Legislature(1993 - 1994)
02/08/1994 05:00 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE
February 8, 1994
5:00 p.m.
MEMBERS PRESENT
Representative Richard Foster, Chair
Representative Gary Davis, Vice-Chair
Representative Eldon Mulder
Representative Al Vezey
Representative Bill Hudson
Representative Jerry Mackie
Representative Curt Menard
MEMBERS ABSENT
None
OTHER LEGISLATORS PRESENT
Representative Terry Martin
COMMITTEE CALENDAR
HCR 26: Declaring 1994 the year of Vancouver.
MOVED OUT OF COMMITTEE
HB 46: "An Act relating to frequent traveler credit for
state-paid travel."
HEARD AND HELD OVER
Alaska Marine Highway System Overview
WITNESS REGISTER
REPRESENTATIVE BILL HUDSON
Alaska State Legislature
Room 108, State Capitol
Juneau, Alaska 99811
465-3744
Position Statement: Sponsor of HCR 26
REPRESENTATIVE TERRY MARTIN
Alaska State Legislature
Room 411, State Capitol
Juneau, Alaska 99811
465-3783
Position Statement: Sponsor of CSHB 46
DUGAN PETTY, Director
Division of General Services
Department of Administration
P.O. Box 110210
Juneau, Alaska 99811-0210
Position Statement: Available to answer questions on
CSHB 46
GREGORY A. DRONKERT, System Director
Alaska Marine Highway System
1591 Glacier Avenue
Juneau, Alaska 99802
465-3959
Position Statement: Provided overview of AMHS
PREVIOUS ACTION
BILL: HCR 26
SHORT TITLE: DECLARING 1994 THE YEAR OF CAPT VANCOUVER
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
01/18/94 2096 (H) READ THE FIRST TIME/REFERRAL(S)
01/18/94 2096 (H) TRANSPORTATION
01/27/94 (H) TRA AT 05:00 PM CAPITOL 17
02/08/94 (H) TRA AT 05:00 PM CAPITOL 17
BILL: HB 46
SHORT TITLE: STATE-PAID TRAVEL MILEAGE CREDITS
SPONSOR(S): REPRESENTATIVE(S) MARTIN
JRN-DATE JRN-PG ACTION
01/12/93 43 (H) READ THE FIRST TIME/REFERRAL(S)
01/12/93 43 (H) STATE AFFAIRS, TRANSPORTATION,
FINANCE
03/20/93 (H) STA AT 08:00 AM CAPITOL 102
03/20/93 (H) MINUTE(STA)
03/30/93 (H) STA AT 08:00 AM CAPITOL 102
03/30/93 (H) MINUTE(STA)
04/03/93 (H) MINUTE(STA)
04/05/93 972 (H) STA RPT CS(STA) 2DP 1DNP 3NR
04/05/93 972 (H) DP: VEZEY, OLBERG
04/05/93 972 (H) DNP: ULMER
04/05/93 972 (H) NR: B.DAVIS, G.DAVIS, KOTT
04/05/93 972 (H) -FISCAL NOTE (ADM) 4/5/93
04/05/93 972 (H) REFERRED TO TRANSPORTATION
04/06/93 (H) TRA AT 05:00 PM CAPITOL 17
04/13/93 (H) TRA AT 05:00 PM CAPITOL 17
04/13/93 (H) MINUTE(TRA)
04/15/93 (H) TRA AT 05:00 PM CAPITOL 17
04/15/93 (H) MINUTE(TRA)
04/15/93 (H) MINUTE(TRA)
02/08/94 (H) TRA AT 05:00 PM CAPITOL 17
ACTION NARRATIVE
TAPE 94-3, SIDE A
Number 000
CHAIR FOSTER called the meeting to order at 5:10 p.m.
HCR 26 - DECLARING 1994 THE YEAR OF VANCOUVER
CHAIR FOSTER introduced Representative Bill Hudson as the
sponsor of HCR 26.
Number 023
REPRESENTATIVE HUDSON introduced HCR 26 by stating, "HCR 26
was brought to me by the Alaska Maritime Heritage
Foundation, some of my colleagues in Juneau, and
Representative Fran Ulmer. This year marks the 200th
anniversary of Captain George Vancouver's voyage to Cook's
River and Prince William Sound, then to northern Southeast
Alaska. In two small vessels, the Discovery (100 feet) and
the Chatham (65 feet), the expedition had, by the end of
1793, finished exploring the Columbia River, British
Columbia coast, and southern Southeast Alaska. HCR 26
declares 1994 to be the year of Vancouver to commemorate
George Vancouver's important contribution to Alaska's
history.
"To celebrate the 200th anniversary of Vancouver's
expedition, the newly formed Alaska Maritime Heritage
Foundation Vancouver Bicentennial Committee is planning
educational events. In Anchorage there are plans for a
lecture series and a conference to commemorate Vancouver.
Here in Juneau we plan to have a special exhibit at the
Alaska State Museum and a series of speakers over the summer
months. The exhibit, a major event called `Vancouver Meets
the Tlingits' will consist of Native and European artifacts
and trade goods that have had an influence on Native culture
and change.
"The National Geographic Society and the Alaska
Geography and Education Program are very supportive of the
concept and are working to prepare a curriculum for use in
Alaska's schools. I believe this is an excellent
opportunity to provide public education on many of Alaska's
place names and the rich history of our state."
Number 081
REPRESENTATIVE MACKIE moved that the committee pass HCR 26
out of the Transportation Committee.
Number 083
There were no objections, and CHAIR FOSTER declared HCR 26
to be moved out of committee.
Number 087
HB 46 - STATE-PAID TRAVEL MILEAGE CREDITS
CHAIR FOSTER stated that he was neutral on CSHB 46 and it
would be a committee decision as to whether or not to move
the bill.
Number 098
REPRESENTATIVE TERRY MARTIN, Prime Sponsor of HB 46,
introduced CSHB 46 by stating, "CSHB 46 represents a simple
and efficient effort to reduce the budget and potential
waste in departmental operations. It targets the abuse and
under-regulated tabulation of frequent flier credit miles by
state employees during state paid flights. The purpose of
the bill is to apply all mileage earned through state travel
to the specific department authorizing the ticket. State
employees conducting business, at state expense, should
relinquish awarded miles as property of the state. As
frequent flier award certificates are issued, they should in
turn be applied to future travel expenses incurred by the
department.
"The bill should also enhance efficiency by deterring
and limiting the number of employees attending the same
meeting. In the same instance, it will promote information
sharing and increase a team effort to reduce excessive
travel in certain divisions. In terms of the national
perspective, as of last year 14 states had frequent flier
policies. All 14 describe the mileage as `property of the
state' and require a central collection location in a
division to maintain enforcement and consolidate travel
data. In some cases, states whose employees travel
extensively have two frequent flier mileage numbers: one
for personal travel and one for state business.
"In an effort to curb travel expenses, all state
agencies should maintain a permanent, cumulative file of
their personnel's travel records. The file should include,
at a minimum, the total current airline frequent flier
mileage accrued by state employees at state expense.
Coupled with the passage of CSHB 46, tracking and recording
funds spent on travel will help reduce waste in each
departmental budget and should assist administrators in
reaching a more fiscally conservative approach to state
operations."
Number 174
REPRESENTATIVE HUDSON commented that this subject is not a
new one, and asked Representative Martin what the current
position of the airlines was, in contrast to Alaska
Airline's past position that frequent flier points were a
bonus to the flier and nothing else.
Number 186
REPRESENTATIVE MARTIN responded that this was something that
would have to be worked out with the airlines, but 14 other
states already have such programs. He added that he is
amazed that the airlines are able to do this with IBM, ARCO,
and other private enterprises as well and that Alaska
Airlines has a monopoly going on and no incentive to
cooperate. He added that a Juneau outfit, U.S. Travel,
would be able to set up such a program for every department
of state government.
Number 210
REPRESENTATIVE HUDSON stated that he has always felt
frequent flier miles are not state assets, but rather
employee entitlements, since often employees traveling on
state business must fly at night and on weekends. He
expressed concern that, through CSHB 46, the organized
employees of the state, rather than legislators and the
governor and other such employees, are being asked to give
up something that the state doesn't own.
Number 231
REPRESENTATIVE MARTIN responded that, if this is the case,
it should be an explicitly stated component of the employee
benefits package.
Number 243
REPRESENTATIVE HUDSON commented that the dialogue taking
place was very important and emphasized his belief that the
state has no call on the mileage points at issue. The state
has a responsibility to pay the fare, and if they don't
think the fare is appropriate, they should negotiate for a
lower fare. He cited an earlier attempt to negotiate for a
lower fare when Mark Air first flew into Juneau and offered
blocks of seats at lower fares for state travelers, adding
that in his mind such an approach was the proper way to do
it -- not via the proposals contained in CSHB 46. He
further added that he thought CSHB 46 would have a
demoralizing effect.
Number 261
REPRESENTATIVE MARTIN responded that a decision clearly
should be made by the legislature on how to treat the
mileage. He also commented that Mark Air's past efforts had
been honest ones to save millions of dollars, but employees
went over to Alaska Air and flew with them in order to get
the free mileage.
Number 270
REPRESENTATIVE FOSTER restated his position that he would
either move or not move CSHB 46 at the end of discussion and
ask for a vote thereon.
Number 276
REPRESENTATIVE MACKIE stated that he understood CSHB 46 only
deals with employees who are part of an organized bargaining
unit and under contract and does not effect legislators, the
governor, the governor's people, or other political people
who are, nonetheless, state employees. He asked
Representative Martin why that was the case.
Number 281
REPRESENTATIVE MARTIN replied that under absolutely no
circumstances was it his intent that legislators, the
governor, the governor's people, or other political people
be exempted from the requirements of CSHB 46. He added that
any state of Alaska employee should be responsible for
turning in the frequent flier miles to the state and the
airline should be responsible for the points being credited
to the state or state agency.
Number 296
REPRESENTATIVE MACKIE expressed concern that only organized
bargaining units would be losing frequent flier benefits.
Number 302
REPRESENTATIVE MARTIN responded that they then needed to add
words to the effect of "no one" to the bill.
Number 312
REPRESENTATIVE MACKIE continued to express concern regarding
the seeming exemption of legislators and other political
employees from the terms of the CSHB 46, according to his
interpretation of AS 39.
Number 317
REPRESENTATIVE MARTIN expressed willingness to amend CSHB
46, though he stated that he did not construe AS 39 to say
what Representative Mackie interpreted it as saying.
Number 318
REPRESENTATIVE MACKIE stated to Chair Foster that he was not
trying to be dilatory, but according to his reading, it was
obvious CSHB 46 only dealt with employees in organized
groups.
Number 320
REPRESENTATIVE MARTIN said that this was the first he had
ever heard of Representative Mackie's interpretation of CSHB
46.
Number 330
REPRESENTATIVE VEZEY made the point that he recognized the
demoralizing effect of losing benefits, but it certainly
wouldn't be as demoralizing as the loss of a job or having a
cohort lose a job. He added that he, personally, places
jobs at a higher priority than travel benefits.
Number 340
REPRESENTATIVE DAVIS stated that he had been under the
impression that there is no mechanism for the airlines to
credit the state, but Representative Martin's testimony
contradicted that impression. He asked Representative
Martin to confirm that if the state paid for the tickets,
the state could, under law, receive the frequent flier
benefits.
Number 351
REPRESENTATIVE MARTIN responded that there is currently no
mechanism in the state to implement a program such as he is
suggesting. He added that he is frustrated with the entire
situation, although U.S. Travel has told him that they could
do it through a very simple process.
Number 373
REPRESENTATIVE DAVIS asked Representative Martin to clarify
what U.S. Travel is and if it is a travel agency.
Number 376
REPRESENTATIVE MARTIN replied affirmatively, indicating that
U.S. Travel is a travel agency. He mentioned receiving a
program from U.S. Travel, but said he hadn't had the time to
go down and see U.S. Travel. He added that U.S. Travel has
told him that if the bill goes through, they can set up the
system for the state.
Number 380
CHAIR FOSTER reminded the committee that CSHB 46 had been in
a subcommittee consisting of Representative Mulder and
Representative Mackie and asked if there were any comments
the subcommittee wished to make.
Number 382
REPRESENTATIVE MULDER responded that he had asked the
representative of Alaska Airlines if they had done anything
like this, and they had not, and they were not excited about
having the opportunity to do it. He added that many state
employees don't look at travel as a benefit; rather, they
view it as part of the job. He concluded that he does not
feel that CSHB 46 is all that necessary at this point in
time, although the issue it addresses is certainly fair game
when looking for ways to cut overall spending.
Number 395
REPRESENTATIVE MULDER stated that in deference to Chair
Foster's request, he and Representative Mackie had moved
CSHB 46 out of subcommittee so that it could be discussed by
the entire committee.
Number 399
REPRESENTATIVE MACKIE asked Representative Martin to confirm
that what he was proposing was adding a new section which
would result in all state employees being addressed in
CSHB 46.
Number 404
REPRESENTATIVE MARTIN confirmed that CSHB 46 addresses all
state employees.
Number 406
REPRESENTATIVE MACKIE commented that he felt he had a better
understanding, but he would like to see if the bill could
work before implementing it as legislation and, ultimately,
he agrees with Representative Hudson that negotiating lower
fares with the airlines is really the answer, not CSHB 46.
Number 420
REPRESENTATIVE MARTIN stated that the legislature has a
responsibility, one way or the other, to do something about
this. He added that many state employees call and tell him
how they and their families travel together, sometimes for
30 days, on state frequent flier miles.
Number 440
REPRESENTATIVE HUDSON made the point that CSHB 46 is making
a major public statement by, in effect, saying that nobody
gets the mileage, and if you take the mileage, you get
fired. And not only that, these terms aren't even
negotiable through collective bargaining or other
negotiation. Along with that, injured state employees and
organized militia combine to make this very questionable
public policy. He stressed the need to know the costs of
implementing, and the importance of such a program to the
state -- that the rationale would have to be great.
Number 463
REPRESENTATIVE MARTIN replied that the rationale is to save
the state money.
Number 474
REPRESENTATIVE HUDSON remarked that he had done a good deal
of collective bargaining, and just because something is
silent doesn't mean it's acted on one way or another. In
this case, according to all he's seen, Representative Hudson
didn't consider frequent flier mileage ownership to be an
issue to be acted upon, and considered the state to have no
contractual right to the mileage.
Number 489
CHAIR FOSTER asked if there were any other questions.
Number 494
REPRESENTATIVE MACKIE asked if the Department of
Administration (DOA) had a position on CSHB 46.
Number 495
JIMMY PETTY, from the audience, identified himself as the
Director of the Division of General Services, and stated
that the DOA has a zero fiscal note for CSHB 46 and has not
prepared a position paper at this point. He added that DOA
has gone to Alaska Airlines with the idea that, if it were
possible, pooling the miles could be of substantial benefit.
Alaska Airlines' policy is to not allow pooling of miles, so
there is no way the state can get the collective benefits of
pooling mileage from Alaska Airlines. Alaska Airlines also
told DOA that they view the miles as belonging to the
employees -- the traveler.
Number 520
REPRESENTATIVE DAVIS asked Mr. Petty to clarify that it
wasn't an illegal thing, it was just Alaska Airlines'
policy.
Number 523
MR. PETTY confirmed Representative Davis' statement and said
the question of illegality had to do with the prior bill,
before the committee substitute was adopted, so that state
statutes would not be violated.
Number 527
REPRESENTATIVE DAVIS asked Mr. Petty how much the state
spends per year on travel.
Number 528
MR. PETTY said the DOA does not have good indicators on how
much individual travel was taking place.
Number 535
REPRESENTATIVE DAVIS expressed concern that the amount of
money spent yearly by the state on travel is a valid
question with regard to this entire issue.
Number 539
MR. PETTY responded that from the governor's budget,
provided by Representative Martin, it was very difficult to
ascertain how much money went to airlines specifically,
since travel was all lumped together.
Number 540
REPRESENTATIVE HUDSON wondered if the travel budget
indicates which airlines are flown and if mileage is claimed
in every case.
MR. PETTY acknowledged that Representative Hudson's comment
was a possibility, and discussed state contracts for the
best possible fare, period, without mileage incentives.
Number 555
REPRESENTATIVE MARTIN stated there is a $46 million travel
allocation, most of it for air travel.
Number 558
REPRESENTATIVE MACKIE said that Representative Martin's
numbers are neither achievable or realistic.
Number 560
REPRESENTATIVE MARTIN expressed concern.
Number 568
REPRESENTATIVE MACKIE made a motion to move the bill from
committee, in deference to the wishes of Chair Foster.
Number 569
CHAIR FOSTER asked for a voice vote as to whether CSHB 46
should be moved out of committee. Representative Davis and
Representative Vezey said "yes," all other committee members
said "no," and Chair Foster declared the bill to be held in
committee.
Number 578
ALASKA MARINE HIGHWAY SYSTEM OVERVIEW
CHAIR FOSTER introduced GREG DRONKERT, Director of the
Alaska Marine Highway System (AMHS).
Number 580
MR. DRONKERT introduced himself, thanked Chair Foster and
members of the committee and, due to the time constraint,
offered to give the committee a condensed version of the
AMHS issues and priorities.
Number 585
CHAIR FOSTER replied that a condensed version of issues and
priorities would be fine and the committee could delve into
them in detail should they deem it necessary.
Number 587
MR. DRONKERT stated his intent, as director, to focus on the
core business at AMHS, with concentration on providing safe,
efficient and reliable transportation. The other key issue
for AMHS was asset utilization -- how assets are configured,
how they're maintained, and how they're deployed.
Number 592
MR. DRONKERT addressed the question, "why an Alaska Marine
Highway System?" He stressed that the AMHS represents a
critical lifeline for Alaskans; it must be open to all users
and free, affordable access must be provided. The AMHS also
represents a tremendous strategic asset to the state --
marine trade and transportation is a vital component of the
state's infrastructure. He added that, historically, marine
trade has been the foundation linking various components of
our industrial base and trade. The AMHS mitigates the
ability of outside forces to control the cost of our
transportation, and provides immeasurable value in Alaska's
ability to retain its independence and control its destiny
by controlling ships, which in turn control trade.
Number 620
MR. DRONKERT listed basic transportation, trade
opportunities, jobs, security, and a critical link as
benefits provided by the AMHS.
Number 625
MR. DRONKERT reemphasized that the AMHS mission is to
provide safe, reliable and efficient transportation. He
listed the values of the AMHS as: direct and indirect
jobs, carriage of passengers, carriage of vehicles and
general cargo, generation of revenue, supporting Alaska
shipyards, and significant indirect economic impacts.
Number 632
MR. DRONKERT stated his belief that the real point is:
value must be assessed by considering the strategic
significance of the industry as it relates to Alaska's
infrastructure, industrial base, trading position, and
strategic security. Ultimately, he concluded, the socio-
economic benefits of the AMHS exceed the costs.
Number 635
MR. DRONKERT indicated that his objectives as director are
to continue to meet the AMHS mission, provide safe,
efficient and reliable basic service, and strive for
continued improvement. He sees the issues as being: rising
operating costs, increasing demand, an aging fleet,
declining state revenues, inherent infrequency due to
"public nature," and increasing regulatory requirements.
Number 639
MR. DRONKERT stated that costs are driven by the types of
vessels, how they're configured and their condition, as well
as by their operating costs (fuel, crew, and repair costs),
and by management and how efficiently it operates the system
and utilizes assets. He cited an aging fleet, which is
labor intensive to operate and expensive to maintain, as a
reason for the AMHS's currently rising costs. In addition,
there are rising crew costs; and labor agreements/vessel
labor costs account for about 59% of the AMHS total
operating budget. Last, variable vessel productivity and
Jones Act requirements further contribute to rising
operating costs.
Number 643
MR. DRONKERT asserted that demand is driven by population,
per capita income, tourism, development, trade, and the
global economy. Demand has increased steadily. Since 1978
the AMHS has seen a 44% increase in passengers and a 61%
increase in vehicles. However, there has been no increase
in capacity during the same period of time. Mr. Dronkert
stressed this as a key issue to bear in mind. Demand is
projected to continue to rise and Mr. Dronkert predicts that
demand will be constrained by supply -- if more supply
cannot be provided, demand will be constrained. Inadequate
supply will in turn reduce service, due to delays and
overcrowding.
Number 648
MR. DRONKERT cited an aging fleet as the next issue and
mentioned that older vessels limit the type of service that
AMHS can be in, and limit financial performance.
Additionally, older vessels have a propensity to have more
down time and higher costs, but AMHS has no swing of
replacement vessels. Current AMHS vessels require extensive
refurbishments to meet the service requirements.
Number 648
MR. DRONKERT asserted that declining state revenues are
another issue and result in increasing public scrutiny of
the AMHS, questioning of the value of the state subsidy, and
a reassessment of AMHS roles and objectives.
Number 652
MR. DRONKERT referred to the ever increasing federal and
international regulatory requirements, making the point that
a lot of money is being spent to remain in compliance with
U.S. Coast Guard, SOLAS, and EPA regulations.
TAPE 94-3, SIDE B
Number 000
MR. DRONKERT laid out AMHS priorities as ultimately
culminating in safe, efficient, reliable transportation.
Goals to be achieved in striving to meet the mission include
reducing costs through fleet modernization, increased
management efficiency and labor; increasing revenues through
tariffs, asset utilization, and new services; increasing
operational efficiency through organizational development,
rationalization of service, promotion of complementary
commercial operations, and development of Ketchikan-based
repair facility; increasing system reliability and safety,
through assessment of deficiencies, contingency planning,
maintenance management, fleet modernization, and training;
planning, through continued implementation of the AMHS
Master Plan and assisting in comprehensive state DOT/PF
intermodal transportation planning and assessment of
statewide marine transportation issues; and budget
considerations such as developing a long-range business plan
and securing a continued, reliable state funding commitment.
Number 025
MR. DRONKERT described his action plan for AMHS, beginning
with his intent to complete initial organizational
restructuring, solidify the organization's agenda, and
commence AMHS organizational development activities.
His financial plan calls for a focus on analysis and
control, securing FY 95 operating and capital budget
requests, assessing and, when required, restructuring
tariffs, and developing a long-range business plan.
Number 036
MR. DRONKERT identified the components of his operational
action plan as assessing the winter 94-95 operating
schedule, working towards optimization of load factors and
revenues, and seeking equitable negotiation of labor
agreements. Addressing the issue of AMHS assets, he plans
to assess the 94-95 overhaul and capital improvement
programs, prioritize/rationalize projects, continue fleet
modernization, and work to reactivate the Ketchikan ship
maintenance facility.
Number 047
MR. DRONKERT concluded by emphasizing his intention to
ensure integration of AMHS planning with the Department of
Transportation and Public Facilities' comprehensive
intermodal transportation strategy.
Number 078
CHAIR FOSTER thanked Mr. Dronkert and announced, at 5:50
p.m., with the arrival of members of the DOT Budget Finance
Subcommittee, that the House Transportation Committee
meeting was convening into a work session by the Budget
Finance Subcommittee.
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