Legislature(2021 - 2022)ADAMS 519
03/22/2021 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB76 | |
| Presentation: Alaska Marine Highway System by Department of Transportation and Public Facilities | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 128 | TELECONFERENCED | |
| += | HB 76 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 22, 2021
1:33 p.m.
1:33:05 PM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 1:33 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Bryce Edgmon
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Representative Mike Cronk
PRESENT VIA TELECONFERENCE
Adam Crum, Commissioner, Department of Health and Social
Services; Suzanne Cunningham, Legislative Liaison,
Department of Health and Social Services; Megan Wallace,
Director, Legislative Legal Services, Alaska State
Legislature; Sabrina Javier, Analyst, Legislative Finance
Division; Rob Carpenter, Deputy Commissioner, Department of
Transportation and Public Facilities; Captain John Falvey,
Director, Marine Highway Division, Department of
Transportation and Facilities Maintenance; Matt McLaren,
Business Manager, Marine Highway Division, Department of
Transportation and Public Facilities.
SUMMARY
HB 76 EXTENDING COVID 19 DISASTER EMERGENCY
CSHB 76(FIN) was REPORTED out of committee with a
"do pass" recommendation and with a "do pass"
recommendation and with five previously published
notes, three with zero fiscal impact: FN1(CED),
FN2(DHS), and FN3(DPS); and two with
indeterminate fiscal impact: FN4(MVA) and
FN5(REV).
PRESENTATION: ALASKA MARINE HIGHWAY SYSTEM BY DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES
Co-Chair Merrick reviewed the agenda for the day.
HOUSE BILL NO. 76
"An Act extending the January 15, 2021, governor's
declaration of a public health disaster emergency in
response to the novel coronavirus disease (COVID-19)
pandemic; providing for a financing plan; making
temporary changes to state law in response to the
COVID-19 outbreak in the following areas: occupational
and professional licensing, practice, and billing;
telehealth; fingerprinting requirements for health
care providers; charitable gaming and online ticket
sales; access to federal stabilization funds; wills;
unfair or deceptive trade practices; and meetings of
shareholders; and providing for an effective date."
1:33:35 PM
Co-Chair Merrick reported there were two amendments
remaining. The committee had been discussing a conceptual
amendment by Representative Carpenter to Amendment 7 by
Representative Thompson when the committee adjourned. Megan
Wallace and Andrew Dunmire from Legislative Legal Services
online and available for questions. She asked that for
clarity of the record that the motions in progress on
Friday be removed and restated.
Representative Carpenter WITHDREW his original conceptual
amendment to Amendment 7.
Representative Thompson WITHDREW Amendment 7.
1:35:05 PM
Representative Thompson MOVED to ADOPT Amendment 7 (copy on
file):
Page 1, lines 1 - 9:
Delete all material and insert:
"An Act relating to the state's response to and
recovery from the novel coronavirus disease
(COVID-19) pandemic; making temporary changes to
state law in response to the COVID-19 outbreak in
the following areas: powers delegated to the
governor; powers delegated to the Department of
Health and Social Services; powers delegated to
the Department of Military and Veterans' Affairs;
occupational and professional licensing,
practice, and billing; telehealth; fingerprinting
requirements for health care providers;
charitable gaming and online ticket sales; access
to federal stabilization funds; wills; unfair or
deceptive trade practices; and meetings of
shareholders; relating to informed consent for
COVID-19 vaccines; relating to personal
objections to the administration of COVID-19
vaccines; relating to civil and criminal
liability; and providing for an effective date."
Page 1, line 11, through page 5, line 17:
Delete all material and insert:
"* Section 1. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
LEGISLATIVE INTENT: COVID-19 PANDEMIC RESPONSE.
It is the intent of the legislature that
(1) certain limited authority be granted to
the governor, the Department of Health and
Social Services, the Department of Military
and Veterans' Affairs, and the Department of
Commerce, Community, and Economic
Development to implement the state's
response to the ongoing pandemic related to
the novel coronavirus disease (COVID-19);
and
(2) the governor is authorized to
communicate to federal agencies that the
authorities granted by this Act are in
response to the ongoing pandemic and
statewide public health emergency posed by
COVID-19 and tied to the federal public
health emergency and major disaster
declarations.
* Sec. 2. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
POWERS OF THE GOVERNOR. The governor may
(1) issue an order or regulation necessary
to implement secs. 2 - 10 of this Act;
(2) suspend the provisions of a regulatory
statute prescribing procedures for the
conduct of state business, or the orders or
regulations of a state agency, if compliance
with the provisions of the statute, order,
or regulation would prevent, or
substantially impede or delay, action
necessary to respond to and aid in the
recovery from the pandemic related to the
novel coronavirus disease (COVID-19);
(3) use all available resources of the state
government and of each political subdivision
of the state as reasonably necessary to aid
in the recovery from the pandemic related to
COVID-19;
(4) control ingress to and egress from an
area of the state, the movement of persons
within the area, and the occupancy of
premises in it, as reasonably necessary to
aid in the recovery from the pandemic
related to COVID-19; and
(5) allocate or redistribute food, water,
fuel, clothing, medicine, or supplies as
reasonably necessary to aid in the recovery
from the pandemic related to COVID-19.
* Sec. 3. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
POWERS OF THE DEPARTMENT OF HEALTH AND SOCIAL
SERVICES. Notwithstanding any other provision of
law, the Department of Health and Social Services
may
(1) coordinate, allocate, distribute, and
manage the state's vaccination and
therapeutic response to the novel
coronavirus disease (COVID-19) pandemic; and
(2) continue cooperating with the federal
government on
(A) emergency allotments under the
Supplemental Nutritional
Assistance Program;
(B) blanket waivers enacted by the
United States Department of Health and
Human Services, Centers for Medicare
and Medicaid Services;
(C) waivers under section 1135 of the
Social Security Act; and
(D) waivers under section 1915(c) of
the Social Security Act, including
Appendix K.
* Sec. 4. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
POWERS OF THE DEPARTMENT OF MILITARY AND
VETERANS' AFFAIRS.
(a) The Department of Military and Veterans'
Affairs may
(1) support and assist the Department of
Health and Social Services implementing the
provisions of sec. 3 of this Act;
(2) receive delegations of authority from
the governor allowing activation of the
Alaska organized militia under AS 26.05 .070
to respond to, and aid in the recovery from,
the novel coronavirus disease (COVID-19)
pandemic; and
(3) coordinate with the Federal Emergency
Management Agency to maintain or increase
funding for non-congregate shelters
providing temporary quarantine and isolation
for the following:
(A) a first responder or health care
worker who must quarantine to prevent
exposure to family members;
(B) members of a homeless family
residing in a congregate shelter if at
least one member of the family tested
positive for COVID-19 and requires
isolation;
(C) a homeless individual who has
tested positive for COVID-19 or who has
been exposed to COVID-19 and requires
isolation while awaiting test results;
(D) a homeless shelter occupant;
(E) an individual living with a certain
underlying medical condition identified
by the Centers for Disease Control and
Prevention, United States Department of
Health and Human Services, that places
the individual at increased risk of
severe illness from COVID-19, including
cancer, chronic kidney disease, chronic
obstructive pulmonary disease, Down
syndrome, heart conditions, an
immunocompromised state resulting from
solid organ transplant, obesity, severe
obesity, pregnancy, sickle cell
disease, smoking, and type 2 diabetes
mellitus.
(b) In this section, "non-congregate shelter"
includes hotels, college and university
dormitories, and properly modified nontraditional
structures."
Renumber the following bill sections accordingly.
Page 5, lines 28 - 29:
Delete ", or 60 days after the date the governor
determines, under sec. 2 of this Act, that the
public health disaster emergency no longer
exists, whichever is earlier"
Page 6, lines 2 - 4:
Delete "during the novel coronavirus disease
(COVID-19) public health disaster emergency
declared by the governor on January 15, 2021, as
extended by sec. 2 of this Act,"
Page 6, line 10:
Delete "public health disaster emergency"
Insert "novel coronavirus disease (COVID-19)
pandemic"
Page 6, line 11:
Delete "the earlier of'
Insert "September 30, 2021."
Page 6, lines 12 - 14:
Delete all material.
Page 6, line 16:
Delete "public health disaster emergency"
Insert "novel coronavirus disease (COVID-19)
pandemic"
Page 7, lines 8- 10:
Delete "during the novel coronavirus disease
(COVID-19) public health disaster emergency
declared by the governor under AS 26.23.020 on
January 15, 2021, as extended by sec. 2 of this
Act,"
Page 7, line 31, through page 8, line 1:
Delete "COVID-19 public health disaster
emergency"
Insert "novel coronavirus disease (COVID-19)
pandemic"
Page 8, lines 8 - I 0:
Delete "For the duration of the novel coronavirus
disease (COVID-19) public health disaster
emergency declaration issued by the governor on
January 15, 2021, as extended by sec. 2 of this
Act, the"
Insert "The"
Page 9, lines 10 - 12:
Delete "for the duration of the novel coronavirus
disease (COVID-19) public health disaster
emergency declared by the governor under AS
26.23.020 on January 15, 2021, as extended by
sec. 2 of this Act,"
Page 10, lines 18 - 30:
Delete all material and insert:
"CIVIL AND CRIMINAL LIABILITY. (a) A state
agency, or an employee or agent of the state
acting in an official capacity for the state, is
immune from civil and criminal liability for acts
performed in good faith based on the authority
granted by this Act.
(b) A person is immune from civil and criminal
liability for acts performed in good faith at the
request of a government agency acting on the
authority granted by this Act. This immunity does
not apply to an act or omission that constitutes
gross negligence, reckless misconduct, or
intentional misconduct."
Renumber the following bill sections accordingly.
Page 10, line 31, through page 11, line 4:
Delete all material and insert:
"* Sec. 14. Sections 1 - 4 and 6 - 13 of this Act
are repealed September 30, 2021."
Representative Wool OBJECTED for discussion.
Representative Carpenter MOVED to ADOPT Amendment 1 to
Amendment 7 (copy on file):
Page 1, line 5 of the amendment:
Delete "powers delegated to the governor;"
Page 1, line 21 of the amendment:
Delete "the governor,"
Page 2, lines 6 - 22 of the amendment:
Delete all material.
Page 2, line 23 of the amendment:
Delete "Sec. 3"
Insert "Sec. 2"
Page 3, line 7 of the amendment:
Delete "Sec. 4"
Insert "Sec. 3"
Page 3. line 12 of the amendment:
Delete "sec. 3"
Insert "sec. 2"
Page 4. line 21 of the amendment:
Delete "September 30. 2021"
Page 5, line 27 of the amendment:
Delete"""
Page 5, following line 27 of the amendment:
Insert a new subsection to read:
(c) A person may not be held liable for an
action taken on, before, or after the
effective date of this Act that complies
with or does not comply with an order,
proclamation, or declaration adopted by the
governor to respond to the declaration of a
public health disaster emergency or to
respond to this Act."
Page 6, line 2 of the amendment:
Delete all material and insert:
"* Sec. 13. Sections 1 - 3 and 5 - 12 of this Act are
repealed May 31, 2021."
Representative Wool OBJECTED for discussion.
Co-Chair Merrick invited Representative Carpenter to
discuss his amendment.
Representative Carpenter indicated his amendment had
already been discussed.
Representative Thompson MOVED to divide the question. His
intention by dividing the question was to hold a separate
vote on the portions of the amendment that deleted the
powers of the governor. The applicable portions could be
found in Amendment 1 to Amendment 7 from lines 1-20
[Amendment 1 to Amendment 1 to Amendment 7]. The remainder
of the amendment would be voted on separately [Amendment 1A
to Amendment 1 to Amendment 7].
1:36:00 PM
AT EASE
1:37:58 PM
RECONVENED
There being NO OBJECTION, it was so ordered. The question
was divided.
Representative Merrick clarified that the committee would
first vote on Amendment 1 to Amendment, lines 1-20.
Vice-Chair Ortiz OBJECTED.
1:38:38 PM
AT EASE
1:39:26 PM
RECONVENED
Representative Merrick reiterated that the committee would
be voting on Amendment 1 to Amendment 7, lines 1-20.
A roll call vote was taken on the motion.
IN FAVOR: Rasmussen, Thompson, Carpenter, Johnson
OPPOSED: Ortiz, Wool, Edgmon, Josephson, Merrick, Foster
The MOTION FAILED (5/6). Amendment 1 to Amendment 7, lines
1-20 FAILED to be ADOPTED.
Representative Merrick moved to the second portion of
Amendment 1 to Amendment 7 lines 21-23 on page 1 and lines
1-15 on page 2.
Representative Ortiz OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Carpenter
OPPOSED: Thompson, Wool, Edgmon, Johnson, Josephson,
LeBon, Ortiz, Rasmussen, Foster, Merrick
The MOTION FAILED (1/10). Amendment 1 to Amendment 7 lines
21-23 on page 1 and lines 1-15 on page 2 FAILED to be
ADOPTED.
1:41:41 PM
Representative Thompson returned to his original Amendment
7. He had already explained the amendment and invited the
administration to comment.
Co-Chair Merrick clarified that he was talking about
Amendment 7.
ADAM CRUM, COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES, commented that the Amendment 7 still supported
the governor's position that the disaster declaration was
not needed nor the broad authority contained within the
Alaska Disaster Act. The amendment provided the limited
authority for the state to continue essential response
elements. The administration was supportive of Amendment 7.
1:43:10 PM
SUZANNE CUNNINGHAM, LEGISLATIVE LIAISON, DEPARTMENT OF
HEALTH AND SOCIAL SERVICES, did not have any further
comment outside of what Commissioner Crum stated. The
amendment met the request of the governor to outline
certain authorities to support the continued response to
Covid-19 in Alaska.
Representative Thompson indicated that Amendment 7 deleted
the language inferring a declaration of emergency.
Representative Rasmussen commented that the Senate
leadership had announced a condensed version of SB 56 which
she thought was the companion bill to SB 76. She asked the
administration to highlight Amendment 7 and how similar the
language was to what might be coming out of the Senate
soon. Ms. Cunningham replied that she had not reviewed the
language or a committee substitute for SB 56 yet. She could
provide a written response to the committee once she was
able to review the legislation.
Representative Josephson would not be supporting Amendment
7. He noted that the bill already pared back what was done
in late March. It no longer spoke to medical officers'
standing orders, elections by mail, forbearance of state
loans, or Workers' Compensation presumption. The amendment
did not discuss RCA deadlines, sanitation for retail
sellers, moratoria on disconnection of residential
utilities, moratoria on evictions or foreclosures,
moratoria on repossession of motor vehicles, Permanent Fund
absences, income determination, seafood distribution, and
the homelessness assistance in the Office of
Administration's flexibility. He reiterated that the bill
was already significantly pared down. The bill before the
committee without Amendment 7 provided what the
administration needed.
Representative Thompson noted that the governor's letter of
March 18, 2021, to Speaker Stutes indicated that a disaster
declaration was no longer needed. However, legislation was
needed to support the state in its continued public health
response. However, limited authority to support the state's
response was needed and addressed in the amendment.
Vice-Chair Ortiz MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Thompson, Johnson, LeBon, Rasmussen
OPPOSED: Wool, Carpenter, Edgmon, Josephson, Ortiz,
Merrick, Foster
The MOTION FAILED (4/7). Amendment 7 FAILED to be ADOPTED.
1:48:29 PM
Co-Chair Merrick indicated that Amendment 1 was rolled to
the bottom of the list. Megan Wallace was online from
Legislative Legal Services to speak to the legal opinion
members received in the prior week from Representative
Carpenter.
Representative Josephson MOVED to ADOPT Amendment 1 (copy
on file):
Page 1, line 2, following "pandemic;":
Insert "approving and ratifying declarations of a
public health disaster emergency;"
Page 3, line 21, following "EMERGENCY;":
Insert "APPROVAL, RATIFICATION, AND"
Page 3, line 22, following "EMERGENCY.":
Insert a new subsection to read:
"(a) The declarations of a public health
disaster emergency issued by the governor on
November 15, 2020, December 15, 2020, and
January 15, 2021, are approved and
ratified."
Reletter the following subsections accordingly.
Page 3, line 28:
Delete "(a)"
Insert "(b)"
Page 4, line 5:
Delete "(b)"
Insert "(c)"
Page 11, line 7:
Delete "If this Act takes effect after February
14, 2021"
Insert "(a) Except as provided in (b) of this
section"
Page 11, following line 8:
Insert a new subsection to read:
"(b) Section 2(a) of this Act is retroactive to
November 15, 2020."
Representative Rasmussen OBJECTED for discussion.
Representative Josephson reviewed the amendment. The
amendment stated that the legislature blessed and decreed
that the three emergency declarations from November 15,
December 15, and January 15 were fully ratified. The legal
memo, broadly speaking, stated that it was okay to
retroactively ratify the declarations. He reported that on
the prior Saturday the legislature essentially ratified
earlier Zoom hearings that were held remotely by
non-profits and corporations dating back to March 11. In
other words, the legislature blessed an entire year of
board and non-profit meetings. The vote was unanimous in
both bodies. He was encouraging the legislature to do so
again as it related to the emergency declarations. The
amendment did two very important things. The amendment
stated that the legislature had the sole authority to
extend a declaration. It would also give political cover to
the governor and the legislature.
Representative Rasmussen declined to speak to her
objection.
1:51:39 PM
Co-Chair Merrick asked Ms. Wallace to provide a brief
explanation of the memo that the committee was provided a
copy by Representative Carpenter in the prior week. She
also asked for a detailed description of section 3 which
dealt with the financing of the bill.
MEGAN WALLACE, DIRECTOR, LEGISLATIVE LEGAL SERVICES, ALASKA
STATE LEGISLATURE, responded that regarding the memo about
the extension of a disaster and whether the retroactivity
provision currently contained in the bill would cause a
legal issue given that the state was no longer under an
active disaster declaration, the memo given to the
committee generally went through that the legislature
should consider when inserting a retroactivity provision
into legislation. Retroactivity provisions were not
uncommon legislative tools. From a legal perspective, it
had the effect to go backwards in time, meaning that there
was no break from a legal perspective with respect to a law
that was made to have retroactive effect.
Ms. Wallace noted that one of the most common areas of
concerns for a retroactivity provision was for the
legislature to make sure it was not creating a penalty or
other penal punishment for conduct that was not unlawful at
the time a person acted or did not act a certain way.
Retroactive criminal provisions, for example, generally
were not permitted except in rare circumstances. The
memorandum before the committee generally outlined and
inserted language from the manual of legislative drafting
outlining best practices with respect to retroactivity
provisions. However, as the opinion noted, her opinion was
that the retroactivity provision that was currently in HB
76 would likely survive a challenge if it was challenged.
As the opinion noted it would be an issue of first
impression. There was always some risk that someone could
make a different argument to mount a challenge to this
provision.
Co-Chair Merrick indicated Representative Cronk had joined
the meeting. She asked Ms. Wallace to comment on the
financing plan in Section 3.
Ms. Wallace was generally familiar with the financing plan.
Andrew Dunmire from her office had been specifically
involved with drafting HB 76 and the provisions in front of
legislators. She detailed that Alaska Statute 26.23.020
which was part of the disaster act specifically provided
certain limitations of what the governor could spend in
response to a disaster without legislative approval.
Section 3 was the legislature approving a financing plan
and setting out expectations of the sources of funds that
the governor would utilize in response to a disaster. She
noted that there were some provisions in the Alaska
Disaster Act that allowed the governor to expend from the
Disaster Relief Fund in an effort to respond to a disaster.
The provision in Section 3 more narrowly defined what was
approved for financing and expenditure relating to the
Covid-19 disaster contemplated in HB 76.
1:56:58 PM
Representative LeBon asked the administration online if
they had an opinion regarding the amendment being
discussed. Commissioner Crum indicated the administration
had no opinion on the amendment.
Representative Rasmussen MAINTAINED her OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Wool, Edgmon, Josephson, Ortiz, Foster, Merrick
OPPOSED: Carpenter, Johnson, LeBon, Rasmussen, Thompson
The MOTION PASSED (6/5). Amendment 1 was ADOPTED.
Representative Merrick relayed that the committee had
concluded amendments on HB 76. She asked if there was any
discussion about the bill before moving it from committee.
Representative Carpenter appreciated the comments about the
legislature caring about its responsibility regarding
disaster declarations. He believed that the action the
committee was taking regarding retroactivity was not the
intention of the Alaska Constitution or the Alaska
Statutes. The governor had clearly communicated that he did
not want to have an emergency declaration. The
representative asserted that the committee was using
retroactivity to force an emergency declaration on the
governor. He believed it was a mistake, a bad precedent,
and unnecessary in addressing the Covid crisis.
1:59:55 PM
Vice-Chair Ortiz took a slight exception with the comment
that the governor had clearly expressed his desire not to
have an emergency declaration. He elaborated that it was
about a month ago when the governor submitted HB 76 as a
governor's bill which was an extension of the emergency
declaration. He was unclear what had transpired in the past
month to change the governor's mind.
Representative Rasmussen commented that if the
legislature's goal was to pass a piece of legislation
quickly to the other body and to the executive branch
giving limited powers to the administration as tools for
navigating through the end of the pandemic, she thought the
best option would be to consider it on the full floor with
Amendment 7. She relayed that the public had expressed
strong concern against another disaster declaration. The
administration requested specific limited powers that
allowed the state to navigate out of the economic crisis
that had followed so many business closures from the
pandemic. The bill allowed for the vaccine allocation to
those who wish to vaccinate and suspended regulations that
were needed for some telehealth and airport testing.
Representative Rasmussen remarked that the airport testing
had been very successful in a number of cases that had been
caught. As the state geared up for the summer and hopefully
brought up as many tourists to the state as possible, it
was important that there were measures in place to protect
Alaskans especially in smaller communities that might not
have access to the same medical facilities as there were in
larger cities. Alaska's cases had drastically declined. The
state needed to get businesses back open and give
confidence to Alaskans as everyone went back to life as
normal. She did not think it was appropriate to reference a
bill that the legislature passed in March 2020 prior to the
height of the pandemic. The legislature did not know what
powers the governor would need to protect Alaskans at the
time and what tools the state would need to handle what the
state was likely to face. she appreciated that the bill
before the committee had more limited tools. She still
thought the legislation went a little too far. She hoped
the legislature would consider which battles were the most
important to fight. She opined that the legislature was
fighting to give tools to the administration that they were
not asking for. She was aware of a significant amount of
work before the House Finance Committee including a budget
and some serious fiscal challenges. She hoped the committee
would not dwell too long on the issue moving past it to get
to the serious work of the state.
2:03:45 PM
Representative Josephson used a baseball metaphor to point
out that the state had lost 544,000 people. He argued that
if the administration did not want the powers outlined in
the bill, they had the discretion to not use them. However,
they should be provided to them. The powers helped to
provide local guidance. Alaska had done well with
vaccination, yet there were variants that caused concerned.
He brought up that the capital in Boise, Idaho had people
leaving because of not being able to contain the virus. He
did not think it was unreasonable to pass the pared down
version of the emergency declaration to the floor and the
other body. He noted that there were 17 states with rising
cases presently. Alaska had done well, and he wanted it to
keep doing well. He would be supporting the bill.
Representative Wool agreed with the previous speaker. He
had heard that 17 states were seeing a rise in case counts.
Many of those state had high vaccine rates. He mentioned
the variants that were 56 percent more contagious. He did
not think the pandemic was over. He believed it was a good
idea to provide additional tools to the administration. He
suggested that if the state wanted to recover economically
and be one of the safest states in the country, it should
use the tools at the state's disposal. He supported the
disaster declaration as did the administration a month
prior. He was unsure why the governor had changed his
position. He thought it was better to be on the safe side.
He did not want to do anything that would impede businesses
or the economy from moving forward.
2:07:22 PM
Representative Thompson read a portion of a letter from
Governor Dunleavy dated March 18, 2021:
My administration conducted a thorough analysis to
determine what essential tools were necessary to
continue the State's public health response. We
concluded we needed limited authorities to support
four elements of the state's response:
The ability to allocate and distribute vaccines and
therapeutics.
Limited immunity for officials performing their
duties related to the state's response plan.
The continued use of enhanced telehealth services.
Necessary authority accessing federal relief funding
as they pertain to the state's continued response and
nexus to the federal public health emergency and major
disaster declaration.
Though the above items need legislation, none need a
disaster declaration, nor the broad authorities
contained within the Alaska Disaster Act, to occur.
Despite having made it clear that the State does not
need a disaster declaration, the House Health and
Social Services Committee chose to move the bill, HB
76, forward with a full disaster declaration included.
Representative Thompson stated that in response to the
prior speaker, everyone wanted to see Alaska's businesses
open up and for them to get back to work. However, a full
disaster declaration would give the governor authority to
cut back on all of it. He could things in the future by
shutting down businesses and shutting down travel which was
allowed in HB 76. He was not in support of HB 76 in its
current form.
Representative Edgmon commented that he had more faith in
the administration than the previous speaker. He suggested
that by providing a disaster declaration, the legislature
would simply be giving the governor the option to put it in
motion. In terms of the pandemic, last week there were 27
known variants in the United States, 5 of which were in
Alaska. He noted that only about one-fourth of Alaskans had
been fully vaccinated, and many would choose not to
vaccinate. He argued that Alaska was not out of the woods
with the pandemic.
Representative Edgmon thought it was unfortunate that the
issue had become highly politicized across the country. The
committee had heard a clear demarcation line between people
who viewed the bill as giving the governor shutdown powers
and people that viewed it as an infringement to personal
liberties. He argued in favor of joining a number of
entities who vigorously requested that the legislature keep
the disaster declaration in place. In his view, not giving
the governor the authority would be short-sided, and he
believed he would be shirking his fiduciary duty as a
policy maker to not look at the data objectively. He asked
what would happen if things took a turn for the worse and
the legislature was out of session. He wondered what the
governor would do then. If the variant took hold in Alaska,
the governor did not have the authority to put public
health mandates back into place.
Representative Edgmon continued that as a legislator he had
to look into the future weighing the information in front
of him and making the best decision possible. The majority
of his constituents supported having every protective means
in place. For those in his district that did not support
the bill, he was happy to explain that the legislature was
just giving the governor a tool if he needed it. His
neighbor in Dillingham came to mind who had a snow plow on
his truck. He would not discourage him from keeping the
plow on his truck. He was thinking on the lines of
protection, what could happen, and being prepared.
Representative Edgmon noted being on a Zoom call with Dr.
Anne Zink, who indicated there was still widespread
transmission of Covid-19 in Alaska. The situation had
improved, as the state's death rates were down and
intensive care units were in better shape. However, there
were strains of the variants that were unknown, and it was
unclear how the vaccines would work against them. He
supported giving the governor a way to put a disaster
emergency in place if needed. He hoped the governor would
not have to use it or have to participate in any health
mandates that would restrict individual liberties or what
might happen on a broader scale in the state.
2:14:03 PM
Representative LeBon suspected the bill would pass out of
the House Finance Committee and delivered for further
debate. He thought between the Senate and House versions of
the bill, a grand bargain would be negotiated and delivered
to the governor for endorsement. Ultimately, it would be up
to the administration to accept the authority. He was
pleased the committee amended the bill to offer private
sector business liability protection and thanks members for
their support on the issue. However, he wished the
committee had adopted Representative Thompson's amendment,
because it would have aligned with the administration. The
amendment originated with the help of the administration.
The committee's failure to adopt the amendment created a
slight problem.
Representative Wool thanked Representative LeBon for
introducing the amendment that would help protect small
businesses. As a formal small business owner, he truly
appreciated it and would be supporting the bill with the
amendment in it. He noted the Alaska Chamber of Commerce
supported the bill. He also noted receiving an email of
support from the Fairbanks Economic Development Corporation
(FEDCO). He thought the bill was a pro-business bill piece
of legislation which provided tools.
2:16:23 PM
Representative Johnson told a fishing joke. She was trying
to say that certain tools were not always welcomed. The
governor had indicated he did not want or support the bill.
Although the governor originally introduced the bill, it
had morphed into a different iteration not supported by the
governor. She continued that while she appreciated the
amendment that provided a liability, she thought it kept
small business owners in a state of uncertainty. She would
not be supporting the bill.
Representative Carpenter noted that trust in the governor
had been brought up earlier. He thought the sequencing of
events and the statute as written was important to keep in
mind. If the legislature was looking at a disaster
declaration that was currently in affect, the statute and
the timing of the disaster declaration would matter. The
statute specifically stated that only the legislature could
extend a declaration past 30 days. He asserted it had been
a travesty that the legislature was unable to deal with the
issue previously when other emergencies were declared. The
legislature should have had played a role.
Representative Carpenter commented that as far as timing
went the governor had changed his mind and conditions had
changed. In his letter, the governor stated he was no
longer interested in declaring an emergency. The governor
could accomplish everything he needed without an emergency
declaration in place. The representative indicated that per
statute the legislature had the right to extend an
emergency declaration currently in effect. He suggested
that there were no emergency declarations currently in
effect, nor was the governor requesting one. He agreed with
an earlier comment that politics were being played. He
reiterated that the governor did not want an emergency
declaration presently, yet the legislature was going to
give him one. He thought it was a mistake.
2:20:48 PM
AT EASE
2:22:19 PM
RECONVENED
Co-Chair Merrick asked Sabrina Javier from the Legislative
Finance Division (LFD) to review the fiscal notes.
SABRINA JAVIER, ANALYST, LEGISLATIVE FINANCE DIVISION,
relayed that there were 5 fiscal notes for HB 76. She
indicated that for most of the fiscal notes, LFD saw no
technical issues. However, she noted that the fiscal note
by the Department of Military and Veterans Affairs for the
Office of the Commissioner allocation had an indeterminate
figure. The indeterminate status was due to the unknown
need for state active-duty deployment. She believed the
guard could be deployed for a federal disaster without a
state disaster being declared. She asked the department if
there would be a fiscal impact of deploying the state
defense force without a state disaster being active.
Emergency management responded that if a public health
disaster emergency was not extended, state active duty
could be used for the Covid-related items (contact tracing,
vaccine distribution, and others) because they were still
under the federal declaration DR4533 and the state
declaration AK269.
2:24:43 PM
Representative Thompson clarified that both SB 56 and HB 76
were penned by the administration in January 2021. He
pointed out that it had been more than two months prior.
Since that time, the governor had indicated he did not need
one. He would be a "no" vote.
Co-Chair Merrick stated that it was imperative that
Alaskans understood that HB 76 did not implement any
mandates: no mask mandates; no occupancy restrictions; and
no business or school closures. She emphasized that it also
did not impose mandatory vaccinations.
Co-Chair Foster MOVED to report HB 76 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes.
Representative Thompson OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Edgmon, Josephson, Ortiz, Wool, Foster, Merrick
OPPOSED: Carpenter, Johnson, LeBon, Rasmussen, Thompson
The MOTION PASSED (6/5).
CSHB 76(FIN) was REPORTED out of committee with a "do pass"
recommendation and with a "do pass" recommendation and with
five previously published notes, three with zero fiscal
impact: FN1(CED), FN2(DHS), and FN3(DPS); and two with
indeterminate fiscal impact: FN4(MVA) and FN5(REV).
2:27:02 PM
AT EASE
2:29:07 PM
RECONVENNED
Co-Chair Foster indicated the committee would be hearing a
presentation by DOT.
^PRESENTATION: ALASKA MARINE HIGHWAY SYSTEM BY DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES
2:29:34 PM
ROB CARPENTER, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, introduced himself
and the PowerPoint presentation: "Alaska Marine Highway
System." He began by discussing the challenges faced by the
Alaska Marine Highway System (AMHS) on slide 2. He
highlighted some of the challenges AMHS was facing. He
noted the state's exceptionally aging fleet of vessels.
They were immensely challenging to operate and very
expensive. He mentioned dealing with several turnover and
recruitment issues, especially related to AMHS' declining
budget. The uncertainty of the budget made it challenging
to recruit and maintain employees year-round.
Mr. Carpenter continued that AMHS was also faced with
challenges related to system reliability and vessel
flexibility. He noted in the governor's reshaping workgroup
report that recently came out that system reliability was a
focus and had to do with the aging of the AMHS fleet and
budgetary impacts. He indicated that AMHS had a couple of
new ships that were limited in what they could do and did
not provide the redundancy and reliability needed for the
system. The department was examining ways to improve vessel
flexibility. The collective bargaining agreements provided
some management challenges for the ferry system, because of
their complexity and detail. He relayed that Covid-19 had
been a major problem for the ferry system. However, the
AMHS had success after an initial experience on the M/V
Tustumena. The department implemented a mitigation plan
that had worked well. He mentioned the closure of service
to Prince Rupert. The department was working towards
returning to service in Prince Rupert. It was an ongoing
issue.
2:33:12 PM
Representative Thompson had a question about the collective
bargaining agreements. Specifically, he wondered about the
bar closures on the ferries. He noted that a few years ago
the legislature was trying to figure out how to slow down
the losses to AMHS. The state closed the bars on the
ferries. He had spoken with the Alaska Brewing Company who
claimed they rolled hundreds of kegs of beer onto the
ferries and that any businesses that went through that
amount of beer had to be profitable. He suggested the
possibility of leasing the bar to a local or individual
business. He was told that the bargaining agreement
prevented vendors from going onto the ships including bar
and gift shop vendors. He looked into the issue and found
that the ships' bartenders were being paid $110,000 per
year. He wondered if the circumstances had changed any.
Mr. Carpenter indicated that the bars were closed on the
vessels. He thought Representative Thompson was correct
regarding the bartender salary. He invited Captain Falvey
to make any additional comments.
2:35:16 PM
CAPTAIN JOHN FALVEY, DIRECTOR, MARINE HIGHWAY DIVISION,
DEPARTMENT OF TRANSPORTATION AND FACILITIES MAINTENANCE,
replied that the bars and gift shops on the AMHS ferries
remained closed. The cost to staff the positions were very
costly. He indicated that the system was losing over $1
million per year on bars and giftshops. The circumstances
had not changed. The ferry system served beer and wine on
some vessels and required a liquor license. He reiterated
that not all of the vessels served beer and wine. The
bargaining agreements had not changed and the state could
not outsource the bars and the gift shops.
Representative Thompson recalled that the committee had
been told that the bars were losing $500,000 each year. He
asked if the restrictions on outsourcing remained in
effect. Captain Falvey replied that Representative Thompson
was correct.
Representative Thompson pointed out that at the time
closing the bars was being discussed, the union contract
did not allow workers to be laid off. They continued to
work doing shore duties. It was a point he wanted to
emphasize.
2:37:21 PM
Representative Rasmussen met with one of the unions in
2019. They had mentioned the possibility of cost savings if
the state would work with them on giving them the ability
to handle the scheduling. There was some element that would
have saved the state money. She was curious if any of the
conversations had happened in the prior 2 years between the
state and the union.
Captain Falvey thought the representative was referring to
dispatching of the ferry system's unlicensed IBEW and the
AMEBA staff. He reported that AMHS had not entertained the
idea, as it was a very complex evolution. In the case of
complex contracts, the state had to be very careful how it
dispatched people. Care needed to be taken with payment and
travel. He relayed that AMHS had vacation committees to
pre-discuss when employees on the ship came and went for
the officers and the unlicensed. It helped to alleviate
some of the challenges of dispatching crews.
Representative Rasmussen asked Mr. Falvey to discuss what
happened to the employees when a ship broke down or needed
repair. She wondered if the employees were stranded for
days or weeks.
Captain Falvey responded that if a ship broke down the
employees stayed with the ship until it was time for them
to rotate out. At times AMHS had to do fly-in crew changes.
Currently, AMHS was changing crews every 2 weeks due to
Covid-19. In prior agreements with the unions most of the
crew were changing on a weekly basis. Presently it had
changed to every 2 weeks to reduce Covid exposure for crews
coming and going.
Representative Rasmussen asked what AMHS did when a vessel
went down leaving passengers stranded for days and weeks.
She wondered if a system was in place to make sure people
got home. She had heard concern about the reliability of
the vessels. She thought it would be an increasing problem
if people were stranded. At some point they might not trust
the reliability of the system.
Capitan Falvey responded that AMHS did its best to work
with the passengers that were on a broke down vessel. In
prior years when there were more ships in operation and
there was more flexibility to reroute another ship running
up through the system. Presently, with only 6 ships
running, it limited the system from responding. In severe
cases such as the recent breakdown of the M/V Matanuska
heading to Sitka, the department refunded monies which
allowed passengers to fly to their destination and barge
their vehicles. The ferry system assisted passengers with
getting alternate transportation. In the case of the M/V
Matanuska breakdown, the ship was repaired within a few
days and brought those passengers headed to Haines and
Skagway through the Northland Canal. The Alaska Marine
Highway System dealt with breakdowns on a case-by-case
basis working closely with passengers to help them get
home.
2:42:40 PM
Representative Rasmussen asked Captain Falvey to estimate
how frequently a vessel broke down each year.
Captain Falvey did not think it was as often as a person
might anticipate. Over 12 months, aside from an 8-week
overhaul period in a shipyard, a breakdown or repair need
might occur a couple of times annually. The Alaska Marine
Highway System did its best to keep its vessels running.
Some years were better than others.
Vice-Chair Ortiz returned to the topic of union contracts
and negotiations between management and unions. Based on
the conversation so far, it was his interpretation that
there had been little willingness on the part of the unions
to make concessions regarding the outsourcing of services.
He relayed that over the previous 10 years there had been
numerous occasions where the unions for the ferry system
had made accommodations regarding contracting out. He asked
if the information was true, or whether they had shown no
willingness to cooperate when management made requests.
Captain Falvey asked whether Representative Ortiz was
talking about outsourcing route or negotiating collective
bargaining agreements. He was unsure about the question.
Vice-Chair Ortiz responded that he was speaking about both.
He asked, when the state approached the bargaining groups
about concessions of any sort, if there had been a
willingness on the part of the unions to discuss and make
concessions.
Captain Falvey replied that generally speaking they did.
The ferry system had an outsourcing contract agreement for
the villages out of Juneau or Sitka. In the past, if the
state got into a situation where AMHS needed to provide
extra service, the unions had agreed to outsource Lynn
Canal, Haines, and Skagway. He thought that as the state
negotiated with the bargaining units, there was give and
take. He explained that when the department sat down to
negotiate, management would set out a series of wish lists
to be negotiated. Typically, agreements were reached.
2:46:55 PM
Vice-Chair Ortiz suggested that for someone managing a gift
shop on a vessel, their wages were not specific to being
gift shop managers. Rather, it was because of their
membership with the Inlandboatmen's Union (IBU)and going
through the process of moving up and gaining wage increase
based on experience. He asked if he was correct.
Capitan Falvey responded that, in general, he was correct.
There were different categories of wage descriptions that
were fully bargained. In the case of the gift shops and
bars, all of the IBU staff were placed into other positions
shipboard. There was no loss of employment because of the
shutting of the gift shops. The department moved the
shipboard staff into other positions. As far as fully
burdened wages, he would defer to Matt McClaren.
Vice-Chair Ortiz asked about the bar manager being paid
$110,000 per year. The issue was not the specific job. It
was about a specific person rising to a level of pay based
on their seniority. He asked if he was accurate. Captain
Falvey responded that Representative Ortiz was correct. He
clarified that the number was fully burdened with benefits
not just wages.
2:49:30 PM
Representative LeBon clarified that the gift shop and bar
employees were not laid off. The last time he rode on the
ferry system in 2017 the bar was not open. He asked if that
since there were a number of bargaining agreements, he
suspected one of the agreements had to cover the bar and
gift shop. He asked if there might be another opportunity
to renegotiate the status of the bar and gift shop. He
wondered if the negotiation would be coming up soon.
Captain Falvey replied that it might be an issue that could
be addressed through a letter of agreement. The state was
only a year into the contract with IBU and would be another
year before the state took up negotiations again. The
contracts were typically a duration of 3 years. The only
way around the contract would be to discuss a letter of
agreement.
Representative LeBon admitted his question was not all that
fair. He provided a private sector story whereby he
financed a hotel, bar, and restaurant business when he was
a banker. He had asked the owner about different parts of
his business. He also asked about the restaurant. He asked
how it was to operate the restaurant. The owner indicated
he did not operate the restaurant but leased the space to
someone who ran it. The only rent he charged the
restauranteur was $1 per month. But the restaurant owner
had to provide the best service possible to the building
owner's hotel and bar guests.
2:52:39 PM
Representative Edgmon looked at the 7 challenges listed on
slide 2. He suggested the bottom 2 were situational
challenges. The top five challenges were systemic
challenges that had existed for a significant time. He
thought an item was missing lack of a collective vision
on how to transition AMHS. It had become outmoded, too
expensive, with rotting steel and expensive engines. Costs
were through the roof but the service needs were still
there. He recalled having similar discussions in the 1980s.
He hoped the deputy commissioner or Captain Falvey could
provide some input. He mentioned the governor's 9-member
advisory board. He wanted to see a collective vision and
did not think there had been. He asked if he was correct.
Mr. Carpenter agreed that the strengthening of the
governance toward the AMHS should have been on the list of
challenges, as it was one of the primary recommendations of
the governor's working group study. It was also the driver
behind one of the governor's bills that was introduced.
Representative Stutes also had a bill to create a new
revised board to replace the Marine Transportation Advisory
Board (MTAB). The bill would help to give the board more
business acumen and be more removed from political whims.
Based on where AMHS was presently, the state needed to
regroup and find a path forward. He thought the new board
would be a step in the right direction.
2:56:20 PM
Representative Thompson asked if the inventory from the
bars and gift shops was still in the possession of AMHS.
Captain Falvey indicated the inventories had been
auctioned.
Representative Wool had met someone the other day who had
been a staffer to the transportation committee who
confirmed that there had been talk previously about
reorganizing the ferry system like the railroad to avoid
changing direction every time a new administration takes
office. Many people thought it was a great idea and took
the politics out of the equation. The change would mean a
long-term vision for the system rather than a vision that
only lasted 4 years. He hoped such a plan would move
forward. He had seen the ferry system change significantly
in his previous 6 years in office. He also spoke in support
of bringing back the bars and gift shops on the ferries. He
reiterated that he believed the AMHS should be run similar
to the Alaska Railroad. He asked about assets owned by the
AMHS.
Representative Carpenter agreed that the railroads were off
budget in that they were outside of the executive budget
act. They were also self-sustaining, as they no longer
received state monies. He thought it spoke to the
railroad's ability to generate revenue. The Alaska Marine
Highway System did not have a land base. Although the ferry
system had some state terminals, they did not generate any
monies, and AMHS had expensive ships. He reported that
determining the most sensible governance structure for AMHS
was the largest challenge for the working group. The group
agreed that a corporate structure like the railroad or a
structure insulated from the legislature would be most
ideal. He added that there were some benefits of AMHS being
a part of DOT given the intermodal transportation aspects.
He agreed that the difference between the railroad and AMHS
was substantial. If the system became a corporation or a
separate entity, it would need to become self-supporting.
Otherwise, it would always require a state contribution.
The issue was a challenge.
Representative Carpenter asked for an update on the M/V
Malaspina.
Mr. Carpenter responded that the M/V Malaspina was tied up
in Wards Cove and had been since 2019. The state had
recently divested itself of the two fast vehicle ferries.
He believed the M/V Malaspina was next on the list. There
had been minimal interest from buyers. The department was
also looking at other options such as skuttling the vessel.
He was talking with the Environmental Protection Agency
about taking all of the asbestos out and creating a reef
somewhere. Another option would be to salvage the steel. He
advocated addressing the issue sooner rather than later
because of the cost to the state keeping her tied up.
Representative Carpenter thought cleaning a vessel the size
of the M/V Malaspina to a certain environmental standard
prior to scuttling would be costly. He wondered how much it
would cost. He thought handing the vessel over for scrape
might not cost as much.
Mr. Carpenter estimated that the clean-up cost would be
between $500,000 to $1 million. If someone was interested
in purchasing the M/V Malaspina, the department would
gladly sell the vessel. He thought the department might
want to revisit the possibility of selling the M/V
Malaspina. However, he noted the difficulty the department
had in selling the two fast ferries recently sold. It was
challenging to sell a vessel currently, especially one as
old as the M/V Malaspina.
Representative Carpenter asked if it was possible to give
the vessel away rather than scuttling it or selling it. Mr.
Carpenter believed the department could give it away. He
invited Captain Falvey to comment. Captain Falvey noted
that to sell the vessel to a foreign entity, the department
would need permission from the United States Department of
Transportation. There was a process the state would have to
complete to get permission from the federal government.
3:06:31 PM
Mr. Carpenter turned to slide 3 to review the historical
revenues and operating costs of AMHS. The pink bars on the
bottom represented the revenue generated by AMHS. The dark
blue bars on top represented the unrestricted general funds
(UGF) funded by the state. The red and blue bars combined
equaled the budget for AMHS back to 1991. The dollars were
adjusted for inflation to show the bigger buying power of
older dollars. Next, he pointed to the squiggly yellow line
that showed the fare box recovery rate. On the right
vertical axis, the percentages could be seen. The squiggly
line was at 60 percent and declining in the 1990s to 2000s.
It took a significant drop in the mid-2000s. He highlighted
the bubbles in the dark UGF.
Mr. Carpenter reported that in the later years to the
present day the percentages plummeted as a result of the
revenue impacts from Covid-19. The ferry system had
experienced unrealized revenue of about $45 million. The
final bar in the right showed the FY 22 governor's budget.
The department was anticipating a return of normal revenue.
He explained that with the proposed UGF portion, AMHS would
reach above a 50 percent fare box recovery. It had been the
intent of the last 2 fiscal years prior to the Covid
impact. The graph emphasized that in earlier years AHMS was
at nearly 50 percent - a ratio of 50 percent revenue to 50
percent state funds. There was a change from 2008 to 2019.
In that span, the fast ferries came online; there were some
significant wage increases; and there were huge oil prices
and cost drivers contributing; and there were ports of call
added driving up the need for UGF.
Vice-Chair Ortiz referred to the yellow line which he saw
as a positive sign. He asked the basis of the upward trend.
Mr. Carpenter thought there was a hope of returning to a
somewhat normal schedule. The ferry system demand had
increased from the previous year. He deferred to Matt
McLaren to provide additional information.
3:11:13 PM
MATT MCLAREN, BUSINESS MANAGER, MARINE HIGHWAY DIVISION,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, replied
that when he prepared the budget for the governor to
review, he looked at the ships that would be available and
the circumstances around Covid pandemic. He was directed to
aim for a 50 percent recovery. He reported that everything
he was seeing with summer bookings appeared in line with a
normal fiscal year. The car decks were filling up
especially out of Bellingham, Washington, and the
cross-Gulf routes. There was significant military traffic
due to relocations from the Lower 48 to military bases in
Alaska. Based on what he was seeing, he thought it was a
safe projection. The Alaska Marine Ferry System was also
adjusting its schedule. There would be fewer ships which
would decrease costs. Yet, the system would still meet the
demand for traffic. He would address the topic in another
slide.
Representative Carpenter asked for the dollar figure for
military transfers. He also wondered about revenues
associated with a scenic highway designation. Mr. McLaren
did not have the military total in front of him. He could
pull the data for the previous few years and provide the
information to the committee.
Representative Wool noted that the graph showed an increase
in the recovery rate from a pre-pandemic of 35 percent in
2019. It was the high-water mark from 2012. He wondered how
much of the change from 35 percent to 50 percent was based
on rate increases. He suggested that if the AMHS increased
the rates downward pressure would be placed on the end
user.
Mr. McLaren pointed to the salmon portion of the bar chart
from 2017 through 2019. There were some increases in
revenues over those years due to rate increases. The
following couple of slides would show more detail on
revenue generation. Looking at the FY 22 governor's
proposed budget, the largest factor influencing a jump in
the percentage was that costs were quite a bit lower than
in 2019. The cost recovery percentage, the percentage of
the total expenditures being covered with revenues, was a
higher percentage.
Representative Wool noted that recovery was high but net
sales were not much higher. Rather the expenditures were
less. He asserted that the percentage of cost recovery
should not be confused with increased revenues. Mr. McLaren
responded, "That is correct." He relayed that historically
in the 1990s revenue was pretty consistent. The change was
due to the total expenditures as opposed to revenue
increases.
3:16:41 PM
Representative Rasmussen asked what happened between 06 and
08 where the recovery rate dropped significantly and most
recently spiked up. It gave her pause.
Mr. Carpenter noted that in 07 and 08 oil prices went
through the roof. He reported that there was a combination
that drove the UGF portion, represented in blue, upwards.
Due to high oil prices the cost of fuel was significantly
higher. Also, two new fast vehicle ferries came online
along with added ports of call and operating weeks. At the
time, the state was flush with money allowing the ferry
system to provide more service. Therefore, as revenue
increased and AMHS was incurring more costs, it made the
ratio of the total budget covered by revenue decline from
50 percent to 30 percent. He wanted to see thing return to
the 50 percent level of revenues to the total state budget
while still providing the same level of service with less
ships. He hoped to utilize more capcity.
Mr. Carpenter moved to slide 4 and deferred to Matt
McLaren. The slide showed AMHS' revenue and operating weeks
from FY 13 through FY 22.
Mr. McLaren wanted to look at further detail for the
preceding 10 years of revenue generation compared to the
number of operating weeks represented by the blue line. He
equated operating weeks to the level of service provided by
the ferry system. As the budgets and total funding had
decreased over several years, AMHS provided fewer and fewer
operating weeks since FY 13. For FY 18 and into FY 19 there
was a slight bump up. The ferry system had a fairly level
revenue stream with a slight drop in FY 16. However, from
FY 16 through FY 19 AMHS increased tariffs and implemented
dynamic pricing helping with revenue generation in those
years. In FY 20 and FY 21 the impacts of Covid-19 had
greatly diminished revenues. He indicated that because AMHS
used its revenues to operate in the years the revenues were
generated there were fewer operating weeks in FY 20 and in
FY 21. In FY 22, AMHS was projecting just over $47 million
in revenues at 241.9 weeks of service.
3:21:08 PM
Vice-Chair Ortiz suggested that slide 4 strictly spoke
about revenue generated by the marine highway system.
Revenues went from $24 million up to $47 million. He
wondered how much those numbers were influenced by
breakdowns in the system. He had heard about the historical
data bout breakdowns and about the aging fleet. He wondered
if the system was reliable enough to earn $47 million in
revenues.
Mr. McLaren responded that the projection was based on
reaching the number of operating weeks projected. If the
system had breakdowns or shipyard delays, the revenue
number could be affected. With fewer vessels able to
operate, there were less back up vessels the state could
depend on to capture revenue. He reiterated that the amount
of revenue that could be earned by the ferry system was
dependent on the number of weeks it could provide service.
Representative Carpenter commented on the number of
operating weeks. He did not have an understanding about the
number of operating weeks without knowing the demand. He
wondered if demand was declining based on the number of
weeks the system was operating. He needed context. Mr.
McLaren responded that regarding demand he could provide
some utilization information. However, the following slide
would provide correlation between operating weeks and
revenue generation.
Representative Carpenter was happy to wait until the next
slide. He thought it was unclear whether a trend line that
showed a decrease in operating weeks was good or bad
without knowing the demand for service. He suggested that
if there was less demand for service it might be a good
thing to provide less weeks of service. He needed
additional information. Mr. McLaren noted the department
had some ridership charts that might address questions
about demand and ridership levels.
3:25:20 PM
Mr. McLaren advanced to the bar chart on slide 5: "Revenue
Per Operating Week: FY2011 - FY2020." The slide showed the
correlation between the number of operating weeks and
revenue generation. He was trying to see how much revenue
was generated in each week of operation. He wanted to see
if providing more service generated revenue or did
providing less service make things more efficient while
meeting demand. The chart indicated that from FY 11 to FY
20 there had been a steady increase in the amount of
revenue the system had been able to generate each week of
operation. FY 20 was an exception because of Covid which
impacted the revenue generation per week. In FY 16 through
FY 19 the system showed a steady increase because of
dynamic pricing and the tariff increases. They had helped
generate more revenue in each week of operation.
Representative Carpenter asked Mr. McLaren to provide the
number of sailings that were booked at max capacity. It
would help him to understand the demand. Mr. McLaren could
provide the information.
Vice-Chair Ortiz asked why increasing the number of
operating weeks might not equate to increased demand. He
returned to slide 3. A remark was made how the state had
significant amount of money between FY 09 FY 12 and
poured UGF monies into the marine highway system which
increased the number of operating weeks. However, he asked
if some of the sailings provided services to areas in need
but that were not in high demand and did not generate much
revenue. He surmised that there would not necessarily be a
higher demand overall because although there were areas
that needed service, they had smaller populations which
would not fill the vessels. He asked if he had made a safe
assumption.
Mr. McLaren replied in the affirmative. At the time the
fast ferries started operating but the traffic numbers
remained consistent in those years compared to the most
recent traffic even though AMHS was running two ships with
greater frequency.
3:29:45 PM
AT EASE
3:30:56 PM
RECONVENED
Co-Chair Foster indicated the committee would pick up with
the presentation in the following day at the regularly
scheduled meeting at 1:30 P.M.
ADJOURNMENT
3:31:45 PM
The meeting was adjourned at 3:31 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HFIN DOT - AMHS Overview 03.22.2021.pdf |
HFIN 3/22/2021 1:30:00 PM |
|
| HB 76 CMS Response Letter re Federal Waivers 3-16-21.pdf |
HFIN 3/22/2021 1:30:00 PM |
HB 76 |
| HB 76 Extend COVID Emergency Declaration - Approved FEDC Board 3-19-2021.pdf |
HFIN 3/22/2021 1:30:00 PM |
HB 76 |
| HB 76 Public Testimony Pkt 6 032221.pdf |
HFIN 3/22/2021 1:30:00 PM |
HB 76 |
| HB 76 New Amendment 1 to Amendment 7 031921.pdf |
HFIN 3/22/2021 1:30:00 PM |
HB 76 |
| HB 76 House Leadership Letter to Gov 031721.pdf |
HFIN 3/22/2021 1:30:00 PM |
HB 76 |
| HB 76 Amendments with Actions 032221.pdf |
HFIN 3/22/2021 1:30:00 PM |
HB 76 |