Legislature(2001 - 2002)
04/26/2001 01:43 PM Senate TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 130-ALASKA MARINE HIGHWAY AUTHORITY SENATOR ROBIN TAYLOR, sponsor of SB 130, gave the following explanation of the measure. SB 130 is essentially the same measure that he introduced about 10 years ago when he was a member of the House. Senator Lloyd Jones introduced a companion bill in the Senate. The concept originated from studies done on Southeast Alaska transportation over the last 25 years. Those studies have concluded that transportation issues should be removed from the influence of politics by establishing an autonomous board that would hire staff. An autonomous board would also provide for continuity and hopefully develop an intermodal system of transportation to interconnect the expanding road system of Southeast Alaska. None of that has occurred in the last 37 years. Unfortunately, that operation, in the words of Jim Ayers, "is in a death spiral." SENATOR TAYLOR said that without continuity in transportation, he doesn't believe the ferry system will continue to exist, even as a shadow of what it was in the past. The entire economy of Southeast Alaska depends upon a certain level of service that may or may not be available. If those communities are going to survive and have a viable transportation link, this bill is crucial. This matter always come down to a confrontation between the legislative and executive branches. Every governor wants to be able to appoint the people who will run the Alaska Marine Highway System (AMHS). This administration has been no more successful in that effort than has any previous administration. Senator Taylor expressed concern that the head of the entire transportation system and the people who run it change every four years and the replacements have no background in that system. That has led to a lack of continuity, a lack of expertise, and wildly vacillating concepts. SENATOR TAYLOR noted he is not aware of any marine highway system in the world that is building high speed ferries for normal runs. High speed ferries are being built for critical runs where the existing system has no capacity left. Passengers are paying two to three times the cost to get to their destination quicker. Number 467 CHAIRMAN COWDERY asked if the high speed ferries are capable of running in big seas. SENATOR TAYLOR said that every system he has contacted does not operate fast ferries in adverse weather conditions. In addition, staff from the Department of Transportation and Public Facilities (DOTPF) have said they would not be able to operate a fast ferry several days each year; high seas are a major factor, as well as cost and maintenance. High speed ferries are probably an innovative idea that will develop over time to where they will be less expensive to operate. He pointed out that issue should be resolved by a board of directors with expertise in public transportation, and specifically marine transportation. CHAIRMAN COWDERY noted that Senators Ward, Taylor, Wilken were present and that Senator Elton was ill. He then took public testimony. Number 664 MR. GEORGE CAPACCI, General Manager of the Alaska Marine Highway System, read the following prepared statement to the committee. It is important that I be here today to express my concerns about the proposed marine highway authority contained in SB 130. These concerns are essentially the same as Commissioner Perkins presented in 1997, with some important updates about the management and direction of the Alaska Marine Highway. Let me begin with a review of why the Alaska Marine Highway Authority is not in the best interest of our customers, the citizens of Alaska, and the Alaska Marine Highway employees. First off, the authority creates more problems than it solves. SB 130 diminishes public accountability. Under the present system, the marine highway system management is accountable to the public. Concerns and requests are responded to quickly and completely. They have to be. Elected officials are responsible for the management of the marine highway and elected officials have to be responsive to the public they serve. Sometimes that is a time consuming and cumbersome process but it is the most responsive way to handle the people's business. The establishment of an authority would diminish the publics' accountability of marine highway management by inserting an appointed board between management and the people. Marine highway management will no longer answer directly for the elected governor or for any other elected representatives. The board, and not the governor nor the legislature, will make management decisions. Once appointed, board members will not be accountable to the public. A board member may be removed only for cause. The accountability of the marine highway management to the communities they serve will be substantially reduced. We believe this is not desirable. SB 130 diminishes public influence on decision making. Alaskans know who is in charge of the marine highway system. When things are running well, they know who to compliment. When things aren't going so well, they know who to contact. Believe me, they know who to contact. This bill changes all of that. When accountability of elected officials changes, public access to the decision making process also changes. Although a person or a community may ask the board of directors of the system for a schedule change or a special run, there may be little or no pressure to respond. The CEO is insulated from the effect of public pressure. Current community input to the fleet's schedule is an ongoing effort. Annually we solicit this input and adjust our schedule as much as possible to meet those demands. We believe Alaskans appreciate direct access to the public systems that most affect their lives, and this bill will have a substantial negative impact on that access. The Alaska Marine Highway System is not broken. The marketing and pricing study was recently completed. There is a lot that is right about the Alaska Marine Highway System. The ships have an enviable safety record, they generally run on time, they provide safe, economical, comfortable and reliable transportation service to our traveling public. The currently completed, back in September of last year, marketing and pricing study, found that 93 percent of our customers rate their AMHS experience as good or very good. The study also concluded of the top ten locations visited by summer of 1999 visitors, five locations - Anchorage, Mat- Su/Denali, Fairbanks, Valdez and the Kenai Peninsula are not even in Southeast Alaska. So five of the top ten locations are not even in Southeast Alaska. This points out that we are carrying visitors and passengers throughout the state of Alaska. The entire state's economy therefore benefits from the marine highway's passengers. Of course, I'll be the first to admit some problems occur. They are inevitable in an operation that is as vulnerable to as many variables as the marine highway system is. It is a system that has a large and varied constituency, and everyone has an opinion as to what should be done and how it should be operated. But, overall, the system is doing what it was designed to do in the mid-60s - transporting people and vehicles throughout coastal Alaska in the context of an intermodal transportation network. It is a credit to the hard working crewmembers and dedicated staff that we operate as well as we do. SB 130 adds another administrative layer. This bill would set up another administrative layer over which neither the governor nor the legislature will have control. We believe that is bad public policy. But, even worse, it doesn't fix anything. There is nothing in the bill that encourages stability or financial support by the legislature. There is nothing in the bill that addresses the increasing capital needs of an aging fleet. There are major challenges at marine highways that we are addressing with strong leadership and action. One of the biggest problems that you can help relieve is the time and energy that now is being spent controlling the damage caused by anxiety over our future. That is a problem that you can materially affect by telling the whole story in this very successful state adventure by demonstrating your support for its future and helping us fix the problems that we have. The system is nearly 40 years old. The ships are aging, the system is running the same type of operation it did 38 years ago with more public service. In 1976, for example, Sitka was provided with 268 trips and in 1999 that number was 325 trips. Today we are responding to the challenges of shrinking funding and increasing regulatory demands. I'd like to talk a little bit about AMHS maritime experience. Although it isn't specifically stated in the proposed legislation, an implicit purpose for an authority is apparently to insulate the marine highway system from inexperienced managers appointed through the political patronage process. The 1989 "Acres Report" recommended that additional experienced mariners should be hired as managers to better understand the operation of the maritime vessels. AMHS has done that and more. From myself, the director of the Southeast region, through the vessel operations managers, the marine engineering manager, the port captain, assistant port captain, the ISM/STCW coordinator, the three port engineers, the eight vessel construction managers, and the state's only naval architect and our safety officer, the Alaska Marine Highway System is staffed with marine professionals with over 500 years of vessel operation and maintenance experience. Most of my staff, my senior level staff, have the title "captain" in front of their names and we can refer to them because of their master mariners documents. This staff exists to support the Alaska Marine Highway vessels and conducts its daily business to that end. The Southeast Transportation Plan and the Prince William Sound Transportation Plan point toward the future. The Southeast Alaska Transportation Plan was a comprehensive plan that was developed through extensive public participation. The basic tenant of the SATP is a series of shuttle vessels connecting Southeast communities coupled with a version of the exiting mainline vessels to improve the overall transportation system for our customers. The same holds true for the Prince William Sound Transportation Plan. A vessel capable of 30 plus knots is needed to solve the elemental time and distance equation to provide daily service in Southeast Alaska and Prince William Sound. The residents of Prince William Sound communities strongly support our transportation planning efforts. The residents of Southeast Alaska have uniformly supported a Southeast transportation plan. The Southeast Transportation Plan and the Prince William Sound Transportation Plan are not perfect but they are good plans and the best our public process can produce for essential transportation improvements. These plans have wide public support and endorsement. We need your support to implement these transportation plans. I believe a firm foundation is being laid for future statewide transportation services including the essential Alaska Marine Highway System. Vessels are being upgraded to comply with ever increasing international and federal safety regulations. Our crews are undergoing standardized training mandated by the international regulations to be the most professional mariners possible. An authority would further isolate the marine highway system from capital funds. The marine highway system is presently managed by DOT/PF personnel as an integral part of Alaska's intermodal transportation system. The majority of the routes have been designated by Congress as part of the national highway system. As an operating arm of the department, the system receives federal highway funds from the department. By separating the system from DOT, as an authority, operating independently from the rest of the Department of Transportation, the debate for funding the marine highway system capital improvement projects could conceivably shift more toward the legislature for resolution. This will force the marine highway system to compete more aggressively with individual communities throughout the state, other DOT regions, and other agencies for its share of the federal highway funds, rather than sharing them as one component of Alaska's intermodal transportation system. While the commissioner of DOT would serve on the board of directors of this new authority, it is unrealistic to think that an organizational component, which is separate form the rest of the agency, and for which the commissioner no longer has primary responsibility, will receive the same level of consideration for federal highway funds as it receives as a line agency within the department. The authority itself provides no mechanism to reduce subsidies. The marine highway system presently derives about 55 percent of its operating funds from revenues, with the remaining 45 percent of its operating budget appropriated from the general fund by the legislature. The marine highway provides an essential public good, transportation, that cannot be provided by the [private] sector. As such, providing a state operating subsidy is an appropriate role for government. This subsidy is essential for continuing service year round at a reasonable price. Nothing in this proposed legislation is directed toward changing that funding relationship. The proposed authority is not designated to be self- sufficient. It will continue to require annual legislative appropriations for operations and capital improvements. What then is the justification for establishing it as a state corporation? An authority will require additional subsidy to fund its increased overhead costs. Additionally, administrative costs are likely to increase. The marine highway system is already unfairly criticized for its large size of central office staff. In truth, the Juneau office staff has diminished in recent years despite extensive additional international and national safety and training regulations, which need implementation, monitoring, and oversight. If the marine highway system is split from the rest of DOT into a quasi-independent authority, it will lose the administrative support presently provided by the department, and the administrative costs for the marine highway system will certainly increase. Personnel and accounting services, which are now provided in part by headquarters, would fall entirely on the authority itself, so would engineering services now being provided by the Southeast region. The system would further be removed from the Federal Highway Administration. The relations with DOT and the Federal Highway Administration would be complicated since our CFR Title 23 for the administration of the Federal Highway funding programs is the responsibility of the state highway agency, which is the Department of Transportation. Separate accounting and data processing systems would almost certainly be necessary. That authority would not be exempt from the Executive Budget Act, state procurement code, and other state mandated rules and regulations. Finally, and thankfully, in summary, the proposed marine highway authority would be a move in the wrong direction as far as transportation in Alaska is concerned. We all recognize that the marine highway system cannot continue to operate as if it were still in the 1960s. Times have changed and the needs of Alaska's communities and the traveling public have changed. The transportation network along Alaska's coastline has changed. The changes needed in the marine highway system are evolutionary as the system adapts to meet the demands of our varied customers. However, SB 130 takes us in the wrong direction. With the help of the legislature, we will continue to work to ensure the marine highway system truly functions as an integral system and element in a well designed state transportation system. I am working to bring about this evolutionary change to improve the marine highway system but this transition must be well thought out and have the support of the people of Alaska. This takes time and the worst action we can take now is to create another level of unneeded bureaucracy as this bill proposes to do. Thank you for allowing that many pages and I would be happy to answer any questions you might have. Number 1400 CHAIRMAN COWDERY asked if the ferry systems in other states are privately owned and, if so, how they deal with federal subsidies. MR. CAPACCI said there are a number of ferry systems throughout the country, both publicly and privately owned. Most of the publicly owned ferry systems get federal dollars to improve and construct their vessels. Their operating funds come from their own revenues and from their state legislatures. Those systems are very different from Alaska's. Alaska has passenger ships that also carry cars and are not used as commuter systems. Most other state ferry systems do not have to deal with long distances. SENATOR WARD asked for a copy of Mr. Capacci's written comments. He also asked if any other ferry systems are run by an authority. MR. CAPACCI said he is not aware of all the authorities, but a number of bodies advise the Washington Legislature and do studies for it, such as tariff pricing studies. He does not believe that Washington State has a true authority that directs the CEO of that ferry system. SENATOR WARD asked if the existing authorities are port authorities. MR. CAPACCI said he would have to do more research on that question. SENATOR WARD commented that he asked because Mr. Capacci said he was not in favor of authorities. He then noted the Governor has proposed new regulations on cruiseships to deal with waste. He asked if the ferry system is already complying with the Governor's proposed regulations. MR. CAPACCI replied, "Through the Chair, yes - Senator Ward there are a number of different ...." SENATOR WARD responded, "Okay, that's fine, thank you." MR. CAPACCI said, "...but yes." SENATOR WARD asked if the AMHS has the ability to acquire state lands so that it can develop, sell or lease those lands in order to supplement its operations, similar to the Alaska Railroad Corporation (ARRC). MR. CAPACCI said he did not know what possibilities exist along that line. SENATOR WARD asked if Mr. Capacci has read Sec.19.55.210, regarding acquisition of land and easements, on page 6 of SB 130. He noted that one of the cornerstones of this bill is to transfer 1.4 million acres of state land to this new authority to offset some of the operational costs. He again asked if the AMHS has the authority to accept land now. MR. CAPACCI said he did not see that section in the previous edition of the bill. He repeated that he is not sure whether the AMHS can accept land at this time. He noted that is an intriguing idea. SENATOR WARD said, regarding Mr. Capacci's comment, that an authority would separate the people from the operations, that he believes an authority would bring the two into closer contact. He asked if that would be eliminated if the members of the authority are elected rather than appointed. MR. CAPACCI said he would have to give that question more thought. SENATOR WARD said to serve on other authorities, candidates must fit certain criteria, such as geographic location. He felt that should solve the public input problem and asked Mr. Capacci if that is what he is proposing. Number 1693 MR. CAPACCI said he does not know that the Port of Bellingham's authority runs a maritime transportation system. DOTPF deals with the facilities in Bellingham but he is only aware of the terminal facilities that they operate. SENATOR WARD asked Mr. Capacci if he is familiar with that authority. MR. CAPACCI said he is aware they have an authority with elected officials. SENATOR WARD again asked if that would alleviate Mr. Capacci's concern about public participation. MR. CAPACCI said he is not sure how that authority relates to the public and how responsive it is to the public. He noted that authority is not developing a transportation system. It makes decisions about the shore side facilities. CHAIRMAN COWDERY said he is glad the marine highway system is already conforming to the proposed cruiseship regulations on waste disposal. MR. CAPACCI said there will be expenses. CHAIRMAN COWDERY said the marine highway system must not be conforming then. MR. CAPACCI said, "We do conform with the outflows but the testing requirements and the reporting requirements and the monitoring requirements are going to be additional administrative and additional costs if the periodicity is changed. The sampling that we do - we weren't initially sampling effluent, we had other measures of whether the systems are effective or not, but we took it upon ourselves to sample those outflows and found that they were within specifications so, if a lot of those bills get enacted, there's going to be some expenses involved in that, yes sir." There being no further testimony or questions, SENATOR TAYLOR moved SB 130 from committee with individual recommendations. There being no objection, the motion carried.