Legislature(1997 - 1998)
02/10/1997 01:10 PM House TRA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE
February 10, 1997
1:10 p.m.¶
MEMBERS PRESENT
Representative Bill Williams, Chairman
Representative Beverly Masek, Vice Chairman
Representative John Cowdery
Representative Jerry Sanders
Representative Kim Elton
Representative Al Kookesh
MEMBERS ABSENT
Representative Bill Hudson
COMMITTEE CALENDAR
HOUSE BILL NO. 83
"An Act relating to commercial motor vehicle inspections; and
providing for an effective date."
- MOVED CSHB 83(TRA) OUT OF COMMITTEE
*HOUSE BILL NO. 55
"An Act relating to the fiscal operations of the Alaska Railroad
Corporation and to land acquired by the State of Alaska under the
Alaska Railroad Transfer Act of 1982 or otherwise acquired for
railroad purposes; and providing for an effective date."
- HEARD AND HELD
(* First Public Hearing)
PREVIOUS ACTION
BILL: HB 83
SHORT TITLE: COMMERCIAL VEHICLE INSPECTIONS
SPONSOR(S): REPRESENTATIVE(S) MARTIN
JRN-DATE JRN-PG ACTION
01/22/97 122 (H) READ THE FIRST TIME - REFERRAL(S)
01/22/97 122 (H) TRANSPORTATION, STATE AFFAIRS
02/03/97 (H) TRA AT 1:00 PM CAPITOL 17
02/03/97 (H) MINUTE(TRA)
BILL: HB 55
SHORT TITLE: ALASKA RR BUDGET AND LAND
SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT
JRN-DATE JRN-PG ACTION
01/13/97 42 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 42 (H) TRANSPORTATION, FINANCE
01/15/97 78 (H) STA REFERRAL ADDED
02/05/97 (H) TRA AT 1:00 PM CAPITOL 17
02/10/97 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
BRAD BROWN, Sergeant
Alaska State Troopers
117 West Fourth Avenue
Anchorage, Alaska 99515
Telephone: (907) 278-0312
POSITION STATEMENT: Testified on HB 83
FRANK DILLON, Executive Director
Alaska Trucking Association
3433 Minnesota Drive
Anchorage, Alaska 99505
Telephone: (907) 465-4970
POSITION STATEMENT: Testified on HB 83 and HB 55
TERRY MARTIN, Representative
Alaska State Legislature
Capitol Building, Room 502
Juneau, Alaska 99901
Telephone: (907) 465- 3783
POSITION STATEMENT: Testified on HB 55
GEORGE UTERMOHLE, Attorney
Legislative Legal and Research Services
Legislative Affairs Agency
130 Seward Street, Suite 409
Juneau, Alaska 99801
Telephone: (907) 465-2450
POSITION STATEMENT: Testified on HB 55
RANDY WELKER, Legislative Auditor
Legislative Audit Division
Legislative Agencies and Offices
P.O. Box 113300
Juneau, Alaska 99811
Telephone: (907) 465-3830
POSITION STATEMENT: Testified on HB 55
BILL COUMBE, Mayor
City of Whittier
P.O. Box 690
Whittier, Alaska 99693
Telephone: (907) 472-2320
POSITION STATEMENT: Testified on HB 55
JOE PERKINS, Commissioner
Department of Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801
Telephone: (907) 465-3000
POSITION STATEMENT: Testified on HB 55
BILL SHEFFIELD, former Governor
P.O. Box 107500
Anchorage, Alaska 99510
Telephone: (907) 265-2403
POSITION STATEMENT: Testified on HB 55
PAUL LAVERTY, member
Government Hill Community Council
224 East Manor Avenue, Anchorage 99501
Telephone: (907) 258-11896
POSITION STATEMENT: Testified on HB 55
JERRY DURNILL
(address and telephone not provided)
FRANK DEWEY, Locomotive Engineer
Alaska Railroad Corporation
4011 Edinburgh Drive
Anchorage, Alaska 99515
Telephone: (907) 248-2406
POSITION STATEMENT: Testified on HB 55
BILL CUMMINGS, Assistant Attorney General
Transportation Section
Department of Law
P.O. Box 110300
Juneau, Alaska 99811
Telephone: (907) 465-3600
POSITION STATEMENT: Testified on HB 55
ACTION NARRATIVE
TAPE 97-4, SIDE A
Number 001
CHAIR BEVERLY MASEK called the House Transportation Standing
Committee to order at 1:10 p.m. Members present at the call to
order were Representatives Masek, Cowdery, Sanders, Elton and
Kookesh. Representative Williams was present via teleconference
from Ketchikan. Representative Hudson was absent.
HB 83 - COMMERCIAL VEHICLE INSPECTIONS
Number 090
CHAIR MASEK announced the first order of business would be HB 83,
"An Act relating to commercial motor vehicle inspections; and
providing for an effective date."
REPRESENTATIVE JERRY SANDERS made a motion to adopt CSHB 83,
Version F.
Number 137
REPRESENTATIVE KIM ELTON objected for the purpose of discussion as
to what the differences are between the proposed committee
substitute and HB 83.
Number 146
CHAIR MASEK stated that Sergeant Brad Brown and Frank Dillon from
the Alaska Truckers Association are on line to discuss the proposed
committee substitute. She stated that she would like to adopt CSHB
83 in order to discuss the proposed committee substitute.
Number 180
REPRESENTATIVE ELTON stated he would withdraw his objection.
Number 194
CHAIR MASEK stated there being no objection, CSHB 83(TRA) was
adopted by the House Transportation Standing Committee.
Number 207
BRAD BROWN, Sergeant, Alaska State Troopers, testified via
teleconference from San Diego. He stated CSHB 83 is to replace the
current law which is not being applied. He stated that in the
1980s, part of the commercial vehicle enforcement activity was
annulled and they came in with a self inspection program that was
not adequately funded and not applied. Sergeant Brown stated that
after an investigation, it was found that the Department of
Transportation and the Department of Public Safety were not
complying with the provisions of AS 28.32.010, as a result it was
changed to be compatible with the current enforcement effort, the
Motor Carriers Safety Regulations (MCSR). He stated that the
current annual inspection program in effect, is an administrative
code rather than a statutory code. Sergeant Brown stated that he
is looking to move the requirement of annual inspections to a
statutory nature. He stated he would like CSHB 83 to be consistent
with the current penalty for a driver or vehicle that is placed out
of service to be issued a class A misdemeanor, instead of a class
B misdemeanor.
Number 422
CHAIR MASEK asked Sergeant Brown to discuss the repeals in Title
28.
Number 475
SERGEANT BROWN stated that he would like to have the Section 32 as
it pertains to certified inspection stations removed from CSHB 83
because it would be impossible to monitor certified inspection
stations in Alaska specifically in the rural areas. He further
stated "What we are looking at is to have qualified inspectors and
that is under AS 28.32.040, that says if they are certified and we
already have it adopted again underneath the Alaska Administrative
Code, that will lay out the criteria of what an inspector is so we
don't have to go back to and try reinvent the wheel again we've
already got the laws already on the books that says this is what
involves being a certified inspector."
Number 580
REPRESENTATIVE JOHN COWDERY asked if there are any plans regarding
vehicle identification stickers to identity the vehicles that have
been inspected.
Number 598
SERGEANT BROWN stated that in accordance to the MCSR under Title 49
Section 396.17, proof is required of an annual inspection, which is
shown by a sticker attached to the vehicle. He stated that an
additional provision in the MCSR under Title 49 Section 396.17(c)
basically states "if the vehicle has passed one of our inspections
it can act as its annual inspection, so they would carry a copy of
the inspection report in the vehicle and produced that upon demand
and that would identify that they have in fact passed an annual
inspection."
Number 693
REPRESENTATIVE COWDERY asked if there was an outside visual that
indicated what month the vehicle passed the inspection.
Number 706
SERGEANT BROWN stated the Federal Highway Administration (FHWA)
sticker provides the date when the inspection was performed.
Number 738
REPRESENTATIVE COWDERY asked if the certified stations that perform
the inspections would be licensed by the state.
Number 745
SERGEANT BROWN stated that it is proposed that there wouldn't be
any licensing by the state because it would be difficult to monitor
the stations, the certified stations would comply with the
provisions of the MCSR as far as being a certified inspection
station and have qualified inspectors in the stations.
Number 781
REPRESENTATIVE COWDERY asked if a company that has its own
inspection station would be able to perform its own inspections.
SERGEANT BROWN replied, "Yes they could."
Number 788
REPRESENTATIVE ELTON asked if in CSHB 83, Section 2, AS 28.32.040
where it is repealed and reenacted to read "a person may not
conduct commercial vehicle inspections unless qualified under law",
is the law you just referenced to Representative Cowdery.
Number 822
SERGEANT BROWN replied, "Yes." He stated, the commissioner can
enact administrative codes and adopted 396.11 through 396.17 under
Administrative Code 13 AAC05.020.
Number 870
REPRESENTATIVE ELTON stated, "I wanted to make sure that by
repealing the former sections and by saying qualified under law,
this new section does give you the authority to maintain those
administrative regs."
SERGEANT BROWN responded, yes it does.
Number 881
FRANK DILLON, Executive Director, Alaska Trucking Association,
testified via teleconference from Anchorage, that CSHB 83 would put
into statute the MCSR that have been applied to the trucking
industry through the administrative code for the past several
years. MCSR is a comprehensive set of regulations that cover
everything from the types of equipment allowed, to the drug testing
and alcohol testing programs as well as encompassing the equipment
inspection criteria. He stated that under the federal regulation
when adopted into statute, will result in a system where people
will have to meet minimum qualifications for inspection purposes.
He stated that, besides the annual inspection requirement there is
the pre-trip inspection which requires the driver to inspect the
equipment twice daily at the beginning and end of the shift to
ensure the equipment is in good working order, if not the equipment
must be fixed before it can be operated. The daily inspection
sheets are carried with the equipment and is available on the road,
upon request by an inspector.
Number 1059
REPRESENTATIVE SANDERS made a motion to move CSHB 83, out of
committee with unanimous consent, individual recommendations and
zero fiscal note.
Number 1077
CHAIR MASEK asked if there was an objection. Hearing none CSHB
83(TRA), Draft F, was moved out of the House Transportation
Standing Committee. She wanted to note that the bill was greatly
supported by both the administration and the Alaska Trucking
Association.
HB 55 - ALASKA RR BUDGET AND LAND
Number 1117
CHAIR MASEK stated HB 55, "An Act relating to the fiscal operations
of the Alaska Railroad Corporation and to land acquired by the
State of Alaska under the Alaska Railroad Transfer Act of 1982 or
otherwise acquired for railroad purposes; and providing for an
effective date", would be the next order of business. She asked
Representative Martin to give his explanation of HB 55.
REPRESENTATIVE TERRY MARTIN stated that HB 55 was introduced on
behalf of the Legislative Budget and Audit Committee and it hopes
to smooth out some of the problems pertaining to the Alaska
Railroad Corporation, the assets of Alaska, and complete the
transfer of the Alaska land, after Alaska's commitment is completed
to the federal government. He stated the commitment to the federal
government developed in 1982, when the federal government wanted to
get rid of the railroad because it was costing the federal
government a lot of money. He stated that the state legislature
decided it wanted to save the railroad and paid the federal
government $22,400,000 for it as well as established the railroad
board to operate and manage the railroad for an unspecified period
of time. He stated that it was anticipated that the railroad would
be privatized because the state did not want to have the same
financial obligation as the federal government had. He stated that
for the past 12 years the railroad has been successful, and now the
legislature needs to do something to transfer the assets to the
state of Alaska or the corporation, because without the transfer,
Alaska is losing millions of dollars. He stated that once the land
is transferred to the state then the decision of what to do with
it, such as put it under the corporation, give it local government,
or to sell it, can be made. He stated that the most important
aspect of HB 55, is it puts the corporation under the Executive
Budget Act. He stated "we have negated our responsibilities of
overseeing the appropriations, of overseeing how the land had been
disposed of or used or leased, of overseeing the other assets of
the state corporation." He stated that this is the only state
corporation not under the preview of the legislature.
Representative Martin stated that this has nothing to do with
diminishing the operation of the railroad but with following the
constitutional responsibility in Article 8 and Article 9, regarding
the resources of the state. He stated that if the Alaska Railroad
Corporation is put under the Executive Budget Act it would be
another part of the Department of Revenue along with all the other
corporations such as Alaska Industrial Development and Export
Authority (AIDEA), the Alaska Housing Finance Corporation and the
Permanent Fund Corporation. He stated HB 55 protects the state,
its citizens and ensures the legislature is aware of what is
occurring with the railroad.
Number 1448
REPRESENTATIVE COWDERY asked if AIDEA, under the Executive Budget
Act has shown a profit.
Number 1460
REPRESENTATIVE MARTIN replied that we monitor what they invest in
and what they will do and not do. He stated they do not want money
to be misused.
REPRESENTATIVE COWDERY asked if his understanding was correct that
the Legislative Budget and Audit Committee has done a study on the
railroad.
Number 1519
REPRESENTATIVE MARTIN replied, "They have done a number of small
requests according to what legislators have come up with in
problems. One would be the R.V. park up in Fairbanks, what
happened there. There is a serious question to what degree the
railroad is getting involved in private enterprise that is outside
of the railroad domain." He stated that a letter of intent was
passed prohibiting the railroad from getting into private ventures
that do not relate to the railroad business.
Number 1557
REPRESENTATIVE COWDERY asked, "What is the cost occurred from the
board of directors on the railroad."
Number 1565
REPRESENTATIVE MARTIN stated that it was to some degree available
but he would have to ask Mr. Welker for more information.
Number 1573
REPRESENTATIVE ELTON stated, "When I read the bill it seemed almost
like the stereotypical democratic response. You want to bring this
corporation more fully under the government tent. I'd be
interested in your response to that. I would have thought that you
retain flexibility by keeping the corporation outside of that
tent."
Number 1602
REPRESENTATIVE MARTIN replied that it seems like just the opposite
in that he believes in free enterprize and private enterprise. He
stated that the future life of the railroad will be privatization
and getting private monies. He stated that we got a nice gift from
the federal government, 43,000 acres of land for $22 million. He
stated that it was not expected that the railroad be run as a
public corporation for 13 years, it was thought that it would be
privatized and now the legislature finds itself with the
constitutional responsibility. He stated that when the land is
transferred to the state, the legislators will have to decide, not
the railroad board, what they want to do with it.
Number 1673
REPRESENTATIVE ELTON stated, "I understand what you are saying and
in some ways it kind of bothers me. What we are doing is bringing
them in we're making their assets more difficult to use and we're
adding 62 politicians to the board."
Number 1697
REPRESENTATIVE MARTIN stated that legislators are not going to be
on the board. He stated that it is like the Permanent Fund
Corporation where we monitor their involvements closely and pass
legislation as things change. He stated the railroad corporation
belongs to the people and constitutionally only the public has the
responsibility of authorization, appropriation, leasing sales, and
need an open forum to be aware of what is being done with the lands
and gravel.
Number 1759
REPRESENTATIVE ELTON asked, "You're not saying that the existing
structure is unconstitutional now?"
Number 1778
REPRESENTATIVE MARTIN replied that we are in serious neglect from
our responsibilities under Article 8 and Article 9. He stated, "It
was not meant to be, we felt we would privatize it pretty quick and
not have to worry about it but now since it has been belabored this
long and now that we do need to take necessary action to transfer
the land to us we are the ones that are responsible not the
railroad board."
Number 1839
REPRESENTATIVE BILL WILLIAMS asked if Representative Martin would
have a problem if the committee chose to split the fiscal
operations of the railroad corporation and the transference of land
to the state into two bills.
Number 1869
REPRESENTATIVE MARTIN responded that he thought that it was an
excellent idea due to the long range evaluation and consideration
for the legislature regarding the transference of land.
Number 1969
GEORGE UTERMOHLE, Attorney, Legislative Legal and Research
Services, Legislative Affairs Agency, stated that the issue relates
to whether or not the legislature is required to appropriate funds
of the Alaska Railroad. He stated the issue arises under Section
7, Article 9 of the constitution which requires that no money be
removed by the state treasury except by appropriation of law. Mr.
Utermohle stated that the issue then becomes whether or not the
Alaska Railroad is part of the state treasury. If the railroad and
its revenues are part of the state treasury than the constitution
would require those revenues be appropriated by the legislature.
He stated that if the corporation is a public corporation with an
existence independent than that of the state, then it would be out
of the state treasury. He stated however, that in itself, does not
eliminate the power of the legislature to appropriate railroad
revenues, the issue then becomes whether or not railroad revenues
are subject to appropriation by the legislature, as required by the
constitution under Section 7, or they become available for
appropriation under the legislature's appropriation power. Mr.
Utermohle stated it would take a court decision to resolve those
questions.
Number 2069
REPRESENTATIVE COWDERY asked if his understanding was correct that
any amount of money that may be appropriated should go towards the
purpose of the railroad operation and that the question is the
requirement to appropriate.
Number 2092
MR. UTERMOHLE replied, "that is the issue, the role of the
legislature in appropriating the revenue. The use of that revenue
is restricted under the terms of the Alaska Railroad Transfer Act.
That legislation requires that the revenue of the railroad be
retained by the railroad, and used for railroad and railroad
related purposes." He stated the broad sense of what that money is
used for, is not at issue here.
Number 2127
REPRESENTATIVE COWDERY asked if it was Mr. Utermohle's opinion that
all of the requirements of the transfer from the federal government
to the state were met, for instance, the opportunity to privatize
the railroad at any given time.
Number 2135
MR. UTERMOHLE responded that at the time the state acquired the
railroad and under the Alaska Railroad Corporation Act, it was the
intent that the Alaska Railroad be held and operated by the state
until it is converted to private ownership. He stated, however,
the law did not provide a specific date, it just stated when the
state found it appropriate that the railroad be transferred to
private ownership.
Number 2155
REPRESENTATIVE COWDERY stated it was his understanding that
privatization was within a ten year span.
Number 2160
Mr. UTERMOHLE stated there is no specific time under statute or law
when the railroad was to become privatized.
Number 2179
RANDY WELKER, Legislative Auditor, Legislative Audit Division,
Legislative Agencies and Offices, stated that the Legislative Audit
Division and the Budget and Audit Committee roles, in regards to
the railroad, has always been an after the fact approach, to
prevent a problem from reoccurring. He stated that the issue today
is determining what is the best vehicle to provide legislative
oversight of the assets of the state. He stated that he is in the
agreement that the Executive Budget Act is that vehicle. He stated
that it is meant to be a tool for informing the legislature of what
is going on in the corporations. He stated that it is legislative
prerogative to appropriate. He stated that the railroad prepares
a budget annually, and bringing the budget in front of the
legislature for oversight would not be a burden on the railroad
corporation. Mr. Welker stated that we are looking at the best
mechanism to provide a degree of legislative oversight.
Number 2366
REPRESENTATIVE SANDERS asked if Mr. Welker was saying that this is
an unconstitutional dedicated fund and that the legislature needs
to do something about it.
Number 2380
MR. WELKER stated that would be his position that we are in
violation by not appropriating, although it is untested. Mr.
Welker stated that this is the only entity of state government that
is not subject to the Executive Budget Act.
Number 2429
CHAIR MASEK asked Mr. Welker to comment on railroad management
regarding payment of property taxes, state corporation taxes,
vehicle licensing taxes and how it effects the state's revenue.
Number 2442
MR. WELKER stated that the railroad does not receive a general fund
subsidy for its operation. He said that state subsidies have not
been quantified dollar-wise to indicate how much the state is
actually subsidizing operations.
TAPE 97-4, SIDE B
Number 030
REPRESENTATIVE COWDERY asked if they did pay the taxes would they
still show the $7 million profit as in the past.
Number 039
MR. WELKER stated that it would definitely impact the income
statement unfortunately there is not a calculation on how much that
impact would be.
Number 060
REPRESENTATIVE COWDERY asked if his understanding was correct that
there are several entities that would like to purchase the
railroad, but did not want to purchase the land. He believed that
if they did need land they would prefer to lease rather than buy.
Number 081
MR. WELKER stated, "We are venturing off now the sale discussion
and in my opinion there is a little bit we know and a lot we need
to know about the railroad before those decisions can be
responsibly reached."
Number 093
REPRESENTATIVE ELTON asked if HB 55 changed the collection of any
fees.
Number 107
MR. WELKER replied that HB 55 does not change any of the fees.
Number 111
REPRESENTATIVE ELTON asked if his understanding was correct that
because the railroad is not under the Executive Budget Act now, all
funds that are spent by or on the railroad are not part of general
fund dollars that are attached to the overall state budget.
Number 121
MR. WELKER stated, "That's correct."
REPRESENTATIVE ELTON asked if his understanding was correct that if
the railroad is brought in under the Executive Budget Act and we
have a pledge that we are going to cut $60 million, that will mean
we are going to have to cut more than $60 million because we are
adding general fund dollars to the top.
Number 142
MR. WELKER replied that the railroad's receipts as they would come
into the budget act and be appropriated would be considered
corporate receipts, therefore, would fall outside the general fund.
He stated that he would assume, if a component was going to be
brought into the budget that was not there previously, an
adjustment would result to prevent an out of balance starting
point.
Number 165
REPRESENTATIVE ELTON asked if passenger fees and freight fees would
come in as general fund dollars.
Number 172
MR. WELKER replied that they would fit the definition of corporate
receipts, which is all inclusive.
Number 180
CHAIR MASEK asked if her understanding was correct, that if the
railroad was under the Executive Budget Act, the public would have
better scrutiny over its operations.
Number 191
MR. WELKER stated that the Executive Branch has an input in the
railroad operation by the appointment of board members, so the
administration is represented in the railroad corporation. He
stated that what has been absent is a structured formal mechanism
that requires legislative oversight.
Number 240
BILL COUMBE, Mayor, City of Whittier, testified via teleconference
from Whittier, that the city of Whittier is in the process of
trying to develop its infrastructure, and has to deal with the
railroad because it owns 50 percent of Whittier's core land and 70
percent of the land in the harbor areas. Mayor Coumbe stated that
the city of Whittier's issues are an upcoming road that will
increase traffic to Whittier by 600,000 vehicles in two years and
600 people on the boat harbor's waiting list. He stated that
negotiations have been going on for two years with little
resolution in regards to the land needed to expand the boat harbor,
uplands and city core. The position in the past has been to lease
land at five year intervals. He stated that Whittier needs
legislative help to resolve the problem. Mayor Coumbe stated that
they have passed a sales tax ordinance but it does not affect the
sales of tickets and freight fees of the city. He stated
Whittier's budget is $360,000 and feels they will not be able to
build the infrastructure needed in two years.
Number 379
CHAIR MASEK stated that the committee has Mayor Coumbe written
testimony and resolution from the city of Whittier.
Number 387
REPRESENTATIVE COWDERY asked how much of the land in Whittier is
useable.
Number 403
MAYOR COUMBE replied that out of 211 acres, about 137 acres are
suitable for development and half of it is owned by the railroad.
Number 414
REPRESENTATIVE COWDERY stated that it was his understanding "that
the federal monies were going to be used to expand the harbor and
some of railroad yard that was down in the harbor area was going to
be moved up north near the tunnel."
Number 441
MAYOR COUMBE replied that the engineering plan is that the city of
Whittier must expand inward from the current location into land
owned by the railroad.
Number 453
REPRESENTATIVE COWDERY further asked if his understanding was
correct, that the railroad yard and tracks were going to move up
near the three-mile tunnel.
Number 465
MAYOR COUMBE, replied not that it was known to him. He stated that
there is a plan to move the tracks south at the city's expense of
$3 million to $4 million.
Number 477
REPRESENTATIVE COWDERY asked how the legislature could help the
city of Whittier.
Number 483
MAYOR COUMBE replied the uplands on the south side of the railroad
would be owned by the railroad and the city of Whittier would own
the land on the east and the west the property, resulting in two
landlords and two supervisors in the harbor. Mayor Coumbe stated
that the city of Whittier would like to resolve that issue in a
manner that would allow the city to seek the funding to (indisc.)
the harbor. He stated that core lands, half the size of the
current community, are unused and the city has no ability to plan
for the use of the property because it is not their land.
Number 523
REPRESENTATIVE COWDERY asked if his understanding was correct that
there are appropriations to expand the land to put the road in, but
without the negotiations the building is held up.
Number 544
MAYOR COUMBE stated that is correct. He stated there are six
issues that the city and railroad need to work out. He stated the
city of Whittier is in a hard position because they have pressures
for the road to be built, but without negotiations they can not
begin.
Number 600
JOE PERKINS, Commissioner, Department of Transportation and Public
Facilities (DOT/PF), stated that the administration does not have
a final position on HB 55 as it is still being reviewed. He stated
the DOT/PF feels that if the system is working fine it should not
be changed. He stated that the railroad did make a $9 million
profit in 1996, although there was service made by the state to the
railroad, but no appropriation to the railroad of general fund
money by the legislature. He stated currently the DOT/PF knows how
the railroad is operating and can predict the impact of this
operation. He believes that because HB 55 would result in portions
of land no longer in railroad control it would be difficult to
predict the future of the railroad financially and operationally.
He questioned if it was worth the risk to get into unknowns versus
the current operation. Commissioner Perkins stated that land has
been involved with the railroad ever since it was built, and it is
not unusual to have a railroad own land. The revenue from the
lease portion of the land is a major contributor to the railroad
operation. He stated that the sizable amount of jobs, economic
benefit and revenue that the railroad provides must be considered.
He stated that the committee needs to look at the railroad as what
is best for it now and not what was intended for it 15 years ago.
Number 775
REPRESENTATIVE COWDERY asked where HB 55 would affect the amount of
jobs because it would take the same amount of people to operate the
railroad no matter who the owner is.
Number 791
COMMISSIONER PERKINS replied, "When I look at jobs, I look at jobs
that are created by those people that are using the railroads. For
instance, the refining business in Fairbanks, the coal in Healy,
the gravel that we haul to Anchorage." He stated that the railroad
is an operating organization, that runs a service to the people in
the state and in doing so there needs to be flexibility. He stated
for example, it not known what the gravel shipments are going to be
to Anchorage and if more employees and extra trains are going to be
needed. He stated, "this is something that on the business side
requires a lot of flexibility, this all affects jobs. I think it
is tied very closely to economics and the ability of the railroad
to react to changing situations daily."
Number 874
REPRESENTATIVE COWDERY stated that the municipalities, do not know
how much it is going to snow and the streets are kept in good shape
even though they have unknown circumstances under the Executive
Budget Act. He further stated that he can not see how the railroad
being under the Executive Budget Act would have any affect on the
jobs as fuel and gravel is still going to be hauled. He said, "I
don't agree that this is going to have an impact on the jobs."
Number 920
COMMISSIONER PERKINS stated, "If you prescribed an X number of
people that they would have and they could not hire more without
coming back then definitely it would affect the ability to have
flexibility in the summertime." He stated that in order to run a
business flexibility is needed and you need to be able to instantly
change a particular business plan. He suggested that maybe this
could be written in to HB 55.
Number 961
CHAIR MASEK asked Commissioner Perkins that since he is a board
member on the railroad, is he testifying on behalf of the Knowles
Administration or on behalf of the railroad.
COMMISSIONER PERKINS stated that his testimony is from the Knowles
Administration.
Number 985
REPRESENTATIVE AL KOOKESH asked Commissioner Perkins when he
thought he would be done with his analysis on HB 55.
Number 995
COMMISSIONER PERKINS stated that probably a week to ten days,
because it involves quite a few people and the DOT/PF needs to look
at HB 55 in detail.
Number 1053
CHAIR MASEK indicated that Jane Angvik, Director, Division of Land,
Department of Natural Resources and Crystal Smith, Legal
Administrator, Office of the Attorney General, Department of Law,
were on line to answer any questions.
Number 1077
BILL SHEFFIELD, former Governor, testified via teleconference from
Anchorage, that the changes in the railroad business require the
ability to respond with capital investments. The railroad is a
capital business and has responded to changes by becoming more
competitive to get cargo and passengers to employ the railroad. He
stated that they have a long term contract to ensure that the tank
car fleet is the most competitive in the business. He said, "We
are currently evaluating the upgrade of our locomotive fleet, the
upgrade will offer the opportunity for long term savings.
Responding to customer needs requires quick action and it usually
occurs during the fiscal year." He stated that this would be
difficult if not impossible to respond, if administrative approval
was needed, as it would be under the Executive Budget Act. He
stated that by assuming substantial control over the financial and
legal obligations of the railroad and by removing a substantial
portion of the railroads asset base, the state may be subjecting
itself to full state liability, despite language to the contrary.
Number 1266
MR. SHEFFIELD stated that the railroad is considering buying 20 new
locomotives which will cost $40 million. The public corporation
for profit allows the railroad to borrow money. He stated that HB
55 will make it difficult to borrow money for operating capital or
to purchase equipment. He stated it may be difficult for the
railroad to assure its creditors that the legislature will
appropriate sufficient money, or approved line entries on its
budget to pay for the debt service on its loans. He stated that
HB 55 would be a violation of the Alaska Railroad Transfer Act
which provides that the railroad would retain control of the funds
and budget because the federal railroad realized it was not
possible to recognize all the business opportunities. He stated
that the federal government might recognize HB 55 to be a breech of
its contract with the state of Alaska. He stated that the
railroad's customer base may not change but the proposed budgeting
process will increase the cost of doing business. He stated that
it would be unreasonable to suggest that the customers could make
up the additional cost.
Number 1344
MR. SHEFFIELD stated that Alaska's business is highly seasonal, and
moving to a state's fiscal year would split the railroad's business
season. He stated it would also require the railroad to spend
considerable time participating in the budgeting process. He
stated the inconsistencies in HB 55 illustrate the difficulty in
separating the financial management of the corporation from the
operational management. He stated HB 55 lacks definition of
guidance on making decisions.
MR. SHEFFIELD indicated that the 1996 financial statement exhibits
that real estate provided for $4.4 million of the railroad $8
million income. He stated that the general effect of the bill
would be to remove a considerable amount of railroad real estate
holdings from the operation's control. He stated that the real
estate revenues are relatively stable and predictable unlike
freight revenue. He indicated that most of the valuable leasable
land is already leased which will complicate the effectiveness of
any transfers. He stated that the railroad currently enjoys a
benefit with the Federal Railway Administration that clarifies the
responsibility for pre-transfer of contamination. He stated that
this could be jeopardized by the transfer of the land or by other
parties who could find a basis for a significant environmental
liability. He stated that HB 55 will result in "Ratification of
leases to third parties. Limitations on future leases of right
away. Inconsistency created by terminology, a technical amendment
is needed to make reference to the right away consistency." He
stated more opportunities for communication is needed and if you
want more legislative oversight the Executive Budget Act is not the
place to do it. He stated that HB 55 limits the railroad's ability
to earn an profit and as a result the railroad will not be worth
anything. He indicated that the board of directors want to be able
to work with the legislature. He stated that there is a new
service starting up next year from Seattle into Whittier. He
stated the railroad employees are not state employees they come
under the railroad retirement program. He stated that they are
trying to work with the city of Whittier to move the tracks away
from the waterfront so the harbor will be able to expand. He
stated that they would work with the city of Whittier on the budget
and how to get the expansion of the boat harbor to pay for itself.
CHAIR MASEK stated that the committee was running short of time as
there are other people who would like to testify so if he would
like to forward his testimony the committee would greatly
appreciate it.
Number 1958
PAUL LAVERTY, member, Government Hill Community Council, testified
via teleconference from Anchorage, that Government Hill was
established at the same time the railroad was established, it sits
above the railroad and is surrounded by railroad land. He said
that he would like to see the railroad placed under the state
procurement code, so that it will explicitly state that the
railroad will function as a state entity. He believed that the
railroad acts as a private corporation when it is most convenient
and as a state agency at other times. He stated that during the
joint oversight hearing it was said the railroad does not pay any
state corporate tax, local property tax or even pay for their
license plates. He stated that during tax time the railroad
functions as a state agency. He stated these arbitrary procurement
rules have resulted in the Comfort Inn transaction which involved
state land being traded for equity share of a hotel in downtown
Anchorage in direct competition with other privately owned hotels.
He stated that these roles resulted in the real estate transaction.
He stated that five years ago the first developer was picked
through a team comprised of the municipality of Anchorage,
Anchorage Economic Development Corporation and the railroad. The
name of this entity was the Intergroup Development of Texas. The
railroad arbitrarily dropped the Intergroup Development Corporation
and then signed a contract with the LoPatin Corporation resulting
a lawsuit. He stated that the lease will expire in end of February
of 1997 and there has been no action taken with the re-development,
in fact the legislature had to re-appropriate $5 million from this
project. He stated another instance of the implementation of
arbitrary rules is documented in a division of Legislative Audit
Report Number 08-45-47-96 dated July 3, 1996, regarding the
Flamingo Brothers gravel disposal contract. He stated that this
was a sole source contract for the disposal of up to one million
tons of Alaska railroad owned gravel with no public notice and no
open competitive bidding. He stated the railroad has excluded the
owners of the railroad, the public and by doing so they made
decisions that may not have been in the best interest of the
general public.
Number 2312
MR. LAVERTY stated that HB 55 seeks to transfer the management of
the land not needed for real operations to the DNR. He stated that
this will result in the name change of the corporation from the
Alaska Real Estate and Railroad Corporation to the Alaska Railroad.
He stated that there are bills filed to convey state land to
municipalities and burroughs. The Anchorage Heritage Land Bank is
set up to sell excess municipality land to the highest bidder
completing the transfer of land from government management to
private ownership and puts it under local tax rules. He stated
that major developers, financial developers and financial
institutions may not want long term leases on government owned land
when it comes time to develop local projects and to lend money.
Development would be easier on private owned land if it was
conveyed from the DNR to private ownership. Mr. Laverty stated
that the DNR is more willing to look out for the best interest of
the general public. He stated that he urged the Legislature to
look at the information presented at the Legislative Budget and
Audit Committee meeting conducted on June 25, 1996 and August 29,
1996. He stated that there were a couple of pertinent items such
as adding a legislator to the Alaska Railroad Board providing more
oversight of the railroad activities. He stated that even though
only 5 percent of the land is in Anchorage, 75 percent of the total
value of the land is in Anchorage.
TAPE 97-5, SIDE A
Number 001
MR. LAVERTY stated that former Governor Sheffield said by adding
oversight to the legislature the process will add time and cost
without adding value. Mr. Laverty feels that by adding legislative
oversight, making sure that the state asset is being run in a
prudent manner both financially and in the public interest, is
adding value to the entire asset. He stated that as far as
differences in the fiscal year, Alaska's fiscal year is different
than the federal's and the municipality of Anchorage's fiscal year
but they are able to make things work. He stated that a valuable
piece of land is becoming available and since the railroad has
shown that they have not been successful at picking developers,
transferring the land into the municipality to sell the land to the
highest bidder would be best for the railroad.
Number 217
JERRY DURNILL, testified via teleconference from Whittier, that the
total acreage in the core area owned by the railroad is 108.7
acres, the city owns 19.6 acres of the core area. He stated that
a resolution would be a more equitable distribution of the land,
that is available, more along the lines of the rest of the railbelt
community. He stated that the documentation in those communities
show that the railroad percentage of ownership is under ten percent
of the core areas. In Whittier it is 51.3 percent of the core
area. He stated that the railroad has said that they will follow
guidelines established by the city for the development of the core
area but the city lacks revenues from property taxes that would
come from the sale of this property through private development.
Number 408
REPRESENTATIVE WILLIAMS stated that he called the city manager of
Whittier in January and he was told that the city was meeting with
the railroad corporation and asked Mayor Coumbe if that was
correct.
Number 461
MAYOR COUMBE replied that they have been meeting infrequently and
they had attended the railroad's board meeting in January.
Number 521
REPRESENTATIVE COWDERY asked Mayor Coumbe if he could sent a public
opinion message so the legislature could work to get all parties to
the table to resolve the issue.
Number 581
FRANK DEWEY, Locomotive Engineer, Alaska Railroad Corporation,
testified via teleconference from Anchorage, and read the following
testimony into the record.
"As an Alaska Railroad engineer for the past 22 years, I speak with
experience across many different administrations. As an applicant
to the position of Alaska Railroad Corporation's Chief Executive
Officer, I speak of the prospect for the immediate future. As one
who believes in the expansion of railroads, as being key to the
future economy of the state of Alaska, I speak of the distant
future. As a resident of the state of Alaska, I speak as on who
desires an accounting of the railroad, the land and the policies
affecting them.
"Maybe our eyes are being clouded by another's riches. When one
prospers, others set about to discover ways to enrich themselves
with or by the other's effort. On January 5, 1985, the state of
Alaska received ownership of the Alaska Railroad and its 36,000
acres of land and now we hear it may be as high as 43,000. Of the
total amount approximately 12,000 acres lies beneath our current
facilities, some lies beneath abandoned rights of way or industrial
developments, the rest is principally undeveloped.
"Municipalities, communities, villages, and others have eyed some
of these lands with envy. The railroad corporation apparently
feels that they deserve the right to retain their lands without any
oversight, both I feel are wrong in their assumptions. Just
because a neighbor prospers does not give us the right to steal
form them. Neither is it right for the other to totally disregard
their neighbor. Some people feel that because the railroad
received 'free' land that it came without a price.
First, the land was given to the railroad to provide transportation
and townsites to those along its right of way. Without the
railroad Anchorage need not exist, Fairbanks would be a hamlet
forgotten along the banks of the Chena River, remembering only a
Gold Rush of long ago. Seward, Whittier, Palmer, Wasilla,
Talkeetna, Healy, Nenana and North Pole who could even imagine.
Prudhoe Bay might be visited only by Eskimo whalers following the
annual migrations. The state of Alaska might still be a
protectorate of the United States or may have been traded back to
Russia for some reason. World War II might have turned out
differently.
"Secondly, the railroad was granted land as an inducement to
develop industries and commerce in the nearby areas. That
profitable revenues would be able to sustain operation without
further expenditures of federal dollars. The idea was also to
create a demand to sell the adjoining lands, there by gaining
immediate revenues and future tax income.
"For the Alaska Railroad Corporation, owned 100 percent by the
state of Alaska, to feel that it owes no obligation to its owner is
nonsensical. For the state of Alaska to expect that the railroad
could remain profitable, either in State or private hands, without
land to develop is equally as much nonsense. The state has the
right to demand that its property is being handled properly and
profitably. The state, needs to allow the Alaska Railroad
Corporation to use all of its assets to achieve this. The Alaska
Railroad Corporation must recognize that good working partnerships
must be formed with local governments. The local governments must
realize that rail operation don't happen in a vacuum. The railroad
needs land development and land revenues to sustain normal rail
maintenance, operations and the payment of local employment
dollars.
"I propose HB 55 be changed to include the following:
"1. All lands, by mutual agreement, be classified as to the useful
proximity to the railroad right of way. That future rail corridors
throughout the state be identified and guaranteed. That the
process of eminent domain be guaranteed by the state to the Alaska
Railroad Corporation, or its successor, for future development of
any railroad within the state of Alaska.
"2. That Alaska Railroad ownership of abandoned right of way must
be guaranteed, if it might be judged that any marketable quantity
of mineral or industrial development may be occurring in the area
within the next 50 years, i.e Palmer branchlike to Sutton.
"3. All lands currently under actual lease by the Alaska Railroad
Corporation at time of enactment of this bill, be guaranteed from
that date forth as Alaska Railroad Corporation corporate lands; to
be sellable, leasable and developable by the Alaska Railroad
Corporation, or its successor.
"4. That any amount of land transferred form the Alaska Railroad
Corporation for any reason to the state of Alaska or any entity
within the state of Alaska, be paid in present marketable cash
value or an equal amount of land area be held in reserve for future
selection by the Alaska Railroad Corporation, or its successor.
"5. That a vehicle be created to allow shared land development
partnerships to be formed between the Alaska Railroad Corporation
and any recognized governmental bodies for the equal and mutual
development of land within their boundaries for the benefit of both
parties.
"6. That re-alignments of existing right of way be guaranteed to
the Alaska Railroad Corporation, or its successor, for its
increased efficiency and the safety of railroad traffic. That
sufficient wetlands be set aside to cover any possible usage by the
Alaska Railroad Corporation, or its successor, for said
realignments affecting wetlands.
"7. That any reference to executive budgeting be separated from HB
55.
"8. That a vehicle be created to allow Alaskan Citizens and
Alaskan Companies and Corporations to purchase stock shares in the
Alaska Railroad Corporation. This would allow the state of Alaska
to divest itself of total responsibility for the railroad and allow
the citizens of the state of Alaska to participate in the future of
the Alaska Railroad.
"I ask, how do you view the railroad and its future? What, as a
leader of this state, is your vision for the state of Alaska in the
21st century? The future economic health of the state of Alaska is
tied directly to the future of the Alaska Railroad. No single
development could ever give back to the state of Alaska what an
expanded rail system could. Creating more jobs, more revenues,
more tax base, more economically and protecting the environment
more than any other transportation system known. The question is
what kind of Alaska do you want for the future. I want one where
my children and their children will be able to have a home, a job
and a future in the Alaska that we all love."
Number 1041
FRANK DILLON, Executive Director, Alaska Trucking Association,
testified via teleconference from Anchorage, that it would be a
good idea to see the executive budget portion and the land portion
split into different bills. He stated that the trucking industry
competes directly with the railroad in a number of areas. He
stated that the railroad plays the game of being a state entity
when it is to its advantage and a private entity when it is to its
advantage. He stated that he was shocked to hear that the railroad
was debt free. He stated that the Alaska Trucking Association does
not have the types of subsidies that railroad has, we pay for our
highways through fuel excise and other taxes. He stated we that if
the railroad is such a good business deal it should be privatized.
He stated "If it needs all the sorts of convoluted things that it
has now to keep itself in existence than it shouldn't be
maintained." He stated that he disagreed that the railroad is
vital to Alaska's economy. He stated that railroads were built
before highways existed. He stated that Alaska future lies in the
development if the highway system and not in the railroad. He
stated that the railroad does not go to Prudhoe Bay, the railroad
does not go any farther north that Fairbanks. He stated that the
freight that goes to Prudhoe Bay is sent by truck.
Number 1131
REPRESENTATIVE COWDERY asked Mr. Dillon if he would fax his
comments to the committee.
Number 1186
BILL CUMMINGS, Assistant Attorney General, Transportation Section,
Department of Law, stated that the provisions of Section 25 in HB
55 vest the title and the land transfer from the railroad to the
state on the effective date of this act. He stated that the way it
is written could result in state exposure to environmental
obligations. The total land is in excess of 40,000 acres which
would require a thorough environmental review. He stated the
Department of Law anticipates that this would require the need for
three lawyers and $415,000.
Number 1266
REPRESENTATIVE COWDERY asked if the legal process would be ongoing.
Number 1281
MR. CUMMINGS stated that one lawyer would be needed to be involved
with the federal government over the presently existing pollution
sites, such as the standard steel site in Anchorage. He stated
that the state would be subject to other litigation if the state
received the immediate transfer.
Number 1309
REPRESENTATIVE COWDERY asked isn't the state liable for a spill
that exceeds the ability of the railroad.
Number 1324
MR. CUMMINGS responded that a benefit of having a state owned
corporation isolates the general fund from claims, the people could
only collect the assets of the railroad.
Number 1348
REPRESENTATIVE COWDERY asked that it would have to be resolved
separately since we inherited that from the federal government.
Number 1356
MR. CUMMINGS replied yes and that the railroad has had on going
litigation with the federal government over that and anticipates
that if the set out transfer were to happen it could result in a
very expensive burden.
Number 1396
REPRESENTATIVE WILLIAMS stated that he would split HB 55 to
separate bills regarding the Executive Budget Act and the land
transfer.
Number 1413
ADJOURNMENT
CHAIR MASEK stated that the House Standing Transportation Committee
meeting is adjourned at 3:07 p.m.
| Document Name | Date/Time | Subjects |
|---|