03/19/1997 01:30 PM House TRA
| Audio | Topic |
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE
March 19, 1997
1:30 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
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
03/12/97 (H) MINUTE(TRA)
03/19/97 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
PETER ECKLUND, Legislative Assistant
to Representative Bill Williams
Alaska State Legislature
Capitol Building, Room 424
Juneau, Alaska 99801
Telephone: (907) 465-3424
POSITION STATEMENT: Presented amendments to HB 88.
DOUG WARD, Project Manager
Alaska Ship and Dry Dock
P.O. Box 7552
Ketchikan, Alaska 99901
Telephone: (907) 225-7199
POSITION STATEMENT: Provided testimony on Amendment 1.
MIKE DOWNING, Director
Division of Engineering and Operations
Department of Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801
Telephone: (907) 465-2960
POSITION STATEMENT: Provided testimony on Amendment 1.
JOE PERKINS, Commissioner
Department of Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801
Telephone: (907) 465-3900
POSITION STATEMENT: Testified on HB 88.
JOHN RITTERBACH, Member
Executive Board, Inland Boatmen's Union
Purser, M/V Matanuska
P.O. Box 9420
Ketchikan, Alaska 99901
Telephone: (907) 225-9459
POSITION STATEMENT: Testified in support of HB 88.
BOB PICKRELL
Ketchikan Chamber of Transportation Committee
8339 Snug Harbor Lane
Ketchikan, Alaska 99901
Telephone: (907) 247-2490
POSITION STATEMENT: Testified on HB 88.
JIM VANHORN
Ketchikan Advisory Board
3434 Arnold Avenue
Ketchikan, Alaska 99901
Telephone: (907) 225-2828
POSITION STATEMENT: Testified on HB 88.
ACTION NARRATIVE
TAPE 97-16, SIDE A
Number 001
CHAIRMAN BILL WILLIAMS called the House Transportation Standing
Committee to order at 1:30 p.m. Members present at the call to
order were Representatives Williams, Masek, Cowdery, Hudson,
Sanders and Elton. Representative Kookesh arrived at 1:33.
HB 88 - ALASKA MARINE HIGHWAY AUTHORITY
Number 040
CHAIRMAN WILLIAMS announced the committee would take up 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 there are three amendments and further
public testimony.
Number 215
REPRESENTATIVE BEVERLY MASEK moved to adopt Amendment 1 for
discussion purposes.
Number 226
CHAIRMAN WILLIAMS asked if there were any objections.
Number 233
REPRESENTATIVE KIM ELTON objected.
Number 256
REPRESENTATIVE BILL HUDSON stated that the motion was for
discussion purposes only.
REPRESENTATIVE ELTON stated that he was objecting so the committee
would have a discussion and withdrew his objection.
Number 273
PETER ECKLUND, Legislative Assistant to Representative Bill
Williams, stated that Amendment 1 addresses the interport
differential when the Marine Highway System bids out maintenance
work. One of the things accounted in the bids is the interport
differential for Alaskan based shipyards. He stated Amendment 1
would clarify some of the details which go into how the interport
differential is calculated.
Number 337
DOUG WARD, Project Manager, Alaska Ship and Dry Dock, testified via
teleconference from Ketchikan, that the first part of the amendment
is designed to take a business like approach to measuring the true
interport costs when delivering a marine higway vessel from their
home ports to a remote repair facility which is not their homeport.
The amendment will have the department measure all of the costs
related to conducting a repair at remote facilities so that the
state can make a business like decision and know the true cost of
performing that particular repair project. That is why an
interport differential cost is added to a non-home port repair
yard's total bid. He stated that the second part of the amendment,
is asking for an equitable process to evaluate the interport cost
to the bid amount. The evaluation process should measure the true
interport cost, against the true value of the work. He stated that
currently, the interport differential is measured against the bid
amount, which is an inflated amount, there are a number of
contingency items in the bids schedules that are not activated
during the actual contract, therefore the contract value is often
less then the bid amount. The intent is to measure the true cost,
which is the true cost of the work.
Number 499
MR. WARD stated that there seems to be a misunderstanding on the
intent of Amendment 1. He stated that the Alaska Industrial
Development and Export Authority (AIDEA) reports, state that
performing these projects in Alaska are going to be twenty percent
higher. He stated that if Alaska Ship and Dry Dock wins the
competitive bid, it would be because it cost the state less then
the next highest bidder. He stated that he did not understand
AIDEA's argument. He stated that he also heard comments that
Amendment 1 was going to change the bidding procedure of the state,
so that it can no longer be reimbursed over certain pay items in
the bid schedule. He stated that the interport differential does
not address the inner workings and the flow of money between the
federal and state highway department, is only used as a tool to
evaluate the true cost after the bids have been left. He stated
that he does not see how Amendment 1 would affect the various
relationships between the funding entities.
Number 639
MR. WARD stated that he understood that there was a legislative
audit conducted on the interport differential cost and the
assertion was made that the actual costs are coming in less than
calculated interport differential, he stated that might be true
under current departmental policy. He stated that the amendment is
asking the department to change its policy so that all of the costs
are put in there initially, so we get a true statement of the costs
and we do not have a discrepancy of the final analysis.
Number 689
REPRESENTATIVE ELTON asked if the amendment is added to the bill
and the bill passes, he stated that he was referring to the
interport differential, does the state go through and calculate all
of these interport differential items that are identified in the
amendment, and then is there an Alaska bidders preference that is
applied.
Number 744
MR. WARD replied in a federal aided project, the Alaska bidders
preference is not applied to the bid amount because of federal
procurement regulations. He stated that they are researching it to
see if it can be changed. He stated that the interport
differential is not so much designed to provide a preference for
Alaska shipyards but to let the state know what the true costs of
the repairs are.
Number 795
REPRESENTATIVE ELTON stated that his initial preference would not
to codify in statute, what the elements of the interport
differential may be, but to do that through regulation so there is
a little more flexibility and as times change it is easier to
change the definition of interport differential. He asked what Mr.
Ward's comfort level is in having this in statute versus having
this in regulation.
Number 848
MR. WARD replied that it was the intent to keep the amendment as
broad and general as possible and not fully codify all the
elements, but provide the department guidance of the types of costs
to be considered. He stated that the next step would be to go into
regulation to truly identify those costs and create a formula that
provides consistency in determination. He stated that cost
identification, methods of evaluation and funds that will be used,
could come in under regulation without a statute for guidance, but
we don't believe there is an incentive for the DOT/PF to accurately
identify those costs, and they haven't to date.
Number 906
REPRESENTATIVE HUDSON believed that there should be this definition
of interport differential in the bill, so that we don't have a
contractual conflict with a claim that the state is skewing it
towards a higher bidder. He stated that he supports the amendment,
the added employee cost and fuel cost ought to be included in the
bid. He stated that he is a strong supporter of performing vessel
maintenance, to the greatest extent, in Alaska.
Number 985
REPRESENTATIVE JOHN COWDERY stated that he supports the amendment.
Number 1060
MIKE DOWNING, Director, Division of Engineering and Operations,
Department of Transportation and Public Facilities, asked if this
is the same language in the amendment of SB 21.
CHAIRMAN WILLIAMS replied, "Yes."
Number 1084
MR. DOWNING stated that he did an analysis of the language and read
the analysis into the record:
"The first part is subsection C. This subsection refers to the
commissioners responsibility under the existing subsection A to
prepare a written determination, when a vessel is taken out of
state for maintenance or repairs. They allow the basis for the
determination as limited to an unresponsible proposed cost, or lack
of shipyard qualifications, or equipment. The new subsection C
further defines the consideration given to the cost of the proposed
work by requiring it to be compared to the lower of either the
budgeted cost or the anticipated actual cost, assuming that there
would be a difference. The strict application of the subsection
language, should have little to no effect on the way that the
Alaska Maine Highway System conducts its business, regarding the
maintenance and repair contracts. The occurrence of a condition
where the negotiations for a state funded contract have failed
because of an unreasonable proposed cost, is at the least very
rare. There is a need for caution though, when a statute is
proposed that reaches all the way to the negotiating table of the
construction contract and effectively adjusts the character of
those negotiations. The greater concern and likely difficulty,
with subsection C, will come in determining what the provision
means and when it is to be applied. If the expectation is that
this subsection would apply to competitively bid contracts, then
there may be unintended and negative consequences. In applying the
subsection to competitive bid contracts, the state would be
prevented from considering contingent or optional bid items in the
basis of award and therefore, would not receive competitive pricing
for these items. Further compounding this problem, is that the
scope of needed repairs is often impossible to determine without
dry docking or other service interruption. That is why you have
the contingent and optional bid items.
"Subsection D. This subsection defines what is to be included in
the interport differential. The interport differential is the
estimated cost of moving a vessel from its home port to the
facility where the work will take place. An interport differential
is considered by the Alaska Marine Highway System and other ship
owners and contract or determinations, so that the costs to the
owner of moving a vessel is included in the determination of the
low bid. This way the owner knows which bidder is offering the
true lowest price. The interport differential is only used in the
basis of award, the actual cost to the owner for moving the vessel
is not influenced in any way or in any way affected by the
interport differential. Nor is the interport differential bid item
ever awarded to the contractor since the cost is incurred by the
owner. The key to an accurate interport differential is that it
reflect only the incremental cost of moving to and being at a
different port, the total cost is irrelevant. If our interport
differential is developed such that the home port has a cost then
it is no longer reflecting the incremental cost it has got total
cost in it. If there are costs that are included that would also
be occurring in the home port, that is where you would have the
non-zero home port interport differential. For the Alaska Marine
Highway System, the interport differential applies, primarily to
federally funded contracts. For the most part, the state funded
overhauls are negotiated within state shipyards and therefore, the
interport differential is not considered in the basis of award,
there is no calculation. In a federally funded contract we should
examine the eligibility for reimbursement, a problem could develop
if the interport differential causes a contract to be awarded for
an amount greater then the Federal Highway Administration believes
is fair and correct. If otherwise ineligible costs are included in
the interport differential and an award occurs to the home port
ship yard for the greater amount, the state may end up having to
pay the difference. We should review the proposed amendment with
the Federal Highway Administration for eligibility. An example of
the potential problem, is that agency overhead is the required
inclusion under this provision but is clearly not eligible for
reimbursement. The legislative budget and audit committee is in
the process of completing their report following an audit of the
methods used by the Alaska Marine Highway System to determine the
interport differential. Public funds have been expended to
interview the Alaska Marine Highway System Staff, gather
information, analyze contracts, policies and procedures and begin
the drafting of a report. The amendment appears to assume that
these efforts and expenditures will yield a result that is
inconsequential. A more logical sequence would have the amendment
follow the completion of the report. Both of these subsections
have an effect on the contractors selection process for vessel
contracts in favor of the Alaska home port shipyard. A continual
challenge to the Alaska Marine Highway System in contracting for
maintenance and repairs to the vessels, is the low number of
bidders. Out of state shipyards are likely to view these new
provisions as a further deterrent to bidding on the Alaska Marine
Highway System work which may lead to less competitive pricing and
less competition and higher pricing."
REPRESENTATIVE HUDSON questioned the statement that the interport
differential may tend to limit out of state bidders because they
will see this as an advantage to the instate marine maintenance
facility. He stated that we are looking at the total cost to the
state whether the feds pay for it or the state pays for it as far
as maintenance is concerned and if we apply the actual cost that we
are going to have, which is what the section says, it seems like we
would have to address it because it is part of the total cost. He
stated that if it is a Ketchikan vessel and it is performed in
Ketchikan we do not incur any of these costs, and asked if anything
in the amendment affects the other costs that are measured.
Number 1452
MR. DOWNING replied that an example of a cost that is in the list
that would occur in Ketchikan or Seward, which are the two home
ports, would be the agency overhead that occurs regardless of the
location of the ship or the project.
REPRESENTATIVE HUDSON asked if the agency referred to, meant the
marine highway.
MR. DOWNING replied yes, the marine highway.
Number 1480
REPRESENTATIVE HUDSON stated the he hasn't heard anything that
would sway him away from the amendment.
Number 1488
REPRESENTATIVE COWDERY stated, "I see nothing wrong in us coming
with a -- when you are analyzing bids with a true and accurate
costs in awarding the bid to the cost to the people." He stated
that after dry docking the additional problems that were found
would be found whether the vessel was dry docked in Seattle,
Ketchikan or Juneau. He stated that if it is going to be a cost to
the state then the costs should be included in determining where it
going to be done.
Number 1571
MR. DOWNING replied that the department understands that the
interport differential is a reasonable thing to include in the
contract, in the process of determining the true lowest cost. He
stated that we probably have the same goals in mind, the language
of Amendment 1 was drafted without consultation with the Marine
Highway System, we would have drafted language differently showing
the incremental differences.
REPRESENTATIVE HUDSON stated that he wanted Mr. Ward to respond to
the agency overhead question.
Number 1735
REPRESENTATIVE AL KOOKESH stated that it bothers him to have the
Ketchikan entity that stands to gain by having us birth in Alaska,
they are a private company. He said, "To have them draft language
for us which describes interport differential, I am a little bit
uncomfortable with that. To have a true interport differential we
ought to have one that does not include things that are going to
happen anyway." For example maintenance cost occurred during
running time. He stated that maintenance costs are going to be
occurred when you run it from Juneau to Ketchikan, it just will be
less then if run to Seattle. He stated that difference will have
to be determined, there is going to be agency overhead, dockage and
port charges will be incurred. To have it only charged in an out
of state port does not make sense. An interport differential ought
to be the true difference between running to Ketchikan and running
to Seattle. He stated that he was uncomfortable with the port in
Ketchikan writing the definition, and the Alaska Marine Highway
should be involved with the definition.
Number 1710
CHAIRMAN WILLIAMS stated that Alaska Shipyard and Dry Dock more or
less belong to the state of Alaska through AIDEA.
Number 1720
REPRESENTATIVE KOOKESH stated that it is his understanding that the
organization has changed hands four times during the last five
years. He stated that it came to AIDEA almost by default. He
stated that he hopes Alaska Shipyard and Dry Dock does get all the
business but he just wants to be fair about it.
Number 1729
MR. WARD stated that this amendment will not particularly change
the overall bid process. In reference to codification and Mr.
Downing's statement that the total cost of the interport
differential is irrelevant, speaks to why we would want to have it
in statute form. He stated that the Alaska Marine Highway System
will be able have an opportunity to input language when the
regulation is formed and truly define what each and everyone of
those costs are and mutually accept the formula for calculating
that cost. He stated that the formula could be standardized,
therefore, in every project, every cost would be considered. He
agreed with the concept that agency overhead occurs everywhere but
it occurs in different places at different levels. Agency overhead
should include contract managers travel to various yards to conduct
contract administration activities or engineering for special
problems that occur in the yard. He stated that we want to see
that those costs are identified and evaluated consistently and
equitably to give Alaskan shipyards a level playing field.
Number 1878
MR. ECKLUND stated that people from the Alaskan Ship and Dry Dock
stated some of their concerns to Chairman Williams and Senator
Taylor, as Senator Taylor has a companion measure in the Senate,
and it was Senator Taylor's office that drafted the amendment.
Number 1908
REPRESENTATIVE JERRY SANDERS stated that he agreed with the
amendment in concept because we should give every advantage to an
Alaskan bidder that we can. He stated, "I did not realize that a
contract manager would come under that as agency overhead and if
that is true then I am kind of backing off and I am wondering what
else that I don't understand is involved in this agency overhead,
because if you are talking about the secretaries in the office and
if you talking the commissioner then I understand it doesn't have
a place in here. I have had a lot of dealings with contract
managers and their trips south and if you're applying that then it
I think it does need to be in here. I just need more explanation
on it."
Number 1967
JOE PERKINS, Commissioner, Department of Transportation and Public
Facilities, stated that the DOT/PF is in favor of the interport
differential because the department wants the business to go to
Alaska. He stated that bidders have rights and if the overhead
interpretation is not clear and concise it could result in a court
case. He stated that if an overhead portion made an otherwise
lowest bidder, in the lower 48, lose the contract, the bidder would
have the right to protest the calculation and interpretation that
Alaska makes of this law. He stated that a judge will have to
decide on what the legislature meant and it can go either way.
During this process the job is not going to get done. He stated
that we are changing procurement law and the department would like
to have the procurement lawyers look to see if they see future
problems. He stated that he would prefer to identify the problems
now, rather then be tied up by a lawsuit later on.
Number 2043
CHAIRMAN WILLIAMS asked how long it would take to get it done.
Number 2050
MR. PERKINS stated that it could be done in a week.
Number 2058
CHAIRMAN WILLIAMS stated that this amendment has been more or less
before the committee as it was talked about in the last meeting.
He asked that the thought that other bidders would go away as a
result of this process be addressed.
Number 2090
MR. DOWNING stated that there are very few shipyards in the
Northwest that can dry dock the ships that we own, consequently the
number of bidders that we have is narrowly constricted. He stated
that best dry dock in the Northwest is owned by the Ketchikan
shipyard and it was built for the ferries. He stated that the
challenge of getting other bidders to compete causes higher
pricing. He stated that you get a lower bid with ten bidders then
with two. It is fairly common to have two or three bidders on a
project. He stated that recently bids were opened on the Matanuska
life saving project, the Ketchikan shipyard was the low bidder, the
next lowest came out of Tacoma, the difference between the two bids
was less then the interport differential. He stated that the
DOT/PF policy on the interport differential requires an interport
differential to be included in the award of the contract. Since
the home port for the Matanuska is Ketchikan the interport
calculation for Ketchikan was zero and the cost of moving the ship
to and from Puget Sound was calculated. The ship came off line in
Bellingham and the department now has a protest from the bidder
that the calculation should have been from Bellingham.
Number 2181
CHAIRMAN WILLIAMS stated that he has worked for a company that bid
on contracts and as long as the issues are known up front they are
worked into the bid, if the contractor wants to stay in business.
Number 2192
REPRESENTATIVE HUDSON stated that it may be worth while to
entertain amendments by the administration in one of the subsequent
hearings.
Number 2220
REPRESENTATIVE KOOKESH stated he wouldn't have any objection to
that. He stated that he thinks the interport differential
amendment is a great idea, he just wanted to make sure the formula
to figure it out was fair, he has no objection to adopting the
amendment and then having future amendments come in later.
Number 2236
REPRESENTATIVE HUDSON stated that in the case of emergency repairs
the interport differential might actually harm Alaska and he agreed
that maybe we do need to have some flexibility and have it embodied
in statute but verified by regulations. The statutes being less
detailed and the regulations ought to go throughout the regulatory
process to look at all the different variables.
Number 2269
REPRESENTATIVE ELTON stated that he would like to know how we are
applying interport differential now and it seems like we made an
application that benefits the shipyard which has the business and
it would be helpful to know what the department is applying versus
what is different with this language.
Number 2304
MR. DOWNING stated that the department could do that. He stated
that the interport differential only comes up under the federal aid
contracts because they are the contracts that are bid on. It is
rare that the department bids on an instate state funded
maintenance contract and ends up in a condition where we apply the
5 percent bidder preference and the product preference and the
other elements of the procurement code. He stated that when it
comes to federal aid funds they are fairly strict in having a fair
balance between bidders geographically.
Number 2338
CHAIRMAN WILLIAMS stated if it pleases the committee we could pass
this amendment as with Representative Hudson's suggestion.
Number 2360
REPRESENTATIVE HUDSON made a motion to adopt Amendment 1.
Number 2365
CHAIRMAN WILLIAMS asked if there was an objection. Hearing none,
Amendment 1 was adopted.
Number 2384
REPRESENTATIVE HUDSON made a motion to accept Amendment 2 for
discussion purposes.
Number 2387
CHAIRMAN WILLIAMS asked if there was an objection. Hearing none is
was so ordered.
Number 2398
MR. ECKLUND stated the there was some thought that the appointees
to this authority should be subject to legislative confirmation and
in talking to the legal department the best way to get them to fall
under legislative confirmation was to give the authority some
quasi-judicial powers. The intent of Amendment 2, is to subject
the appointees to confirmation of the legislature, not including
the commissioner. He stated that this is Mr. Utermohle's best
effort to try and accomplish that, however, it is still
questionable whether or not the language will accomplish that.
Number 2440
REPRESENTATIVE ELTON stated that on page 2, line 8, one of the
concerns regarding the appointed members language switch to
directors is fine but he is not sure that the board should be
completely dominated by people with maritime affairs.
TAPE 97-16, SIDE B
Number 005
CHAIRMAN WILLIAMS asked that comments be keep to the amendment.
REPRESENTATIVE ELTON stated that he would not attempt to amend the
amendment and that he would wait until the discussion of the full
bill.
Number 050
REPRESENTATIVE COWDERY made a motion to adopt Amendment 2.
Number 054
CHAIRMAN WILLIAMS asked if there were any objections.
Number 056
REPRESENTATIVE ELTON objected.
Number 075
CHAIRMAN WILLIAMS asked for a roll call vote. Representatives
Cowdery, Kookesh, Masek, Hudson, Sanders, Williams voted in favor
of Amendment 2. Representative Elton voted against Amendment 2.
Amendment 2 carried.
Number 96
REPRESENTATIVE HUDSON made a motion to accept Amendment 3 for
discussion purposes.
Number 102
CHAIRMAN WILLIAMS asked if there was an objection. Hearing none it
was so ordered.
Number 106
MR. ECKLUND stated that the Amendment 3 on page 2, line 13, deletes
"a maritime union" and inserts "the maritime union representing the
largest number of onboard employees of the authority." He stated
that this would be the Inland Boatmen's Union (IBU) since that
particular union represents 85 percent of the onboard personnel, it
was important that those employees were represented in the
authority.
Number 134
REPRESENTATIVE HUDSON asked for a minute to examine the amendment.
He asked that essentially the unlicensed union would be the source
of the union representation in all cases. He asked if this would
preclude an Marine Engineers Beneficial Association (MEBA) member
or and Master Mates and Pilots (MMP) member.
Number 166
MR. ECKLUND stated that it would not preclude them because there
would still be at least two people who are members of the unions
but a least one person would have to be a member of the IBU, which
is the largest union of the onboard employees.
Number 188
REPRESENTATIVE HUDSON made a motion to move Amendment 3.
Number 192
CHAIRMAN WILLIAMS asked if there was an objection.
Number 197
REPRESENTATIVE ELTON objected.
Number 200
CHAIRMAN WILLIAMS asked for a roll call vote. Representative
Sanders, Hudson, Masek, Cowdery, Kookesh and Williams voted in
favor of the amendment. Representative Elton voted against the
amendment. Amendment 3 carried.
Number 237
REPRESENTATIVE HUDSON stated that it is not the first time this
type of bill has been before the legislature. He stated that he
has taken great pains to listen to the department, to read the
materials prepared by Mr. Ross by looking back at the Marine
Transportation Plan of 1993. He has spoken with the Director of
the Marine Highway System and heard of his plans to essentially
underwrite a revised plan for Southeast Alaska. He stated that he
can not support the move to a Marine Highway Authority in light of
the overabundance of major problems. He felt that the authority
will not solve but possibly exasperate the problem. He stated that
until we know how we are going to solve our problems, by placing
the added responsibility of converting over to a major authority,
may do great harm to the Marine Highway System. He stated that we
need to identify all the problems and set up a course of action.
He stated that he would like to work with the marine highway
employees, the department, and the communities. He stated that
there is a private ferry that is being suggested for operations
between Prince Whales Island Community and Wrangell or Ketchikan.
There is the question of what to do with the Malaspina and identify
what the new vessels course is going to be. He stated that in 1987
he wrote a White Paper, in which he called for this kind of plan.
He stated that his vision of the system is to figure out how to
make it be an economic generator out of the system. He stated that
the Marine Highway System can provide a greater economic benefit to
Wrangell, Ketchikan and Petersburg. He stated that if the schedule
could be adjusted to have 45 more minutes at each of those
communities. He stated that he is not sure that a board of
directors could do more with the dynamics that the Marine Highway
System has to have. He stated that if each member has its specific
concerns it could result in a cumbersome resolution process. He
stated that he is speaking from his experience with the Marine
Highway System. He stated that during that time he was able to
move with the dynamics, which might not be possible under a mixed
board. He stated he would like to see the issue looked at
carefully and have some broader hearings within the communities and
ask the communities to tell us what they want from the Marine
Highway System. He stated that some of the complaints are in the
form of venting on the part of the crew members. He stated that he
realizes the crew has many of the answers on how to make the system
run more effective. There are vessels that are not on routes that
they need to be on or there are two vessels right after each other.
He stated that many of the unions are so frustrated with the system
that they will take anything. He stated that the bill will
preoccupy the director, the commissioner and the system, so that it
will not solve problems. He stated that he has some suggestions
such as moving all of the spare parts into Ketchikan. He stated
that he would ask for a work committee to bring some unions in to
have a workshop.
Number 615
JOHN RITTERBACH, Member, Executive Board, Inland Boatmen's Union,
and Purser, M/V Matanuska, testified via teleconference from
Ketchikan, that he does not agree that an authority will take a lot
of time and money to implement and that it is a bad time to make
such a drastic change. He stated that a Marine Authority Board,
made up of almost entirely of people with maritime experience, does
not make another layer of government, it makes a government body
that is knowledgeable to the affairs that it manages. It is made
up of the very people that it serves, therefore it will be more
responsive to the public that it serves. The director appointed by
the board will come from the maritime industry not appointed by the
governor, it will be taken out of politics. He stated that an
authority will be more responsible to the public not less. He
stated that there will be an initial cost in excess of what is in
place, but with the increased efficiency in operation and more
effective management these costs will result in being much lower
than what is now in place. He stated that a large part of the
Alaska Marine Highway System's budget is in management which can be
reduced. He stated that he disagreed that this is a bad time to
make changes. He stated that it is not the Alaska Marine Highway
system that is broken, it is just the way that it is managed, we
need to be pointed in the right direction. He stated that it is
important to know what to ask for, which takes experience,
something the present management team does not have. He stated
that the Alaska Marine Highway System contributes to the economic
development of the communities served and provides billions of
dollars in revenue to many parts in the state. In two months we
will be the largest employer in Ketchikan and with the M/V Kennicot
we will be able to have a link for the first time from South
Central Alaska to Bellingham. He stated that sometimes it takes
money to make money. The Alaska Marine Highway Management is not
asking for the funds to do the job because the administration has
tied their hands from asking. He stated that he is proud to be a
member of the Alaska Marine Highway and felt that the ships should
be the pride of the Alaska Marine Highway, we don't deserve second
rate repairs or second rate management, we are a vital part of the
state economy. He stated that he urges passage of the bill and of
full funding of the Alaska Marine Highway.
Number 830
MR. RITTERBACH stated that he does not think that he is an employee
who is venting anger at management. He feels that as an employee,
he has close ties to seeing the decisions that management has made.
He stated that during the time Representative Hudson was involved
with the Alaska Marine Highway System it was managed very well,
unlike now, which is the point of the bill, to get the Alaska
Marine Highway System out of the hands of the politicians which
sometimes appoints good managers and sometimes appoints bad ones.
He stated that he does not believe that a board will create a great
confusion. The only thing that is being changed is the upper end
of the management. He stated that by adding the union to the
board, will result in bringing the unions and management closer
together.
Number 970
BOB PICKRELL, Ketchikan Chamber of Transportation Committee,
testified via teleconference from Ketchikan, that there is lack of
management continuity when there is 23 directors and 23
commissioners of transportation during the 35 years history of the
institution. He stated the new administration always thinks that
they can do it better, but they don't refer to the files to find
out what some of the suggestions have been in the past. He stated
that authority will be a solution to this problem of management
continuity. It has been proved in the past that the present system
is not working.
JIM VANHORN, Ketchikan Advisory Board, testified via teleconference
from Ketchikan, that Mr. Pickrell and Mr. Ritterbach spoke
eloquently on the matter and he had no further comment.
Number 1104
CHAIRMAN WILLIAMS asked if anyone else wanted to testify, if not
public testimony is closed.
Number 117
REPRESENTATIVE ELTON stated that Representative Hudson articulated
as well as anybody can the dangers of trying to address a discreet
problem with a massive change. He stated that if this bill is
adopted there is no guarantee that management approves. He stated
that he also worked for a board, and the perception is that the
politics of gubernatorial appointments is bad, a board balkanizes
management authority. "You create little thiefdoms each
representing their own little perspective. What happens instead of
a broadening you get a narrowing of perspectives by board members
and a good or a bad executive director lasts for a long time by
making sure that he or she has 50 percent plus one of the board
behind it." He stated that the executive director does not respond
to the communities but responds to the board that hires, fires and
grants pay raises. He stated that the bill does not come in time
to help with the major decisions, the effective date of the bill is
January 1, 1998. The decisions made on the Kennicot, will occur
before the board is appointed.
Number 1271
REPRESENTATIVE ELTON stated that he would like to propose an
amendment.
Number 1282
CHAIRMAN WILLIAMS stated that he plans on having another meeting on
this and would like to have the amendment written up and presented
at that time.
Number 1295
REPRESENTATIVE ELTON stated that conceptually the amendment
addresses the concern that the six appointed members must be state
residents that must have experience with maritime affairs. The
amendment would state "with the exception of the public member."
He stated we no longer have a public member if that member has to
have experience in maritime affairs.
Number 1328
REPRESENTATIVE MASEK stated that she does have some ill feelings
toward the bill and is trying to figure out if there is any merit
in trying to put the Marine Highway under a separate authority.
She stated that Representative Hudson did bring up some valid
points. She stated that everyone involved can work together under
the present system. It is important to not push something through
that will not entirely answer all the problems that we are facing
with the Marine Highway System. She stated that she has not heard
much public testimony from the general public, it seems like it is
a employee situation that brought the bill out. More communication
is needed between the administration and the employees that are
working on the marine highway.
Number 1417
REPRESENTATIVE SANDERS stated that being from Anchorage and only
have ridden the ferry three or four times, feels unprepared to
comment on this. He stated that it is quite obvious that there are
problems with the Marine Highway System and something needs to be
done about it. He is glad the bill is in front of the committee
and thinks that one way or another it will lead to a solution but
would feel uncomfortable about moving the bill out today.
Number 1465
CHAIRMAN WILLIAMS stated that we have been having problems with the
ferry system for quite some time. He said, "things that get bad
with a system just don't happen overnight." He stated that Senator
Taylor put together the task force and had public hearings last
year which is how the bill came about. Something has to be done
and it is harder to be on the department's side when the public is
asking the legislature why can't there be better ferry service. He
stated that the ferry isn't making money as result of the lack of
service, the public has found other ways to get to where they are
going. The private sector ferries are a concern that could take
over Prince of Whales, Petersburg and Wrangel. He stated they will
be taking over Metlakatla. The private sector usually does a
better job then the government, and when there are problems the
private sector increases service, the ferry system is doing just
the opposite. He stated that the director that started when the
ferry system started going down in 1992 is still employed. He
stated that he has worked with a board of directors for ten years
and disagrees with the comments on working with directors. He has
worked with a board in both the public and the private sector. He
stated that a board has a good chance of changing the direction and
that he likes the make-up of the board and Representative Elton's
amendment of a public person on the board will add a diversity as
will the three members that will come from marine unions. He
stated that he would like to move the bill and would like to talk
to the two representatives from Juneau to see if it was possible to
make it a better situation. He believes the bill is not out of
spite but out of need to correct an ongoing situation. He said,
"It just didn't happen, we knew that there was something wrong with
the ferry system and now we are going to wait for them to do
something again." He stated that this is a companion bill to
Senator Taylor's bill, who put together the task force and did all
of the leg work to find out why the bars were closing, the food
service going down and the moral on the ships going down. He
stated that change should be good for this, if something isn't done
we are going to lose it.
Number 2008
REPRESENTATIVE ELTON stated the he thinks everybody agrees on two
points. No system is well served when there is a revolving door of
management, unfortunately the revolving door of management that Mr.
Pickrell delineated for us also affects our management of rural
airports and highways, it is destructive to all modes of
transportation. He stated the second point is that it is extremely
difficult to maintain any transportation system when the money goes
away, as we are seeing it the rural airports and highway
maintenance. He stated that we just have different answers to
solving the problem.
Number 2094
CHAIRMAN WILLIAMS stated that he will bring the bill up again on
Monday and on Friday the committee will have a continuation of the
Alaska Marine Highway overview to hear answers to the employees'
questions.
ADJOURNMENT
Number 2138
CHAIRMAN WILLIAMS adjourned the House Transportation Standing
Committee at 3:00 p.m.
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