Legislature(1997 - 1998)
03/12/1997 01:11 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
March 12, 1997
1:11 p.m.
MEMBERS PRESENT
Representative Bill Williams, Chairman
Representative Beverly Masek, Vice Chairman
Representative John Cowdery
Representative Bill Hudson
Representative Jerry Sanders
Representative Kim Elton
Representative Al Kookesh
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION: PORT OF BELLINGHAM
*HOUSE BILL NO. 88
"An Act relating to ferries and ferry terminals, establishing the
Alaska Marine Highway Authority, and relating to maintenance of
state marine vessels; and providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 88
SHORT TITLE: ALASKA MARINE HIGHWAY AUTHORITY
SPONSOR(S): REPRESENTATIVE(S) WILLIAMS
JRN-DATE JRN-PG ACTION
01/24/97 137 (H) READ THE FIRST TIME - REFERRAL(S)
01/24/97 137 (H) TRANSPORTATION, FINANCE
03/07/97 (H) TRA AT 1:00 PM CAPITOL 17
03/07/97 (H) MINUTE(TRA)
03/12/97 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
MARK ASMUNDSON, Mayor
City of Bellingham
City Hall
210 Lottie Street
Bellingham, Washington 98225
Telephone: (907) 398-2600
POSITION STATEMENT: Presented the port of Bellingham's staff.
JIM DARLING, Executive Director
Port of Bellingham
625 Contiwall Avenue
Bellingham, Washington 98225
Telephone: (907) 676-2500
POSITION STATEMENT: Presented the slide presentation.
PETER ECKLUND, Legislative Assistant
to Representative Bill Williams
Alaska State Legislature
Capitol Building, Room 424
Juneau, Alaska 99801
Telephone: (907) 465-3424
POSITION STATEMENT: Read the Sponsor Statement.
JOE AMBROSE, Legislative Assistant to Representative Robin Taylor
Alaska State Legislature
Capitol Building, Room 30
Juneau, Alaska 99801
Telephone: (907) 465-4906
POSITION STATEMENT: Testified on HB 88.
JOE PERKINS, Commissioner
Department of Transportation and Public Facilities
3131 Channel Drive
Juneau, Alaska 99801
Telephone: (907) 465-3900
POSITION STATEMENT: Testified against HB 88.
MIKE MCMULLEN, Personnel Manager
Division of Personnel
Department of Administration
P.O. Box 110201
Juneau, Alaska 99811
Telephone: (907) 465-4431
POSITION STATEMENT: Testified on HB 88.
DOUG WARD, Project Manager
Alaska Ship and Dry Dock
P.O. Box 7552
Ketchikan, Alaska 99901
Telephone: (907) 225-7199
POSITION STATEMENT: Testified on HB 88.
JOHN RITTERBACH, Purser
M/V Matanuska
1325 Peyton Place
Ketchikan, Alaska 99901
Telephone: (907) 225-9459
POSITION STATEMENT: Testified in support of HB 88.
JAN SANDE, Captain
M/V Aurora
P.O.Box 5395
Ketchikan, Alaska 99901
Telephone: (907) 247-0321
POSITION STATEMENT: Testified on HB 88.
TOM MOORE, Second Mate
M/V Taku
P.O. Box 9289
Ketchikan, Alaska 99901
Telephone: (907) 225-5735
POSITION STATEMENT: Testified in support of HB 88.
ANDREA BARKLEY, Ferry Worker
and Labor Management Committee Member
P.O. Box 1037
Ketchikan, Alaska 99901
Telephone: (907) 225-3405
POSITION STATEMENT: Testified in support of HB 88.
ACTION NARRATIVE
TAPE 97-15, SIDE A
Number 001
CHAIRMAN BILL WILLIAMS called the House Transportation Standing
Committee to order at 1:11 p.m. Members present at the call to
order were Representatives Williams, Cowdery, Sanders, Elton and
Kookesh. Representative Hudson arrived at 1:15 and Representative
Masek arrived at 1:20.
PRESENTATION: PORT OF BELLINGHAM
Number 034
CHAIRMAN WILLIAMS announced the first order of business to be a
presentation by the port of Bellingham.
Number 081
MARK ASMUNDSON, Mayor, City of Bellingham, expressed his gratitude
to the state of Alaska for its partnership with the port of
Bellingham in providing marine highway services. He introduced his
staff: Pete Kremen, Whatcom County Executive; Jim Darling,
Executive Director, Port of Bellingham; Fred Sexton, Director,
Bellingham Economic Development Council; Mike Brennan, Director,
Bellingham Chamber of Commerce; Drew Pettis, Bellingham Chamber of
Commerce; Fred Haskell, President, Haskell Corporation; Scott
Walker, Commissioner, Port of Bellingham.
Number 169
JIM DARLING, Executive Director, port of Bellingham, gave a slide
presentation regarding the transportation center in Bellingham as
it is the southern terminus of the Alaska Ferry. He stated that
the ferry terminal is built with revenue bonds supported by the
general revenue for the port of Bellingham. It cost $13 million to
build. The building has won a number of awards for its masonry
work. He stated that Amtrack is now running between Seattle and
Vancouver. He stated that Greyhound also comes into the train
station.
Number 751
MR. DARLING stated that commitment from the community of Bellingham
is very strong, there are cultural and economic ties with Alaska as
well as transportation ties. He stated that they consider
themselves the front door to Alaska because of the ferry terminal.
He stated that it was not an inexpensive process, the debt service
is $750,000 a year on the building, and the contract with Alaska is
for $100,000 a year. He stated that there is a very strong
commitment with the Bellingham community to support the terminal
with tax dollars.
Number 819
MR. DARLING stated that there is a base lease with Alaska to
provide the docks, warehouse, ticketing office, the terminal and
the waiting areas which is $100,000. It started in 1989 for twenty
years without an inflationary index. He stated that there are two
operating contracts. One is for $63,000 a year for light and
maintenance of the waiting area and a services contract for
$221,000 a years for ticketing and loading of the ferry.
Number 946
REPRESENTATIVE JOHN COWDERY asked how long the ferry stays in
Bellingham.
Number 861
MR. DARLING replied it typically arrives in the morning and will
leave between six and eight in the evening.
Number 972
REPRESENTATIVE COWDERY asked of the crew is a stay aboard crew.
MR. DARLING replied that he thinks the vessel is always manned.
Number 1009
REPRESENTATIVE BILL HUDSON stated that Bellingham was willing to
put in a real gateway into Alaska, at their expense and charge it
back to Alaska at less then we were paying in Seattle. He stated,
"We have better working relationships with the port of Bellingham
then we have anywhere else, it has just been outstanding."
Number 1075
MR. DARLING stated that it is much nicer to get off the ferry in
Bellingham and drive a mile and a half to the interstate, rather
then to be unloaded in downtown Seattle and have to fight the
congestion.
CHAIRMAN WILLIAMS thanked everyone from Bellingham for coming to
the meeting.
Number 1118
REPRESENTATIVE HUDSON stated that it is a beautiful city and a
wonderful place and it would be worth going to.
UNIDENTIFIED MALE SPEAKER stated that the city of Bellingham wanted
to make the southern terminus of the marine highway system a viable
and thriving one. He stated that he is looking forward to
nurturing and cultivating a more productive and meaningful working
relationship with the state of Alaska and invited everyone to come
and visit the community.
Number 1225
CHAIRMAN WILLIAMS called a brief at ease at 1:30.
Number 1225
CHAIRMAN WILLIAMS called the House Transportation Standing
Committee back to order at 1:35.
HB 88 - ALASKA MARINE HIGHWAY AUTHORITY
Number 1233
CHAIRMAN WILLIAMS announced the next order of business to be HOUSE
BILL NO. 88 "An Act relating to ferries and ferry terminals,
establishing the Alaska Marine Highway Authority, and relating to
maintenance of state marine vessels; and providing for an effective
date." He stated that he planned on getting as much public
testimony as he could today and he did not plan on moving HB 88 at
this meeting.
Number 1272
PETER ECKLUND, Legislative Assistant to Representative Bill
Williams, read the following Sponsor Stat ement into the record:
"House Bill 88 would establish an Alaska Marine Highway Authority
to assume management of the Marine Highway System from the
Department of Transportation and Public Facilities.
"The authority would be a public corporation of the state as an
instrument of the DOT/PF, but would have a legal existence
independent and separate from the state. The new authority would
be comparable to the Alaska Housing Finance Corporation or the
Alaska Industrial Development and Export Authority.
"The powers of the authority would rest with a seven member board,
appointed by the Governor. One member would be the Commissioner of
Transportation. The six other members would be required to have
experience in maritime affairs and would serve staggered five year
terms. The board would hire the system director.
"Establishment of such an authority board would bring maritime
experience and continuity to the management of the Alaska Marine
Highway System (AMHS).
"Based on information gathered at public hearings over the interim,
the Senate Task Force, 'which you will hear a report on in a few
minutes', on the Alaska Marine Highway System concluded that the
legislature should consider creation of such an authority.
"Testimony received by the Task Force indicated that DOT/PF
management of the Marine Highway lacks focus and that AMHS
administration under DOT/PF lacks maritime experience.
"Management under DOT/PF has become insular and is unresponsive to
input from vessel employees and the general public. Scheduling is
often chaotic and the fare structure has discouraged ridership.
The reservation system has not been user friendly or accurate.
"While concerns over funding levels are valid, the naturally
bureaucratic mind-set of the Department has tightened what former
director Jim Ayers termed a 'death spiral'. Establishment of the
Alaska Marine Highway Authority may not provide all of the answers
needed for our ferry system, but will give the system a new
perspective.
"We ask for your support of House Bill 88."
Number 1413
JOE AMBROSE, Legislative Assistant to Representative Robin Taylor,
stated that Robin Taylor is the sponsor of the companion bill on
the Senate side. He stated the Senate Task Force on the Marine
Highway System was established by Senator Drue Pearce. It had
three public hearings; in Ketchikan on July 19, in Seward on August
19 and in Sitka on October 14. He stated that in the October
meeting, Senator Taylor stated that the record would be keep open
to allow for written testimony and it was based upon that written
and oral testimony that the task force identified several key
management policies and decisions that brought the current
management into question. He stated that current management's
practices resulted in a growing lack of confidence in the Alaska
Marine Highway System on the part of elected officials and the
general public they represent. He stated that the only
recommendation from the task force was that this legislature
consider moving the management of the Alaska Marine Highway to a
semi-autonomous board. He stated that there were five key elements
that the task force focused on. He stated, "First was what they
termed arbitrary and repeated changes in the days that crews
rotated on the fleet. Those decisions have estimated to cost the
system in excess of a quarter of a million dollars in unnecessary
overtime and expenses over the past year." He stated that
scheduling and passenger fare policies were identified as tending
to discourage ridership despite constant recommendations from the
communities served by the system and from the crews and the line
officers, who were actually responsible for the operation of the
vessels. The reservation system was deemed an abject failure and
the task force also expressed its concerns on what appears to be a
waste of an attempt to computerize vessel maintenance. He stated
that the decision to close the bars came despite the
recommendations of an employee management committee that actually
identified other non revenue generating staff positions that could
have been eliminated and despite the effort by the employees the
bars remained closed. He stated that the fifth concern is what
appears to be continued additions to the staff at the Juneau
Central Office despite a strong and critical public perception that
the management of the Marine Highway System is already top heavy.
He stated that in his office he has all kinds of written letters
regarding this issue. He stated that there is a real concern from
ferry employees and from the private sector. He stated that there
is the tendency on the part of the Alaska Marine Highway System to
say that this is the result of disgruntled employees. He stated
that Lew Williams, Jr., was a founder of the Alaska Marine Highway
System and he supports the idea of the creation of the Marine
Highway Authority.
CHAIRMAN WILLIAMS stated that he did not want to get into a debate
over the bill today, he would like to get in as much public
testimony as possible.
Number 1693
REPRESENTATIVE COWDERY stated that he read the board will receive
$300 a day plus a per diem and asked what the per diem would be.
Number 1702
MR. AMBROSE stated that he did not know what the current per diem
would be.
Number 1714
REPRESENTATIVE COWDERY asked what the Executive Director's salary
is.
Number 1735
MR. AMBROSE stated that he believed the current director is getting
$119,000 with benefits and he would be surprised if the Marine
Highway Authority Board would pay much more than that.
Number 1759
JOE PERKINS, Commissioner, Department of Transportation and Public
Facilities (DOT/PF), stated that the DOT/PF has some problems with
HB 88 and read the following testimony into the record:
"Under the present system that we have, the Marine Highway System
Management is accountable to the public. Concerns and requests are
responded to quickly and completely, they have to be. Elected
officials are responsible for the management of the Marine Highway
System, and elected officials have to be responsible to the public
they serve, sometimes it is time consuming and cumbersome, but it
is the most responsible way to handle the people's business. The
establishment of an authority will diminish the public
accountability of marine highway management by inserting an
appointed board between the management and the people. Marine
highway management will no longer work directly for the elected
governor or for any other elected representatives. Management
decisions will be made by the board, and not the governor nor the
legislature. Once appointed, board members will not be accountable
to the public. A board member, under this bill, can be removed
only for cause. The accountability of marine highway management to
the communities they serve, in my opinion, will be substantially
reduced. We don't think this is desirable.
"We feel that the bill lessens public influence on decision making.
Alaskan's, for better or for worse, now know who is in charge of
the Marine Highway System. When things are running well, they know
who to compliment, when things aren't going so well, they know who
to blame. This bill will change all of that. When accountability
of elected officials changes, public access to the decision making
process also changes. Although a person or community may still ask
the executive director or the board of directors of the system for
a schedule change or special run to haul kids around for basketball
games, there may be little or no pressure on this board or on the
Executive Director to respond. The manager is insulated from the
effect of public pressure. We believe that Alaskans appreciate
direct access to the public systems that most affect their lives,
and this bill will have a substantial negative impact on that
access.
"We don't feel that the Marine Highway System is broken, nor do we
feel that the Marine Highway System is in a death spiral. There is
a lot that is right about the marine highway system. The ships
have a fine safety record, have we heard anybody talking about
that, they generally run on time and they provide simple,
economical, comfortable and reliable transportation services to the
traveling public. The state's economy receives approximately $170
million a year in benefits from the operation of the system. Of
course some mistakes are made, they are inevitable in an operation
that is as vulnerable to as many variables as is the Alaska Marine
Highway System. It is a system that has a large and varied
constituency, and everybody has an opinion as to what should be
done and how it should be operated. But overall, the system is
doing what it was designed to do, transporting people in the
Southeast and Southwest Alaska in the context of an intermodal
transportation network.
"Past legislatures have determined that the Marine Highway System
is an essential part of the state transportation system that
warrants continued and predictable state support. Many
communities' economies are dependent on its steadiness and
stability, and the state's tourism industry is greatly enhanced by
the system. These advantages are evident when the whole story of
the system is told. But when only the mistakes and the
difficulties are discussed, when only the negatives are emphasized,
when legislature funding levels are reduced each year and when the
future of the system is under siege these advantages are not
discussed. The perception of an insecure future becomes a reality
for employees whose lives are intricately woven into the system's
future. The perception of a shrinking system is a source of
considerable anxiety for communities and for Alaskan's whose
economies and way of life have been partially dependent on the
regular arrival of the ships. The perceived unwillingness of the
legislature to commit sufficient state resources to insure an
adequate future for the system, can't help but undercut morale,
performance and hope of the employees and those we serve. This
unfortunately has happened and it is sad.
"We think the bill is a bad idea, it sets up a layer of
administration over which neither the governor nor the legislature
will have control. As I have said, we believe that is bad public
policy. But even worse, it doesn't fix anything, there is nothing
in the bill that encourages stability or financial support by the
legislature. There is nothing in the bill that addresses the
increasing capital needs of an aging fleet.
"If there are major problems at the marine highways, and I think
there are, they can be solved and handled. One of the biggest
problems that you can help relieve is the time and energy that now
is being spent controlling the damage caused by anxiety about the
future. That is a problem that you can materially affect, by
telling the whole story of this very successful state adventure, by
demonstrating your support for its future and helping us fix the
problems. The system is 35 years old, the ships are aging, the
system is running the same kind of service as it did 35 years ago,
in 1976 Sitka was provided with 268 trips and in 1996, twenty years
later, the number was 311. Today we are responding to the
challenges of shrinking funding and increasing regulatory demands.
The employees who you heard from are experiencing the impacts of
these dynamics. People are being affected and jobs are being
impacted. However, I believe a firm foundation is being laid for
future statewide transportation services to include the essential
service of the Marine Highway System, costs are being contained,
vessels are being upgraded, the services are being used. In fact,
we are now examining, with the Southeast Alaska mayors, the Marine
Highway employees and the legislature, the potential to
dramatically change the way the system is operated and to offer
improved and expanded service. In this endeavor we need your
support.
"The Marine Highway system is presently managed by DOT/PF as an
integral part of Alaska's intermodal transportation system. The
majority of the routes have been designated by Congress as part of
the National Highway system. As an operating arm of the
department, the system receives federal highway aid funds from the
department. By separating the system from DOT/PF, as an authority,
operating independently from the rest of the department, the debate
for funding the Marine Highway System capital improvement programs
could conceivably shift more toward the legislature for resolution.
This bill will force the Marine Highway System to compete with
individual communities throughout the state, other DOT/PF regions,
and other agencies for its share of federal highway funds, rather
than sharing them as they do now as one component of Alaska's
Intermodal Transportation System.
"While the commissioner of DOT/PF would serve on the board of
directors of this new authority, I think it is unrealistic to think
that an organizational component which is separated from the rest
of the agency, and from which the commissioner no longer has
primary responsibility, will receive the same level of
consideration as it receives currently.
"A big thing in this legislation is that I don't feel an authority
provides any kind of a mechanism or vehicle to reduce the subsidy.
Although not expressly stated in the proposed legislation, an
implicit purpose for an authority is apparently to insulate the
Marine Highway System from inexperienced managers appointed through
the political patronage process. It should be noted, that we have,
in our headquarters, 16 employees that have over 290 years of
maritime experience, they're working in the administration and
management of the system, I think it is a great disservice to these
employees to say that the management of the Marine Highway System
does not have marine experience. As I've already noted, insulation
also isolates the system from a direct accountability from the
public. This might be acceptable if the authority was established
to run the system as a business designed to be self-supporting
through revenues. However, this is not the case.
"The Marine Highway System presently, and in looking to the future
I think this is going to be true, derives about 60 percent of its
total operating money from revenues, the remaining 40 percent of
the operating budget is now and will in my opinion, continue to be
appropriated from the general fund by the legislature. Nothing in
this bill is directed toward changing that funding relationship.
The proposed authority is not designed to be self sufficient. It
will continue to require annual legislative appropriations for
operations and capital improvements. What then is the
justification for establishing it as a state corporation? An
authority will require additional subsidy to fund its increased
overhead costs.
"The Marine Highway System is already unfairly criticized for the
large size of its central office staff. However, if the Marine
Highway System is split from the rest of DOT/PF into an quasi-
independent authority, it will lose the administrative support,
currently provided by DOT/PF and administrative costs will, most
certainly increase. Personnel and accounting services which are
now provided in part by headquarters DOT/PF would fall entirely on
the authority. So would engineering services which are now being
provided by Southeast Region of the DOT/PF. The system would be
further removed from the Federal Highway Administration. The
relationship with DOT/PF and Federal Highway Administration would
be complicated since CFR title 23 for the administration of all
federal highway funding programs is the responsibility of the state
highway agency which is DOT/PF.
"I don't think authority will solve the systems labor costs. Labor
Agreements for Marine Highway System employees are currently
negotiated and administered as a part of the state's overall labor
relations program. Although vessel employees were ten years ahead
of their shoreside peers in collective bargaining, economic
settlements in the last two decades have been reasonably uniform an
consistent for all state employees.
"As proposed, all employees of the authority would be placed into
the exempt service but remain subject to the terms of existing
labor agreements until their expirations. The authority is then
authorized to negotiate new labor agreements, although it is
somewhat unclear whether or not the terms of these agreements must
be consistent with those of other executive branches of the state.
Since the authority's employees will be in the exempt service, they
are prohibited by bargaining regulations from remaining in the same
classified employee bargaining units from whence they came. What
this means is the addition of probable four more bargaining units
and contracts for just authority staff. These units could be
general government, supervisory, confidential, and labor, trades
and crafts.
"Some of these units would be composed of only a handful of
employees, but each small group has the same rights to negotiate as
larger employee groups. Each requires the authority's resources to
negotiate new contracts, and each has the right to engage in a
strike if those negotiations fail. The economic leverage which
could be exerted by these small groups of employees would be
considerable. Each has the potential to shut the system down in
the event an impasse is reached.
"Small bargaining units can be problematic for just these reasons.
Every small group requires a large expenditure of labor relations
resources, which now would come from the authority and each of
these groups has leverage out of proportion to its size, there is
no reason that I can come up with, to believe that an authority has
any greater ability to negotiate reasonable contracts then the
state. If anything, I think the reverse may well be true.
"Another problem that I see which is going to happen, no matter
what, is that this authority will not be created over night it will
take a considerable time to implement the authority, appointing
board members. The Senate Bill I think is also going to include
the discussion of it including a confirmation by the legislature.
Hiring of Executive Director, hiring of the staff, getting new
buildings for them to be in, all of these things are going to take
a considerable time. I would estimate it would take a minimum of
six months to a year and a half to get this organization
operational. During this time we are going to have a new ferry
come on board, we are going to have to make major decisions
concerning the Malaspina and this is a very very poor time to have
complete and almost total confusion within the ranks of who runs
this system.
"As a summary I would like to go back a little bit in history.
Alaska's long term historical experience with creating and
operating authorities and public corporations has not been entirely
positive. Consider the Alaska Power Authority, of which I spent
three years in. At the time of its creation, the APA was billed as
the answer to Alaska's need for cheap and abundant energy. Visions
were for hydroelectric and other power projects throughout the
state, with modern power grids serving the majority of Alaska.
After numerous legislative changes to the authority over several
years, it was finally closed down by the legislature as an
operational agency. The Alaska Railroad Corporation is another
example. It was formed by the legislature just over a decade ago.
Today, the legislature is considering restricting the operations or
potentially selling that corporation. Could these examples be
applicable to a marine highway authority?
TAPE 97-15, SIDE B
Number 005
"The answer is yes because this legislature cannot bind what
happens in future legislative actions.
"The proposed authority, in my opinion, would be a move in the
wrong direction as far as transportation in Alaska is concerned.
Six years ago, the U.S. Congress initiated major changes in the
National Transportation Industry with the enactment of the
Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA).
That act provides us with $200,000 million plus a year for our
highway program. In ISTEA the 'I ' stands for 'Intermodal'. The
simple genius of ISTEA is its premise that transportation choices
cannot be effectively or economically made in isolation from one
another. This is the concept we call intermodalism.
"A decision to invest public money in roads, or in airports or in
ferry vessels, requires a balancing of public policy issues that
cannot be completely balanced if one transportation mode is somehow
treated differently. Nationally, the trend is to bring these modes
together to provide more efficient transportation services. As I
travel to other states and discuss transportation issues with my
peers, it is clear that this intermodalism is not a passing fad.
It is here to stay and it makes sense. ISTEA will be reauthorize
this year and it is going to be reauthorize either by being called
ISTEA II or NISTEA, but the 'I' is still going to be in the
reauthorization of this act.
"We all recognize that the Marine Highway System cannot continue to
operate as if it were still the 1960's. Times have changed, and
the needs of Alaska's communities and the traveling public have
changed, the transportation network along Alaska's coastline has
also changed. The changes needed in the Marine Highway System may
well be dramatic. However, HB 88 takes us in the wrong direction.
With the help of the legislature, we need to work to insure that
the Marine Highway System truly functions as an integral element in
a well designed state wide transportation system. This
administration and myself will change and improve the system but
these changes must be well thought out and have the support of the
people of Alaska. This takes time and the worst action we can take
now is to make changes such as this bill does without thoughtful
and deliberate considerations of its short and long term
consequences. The administration and myself therefore, do not
support this legislation."
Number 150
CHAIRMAN WILLIAMS asked for a copy of the Commissioner's Perkins
testimony and asked if he got a copy of the Senate Task Force
report on the Alaska Marine Highway system.
COMMISSIONER PERKINS stated that they had a copy of the report and
provided the committee with copies of his testimony.
Number 183
CHAIRMAN WILLIAMS stated that he did not want to debate the issue
but stated that he planned on having another hearing on this, next
week and asked Commissioner Perkins if he would be available to
answer questions on his testimony.
COMMISSIONER PERKINS stated that he would be available.
CHAIRMAN WILLIAMS stated that the problem in the system has been
ongoing for quite some time and it didn't just happen. He stated
that the legislature did not just decide that an authority was
needed, it was well thought out on the reasons why the legislature
decided to go this way.
Number 235
MIKE MCMULLEN, Personnel Manager, Division of Personnel, Department
of Administration, stated that Commissioner has understated the
complexity of the collective bargaining issue that this bill
presents. In 1992 the legislature moved a program from the
Department of Community and Regional Affairs, the classified
service of the Executive Branch, to the Alaska Housing Finance
Corporation. He said. "In 1996 the supreme court heard the issue
and remanded it back as far as the Alaska Labor Relations Agency
into the superior court and at this point almost five years later
the question of those units is still unresolved." He stated that
they see the same potential problems with this bill in the current
form, and the issue is with the creation of the authority and the
expiration of the contracts. It is unclear as to what happens to
the bargaining unit as it currently exists with this representative
in place. It appears that the unit will then span both the
classified and the exempt service, have a single representative for
the unit but have two employers, the authority and the Executive
Branch Proper as employers bargaining over the same people, we
think that would lead to considerable chaos and the potential for
five years of potential court resolution to figure that out. He
stated that they don't have a solution at the moment but they have
committed to the senate committee to work on the solution, and will
be glad to provide it to this committee as soon as they have it.
Number 325
DOUG WARD, Project Manager, Alaska Ship and Dry Dock, located in
Ketchikan. He stated that he is going to speak to Section 21 of
the bill, that requires the state to basically have Alaska owned
vessels maintained and repaired in Alaskan shipyards. He stated
that this section was put into this bill initially in an effort to
repatriate jobs and dollars that were being exported out of the
state of Alaska to out of state shipyard contractors up and down
the West Coast. He stated that we think that was an important part
of that bill and is an important part of this bill and it is
needed. He stated that unlike other DOT/PF projects that were
performed in this state, for instance a bridge painting contract,
when that bridge contract is lent to an out of state contractor in
a competitive situation, we don't sent the bridge out to be
painted, the contractor comes to Alaska, to spend his contract
dollars in Alaska. He stated that the Alaska Marine Highway System
projects can be sent to an out of state shipyard, and when this
happens Alaska loses jobs and dollars. He stated that this is the
reason Section 21 is in this bill, particularly in respect to
keeping Alaska shipyards healthy. He stated that this section will
benefit any shipyard in the state of Alaska.
Number 428
MR. WARD stated that Representative Williams will be proposing an
amendment to the bill that strengthens Section 21, by addressing
the inter-port differential. The inter-port differential is a way
of measuring the costs of transporting the vessel to an out of
state shipyard, it is a fairly common calculation done by private
fleet operators whenever they take bids on maintaining their
vessels. They will note the location of the various yards and then
they will accurately calculate the costs that it takes to transport
that ship to that site, and then they will evaluate all the bids by
adding the inter-port costs to the various sites and evaluating the
bids on that basis. He stated that the amendment would require
that the state consistently account for all of the costs associated
with transporting these state owned vessels out of the state. He
stated right now it does not appear that all of the costs are being
included, such as crew payroll when the vessels are being
transported. Crew salaries should be part of the inter-port
differential and we would like to see a standardization of that
formula for determining those inter-port costs that does consider
all of the costs. He stated that the method of how the inter-port
differential is used in the evaluation is also a concern in the
amendment which will address that. In the instance of a
competitive bid situation we will see a lengthy list of contingency
items within the bid because the state doesn't know what has to be
done to the vessel until they get it up in dry dock and can take a
look at the underwater portion of the vessel to determine that.
The contingency items are done to anticipate every conceivable
condition of the boat haul and there is no expectation that all of
those contingency items will be activated. He stated that the net
result of that is that the total bid amount is inflated over the
actual budgeted, anticipated contract amount. A bid of $800,000
could have the project value of $500,000. He stated that when this
is evaluated with a $50,000 inter-port differential to a $800,000
bid value and then compare $50,000 to a $500,000 contract value,
the impact of the inter-port differential is much greater to the
lesser amount. By evaluating the bid amount for the inter-port
differential there is a delution of the inter-port value and of the
intent of the entire process. He stated that it lessens the
competitive opportunity for Alaskan shipyards to repatriate those
jobs and dollars back to Alaska.
Number 606
MR. WARD stated that the amendment does not require any expenditure
of tax dollars and will result in a savings to the state. He
stated that in the Alaskan shipyards, there are Alaskans working on
Alaskan boats, and are familiar with the vessels. He stated
Alaskan Ship and Dry Dock was the low bidder on the $3.5 million
SOLAS upgrade to the Matanuska ferry. He stated that the inter-
port differential for that project was $40,000 and the bid was won
by $31,000. The inter-port differential brought $3.5 million of
state dollars back to the state.
Number 665
REPRESENTATIVE KIM ELTON stated that at the point the amendment
comes forward he would hope there would be some discussion on why
we should codify that in statute when later on in the bill it
allows the authority itself to set up procurement rules and under
that authority they could do that by regulation.
Number 707
CHAIRMAN WILLIAMS stated that it will be taken up at the next
meeting.
Number 717
REPRESENTATIVE COWDERY asked if the company was capable of doing
all the maintenance on the ferries that comes into Ketchikan.
MR. WARD replied that they are capable of doing the maintenance and
that they are capable of doing it better.
Number 732
REPRESENTATIVE COWDERY asked how much time the average vessel is in
the yard.
Number 738
MR. WARD replied the average state ferry is probably in the yard
between three and five weeks.
Number 750
REPRESENTATIVE COWDERY asked what happens to the crew members on
the vessel, do they stay or do they leave.
Number 758
MR. WARD responded that it varies with every project, depending on
what the particular maintenance projects are. He stated that there
are two activities that occur to the state ferries while they are
in the yard. One is lay up, which is a budgetary requirement to
lay up the ferries so that they are not operating for a period of
time in effort to reduce the operating budget. The second is the
active repair period which occurs at both pier side and dry dock
repair periods. He stated that the actual repair contracts are
from three to five weeks, lay ups can last from 30 days to 90 days,
and it seems to be increasing.
Number 824
REPRESENTATIVE ELTON asked if the shipyard was non-union.
Number 833
MR. WARD replied that was correct. He stated that the first inter-
craft labor agreement in the shipyard industry has been negotiated
in Oregon recently. The reason to do so is to increase the
efficiencies in ship repair and make domestic shipyards competitive
with foreign shipyards.
Number 892
JOHN RITTERBACH, Purser, M/V Matanuska, testified via
teleconference from Ketchikan, and read the following statement
into the record:
"As I have stated before, it is not easy to speak against your
employer, however I see no future with the Alaska Marine Highway
with the present administration. I came here today because I care
about the system and the people that we serve. I come before this
committee to plead the case of a dying patient and that patient is
the Alaska Marine Highway and we are in a dire need of a dose of
common sense. I support House Bill 88 to establish a Marine
Highway Authority. As you look at this bill it may not be the
perfect cure for the woes of marine transportation but without
action soon the system, itself will surely die. The time to act is
now, gentlemen, before there is nothing left to save. It is time
to stop playing politics with the Alaska Marine Highway. The
people of Alaska deserve better and they can have better if you
will act.
"The management of the Alaska Marine Highway System is inept at
best. The vast majority of central office management from the
Director, Mr. Hayden on down have little or no maritime experience.
Internal decisions are being made from the commissioner of
transportation's office with no rational basis. The commissioner
of transportation and the director of the Alaska Marine Highway
have been caught in lies to the public and the employees of the
Alaska Marine Highway. The Alaska Marine Highway has no leadership
because there are no leaders. Only the tired old minds of
politically appointed commissioners and directors. We need leaders
with experience not someone who is popular with the Governor. As
I said to Mr. Perkins recently, in order to grow and prosper in
times of economic shortage we must pull together to do more with
less. The employers of the Alaska Marine Highway understand this
and we must find more reasons for the public to use our services
and not raise prices and cut services at every turn. Not only is
the Alaska Marine Highway just a highway but is a vital way to
stimulate the economy of communities that we serve. I believe that
the way to generate more revenue and reduce the amount that you
have to appropriate each year to give the public what we were meant
to be and that service that we can rely on at a reasonable price.
"Compare the Alaska Marine Highway System with our friends in
Canada, the prices are lower, their out of work services are better
and their schedules are user friendly. At a recent meeting it was
suggested to Director Hayden that we needed to cut prices, his
answer was if we cut prices and we don't increase our revenue, then
what. My reply is that it is price or schedule and lack of
services that have caused our lack of revenue. We are in a spiral
of destruction. Managements only solution to any problem is to cut
service and raise prices. I believe we are not getting much bang
for our buck. I believe we would be much more effective even with
the level of funding that is now provided. If I think that I have
ideas to bring 30 percent more effective imagine what real
effective management that is not afraid to listen to its employees
and suggestions for what the public could do. Management is so top
heavy it is hard to believe, during the winter reduction force the
number of people working in the Juneau Central Office almost equals
the number of employees left, working on the three ships that are
still running. About 60 percent of ship employees lose their jobs
in the winter months and it takes a new employee hired this year in
the Inland Boatmen's Union about six years to become a full time
year round worker. If you are hired in the Juneau Central Office,
however, you are full time right from the start, in fact not one
employee in the Juneau Central Office loses one hour of one weeks
pay during the winter reduction period. Is there something wrong
with this picture? Mr. Hayden makes the lame reply that some
reservation agents have reduced hours in the winter. It is my
belief that the Juneau Office Staff could and should be reduced by
30 percent or more.
"Representatives take a tour of the Juneau Central Office some
time, it has bright new equipment and it is fully staffed. Take a
look at our shiny new terminal building and then take a tour of the
ships of the Alaska Marine Highway that they support. Tired,
shabby and in dire need of a face lift. For years the motor vessel
Malaspina has been neglected by the Alaska Marine Highway System.
We have been told there is no money, not even for basic items like
paint. Yes the Marine Highway System Staff would have you believe
that motor vessel Malaspina isn't worth much and would be better
off sold. The question is what a new ship of that size would cost
compared to the cost of upgrade of the Malaspina. An important
question might be, can the management the Alaska Marine Highway
System can be trusted to tell the truth about the Malaspina. The
Alaska Marine Highway System has a motto and that is a 'Proud
Tradition', that tradition of service has been allowed to tarnish
and I urge you to embark on a course that would restore that
tradition and I urge you to embark on a course that would restore
that tradition and I urge you to support House Bill 88. And lets
make the ships of the fleet something to be proud of something new
and alive and a fleet that we can be proud of."
Number 1199
MR. RITTERBACH stated that he did want to reply to a statement that
Commissioner Perkins made regarding having experienced people in
the Juneau Central Office, that there are sixteen people there that
have 290 years maritime experience. He stated that just in this
room in Ketchikan, there are seven employees that have almost 200
years of maritime experience. He stated that the members of the
Alaskan Marine Highway have probably 10,000 years of experience all
together, and nobody listens to us which is part of the problem.
Number 1250
CHAIRMAN WILLIAMS stated that if any of the people testifying wish
to submit written copies of their testimony they are welcome to do
so.
Number 1263
JAN SANDE, Captain, M/V Aurora, testified via teleconference from
Ketchikan, stated that he did not agree with most of Commissioner
Perkins' statement. He stated that at best the departments within
the Juneau Central Office do not communicate and they certainly do
not communicate with the directors. He stated that he has had two
directors come down to talk with him about problems and stated that
they could not get any information out of the department heads. He
stated that there is almost no one in middle and upper middle
management that is accountable in Juneau's Central Office. He
said, "I feel that this bill will get accountability back because
of the board which is appointed by the governor having maritime
personnel." He stated that the current employees do not know
enough about maritime issues to know when the truth is being told.
He stated, "I feel that one other person needs to be added to this
list of people, that happens to be the Govonor's Chief of Staff,
all of those upper people are part of the problem."
Number 1370
MR. SANDE stated that the Aurora was in Bellingham for four months
undergoing a federal project. The last three weeks of this period
the Chief Engineer and himself were working 12 to 15 hours a day
without receiving overtime. He stated that the last week of work
he did not receive a purser, which meant that he had purser duties
along with his other duties. He stated he received a department
head that was not up to the job and disciplinary action had to
taken. He stated that middle management's response was to laugh at
him. He questioned were the accountability is. He stated that the
bill is the only solution for a system which is almost totally
dead.
Number 1482
TOM MOORE, Second Mate, M/V Taku, testified via teleconference from
Ketchikan, asked if Commissioner Perkins was still present.
CHAIRMAN WILLIAMS replied that he was not.
MR. MOORE asked if it was correct that Commissioner Perkins left
before public testimony.
CHAIRMAN WILLIAMS replied, "yes."
Number 1498
MR. MOORE stated that he is in favor of the Marine Highway
Authority. He stated that the Federal Highway Administration has
threatened to cut $200 million from Alaska road construction
because they feel that the state isn't doing enough to maintain the
existing roads. He stated that all one has to do is look at the
roads in Southeast Alaska and the Alaska Marine Highway System to
see what the administration is referring to. He stated that the
ferry system is losing money and driving away passengers. He
stated that Marine Authority would provide stability in the Marine
Highway System. He stated that the only stability in the last 20
years has come from the Core Captain's office. He stated that the
zone system is an inconvenience and an hassle to repack and change
ships three or four times to get to the final destination. The
zone system reflects complete disregard for the traveling public,
the present administration lack of compassion for travelers and
masked hidden agenda at the expense of the people in Southeastern
Alaska. He stated that none of the communities would be looking
towards the privatization of the ferries if they were still
receiving the adequate service they have received from past
administrations.
Number 1734
ANDREA BARKLEY, Ferry Worker and Labor Management Committee Member,
testified via teleconference from Ketchikan. She stated that she
had submitted a statement on the Senate Bill where she addressed
the big lie of the bar closure and that it was not related to
revenue. She stated that she also submitted another statement
regarding the hospitality of the bars. She stated Commissioner
Perkins has stated that the unwillingness of the legislators to
commit sufficient funding and resources have undercut moral
performance and health of the employees. She stated that the
implication is that it is the legislature's fault and the Alaska
Marine Highway System has no accountability in the situation before
the legislature today, and that she does not believe this is the
case. She stated that the administration makes it sound as if this
situation has occurred overnight and that the employees of the
Marine Highway System have not gone through the proper channels to
work out the problems. She stated that this situation has occurred
over years of employees trying to deal with management and not
being heard resulting in a major event in which employees as well
as concerned citizens have pulled it into the political arena
feeling that business can no longer be conducted this way. She
stated that the Marine Highway Authority will be an improvement.
Accountability is not present under the current system. She stated
that she does not agree with Commissioner Joe Perkins that
accountability and direct public access is there. 668 public
comments heard wanted the bars to the Marine Highway System opened
again and 9 people said they didn't, therefore 668 people received
no accountability, and no redress for any of there concerns. She
stated that citizens have been saying that we might be getting some
decent ferry service if the bill goes through. She stated that she
supports the bill very strongly.
Number 1954
CHAIRMAN WILLIAMS stated that he did receive Ms. Barkley's letter
and it was passed on to Gary Hayden. He stated that in the near
future there will be a meeting with Mr. Hayden to present his
written comments on the issue.
Number 1994
MR. RITTERBACH stated that all of the people here listened to
Commissioner Perkins testimony but he left the room before any
public comment was made because he does not want to hear it. He
stated that isn't it also strange that a director is paid $119,000
a year with benefits is not testifying in front of the committee,
if he is supposed to be accountable for what is going on.
Number 2096
CHAIRMAN WILLIAMS asked if there was anyone else who wanted to
testify. He stated that this will be brought up again at the next
meeting.
ADJOURNMENT
Number 2103
CHAIRMAN WILLIAMS adjourned the House Transportation Standing
Committee at 2:45 P.M.
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