Legislature(2019 - 2020)ADAMS ROOM 519

02/10/2020 01:30 PM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

Audio Topic
01:50:56 PM Start
01:51:53 PM HB205 || HB206
01:52:01 PM Fy 21 Budget Overview for the Department of Transportation and Public Facilities; and Alaska Marine Highway System Update
03:25:22 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 1:45 pm --
Heard & Held
Heard & Held
+ FY21 Dept. Budget Overviews: TELECONFERENCED
- Dept. of Transportation & Public Facilities
- Marine Highway Update
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 10, 2020                                                                                          
                         1:50 p.m.                                                                                              
1:50:56 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:50 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Jennifer Johnston, Co-Chair                                                                                      
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
Representative Adam Wool                                                                                                        
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
John MacKinnon,  Commissioner, Department  of Transportation                                                                    
and Public Facilities;  Dom Pannone, Administrative Services                                                                    
Director,   Department   of    Transportation   and   Public                                                                    
Facilities, Office  of Management and Budget,  Office of the                                                                    
Governor;  Mary Siroky,  Deputy Commissioner,  Department of                                                                    
Transportation and Public Facilities.                                                                                           
PRESENT VIA TELECONFERENCE                                                                                                    
Matt   McLaren,  Alaska   Marine  Highway   System  Business                                                                    
Development  Manager,   Department  of   Transportation  and                                                                    
Public Facilities.                                                                                                              
HB 205    APPROP: OPERATING BUDGET/LOANS/FUNDS                                                                                  
          HB 205 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HB 206    APPROP: MENTAL HEALTH BUDGET                                                                                          
          HB 206 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
FY  21 BUDGET  OVERVIEW:  DEPARTMENT  OF TRANSPORTATION  AND                                                                    
PUBLIC FACILITIES                                                                                                               
PRESENTATION: ALASKA MARINE HIGHWAY SYSTEM UPDATE                                                                               
Co-Chair Foster reviewed the agenda for the day.                                                                                
HOUSE BILL NO. 205                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     loan  program  expenses  of state  government  and  for                                                                    
     certain    programs;    capitalizing   funds;    making                                                                    
     appropriations under art.  IX, sec. 17(c), Constitution                                                                    
     of the State of  Alaska, from the constitutional budget                                                                    
    reserve fund; and providing for an effective date."                                                                         
HOUSE BILL NO. 206                                                                                                            
     "An  Act making  appropriations for  the operating  and                                                                    
     capital    expenses   of    the   state's    integrated                                                                    
     comprehensive mental health  program; and providing for                                                                    
     an effective date."                                                                                                        
1:51:53 PM                                                                                                                    
^FY 21 BUDGET OVERVIEW  FOR THE DEPARTMENT OF TRANSPORTATION                                                                  
AND  PUBLIC FACILITIES;  AND  ALASKA  MARINE HIGHWAY  SYSTEM                                                                  
1:52:01 PM                                                                                                                    
JOHN MACKINNON,  COMMISSIONER, DEPARTMENT  OF TRANSPORTATION                                                                    
AND  PUBLIC   FACILITIES,  introduced  himself   and  listed                                                                    
department  staff  present  for  questions.  He  provided  a                                                                    
PowerPoint   presentation  titled   "Alaska  Department   of                                                                    
Transportation   and   Public  Facilities:   House   Finance                                                                    
Committee, DOT&PF Overview and  AMHS Update," dated February                                                                    
10, 2020  (copy on file). He  began on slide 2  and reviewed                                                                    
the FY  21 operating budget comparison  showing a relatively                                                                    
flat  budget.  The  budget  included  an  increase  of  $4.7                                                                    
million  for the  Alaska Marine  Highway  System (AMHS).  He                                                                    
noted that  other differences shown  on the  slide reflected                                                                    
the  replacement of  undesignated general  funds (UGF)  with                                                                    
designated  general  funds  (DGF).  He  explained  that  the                                                                    
department  was working  to replace  UGF  with DGF  wherever                                                                    
possible. The intent of the  additional funding for AMHS was                                                                    
to close some  of the service gaps resulting  from the prior                                                                    
year budget. The hope was to  increase from 254 to 263 total                                                                    
weeks  of service.  The proposed  budget  showed about  $145                                                                    
million to $146 million UGF.                                                                                                    
1:54:18 PM                                                                                                                    
DOM  PANNONE, ADMINISTRATIVE  SERVICES DIRECTOR,  DEPARTMENT                                                                    
OF   TRANSPORTATION  AND   PUBLIC   FACILITIES,  OFFICE   OF                                                                    
MANAGEMENT AND  BUDGET, OFFICE OF  THE GOVERNOR,  reviewed a                                                                    
fund source breakdown  on slide 3. He noted  that the bottom                                                                    
table on the slide showed which  funds made up the UGF, DGF,                                                                    
other, and  federal fund categories.  He highlighted  a note                                                                    
underneath the  top table defining  which fund  sources were                                                                    
identified  as  duplicate  funds.  He  elaborated  that  the                                                                    
operating budget  included $245 million in  duplicate funds.                                                                    
He  explained  that  the duplicate  funds  included  funding                                                                    
collected from elsewhere  in the budget either  from the DOT                                                                    
budget or another department.                                                                                                   
1:55:14 PM                                                                                                                    
Commissioner   MacKinnon  reviewed   the   proposed  FY   21                                                                    
operating  budget   on  slide   4.  The  slide   showed  the                                                                    
department's various  fund sources  and how they  were used.                                                                    
He  noted  that  Mr.  Pannone had  developed  the  slide  to                                                                    
illustrate  how the  funding flowed.  He referenced  slide 3                                                                    
that showed $145 million in  UGF, which was about 25 percent                                                                    
of the department's total operating budget.                                                                                     
Commissioner MacKinnon  moved to  slide 5 showing  a 10-year                                                                    
operating history.  He pointed to a  significant increase in                                                                    
DGF and decrease in  UGF in FY 18 due to  a AMHS fund source                                                                    
swap. He  detailed that the  department had  swapped general                                                                    
funds  with   AMHS  funds,  which  had   been  reversed  the                                                                    
following year (reflected on the  chart). The slide showed a                                                                    
decrease in UGF from  FY 19 and FY 20 due  to a reduction of                                                                    
close  to $43  million  in  the AMHS  budget.  There was  an                                                                    
increase in other  funds attributed to about  $41 million in                                                                    
interagency  receipt authority  due to  the creation  of the                                                                    
Division of Facilities Services.  He intended to address the                                                                    
issue in more detail in a later slide.                                                                                          
1:56:41 PM                                                                                                                    
Commissioner  MacKinnon reviewed  slide  6  and stated  that                                                                    
highways   and  aviation   components  pertained   to  DOT's                                                                    
maintenance  of   roads  and  airports  in   the  state.  He                                                                    
addressed some of the challenges  the department was facing,                                                                    
including  empty authority.  He  referenced  $37 million  of                                                                    
motor fuel  tax receipts to  fund the highways  and aviation                                                                    
components and  explained that those  kinds of  numbers were                                                                    
not  being  realized. He  stated  explained  that with  more                                                                    
efficient vehicles  and around 400 electric  vehicles in the                                                                    
state, people  were using less  gas. He expounded that  at 8                                                                    
cents per gallon  coming into the state for  motor fuel tax,                                                                    
the department  was not receiving the  expected revenue. The                                                                    
reductions  in revenue  had resulted  in some  reductions in                                                                    
DOT's maintenance  abilities. He shared that  the department                                                                    
had  closed another  maintenance station  in the  past year,                                                                    
which was  the fifth maintenance station  closed since 2014.                                                                    
He  explained  that the  closure  of  a maintenance  station                                                                    
meant that  adjacent maintenance stations had  more miles of                                                                    
road to take care of.                                                                                                           
Co-Chair Johnston  noted there was legislation  in the other                                                                    
body  attempting to  increase the  gas tax  and registration                                                                    
tax. She  remarked that she  frequently heard  people asking                                                                    
why Alaska  did not  have toll roads.  She believed  most of                                                                    
the roads in  the state were federally funded.  She asked if                                                                    
it meant toll roads were not  an option when the majority of                                                                    
a road had been federally funded.                                                                                               
Commissioner MacKinnon answered that  if the federal highway                                                                    
program had put money into a  road, the state could not turn                                                                    
it into a toll road.  He explained that the department could                                                                    
not  turn an  existing  facility into  a  toll facility.  He                                                                    
elaborated that if  the state were to build a  new road, add                                                                    
lanes to  an existing road,  or build a bridge  with federal                                                                    
funds, it  could have a  toll facility provided it  was part                                                                    
of the initial plan.                                                                                                            
Co-Chair  Johnston surmised  that many  of the  additions to                                                                    
new lanes were funded by federal dollars.                                                                                       
Commissioner MacKinnon affirmed.                                                                                                
Representative    Merrick   highlighted    turnover   issues                                                                    
experienced  in  various  departments. She  asked  what  was                                                                    
causing the problem in DOT.                                                                                                     
Commissioner  MacKinnon  answered  that the  issue  was  not                                                                    
unique to  Alaska. He had met  with transportation officials                                                                    
in  the western  states the  past May  and had  learned they                                                                    
also  faced challenges  with recruitment  and retention.  He                                                                    
noted the problem was more  pervasive in the maintenance and                                                                    
operations side  than in the technical  fields, although the                                                                    
problem  existed  in the  latter  area  as well.  The  issue                                                                    
existed with Local 71 equipment  operators - the state spent                                                                    
time training individuals  and within a couple  of years the                                                                    
individuals went to work for  a municipality earning $5 more                                                                    
per hour. The  same problem existed in  airport, police, and                                                                    
fire. He  stated that the  Department of Public  Safety sent                                                                    
recruits  to  the  academy to  become  police  officers.  He                                                                    
explained that training covered  police, fire, and emergency                                                                    
medical services.  The individuals  were not trained  by the                                                                    
state without some commitment on  their part; however, after                                                                    
they fulfilled  their obligation,  individuals went  to work                                                                    
for   the  troopers   or  local   government  at   a  fairly                                                                    
substantial pay increase.                                                                                                       
2:01:03 PM                                                                                                                    
Vice-Chair Ortiz  referenced the top bullet  point about the                                                                    
decline  in  motor  fuel  receipts  on  slide  6.  He  asked                                                                    
Commissioner  MacKinnon to  repeat  the  number of  electric                                                                    
vehicles in Alaska.                                                                                                             
Commissioner  MacKinnon  believed  there were  400  electric                                                                    
vehicles in Alaska.                                                                                                             
Vice-Chair Ortiz asked  how many vehicles there  were in the                                                                    
Commissioner  MacKinnon replied  that  there  was about  one                                                                    
vehicle per person. He detailed  that with electric, hybrid,                                                                    
and fuel  efficient vehicles, even  though the  miles driven                                                                    
were  close  to the  same  as  five years  earlier,  current                                                                    
vehicles were much more efficient and burned less fuel.                                                                         
Vice-Chair Ortiz asked for verification  that DOT had seen a                                                                    
significant reduction in tax revenue because of the change.                                                                     
Commissioner  MacKinnon  replied   in  the  affirmative.  He                                                                    
elaborated  that  the  change  had  resulted  in  unrealized                                                                    
revenue the department had expected to receive.                                                                                 
Co-Chair Foster  asked Commissioner MacKinnon to  repeat the                                                                    
shortfall figure resulting from lost receipts.                                                                                  
Commissioner MacKinnon  replied that the shortfall  was $1.3                                                                    
Representative  Knopp referenced  the  closure of  Silvertip                                                                    
[maintenance station]  on the  Kenai Peninsula.  He believed                                                                    
the  department worked  the stretch  of  highway from  Crown                                                                    
Point  to  Girdwood.  He highlighted  there  had  been  some                                                                    
unprecedented storms  in the  area in  the current  year. He                                                                    
noted that no one on the  peninsula had been happy about the                                                                    
situation.  He remarked  that DOT  had received  significant                                                                    
feedback  on its  statement  that  occasional road  closures                                                                    
were acceptable.  He highlighted that a  couple of positions                                                                    
in  the  Homer  and  Soldotna stations  had  been  lost.  He                                                                    
remarked  that in  the past,  maintenance had  been provided                                                                    
around the clock;  however, there was now a  gap in service.                                                                    
He asked for the accuracy of his statements.                                                                                    
Commissioner MacKinnon  answered that  with the cuts  in the                                                                    
past   year,   which    included   closing   Silvertip   and                                                                    
transferring  its positions,  eight unfilled  positions were                                                                    
eliminated.  He  did not  see  Homer  on  the list  of  lost                                                                    
positions, but  Bethel, Quartz Creek, and  Soldotna had lost                                                                    
positions in the central peninsula region.                                                                                      
Representative Knopp asked if they were unfilled positions.                                                                     
Commissioner MacKinnon replied in the affirmative.                                                                              
Representative Knopp  stated it  was his  understanding that                                                                    
they  had lost  some manpower.  He remarked  that previously                                                                    
there  had been  around  the clock  coverage,  which was  no                                                                    
longer the case. He noted that  a loss of manpower would not                                                                    
result from unfilled positions.                                                                                                 
2:04:16 PM                                                                                                                    
Commissioner MacKinnon replied that  the current coverage in                                                                    
terms of hours was close to  what it had been when Silvertip                                                                    
was open. There had been two  periods of time during the day                                                                    
without  coverage; however,  it had  become more  continuous                                                                    
throughout the day.                                                                                                             
Representative  Knopp clarified  that his  comments expanded                                                                    
beyond  the one  stretch  of highway  on  the peninsula.  He                                                                    
asked  if  a  savings  had  occurred  with  the  closure  of                                                                    
Silvertip.  He remarked  that workers  had longer  hours and                                                                    
travel time.  He was concerned that  essential services were                                                                    
being cut  in the  way of winter  storms. He  suggested that                                                                    
some nonessential  services in the summer  months could have                                                                    
been cut.  He wondered if  the anticipated savings  had been                                                                    
realized by making the cuts.                                                                                                    
Commissioner MacKinnon replied that  they would have to wait                                                                    
for winter to end in order  to know. There had been closures                                                                    
on the Seward  Highway in the Anchorage  to Girdwood stretch                                                                    
due to  blizzards, not  rockfall. There  had been  a six-day                                                                    
closure  on  the  Klondike Highway  the  previous  week.  He                                                                    
reported that about  six roads had closures for  a period of                                                                    
time between a couple of hours  and an entire day due to the                                                                    
weather. He  remarked that there  had been easy  winters for                                                                    
the past  couple of years;  however, the current  winter had                                                                    
not proven  to be  easy thus far.  He elaborated  that there                                                                    
had been a  number of problems including  drifting and heavy                                                                    
snow, road  closures, and  the sideswiping  into an  ore and                                                                    
fuel  truck  on  the  Klondike Highway  that  had  caused  a                                                                    
problem. He relayed  that DOT would know  whether its budget                                                                    
was sufficient or lacking once the winter was over.                                                                             
Representative Wool referenced the  motor fuel tax issue. He                                                                    
asked if  activity on  the North Slope  went the  coffers of                                                                    
the motor fuel  tax. Alternatively, he asked if  the tax was                                                                    
only assessed on public roads.                                                                                                  
Commissioner  MacKinnon replied  that  he did  not know  the                                                                    
answer, but he did not think so.                                                                                                
Representative  Wool  recalled that  the  topic  had been  a                                                                    
factor in a committee meeting on  the motor fuel tax. He did                                                                    
not know whether various mines, such  as Red Dog, had to pay                                                                    
the motor fuel tax.                                                                                                             
2:07:12 PM                                                                                                                    
Commissioner  MacKinnon  answered  that since  most  of  the                                                                    
roads were private,  he suspected the mines  were not paying                                                                    
into  the tax.  He  returned  to slide  6  and continued  to                                                                    
address  challenges related  to  highways  and aviation.  He                                                                    
reiterated   his  earlier   statement   that  turnover   and                                                                    
recruitment continued to be a  problem in Alaska and in many                                                                    
other states.  The increase in  commodity cost was  an issue                                                                    
having to do  with the maintenance of the  state's roads. He                                                                    
elaborated that  the price  of salt  and aggregate  sand and                                                                    
gravel continued  to increase. Consequently, DOT  had scaled                                                                    
back on  its purchase  of the commodities.  He noted  it was                                                                    
not  something  that put  the  department  in a  comfortable                                                                    
position;  however,  DOT   had  significantly  improved  its                                                                    
ability to manage snow and  ice control as opposed to moving                                                                    
the snow  off. One of  the management methods was  to spread                                                                    
liquid  on roads  prior to  a snow,  which was  an effective                                                                    
measure for preventing the snow from sticking to the road.                                                                      
Commissioner  MacKinnon continued  to  address  slide 6.  He                                                                    
highlighted  the  challenge   related  to  changing  weather                                                                    
patterns. He noted  that the current winter  had been harder                                                                    
than others  in recent  years. Additionally, there  had been                                                                    
some  issues with  rockfalls on  the Seward  Highway between                                                                    
Anchorage  and Girdwood.  He reported  it was  believed that                                                                    
the earthquake in November of  2018 had loosened up the rock                                                                    
more  than   it  had  been,   which  meant  that   rain  and                                                                    
freeze/thaw  events caused  rocks  to fall,  which could  be                                                                    
deadly.  The  department was  addressing  the  issue with  a                                                                    
highway  safety improvement  project  where  they would  put                                                                    
mesh on  the rock  to hold  it. He added  that DOT  had also                                                                    
identified numerous other sites where work was needed.                                                                          
2:09:15 PM                                                                                                                    
Commissioner  MacKinnon  reviewed   a  ten-year  history  of                                                                    
highways and aviation components on  slide 7. He pointed out                                                                    
that in FY  18, DOT had begun to reduce  its reliance on UGF                                                                    
by swapping  DGF. The funding  source was mostly  motor fuel                                                                    
tax,  which  had  not  been   realized  as  anticipated.  He                                                                    
reiterated  his earlier  testimony  that  the reduced  motor                                                                    
fuel  tax  revenue  was   attributed  to  increased  vehicle                                                                    
efficiency, in addition to hybrid and electric vehicles.                                                                        
Commissioner  MacKinnon turned  to slide  8 regarding  other                                                                    
department  challenges.  He  noted   he  had  discussed  the                                                                    
problem  of   recruitment  and  retention  earlier   in  the                                                                    
presentation.  He shared  that  DOT was  a large  department                                                                    
with  about 3,300  employees between  AMHS, maintenance  and                                                                    
operations   of  the   highways   and   aviation,  and   the                                                                    
engineering  construction side  responsible for  the federal                                                                    
highways  and  aviation  program.   He  relayed  that  3,300                                                                    
represented  about 20  percent  of all  state employees.  He                                                                    
shared  that issues  related  to  recruitment and  retention                                                                    
were related to more than  pay. He noted that the Department                                                                    
of Administration  had some new  initiatives it  was working                                                                    
on  [related to  recruitment  and retention].  Additionally,                                                                    
DOT  was  also dealing  with  the  Per- and  polyfluoroalkyl                                                                    
substances   (PFAS)  issue   at  the   state's  certificated                                                                    
airports.  He  explained that  PFAS  had  become a  national                                                                    
Commissioner  MacKinnon  continued   to  address  challenges                                                                    
facing  the department  on slide  8. He  discussed that  the                                                                    
Division  of  Facilities  Services was  established  several                                                                    
years back  as part  of the  effort to  consolidate services                                                                    
and put all of the  facilities under DOT. The department had                                                                    
700  of its  own facilities  ranging from  large maintenance                                                                    
stations  to  fuel  sheds.   Under  the  consolidation,  the                                                                    
department was  up to 1,200  facilities, which  included 500                                                                    
from  other agencies.  He elaborated  that the  number would                                                                    
continue  to  grow.  He  noted that  DOT  was  managing  the                                                                    
growing pains;  however, it  was challenging  because growth                                                                    
was not occurring  organically, but by leaps  and bounds. He                                                                    
explained  that the  growth had  caused a  few problems.  He                                                                    
continued  to  remind staff  that  it  was the  Division  of                                                                    
Facilities   Services,  with   an  emphasis   on  the   word                                                                    
"services." The division was providing  the service to other                                                                    
state agencies for the facilities.                                                                                              
Co-Chair  Johnston  looked at  the  weigh  station image  on                                                                    
slide  8. She  had observed  that most  weigh stations  were                                                                    
closed.  She  asked  if   weight  was  currently  determined                                                                    
automatically  under  the  roadbed.  She asked  if  DOT  was                                                                    
looking  at  divesting  from  some   of  the  weigh  station                                                                    
Commissioner  MacKinnon answered  that  weigh stations  were                                                                    
closed certain hours of the  day and open during others. The                                                                    
purpose of  the weigh  stations was  to get  an idea  of the                                                                    
volume of  the trucks  passing over  them. He  reported that                                                                    
the  department kept  track of  the  information. He  shared                                                                    
that DOT recorded  the weights of trucks when  they came out                                                                    
of  the yards.  He explained  that the  weigh stations  were                                                                    
typically open at night when  the weights of the trucks were                                                                    
not being recorded in the yards.                                                                                                
2:13:26 PM                                                                                                                    
Co-Chair Johnston  observed that  the stations seemed  to be                                                                    
closed  at  night  on  the Seward  Highway.  She  asked  for                                                                    
verification  that the  modernization  entailed getting  the                                                                    
truck weights at their point of departure.                                                                                      
Commissioner MacKinnon replied in the affirmative.                                                                              
Representative   Wool   asked   what   percentage   of   the                                                                    
department's  resources  went  to  the  facilities  services                                                                    
Commissioner   MacKinnon  deferred   the  question   to  Mr.                                                                    
Mr.  Pannone  answered  that   the  Division  of  Facilities                                                                    
Services had  a budget of  about $41 million  in interagency                                                                    
receipts. He  explained that  the interagency  receipts were                                                                    
comprised of  funds the  department collected  from agencies                                                                    
that  had  "onboarded"  to  the  service.  The  department's                                                                    
overall budget  also included facilities  components showing                                                                    
what DOT  paid to  the Division  of Facilities  Services. He                                                                    
offered to provide the information.                                                                                             
Representative Wool  clarified that  he was  more interested                                                                    
in interagency  receipts. For  example, the  legislature had                                                                    
been talking  to the Department  of Corrections  (DOC) about                                                                    
reopening the Palmer  Correctional Center and DOC  had to go                                                                    
through DOT. He  wondered how laborious the  process was and                                                                    
whether DOT  had abundant resources to  handle the reopening                                                                    
of the facility immediately.                                                                                                    
Commissioner MacKinnon  had not  seen anything from  DOC, he                                                                    
had  only heard  rumors. He  shared  that DOT  had a  recent                                                                    
issue  with one  of the  other departments  questioning what                                                                    
the cost  of a capital project  would be. At first  blush it                                                                    
looked like there were some  additional costs, but when they                                                                    
dialed into  the budget, they found  contingencies that were                                                                    
not  real charges  until needed.  The department  had talked                                                                    
with  other agencies  about increasing  their delegation  of                                                                    
authority  from  the  standard $200,000  in  certain  cases.                                                                    
There   were  a   number  of   past  situations   where  the                                                                    
delegations had not  gone well. He stated that  the staff in                                                                    
the   Division   of   Facilities  Services   were   in   the                                                                    
construction business  and knew how  to bid and  operate the                                                                    
projects.  He explained  that  without  that background,  it                                                                    
could  lead to  a negative  and more  costly experience.  He                                                                    
reiterated that he had not heard from DOC.                                                                                      
2:16:35 PM                                                                                                                    
Vice-Chair Ortiz looked  at slide 7 related  to highways and                                                                    
aviation  components.   He  observed  that  in   FY  15  the                                                                    
component had been  funded at about $144  million, which had                                                                    
begun  to  decline  to  its current  budget  of  about  $122                                                                    
million. He  asked if the  reduced funding had  impacted the                                                                    
Statewide Transportation Improvement  Program (STIP) and its                                                                    
projects. He  asked if the  spending reduction  had resulted                                                                    
in  a potential  growth in  expenses  for the  state in  the                                                                    
future due to deferred maintenance.                                                                                             
Commissioner  MacKinnon  answered  there was  not  a  simple                                                                    
answer.  He explained  that STIP  was  a separate  component                                                                    
from state maintenance and operation  of roads and airports.                                                                    
He detailed  that STIP was federal  funding for construction                                                                    
projects  for new  transportation  facilities. He  expounded                                                                    
that  for a  number  of  years, DOT  had  been  able to  use                                                                    
federal highway funds for  certain maintenance projects. The                                                                    
department  kept  its  winter response  maintenance  workers                                                                    
busy in the summer months - DOT  did not want to lay off the                                                                    
workers  during  part  of  the  year  as  it  would  add  to                                                                    
recruitment and  retention problems.  He continued  that DOT                                                                    
was  able  to  use   federal  programs  for  replacement  of                                                                    
guardrails  or   a  cracked  ceiling.   He  stated   it  was                                                                    
especially important  on the Dalton Highway.  The department                                                                    
had to  keep tight track of  work staff was doing  under the                                                                    
federally funded program; it could  not take workers off the                                                                    
federal payroll and put them on the state maintenance side.                                                                     
Commissioner MacKinnon continued  answering the question and                                                                    
referenced an  earlier slide showing a  potholed road (slide                                                                    
6).  He detailed  that the  image  was taken  on the  Dalton                                                                    
Highway in August.  He elaborated that rainfall  in the area                                                                    
had been  much higher than  normal. He explained  that DOT's                                                                    
maintenance crews  were shorthanded as  it was and  had been                                                                    
busy  doing federal  projects on  the Dalton.  Consequently,                                                                    
the blading and  smoothing of dirt roads  had been neglected                                                                    
due to budget  reasons. The department had  replaced much of                                                                    
its  general fund  funding for  highways  and aviation  with                                                                    
federal funds.                                                                                                                  
2:19:33 PM                                                                                                                    
Vice-Chair Ortiz  asked if there  was an  increasing problem                                                                    
with higher costs due to deferred maintenance issues.                                                                           
Commissioner  MacKinnon  answered  in  the  affirmative.  He                                                                    
elaborated that required  critical components, like culverts                                                                    
and  biennial  bridge  inspections, were  conducted  on  the                                                                    
federal side. However,  when it came to  routine potholes on                                                                    
roads   such  as   the  South   Tongass  Highway,   deferred                                                                    
maintenance was a big issue.                                                                                                    
2:20:32 PM                                                                                                                    
MARY    SIROKY,   DEPUTY    COMMISSIONER,   DEPARTMENT    OF                                                                    
TRANSPORTATION  AND  PUBLIC  FACILITIES, addressed  AMHS  on                                                                    
slide 9. She spoke to  the challenges facing AMHS, including                                                                    
aging terminals and  vessels. She detailed that  some of the                                                                    
vessels  were 55  years  old and  still  had their  original                                                                    
engines,  which  had  made  keeping   them  in  operation  a                                                                    
significant challenge.  There were some significant  gaps in                                                                    
service as a result of a  $43 million reduction to the FY 20                                                                    
operating budget.  The gaps in  service were  exacerbated by                                                                    
vessels breaking  down and the  Matanuska not coming  out of                                                                    
its overhaul as quickly as possible.                                                                                            
Ms.  Siroky  shared that  AMHS  was  faced with  changes  in                                                                    
federal law.  The department  had been  told in  the current                                                                    
year  that  it needed  to  have  armed presence  to  support                                                                    
border patrol workers  responsible for providing inspections                                                                    
as passengers  traveled from  Prince Rupert  in Canada  on a                                                                    
marine highway  vessel headed for  Ketchikan. She  stated it                                                                    
was a significant challenge the  department needed to figure                                                                    
out how to fund.                                                                                                                
Ms. Siroky  relayed that there were  three marine collective                                                                    
bargaining  unions,   all  with  different   contracts.  She                                                                    
expounded that  some unions worked  two weeks on,  two weeks                                                                    
off  and  others worked  one  week  on,  one week  off.  She                                                                    
explained  that the  different contract  provisions made  it                                                                    
difficult to  dispatch employees to boats  and determine how                                                                    
best  to  use  resources   effectively.  She  reported  that                                                                    
turnover and recruitment had been  a challenge over the past                                                                    
several years.  She detailed it  had been difficult  to keep                                                                    
enough vessel  employees employed  in order to  avoid losing                                                                    
them in the  winter. She explained that  the unions operated                                                                    
on a  seniority based system;  therefore, if a  young person                                                                    
came in and  did a great job in the  summer months, they may                                                                    
not be the one with a job in the fall and winter.                                                                               
Co-Chair  Johnston   asked  when  each  of   the  collective                                                                    
bargaining agreements expired.                                                                                                  
Ms. Siroky replied that the  IBU [Inlandboatmen's Union] had                                                                    
gone on  strike the past  summer. The department was  in the                                                                    
process of  working out  the final  details of  an agreement                                                                    
with  IBU,  which  would  hopefully   be  signed  soon.  The                                                                    
department  was in  active  negotiations  with the  Masters,                                                                    
Mates  and  Pilots  and  the  Marine  Engineers'  Beneficial                                                                    
Association;   DOT  hoped   to  have   agreements  for   the                                                                    
legislature to review prior to the end of session.                                                                              
Co-Chair Johnston noted there were three unions.                                                                                
Ms.  Sirkoy answered  that IBU  had gone  on strike  and the                                                                    
department  was  working  with  the  union  [on  a  contract                                                                    
Co-Chair   Johnston  asked   if  any   of  the   unions  had                                                                    
apprenticeship  programs.  She  remarked that  some  of  the                                                                    
positions  required  training.  She was  interested  in  the                                                                    
recruiting aspect  and asked if  the responsibility  fell on                                                                    
the state or if there was a partnership.                                                                                        
Ms.  Siroky answered  that there  was not  an apprenticeship                                                                    
program  for  the  AMHS.  There   were  jobs  that  required                                                                    
additional  skills such  as  an engineer,  a  master, and  a                                                                    
master with pilotage.                                                                                                           
Representative  Josephson looked  at slide  13 and  observed                                                                    
there were five  vessels that were 16 years  old or younger.                                                                    
He   believed   one  of   the   vessels   was  serving   the                                                                    
Metlakatla/Ketchikan  route. He  asked  why  the other  four                                                                    
were not operating.                                                                                                             
Ms. Siroky  answered that the  Cheenega and  the Fairweather                                                                    
were  both  aluminum  vessels, meaning  their  lifespan  was                                                                    
significantly different  than for steel hulled  vessels. The                                                                    
two vessels  were very expensive  to operate.  She explained                                                                    
that the vessels had been  built and operated under the high                                                                    
speed  vessel  code.  She  relayed   that  the  Tazlina  had                                                                    
recently come out of the yard  and had not been in operation                                                                    
the past  summer [note: Ms.  Siroky made a  correction later                                                                    
that  this  statement  pertained  to the  Hubbard,  not  the                                                                    
Representative  Josephson  shared  that  he  had  only  read                                                                    
summaries of the Northern Economics  Report. He believed the                                                                    
report specified that some routes  were not as attractive as                                                                    
private   routes.  He   asked  about   the  administration's                                                                    
position on the  public policy behind having  a ferry system                                                                    
for coastal  Alaska. He asked if  the administration thought                                                                    
the state should have a ferry system.                                                                                           
Ms.   Siroky  answered   that  she   did  not   believe  the                                                                    
administration had  ever said  the state  should not  have a                                                                    
marine    highway   system.    She    reported   that    the                                                                    
administration, by  way of DOT,  had requested  the Northern                                                                    
Economics study,  also referred to within  the department as                                                                    
the  "reshaping study."  The study  had  brought together  a                                                                    
large  amount  of information.  The  governor  had formed  a                                                                    
small taskforce to review and  balance the study with all of                                                                    
the modes  of transportation the state  was responsible for.                                                                    
The  state   provided  the  infrastructure  for   roads  and                                                                    
runways. She  explained that the  marine highway  system was                                                                    
the   only    system   where   the   state    provided   the                                                                    
transportation. She  remarked that as the  state developed a                                                                    
plan for AMHS going forward, it  was important to look at it                                                                    
in   the  context   of  how   the  state   dealt  with   all                                                                    
transportation. She explained that  the taskforce would help                                                                    
outline the big  policy issues and address  how to reconcile                                                                    
2:29:23 PM                                                                                                                    
Mr. Pannone reviewed slide 10  showing a 10-year lookback of                                                                    
the  AMHS  operating budget.  He  pointed  out that  between                                                                    
FY 11 and FY 19 there  had been a gradual reduction of $16.2                                                                    
million  in the  AMHS operating  budget. The  reduction from                                                                    
FY 19 to FY 20 was $43 million.                                                                                                 
Ms. Siroky  turned to slide  11 and  provided an FY  20 AMHS                                                                    
service overview. She noted that  DOT had been asked to talk                                                                    
to the  committee about  the ferry service  it had  hoped to                                                                    
provide with  the FY  20 operating  budget and  reduction of                                                                    
$43  million. The  department had  planned  to provide  just                                                                    
under  284  weeks  of service.  She  reported  that  through                                                                    
December 31,  146 weeks  of service  had been  provided. The                                                                    
department estimated  it would provide 250  weeks of service                                                                    
by  the end  of  June.  She explained  the  reasons for  the                                                                    
discrepancy. First, the  [IBU] strike had cost  a full eight                                                                    
weeks of  service. Second, the  Matanuska had stayed  in the                                                                    
shipyard longer.  Third, the  Columbia had  not been  put in                                                                    
layup as  early in  order to  provide mainline  service when                                                                    
the Matanuska did  not return as quickly  as possible, which                                                                    
had cost the department funding  it did not have; therefore,                                                                    
service had been reduced elsewhere.  Fourth, the LeConte had                                                                    
needed a  significant amount of  steel work.  She elaborated                                                                    
that  a  six-week overhaul  had  turned  into a  seven-month                                                                    
overhaul. Lastly, the Matanuska had broken down.                                                                                
2:32:11 PM                                                                                                                    
Vice-Chair  Ortiz  looked  at  the plan  for  280  weeks  of                                                                    
service and  the reality  of 146  weeks of  service [through                                                                    
December 31, 2019]. He asked  if the Lituya accounted for 52                                                                    
of the 146  weeks of service. He noted the  Lituya ran year-                                                                    
round from Ketchikan to Metlakatla only.                                                                                        
MATT MCLAREN, AMHS  BUSINESS DEVELOPMENT MANAGER, DEPARTMENT                                                                    
OF    TRANSPORTATION    AND     PUBLIC    FACILITIES    (via                                                                    
teleconference), answered  that the Lituya accounted  for 50                                                                    
of the weeks  of service. He clarified that  the 146.6 weeks                                                                    
of  service was  for  the  first half  of  the fiscal  year;                                                                    
therefore,  the  full  50  weeks  for  the  Lituya  was  not                                                                    
included in that number. He  explained that the 50 weeks was                                                                    
included in the estimated total of 250.3.                                                                                       
Representative Wool  considered the  383.9 planned  weeks of                                                                    
service for  FY 20.  He asked  how much  of a  reduction the                                                                    
number represented when compared to FY 18.                                                                                      
Mr. McLaren  replied that the department  had provided 329.1                                                                    
weeks of  service in  FY 19,  317.5 in FY  18, and  329.6 in                                                                    
FY 17.                                                                                                                          
Ms. Siroky discussed the status  of the vessels on slide 12.                                                                    
She  noted it  was likely  not  a very  pretty picture.  She                                                                    
provided  details on  the various  vessels.  The Lituya  was                                                                    
operating.  The  Columbia  was  scheduled  to  come  out  of                                                                    
overhaul  on May  6. The  Tazlina, the  new ACF  vessel, was                                                                    
scheduled  to begin  operating on  March  5. She  elaborated                                                                    
that  the  Tazlina  overhaul  was   time  dependent  as  the                                                                    
warranty ran out at the  end of April. The department wanted                                                                    
to ensure  the vessel reached  the yard with plenty  of time                                                                    
to deal with any unknown  warranty issues. The Kennicott was                                                                    
scheduled to  run on April  16. The Tustumena  was scheduled                                                                    
to begin service  again on May 1. The  LeConte was scheduled                                                                    
to run  on May 20.  She expounded  that the LeConte  went in                                                                    
for repair and  the replacement of eroded  steel in November                                                                    
(the  schedule  gave about  seven  months  for the  repair).                                                                    
There had been problems with  the Matanuska - there had been                                                                    
some good news  and the department was hoping  for more. She                                                                    
elaborated that  DOT was  hoping to get  the vessel  back in                                                                    
operation  by  March 2.  The  Hubbard  was currently  having                                                                    
forward  doors  installed,  otherwise the  department  would                                                                    
have  considered operating  the vessel  while the  Matanuska                                                                    
was down.  The Aurora,  Malaspina, Fairweather,  and Chenega                                                                    
were currently in warm layup and had no crew on.                                                                                
Ms. Siroky stated it was  important for people to understand                                                                    
that the  ships in  the yard  were all  having work  done on                                                                    
them.  She clarified  that just  because a  boat was  not in                                                                    
drydock did  not mean  that people  were not  taking engines                                                                    
apart  and looking  at  different parts  and  pieces of  the                                                                    
ship. The department  did not want people to  think that the                                                                    
boats were tied up and nothing was happening.                                                                                   
2:37:04 PM                                                                                                                    
Representative Knopp  thought Ms. Siroky had  stated earlier                                                                    
that the  Tazlina had come  out of the shipyard  three weeks                                                                    
back. He  asked for verification  that the vessel  had never                                                                    
been put in service.                                                                                                            
Ms. Siroky  corrected her  earlier statement.  She clarified                                                                    
that she  had meant to say  that the Hubbard had  never been                                                                    
put into service the past summer.                                                                                               
Representative Knopp  asked for  the status of  the Tazlina.                                                                    
He believed  the shipyard  only had the  ability to  work on                                                                    
one vessel at a time.                                                                                                           
Ms. Siroky  clarified that the  shipyard had the  ability to                                                                    
work on many  ships at a time. The Tazlina  was currently in                                                                    
its  warranty overhaul  and should  be out  on March  5. The                                                                    
vessel had  been put into  overhaul ahead of time  to ensure                                                                    
there was  time to do any  warranty work by April  30 if any                                                                    
problems arose. Any work done  under the warranty would cost                                                                    
the state nothing.                                                                                                              
Representative  Sullivan-Leonard  looked  at the  11  or  12                                                                    
vessels  that were  currently  being worked  on  or were  in                                                                    
layup. She surmised that it  was positive that in the spring                                                                    
and summer there would be  at least eight vessels in service                                                                    
during  a  season  that  was  busy  with  tourists  and  the                                                                    
movement  of  goods  and  services.  She  believed  that  if                                                                    
vessels were going  to be down, the current time  was a good                                                                    
time for it to happen.                                                                                                          
Ms. Siroky answered  it was the slight silver  lining in the                                                                    
situation. She was certain the  people who had not been able                                                                    
to  travel  would not  see  it  that  way; however,  it  was                                                                    
fortunate that  the Matanuska  had not  gone offline  in the                                                                    
middle of summer.                                                                                                               
Representative   Sullivan-Leonard   stated  that   the   DOT                                                                    
subcommittee  had  discussed  that  the  Columbia  would  be                                                                    
filling a  significant portion  of the  gap in  service. She                                                                    
asked if the Tazlina or Kennicott  could be used to fill the                                                                    
needs while the Columbia was out of service.                                                                                    
Ms. Siroky replied  in the negative. She  clarified that the                                                                    
dates listed  [on slide  12] were  the dates  the department                                                                    
expected the ships to come out  and DOT did not believe they                                                                    
could come  out any earlier.  She explained that  the bigger                                                                    
shipyard  required technicians  with  specific expertise  to                                                                    
come up and help. The  technicians were scheduled to come up                                                                    
to  work on  all of  the  vessels at  one time.  She used  a                                                                    
hypothetical  example   of  a   person  with   marine  radar                                                                    
expertise who  would come up  to work  on all of  the boats'                                                                    
systems  at one  time. She  elaborated that  if the  vessels                                                                    
were located  at a  much larger shipyard  there may  be some                                                                    
greater flexibility to get some boats out sooner.                                                                               
2:41:16 PM                                                                                                                    
Representative  Sullivan-Leonard  considered the  short-term                                                                    
gap  and  asked if  DOT  was  looking  at having  a  private                                                                    
company assist during the gap.                                                                                                  
Ms. Siroky  replied in the  affirmative. The  department had                                                                    
issued a request  for information the previous  Monday for a                                                                    
period  of  three   or  four  days.  The   request  was  for                                                                    
information about companies  that may be able  to operate in                                                                    
northern Lynn Canal and service  a set number of passengers.                                                                    
She  shared   that  they   had  received   some  interesting                                                                    
responses.  The  department  was   circling  back  to  those                                                                    
companies  and   talking  about  getting  some   service  in                                                                    
northern  Lynn  Canal  to  reach  villages  and  Haines  and                                                                    
Skagway. The department  was also hoping for  the ability to                                                                    
move  some  palletized  freight. The  department  recognized                                                                    
that if  there was the  ability to move  palletized freight,                                                                    
the  communities  would  need  some time  in  order  to  get                                                                    
freight where  it needed  to be to  get to  the communities.                                                                    
She relayed  that DOT was hoping  to know by the  end of the                                                                    
week how it may be able to fill in for some needed service.                                                                     
2:43:08 PM                                                                                                                    
Vice-Chair  Ortiz considered  recruitment  and retention  of                                                                    
workers.  He asked  what happened  to the  workforce on  the                                                                    
Matanuska when  the boat had  gone out of service.  He asked                                                                    
if the workers were still with the boat and still employed.                                                                     
Ms. Siroky answered that the  crew on the boat were assigned                                                                    
for a  set period of  time and had  a set minimum  number of                                                                    
hours they  were guaranteed to  be paid. She  explained that                                                                    
when the Matanuska had broken  down, crew members had stayed                                                                    
on the boat and were being paid.                                                                                                
Vice-Chair Ortiz  shared that a  constituent who  worked for                                                                    
AMHS  believed  they were  subject  to  losing their  health                                                                    
insurance because they were no  longer employed.  He thought                                                                    
it had  been in relationship  to the Matanuska. He  asked if                                                                    
there had  ever been  a situation when  a vessel  had broken                                                                    
down where  employees had  been put  on hold  without health                                                                    
benefits. He thought  it would be difficult for  a person to                                                                    
continue wanting to be employed if that was the situation.                                                                      
Ms.  Siroky replied  that there  had  been discussion  about                                                                    
whether employees  were covered  by health  insurance during                                                                    
the [IBU] strike [the previous  August]. She believed it had                                                                    
been  determined  that  the employees  had  healthcare.  She                                                                    
relayed  that many  vessel employees  saved  their leave  to                                                                    
help them  get through the slow  times of the year.  She did                                                                    
not know of  specific people who thought they had  a job and                                                                    
were  currently not  working and  without health  insurance.                                                                    
The  department had  received an  email earlier  in the  day                                                                    
listing the number  of staff on each of  the boats currently                                                                    
in layup.  She elaborated  that each of  the boats  in layup                                                                    
had between 5 and 15 crew members on board.                                                                                     
2:45:59 PM                                                                                                                    
Vice-Chair Ortiz considered the  potential for the system to                                                                    
try  to  help  communities  with  some  of  the  significant                                                                    
problems caused by the breakdown  of the system. He asked if                                                                    
it would be possible to  have an early sailing from Whittier                                                                    
to Cordova. He  had heard much concern  about people needing                                                                    
to move supplies to prepare for the fishing season.                                                                             
Ms.  Siroky  answered  that the  department  had  heard  the                                                                    
concern many times during public  comment on the AMHS spring                                                                    
and summer schedule.  The department had come up  with a way                                                                    
to  get the  Kennicott  up  to the  area  to  help with  the                                                                    
fishing season in Cordova. She  elaborated that DOT sent the                                                                    
[Cordova] mayor  an email  a couple  of weeks  back advising                                                                    
him  that they  did not  believe they  would meet  his April                                                                    
15th  date, but  they could  get the  vessel there  by April                                                                    
19th.  The  plan  was  to  run back  and  forth  trips  from                                                                    
Whittier to  Cordova. The department  was hoping to  get the                                                                    
finalized schedule out in the  next week or two. She thought                                                                    
people  would realize  the department  had been  creative in                                                                    
trying to find ways to meet the significant gaps and needs.                                                                     
Vice-Chair Ortiz asked  if there would be  anything done for                                                                    
special coastal  Alaska school  events requiring  travel. He                                                                    
highlighted  music  festivals in  Cordova  and  Sitka and  a                                                                    
basketball tournament in Juneau  as examples. He pointed out                                                                    
that large  numbers of students had  traditionally used AMHS                                                                    
to travel to the events.                                                                                                        
Ms. Siroky  replied that  the department's  scheduler worked                                                                    
with communities and  schools to get event  dates upfront in                                                                    
order  to  try  to  build  an  accommodating  schedule.  She                                                                    
believed the planned  schedule took care of  the Sitka music                                                                    
festival, the  high school tournaments,  and the  Gold Medal                                                                    
basketball  tournament. The  department  recognized that  if                                                                    
the  Matanuska was  not  back online,  the  events would  be                                                                    
significant  needs  for  the communities  and  some  fill-in                                                                    
service would be needed.                                                                                                        
2:49:17 PM                                                                                                                    
Representative Carpenter looked at  the eight vessels on the                                                                    
left  side of  slide  12 and  asked how  many  were out  for                                                                    
scheduled  repair versus  emergency  repair.  He asked  when                                                                    
each of the ships had gone offline.                                                                                             
Ms.  Siroky answered  that all  of the  boats had  scheduled                                                                    
repairs. The department had planned  that the Columbia would                                                                    
not operate  over the winter.  The vessel had  been operated                                                                    
longer  than expected  before going  into the  shipyard. The                                                                    
Tustumena, Kennicott, and Tazlina  were all in their regular                                                                    
overhaul time slips,  along with some out  of revenue period                                                                    
of time due to a lack  of operating funding. The LeConte was                                                                    
offline for  a longer period  due to a need  for significant                                                                    
steelwork.  The   Aurora  had  been  laid   up  because  the                                                                    
department could not afford to  fix both the LeConte and the                                                                    
Aurora.  Experts  had looked  at  the  two vessels  and  had                                                                    
determined  the  LeConte  would be  cheaper  and  faster  to                                                                    
2:51:17 PM                                                                                                                    
Representative Wool  stated that the Tazlina  was a one-year                                                                    
old boat  and was virtually  brand new by comparison  to the                                                                    
other boats.  He asked if  the department could  predict how                                                                    
long the  boat's scheduled warranty overhaul  would take. He                                                                    
reasoned that  the overhaul would  not find  the significant                                                                    
rust that may be found on older boats.                                                                                          
Ms. Siroky answered  that the department did  not expect the                                                                    
Tazlina's  overhaul   to  take   longer  than   normal.  She                                                                    
explained  that the  ship  had been  put  into its  overhaul                                                                    
already, to  give time to  do any unanticipated work  by the                                                                    
April 30 warranty deadline.                                                                                                     
Representative Wool  assumed that  the vessels were  not all                                                                    
the  same size.  He asked  if  the Tazlina  could help  with                                                                    
service  if  the Matanuska  broke  down.  He understood  the                                                                    
Tazlina  was  a  smaller  boat. He  asked  for  the  primary                                                                    
differences between the two vessels.                                                                                            
Ms. Siroky answered  that the Tazlina could fill  in for the                                                                    
Matanuska in  northern Lynn  Canal. She  did not  know about                                                                    
the  ship's ability  to go  to Bellingham.  She noted  there                                                                    
were not  crew quarters  on the  Tazlina, which  made things                                                                    
much more difficult to operate on a 24 hour/day route.                                                                          
Representative  Wool asked  if  the department  ever left  a                                                                    
boat in  reserve that was not  under repair and not  in use.                                                                    
He reasoned  that the boat  could be used if  problems arose                                                                    
on  another vessel.  He remarked  that the  vessel could  be                                                                    
taken  out  of  storage  without  requiring  six  months  of                                                                    
startup  time. He  noted  that no  one  had anticipated  the                                                                    
Matanuska having problems.                                                                                                      
Ms.  Siroky answered  that DOT  had  not had  the luxury  of                                                                    
having a spare  vessel ready to fill in  for another vessel.                                                                    
However, AMHS had  been operating enough vessels  to pick up                                                                    
the slack or fill in  for another vessel. She explained that                                                                    
if  the  Matanuska  had  gone offline  in  the  summer,  the                                                                    
Columbia  may be  operating and  may fill  in. In  the past,                                                                    
when DOT had  run into situations "of  this magnitude" there                                                                    
had  been more  boats  operating and  more opportunities  to                                                                    
minimize the challenges.                                                                                                        
2:55:21 PM                                                                                                                    
Representative  Wool asked  for  verification  that the  new                                                                    
door being installed on the  Hubbard was different than what                                                                    
the department  believed was needed  when the boat  had been                                                                    
ordered. He asked if the Hubbard  had the same limits as the                                                                    
Tazlina in  terms of sleeping  quarters and routes  it could                                                                    
pick  up. He  remarked  that  the two  new  boats were  more                                                                    
limited than the older fleet.                                                                                                   
Ms. Siroky  replied that  the Hubbard  and Tazlina  had been                                                                    
designed  for the  Juneau Access  Project  to be  at a  much                                                                    
different state.  She elaborated  that the ferries  had been                                                                    
designed to operate out of  Katzehin about 50 miles north of                                                                    
Juneau. She explained that the  boats would have the ability                                                                    
to get  to Haines and  Skagway within 12 hours,  which meant                                                                    
crew would  not have to be  kept on board around  the clock.                                                                    
The   road  infrastructure   had  not   come  to   fruition;                                                                    
therefore,  the  boats  were  operating  under  a  different                                                                    
scenario than  the original plan.  The forward doors  were a                                                                    
modification to  make the boats  more efficient on  a longer                                                                    
run. She detailed  that the boats were designed  to be "roll                                                                    
on,  roll off"  and the  docks  were not  modified for  that                                                                    
option.  She   explained  that  there  was   a  very  narrow                                                                    
turnaround on the boat. She  had been told the forward doors                                                                    
would increase  the kinds  of trucks that  would fit  on the                                                                    
boats  (e.g.  large  RVs) and  the  loading  and  offloading                                                                    
efficiency,  which  would decrease  the  time  spent at  any                                                                    
given port.                                                                                                                     
2:57:40 PM                                                                                                                    
Representative  Wool  surmised  that because  the  road  had                                                                    
never been built,  the department was modifying  the boat to                                                                    
adapt to other purposes.  He referenced Ms. Siroky's earlier                                                                    
statement that  the state provided infrastructure  for roads                                                                    
and   bridges,  but   the  marine   highway  was   the  only                                                                    
infrastructure  where the  transportation  was provided.  He                                                                    
cited  the  Alaska Railroad  as  another  example where  the                                                                    
maintenance and  operation were provided. He  understood the                                                                    
railroad  was  a  separate state  corporation,  but  it  was                                                                    
affiliated with the state.                                                                                                      
2:58:41 PM                                                                                                                    
Vice-Chair Ortiz  considered the  future for AMHS.  He asked                                                                    
what it  meant to put  a vessel  in layup instead  of making                                                                    
repairs. He  asked if  it meant the  vessels would  never be                                                                    
Ms. Siroky  answered that DOT had  put out an RFP  to hire a                                                                    
broker to sell  the Fairweather and Chenega.  The Aurora and                                                                    
Malaspina  were  in layup  and  were  being kept  warm.  She                                                                    
detailed that  a contractor checked  on the boats  daily and                                                                    
the department  had not determined whether  it would dispose                                                                    
of the two  vessels. The department was  keeping its options                                                                    
open  and the  vessels were  being  kept in  good shape  for                                                                    
whatever decision was made.                                                                                                     
Vice-Chair Ortiz  remarked that  the multitude of  needs [in                                                                    
coastal communities] had become  very clear as the breakdown                                                                    
of the  system had occurred. He  highlighted rural Southeast                                                                    
Alaska, Cordova,  and Southwest  Alaska and stated  the need                                                                    
for transportation  infrastructure was  there. He  asked for                                                                    
verification  that  DOT would  only  sell  the Malaspina  if                                                                    
there was an equivalent vessel to fill its spot.                                                                                
Ms. Siroky answered in the  negative. She clarified that DOT                                                                    
had  not yet  decided  to sell  the  [Aurora and  Malaspina]                                                                    
vessels.  She stressed  the  importance  of determining  the                                                                    
AMHS needs going forward -  the individuals on the reshaping                                                                    
study would help with the task  - and she did not believe it                                                                    
would  be appropriate  to say  DOT  would replace  something                                                                    
that   already  existed.   She   explained  that   replacing                                                                    
something that already  existed may not meet  the true needs                                                                    
of the system going forward.                                                                                                    
Representative Knopp  stated there was no  denying there was                                                                    
significant  angst  in Southeast  Alaska  in  regard to  the                                                                    
current  state of  AMHS. He  elaborated that  the governor's                                                                    
budget  rolled  out the  previous  year  had come  close  to                                                                    
eliminating the  entire marine highway system.  He described                                                                    
the system's current  status as zero ferry  service with one                                                                    
small boat operating. He asked  if the Aurora and Malaspina,                                                                    
currently  in warm  storage, could  be  used immediately  if                                                                    
desired. He noted that Ms.  Siroky had stated the boats were                                                                    
currently in  warm storage. He  added that she had  not said                                                                    
the   two  boats   were  undergoing   any  maintenance.   He                                                                    
referenced  the statement  that the  Tazlina was  undergoing                                                                    
maintenance to try  to beat the warranty  expiration. He was                                                                    
concerned  by the  maintenance issue  and the  fact that  so                                                                    
many vessels  were broken  at one time.  He stated  that the                                                                    
commissioner  and  others  responsible for  managing  fleets                                                                    
knew  that everything  was  on a  rotational  cycle. He  was                                                                    
dumbfounded that  the system  was in  its present  state. He                                                                    
asked  about  the  status  of  the  effort  to  replace  the                                                                    
Tustumena.   He  highlighted   that   the  legislature   had                                                                    
appropriated $240  million in federal highway  funds in 2018                                                                    
to go  out to bid on  a four-year project. He  asked for the                                                                    
3:03:09 PM                                                                                                                    
Ms. Siroky  answered that the  Malaspina and the  Aurora had                                                                    
both been  issued what  the U.S. Coast  Guard called  an 835                                                                    
notification  or a  no-sail  notification.  Issues had  been                                                                    
identified with  the boats that required  repairs before the                                                                    
boats could  sail. The steel  replacement on the  Aurora was                                                                    
one  of the  issues and  DOT had  determined the  cost would                                                                    
exceed the  $7 million it  was spending on the  LeConte. The                                                                    
Malaspina  had   some  significant  steel  issues   and  she                                                                    
believed it  would cost $10 million  or more to fix  the no-                                                                    
sail issues found by the Coast Guard.                                                                                           
Ms.   Siroky   continued   to  address   the   question   by                                                                    
Representative  Knopp.  The  department  had  determined  it                                                                    
would   be  irresponsible   to  operate   the  57-year   old                                                                    
Malaspina,   given  that   no  spare   parts  were   readily                                                                    
available. She elaborated that it  did not make sense to put                                                                    
$10 million into a boat that  would then need new engines at                                                                    
a cost  of $30 million.  Additionally, bringing the  ship up                                                                    
to Coast  Guard standards would  cost another $4  million to                                                                    
$5 million. There was an  authorized amount for construction                                                                    
of the  Tustumena. The  department would  be looking  to the                                                                    
reshaping  group  for  information  on  what  the  Tustumena                                                                    
replacement  should  do  and  which  communities  it  should                                                                    
service. She  elaborated that  the information  would factor                                                                    
into  the ship  design.  She asked  Representative Knopp  to                                                                    
repeat his remaining question.                                                                                                  
Representative Knopp asked about  the earlier statement that                                                                    
the Tazlina  was undergoing maintenance  to try to  beat the                                                                    
warranty  expiration.  He  asked   why  the  department  was                                                                    
holding onto the Aurora if it  was in such bad condition. He                                                                    
wondered why the department had  not decided to put the boat                                                                    
on  the market.  He  surmised  there must  be  a reason  for                                                                    
keeping boats in warm storage.                                                                                                  
Ms. Siroky replied that each  boat had its scheduled time in                                                                    
the shipyard. She highlighted her  earlier statement work on                                                                    
ships overlapped in order to  make the most efficient use of                                                                    
technicians  coming to  Alaska to  do the  work. She  stated                                                                    
that nothing  had gone  their way in  the current  year. She                                                                    
elaborated  that there  had been  boats in  layup, overhaul,                                                                    
and out because of a lack  of operating funding. In terms of                                                                    
making a  decision on the  Aurora and Malaspina,  DOT wanted                                                                    
to wait  until the  reshaping group  looked at  the vessels.                                                                    
The department did not feel  it would be responsible to take                                                                    
any options off the table at present.                                                                                           
3:06:46 PM                                                                                                                    
Vice-Chair  Ortiz asked  when the  Malaspina  had last  been                                                                    
overhauled in layup.  He thought that it  had been receiving                                                                    
repair work in Portland  relatively recently. He wondered if                                                                    
he was confusing it with a different boat.                                                                                      
Ms.  Siroky answered  that the  Matanuska had  recently come                                                                    
out of a  two-year repower in Portland.  She elaborated that                                                                    
over  $40  million  had  been  spent  on  new  engines.  She                                                                    
explained  that the  brand new  engines were  having issues.                                                                    
While  the  situation  was not  ideal,  the  department  was                                                                    
grateful the engines were still under warranty.                                                                                 
Vice-Chair  Ortiz asked  for more  detail  on the  Malaspina                                                                    
maintenance timeline.                                                                                                           
Ms. Siroky answered that every  boat was required to undergo                                                                    
an overhaul  annually in order  to receive a  certificate of                                                                    
inspection.  The vessels  were  required to  have a  current                                                                    
certificate of inspection from the Coast Guard to operate.                                                                      
Vice-Chair Ortiz  asked if the significant  issues requiring                                                                    
$45 million  in work had  been discovered during  the boat's                                                                    
layup in the past year.                                                                                                         
Ms.  Siroky answered  that the  Coast  Guard had  identified                                                                    
some significant issues with a  cost of about $10 million to                                                                    
$15 million. The remainder of  the $40 million cost resulted                                                                    
from  replacing the  engines. She  questioned  the logic  of                                                                    
trying to  operate a 57-year-old  with original  engines and                                                                    
no spare parts. She stated that  if it broke, it was broken.                                                                    
She explained  it was the  reason the department  had chosen                                                                    
the  Malaspina. The  Matanuska had  just come  out of  a $47                                                                    
million repower and overhaul.                                                                                                   
3:09:04 PM                                                                                                                    
Co-Chair Johnston asked if AMHS owned docks.                                                                                    
Ms. Siroky  answered that  the State  of Alaska  owned docks                                                                    
through AMHS.                                                                                                                   
Co-Chair Johnston asked if the  docks were under the purview                                                                    
of AMHS or DOT.                                                                                                                 
Ms. Siroky  answered that the  docks were  primarily managed                                                                    
and maintained by AMHS.                                                                                                         
Co-Chair Johnston asked how the docks were doing.                                                                               
Ms. Siroky  answered that the  department was doing  work on                                                                    
the Gustavus and the Tenakee  docks in the current year. She                                                                    
relayed that work was scheduled  on the docks in Skagway and                                                                    
Haines. She did  not know that any work was  taking place on                                                                    
the  Cordova   dock  or  out   the  [Aleutian]   Chain.  The                                                                    
department owned  the dock  in Prince  Rupert, which  was in                                                                    
pretty  poor   condition.  The  department   had  frequently                                                                    
discussed  repairing   the  dock  and  bringing   it  up  to                                                                    
standards;  however, it  had faced  issues with  Buy America                                                                    
Steel and the Canadian location.                                                                                                
Co-Chair Johnston asked  if the dock in  Whittier was state-                                                                    
Ms. Siroky  answered that the  department had a  facility in                                                                    
Co-Chair Johnston  requested a list  of the docks  and their                                                                    
Ms. Siroky replied that the  department would follow up with                                                                    
the information.                                                                                                                
Representative  Carpenter asked  for verification  that even                                                                    
without  a  budget  issue,  nine out  of  ten  vessels  were                                                                    
currently offline. He asked which  of the boats could run if                                                                    
money was not an option.                                                                                                        
Ms. Siroky replied  it would be difficult to  say. She noted                                                                    
that the timing of the  Columbia's overhaul was out of sync,                                                                    
which had caused some problems.  She deferred to Mr. McLaren                                                                    
and  asked  which  vessels had  been  operational  the  past                                                                    
January through March.                                                                                                          
Mr. McLaren  answered that  the department's  current budget                                                                    
only  allowed for  the operation  of two  vessels from  mid-                                                                    
January through the end of  February. One of the two vessels                                                                    
that  had been  scheduled for  operation was  the Matanuska,                                                                    
which was  currently offline. The budget  provided for three                                                                    
vessels  from  March  1  through  mid-April,  including  the                                                                    
Matanuska  and  the Tazlina  (after  the  completion of  its                                                                    
warranty  work  at the  beginning  of  March). He  addressed                                                                    
which vessels  would be available the  soonest. The shipyard                                                                    
had  reported  that  the  Kennicott   was  a  bit  ahead  of                                                                    
schedule. He estimated  that in a perfect  funding world, it                                                                    
may mean the Kennicott could be  back in operation a week or                                                                    
two earlier than  expected. All of the  other vessels needed                                                                    
their work to be complete prior to coming back online.                                                                          
3:13:14 PM                                                                                                                    
Representative Josephson  asked if resources  were unlimited                                                                    
whether there would be vessels  on the water. He thought the                                                                    
burden should be  on DOT to tell  the legislature otherwise.                                                                    
He  viewed  the  issue  as  a  resources  problem  with  the                                                                    
addition of  some bad  luck. He did  not know  whether there                                                                    
was  another time  in the  state's history  where there  had                                                                    
been  no operational  boats, apart  from the  Lituya located                                                                    
down by the Dixon entrance.                                                                                                     
Ms. Siroky answered that if  resources were not an issue the                                                                    
department  would  have  scheduled  things  differently  and                                                                    
there would be boats on the water.                                                                                              
Representative Wool looked at the  ship graphics on slide 12                                                                    
and asked if  the Tazlina and Hubbard vessels  were the same                                                                    
Ms.  Siroky replied  in the  affirmative. She  detailed that                                                                    
the following pairs were sister  ships: Hubbard and Tazlina,                                                                    
Matanuska and Malaspina, and LeConte and Aurora.                                                                                
Representative  Wool asked  if  the forward  door was  being                                                                    
installed on the Tazlina as well [as the Hubbard].                                                                              
Ms.  Siroky responded  in  the  affirmative. The  department                                                                    
would schedule the Tazlina to  have the forward installation                                                                    
after  DOT's  operating  budget  was  solidified.  Once  the                                                                    
legislature   passed  the   budget,  the   department  would                                                                    
determine how to best fit the work in.                                                                                          
Representative Wool stated his  understanding that the state                                                                    
had owned  the Hubbard for a  year, and it had  not yet been                                                                    
used. He asked  how long it would take to  have the new door                                                                    
installed.  He  asked if  it  was  a six-month  or  two-year                                                                    
project. He remarked that the  Tazlina had been used and the                                                                    
Hubbard had not.                                                                                                                
Ms. Siroky deferred the question to Mr. McLaren.                                                                                
Mr. McLaren  answered that the  door project on  the Hubbard                                                                    
had just started.  He detailed that the door  had arrived in                                                                    
December  and  the  installation   would  take  about  three                                                                    
months. The  Hubbard had  not been in  operation due  to the                                                                    
department's  funding  levels;  DOT   could  not  afford  to                                                                    
operate both Alaska Class ferries,  the Tazlina and Hubbard,                                                                    
as well as the LeConte and Aurora.                                                                                              
Representative Wool  asked if the Alaska  Class vessels were                                                                    
large enough to go from Whittier  to Cordova. He asked if it                                                                    
was  doable  for  ferries   without  sleeping  quarters.  He                                                                    
understood that the route was currently without service.                                                                        
Ms.  Siroky  responded that  the  Hubbard  and Tazlina  were                                                                    
capable of making  the run from Whittier to  Cordova and the                                                                    
boats  were compatible  with the  docks in  those locations.                                                                    
The  challenge  with  operating either  of  the  vessels  in                                                                    
Prince William Sound was the  need to meet 12-hour work/rest                                                                    
rules  as dictated  by the  Coast Guard.  The vessels  could                                                                    
potentially make the  run from Cordova to Whittier  in 12 to                                                                    
14 hours, but the boats did  not have a place to accommodate                                                                    
the crew at night.                                                                                                              
3:18:16 PM                                                                                                                    
Representative  LeBon  suggested  that   if  a  vessel  were                                                                    
running from  Whittier to Cordova,  it could stop  in Valdez                                                                    
to break up the trip.                                                                                                           
Ms.  Siroky agreed;  however, the  department would  have to                                                                    
put the  crew up  at night  because the  two vessels  had no                                                                    
crew quarters.                                                                                                                  
Representative LeBon suggested  that accommodations could be                                                                    
made for crew in Valdez.                                                                                                        
Ms. Siroky agreed.                                                                                                              
Representative  Knopp  asked  for  detail  on  the  vessels'                                                                    
purpose and their limited operations.                                                                                           
Ms. Siroky responded that the  vessels were designed to work                                                                    
out of Katzehin, a point about  57 miles north of Juneau, to                                                                    
provide service to Haines and  Skagway. The idea had been to                                                                    
provide a lot  of service on a daily basis  within a 12-hour                                                                    
period. She  explained that moving  many miles up  the coast                                                                    
constituted  a  major  difference  in how  the  boats  could                                                                    
Representative  Knopp asked  if  it  explained the  $400,000                                                                    
supplemental   request  for   unexpected  lodging   for  the                                                                    
Ms. Siroky answered in the  affirmative. She elaborated that                                                                    
when  the  Tazlina  had  been in  operation  over  the  past                                                                    
summer, the department had been  housing crew in Haines. She                                                                    
relayed   that  the   costs  had   been  much   higher  than                                                                    
Representative Knopp  surmised the supplemental  request was                                                                    
to pay  for the past  bills but  there was no  request going                                                                    
3:20:40 PM                                                                                                                    
Representative Wool  remarked that the Alaska  Class vessels                                                                    
were for  a route that  did not  exist because the  road had                                                                    
not been  built. He  asked whether  the department  had been                                                                    
fairly  certain the  road would  be  built at  the time  the                                                                    
boats were commissioned.  He had not known  the planned road                                                                    
had been a done deal. He  was unclear why the department had                                                                    
decided to  spend such a  large amount of money  to purchase                                                                    
such route-specific vessels.                                                                                                    
Ms. Siroky  replied that the department  had been optimistic                                                                    
that the road would be constructed.                                                                                             
Ms. Siroky  briefly pointed to  slide 13 showing the  age of                                                                    
each vessels  in the fleet.  Highlighted the  AMHS reshaping                                                                    
study  on  slide 14.  The  goal  was to  identify  potential                                                                    
reductions   in    the   state's   obligation    for   AMHS.                                                                    
Additionally, the  goal was to  determine how to  operate as                                                                    
effectively and  efficiently as  possible. The  governor had                                                                    
established  a reshaping  workgroup to  be comprised  of the                                                                    
following: a  representative from the aviation  community, a                                                                    
representative  from  the  state's boards  and  highways,  a                                                                    
representative   from   the   marine   transportation,   two                                                                    
legislators (Representative  Louise Stutes and  Senator Bert                                                                    
Stedman),  a  representative  from the  marine  unions,  and                                                                    
three public members. The department  was hoping the members                                                                    
would be announced within the next two to three weeks.                                                                          
3:23:30 PM                                                                                                                    
Vice-Chair Ortiz  referenced the  objective of the  study to                                                                    
identify  potential  reductions  in  the  state's  financial                                                                    
obligation and/or  liability related to AMHS  (slide 14). He                                                                    
had heard there was a  specific number attached to the study                                                                    
and asked for details.                                                                                                          
Ms. Siroky  replied that the  department had  asked Northern                                                                    
Economics  to  look  at  the  governor's  original  proposed                                                                    
operating  budget,  which  included   a  70  to  75  percent                                                                    
reduction. The  department had  asked Northern  Economics to                                                                    
evaluate  the  11  scenarios to  determine  whether  it  was                                                                    
possible to get close to the number.                                                                                            
Vice-Chair  Ortiz asked  if Ms.  Siroky was  referencing the                                                                    
prior year's budget number.                                                                                                     
Ms. Siroky answered she was  referencing the budget proposed                                                                    
by the governor the past year.                                                                                                  
Vice-Chair Ortiz asked  if the proposed number  had been $19                                                                    
million or $20 million.                                                                                                         
Ms. Siroky believed the figure  had been between $20 million                                                                    
and $25 million in general funds.                                                                                               
Co-Chair Foster thanked the presenters.                                                                                         
HB  205  was  HEARD  and   HELD  in  committee  for  further                                                                    
HB 206 was HEARD and HELD in committee for further                                                                              
Co-Chair Foster reviewed the meeting schedule for the                                                                           
following day.                                                                                                                  
3:25:22 PM                                                                                                                    
The meeting was adjourned at 3:25 p.m.                                                                                          

Document Name Date/Time Subjects
FINAL - HFIN 02.10.2020 Overview AMHS Update.pdf HFIN 2/10/2020 1:30:00 PM
DOT Budget Overview/Marine Hwy. Update