Legislature(1993 - 1994)

02/08/1994 05:00 PM TRA

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

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