Legislature(2021 - 2022)BELTZ 105 (TSBldg)
05/05/2022 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| SB170 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 170 | TELECONFERENCED | |
SB 170-MARINE HIGHWAY CORPORATION
1:36:13 PM
CHAIR MYERS announced the consideration of SENATE BILL NO. 170
"An Act relating to the Alaska marine highway system;
establishing the Alaska Marine Highway Corporation; and
providing for an effective date."
[The committee previously heard SB 170 on 2/17/2022, 2/22/2022,
3/17/2022, 3/24/2022, 4/5/2022, and 5/3/2022.]
1:36:29 PM
SENATOR KIEHL moved to adopt Amendment 16, work order 32-
LS0528\W.31.
32-LS0528\W.31
Bannister
4/4/22
AMENDMENT 16
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 24, lines 7 - 17:
Delete all material and insert:
"Sec. 42.50.530. Alaska marine highway system
fund. (a) The Alaska marine highway system fund is
created in the corporation as a special account
outside and separate from the general fund. The board
shall administer the Alaska marine highway system fund
consistent with (b) of this section and may expend
money from the fund without further appropriation. The
Alaska marine highway system fund consists of money
appropriated to the fund by the legislature from the
following sources:
(1) the gross revenue of the Alaska marine
highway system;
(2) the general fund; and
(3) designated federal receipts.
(b) The board may use money from the Alaska
marine highway system fund in a manner that is
consistent with the program and financial plan
prepared under AS 37.07.050 to
(1) carry out the intents and purposes of
the legislature found in this chapter;
(2) fund and support the operation of
Alaska marine highway system;
(3) pay costs incurred through the
operation of the Alaska marine highway system,
excluding capital improvements; however, the
corporation may use money from the vessel maintenance
and replacement account created under AS 42.50.550 for
capital improvements;
(4) acquire, hold, lease, sell, or dispose
of property that is necessary to the administrative
functioning of the Alaska marine highway system;
(5) fund contracts or agreements relating
to the Alaska Marine highway system with
(A) the federal government, a municipality,
or a political subdivision; or
(B) a foreign government, if the contract
is approved by the federal government; and
(6) award and administer grants authorized
by the legislature.
(c) Notwithstanding any other provision in this
chapter, the operating budget of the corporation is
subject to the provisions of AS 37.07 (Executive
Budget Act)."
Page 24, line 23:
Delete "operating"
Page 24, line 27:
Delete "operating"
Page 25, line 4:
Delete "operating"
Page 26, line 17:
Delete "operating"
Page 35, line 5:
Delete "operating"
1:36:32 PM
CHAIR MYERS objected for discussion purposes.
1:36:35 PM
SENATOR KIEHL explained Amendment 16 would insert the language
from the governor's bill [SB 226] on the non-sweepable Alaska
Marine Highway System Fund into SB 170. It would clarify that
the fund is housed in the corporation, and AMHC can use money
from the Vessel Maintenance and Replacement Account [created
under AS 42.50.550] for capital improvements.
1:37:18 PM
CHAIR MYERS pointed out that the original language of the SB 170
places the Alaska Marine Highway System Fund inside the
corporation. He asked whether Amendment 16 would change that
structure.
SENATOR KIEHL directed attention to page 1, line 4 of Amendment
16, which indicates the fund is created in the corporation as a
special account, outside and separate from the general fund.
1:38:15 PM
CHAIR MYERS asked for the substantive reason for the change.
SENATOR KIEHL responded that the intent was to match the
governor's bill as closely as possible. He deferred to his staff
for the specific details.
1:39:13 PM
CATHY SCHLINGHEYDE, Staff, Senator Jesse Kiehl, Alaska State
Legislature, Juneau, Alaska, on behalf of the sponsor of
Amendment 16, stated that relatively similar to the language in
the bill, it uses different language to clarify that the fund
cant be swept. The administration previously testified that
this language would prevent the fund from being a sweepable
fund. Amendment 16 also clarified on page 1, lines 20-22, that
the Vessel Maintenance and Replacement Account can be used for
capital improvements because the governor's bill established two
separate accounts rather than creating a subaccount.
1:40:06 PM
SENATOR KIEHL referred to page 1, line 13 of Amendment 16 and
said the language requires that the expenditure must be
consistent with the program and financial plan prepared under AS
37.07.050.
1:40:34 PM
CHAIR MYERS suggested that more specificity is better than less
as a general rule.
1:40:47 PM
CHAIR MYERS removed his objection; he heard no further
objection, and Amendment 16 was adopted.
1:41:06 PM
SENATOR KIEHL moved to adopt Amendment 17, work order 32-
LS0528\W.34.
32-LS0528\W.34
Bannister
4/5/22
AMENDMENT 17
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 24, following line 17:
Insert a new subsection to read:
"(d) On the last day of each fiscal year of the
corporation, the corporation shall transfer to the
general fund the amount by which the Alaska marine
highway system operating fund exceeds 150 percent of
the projected costs of operating the corporation
during the following fiscal year. This subsection does
not apply to money in the vessel maintenance and
replacement account created under AS 42.50.550."
Page 26, lines 15 - 18:
Delete all material.
1:41:11 PM
CHAIR MYERS objected for discussion purposes.
1:41:14 PM
SENATOR KIEHL explained that Amendment 17 would replace the
dividend section with language he developed after holding
discussions with Senator Micciche. He stated that the
corporation could keep one and one-half years or 150 percent of
operating expenses. After retaining the operating fund, the rest
of the funds would go back to the general fund at the end of the
fiscal year, excluding funds in the Vessel Maintenance and
Replacement Account to allow it to build sufficient funds.
1:42:09 PM
SENATOR MICCICHE stated the importance of having a self-
sufficient AMHS. He offered his belief that Amendment 17 would
allow that to occur. Often ridership or other costs create
financial obstacles for AMHS, so this change could help
management control costs, given fluctuating fuel costs. He hoped
the ferry system would become independent and successful so the
corporation would not need legislative subsidies.
1:42:55 PM
CHAIR MYERS removed his objection; he found no further
objection, and Amendment 17 was adopted.
1:43:09 PM
SENATOR KIEHL moved to adopt Amendment 18, work order 32-
LS0528\W.32.
32-LS0528\W.32
Bannister
4/5/22
AMENDMENT 18
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 24, line 25, through page 25, line 13:
Delete all material and insert:
"Sec. 42.50.550. Vessel maintenance and
replacement account. The Alaska marine highway system
vessel maintenance and replacement account is created
as a separate account in the Alaska marine highway
system operating fund established under AS 42.50.530.
The account consists of money appropriated to it by
the legislature and money deposited in the account by
the corporation from the Alaska marine highway system
operating fund. Money appropriated to the account does
not lapse. Interest received on money in the account
shall be accounted for separately and may be
appropriated into the account annually. The board
shall administer the account and may expend money from
the account without further appropriation for
refurbishment of existing state ferry vessels,
acquisition of additional state ferry vessels, or
replacement of retired or outmoded state ferry
vessels. The corporation shall deposit money from the
Alaska marine highway system operating fund in the
account each year to cover the state's share of
depreciation and shall adjust the deposit for
inflation and the rising costs of construction."
1:43:16 PM
CHAIR MYERS objected for discussion purposes.
1:43:20 PM
SENATOR KIEHL explained that Amendment 18 was comparable to a
previous amendment. It would apply the approach the governor's
bill, SB 226, took regarding the non-sweepable account to the
Vessel Maintenance and Replacement Account. It would create a
subaccount within the Alaska Marine Highway System Operating
Fund, which helps avoid the dedicated fund issue. Amendment 18
would also require the corporation to deposit funds each year to
cover the state's share of depreciation, adjusted for inflation
and rising construction costs. This language was designed to
ensure that the corporation would save sufficient funds to
maintain and repair vessels. It would also consider any federal
funding when calculating the state share of depreciation.
1:44:36 PM
CHAIR MYERS offered his view that Amendment 18 was an
improvement over the language in the original bill since it
provides more flexibility. It would help the corporation to plan
for future costs since vessels depreciate, must be maintained,
and eventually replaced.
1:45:15 PM
CHAIR MYERS removed his objection; he found no further
objection, and Amendment 18 was adopted
1:45:28 PM
SENATOR KIEHL moved to adopt Amendment 19, work order 32-
LS0528\W.22.
32-LS0528\W.22
Ambrose/Bannister
3/30/22
AMENDMENT 19
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 25, line 18:
Delete "state"
Insert "legislature"
Page 25, line 19, following "for":
Insert "sailings in the following regions of the
state:"
Page 25, line 20, through page 26, line 3:
Delete all material and insert:
"(1) Southeast;
(2) Southwest; and
(3) Prince William Sound."
Page 26, line 6:
Delete "state"
Insert "legislature"
Page 26, line 10:
Delete "state"
Insert "legislature"
Page 26, line 12:
Delete "state"
Insert "legislature"
1:45:34 PM
CHAIR MYERS objected for discussion purposes.
1:45:38 PM
SENATOR KIEHL explained Amendment 19. It would clarify that the
assurance agreements are between the legislature and the
corporation. It would simplify how the assurance agreements
work. Instead of using a prescriptive list of ports, it would
require the assurance agreement to cover the state's three
regions currently served by AMHS.
1:47:01 PM
SENATOR KIEHL moved to adopt Conceptual Amendment 1 to Amendment
19.
1:46:55 PM
At ease
1:47:06 PM
CHAIR MYERS reconvened the meeting.
1:47:07 PM
SENATOR KIEHL restated his motion to adopt Conceptual Amendment
1 to Amendment 19, which read:
Conceptual Amendment 1 to Amendment W.22
Delete Amendment pg.1, ln. 1-3 and replace with:
Pg.25, ln. 18-19: Delete all material and insert "The
legislature shall approve an assurance agreement with
the corporation, as evidenced by the level of
appropriation, to guarantee funding for:
Amendment pg. 1, 10: After 'Southeast' insert
'including terminals outside of the State'
1:47:11 PM
CHAIR MYERS objected for discussion purposes.
1:47:15 PM
SENATOR KIEHL explained that Conceptual Amendment 1 to Amendment
19 would clarify that the legislature must approve the agreement
by funding the agreement in an appropriation bill. He stated the
intention was not to require the legislature to pass a stand-
alone bill each year or to empower the chair of the Senate
Transportation Committee. It would clarify that the
appropriation level would be done through an assurance
agreement. It would also specify that the Southeast Region
covers terminals outside the state, such as Bellingham or Prince
Rupert.
1:48:23 PM
SENATOR SHOWER asked how it would work. He read, ...shall
approve the assurance agreement with the corporation, as
evidenced by the level of appropriation, to guarantee funding
for He explained that the legislature could not guarantee
funding because it cannot bind future legislatures.
1:49:07 PM
SENATOR KIEHL stated that Conceptual Amendment 1 to Amendment 19
uses language from the underlying bill. He indicated that if the
level of funding was set by appropriation in a given year, this
language would only guarantee funding for one year. He
acknowledged that the governor could also act on appropriations.
He stated that the term "guarantees" is used to describe what
the legislature assures as the level of service for that budget
year. This is not an attempt to guarantee funding for the next
five years but only to cover the term of the assurance
agreement, which spans a calendar year. The corporation would
rely on an annual appropriation for any general funds just as
any other state entity relies on legislative appropriations.
1:50:21 PM
CHAIR MYERS expressed concern about the language "... as
evidenced by the level of appropriation..." He offered that one
thing that appealed to him about the annual assurance contract
was that it would be a straight up or down vote. He highlighted
that the legislature consistently reduces or increases the
appropriation level for AMHS. The assurance agreement would
provide consistent funding for AMHS.
CHAIR MYERS said he supports the second part of Conceptual
Amendment 1 to Amendment 19, which identifies the terminals
outside of Alaska.
1:51:46 PM
SENATOR SHOWER read, '... to guarantee funding for He pointed
out that the governor could veto the funding. He asked whether
that meant that the governor could not or if this would affect
the separation of powers.
1:52:29 PM
SENATOR KIEHL responded that one of the fundamental premises of
SB 170 is the agreement between the state and the corporation.
This language defines the legislature as the body that would
assure certain service levels in exchange for a certain level of
funding authorization. He acknowledged that this does not
provide greater protection than the Alaska Constitution allows
since that is not permissible. However, the assurance agreement
would create the structure to cover an investment of public
dollars necessary to provide service. He acknowledged that the
governor would still have the authority to veto funds.
1:53:40 PM
CHAIR MYERS agreed that the veto authority would still exist. He
offered his belief that Conceptual Amendment 1 to Amendment 19
would not create constitutional issues because the legislature
would limit the funding to one year at a time. He offered his
view that this language would likely move in the right
direction, but it was not perfect. He suggested that members may
wish to contemplate this as the bill moves through the process
next year.
1:54:36 PM
SENATOR MICCICHE suggested that if it appeared that Conceptual
Amendment 1 to Amendment 19 might fail, the committee could
consider deleting the first section of Conceptual Amendment 1 to
Amendment 19.
1:55:25 PM
CHAIR MYERS offered his support for Conceptual Amendment 1 to
Amendment 19. He acknowledged that the language was not perfect,
but the underlying bill is not perfect either. He offered his
view that this was a step in the right direction. He offered to
work with Senator Kiehl during the legislative interim.
1:56:13 PM
SENATOR MICCICHE pointed out that the state does not guarantee a
certain level of funding for any corporation. He said he has a
problem with the guaranteed funding.
1:56:42 PM
SENATOR MICCICHE made a motion divide the question in Conceptual
Amendment 1 to Amendment 19.
On page 1, lines 1-3 and part 2, the language related
to page 1, line 10: '"After 'Southeast' insert
'including terminals outside of the State."
CHAIR MYERS stated that the question was divided.
1:57:12 PM
CHAIR MYERS maintained his objection on the first half of
Conceptual Amendment 1 to Amendment 19.
Delete Amendment pg.1, ln. 1-3 and replace with:
Pg.25, ln. 18-19: Delete all material and insert "The
legislature shall approve an assurance agreement with
the corporation, as evidenced by the level of
appropriation, to guarantee funding for:'
1:57:34 PM
SENATOR SHOWER asked for clarification on the motion.
1:57:40 PM
CHAIR MYERS stated that the question was divided, and the roll
call vote would pertain to the first half of Conceptual
Amendment 1 to Amendment 19, which read:
Delete Amendment pg.1, ln. 1-3 and replace with:
Pg.25, ln. 18-19: Delete all material and insert "The
legislature shall approve an assurance agreement with
the corporation, as evidenced by the level of
appropriation, to guarantee funding for:
1:57:48 PM
A roll call vote was taken. Senator Kiehl voted in favor of
adopting the first half of Conceptual Amendment 1 to Amendment
19 and Senators Shower, Micciche, Myers voted against it.
Therefore, the motion to adopt the first half of Conceptual
Amendment 1 to Amendment 19 failed by a 1:3 vote.
1:58:10 PM
CHAIR MEYER turned to Conceptual Amendment 1 to Amendment 19,
part 2, which would allow for terminals outside of the state,
which read
Amendment pg. 1, 10: After 'Southeast' insert
'including terminals outside of the State'
1:58:20 PM
CHAIR MYERS withdrew his objection; he found no further
objection, and Conceptual Amendment 1 to Amendment 19, part 2
was adopted.
CHAIR MYERS stated that Amendment 19, as amended, was before the
committee.
1:58:37 PM
SENATOR MICCICHE moved to adopt Conceptual Amendment 2 to
Amendment 19.
1:58:41 PM
CHAIR MYERS objected for discussion purposes.
1:58:46 PM
SENATOR MICCICHE stated Conceptual Amendment 2 to Amendment 19.
On page 1, line 6 of Amendment 19, after "sailings" to
add, "or other service delivery option".
SENATOR MICCICHE restated the amended language:
Page, 25, line 19, following "for"
Insert "sailings or other service delivery option in
the following regions of the state:"
SENATOR MICCICHE stated that this seemed to point to AMHS's
service. He clarified that the state may be able to expand
service with private sector options, particularly to serve
smaller communities.
1:59:55 PM
SENATOR SHOWER agreed with Senator Micciche on potentially
expanding AMHS's service by adding private sector service. He
stated that the committee had discussions about cargo and the
possible implications that the ferry system might divert some
cargo from being shipped by private companies. He wanted to
ensure this did not include other freight.
SENATOR MICCICHE stated that it would include cargo options.
SENATOR SHOWER offered his view that the question has not been
answered as to whether it was problematic for AMHS to carry
cargo because the state subsidizes the system. Although he
doesn't have an issue with the ferry system carrying cargo, he
suggested that AMHS would be competing with companies that do
not receive a subsidy.
2:01:23 PM
ANDY MILLS, Special Assistant to the Commissioner, Department of
Transportation and Public Facilities (DOTPF), Juneau, Alaska,
responded that DOTPF considers that AMHS provides service, and
part of that service could consist of large trucks, cargo, and
light freight. He stated that Captain Falvey had indicated that
carrying cargo was not the focus of AMHS. He recalled that AMHS
substantially increases the shipping rates for vans over a
certain length. This disincentivizes companies from shipping
large cargo containers on the ferries at a reduced or subsidized
rate. He related that the ferry system was built primarily to
provide service for cars and individuals because it serves as a
road. However, he said he did not envision AMHS competing with
barge companies. He asked whether the three regions would
restrict AMHS from expanding service to other parts of the
state, such as the Kuskokwim region or the western or northern
part of Alaska.
CHAIR MYERS stated he would like to hold the question on routes
until the committee finished its action on Conceptual Amendment
2 to Amendment 19.
2:03:07 PM
SENATOR SHOWER asked whether the committee would hear from the
Department of Law or Legislative Legal Services.
CHAIR MYERS agreed to do so at a subsequent meeting.
2:03:32 PM
SENATOR KIEHL referred to Conceptual Amendment 2 to Amendment
19. He said he did not think it was necessary to address this.
He referred to the powers and duties of the corporation on page
17, lines 18 and 19, "(15) establish the routes, schedules, and
types of service to be provided by the Alaska marine highway
system ..." He offered his view that Conceptual Amendment 2 to
Amendment 19 would not do any harm.
2:04:45 PM
CHAIR MYERS removed his objection; he found no further
objection, and Conceptual Amendment 2 to Amendment 19 was
adopted.
CHAIR MYERS stated that Amendment 19, as amended, was before the
committee.
CHAIR MYERS directed attention to Mr. Mills' previous question
about expanding routes. He referred to lines 8-12 of Amendment
19.
2:05:19 PM
SENATOR KIEHL offered his view that neither the underlying bill
nor Amendment 19 contemplates expanding AMHS routes.
CHAIR MYERS agreed in theory that expanding the system would be
fine. However, the goal of SB 170 was to stabilize the current
AMHS. He suggested that the committee could discuss this issue
much later. He envisioned that perhaps the state would be
willing to expand the system in ten years.
2:06:18 PM
CHAIR MYERS stated that Amendment 19, as amended was before the
committee.
2:06:26 PM
CHAIR MYERS removed his objection; he found no further
objection, and Amendment 19, as amended, was adopted.
2:06:39 PM
SENATOR KIEHL moved to adopt Amendment 20, work order 32-
LS0528\W.23.
32-LS0528\W.23
Ambrose/Bannister
3/29/22
AMENDMENT 20
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 26, lines 4 - 11:
Delete all material and insert:
"(b) The agreement required by this section
(1) must establish an overall cost recovery
rate that includes the anticipated costs of fuel,
labor, overhead, and maintenance; and
(2) may provide different cost recovery
rates for different routes or vessels."
Reletter the following subsection accordingly.
2:06:43 PM
CHAIR MYERS objected for discussion purposes.
2:06:47 PM
SENATOR KIEHL explained that Amendment 20 would replace how the
corporation sets its rates and fees. It would remove the
language that requires 80 percent minimum cost recovery on each
sailing. It would require the corporation to establish an
overall cost recovery rate that includes the anticipated costs
of fuel, labor, overhead, and maintenance. It would also provide
the assurance agreement with more flexibility by establishing
different cost recovery rates for some routes or vessels. He
noted that the current system allows the system to generate more
revenue than the actual cost of some routes. He surmised that
some routes would never generate sufficient revenue to cover
vessel costs.
2:07:59 PM
CHAIR MYERS explained the concept behind the 80 percent cost
recovery rate was to achieve a balance. He acknowledged that the
bill did not set the cost recovery at 100 percent to allow the
corporation to earn a profit on some routes but did not give it
free rein. He expressed concern that this might be too
permissive and result in the legislature subsidizing more of the
system's operational cost.
2:09:06 PM
SENATOR MICCICHE stated that he viewed Amendment 20 as having
the opposite effect because it would apply to the overall cost
recovery rate, not just to the 80 percent. He suggested that the
impact of Amendment 20 was just the opposite because it would
allow the corporation to set an overall cost recovery rate. He
envisioned the corporation could easily adjust the rates as fuel
costs fluctuated. He indicated that he does not support
calculating the cost recovery rates based on each sailing
because of the labor cost associated with the rate-setting. He
offered his support for Amendment 20 because it would achieve a
better result.
2:10:27 PM
CHAIR MYERS indicated that Senator Micciche influenced his view
on Amendment 20.
2:10:44 PM
CHAIR MYERS removed his objection; he found no further
objection, and Amendment 20 was adopted.
2:10:57 PM
CHAIR MYERS stated that he would not offer Amendment 21, work
order 32-LS0528\W.2.
2:11:23 PM
CHAIR MYERS moved to adopt Amendment 22, work order 32-
LS0528\W.1.
32-LS0528\W.1
Bannister
3/28/22
AMENDMENT 22
OFFERED IN THE SENATE BY SENATOR MYERS
TO: SB 170
Page 26, following line 14:
Insert a new subsection to read:
"(f) An assurance agreement entered into under
this section must be based on the fiscal year of the
corporation."
2:11:26 PM
SENATOR SHOWER objected for discussion purposes.
2:11:42 PM
CHAIR MYERS explained that the goal of Amendment 22 was to
provide specificity. He highlighted that multiple parties had
suggested that it would be helpful for the corporation and AMHS
to operate under a different fiscal year than the state.
Amendment 22 would specify that the assurance agreement follows
the corporation's fiscal year and not necessarily the state's
fiscal year.
2:12:22 PM
SENATOR MICCICHE stated that it would technically operate on the
calendar year so it does not matter if it was matching the
fiscal year (FY) of the corporation, which could be the calendar
year. He stated his support for Amendment 22.
CHAIR MYERS explained that he had mulled over several options,
including potentially matching the federal fiscal year of
October 1.
2:13:17 PM
SENATOR SHOWER removed his objection.
2:13:20 PM
CHAIR MYERS found no further objection, and Amendment 22 was
adopted.
2:13:26 PM
SENATOR KIEHL moved to adopt Amendment 23, work order 32-
LS0528\W.33.
32-LS0528\W.33
Bannister
4/4/22
AMENDMENT 23
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 26, line 22, following "issue.":
Insert "The corporation may not issue bonds in
excess of $5,000,000 unless the legislature approves
the action by law."
2:13:31 PM
CHAIR MYERS objected for discussion purposes.
2:13:35 PM
SENATOR KIEHL explained that Amendment 23 would require
legislative approval when the corporation wishes to issue bonds
for more than $5 million. He stated that ARRC needs approval for
bonds of any amount per AS 42.40.285(2), which seemed overly
prescriptive. This would give the corporation more flexibility,
especially for opportunities that might involve a commercial
partner, but sets some limits.
2:14:33 PM
SENATOR SHOWER stated that he was not necessarily opposed. He
wondered whether this allows the corporation to be nimble since
legislative approval can take time.
2:15:37 PM
SENATOR KIEHL acknowledged Senator Shower raised a legitimate
concern. He offered his view that ARRC's bonding proposals were
thorough, so the legislature generally approves them. He
recalled that the Alaska Industrial Development and Export
Authority (AIDEA) typically requires legislative approval for
bonds over a certain amount, which generally are approved. He
indicated that Amendment 23 would allow the corporation to bond
up to $5 million. He noted that the corporation could not buy a
new ferry for that amount but would need legislative approval
for significant funding decisions.
2:16:56 PM
SENATOR SHOWER wondered if $5 million was the right amount or if
it was too high or too low.
2:17:43 PM
MR. MILLS responded that the department had flagged Amendment 23
as potentially problematic for the proposed corporation. He
deferred to Captain Falvey.
2:18:17 PM
CAPTAIN FALVEY responded that that the current Capital
Improvement Project (CIP) for the Tustumena in Seward is for
$9.2 million. He stated that AMHS could spend $5 million fairly
easily. He acknowledged that awaiting legislative approval could
delay a project.
2:19:11 PM
SENATOR SHOWER wondered if he could give the committee an
average cost. He referred to the Tustumena CIP of $9.2 million.
He asked whether there was a better number.
CAPTAIN FALVEY responded it was hard to say. He recalled the
Matanuska engine rebuild was $40 million. He offered his belief
that AMHS spends $16-18 million in formula funds each year. He
highlighted that the overhaul of the Lituya will cost $2.5
million. He recommended that the committee not go below $5
million, that $10 million might be better.
CHAIR MYERS asked for the price range for terminal facility
overhauls.
CAPTAIN FALVEY responded that terminal overhauls would range
from $10 to $15 million.
2:21:30 PM
SENATOR KIEHL indicated that he was flexible on the bonding cap.
He pointed out that the most significant projects, such as the
Tustumena Vessel Replacement (TVR), repowering the Matanuska, or
terminal overhauls, would be federally-qualified projects. He
highlighted that the goal was to avoid borrowing for capital
expenditures, which is consistent with currently practices. The
notion is not that the bonding authority in the bill would be to
borrow all the capital projects for all the vessels. He deferred
to the bills sponsor for the general needs for bonding
authority for small projects or opportunities.
2:23:08 PM
SENATOR MICCICHE argued that the listed projects were not
bonded. He highlighted that the only corporation in the state
that can't hear issue bonds independently is the Alaska Housing
Finance Corporation (AHFC). Alaska Aerospace Corporation and
AIDEA issue bonds independently with limits, and the rest
require legislative approval. He wondered what figure would work
for a private partnership. For instance, if a private company
was willing to build a dock, and the dock design was sufficient
to serve a new community, it might require a certain amount of
bonding. He stated he was not stuck on requiring legislative
approval for bonding above $5 million.
SENATOR SHOWER wondered if $5 million might hamper the
corporation from being nimble.
2:25:11 PM
SENATOR MICCICHE asked if Senator Shower would like to offer a
conceptual amendment to Amendment 23.
2:25:35 PM
MR. MILLS replied that the projects Captain Falvey listed
represent the usual cost range.
2:25:54 PM
SENATOR SHOWER moved to adopt Conceptual Amendment 1 to
Amendment 23 to increase the figure from $5 million to $10
million to give the corporation additional flexibility.
CHAIR MYERS found no objection, and Conceptual Amendment 1 to
Amendment 23 was adopted.
2:26:30 PM
CHAIR MYERS stated that Amendment 23, as amended, was before the
committee.
2:26:44 PM
CHAIR MYERS removed his objection; he found no further
objection, and Amendment 23, as amended, was adopted.
2:27:00 PM
SENATOR KIEHL moved to adopt Amendment 24, work order 32-
LS0528\W.28.
32-LS0528\W.28
Ambrose/Bannister
3/29/22
AMENDMENT 24
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 32, line 25, through page 33, line 28:
Delete all material and insert:
"Sec. 42.50.840. Maintenance of vessels. To the
extent practicable, the corporation shall perform
maintenance and ship construction activities in the
state."
2:27:05 PM
CHAIR MYERS objected for discussion purposes.
2:27:09 PM
SENATOR KIEHL was unsure whether the language relating to where
maintenance and ship construction occurs was based on existing
statutes or regulations. He explained that Amendment 24 would
simplify it by requiring the corporation to perform maintenance
and vessel construction in Alaska to the greatest extent
possible.
2:28:24 PM
CHAIR MYERS indicated he liked streamlining the process.
2:38:44 PM
SENATOR SHOWER expressed concern that union contracts can be
touchy. He wondered if Amendment 24 would affect the federal
government or unions. He stated his support for the concepts in
Amendment 24.
2:29:35 PM
SENATOR KIEHL offered his belief that Amendment 24 does not
implicate any existing laws. He offered his view that the
language "To the extent practicable ..." would address any
binding contracts.
2:29:59 PM
CHAIR MYERS removed his objection; he found no further
objection, and Amendment 24 was adopted.
2:30:14 PM
SENATOR KIEHL moved to adopt Amendment 25, work order 32-
LS0528\W.29.
32-LS0528\W.29
Ambrose/Bannister
3/29/22
AMENDMENT 25
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 34, line 1:
Delete all material.
Renumber the following paragraphs accordingly.
Page 34, line 2:
Delete "AS 35"
Insert "AS 35.05, AS 35.10.030 - 35.10.270, and
AS 35.20"
Page 34, line 5:
Delete ", 44.62.180 - 44.62.305, and 44.62.320"
Insert "and 44.62.180 - 44.62.305"
2:30:18 PM
CHAIR MYERS objected for discussion purposes.
2:30:22 PM
SENATOR KIEHL explained that Amendment 25 would clarify which
sections of the law are applicable to the corporation. He
characterized it as taking a fine-grained approach. The
corporation would be allowed to participate in joint municipal
or state port projects. It would exempt the corporation from
some of the restrictive public facility construction
administration rules and acquisition and disposition of
property, as does the bill. It would still require the
corporation to follow building and zoning codes. State entities
allow municipalities to contract for projects and the
legislature to name buildings. Amendment 25 would remove the
exemption from the Administrative Regulation Review Committee
for a statute that no longer exists.
2:32:19 PM
At ease
2:34:54 PM
CHAIR MYERS reconvened the meeting.
2:35:00 PM
SENATOR KIEHL explained that Amendment 25 would leave the
corporation exempt from the existing statutes on the acquisition
and disposition of property because the bill speaks to it
extensively. The corporation would be exempt from the statutes
regarding utilities and encroachment in public facilities
because the bill provides the corporation with significant
authority to manage its lands and easements. The corporation
would be exempt from statutes related to harbors, dikes, and
jetties because they are in the maritime business and will work
on those items. The corporation should not be subject to old
rules related to the state's harbor program that does not
functionally exist. The corporation would be exempt from some
statutory language pertaining to finance and procurements
because the legislature provides the board with financial
authority. It would leave the corporation exempt from existing
statutes on public building administration because the board
will have significant financial and management experience to
take responsibility for its assets.
2:36:30 PM
CHAIR MYERS removed his objection; he found no further
objection, and Amendment 25 was adopted.
2:36:44 PM
CHAIR MYERS moved to adopt Amendment 26, work order 32-
LS0528\W.4.
32-LS0528\W.4
Bannister
3/29/22
AMENDMENT 26
OFFERED IN THE SENATE BY SENATOR MYERS
TO: SB 170
Page 40, line 31:
Delete "June 30"
Insert "December 31"
Page 42, line 3:
Delete "July 1, 2023"
Insert "January 1, 2024"
Page 42, line 21:
Delete "June 1"
Insert "December 1"
Page 43, line 6:
Delete "July 1, 2023"
Insert "January 1, 2024"
2:36:48 PM
SENATOR SHOWER objected for discussion purposes.
2:36:52 PM
CHAIR MYERS explained that Amendment 26 would adjust the
effective dates in the bill to a calendar year.
2:37:38 PM
SENATOR SHOWER removed his objection; he found no further
objection, and Amendment 26 was adopted.
2:37:51 PM
SENATOR KIEHL moved to adopt Amendment 27, work order 32-
LS0528\W.30.
32-LS0528\W.30
Bannister
4/4/22
AMENDMENT 27
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 40, lines 23 - 24:
Delete "NEGOTIATION, NONRENEWAL, AND TERMINATION"
Insert "ASSIGNMENT"
Page 40, line 25:
Delete "the effective date of this section"
Insert "July 1, 2023"
Page 40, lines 25 - 26:
Delete "enter into negotiations with a union to"
Page 40, line 27:
Delete "agreement"
Insert "agreements"
Delete "union"
Insert "unions"
Page 40, line 28, through page 41, line 6:
Delete all material.
Reletter the following subsection accordingly.
Page 41, line 30:
Delete "sec. 29(b)"
Insert "sec. 29"
Page 41, lines 30 - 31:
Delete ", or the agreement with the union has
terminated under sec. 29(c) of this Act"
Page 44, line 19, through page 45, line 10:
Delete all material and insert:
"* Sec. 37. Section 13 of this Act takes effect
July 1, 2023."
Renumber the following bill section accordingly.
Page 45, line 11:
Delete "sec. 38"
Insert "sec. 37"
2:37:57 PM
CHAIR MYERS objected for discussion purposes.
2:37:59 PM
SENATOR KIEHL explained that Amendment 27 would allow the
existing contracts between the state and the unions representing
AMHS's employees to remain in effect until the end of the
contract period. The corporation would negotiate new contracts.
He explained that this would avoid constitutional issues
regarding contracts.
2:38:41 PM
CHAIR MYERS explained that he had gone back and forth on this.
He stated that the unions raised this issue because they wanted
to keep their current contracts. He said that, on the one hand,
he would like the state to negotiate in good faith with the
unions. He offered his view that it appeared to provide a
smoother transition to keep the existing contract in place.
However, sometimes union contracts have been part of why AMHS
has experienced problems. He was unsure which approach was
better.
2:40:11 PM
SENATOR MICCICHE asked when the current union contracts expire.
CAPTAIN FALVEY stated that AMHS is currently negotiating
contracts expiring on July 1, 2022.
SENATOR MICCICHE asked for the expiration date of the next set
of contracts.
CAPTAIN FALVEY responded that the union contracts are three-year
contracts.
SENATOR MICCICHE estimated that if this bill does not pass the
legislature in 2022, there would be approximately 1-2 years left
on the existing contracts.
CAPTAIN FALVEY agreed that was correct. He stated that AMHS
anticipated signing all three union contracts by July 1, 2022.
SENATOR MICCICHE related his understanding that there was always
the ability to reopen negotiations.
2:41:27 PM
CAPTAIN FALVEY deferred to labor relations to respond.
2:41:36 PM
CHAIR MYERS offered his belief that typically the state tries to
offset the expiration dates so that all the unions would not
expire simultaneously.
CAPTAIN FALVEY pointed out that the three maritime unions were
on the same schedule. He reported that the contract for the
Inlandboatmen's Union (IBU) was signed three years ago. He was
unsure about the shoreside unions.
CHAIR MYERS stated his focus was on the maritime unions.
CAPTAIN FALVEY confirmed that AMHS negotiates with all three
maritime unions simultaneously.
2:43:03 PM
SENATOR MICCICHE offered his belief that negotiations could be
reopened.
SENATOR KIEHL agreed that negotiations could be reopened if both
parties agree, but Amendment 27 would not prevent that from
happening. He stated the goal was to clarify the language to
avoid the constitutional issue.
2:44:01 PM
CHAIR MYERS remarked that he hadn't thought of potential
constitutional issues.
2:44:09 PM
CHAIR MYERS removed his objection; he found no further
objection, and Amendment 27 was adopted.
2:44:33 PM
CHAIR MYERS moved to adopt Amendment 28, work order 32-
LS0528\W.3.
32-LS0528\W.3
Bannister
3/29/22
AMENDMENT 28
OFFERED IN THE SENATE BY SENATOR MYERS
TO: SB 170
Page 43, line 1, following "Act":
Insert ";
(3) "real property" includes a lease and
other interests in real property"
2:44:36 PM
SENATOR SHOWER objected for discussion purposes.
2:44:41 PM
CHAIR MYERS explained that Amendment 28 would clarify that when
ownership of assets would be transferred from AMHS to the
corporation, it would transfer the land and any leases.
2:45:18 PM
SENATOR SHOWER pointed out that the state has had some issues
with ARRC. He stated the importance of the legislature to be
cognizant of property agreements to avoid any issues.
2:46:23 PM
CHAIR MYERS stated that he agreed with Senator Shower's concern
about ARRC and its property management. He highlighted a couple
of differences between ARRC and the proposed Alaska Marine
Highway Corporation. For instance, ARRC does not fall under the
Executive Budget Act, but AMHC would fall under it. He offered
his view that this would make AMHC more accountable to the
legislature. Further, when the federal government transferred
the railroad to the state, it also transferred land as a cash
source. However, the legislature is not providing AMHC with land
as a cash source. Instead, AMHC would receive property used for
the Alaska Marine Highway System.
2:47:29 PM
SENATOR SHOWER acknowledged Chair Myers' points. He stated it
was important that the record reflect the issue. He said he did
not foresee any problems with AMHC's property management.
2:47:53 PM
SENATOR SHOWER removed his objection.
2:47:57 PM
CHAIR MYERS found no further objection, and Amendment 28 was
adopted.
2:47:59 PM
CHAIR MYERS brought up Amendment 1, work order 32-LS0528\W.5,
offered by Senator Kiehl, which the committee had previously
considered on May 3, 2022. After discussion, the Chair had
rolled Amendment 1 to the bottom of the amendments. He indicated
that the committee would consider Amendment 1 at this time.
32-LS0528\W.5
Bannister
3/29/22
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR KIEHL
TO: SB 170
Page 5, lines 11 - 13:
Delete "[BOATS AND VESSELS OF THE MARINE HIGHWAY
SYSTEM;
(iv)]"
Insert "boats and vessels of the Alaska marine
highway system;
(iv)"
Page 5, lines 15 - 16:
Delete "and boats and vessels of the Alaska
marine highway system"
2:48:27 PM
SENATOR KIEHL moved to adopt Conceptual Amendment 1 to Amendment
1.
Offered in the Senate Senator Kiehl
To: SB 270
Add a new subsection to amendment 1"
Pg.5, following ln. 16 insert:
AS 35.27.030(2) is amended to read:
(2)"construction cost" is that cost expended for the
actual construction of the facility, exclusive of the
cost of land acquisition, site investigation, design
services, administrative costs, equipment purchases,
and any other costs not specifically incurred within
the construction contract or contracts awarded for the
construction of the facility. For vessels of the
Alaska marine highway system, the construction cost
includes the cost up to $100 million and half of the
cost in excess of $100 million.
2:48:34 PM
CHAIR MYERS objected for discussion purposes.
2:48:41 PM
SENATOR KIEHL explained that Conceptual Amendment 1 to Amendment
1 would reduce the scope of the Percent of Art program for
vessels. He stated that the first $100 million would qualify for
the Percent of Art program, but for any vessel cost above $100
million, it would only apply to half of the value. The
communities and riders would benefit from public art on the
vessels. He explained that the committee discussed reducing the
Percent of Art on a $270 million vessel because it would
dramatically reduce the price tag of public art. He recalled
members asked whether ARRC's engines and passenger cars are
subject to the Percent for Art program. He responded that they
are not subject to the program.
2:50:29 PM
CHAIR MYERS stated that the language states "For vessels of the
Alaska marine highway system ...." He wondered if it should
state "corporation."
CHAIR MYERS stated that his committee aide had indicated that
Legislative Legal Services could make conforming changes to
Conceptual Amendment 1 to Amendment 1.
2:50:55 PM
CHAIR MYERS stated that he goes back and forth on the public
money for art. He acknowledged that the funds for public art
could be used for other features within the vessel. He offered
his view that, ultimately, this is an appropriate compromise.
2:51:33 PM
CHAIR MYERS removed his objection; he found no further
objection, and Conceptual Amendment 1 to Amendment 1 was
adopted.
CHAIR MYERS stated that Amendment 1, as amended, was before the
committee.
2:51:56 PM
SENATOR MICCICHE said he understands the value of having public
art in buildings, but vessels lack the space to display art
which is probably one reason the program does not apply to ARRC.
He highlighted that if a vessel costs $200 million, the program
would be $1.5 million. He suggested that reducing the funding
could make the vessel cost-efficient and make the system more
survivable.
2:53:34 PM
SENATOR KIEHL agreed that things cost money. He stated that
vessel construction costs exclude the design, administration,
and equipment. Unfortunately, maritime infrastructure is costly.
He highlighted that people come to Alaska on marine highway
vessels, whether they are independent travelers or military
families relocating to Alaska. These travelers embark at
Bellingham or Prince Rupert and spend significant time on the
ships. He highlighted that Alaska's airports use the Percent for
Art program, and the art enhances those spaces. He acknowledged
that the reduction of art on AMHS vessels was a compromise.
2:56:02 PM
SENATOR MICCICHE wondered if there was a way of adjusting the
figure for art on the ferry vessels to under the designated one
percent figure but still supporting public art.
2:56:58 PM
SENATOR SHOWER suggested that Senator Micciche might wish to
offer a conceptual amendment to Amendment 1.
2:57:40 PM
SENATOR MICCICHE moved to adopt Conceptual Amendment 2 to
Amendment 1.
2:57:47 PM
CHAIR MYERS objected for discussion purposes.
2:58:01 PM
SENATOR MICCICHE stated Conceptual Amendment 2 to Amendment 1.
For vessels of the Alaska marine highway system, 10
percent of percent of the construction cost.
CHAIR MYERS related that instead of full funding for the Percent
for Art program, the funding for art of AMHS vessels would be
1/10 of a percent.
SENATOR MICCICHE stated that $100,000 would be designated for
public art for a vessel costing $100 million.
2:58:42 PM
SENATOR KIEHL objected.
2:59:22 PM
At ease
3:01:02 PM
CHAIR MYERS reconvened the meeting.
3:01:06 PM
SENATOR MICCICHE stated that he was willing to tie Conceptual
Amendment 2 to the rural schools, which would be one-half of one
percent for art.
3:01:42 PM
SENATOR KIEHL stated that he would not object to Conceptual
Amendment 2.
3:01:49 PM
CHAIR MYERS removed his objection; he found no further
objection, and Conceptual Amendment 2 to Amendment 1 was
adopted.
3:01:54 PM
CHAIR MYERS stated that Amendment 1, as amended, was before the
committee.
3:01:59 PM
CHAIR MYERS explained that Amendment 1, as amended, would reduce
the Percent for Art program to one-half a percent for art on any
AMHS vessels constructed.
3:02:12 PM
CHAIR MYERS removed his objection to Amendment 1; he found no
further objection, and Amendment 1, as amended, was adopted
3:02:37 PM
CHAIR MYERS stated that SB 170, Version W, as amended, was
before the committee. He thanked the committee members for their
interest and hard work.
3:03:18 PM
SENATOR SHOWER moved to report SB 170, work order 32-LS0528\W,
as amended, from committee with individual recommendations and
attached fiscal note(s).
CHAIR MYERS found no further objection, and CSSB 170(TRA) was
reported from the Senate Transportation Standing Committee.
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