  healthy communities  and  a  quality                                                               
environment  in  Southeast  Alaska]  could  tap  the  funding  to                                                               
identify sources of  revenue for a management study of  AMHS.  He                                                               
opined  that the  proposed legislation  may  serve as  a tool  to                                                               
bring Alaskan  communities together  to consult with  DOTPF; akin                                                               
to  being  a  shareholder.   The  department  could  utilize  the                                                               
interaction to  bring those  communities to  the table  when they                                                               
were  considering schedule  changes, levels  of service,  or rate                                                               
changes.   A  committee could  be  engaged to  create a  sounding                                                               
board for  communities to  voice ideas and  concerns in  the AMHS                                                               
planning  process.     He  said  such  a   relationship  may  get                                                               
contributors  and the  department  conversing  over issues  which                                                               
could be formalized through a  memorandum of agreement (MOA) or a                                                               
memorandum    of     understanding    (MOU);     thus    ensuring                                                               
contributor/shareholder engagement  in AMHS activities  and DOTPF                                                               
decisions.                                                                                                                      
                                                                                                                                
REPRESENTATIVE KITO  said that  although the  state and  AMHS are                                                               
facing  financial hardships,  there may  be opportunities  in the                                                               
future to  work through  an MOU to  identify, and  transition to,                                                               
alternative  funding sources.   Currently  the state  is in  flux                                                               
trying  to stabilize  AMHS,  identify  efficiencies and  decrease                                                               
reliance on  state subsidies while increasing  revenues recovered                                                               
through fares.                                                                                                                  
                                                                                                                                
1:11:53 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  HUGHES  asked  whether  there  had  been  any  interest                                                               
expressed by communities to contribute to an AMHS fund.                                                                         
                                                                                                                                
1:12:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO  responded that conversations have  been held                                                               
with the  Alaska Municipal League (AML)  and representatives from                                                               
various communities.  At this  point, he reported, all have shown                                                               
an  interest  and  noted  possible benefits  that  HB  292  could                                                               
affect.    Concerns  have  also   been  expressed  regarding  the                                                               
possibility   of   decreased   state  funding   to   contributing                                                               
communities.   He  indicated that  no community  has specifically                                                               
requested this legislation  and stressed his intent to  use it as                                                               
a  means for  engaging/uniting communities  and AMHS.   He  noted                                                               
that Lieutenant Governor  Byron Mallot had talked  about having a                                                               
summit  to bring  together representatives  from different  areas                                                               
for a potential discussion about the  future of AMHS.  Thus arose                                                               
the idea for this bill:   a mechanisms for municipalities to have                                                               
a more formal role in AMHS planning, and agency engagement.                                                                     
                                                                                                                                
1:13:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR HUGHES  reported having  recently attended a  meeting of                                                               
the  Southeast Conference.   She  stated  her understanding  that                                                               
under the  proposed legislation  Southeast Conference  would have                                                               
to "put  money in  the bucket"  in order  to have  a seat  at the                                                               
table.   She opined that  the department should have  the benefit                                                               
of  hearing from  a  community  regardless of  whether  or not  a                                                               
locale  has the  means  to  contribute funding.    She asked  for                                                               
clarification of the  sponsor's intent to create  a special group                                                               
of AMHS fund contributors.                                                                                                      
                                                                                                                                
REPRESENTATIVE  KITO  replied   that  it  would  be   up  to  the                                                               
department  to determine  community  involvement.   He  explained                                                               
that  DOTPF   receives  input  from  the   Marine  Transportation                                                               
Advisory   Board  (MTAB)   and   conducts   public  meetings   in                                                               
communities.  He  explained that contributors to  the fund should                                                               
have  the opportunity  to  be in  direct  communication with  the                                                               
department, and that the opportunity  could also provide openings                                                               
for other  communities to be engaged  in the process.   It is not                                                               
anticipated  that   the  proposed  legislation  will   create  an                                                               
exclusionary process.                                                                                                           
                                                                                                                                
CO-CHAIR  HUGHES said  it would  seem optimal  for DOTPF  to have                                                               
open communications with all of the communities.                                                                                
                                                                                                                                
1:15:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ORTIZ asked  whether  the  sponsor envisions  the                                                               
funds  to be  used  in  any way  which  the department  considers                                                               
reasonable.  He  asked  whether   potential  donations  could  go                                                               
directly into the operations fund.                                                                                              
                                                                                                                                
REPRESENTATIVE  KITO  answered  that  HB  292  allows  DOTPF  the                                                               
latitude to  create its  own structure for  the benefit  of AMHS.                                                               
He offered  his assumption  that it would  be very  difficult for                                                               
the  department  to  utilize contributions  to  replace  existing                                                               
operating  funds; however,  if special  ferry service  was needed                                                               
during certain  times of year,  or other services  not identified                                                               
in  the   annual  budget,  the  department   could  approach  the                                                               
shareholders regarding  support of  such events.   He  noted that                                                               
the described  relationship reminds  him of the  Juneau community                                                               
foundation in which individuals propose  ideas to the board, when                                                               
seeking funding.  He surmised that  DOTPF could set up a panel to                                                               
generate ideas,  make proposals to the  shareholders, and request                                                               
authorization  to  utilize  the available  funds  contributed  to                                                               
benefit AMHS.                                                                                                                   
                                                                                                                                
1:18:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO said that upon  a recent constituent visit he                                                               
was presented  with an idea  of marketing  for AMHS.   He pointed                                                               
out that marketing  would direct attention to AMHS  but funded is                                                               
not available due  to the state's declining revenue.   He offered                                                               
his  presumption  that  specific,   promotional  ideas  could  be                                                               
brought  to  the proposed,  such  as  purchasing a  stateroom  to                                                               
support the  presence of  a United  States Forest  Service (USFS)                                                               
interpreter aboard a ferry.                                                                                                     
                                                                                                                                
1:19:46 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  HUGHES  questioned whether  a  community  that gives  a                                                               
sizable  amount in  any given  year might  expect an  increase in                                                               
service, and asked whether DOTPF  would be obligated under such a                                                               
situation.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  KITO explained  that the  intent of  the proposed                                                               
legislation  is  not to  give  community  preference, but  rather                                                               
generate funding to be used for  the betterment of AMHS.  He said                                                               
DOTPF   has  prepared   language  to   clarify  the   intent  and                                                               
descriptive application, to avoid any confusion.                                                                                
                                                                                                                                
CO-CHAIR  HUGHES expressed  interest  in the  level of  community                                                               
response  and  whether letters  of  support  have been  received.                                                               
Further, she questioned  whether previously mentioned, clarifying                                                               
language set forth by DOTPF, has been generally disseminated.                                                                   
                                                                                                                                
REPRESENTATIVE KITO  answered that support letters  have not been                                                               
received  and that  the  necessity for  inclusion  of the  DOTPF,                                                               
additional language is being discussed.                                                                                         
                                                                                                                                
CO-CHAIR HUGHES described a previously  testified to situation of                                                               
a school  district that covers  the costs of  additional services                                                               
received from ferry permanently stationed  in its community.  She                                                               
asked to know  how that community funding is  handled with DOTPF.                                                               
Additionally,  she  asked how  the  department  would view  large                                                               
contributions from communities and possible expectations.                                                                       
                                                                                                                                
1:24:27 PM                                                                                                                    
                                                                                                                                
MIKE LESSMAN,  Legislative Liaison,  Office of  the Commissioner,                                                               
Department  of   Transportation  &  Public   Facilities  (DOTPF),                                                               
answered that  the department has  interpreted HB 292 as  a means                                                               
for  municipalities  to  make   voluntary  contributions  to  the                                                               
aforementioned  fund.     He  said  the   agency  recognizes  the                                                               
potential  for  a  community  to  invoke  expectations  based  on                                                               
contribution  levels  and,  thus, the  department  submitted  the                                                               
clarifying language  to the sponsor  for possible inclusion  in a                                                               
committee substitute (CS).                                                                                                      
                                                                                                                                
CO-CHAIR HUGHES  inquired about  the unique  situation described,                                                               
which the community/school district pays for extra services.                                                                    
                                                                                                                                
1:25:18 PM                                                                                                                    
                                                                                                                                
MIKE  NEUSSL, Deputy  Commissioner, Office  of the  Commissioner,                                                               
answered  that the  community in  question  is Metlakatla,  which                                                               
typically  receives service  from  the Motor  Vessel (MV)  Lituya                                                               
five days  a week.  Occasionally,  service is desired on  the two                                                               
off days.  He explained that  rather than put that expense on the                                                               
state  or decline  the request,  the department  entered into  an                                                               
arrangement  with Annette  Island School  District (AISD),  which                                                               
guarantees  district reimbursement  of costs  including fuel  and                                                               
crew overtime.  He explained that  he has approved three of these                                                               
requested runs  and that the  unique arrangement has  worked well                                                               
for  Metlakatla, as  the MV  Lituya  is regularly  docked in  the                                                               
community,  during  its  two  off  days.    The  revenue  receipt                                                               
structure  is  through standard  channels  for  ticket sales  and                                                               
other funding to the marine highway fund.                                                                                       
                                                                                                                                
CO-CHAIR HUGHES  asked whether the department  thought additional                                                               
language was  necessary, since Metlakatla is  already paying into                                                               
a similar fund.                                                                                                                 
                                                                                                                                
MR.  NEUSSL replied  that the  payment from  AISD went  in to  an                                                               
existing  fund,  as  a  fee  for  a  service.    He  offered  his                                                               
understanding that  HB 292 proposes  a contribution  fund without                                                               
attachment  for direct  services;  simply a  means to  contribute                                                               
support for the AHMS.                                                                                                           
                                                                                                                                
CO-CHAIR HUGHES clarified that currently,  statute allows for fee                                                               
based contributions,  but unless the proposed  language is added,                                                               
donation based contributions are not allowed.                                                                                   
                                                                                                                                
MR.  NEUSSL concurred.   He  said AMHS  currently receives  funds                                                               
based on the provision of direct services.                                                                                      
                                                                                                                                
1:28:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   HUGHES   conjectured   on   contributing   communities                                                               
responding  with expectations  for  additional  service, and  she                                                               
requested  departmental assurance  that  the Metlakatla  scenario                                                               
would not be considered a precedent, as such.                                                                                   
                                                                                                                                
MR.  NEUSSL  answered  that  the department  does  not  view  the                                                               
Metlakatla  scenario as  a  precedent.   He  said the  department                                                               
talked with Representative Kito about  amending HB 292 to include                                                               
language stating  there would be no  service guarantee associated                                                               
with  the contribution  of funds.   Any  funding source  directed                                                               
towards  AMHS,  with  the potential  to  supplement  the  reduced                                                               
general funds,  will be  helpful in  operating the  ferry system.                                                               
He  opined that  the proposed  legislation appears  to be  a good                                                               
means for generating funds outside of the general fund.                                                                         
                                                                                                                                
1:30:46 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   HUGHES  emphasized   the  importance   of  considering                                                               
unintended consequences when creating  legislation.  She pondered                                                               
whether a  community giving money to  an AMHS fund, set  up under                                                               
HB 292, might hear about (Metlakatla)  paying a fee for a service                                                               
and request  a service  in return  for its  donation.   She asked                                                               
whether  that might  happen and  surmised that  it could  already                                                               
happen.                                                                                                                         
                                                                                                                                
1:31:45 PM                                                                                                                    
                                                                                                                                
MR.  NEUSSL  agreed that  the  possibility  to purchase  services                                                               
exists  and concurred  with the  potential outfall  of HB  292 to                                                               
generate  competition  among  communities,   which  he  said  the                                                               
department  would have  to  manage.   Currently,  when a  special                                                               
service  request   is  received,   the  department   conducts  an                                                               
evaluation which includes:  the  number of people the change will                                                               
serve,   impacts   on   the   published   schedule,   and   other                                                               
considerations  for  an   alteration.    He  said   a  number  of                                                               
communities would like  to have special runs  for various events,                                                               
but the  Metlakatla situation is  entirely unique.   He explained                                                               
that the weekly, two day  lay-up in Metlakatla allows for changes                                                               
in service to  be made more easily than in  the communities where                                                               
service is provided  by vessels operating on  a twenty-four hour,                                                               
seven days a week basis.  Further,  he said the MV Lituya has the                                                               
lowest  fuel burn  rate with  the  smallest crew,  making it  the                                                               
department's  least expensive  vessel to  operate.   He explained                                                               
that  all the  other vessels  are  larger and  more expensive  to                                                               
operate, which  are important factors  when considering  a change                                                               
request.                                                                                                                        
                                                                                                                                
1:33:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ORTIZ  asked about  the nature  of the  extra runs                                                               
conducted for Metlakatla.                                                                                                       
                                                                                                                                
1:34:34 PM                                                                                                                    
                                                                                                                                
MR. NEUSSL responded that the  runs are to transport students for                                                               
school events.  Students require  access to Ketchikan for airline                                                               
flights, which may fall outside  of the regularly scheduled ferry                                                               
service.                                                                                                                        
                                                                                                                                
1:35:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ORTIZ  stated that  he was aware  of the  need for                                                               
special runs  for school events,  and provided an example  of the                                                               
Alaska School Activities Association  (ASAA), Region V Basketball                                                               
Tournament.  In  the past, AMHS had been able  to accommodate its                                                               
schedule  for special  events,  and predicted  that  it would  no                                                               
longer be  able to do  so given a decline  in funding.   He asked                                                               
whether the passage of HB 292 would offer relief in this regard.                                                                
                                                                                                                                
1:36:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FOSTER passed the gavel to Co-Chair Hughes.                                                                            
                                                                                                                                
1:36:25 PM                                                                                                                    
                                                                                                                                
MR.  NEUSSL   responded  that,   with  funding   constraints  and                                                               
downsizing,  AMHS   will  find   it  increasingly   difficult  to                                                               
accommodate special event requests.   He said that the department                                                               
would  like to  support  special events,  such  as the  Southeast                                                               
Alaska State Fair  in Haines, but that he was  uncertain how many                                                               
communities would willingly contribute.   The proposition to pull                                                               
a  vessel out  of lay-up  and schedule  a run  is expensive.   He                                                               
surmised that not  many communities would be willing  and able to                                                               
cover  the cost  of  gathering  a crew,  stocking  the boat  with                                                               
provisions, and getting it to the right location.                                                                               
                                                                                                                                
1:38:55 PM                                                                                                                    
                                                                                                                                
CO-CHAIR HUGHES opened public testimony.                                                                                        
                                                                                                                                
1:39:15 PM                                                                                                                    
                                                                                                                                
ROBERT  VENABLES,  Chair,  Marine Transportation  Advisory  Board                                                               
(MTAB),  said   that  the  proposed  legislation   had  not  been                                                               
thoroughly vetted by  MTAB, and opined that HB 292  speaks to the                                                               
heart of  what is being  seen throughout communities,  in regards                                                               
to the sponsor's intent for  increasing community engagement.  He                                                               
said  that  finding  mechanisms   to  facilitate  that  level  of                                                               
engagement  is a  worthy consideration.  He stated  that MTAB  is                                                               
dedicated  to  the  development  of  a  strategic  plan  to  take                                                               
discussions to  the next level.   The board has  been considering                                                               
all revenue  streams -  federal, state, and  local -  to discover                                                               
ways  to engage  communities.   He referred  to the  USFS onboard                                                               
interpreters  that  previously  provided   talks  en  route,  and                                                               
speculated  it  could  be something  communities  would  want  to                                                               
support and bring back to AMHS.   He surmised that there are ways                                                               
to explore the means for utilizing opportunities.                                                                               
                                                                                                                                
CO-CHAIR  HUGHES  asked  about  the  MTAB  meeting  schedule  and                                                               
whether HB 292 has been, or will be, an agenda topic.                                                                           
                                                                                                                                
MR. VENABLES replied  that MTAB is tentatively  scheduled to meet                                                               
following the legislative session and  HB 292 will, for the first                                                               
time, be on the agenda for discussion.                                                                                          
                                                                                                                                
CO-CHAIR  HUGHES asked  about the  effectiveness and  ability for                                                               
MTAB   to  enact   solutions  to   the  funding   shortage  while                                                               
maintaining ferry services.                                                                                                     
                                                                                                                                
1:43:09 PM                                                                                                                    
                                                                                                                                
MR. VENABLES explained that prior  to being adopted into statute,                                                               
MTAB's  mission  was  to collaboratively  provide  oversight  and                                                               
integration with  development and operations; that  oversight did                                                               
not happen.  Currently,  the primary role of MTAB is  to act as a                                                               
liaison to the department.   He explained that, statutorily, MTAB                                                               
is only  allowed to conduct two  primary tasks:  advising  on the                                                               
hire  of  the  marine  transportation  operations  manager/deputy                                                               
commissioner, and  aiding the department with  the integration of                                                               
the development of  long-range plans.  He described  the past few                                                               
years  as frustrating  because  DOTPF's Southeast  transportation                                                               
plan has not been updated in years.  He continued, as follows:                                                                  
                                                                                                                                
     We have provided  some input but it's  such a political                                                                    
     arena that  ... it's  really hard  to get  any traction                                                                    
     when you're going  from one session to the  next or one                                                                    
     administration  to the  next.   Which  again brings  us                                                                    
     full circle  to why Southeast Conference  really thinks                                                                    
     there needs  to be a process  and a product and  a plan                                                                    
     that is  kind of  an arm's  length from  that political                                                                    
     atmosphere.                                                                                                                
                                                                                                                                
1:45:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  HUGHES offered  her  understanding  that the  Southeast                                                               
Conference  might  make  some recommendations  for  improvements.                                                               
She asked whether MTAB would also be making suggestions.                                                                        
                                                                                                                                
MR.  VENABLES  answered  yes, and  reported  that  the  Southeast                                                               
Conference  was represented  at the  last MTAB  meeting [November                                                               
2015], and made  a presentation showing its intent,  and the need                                                               
for  improvements.   He  shared his  expectation  that MTAB  will                                                               
become involved  with any advancement  intentions.   He explained                                                               
that the Southeast Conference expects  to lead the initial ground                                                               
effort,  with   hopes  for  extending   beyond  its   purview  of                                                               
Yakutat/Cordova  south to  Metlakatla,  to reach  out across  the                                                               
state and  ensure all  stakeholders and user  groups of  AMHS are                                                               
helping to shape the ferry system's future.                                                                                     
                                                                                                                                
1:45:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ORTIZ offered  his  understanding  that the  MTAB                                                               
board consists  of members from  across Alaska and  asked whether                                                               
it deals with issues outside of the AMHS.                                                                                       
                                                                                                                                
MR. VENABLES  answered that MTAB's  reach does not  extend beyond                                                               
AHMS, and the  MTAB is a diverse group of  community and business                                                               
leaders from across the state.                                                                                                  
                                                                                                                                
REPRESENTATIVE ORTIZ  rephrased to  ask whether there  is regular                                                               
cooperation  and communication  between the  Southeast Conference                                                               
and MTAB other than through the involvement of Mr. Venables.                                                                    
                                                                                                                                
MR. VENABLES  replied that  his position  facilitates cooperation                                                               
between  the two  agencies, such  that  it provides  a forum  for                                                               
marine  transportation  organizations  to be  heard  and  present                                                               
information,  in  a public  and  formal  manner,  to DOTPF.    He                                                               
explained that  anyone is free  to work directly with  DOTPF, and                                                               
the  department has  been receptive  to hearing  from communities                                                               
and individuals.  He said  that there are times when communities,                                                               
individuals,    and    organizations,   desire    a    formalized                                                               
communication method with the department.                                                                                       
                                                                                                                                
1:48:49 PM                                                                                                                    
                                                                                                                                
JAN  WRENTMORE,  Chair,  Skagway Borough  Ad-Hoc  Marine  Highway                                                               
Committee,  shared  her  understanding  that  communities  making                                                               
contributions could  not expect to  receive extra services.   She                                                               
asked, hypothetically,  whether a  community choosing  to support                                                               
the  AMHS public  marketing program,  could  make a  contribution                                                               
directed to that specific request.                                                                                              
                                                                                                                                
1:50:27 PM                                                                                                                    
                                                                                                                                
MR. NEUSSL  agreed to provide  that information to  the committee                                                               
following the next meeting of the MTAB.                                                                                         
                                                                                                                                
CO-CHAIR  HUGHES announced  that  public  testimony would  remain                                                               
open.                                                                                                                           
                                                                                                                                
[HB 292 was held over.]                                                                                                         

Document Name Date/Time Subjects
HB292 Sponsor Statement.pdf HTRA 3/31/2016 1:00:00 PM
HB 292
HB0292 ver A.PDF HTRA 3/31/2016 1:00:00 PM
HB 292
HB292 Fiscal note - DOT&PF.pdf HTRA 3/31/2016 1:00:00 PM
HB 292
HB292 Supporting Documents - Study AMHS Economic Impact 02-04-2016.pdf HTRA 3/31/2016 1:00:00 PM
HB 292