Legislature(1997 - 1998)

05/11/1997 11:20 AM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE FINANCE COMMITTEE                                         
                    MAY 11, 1997                                               
                     11:20 A.M.                                                
                                                                               
TAPE HFC 97 - 138, Side 1, #000 - end.                                         
TAPE HFC 97 - 138, Side 2, #000 - end.                                         
TAPE HFC 97 - 139, Side 1, #000 - #2130.                                       
                                                                               
CALL TO ORDER                                                                  
                                                                               
Co-Chair Gene Therriault called the House Finance Committee meeting            
to order at 11:20 A.M.                                                         
                                                                               
PRESENT                                                                        
                                                                               
Co-Chair Hanley               Representative Kelly                             
Co-Chair Therriault           Representative Kohring                           
Representative Davies         Representative Martin                            
Representative Davis          Representative Moses                             
Representative Foster         Representative Mulder                            
Representative Grussendorf                                                     
                                                                               
ALSO PRESENT                                                                   
                                                                               
Representative Alan Austerman; Representative Gene Kubina;                     
Representative Jeannette James; Senator Robin Taylor; Joe Ambrose,             
Staff, Senator Robin Taylor; Berne Miller, Executive Director,                 
Southeast Conference, Juneau; Kurt Parken, Deputy Commissioner,                
Department of Transportation and Public Facilities; Gary Hayden,               
Director, Alaska Marine Highway System, Department of                          
Transportation and Public Facilities; James Baldwin, Assistant                 
Attorney General, Department of Law; Roxanne Stewart, Staff,                   
Senator Jim Duncan.                                                            
                                                                               
SUMMARY                                                                        
                                                                               
SB 21     An Act relating to ferries and ferry terminals,                      
          establishing the Alaska Marine Highway Authority, and                
          relating to maintenance of state marine vessels; and                 
          providing for an effective date.                                     
                                                                               
          CS SB 21 (FIN) was reported out of Committee with "no                
          recommendation" and with three attached amendments and a             
          fiscal note by the Senate Finance Committee dated                    
          4/29/97.                                                             
                                                                               
SB 130    An Act amending the retirement incentive programs for                
          municipalities and school districts; and providing for an            
          effective date.                                                      
                                                                               
          SB 130 was reported out of Committee with a "no                      
          recommendation" and with a fiscal note by the Department             
          of Administration dated 4/29/97.                                     
SENATE BILL 130                                                                
                                                                               
     "An Act amending the retirement incentive programs for                    
     municipalities and school districts; and providing for an                 
     effective date."                                                          
                                                                               
ROXANNE STEWART, STAFF, SENATOR JIM DUNCAN, stated that SB 130                 
would allow school districts and municipalities to request one or              
more window periods before 6/30/99, to allow their employees to                
participate in the retirement incentive program.                               
                                                                               
The bill would allow school districts and municipalities to request            
one or more window periods up until 6/30/99, with retirement                   
required within six months of the end of the application period.               
That would give school districts and municipalities more                       
flexibility to address declining revenue over the same period as is            
available under the State employees Retirement Incentive Program.              
                                                                               
                                                                               
She stated that it would be in the best interest of our municipal              
governments and school districts to allow them the maximum                     
flexibility to address declining State revenues and increasing                 
demands for public services through the use of the Retirement                  
Incentive Program (RIP).                                                       
                                                                               
Representative J. Davies asked who would make the final                        
determination of eligibility.  Ms. Stewart stated that the school              
board would make the decision as to whether a person could qualify.            
                                                                               
Representative Foster MOVED to report SB 130 out of Committee with             
individual recommendations and with the accompanying fiscal note.              
There being NO OBJECTION, it was so ordered.                                   
                                                                               
SB 130 was reported out of Committee with "no recommendation" and              
with a fiscal note by the Department of Administration dated                   
4/29/97.                                                                       
SENATE BILL 21                                                                 
                                                                               
     "An Act relating to ferries and ferry terminals, establishing             
     the Alaska Marine Highway Authority, and relating to                      
     maintenance of state marine vessels; and providing for an                 
     effective date."                                                          
                                                                               
JOE AMBROSE, STAFF, SENATOR ROBIN TAYLOR, stated that SB 21 would              
establish an Alaska Marine Highway Authority to assume management              
of the Marine Highway System from the Department of Transportation             
and Public Facilities (DOTPF).                                                 
                                                                               
The Authority would be a public corporation of the State as an                 
extension of DOTPF, but would have a legal existence independent               
and separate from the State.  The new Authority would be comparable            
to the Alaska Housing Finance Corporation (AHFC) or the Alaska                 
Industrial Development and Export Authority (AIDEA).                           
                                                                               
The powers of the authority would rest with a seven member Board,              
appointed by the Governor.  One member would be the Commissioner of            
Transportation & Public Facilities.  The six other members would be            
required to have experience in maritime affairs, would serve                   
staggered five year terms and would be subject to legislative                  
confirmation.  The Board would hire the system's director.                     
                                                                               
Mr. Ambrose continued, the establishment of such an authority board            
would bring maritime experience, accountability and continuity to              
the management of the Alaska Marine Highway System.                            
                                                                               
Based on information gathered at public hearings over the interim,             
the Senate Task Force on the Alaska Marine Highway System concluded            
that the Legislature should consider the creation of such an                   
authority.  He noted that Senator Taylor supports the fiscal note              
provided by the Senate Finance Committee.                                      
                                                                               
Representative Mulder asked if there was a relationship between the            
Authority and the Ketchikan shipyard.  Mr. Ambrose stated that                 
there are provisions in the legislation that relate to Alaska base             
maintenance facilities.  Sections #21 & #22 more clearly define the            
applications of that provision and that the sunset provision would             
be repealed.                                                                   
                                                                               
Representative Mulder asked if it would be in the State's best                 
interest to require the provision to keep the costs down.  He felt             
that the Ketchikan shipyard would loose the impetus to keep prices             
competitive if there was such a dis-incentive.  He noted his                   
support for maintaining the integrity of the Alaska Marine Highway             
System and using the Ketchikan shipyard if their price was right.              
                                                                               
Co-Chair Therriault suggested that it would be the work of the                 
Legislature to guard that provision.  Representative J. Davies                 
questioned the indirect benefits calculation and asked if it would             
be in violation of the indirect commerce laws.  Mr. Ambrose replied            
that the language in reference was language from the original                  
statute as passed in 1986, modified in 1992.                                   
                                                                               
SENATOR ROBIN TAYLOR noted that the State currently owns both the              
Seward and Ketchikan facility.  He requested that Amendment #1 be              
adopted.  [Copy on file].  He clarified that the above mentioned               
section would address the local hire concerns, while acknowledging             
that there would be indirect benefits to Ketchikan such as                     
community employment, economics and utilization of Alaska hire.                
                                                                               
Representative J. Davies questioned if there was case and decision             
law record which establishes that a state attempting procurement,              
could take direct benefits of the local economy into account.                  
Senator Taylor believed that could be resolved in the actual                   
activities.                                                                    
                                                                               
Representative Grussendorf noted that he supported the initial                 
legislation in 1986 which granted that the major reconstruction                
work to the ferries be completed in Ketchikan.  He stressed that               
action was not a savings to the State, although, was socially and              
economically good policy.  Representative Grussendorf voiced                   
concern with establishing a marine authority given the proposed                
restrictions.                                                                  
                                                                               
In response to Representative G. Davis, Mr. Ambrose commented that             
most of the wording contained in Section #21 was taken from the                
1986 legislation.  He distributed a sheet of cost comparisons                  
between work performed in Ketchikan and work done in Seattle.                  
[Copy on file].  There is no longer a disparity between the costs              
as seen in the analysis.  He argued that there would be a savings              
to the State for work done in the Ketchikan yard.                              
                                                                               
Representative Mulder questioned if savings in empowering the                  
employees had been considered.  Senator Taylor agreed that those               
employees would provide better service and administration in the               
new system than they are currently receiving.  He pointed out that             
the action would require a liquidation of State assets.  Senator               
Taylor stressed that the entire economic life of Ketchikan is tied             
to the ferries.  He spoke to the composition of the board                      
membership.                                                                    
                                                                               
Representative Mulder voiced concern with the Board's composition              
when addressing policy concerns.  He pointed out that there will be            
individuals involved in the process with whom others work; he                  
suggested that would not be good public policy.  Senator Taylor was            
not willing to comment on the monetary terms regarding conflict of             
interest.  He stressed that information would not be involved in               
the board's combination.                                                       
                                                                               
Representative Grussendorf voiced concern with the composition of              
the board.  The marine authority will always need State subsidy.               
The manner in which the board is appointed will not address the                
financial concerns of keeping the ferries running.  Representative             
G. Davis spoke to the conflict of interest concerns.                           
                                                                               
(Tape Change HFC 97-138, Side 2).                                              
                                                                               
Mr. Ambrose stated that there has been a change in the worker's                
viewpoint in the past couple of years.  The proposed legislation               
only changes the management at the top.  The people who work for               
the system, know that it is in jeopardy and the proposed                       
legislation has the possibility of ending the long conflict between            
ship and the shore.                                                            
                                                                               
Representative Kelly echoed concern with the make-up of the board.             
He thought it could be politically stacked as each category has the            
potential to be a union person.  Senator Taylor suggested that the             
confirmation process would provide the necessary checks and                    
balances.  He stressed that there was no intention to stack the                
board, but rather to create a board with experience.  He agreed                
that the strongest and most effective board, would be the smallest             
one.  Representative Grussendorf questioned if the proposition                 
would create a more efficient structure than currently exists.                 
                                                                               
BERNE MILLER, EXECUTIVE DIRECTOR, SOUTHEAST CONFERENCE, JUNEAU,                
pointed out that the Alaska Highway System is the "road" through               
Southeast Alaska.  The System is nothing more than the lifeblood of            
our region's economic strength and social well-being.  If the                  
System is allowed to atrophy, our region will wither and die.                  
                                                                               
He noted that the interest of the Conference would be in the                   
economic and social well-being of Southeast Alaska as a region.                
The system is important to our region's people and communities and             
to give any priority to passage or defeat of any particular                    
legislation or to seek political alignment with any of the                     
contending factions would not be appropriate.  The Conference                  
advocates common sense and careful deliberation in public decision             
making.                                                                        
                                                                               
Representative Grussendorf pointed out that many members of the                
Southeast Conference are against the proposal.  Mr. Miller                     
responded that the Board of Directors believes that the system is              
too important to launch off on major changes without some                      
understanding of the consequences to the communities.                          
                                                                               
Representative Grussendorf pointed out that a Marine Highway Task              
Force has been established in the House and Senate, with the intent            
to address these concerns during the interim.  The proposed                    
legislation is being expedited by Senator Taylor at a time when it             
needs further consideration.                                                   
                                                                               
KURT PARKEN, DEPUTY COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND             
PUBLIC FACILITIES, stated that the Department does not support the             
legislation because it would not be in the best interest of the                
employees or the communities.  He added that a number of                       
communities and unions throughout the State oppose the legislation.            
                                                                               
He agreed that the Alaska Marine Highway System does have                      
management problems, although, an authority would not guarantee a              
stability in funding nor would it guarantee adequate staffing for              
marketing and reservations.  Creating an authority could separate              
the Marine Highway System from receiving the combined federal                  
Intermodal Surface Transportation Efficiency Act (ISTEA) dollars.              
                                                                               
Mr. Parken enumerated specific problems in the proposed                        
legislation.  He noted that there is not reference in the bill on              
how the transfer of assets from DOTPF to the Marine Highway                    
Authority would take place.  Also, the Department believes that                
there are serious constitutional problems with the confirmation                
process for the board.  The Legislature can not confirm                        
appointments to an authority, and that the definitions of                      
responsibilities are inconsistent in the text of the bill.  The                
bill will create four new collective bargaining units.                         
                                                                               
Representative Grussendorf noted that the Commissioner of DOTPF                
would be responsible for the allocation of federal ISTEA dollars.              
He questioned, with the creation of an authority having State                  
subsidy, would federal receipts continue to be allocated for the               
building of a new vessel.  The entity allocating federal funds                 
would be more carefully spent on renovation repair for the boats.              
He felt that passage of the legislation would jeopardize the Marine            
Highway System and would place political pressure on the                       
Commissioner.                                                                  
                                                                               
Representative J. Davies requested an overview of the major cost               
items associated with the creation of the authority.                           
                                                                               
GARY HAYDEN, DIRECTOR, ALASKA MARINE HIGHWAY SYSTEM, DEPARTMENT OF             
TRANSPORTATION AND PUBLIC FACILITIES, explained that the fiscal                
note contained funds for paying for meeting days.  The Department              
made the assumption that after January 1st, there would be 50                  
meetings for the first year.  That compensation would amount to $54            
thousand dollars.  Travel and per diem would amount to $75 thousand            
dollars on an annual basis.  The fiscal note assumes that the                  
authority will need to add $195 thousand dollars to cover the                  
vacancy by deleting the director position.  These expenses are                 
included in the proposed fiscal note from the Department.                      
                                                                               
JAMES BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,                  
stated that the Department opposes the proposed legislation.  He               
noted that there are provisions which do not follow the State                  
constitution regarding confirmation of board members.  It was                  
established by the State Supreme Court that the Governor's                     
confirmation power does not extend beyond the specifically                     
enumerated occasions as contained in the Alaska Constitution.  The             
proposed authority does not qualify as that type of entity.                    
                                                                               
The Legislature could not provide for the removal for clause                   
provision as suggested in the legislation.  The effect of that                 
clause, if the performance is not adequate, it would have to reach             
a high level of non-performance before they could be removed.  He              
requested that the Committee seriously question the language of the            
legislation.                                                                   
                                                                               
Mr. Ambrose referenced Page 4, Line 19, which clarifies that the               
authority would be a regulatory board.  Co-Chair Therriault asked              
if the regulatory power was incidental to the board or commission              
or would it be their main function.  Mr. Ambrose replied that issue            
had not been addressed with Legal Services when the legislation was            
drafted.                                                                       
                                                                               
(Tape Change HFC 97-139, Side 1).                                              
                                                                               
Mr. Baldwin noted that the State Constitution interrupts a                     
regulatory board as a board that is regulating an enterprise, a                
business or a profession.  It does not mean something that has the             
power to adopt regulations to place in statute.                                
                                                                               
In response to Representative Martin, Mr. Ambrose explained that               
the situation between the Alaska Railroad and the marine highway               
were different. The railroad is independent, whereas, the proposed             
changes to the marine highway would continue to remain an agency of            
State government.  Mr. Baldwin explained that the public                       
authorities are established as a political subdivision of the State            
making them separate from the principle departments.                           
                                                                               
Representative G. Davis MOVED to adopt Amendment #1.  [Copy on                 
file].  He stated that the amendment would remove the section which            
gives priority to the Alaska ports and shipyard facilities,                    
maintaining the status quo.  Mr. Hayden added, the current wording             
would have the inter-port differential only pertaining to the work             
done out of State.  The intent is to have an inter-port                        
differential for both in State and out of State work.                          
                                                                               
Following the discussion between Representative J. Davies,                     
Representative G. Davis and Mr. Hayden regarding the proposed                  
language of the amendment, there was NO OBJECTION and it was                   
adopted.                                                                       
                                                                               
Representative G. Davis WITHDREW Amendment #2.  [Copy on file].                
Representative Foster MOVED to adopt Amendment #2 which speaks to              
the membership of the authority.  Representative G. Davis noted                
that the amendment would remove the specific designation of union              
members.  He said that following the discussion with Senator                   
Taylor, he now more clearly understands the need to consider those             
members.  Representative G. Davis OBJECTED to Amendment #2.                    
A roll call vote was taken on the MOTION.                                      
                                                                               
     IN FAVOR:      Foster, Therriault                                         
     OPPOSED:       Martin, Moses, J. Davies, G. Davis,                        
                    Grussendorf, Kelly, Kohring                                
                                                                               
Representatives Mulder and Hanley were not present for the vote.               
                                                                               
The MOTION FAILED (2-7).                                                       
                                                                               
Representative G. Davis WITHDREW Amendment #3.  [Copy on file].                
There being NO OBJECTION, it was withdrawn.                                    
                                                                               
Representative Grussendorf MOVED to adopt Amendment #4.  [Copy of              
file].  He explained that the amendment would require that a plan              
be presented which would include in detail the amount and funding              
sources needed for the operating and capital improvements of the               
Alaska Marine Highway System for five consecutive fiscal years.                
                                                                               
Mr. Ambrose responded that the sponsor would not object to the                 
proposed amendment.  There being NO OBJECTION, Amendment #4 was                
adopted.                                                                       
                                                                               
Co-Chair Therriault advised that the House Finance Committee had no            
ability to fund the fiscal note; currently, the operating budget               
has been closed out.  He recommended adding an adjustment to when              
the bill could be implemented.  Mr. Ambrose acknowledged that would            
be acceptable.                                                                 
                                                                               
Co-Chair Therriault MOVED a change to Page 23, Line 4, deleting                
12/01/97 and inserting 7/01/97, and Page 23, Line 9, deleting                  
1/01/98 and inserting 1/01/99, to accommodate fiscal concerns.                 
There being NO OBJECTION, it was adopted.                                      
                                                                               
Representative Moses voiced his opposition to the appointment of               
the director position.  Representative Foster strongly objected                
that only one person on the authority would be representing the                
public.                                                                        
                                                                               
Representative Hanley MOVED to report CSSB 21(FIN) with the                    
attached amendments #1, #4, & #6 and individual recommendations out            
of Committee.  Representative Foster OBJECTED.                                 
                                                                               
A roll call vote was taken on the MOTION to move the bill from                 
Committee.                                                                     
                                                                               
     IN FAVOR:      G. Davis, Kelly, Kohring, Martin, Therriault,              
                    Hanley                                                     
     OPPOSED:       Moses, J. Davies, Grussendorf, Foster                      
                                                                               
Representative Mulder was not present for the vote.                            
                                                                               
The MOTION PASSED (6-4).                                                       
                                                                               
CSSB 21 (FIN) was reported out of Committee with the attached                  
amendments #1, #4 and #6 with a "no recommendation" and with a                 
Senate Finance Committee fiscal note dated 4/29/97.                            
ADJOURNMENT                                                                    
                                                                               
The meeting adjourned at 1:30 P.M.                                             
                                                                               
**FIN131PM                                                                     

Document Name Date/Time Subjects