Legislature(1995 - 1996)

04/27/1996 10:12 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         April 27, 1996                                        
                           10:12 a.m.                                          
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Jeannette James, Chair                                         
 Representative Scott Ogan, Vice Chair                                         
 Representative Joe Green                                                      
 Representative Brian Porter                                                   
 Representative Caren Robinson                                                 
 Representative Ed Willis                                                      
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Ivan Ivan                                                      
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 CS FOR SENATE BILL NO. 310(STA)                                               
                                                                               
 "An Act making corrective amendments to the Alaska Statutes as                
 recommended by the revisor of statutes; and providing for an                  
 effective date."                                                              
                                                                               
      - PASSED OUT OF COMMITTEE                                                
                                                                               
 SENATE BILL NO. 256                                                           
                                                                               
 "An Act relating to the offices of mayor and mayor pro tempore of             
 a second class city."                                                         
                                                                               
      - PASSED OUT OF COMMITTEE                                                
                                                                               
 HOUSE BILL NO. 136                                                            
                                                                               
 "An Act mandating the sale of the Alaska Railroad; and providing              
 for an effective date."                                                       
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 CS FOR SENATE BILL NO. 280(FIN) am                                            
                                                                               
 "An Act relating to municipalities; the incorporation of certain              
 boroughs in the unorganized borough; the formation of separate                
 unorganized boroughs; and to taxation in the unorganized boroughs."           
                                                                               
      - BILL POSTPONED                                                         
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  SB 310                                                               
 SHORT TITLE: 1996 REVISOR'S BILL                                              
 SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE COUNCIL                           
                                                                               
 JRN-DATE      JRN-PG            ACTION                                        
 03/14/96      2739    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 03/14/96      2739    (S)   STATE AFFAIRS                                     
 03/14/96      2739    (S)   SECTIONAL ANALYSIS: (S) JOURNAL                   
                             SUPP 11                                           
 04/18/96              (S)   STA AT  4:15 PM BELTZ ROOM 211                    
 04/18/96              (S)   MINUTE(STA)                                       
 04/19/96              (S)   STA AT  1:30 PM BELTZ ROOM 211                    
 04/19/96              (S)   MINUTE(STA)                                       
 04/22/96              (S)   RLS AT  8:40 PM FAHRENKAMP RM 203                 
 04/22/96      3411    (S)   STA RPT  CS  2DP 1NR      SAME TITLE              
 04/22/96      3411    (S)   ZERO FISCAL NOTE (LAA)                            
 04/23/96      3448    (S)   RULES TO CALENDAR  4/23/96                        
 04/23/96      3454    (S)   READ THE SECOND TIME                              
 04/23/96      3454    (S)   STA  CS ADOPTED UNAN CONSENT                      
 04/23/96      3454    (S)   ADVANCED TO THIRD READING                         
                             UNAN CONSENT                                      
 04/23/96      3454    (S)   READ THE THIRD TIME  CSSB 310(STA)                
 04/23/96      3454    (S)   PASSED Y18 N2                                     
 04/23/96      3454    (S)   EFFECTIVE DATE(S) SAME AS PASSAGE                 
 04/23/96      3478    (S)   TRANSMITTED TO (H)                                
 04/24/96      3948    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/24/96      3948    (H)   STATE AFFAIRS                                     
 04/27/96              (H)   STA AT 10:00 AM CAPITOL 102                       
                                                                               
 BILL:  SB 256                                                               
 SHORT TITLE: SECOND CLASS CITY MAYOR                                          
 SPONSOR(S): SENATOR(S) ADAMS BY REQUEST                                       
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 02/02/96      2281    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 02/02/96      2282    (S)   CRA, STA                                          
 03/18/96              (S)   CRA AT  1:30 PM BUTROVICH ROOM 205                
 03/18/96              (S)   MINUTE(CRA)                                       
 03/20/96      2805    (S)   CRA RPT  4DP 1NR                                  
 03/20/96      2805    (S)   ZERO FISCAL NOTE  (DCRA)                          
 04/02/96              (S)   STA AT  3:30 PM BELTZ ROOM 211                    
 04/02/96              (S)   MINUTE(STA)                                       
 04/03/96              (S)   RLS AT  1:15 PM FAHRENKAMP RM 203                 
 04/03/96              (S)   MINUTE(RLS)                                       
 04/03/96      3042    (S)   STA RPT  3DP 2NR                                  
 04/03/96      3043    (S)   PREVIOUS ZERO FN (DCRA)                           
 04/15/96      3243    (S)   RULES TO CALENDAR  4/15/96                        
 04/15/96      3244    (S)   READ THE SECOND TIME                              
 04/15/96      3244    (S)   ADVANCED TO THIRD READING UNAN                    
                             CONSENT                                           
 04/15/96      3244    (S)   READ THE THIRD TIME  SB 256                       
 04/15/96      3245    (S)   PASSED Y20 N-                                     
 04/15/96      3251    (S)   TRANSMITTED TO (H)                                
 04/16/96      3793    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/16/96      3793    (H)   CRA, STATE AFFAIRS                                
 04/23/96              (H)   CRA AT  1:00 PM CAPITOL 124                       
 04/23/96              (H)   MINUTE(CRA)                                       
 04/24/96      3954    (H)   CRA RPT HCS(CRA) 2DP 4NR                          
 04/24/96      3955    (H)   DP: NICHOLIA, IVAN                                
 04/24/96      3955    (H)   NR: AUSTERMAN, ELTON, VEZEY, KOTT                 
 04/24/96      3955    (H)   SENATE ZERO FISCAL NOTE (DCRA)                    
                             3/20/96                                           
 04/27/96              (H)   STA AT 10:00 AM CAPITOL 102                       
                                                                               
 BILL:  HB 136                                                               
 SHORT TITLE: MANDATE SALE OF ALASKA RAILROAD                                  
 SPONSOR(S): REPRESENTATIVE(S) MARTIN                                          
                                                                               
 JRN-DATE      JRN-PG            ACTION                                        
 01/30/95       174    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/30/95       174    (H)   TRA, STA, FIN                                     
 04/03/96              (H)   TRA AT  1:00 PM CAPITOL 17                        
 04/03/96              (H)   MINUTE(TRA)                                       
 04/10/96              (H)   TRA AT  1:00 PM CAPITOL 17                        
 04/10/96              (H)   MINUTE(TRA)                                       
 04/11/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 04/11/96              (H)   MINUTE(STA)                                       
 04/11/96              (H)   MINUTE(STA)                                       
 04/12/96              (H)   FIN AT  1:30 PM HOUSE FINANCE 519                 
 04/12/96      3691    (H)   TRA RPT  CS(TRA) NT 1DP 5NR 1AM                   
 04/12/96      3692    (H)   DP: G.DAVIS                                       
 04/12/96      3692    (H)   NR: WILLIAMS, SANDERS, LONG, JAMES                
 04/12/96      3692    (H)   NR: MASEK                                         
 04/12/96      3692    (H)   AM: BRICE                                         
 04/12/96      3692    (H)   INDETERMINATE FISCAL NOTE (DCED)                  
 04/12/96      3692    (H)   FISCAL NOTE (LAW)                                 
 04/12/96      3692    (H)   2 ZERO FISCAL NOTES (GOV, DOT)                    
 04/12/96      3692    (H)   REFERRED TO STATE AFFAIRS                         
 04/13/96              (H)   FIN AT  1:00 PM HOUSE FINANCE 519                 
 04/16/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 04/16/96              (H)   MINUTE(STA)                                       
 04/18/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 04/18/96              (H)   MINUTE(STA)                                       
 04/23/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 04/23/96              (H)   MINUTE(STA)                                       
 04/25/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 04/25/96              (H)   MINUTE(STA)                                       
 04/27/96              (H)   STA AT 10:00 AM CAPITOL 102                       
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 PAMELA FINLEY, Revisor of Statutes                                            
 Legislative Legal Counsel                                                     
 Legislative Legal & Research Services                                         
 Legislative Affairs Agency                                                    
 130 Seward Street, Suite 409                                                  
 Juneau, Alaska  99801-2105                                                    
 Telephone:  (907) 465-2450                                                    
 POSITION STATEMENT:  Presented CSSB 310(STA)                                  
                                                                               
 MARLA BERG, Legislative Assistant                                             
   to Senator Al Adams                                                         
 Alaska State Legislature                                                      
 Capitol Building, Room 417                                                    
 Juneau, Alaska  99801-1182                                                    
 Telephone:  (907) 465-3707                                                    
 POSITION STATEMENT:  Presented sponsor statement for SB 256                   
                                                                               
 REPRESENTATIVE TERRY MARTIN                                                   
 Alaska State Legislative                                                      
 Capitol Building, Room 502                                                    
 Juneau, Alaska  99801-1182                                                    
 Telephone:  (907) 465-3783                                                    
 POSITION STATEMENT:  Prime sponsor of HB 136                                  
                                                                               
 WILLIAM SHEFFIELD, Former Governor and                                        
   Chairman, Board of Directors                                                
   Alaska Railroad Corporation                                                 
 4442 East 4th Avenue                                                          
 Anchorage, Alaska  99508                                                      
 Telephone:  (907) 337-7526                                                    
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 CLIFFORD PROETZ, Employee                                                     
 Alaska Railroad                                                               
 HC32, Box 6679                                                                
 Wasilla, Alaska  99654                                                        
 Telephone:  (907) 376-5440                                                    
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 JOHN BERG, Employee                                                           
 Alaska Railroad                                                               
 P.O. Box 870002                                                               
 Wasilla, Alaska  99687                                                        
 Telephone:  (907) 376-5893                                                    
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 WILLIAM PHELPS, Employee                                                      
 Alaska Railroad                                                               
 Address Unknown                                                               
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified in opposition to CSHB 136                      
                                                                               
 BRAD PHILLIPS                                                                 
 Seattle, Washington                                                           
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 DALE LINDSEY, Director                                                        
 Alaska Railroad Corporation                                                   
 P.O. Box 107500                                                               
 Anchorage, Alaska  99510-7500                                                 
 Telephone:  (907) 265-2403                                                    
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 LANCE THOMPSON, Employee                                                      
 Alaska Railroad                                                               
 Address Unknown                                                               
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 MR. RUSSACK, Employee                                                         
 Alaska Railroad                                                               
 Address Unknown                                                               
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 AL PARRISH                                                                    
 Holland America Line Westours                                                 
 880 H Street                                                                  
 Anchorage, Alaska  99501                                                      
 Telephone:  (907) 274-9019                                                    
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 JEFF LOWENFELS, President                                                     
 Yukon Pacific Corporation                                                     
 1049 West 5th Avenue                                                          
 Anchorage, Alaska  99501                                                      
 Telephone:  (907) 265-3100                                                    
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 JOHN GAULE, Employee                                                          
 Alaska Railroad Corporation                                                   
 Address Unknown                                                               
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 JEFF COOK, Vice President of External Affairs                                 
 MAPCO Alaska Petroleum, Inc.                                                  
 Anchorage, Alaska                                                             
 Telephone:  (907) 276-4100                                                    
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 MARGARET BRANSON                                                              
 P.O. Box 271                                                                  
 Seward, Alaska  99664                                                         
 Telephone:  (907) 224-3212                                                    
 POSITION STATEMENT:  Testified in writing in opposition to CSHB 136           
                                                                               
 DOROTHY URBACH                                                                
 P.O. Box 249                                                                  
 Seward, Alaska  99664                                                         
 Telephone:  (907) 224-3088                                                    
 POSITION STATEMENT:  Testified in writing in opposition to CSHB 136           
                                                                               
 LAVERL SCHILLINGBERG, Employee                                                
 Alaska Railroad                                                               
 Address Unknown                                                               
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified in opposition to CSHB 136                      
                                                                               
 MICHAEL O'NEIL                                                                
 Moose Pass, Alaska  99631                                                     
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified in opposition to CSHB 136                      
                                                                               
 ROBERT CACY                                                                   
 Moose Pass, Alaska  99631                                                     
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified in opposition to CSHB 136                      
                                                                               
 JACK BURTON, Member                                                           
 Alaska Railroad Board of Directors                                            
 Address Unknown                                                               
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified in opposition to CSHB 136                      
                                                                               
 BERTELLO BUMANGLAG                                                            
 Moose Pass, Alaska  99631                                                     
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 CHARLES DILLARD, Employee                                                     
 Alaska Railroad                                                               
 Address Unknown                                                               
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified in opposition to CSHB 136                      
                                                                               
 CHRISTINE HESTNES                                                             
 Address Unknown                                                               
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 LORRAINE RISCH, Employee                                                      
 Alaska Railroad                                                               
 Address Unknown                                                               
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 LARRY BURTON, Employee                                                        
 Alaska Railroad                                                               
 Moose Pass, Alaska  99631                                                     
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 ED RIVERA, President                                                          
 American Federation of Government Employees                                   
    and Employee, Alaska Railroad                                              
 Moose Pass, Alaska  99631                                                     
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 CHRIS BROOKS, Employee                                                        
 Alaska Railroad                                                               
 Moose Pass, Alaska  99631                                                     
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified in opposition to CSHB 136                      
                                                                               
 JO ANN MCDOWELL                                                               
 Moose Pass, Alaska  99631                                                     
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified in opposition to CSHB 136                      
                                                                               
 JEFF BUSH, Deputy Commissioner                                                
 Department of Commerce & Economic Development                                 
 P.O. Box 110800                                                               
 Juneau, Alaska  99811-0800                                                    
 Telephone:  (907) 465-2500                                                    
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 KIRBY ROUNDTREE, Employee                                                     
 Alaska Railroad                                                               
 Fairbanks, Alaska                                                             
 Telephone:  Unknown                                                           
 POSITION STATEMENT:  Testified on CSHB 136                                    
                                                                               
 MARK HICKEY, Lobbyist                                                         
 211 4th Street, No. 108                                                       
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 586-2263                                                    
 POSITION STATEMENT:  Commented on Alaska Railroad purchase                    
                                                                               
 BOB EVANS, Lobbyist                                                           
 Montana Rail Link                                                             
 2822 Iliamna Avenue                                                           
 Anchorage, Alaska  99517                                                      
 Telephone:  (907) 586-6252                                                    
 POSITION STATEMENT:  Commented on CSHB 136                                    
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-61, SIDE A                                                            
 Number 0015                                                                   
                                                                               
 The House State Affairs Committee was called to order by Chair                
 Jeannette James at 10:12 a.m.  Members present at the call to order           
 were Representatives Robinson, Porter, Willis, Green and James.               
 Members absent were Representatives Ivan and Ogan.                            
                                                                               
 CSSB 310(STA) - 1996 REVISOR'S BILL                                         
                                                                               
 The first order of business to come before the House State Affairs            
 Committee was CSSB 310(STA).                                                  
                                                                               
 CHAIR JEANNETTE JAMES called on Pamela Finley, Legislative Affairs            
 Agency, to present SB 310.                                                    
                                                                               
 Number 0035                                                                   
                                                                               
 PAMELA FINLEY, Revisor of Statutes, Legislative Legal Counsel,                
 Legislative Legal and Research Services, Legislative Affairs                  
 Agency, explained that SB 310 was designed to fix the mistakes                
 found in the Alaska Statutes.  Some of the mistakes went back to              
 the 1962 codification while some were more recent.  It was also               
 intended to remove obsolete provisions.  She called it a boring               
 bill.                                                                         
                                                                               
 Number 0110                                                                   
                                                                               
 REPRESENTATIVE BRIAN PORTER asked Ms. Finley if there were any                
 substantive changes or was it boring?                                         
                                                                               
 Number 0121                                                                   
                                                                               
 MS. FINLEY replied it was a boring bill.  There were a few                    
 substantive matters in the criminal sections where mistakes were              
 being fixed.  There were no policy changes, however.                          
                                                                               
 Number 0163                                                                   
                                                                               
 REPRESENTATIVE ED WILLIS asked Ms. Finley if there were any                   
 repealers?                                                                    
                                                                               
 Number 0176                                                                   
                                                                               
 MS. FINLEY replied yes.  She directed the committee's attention to            
 the last page of the sectional analysis and said it primarily                 
 repeals obsolete or duplicative provisions.                                   
                                                                               
 Number 0217                                                                   
                                                                               
 REPRESENTATIVE WILLIS moved that CSSB 310(STA) move from the                  
 committee with individual recommendations and attached zero fiscal            
 note.  Hearing no objection, it was so moved from the House State             
 Affairs Committee.                                                            
                                                                               
 SB 256 - SECOND CLASS CITY MAYOR                                            
                                                                               
 The next order of business to come before the House State Affairs             
 Committee was HCS SB 256(CRA).                                                
                                                                               
 CHAIR JAMES called on Marla Berg, Legislative Assistant to Senator            
 Al Adams, to present the sponsor statement for SB 256.                        
                                                                               
 Number 0300                                                                   
                                                                               
 MARLA BERG, Legislative Assistant to Senator Al Adams, read the               
 following sponsor statement into the record.                                  
                                                                               
 "Under current law, the mayor of a second class city may not be               
 elected by the voters.  Mayors are elected by and from the council          
 and serve a one-year term, unless a longer term is approved by                
 ordinance.                                                                    
                                                                               
 "This bill, introduced at the request of the City of Savoonga and             
 endorsed by the Alaska Municipal League, would amend the law so               
 that voters in a second class city would have the option of                   
 directly electing their mayor.                                                
                                                                               
 "This bill does not change the qualifications for mayor, powers and           
 duties of the mayor or give the mayor the veto power in second                
 class cities."                                                                
                                                                               
 Number 0349                                                                   
                                                                               
 CHAIR JAMES announced she discussed SB 256 with Representative Ivan           
 Ivan before he left and he supported it.                                      
                                                                               
 Number 0357                                                                   
                                                                               
 REPRESENTATIVE CAREN ROBINSON asked what if the city wanted to                
 continue with the status quo?                                                 
                                                                               
 MS. BERG replied, "that's the way it would be."                               
                                                                               
 REPRESENTATIVE ROBINSON confirmed the bill allowed for it but did             
 not mandate it.                                                               
                                                                               
 MS. BERG responded that was correct.                                          
                                                                               
 Number 0376                                                                   
                                                                               
 REPRESENTATIVE PORTER understood that currently council members are           
 elected and one of them is elected mayor by the rest of the council           
 members.                                                                      
                                                                               
 MS. BERG said that was correct.                                               
                                                                               
 REPRESENTATIVE PORTER asked Ms. Berg if the bill would allow for an           
 additional position?                                                          
                                                                               
 Number 0401                                                                   
                                                                               
 MS. BERG said no, it wouldn't allow for an additional position.               
 One of the city council members would still end up as mayor, but              
 the people would vote instead of the council members.                         
                                                                               
 Number 0410                                                                   
                                                                               
 REPRESENTATIVE PORTER said it would have to be a simultaneous                 
 election.                                                                     
                                                                               
 Number 0420                                                                   
                                                                               
 MS. BERG remarked that based on the bill, the city council would be           
 elected first, followed by a second election for mayor.                       
                                                                               
 REPRESENTATIVE PORTER wondered what would happen if nobody decided            
 to run for mayor.                                                             
                                                                               
 Number 0450                                                                   
                                                                               
 CHAIR JAMES replied that happened to a city in her district where             
 nobody was willing to run for mayor.                                          
                                                                               
 Number 0469                                                                   
                                                                               
 REPRESENTATIVE ROBINSON moved that HCS SB 256(CRA) move from the              
 committee with individual recommendations and attached zero fiscal            
 note.  Hearing no objection, it was so moved from the House State             
 Affairs Committee.                                                            
                                                                               
 HB 136 - MANDATE SALE OF ALASKA RAILROAD                                    
                                                                               
 The next order of business to come before the House State Affairs             
 Committee was CSHB 136(STA) (9-LS0438/R).                                     
                                                                               
 CHAIR JAMES called on Representative Terry Martin, sponsor of HB              
 136.                                                                          
                                                                               
 Number 0509                                                                   
                                                                               
 REPRESENTATIVE TERRY MARTIN explained it was past the tenth                   
 anniversary of the purchase of the Alaska Railroad from the federal           
 government.  He further explained the federal government poured a             
 lot of money into the railroad for close to 100 years before it was           
 bought.  Ironically, the railroad was first offered for $100                  
 million, but it was felt the price was too high and the state ended           
 up paying $20 million including the land.  It had proven to be a              
 great asset to Alaska.  Now, was the opportune time to look again             
 at what the state had for an orderly transfer of the land.  The               
 Alaska Railroad Corporation was being cooperative and he did not              
 expect it to cost that much to take a look at what the state's                
 future was in the railroad.  He was excited about it because he               
 felt that as long as the state owned the railroad, it wouldn't be             
 expanded.   He stated the proposed committee substitute was                   
 substantially different from the original bill; he didn't mind the            
 changes, however.  It created a five person commission that would             
 objectively look at the railroad and the land involved.  He had               
 spoken with Speaker of the House, Gail Phillips, about the                    
 possibility of allowing the Legislative Budget & Audit Committee to           
 objectively take a look at it.  As a result, Randy Welker,                    
 legislative auditor, came up with four recommendations, one of                
 which was that perhaps the Budget & Audit Committee should not be             
 involved so directly.                                                         
                                                                               
 Number 0761                                                                   
                                                                               
 CHAIR JAMES asked Representative Martin if he had any drafted                 
 amendments?                                                                   
                                                                               
 REPRESENTATIVE MARTIN replied any minute now the amendments would             
 be available.                                                                 
                                                                               
 Number 0761                                                                   
                                                                               
 CHAIR JAMES referred committee members to the memorandum dated                
 April 25, 1996, from Legislative Auditor, Randy S. Welker,                    
 referring to draft O.  She explained it would also apply to draft             
 R.  She asked for a motion to accept draft R as the working                   
 document.                                                                     
                                                                               
 Number 0844                                                                   
                                                                               
 REPRESENTATIVE PORTER moved that CSHB 136(STA), 9-LS0438/R be                 
 adopted for consideration.  Hearing no objection, it was so                   
 adopted.                                                                      
                                                                               
 WALT WILCOX, Legislative Assistant, explained for clarification               
 purposes, there would not be four amendments, but rather there                
 would be a committee substitute which would include the four                  
 amendments.                                                                   
                                                                               
 CHAIR JAMES said the committee would take a look at the forthcoming           
 committee substitute; however, amendments could be made to the                
 committee substitute draft R that was just adopted by the                     
 committee.                                                                    
                                                                               
 Number 0950                                                                   
                                                                               
 CHAIR JAMES said she was concerned if the legislature had the                 
 authority to spend the Alaska Railroad Corporation's money.  It was           
 explained to her by George Utermohle, Attorney, Legislative Affairs           
 Agency, that the legislature did have the authority to appropriate            
 money to the railroad each year, if the legislature opted to do               
 that.  It has been set aside to allow the corporation to manage its           
 own funds in the past.  However, the legislature had not given up             
 their authorization for appropriation  of funds, which is the prime           
 responsibility as a legislature.   She explained another concern is           
 that the legislature is not managing the cash flow of this business           
 nor are they considering the cash flow either by taking out a                 
 certain amount of money for a particular purpose.  Personally, she            
 wouldn't like someone telling her she had to spend a particular               
 amount of money when she had already obligated those funds for                
 other things.  Furthermore, there were no sideboards included in              
 the legislation.  There would be costs for the commission including           
 daily costs plus per diem and travel expenses, but there was no               
 schedule of the total cost.  She was also concerned about the cost            
 of the appraisal.  It would probably be necessary to use an outside           
 agent for that.  The bill also said the process was exempt from the           
 Administrative Procedures Act, which means it is not necessarily a            
 bid, but finding someone to do the appraisal.  Again, if the Alaska           
 Railroad Corporation was forced by pay these costs out of their               
 working capital, she was concerned about causing a serious cash               
 flow problem.  She had asked Mr. Utermohle if the legislature could           
 appropriate funds out of the interest on the money that was on                
 deposit for the Wishbone Hill cars, which was part of the                     
 railroad's assets.  It was her understanding the principal or the             
 interest had never been touched and it was her thinking it needed             
 to be reappropriated before any of that money was spent.                      
                                                                               
 Number 1182                                                                   
                                                                               
 REPRESENTATIVE MARTIN believed the legislature had the                        
 responsibility to oversee the expenditures of the Alaska Railroad             
 Corporation.  He explained that audits had been done sporadically             
 over the last two or three years as problems arose, and in fact               
 there was an audit underway now.  He believed the legislature had             
 fulfilled it's responsibility on behalf of the citizens in                    
 monitoring the expenditures and contracts.  He noted the                      
 legislature had the authority to subpoena the records, but he                 
 didn't feel that was necessary.   The state spends state money and            
 okays federal money on a regular basis for the Alaska Railroad                
 Corporation.  Therefore, "we can giveth, we can taketh."  He                  
 believed the Wishbone money could be used since the legislature had           
 the oversight of approval for expenditures.                                   
                                                                               
 Number 1348                                                                   
                                                                               
 CHAIR JAMES wondered if Legislative Budget and Audit was going to             
 oversee the commission proposed in the committee substitute.                  
 Although it wasn't spelled out, she assumed that one member of the            
 commission would be the leader, but her concern was who was going             
 to determine there was not enough money in the railroad operating             
 fund to pay for the expenses of the commission.  She wondered again           
 if Legislative Budget and Audit would have the authority to oversee           
 the expenditures.  She suggested that a more responsive amount of             
 money would be the interest accumulating on the Wishbone Hill fund.           
                                                                               
 Number 1410                                                                   
                                                                               
 REPRESENTATIVE MARTIN replied Legislative Budget and Audit could              
 only look and that's why Mr. Welker did not want the commission as            
 part of Legislative Budget and Audit.  It needed to remain separate           
 to maintain an objective outlook if anything went astray.  It would           
 on behalf of the legislature follow the progress of the commission.           
                                                                               
 Number 1484                                                                   
                                                                               
 REPRESENTATIVE PORTER assumed the committee substitute, draft R,              
 did not have a cap on the expenditures.                                       
                                                                               
 Number 1498                                                                   
                                                                               
 REPRESENTATIVE MARTIN replied there was a cap in a general sense in           
 that the Alaska Railroad Corporation said it would be about $2                
 million.  He explained that approximately $1.2 million was expended           
 when the state bought the railroad from the federal government, so            
 it wasn't necessary to re-invent the wheel, but rather just upgrade           
 the available reports.                                                        
                                                                               
 Number 1518                                                                   
                                                                               
 REPRESENTATIVE PORTER wondered if the legislation couldn't provide            
 for Legislative Budget and Audit to determine the sideboards and              
 give it the authority to review the expenditures in compliance with           
 the sideboards.  He felt it would be appropriate to give the                  
 committee that authority; however, he did not want to issue a blank           
 check.                                                                        
                                                                               
 Number 1567                                                                   
                                                                               
 CHAIR JAMES said when money was being taken from the working                  
 capital of an ongoing business, someone within that business had to           
 have some control over what can be paid and when it can be paid.              
 The committee substitute did not provide those safeguards and                 
 "essentially we could break the railroad by doing just this, if we            
 don't do it in a cautiously, careful way."  She commented that if             
 the legislature was going to go forward with this, she would be a             
 lot more comfortable if the legislature assigned where the money              
 was going to come from, as opposed to coming out of their working             
 capital.                                                                      
                                                                               
 Number 1605                                                                   
                                                                               
 REPRESENTATIVE PORTER thought that within the framework of phase              
 one provided by this legislation, would be a requirement that the             
 Legislative Budget and Audit Committee assess the Alaska Railroad's           
 ability to pay for this so it did not adversely affect the daily              
 operations.                                                                   
                                                                               
 Number 1627                                                                   
                                                                               
 REPRESENTATIVE MARTIN referred to Section 1(d) of Randy Welker's              
 memorandum dated April 25, 1996, from Randy S. Welker, Legislative            
 Auditor in which he suggested that the Alaska Railroad                        
 Corporation's receipts be used.  Representative Martin, however,              
 agreed with Chair James' suggestion to look into using the Wishbone           
 Hill money.  He explained that that money had been set aside over             
 four years ago for the Japanese company who was going to do some              
 coal mining in the Palmer area, but the project didn't go through.            
                                                                               
 Number 1666                                                                   
                                                                               
 REPRESENTATIVE ROBINSON asked Representative Martin why the                   
 legislature, through a resolution, could not direct the existing              
 board to begin the process of evaluating the concept of selling the           
 railroad?                                                                     
                                                                               
 Number 1700                                                                   
                                                                               
 REPRESENTATIVE MARTIN replied the major reason was to maintain an             
 objective evaluation.  Some people, including himself felt that the           
 railroad commission might have a selfish interest.  The commission            
 objected before when there was the potential to sell the railroad             
 about five years ago to an outside group.  He reiterated an                   
 objective approach was needed for the evaluation process.                     
                                                                               
 Number 1772                                                                   
                                                                               
 REPRESENTATIVE ROBINSON asked if it was possible the board could              
 determine to hire an independent person to evaluate the concept of            
 selling the railroad?                                                         
                                                                               
 Number 1793                                                                   
                                                                               
 REPRESENTATIVE MARTIN reiterated the entire idea was to try to keep           
 it separate.                                                                  
                                                                               
 Number 1834                                                                   
                                                                               
 REPRESENTATIVE ROBINSON asked Representative Martin how the                   
 appointments to the Alaska Railroad Commission would be managed?              
 She wondered if a current board member could be appointed.                    
                                                                               
 Number 1876                                                                   
                                                                               
 REPRESENTATIVE MARTIN said it was his thought to be objective and             
 stay neutral with the ultimate goal of doing something on behalf of           
 the people during this tenth anniversary.                                     
                                                                               
 REPRESENTATIVE ROBINSON asked Representative Martin what type of              
 expertise he was considering for the appointment to the commission?           
                                                                               
 REPRESENTATIVE MARTIN replied the Speaker of the House of                     
 Representatives and the President of the Senate have conveyed to              
 him they would be appointing a top person to the commission.                  
                                                                               
 Number 1977                                                                   
                                                                               
 REPRESENTATIVE WILLIS explained that in 1996 the railroad received            
 $10 million from the federal government.  He was concerned if the             
 railroad was sold that revenue source would disappear.  He                    
 announced he had received a lot of phone calls from his                       
 constituents concerned about the retirement of the several hundred            
 employees who 10 or 12 years ago were given the option of staying             
 in the federal retirement system or going to the railroad system.             
 He understood that was a once-in-a-lifetime option.  These several            
 hundred people are now really concerned as to what will happen with           
 their retirement system.  He said there had also been a lot of                
 concern expressed about the labor agreements, both from the                   
 standpoint of the employees who operate the railroad and the                  
 managerial positions, some of which are under contract.  He was               
 further concerned about the objectivity of the fair market value.             
 Lastly, he was concerned about the traditional use of the railroad.           
 The railroad had been a major factor in war and peace to build the            
 state.  He did not want to see the state dismiss the traditional              
 uses of the railroad.                                                         
                                                                               
 Number 2145                                                                   
                                                                               
 REPRESENTATIVE MARTIN stated he too, had received many calls from             
 people concerned about losing their jobs or the railroad being shut           
 down.  He said the railroad would not shut down.  Once the                    
 commission had been set up, they can see whether or not the                   
 railroad can run on its own.  Presently, it's being subsidized;               
 therefore, it was not making it on its own.  Some believe it would            
 shut down in five years, for example, if it continued at the status           
 quo.  There was an agreement that indicated the federal pension               
 program would continue for the approximately 149 people in that               
 program.  Individuals in the other two pension programs would be              
 protected.  The future of the railroad and the employees needed to            
 be considered and a potential buyer would take that into                      
 consideration.  He believed a private enterprise would expand the             
 railroad.  He referred to Representative Willis' concern about fair           
 market value and said of course, fair market value was the goal.              
 The value will never be known if this is not looked at further.  He           
 believed money would be made on the land.  With regard to                     
 tradition, he could not promise that the tradition would continue.            
                                                                               
 Number 2303                                                                   
                                                                               
 CHAIR JAMES stated that in private industry when a business is                
 sold, one of the reasons why almost all the negotiations are done             
 in secret is because selling a business of any kind disrupts the              
 normal flow of business.  Employees get antsy, contractors and                
 customers are hesitant until they assess the stability, etc.  She             
 sympathized with the railroad employees with respect to the                   
 instability of their jobs.  Likewise, it was going to be difficult            
 to negotiate with users for long term commitments while this was in           
 a state of flux.  Therefore, she was willing to act quickly to                
 prevent as much anxiety as possible.  She understood that this                
 issue was a public one however.  She disagreed with Representative            
 Martin; the state has not been subsidizing the railroad because the           
 money for the Wishbone Hill was still sitting there.  The $10                 
 million from the federal government was the first subsidy which was           
 used for the rails.  She believed that the corporation was doing              
 quite well.   Some of the loss was attributed to the total                    
 reorganization of the Alaska Railroad Corporation, which in many              
 cases there is a cost associated with a reorganization.                       
                                                                               
 CHAIR JAMES called on the first witness via teleconference in                 
 Anchorage, Governor Bill Sheffield.                                           
                                                                               
 Number 2433                                                                   
                                                                               
 GOVERNOR BILL SHEFFIELD, Chairman, Board of Directors, Alaska                 
 Railroad Corporation, said this whole issue was troublesome to him.           
 He explained SB 64 mandated the sale of the Alaska Railroad for a             
 minimum of $34 million in a short period of time.  He explained it            
 took 4 years to purchase the railroad from the federal government             
 and 10 years to discuss it, so to sell it in a couple of weeks                
 didn't make a lot of sense to him.                                            
                                                                               
 TAPE 96-61, SIDE B                                                            
 Number 0001                                                                   
                                                                               
 REPRESENTATIVE SCOTT OGAN joined the meeting at 11:00 a.m.                    
                                                                               
 GOVERNOR SHEFFIELD understood that according to this legislation,             
 the evaluation had to be completed by November 1, 1996, but the               
 task force doesn't report to the Governor or the legislature until            
 January 13, 1997.  It seemed to him "the cart was before the                  
 horse."  He suggested a larger task force including the users,                
 engineers, stewards and representation from the visitor industry.             
 He explained this was the first year the railroad did not have to             
 borrow money in January to meet the payroll.  Every person who has            
 operated a business knows that most businesses do less business in            
 the winter time so it is not uncommon to have to borrow money                 
 during the winter season.  The railroad has made a profit every               
 year except for two since it was bought from the federal                      
 government.  He said the railroad is a performing asset; it doesn't           
 come back to the legislature and request funds to operate the                 
 railroad.  He explained that every state that has state-owned                 
 passenger service has been participating for several years in a               
 $2.7 billion fund, except the Alaska state-owned railroad because             
 it didn't qualify.  Last year, Congress changed the law so the                
 railroad qualifies to participate in that $2.7 billion fund which             
 amounts to approximately $5.7 million a year.  He didn't believe              
 the railroad should be condemned for their participation in this              
 fund - it is not a subsidy, it's to upgrade the railroad.  It                 
 wasn't new money; a little was taken from each of the other states            
 to make up the $5.7 million in the formula program for the                    
 railroad.   He noted the formula didn't get out of the Conference             
 Committee in Congress last year because of the budget battle, but             
 Senator Stevens has placed that same language for the formula in              
 the Amtrak bill so maybe the railroad can participate in the annual           
 appropriation.   It was the first time the railroad ever received             
 a capital grant.  The funds are administered through the Federal              
 Railway Administration and are to be used only for upgrades.                  
                                                                               
 GOVERNOR SHEFFIELD further said Governor Knowles had suggested that           
 Governor Sheffield form a committee made up of users, employees,              
 communities, etc., to determine how Alaskans feel about the                   
 railroad and report back next year.  He noted he would do that if             
 there was no legislative action this year.   He didn't believe it             
 made good sense to rush into this now, spend a lot of money and               
 give the railroad away.  He explained the railroad participates in            
 the Alaskan economy in a major way; it hauls coal from the Usibelli           
 mines plus fuel.  The railroad is also involved heavily in the                
 travel industry, carrying over 500,000 passengers last year.  It              
 hauls gravel from Wasilla into Anchorage serving gravel companies             
 for construction.  It also serves communities in the winter time              
 that have no other access except by rail.  The railroad is                    
 developing real estate in all the communities served and currently            
 owns 38,000 acres of which about 16,000 (indisc.) right-of-way and            
 the rest of it is located in Healy, Whittier, Seward, Anchorage and           
 Fairbanks.                                                                    
                                                                               
 GOVERNOR SHEFFIELD said this issue raises a host of public policy             
 questions.  He noted it was nearly impossible to ask the railroad             
 to pay all the costs associated with this legislation.  Their                 
 profits are used for upgrading and maintenance purposes.  In                  
 addition, there are 550 year-round employees and an additional 150            
 in the summer time.  The railroad was bought so that it could                 
 expand into areas when the opportunity was right, get resources to            
 market and to provide jobs.  He said the railroad is a major                  
 transportation link and will explore expansion opportunities, as              
 they arise.   In fact, they are currently exploring the opportunity           
 to expand the rail to the Anchorage International Airport to drop             
 off passengers in the summer time and provide a better service.               
 The Alaska Railroad Corporation is currently expanding the Seward             
 dock and helping Whittier to expand their boat harbor.  He noted              
 that expansion work was underway in Talkeetna to provide better               
 passenger service for Princess Tours in their hotel.  In addition,            
 some work is being done at the downtown terminal in Fairbanks with            
 a goal of expanding out to Alaskaland.                                        
                                                                               
 GOVERNOR SHEFFIELD said as Chairman, he is aware there are                    
 legislators that have problems with the Alaska Railroad.  He                  
 understands that; but he knows the Board of Directors take their              
 job very seriously and are very concerned.                                    
                                                                               
 GOVERNOR SHEFFIELD suggested that Chair James may want to request             
 a legal opinion to determine the role of the legislature as it                
 relates to telling the railroad what to do in terms of the dollars.           
 He remarked the Alaska Railroad Corporation has a budget which                
 outlines the use of their funds; their annual financial statement             
 cites the activities of the Alaska Railroad Corporation; and an               
 annual audit from an operational standpoint is conducted by an                
 independent firm.  These documents are all available for review.              
 He stated he was prepared to do a study which would include a cross           
 section of the people to evaluate how to better serve the people.             
 The value of the railroad continues to increase.  The corporation             
 is aware that it needs to be concerned about the 600,000                      
 shareholders.  He urged the legislature to give the railroad the              
 opportunity to establish a committee and report back to the                   
 legislature next year.                                                        
                                                                               
 CHAIR JAMES called on the next witness via teleconference in Mat-             
 Su, Clifford Proetz.                                                          
                                                                               
 Number 0641                                                                   
                                                                               
 CLIFFORD PROETZ said he was a 21-year employee of the Alaska                  
 Railroad Corporation.  He expressed concern that the bill did not             
 give enough consideration to the employees.  As he approached                 
 retirement, he was very concerned about his retirement                        
 possibilities.  He asked committee members to review the                      
 legislation from 1984-85 for the transfer of the railroad to state            
 ownership and to consider that legislation as a model for this                
 current legislation.                                                          
                                                                               
 CHAIR JAMES called on the next witness via teleconference in Mat-             
 Su, John Berg                                                                 
                                                                               
 CHAIR JAMES noted for the record that Representatives Ogan and                
 Green were in attendance.                                                     
                                                                               
 Number 0697                                                                   
                                                                               
 JOHN BERG thanked Representative Ogan for the courtesy call from              
 him and his staff this morning.  He also thanked Chair James for              
 the opportunity to respond to this issue.  He has worked for the              
 Alaska Railroad Corporation for over 21 years and considers himself           
 to be a hardworking, productive, contributing Alaskan.  He said,              
 "please don't put me out of work by simply not including me as part           
 of the sale."  He thought HR 3420 should be used as a model for               
 this legislation as it had a unique way of giving employees a two-            
 year period to ensure their pensions were protected.  He believed             
 the railroad was a tremendous asset for the citizens of the state.            
 According to his research, when the Montana Rail Link buys a                  
 railroad, it forms a separate company within the corporation or               
 uses one of the subsidiaries to make the acquisition thereby                  
 circumventing the Railway Labor Act.  He said the legislature was             
 his last line of defense and if they believed the railroad must be            
 sold, at least allow him the dignity of continuing his career and             
 saving his pension.                                                           
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, William Phelps.                                                    
                                                                               
 Number 0859                                                                   
                                                                               
 WILLIAM PHELPS said as a 28-year employee of the Alaska Railroad              
 Corporation, he was opposed to the sale of the railroad as it                 
 stands now.  He believed it was on a fast track and needed to be              
 slowed down so that additional consideration could be given to                
 employees and their retirement.                                               
                                                                               
 Number 0888                                                                   
                                                                               
 REPRESENTATIVE OGAN advised Mr. Berg that his letter was being made           
 available to committee members.                                               
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Brad Phillips.                                                     
                                                                               
 Number 0897                                                                   
                                                                               
 BRAD PHILLIPS testified he was in the tourist business and wasn't             
 concerned about retirement because he was too old.  His concern was           
 that of a substantial customer of the railroad.  He supported the             
 testimony of Chair James and Governor Sheffield.  He urged the                
 committee to carefully look at the situation and not allow the use            
 of the railroad's funds.  He noted they have a difficult time                 
 getting the type of service they'd like, but he understands the               
 railroad's limitations financially.  If funds were extracted from             
 the railroad, he believed the tourist industry and the type of                
 service they need would greatly suffer.                                       
                                                                               
 CHAIR JAMES called on the next witness via telephone, Dale Lindsey.           
                                                                               
 Number 0976                                                                   
                                                                               
 DALE LINDSEY said he was testifying in a dual capacity as Director            
 of the Alaska Railroad Corporation and as a concerned citizen.                
 From his perspective, one of the fundamental problems in Alaska was           
 that too many of the cornerstone businesses were located elsewhere.           
 He thought it was a problem because there was not any other state             
 that had such little control over its internal destiny as Alaska.             
 His point was that the railroad periodically did things not                   
 necessarily looking at the bottom line, but just to make things               
 happen, for example the coal from Healy to Seward.  Historically,             
 the railroad has hauled coal and passengers at a loss.   He                   
 wondered if an outside based company would do the same.  He                   
 expressed concern about the dates set out in the bill in that he              
 believed the time schedule was too aggressive.  Appraisals that are           
 on a fast track generally cost more money.   He said the capital              
 requirements of the railroad from a director's perspective, were              
 almost overwhelming.  There is literally not enough cash to do all            
 the things that need to be done in terms of maintaining the rail              
 bed and (indisc.)   He conveyed that the railroad certainly needed            
 to fine tune some of their policies, but he didn't believe it was             
 in the overall best interest of the state to sell the railroad.  It           
 has impacted the morale of the employees and undermined the                   
 confidence of the customers.                                                  
                                                                               
 Number 1128                                                                   
                                                                               
 REPRESENTATIVE MARTIN commented the Montana Railroad actually                 
 expanded its employees from 550 to over 1,000 in one year.                    
                                                                               
 CHAIR JAMES said she understood that; however, that was in the                
 Lower 48 and not in Alaska.  It was dangerous to compare the two.             
 The issue was an emotional one and she did not want to get into it.           
                                                                               
 CHAIR JAMES called on the next witness via telephone, Lance                   
 Thompson.                                                                     
                                                                               
 Number 1177                                                                   
                                                                               
 LANCE THOMPSON said he was a 13-year employee of the Alaska                   
 Railroad Corporation.  He expressed concern about his retirement              
 pension and future agreements if the railroad is sold.                        
                                                                               
 CHAIR JAMES called on the next witness via telephone, Mr. Russack.            
                                                                               
 Number 1193                                                                   
                                                                               
 MR. RUSSACK said he was a 5-year employee of the Alaska Railroad              
 Corporation and a 20-year Alaskan resident.  Present employees did            
 not want to lose their jobs or their benefits and would like to see           
 some protection written into the agreement if the railroad is sold.           
                                                                               
 CHAIR JAMES called on the next witness via telephone, Al Parrish.             
                                                                               
 Number 1227                                                                   
                                                                               
 AL PARRISH said he had three areas of concern he would like to                
 express to the committee.  The first one dealt with the mandating             
 of the new commission to evaluate the sale and the funding aspects            
 of the railroad.  He believed that if the legislature was going to            
 mandate, then they should also supply a funding source separate               
 from the railroad's working fund.   He said his firm, Holland                 
 America Line Westours, was one of the largest users of the railroad           
 from May 15 through the end of September.  He expressed his                   
 concern with using the operating funds of the railroad to fund the            
 review process called for in HB 136 which takes those funds away              
 from railroad ties and the alignment of the railroad, for example.            
 As a customer, he was concerned about the safety and comfort of               
 their passengers and certainly rail beds and alignment of the track           
 was a very important feature.  His second concern was the time                
 frame called for in the bill.  He said it was optimistic and almost           
 impossible to meet.  Just to come to a conclusion in reference to             
 an appraiser would require probably 30 to 45 days at a minimum.  To           
 appraise not only the one asset, but the multiple assets of the               
 railroad would be a very time consuming process.  He believed that            
 fast tracking it to a November 1 date would cause a tremendous                
 amount of management's time to re-focus from running a railroad               
 during its peak season to supplying information that an appraiser             
 will need.   Subsequently, he believed that could defeat the                  
 earnings of the railroad by taking management's focus off of its              
 main priority of running the railroad.  His third concern was with            
 the size of the commission.  A five member commission representing            
 the users and residents of the state of Alaska who have benefits              
 from the railroad, which would be basically the railbelt corridor             
 from Fairbanks to Seward, seems to be an awfully small commission.            
 He suggested increasing the commission to encompass a broader base.           
 He agreed with the comments of Governor Sheffield suggesting the              
 existing board retain a committee to review the issue.                        
                                                                               
 CHAIR JAMES called on the next witness via telephone, Jeff                    
 Lowenfels.                                                                    
                                                                               
 Number 1399                                                                   
                                                                               
 JEFF LOWENFELS, President, Yukon Pacific Corporation, said he knew            
 many people in the legislature were skeptical, but there were                 
 others like him who believed that Alaska would have a gas pipeline            
 project.  He urged the legislature to be extremely careful with its           
 very valuable asset, the Alaska Railroad.  Yukon Pacific believes             
 the dedication given to the maintenance of the track, rebuilding              
 cars, etc., is extremely important.  Their cost estimates are                 
 predicated upon doing a tremendous amount of business with the                
 Alaska Railroad which leads to their concern regarding the                    
 certainty of the continued operation as well as the future of the             
 railroad.  He asked the members to look carefully at this issue and           
 to proceed slowly.  He reiterated that Alaska will have a gas                 
 pipeline project and it will be predicated upon the use of the                
 Alaska Railroad.                                                              
                                                                               
 CHAIR JAMES called on the next witness via telephone, John Gaule.             
                                                                               
 Number 1500                                                                   
                                                                               
 JOHN GAULE testified that as an employee of the Alaska Railroad               
 Corporation and a 20-year resident of the state, he was concerned             
 and against the railroad paying for the commission.  He echoed the            
 concerns voiced by previous speakers regarding his retirement and             
 supported the comments of Governor Sheffield, the tour groups and             
 the residents that previously testified.  He asked committee                  
 members to take into account the testimony heard today when voting            
 on this bill.                                                                 
                                                                               
 CHAIR JAMES called on the next witness via telephone, Jeff Cook.              
                                                                               
 Number 1588                                                                   
                                                                               
 JEFF COOK, Vice President of External Affairs and Administration,             
 MAPCO Alaska Petroleum Inc., said MAPCO was the largest customer of           
 the Alaska Railroad.  They have over 350 rail tanker cars under               
 full or part-time lease to move millions of gallons of oil per year           
 to Anchorage.  In 1995, MAPCO paid nearly $23 million to the Alaska           
 Railroad Corporation which helped contribute to a very profitable             
 year.  He noted the product was moved without incident and with               
 efficiency.  He said that MAPCO is responsible for some of the yo-            
 yo revenues of the Alaska Railroad in that there are several months           
 during the year they cannot export their product because of ice in            
 the Port of Anchorage.   MAPCO exports naphtha to Japan, Korea, and           
 the West Coast, which has to be finely timed and which generally              
 runs heavy from now until the end of October.  He said the railroad           
 had done an outstanding job on a timely and successful basis.  As             
 the largest customer, they were concerned about a possible sale of            
 the railroad because they have 12 years remaining on their contract           
 with options to extend.  He said that MAPCO was proud of their                
 relationship and alliance with the railroad.  They have an                    
 outstanding strategic alliance and are connected with the                     
 railroad's electronic data interchange which results in an almost             
 paper-free relationship.  MAPCO believes the committee substitute             
 is a vast improvement over Senate Bill 64.  He suggested deleting             
 subsection (f), under Section 1 from the committee substitute                 
 because there were really two separate issues that needed to be               
 addressed:  1) Is the railroad doing their job; and 2) should it be           
 considered for sale or not.  If it is determined that it should be,           
 then there needs to be a long time frame to really look at that and           
 set it up.   He believed it was unfair to use the money from the              
 operating fund of the railroad and to force the issue during the              
 busiest time of its season.  He stated the railroad was a great               
 asset which provides a unique service in a unique state.  The state           
 would come to a grinding halt if it were not for the great service            
 the Alaska Railroad provides to MAPCO and other major users.                  
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Seward, Margaret Branson.                                                     
                                                                               
 Number 1809                                                                   
                                                                               
 MARGARET BRANSON referred to her letter sent to the House State               
 Affairs Committee and explained it addressed the CSHB 136 (TRA),              
 not the most recent version of the bill.  She believed the                    
 legislature should pay for the commission and there should be a               
 fiscal note attached.  She said the time frame is extremely                   
 unreasonable and suggested that it be expanded.  She asked that her           
 letter reflect "1990" and not "1984."                                         
                                                                               
 CHAIR JAMES read the paragraph that Ms. Branson changed into the              
 record.                                                                       
                                                                               
 "If you will recall, in 1990 there was an effort by a group to                
 emasculate the operations of the railroad and by a vote margin of             
 72,000, the ballot measure was defeated.  I believe that any sale             
 of the ARR must be ratified by the people who own it - the                    
 Alaskans."                                                                    
                                                                               
 Number 1941                                                                   
                                                                               
 CHAIR JAMES read the following statement into the record from                 
 Dorothy Urbach in Seward.                                                     
                                                                               
 "I am opposed not only to HB 136 but also to selling the Alaska               
 Railroad altogether.  Why would you want to sell an entity that has           
 made money with the exception of two years, and has never asked the           
 state for money.  This bill would not only force the railroad to              
 appraise its property but also to pay for it.  The railroad has               
 better things to do than this project.  Senator Steven's was                  
 successful in obtaining $10 million for improvements this year for            
 the railroad.  Why would the legislators want millions of dollars             
 to go outside than stay in the Alaskan economy."                              
                                                                               
 Number 1980                                                                   
                                                                               
 REPRESENTATIVE OGAN said for the record, the Alaska Railroad                  
 Corporation had asked the legislature for money.                              
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Laverl Schillinberg.                                               
                                                                               
 Number 2050                                                                   
                                                                               
 LAVERL SCHILLINBERG said he has been an employee of the Alaska                
 Railroad Corporation for the past six years.  He believed the                 
 railroad had stood by itself for a long time now and it would be              
 terrible to sell an important asset.  He said everyone owns the               
 railroad and the people will not support somebody else owning the             
 railroad.                                                                     
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Michael O'Neil.                                                    
                                                                               
 Number 2142                                                                   
                                                                               
 MICHAEL O'NEIL testified that as a resident of Alaska for over 20             
 years he was opposed to the sale of the railroad.  He believes the            
 railroad supports a lot of people in the state and expressed                  
 concern that money would go outside if an out-of-state agency                 
 bought it.  He remarked the state has done a good job considering             
 the concerns of Alaskans surrounding the railroad.  It would                  
 benefit the state to keep the railroad.                                       
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Robert Cacy.                                                       
                                                                               
 Number 2300                                                                   
                                                                               
 ROBERT CACY thanked committee members for the changes made to HB              
 136.   He believed the state and the Governor have done a good job            
 running the railroad and it should remain state-owned because it              
 benefits the people of Alaska as well as the state.  He did not               
 want to see it sold to an outside agency.                                     
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, John Britt.                                                        
                                                                               
 Number 2430                                                                   
                                                                               
 JOHN BRITT testified in opposition to the sale of the Alaska                  
 Railroad.                                                                     
                                                                               
 TAPE 96-62, SIDE A                                                            
 Number 0001                                                                   
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Jack Burton.                                                       
                                                                               
 Number 0011                                                                   
                                                                               
 JACK BURTON, Member, Alaska Railroad Board of Directors, said he              
 represented the employees, also.  The railroad has been operating             
 as intended by law in its present form.  He did not know there was            
 anything wrong with the railroad, but it was obvious someone                  
 believed it needed to be fixed.  In his opinion it did not need to            
 be fixed.  He expressed concern about the liability of the                    
 employee's retirement fund and wondered if the state would pick               
 that up.  He had received a number of calls from employees who were           
 concerned about their jobs.  He believed selling the railroad was             
 a bad idea.  He agreed with the testimony of Governor Sheffield.              
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Bertello Bumanglag.                                                
                                                                               
 Number 0210                                                                   
                                                                               
 BERTELLO BUMANGLAG testified in opposition to selling the railroad.           
 He said when discussing the value of the railroad, consideration              
 should also be given to the employees and their livelihoods because           
 it would put a lot of people in distress.  In his opinion, the                
 railroad has been good for the state; it has made a profit and he             
 did not see why an entity making of profit should be sold.                    
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Charles Dillard.                                                   
                                                                               
 Number 0267                                                                   
                                                                               
 CHARLES DILLARD said he had been an Alaskan resident for 35 years             
 and had been an employee of the Alaska Railroad Corporation for               
 over 30 years.  He advised that the state should be very careful              
 selling the railroad to an outside entity.  The railroad was a                
 valuable asset and the future of the railroad is unknown at this              
 time.  He noted that an outside agency could strip the assets of              
 the railroad and leave the state with less.  He commented on the              
 jobs provided by the railroad as well as the opportunities that               
 exist for businesses such as Holland America Lines to participate             
 in business ventures with the railroad.  As a resident of the state           
 of Alaska, the Alaska Railroad means a lot to him because it has              
 provided a good living for him.  He urged the legislature to be               
 very careful in how it manages the state's assets.  He said,  "A              
 lot of times the dollar figure is not necessarily the only thing,             
 and I think this is one of the areas that we haven't given due                
 consideration to - the prospects of the future assets."                       
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Christine Hestnes.                                                 
                                                                               
 Number 0461                                                                   
                                                                               
 CHRISTINE HESTNES said the railroad was here before the Alaska                
 Highway and it opened up the state.  If the coal, gravel, oil and             
 gas could not be transported to the markets, the state could not              
 sell them.                                                                    
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Lorraine Risch.                                                    
                                                                               
 Number 0549                                                                   
                                                                               
 LORRAINE RISCH said she has worked for the Alaska Railroad                    
 Corporation for almost 18 years.  The railroad is a good resource             
 for the state because it services a lot of communities.  She                  
 expressed concern that an outside entity may cut off service to               
 many of those communities.                                                    
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Larry Burton.                                                      
                                                                               
 Number 0621                                                                   
                                                                               
 LARRY BURTON testified that he has worked for the Alaska Railroad             
 Corporation for about 10 years now and was concerned that a lot of            
 employees would be laid off if the railroad was sold.                         
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Ed Rivera.                                                         
                                                                               
 Number 0660                                                                   
                                                                               
 ED RIVERA, President, American Federation of Government Employees,            
 said he had been a resident of Alaska for about 25 years.  He had             
 not heard any testimony today on behalf of selling the railroad so            
 he was concerned that this piece of legislation had its own agenda.           
 He said there was loyalty to the railroad as the testimony                    
 indicated, and he wondered where the loyalty was from the                     
 legislature.  He asked committee members to consider the testimony            
 when voting on the bill.                                                      
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Chris Brooks.                                                      
                                                                               
 Number 0746                                                                   
                                                                               
 CHRIS BROOKS testified in opposition to HB 136 as written.  He was            
 opposed to having the Alaska Railroad Corporation pay for the                 
 appraisal.  Furthermore, the owner would take a profit if the                 
 railroad was sold.  The only place that money would come from would           
 be from employee wages.  This would hurt the economy of Anchorage             
 and put a lot of people out of work.                                          
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Jo Ann McDowell.                                                   
                                                                               
 Number 0836                                                                   
                                                                               
 JO ANN MCDOWELL said she was opposed to HB 136.  In her opinion the           
 railroad should not be sold because of the great resource, not only           
 to the state and the employees, but also many businesses around the           
 state.  She urged the legislature to consider the economic impact             
 of the sale of the railroad.  She believed in keeping the resources           
 in the state.                                                                 
                                                                               
 CHAIR JAMES called on the next witness in Juneau, Jeff Bush, Deputy           
 Commissioner, Department of Commerce and Economic Development.                
                                                                               
 Number 0909                                                                   
                                                                               
 JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic           
 Development, said the Administration was more comfortable with the            
 committee substitute than with the original bill; however, there              
 were still some areas of concern.  The Administration does not                
 oppose an objective analysis of whether or not selling the railroad           
 is a good idea and therefore either a task force appointed by the             
 railroad or an independent commission are acceptable.  The Governor           
 would like more input in the make up of the commission if it was to           
 be established; specifically he would like equal representation as            
 the legislature.  The Governor's Office has also expressed concern            
 with the representation and would like to see more public and users           
 appointed to the commission.  Furthermore, the Governor was                   
 concerned about the legal issues the Department of Law had raised             
 regarding the use of the railroad's operating funds.  He believed             
 the Administration would be more comfortable with an appropriation            
 from an independent funding source such as the Wishbone Hill                  
 interest.   Moreover, the Administration was concerned about the              
 time frame set out in the committee substitute.  In their opinion,            
 November 1 was probably unrealistic for a full appraisal of the               
 railroad.                                                                     
                                                                               
 Number 1071                                                                   
                                                                               
 CHAIR JAMES said she was concerned about the environmental                    
 liability associated with the railroad.  She cited the railroad               
 yard in Fairbanks as an example of contamination.  She asked                  
 Representative Martin if he had considered that issue; it would               
 have to be addressed before selling the railroad.                             
                                                                               
 Number 1109                                                                   
                                                                               
 REPRESENTATIVE MARTIN agreed that was an issue that needed to be              
 looked into.  The railroad has been around for almost 100 years and           
 the state has only been concerned about the environment for the               
 last 20 years.  He said, "who knows what lies under the ground of             
 the railroad."  That would be included in the evaluation process.             
 He wondered if the federal government could be held responsible for           
 the damage done 10 to 20 years ago.                                           
                                                                               
 CHAIR JAMES asked Representative Martin if the extent of the                  
 environmental impact could be determined by November 1, 1996?                 
                                                                               
 Number 1160                                                                   
                                                                               
 REPRESENTATIVE MARTIN replied November 1, 1996, was the first date            
 of review, but really the commission had eight months.  He                    
 suggested an updated review every six weeks to the legislature                
 through the Budget and Audit Committee and a final report by the              
 beginning of the next session.  That would give the commission                
 eight months.                                                                 
                                                                               
 Number 1182                                                                   
                                                                               
 CHAIR JAMES commented part of that time also included the winter              
 which would exclude certain review activities.  The committee                 
 substitute said the commission "shall" determine whether or not it            
 is in the best interest of the state to sell the railroad.  She               
 suggested including sideboards to control the spending and the                
 whole process.                                                                
                                                                               
 Number 1265                                                                   
                                                                               
 REPRESENTATIVE MARTIN replied an open committee would address the             
 "shall" that Chair James was concerned about.  He felt the major              
 problem was there were no answers to anything now.  He reiterated             
 now was the time to look into it.  If, however, the commission                
 determines that by January there was not enough opportunity to                
 study the whole issue but had 80 percent of the answers, the new              
 legislature would be given the opportunity to determine if the                
 commission should be continued.                                               
                                                                               
 CHAIR JAMES said she understood the concerns of Representative                
 Martin, but she wondered how much was needed in this piece of                 
 legislation.                                                                  
                                                                               
 CHAIR JAMES called on the next witness via telephone in Anchorage,            
 Kirby Roundtree.                                                              
                                                                               
 Number 1384                                                                   
                                                                               
 KIRBY ROUNDTREE said he had been an employee of the Alaska Railroad           
 Corporation for 14 years.  He noted the public did not know that              
 much about the railroad.  For example, many people believed he was            
 a state employee.   He was not in favor of selling the railroad               
 because the state could make some money one time, but they would              
 lose control of what the railroad has to offer once it was sold to            
 a private entity.  He noted there are a number of things the                  
 railroad does that are not profit making, but are for the benefit             
 of the state.                                                                 
                                                                               
 Number 1481                                                                   
                                                                               
 REPRESENTATIVE OGAN commented that approximately 20 years ago when            
 he came to Alaska, he spent a great deal of time about 40 miles               
 north of Talkeetna.  It was quite an experience to be dropped off             
 by the passenger service there and to stand by the railroad tracks            
 waving a white flag when you wanted to be picked up.  One time he             
 had just shot a bear right before the train came, and he literally            
 threw the whole bear in the baggage compartment, which was quite              
 entertaining for the tourists.  He remarked there is a certain                
 amount of romance associated with the railroad and there are a lot            
 of people who depend on that service in that area.  He said the               
 state has disposed of land along that corridor which people have              
 built on.   He noted that last year the railroad did ask the                  
 legislature to reappropriate the money that had originally been               
 appropriated for Wishbone Hill to maintain the tracks.  He                    
 expressed concern that if the railroad was going to be sold whether           
 or not some of the assets should be "cherry picked" and some of the           
 real estate liquidated before it's sold.  He believed the concerns            
 of the employees needed to be addressed.  He said the railroad is             
 quasi-private and quasi-private corporations are quite frankly                
 socialistic in nature in this state.  In conclusion, he said if a             
 task force is appointed to study this issue, committee members                
 needed to search their reason and logic as well as their hearts and           
 decide if this is a good idea.  If they believe it is a good idea             
 to sell the railroad, then he believed the committee should move              
 forward with the task force to study it.  However, if it's going to           
 be another task force study that gathers dust on a shelf, he does             
 not support it.                                                               
                                                                               
 Number 1689                                                                   
                                                                               
 REPRESENTATIVE ROBINSON stated she felt strongly this is the wrong            
 direction to be going at this time.  She believed the existing                
 board should look into this issue.  She would like to see the bill            
 tabled or at least put into a subcommittee for further discussions.           
 This was an important decision to consider especially at the end of           
 the legislative session.  Testimony had indicated the railroad was            
 operating as it should.  She asked Governor Sheffield what type of            
 task force he would organize as the chairman of the board?                    
                                                                               
 Number 1787                                                                   
                                                                               
 GOVERNOR SHEFFIELD replied he would select the users, the affected            
 communities, independent individuals and legislators, for example,            
 to be a part of the task force.  He would also work closely with              
 the Governor.  He would ask former Governor Wally Hickel, to serve            
 on the task force as well.  He said he would organize a task force            
 within 30 days and get started right away.                                    
                                                                               
 Number 1915                                                                   
                                                                               
 REPRESENTATIVE GREEN asked Governor Sheffield what type of cost he            
 anticipated for the commission?                                               
                                                                               
 Number 1926                                                                   
                                                                               
 GOVERNOR SHEFFIELD stated he was not sure how much it would cost.             
 When he was Governor, he spent $2 million evaluating the railroad             
 and the federal government spent $2 million; however, a fast track            
 project such as this one would probably cost more.  He stated it              
 would probably cost $750,000 to $1.5 million.  The appraisal would            
 need to be done by knowledgeable people, so that may necessitate              
 the use of an outside agency for the appraisal.                               
                                                                               
 GOVERNOR SHEFFIELD reiterated this was the first year the railroad            
 did not have to borrow money to meet the payroll; business was                
 good.  He was concerned about using the railroad's operating budget           
 to fund the commission.                                                       
                                                                               
 Number 2034                                                                   
                                                                               
 REPRESENTATIVE GREEN asked Governor Sheffield if he would look into           
 the value of the land surrounding the railroad or simply the                  
 operations and maintenance?                                                   
                                                                               
 Number 2056                                                                   
                                                                               
 GOVERNOR SHEFFIELD replied the original bill, SB 64, called for the           
 sale of the property or returning it to the Department of Natural             
 Resources.  He believed that any committee would look at all of it            
 and try to separate the two.  He noted the railroad owns 38,000               
 acres of land of which 16,000 was in right of way.                            
                                                                               
 Number 2138                                                                   
                                                                               
 REPRESENTATIVE GREEN replied the land might not be a large number,            
 but it could be disproportionately valuable compared to other                 
 acreage in the state.                                                         
                                                                               
 Number 2149                                                                   
                                                                               
 GOVERNOR SHEFFIELD replied, "that's right, it would be."  He noted            
 that was something that needed to be watched when they lease                  
 property to an individual or a company because the municipality or            
 town may have other ideas in their planning process about what that           
 land ought to be used for or adjacent to.                                     
                                                                               
 Number 2176                                                                   
                                                                               
 REPRESENTATIVE ROBINSON asked Governor Sheffield where the money              
 would come from for the task force and how the parameters would be            
 set as to what the task force would be addressing?                            
                                                                               
 Number 2188                                                                   
                                                                               
 GOVERNOR SHEFFIELD supposed that if the railroad set up a task                
 force it would not pay anybody except for travel.  He did not                 
 envision a lot of money being spent on the task force.  He                    
 envisioned a lot of time and work.  There were enough interested              
 individuals in the state that would volunteer their time.                     
                                                                               
 GOVERNOR SHEFFIELD further stated he had not thought about an                 
 agenda so he could not answer in detail.  However, he would first             
 concentrate on organizing a cross-section of Alaskans for the task            
 force.  He would then establish the goals of the task force such as           
 getting people's opinion of the railroad, the projected revenue and           
 the long-term plan of the railroad.                                           
                                                                               
 Number 2317                                                                   
                                                                               
 CHAIR JAMES reiterated she was interested in an east-west railroad,           
 and a Bering Strait tunnel to connect to Russia and China.  She               
 continued to focus on those possibilities because no one had flat             
 out said they were not possible.  She explained people around the             
 world were excited about connecting the two continents.  This would           
 never happen, however, as long as the railroad was in state                   
 ownership.                                                                    
                                                                               
 CHAIR JAMES further said she would rather see the land stay with              
 the railroad because it could be good trading stock.  She did not             
 want it to go to the Department of Natural Resources; that would be           
 like dumping it into a black hole.                                            
                                                                               
 TAPE 96-62, SIDE B                                                            
 Number 0001                                                                   
                                                                               
 CHAIR JAMES said she was the biggest critic and the biggest                   
 supporter of the Alaska Railroad Corporation.  She explained a                
 public relations person was needed, however.  The relationship                
 between the public and the railroad was not good because of mis-              
 communication.  She called the current issue a public relations               
 problem.                                                                      
                                                                               
 Number 0036                                                                   
                                                                               
 REPRESENTATIVE PORTER stated he admired the restraint of Governor             
 Sheffield and of others who had resisted the obvious comment of,              
 "this bill was no way to run a railroad."                                     
                                                                               
 Number 0057                                                                   
                                                                               
 GOVERNOR SHEFFIELD said he keeps hearing that the railroad is going           
 to shut down in five years, the railroad can't make and that the              
 railroad is being subsidized all the time.  He wondered what those            
 comments stemmed from.                                                        
                                                                               
 CHAIR JAMES believed that was another public relations problem.               
                                                                               
 Number 0066                                                                   
                                                                               
 REPRESENTATIVE WILLIS wondered if Governor Sheffield associated               
 this with John Voit's book titled, "Runaway Train."                           
                                                                               
 GOVERNOR SHEFFIELD replied, "yes."                                            
                                                                               
 Number 0075                                                                   
                                                                               
 REPRESENTATIVE GREEN asked Governor Sheffield if he would consider            
 using teleconference capability to combine the various committee              
 members to help reduce cost?                                                  
                                                                               
 Number 0102                                                                   
                                                                               
 GOVERNOR SHEFFIELD replied that was a good idea.  He explained that           
 in Fairbanks the railroad had its own phone system which the                  
 members could use for free.  He agreed many of the meetings could             
 be held using a teleconference system.                                        
                                                                               
 Number 0135                                                                   
                                                                               
 REPRESENTATIVE GREEN asked Governor Sheffield to comment on the use           
 of the Wishbone Hill interest money.                                          
                                                                               
 Number 0142                                                                   
                                                                               
 GOVERNOR SHEFFIELD said he did not have a problem using the money             
 from the Wishbone Hill which was approximately $12 million now.  He           
 suggested a ruling from the Attorney's General office to determine            
 if that money could be reappropriated.                                        
                                                                               
 CHAIR JAMES agreed a legal opinion was needed.  According to the              
 Legislative Legal Department a special appropriation was needed.              
                                                                               
 Number 0170                                                                   
                                                                               
 REPRESENTATIVE OGAN referred to the $4 million that was spent on              
 two different studies and asked Governor Sheffield how valuable the           
 information was that was gathered in those studies?  He wondered if           
 it could be used as a baseline and updated at a minimal cost                  
 perhaps.  He commented that government is real good at studying               
 things, but not using the studies for anything.  He reiterated his            
 question of whether the studies done previously could be utilized             
 with a minimal amount of updating.  He wondered if they were                  
 privatization studies or what kind of information was encompassed.            
                                                                               
 Number 0221                                                                   
                                                                               
 GOVERNOR SHEFFIELD noted that Mark Hickey had been involved in the            
 transfer team and could perhaps furnish additional information.  He           
 added the studies encompassed environmental issues, the track, the            
 conditions, amount and location of land owned by the railroad and             
 he hoped the old studies could be used; the information was there             
 but it would need to be updated.  At one point the railroad was               
 appraised at $244 million.  However, due to contamination,                    
 Occupational Safety and Health Administration (OSHA) concerns, and            
 environmental problems, for example, the price dropped to $22.5               
 million, which is what the state paid.  The corporation was given             
 $11 million to start the business because there was no cash to                
 begin the operation.  Therefore, the state has invested $33.5                 
 million in the railroad.  There were a lot of reasons why the state           
 got the railroad for $22.5 million instead of $244 million.  In his           
 opinion, the railroad is better off now; it makes money, the                  
 condition of the railroad has been improved, the contamination is             
 organized from the railroad standpoint.  Therefore, he believes the           
 price should start out at $244 million and go up from there.  He              
 explained that a disgruntled, former employee wants to sell the               
 railroad and is going around looking for a finders fee.  That's how           
 Dennis Washington found out about the Alaska Railroad to begin                
 with.                                                                         
                                                                               
 CHAIR JAMES asked Mark Hickey to respond to the comments of                   
 Governor Sheffield.                                                           
                                                                               
 Number 0360                                                                   
                                                                               
 MARK HICKEY, Lobbyist, explained that he managed the purchase                 
 process for the Governor when it was bought from the federal                  
 government.  The $4 million figure was a rough estimate of all the            
 funds spent by the state and federal government in about a 4.5 year           
 process.  He explained one-half of the federal money was spent on             
 evaluating the railroad.  It was an elaborate effort to look at all           
 aspects of the operation of the railroad as well as the real                  
 property to come up with a price tag, taking into account all the             
 conditions that were imposed on the state under the Federal                   
 Transfer Law.  Some of the state's money was spent working and                
 following that process, doing its own OSHA assessment using the               
 Department of Labor people, and conducting its own condition                  
 assessment because the state knew there were serious problems in              
 some areas in terms of deferred maintenance.  Also, money was spent           
 on following and working on the federal bill.  Therefore, a lot of            
 that information would not be applicable in this situation;                   
 however, he felt a fair amount of the information would be useful.            
 For example, there was a full acquisition assessment done that                
 looked at all the issues including why the railroad is important to           
 the state, what the cost would be to the state in terms of a                  
 highway system if the railroad wasn't there.  He believed it would            
 be fairly easy to update the information to the extent of its                 
 relevancy.  It considered the cost to the state if it was not there           
 and why the railroad was important, for example.  That information            
 would be easy to update without too much difficulty.  He had                  
 participated in the appraisal/evaluation process and he believed              
 that some of the information was useful, but much of it was not to            
 the extent that if a full evaluation of the railroad was going to             
 be done today, many of the conditions have changed since the                  
 appraisal/evaluation was done in 1983.  In conclusion, some of the            
 information would be useful, some would have to be updated, and a             
 lot of the cost went to issues that aren't pertinent to what would            
 need to be looked at currently.                                               
                                                                               
 Number 0480                                                                   
                                                                               
 REPRESENTATIVE MARTIN explained he was interested in an open                  
 process.  He was concerned about his reputation being tarnished               
 with respect to people going around getting bidders for the                   
 railroad.  He advised committee members that he had heard nothing             
 from anyone.  He just recently heard about the Montana Railroad.              
 He stated his interest came from experience because he knew it was            
 only a 10-year commitment to the federal government to keep the               
 railroad running and then find an orderly way to transfer whatever            
 land that could be transferred.  He was fed-up with the bad                   
 publicity surrounding this issue and it was his hope that with an             
 open process these issues would be publicized.  The process called            
 for in the committee substitute would allow for the public to voice           
 their concerns.  He was concerned about a task force established by           
 Governor Sheffield and its objectivity.                                       
                                                                               
 Number 0612                                                                   
                                                                               
 CHAIR JAMES said no one wanted to impugn the character of                     
 Representative Martin.  She stated for the record, that the                   
 concerns of Representative Martin had nothing to do with Montana              
 Rail Link.   He had been completely honest about his intentions               
 from the beginning.                                                           
                                                                               
 CHAIR JAMES said this piece of legislation had been on the fast               
 track and fast tracks don't always produce good results.  The                 
 meeting today had been very informative.                                      
                                                                               
 Number 0695                                                                   
                                                                               
 BOB EVANS, representing Montana Rail Link, said the most important            
 issue discussed here was change.  He explained that change makes              
 people anxious.  His client was interested in talking to an                   
 objective group about the potential to buy the railroad.  There was           
 the possibility his client would not even be interested in the                
 railroad once the evaluation had been made.  However, a process was           
 needed to allow an arms-length assessment and evaluation and he               
 believed that could only be done through a vehicle such as that               
 before the committee.  In terms of cost, he has been told there are           
 four to six groups or operations in the country that have the                 
 skills and ability to complete an evaluation of this nature.  He              
 has been advised by his client that the ability to make an                    
 assessment or an evaluation of the railroad "as a going concern" is           
 very different than the appraisal being talked about and may be               
 significantly less expensive than an appraisal like the one being             
 discussed.   He had further been advised by the President of                  
 Montana Rail Link that the time line for making this kind of                  
 assessment is substantially less than what is being discussed.  He            
 believed the time frame in the legislation was realistic and the              
 cost was probably going to be a lot less than what had been                   
 discussed in the meeting.                                                     
                                                                               
 Number 0833                                                                   
                                                                               
 CHAIR JAMES said she personally believes that if someone wants to             
 buy the railroad, they should pay for the assessment because every            
 company has a different idea of how they're going to run it and               
 their assessment as to whether or not it's a good purchase might be           
 calculated totally different than the state's assessment, as the              
 seller.  However, there is a flip side of that in that just because           
 the assessment may meet their concerns, the state has the fiduciary           
 responsibility of meeting the concerns of the state of Alaska - the           
 shareholders which are the public.  She surmised that only a small            
 portion of the public was even aware this issue was being                     
 discussed.  She expressed concern with the time line in that the              
 railroad is the public's asset and they should be involved in the             
 decision making or at least know what is happening.                           
                                                                               
 Number 0888                                                                   
                                                                               
 REPRESENTATIVE ROBINSON asked Mr. Evans why Montana Rail Link                 
 doesn't feel they can go to the existing board and get the                    
 information needed to determine if a purchase was feasible?                   
                                                                               
 Number 0898                                                                   
                                                                               
 MR. EVANS replied Montana Rail Link did ask the board.  They sent             
 a letter last year in October and received a reply stating the                
 circumstances were such that it was not appropriate to talk about             
 selling the railroad at that time.  The letter was distributed to             
 a joint House and Senate Transportation Committee meeting last                
 month.  Therefore, the company supported the committee substitute             
 as a means to communicate with the railroad.  He believed without             
 this piece of legislation there would not be a public forum.                  
                                                                               
 Number 0970                                                                   
                                                                               
 GOVERNOR SHEFFIELD stated he and Representative Martin were good              
 friends and he wanted to stay good friends.  He hoped it was not              
 something he said today that offended him.  He thought the audit              
 conducted by the Legislative Budget and Audit Committee should be             
 kept a separate issue.  He agreed with Chair James that the                   
 railroad had a public relations problem which he felt had been                
 coming on for a long time and one of his goals as Chairman, was to            
 turn that around.  He explained the Montana Rail Link scenario of             
 events.  Last October, he received a letter from Dennis Washington,           
 the owner of Washington & Companies which owns Montana Rail Link.             
 The letter was also sent to the Governor, the Speaker of the House            
 of Representatives and the President of the Senate.  The letter               
 indicated Washington & Companies wanted to enter into a                       
 confidential dialogue about the possibility of purchasing the                 
 Alaska Railroad Corporation.  He commented that the corporation               
 receives three or four letters a year inquiring about buying the              
 Alaska Railroad.  The fact that Mr. Washington had written to not             
 only him, but also the Governor and the legislature, Governor                 
 Sheffield thought this was probably not any ordinary Montana guy.             
 He responded in what some might say was slightly negative, but it             
 was meant to be guarded so that someone wanting to take over the              
 Alaska Railroad couldn't come back and say things were done wrong             
 and sue.  The last three paragraphs indicated that procedures to              
 purchase the Alaska Railroad would be through the procurement                 
 process for a negotiated sale.  Furthermore, if he was interested             
 in purchasing the Alaska Railroad, the corporation would be willing           
 to meet with him and establish a procedure.  He had noted that 10             
 years ago, the appraisal on the railroad was very expensive so he             
 would expect an interested company to participate up front in the             
 cost of the appraisal.  Governor Sheffield received a call from the           
 go-between person he spoke of earlier, and he finally met Mr.                 
 Washington between Thanksgiving and Christmas in Palm Springs, but            
 he didn't offer to come up with any money for the appraisal and               
 indicated that if the state was really interested in selling the              
 railroad, further discussions could be held in the future.                    
 Governor Sheffield heard nothing more from the Washington company             
 until he received a call from the railroad while on vacation that             
 a hearing was going to be held before the Senate and House                    
 Transportation Committees, which he testified at a couple of weeks            
 ago.  He has nothing against the Washington group or talking with             
 them, but the ball had been thrown in their court.  He reiterated             
 that his idea of a committee would be open to the public.  Governor           
 Sheffield thanked the committee for the opportunity to participate            
 in this discussion.                                                           
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 Number 1319                                                                   
                                                                               
 CHAIR JAMES thanked everyone for their participation and adjourned            
 the House State Affairs Committee meeting at 1:05 p.m.                        
                                                                               

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