Legislature(2017 - 2018)BARNES 124
03/08/2018 01:15 PM House TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Proposal of Committee Sponsored Bill Regarding Alaska Marine Hwy/public Corp. | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
March 8, 2018
1:16 p.m.
MEMBERS PRESENT
Representative Louise Stutes, Co-Chair
Representative Adam Wool, Co-Chair
Representative Matt Claman
Representative Harriet Drummond
Representative Chuck Kopp
Representative Mark Neuman
Representative Colleen Sullivan-Leonard
MEMBERS ABSENT
Representative David Eastman (alternate)
Representative Gabrielle LeDoux (alternate)
COMMITTEE CALENDAR
PRESENTATION: PROPOSAL OF COMMITTEE SPONSORED BILL REGARDING
ALASKA MARINE HWY/PUBLIC CORP.
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
SUSAN BELL, Principal
McDowell Group
Juneau, Alaska
POSITION STATEMENT: Gave a Presentation regarding the proposal
of a committee sponsored bill regarding the Alaska Marine
Highway Corporation.
ACTION NARRATIVE
1:16:46 PM
CO-CHAIR LOUISE STUTES called the House Transportation Standing
Committee meeting to order at 1:17 p.m. Representatives Neuman,
Sullivan-Leonard, Drummond, Claman, Wool, and Stutes were
present at the call to order. Representative Kopp arrived as
the meeting was in progress.
^Presentation: Proposal of Committee Sponsored Bill Regarding
Alaska Marine Hwy/Public Corp.
Presentation: Proposal of Committee Sponsored Bill Regarding
Alaska Marine Highway/Public Corp.
1:17:48 PM
CO-CHAIR STUTES announced that the only order of business would
be the presentation regarding proposal of a committee-sponsored
bill regarding the Alaska Marine Highway Public Corporation.
CO-CHAIR STUTES reviewed that during the House Transportation
Standing Committee meeting held on February 15, 2018, the
committee had heard from the Southeast Conference and the Alaska
Marine Highway Reform Steering Committee on the necessity and
future of Alaska's Marine Highway system. The Southeast
Conference has requested legislation establishing the Alaska
Marine Highway Corporation. She stated her intent that after
the committee hears the presentation, it would then decide
whether to go forward as the sponsor on this type of
legislation.
1:18:58 PM
SUSAN BELL, Principal, McDowell Group, stated that the McDowell
Group participated in the Alaska Marine Highway System (AMHS)
reform project, which was led by Elliott Bay Design Group.
There was a more detailed review of phase 2 and an introduction
of phase 3 at the presentation given on February 15, 2018. She
said that in 2016, Elliott Bay Design Group led phase 1 of the
project to consider governance structures of ferry systems
throughout the world. A statewide transportation summit was
held in Anchorage, Alaska, to gather information before the
Southeast Conference meeting in Petersburg. The recommendation
made was to explore governance more thoroughly, with the idea
that a public corporation similar to the Alaska Railroad
Corporation would benefit the Marine Highway. She spoke of the
expertise of Elliott Bay Design Group and noted that John
Waterhouse, from the group, was present last month.
1:20:50 PM
MS. BELL discussed phase 2. She noted that McDowell Group led
the revenue analysis, which looked at [the Alaska Marine Highway
System's] AMHS's existing traffic, routes, and revenue, as well
as nonoperating revenue sources that may need to be considered
sometime in the future. She said that makes up the first
section of the PowerPoint presentation. She said Elliott Bay
Design Group looked at the existing operation and developed a
financial model, and the group looked at ways to achieve
operational savings. Considering the age of Alaska's fleet,
there could be savings with a newer fleet, for example in fuel
or operational costs. Ms. Bell said she participated in the
consideration of the public corporation and governance model.
She named other corporations that have significant
responsibilities and assets, such as the Alaska Railroad
Corporation, the Alaska Permanent Fund Corporation, and the
Alaska Mental Health Trust Authority. The result of the phase 2
report was the recommendation of a public corporation because of
financial expertise and guidance. She said maintaining the
Alaska Marine Highway as a public corporation would maintain the
existing strength of interdepartmental coordination, public
purpose, access to federal funding and shared services that
support all state agencies, and it would address some of the
existing limitations. She mentioned indirect labor
negotiations, a shorter-term planning horizon, and recognition
of turnover in senior leadership of commissioners and deputy
commissioners.
MS. BELL said McDowell Group supports public involvement. She
informed the committee that Marine Highway documents are found
on amhsreform.com. She thanked AMHS for the support provided to
produce this project.
1:24:58 PM
REPRESENTATIVE NEUMAN mentioned the Executive Budget Act, and he
expressed interest in how [the reform] would work through the
Department of Transportation & Public Facilities (DOT&PF) and
the legislature's budget process.
MS. BELL answered that McDowell Group made a recommendation in
its phase 2 report for a seven-member board exempt from the
Procurement Act with adherence to the Executive Budget Act. She
said the group was trying to recognize "where to draw on the
strength of existing organizations" - private sector expertise,
as well as other state support. She emphasized that McDowell
Group did not want to jeopardize "some of the other Department
of Law supports."
REPRESENTATIVE NEUMAN asked how fees would be set.
MS. BELL answered that the corporation should have rate-setting
authority, but she recognized the legislature's power of
appropriation.
1:28:03 PM
REPRESENTATIVE NEUMAN asked how the board would be funded. He
remarked that AMHS is already under pressure because of lack of
funding.
MS. BELL said McDowell Group studied other public corporations
with significant assets and operating responsibilities, and it
estimated that the seven-member board might have a cost of
approximately $25,000. She said the group believes there could
be flexibility in the rate structure. Further, she said there
may be the opportunity for other non-operating revenue sources,
such as bonding or partnering with tribal transportation
interest in ensuring small rural communities are served.
McDowell Group also looked at what it would take to have a fund,
which she emphasized was not a recommendation but was a method
of helping to answer the questions that might come up through
this process, because "it probably takes a package of things for
us to really fund this system."
REPRESENTATIVE NEUMAN requested committee members be given
copies of the recommendations made by McDowell Group, and he
said he would like to know how maintenance repair and vessel
replacement would be structured.
MS. BELL speculated that if the legislature decides to go
forward with this, it would probably require a discussion the
length of a couple legislative sessions, because it is a complex
issue. Regarding capital needs, she said, "Maintaining it as a
public corporation allows that access to federal funds, which
are critical to the system ...." She said phase 3 is the
current phase, and it is a small one; it's about $15,000. She
said phase 3 begins to answer some of the forward-looking
questions. She said McDowell Group put together a memorandum to
help the steering committee understand the legislative process.
McDowell Group is looking at what can be done now. Key is
stabilizing funding so that the system does not fall into
further disrepair. Second is that AMHS and DOT&PF can begin
actions that align with "where the public corporation might be"
in terms of decisions being made about fleet, terminals, and
operational standardization. Ms. Bell related that McDowell
Group also recommended a change from labor negotiations from the
Department of Administration (DOA) to the [proposed] Marine
Highway Corporation. She emphasized the recommendation is not
to undercut the quality of DOA, but to allow the corporation to
conduct its own negotiations, which would build needed
expertise. She said AMHS currently supports those negotiations,
but McDowell Group envisions one new staff member would be
necessary. She said that "gaining that experience between now
and ... actual transition would be beneficial."
MS. BELL said there is another beneficial phase that will be
more technical. It will address the vessel, risk management,
the board, and engagement. If legislation passed within the
next year, there is still a transition period that will be
needed, and there needs to be a record of this phase so that
people understand it.
1:35:50 PM
REPRESENTATIVE SULLIVAN-LEONARD asked if there are other marine
highway systems across the nation that run by corporation.
MS. BELL noted that phase 1 was a small phase. She relayed that
BC Ferries, in British Columbia, moved to a public corporation.
In its history, the Washington ferry system had some structures
similar to a public corporation. She said there are fully
privately-owned corporations. She imparted that a ferry system
in Scotland was studied. She said she would ensure committee
members had access to the related documents.
REPRESENTATIVE SULLIVAN-LEONARD mentioned "a long list of
supporters for the study" and asked if there was any discussion
as to whether they would continue their support of the
corporation concept. She described stakeholders, tribal
entities, and communities remaining engaged in the operations
and oversight of the operation.
MS. BELL responded that there were approximately 40 supporters
[listed], and they wanted to show that the marine transportation
system was important to their businesses and communities and to
the state. She recollected that "the non-operating revenue
portion of this report" contemplated ... partnering more with
tribal transportation entities; however, she did not think there
was "a connection where they feed together." Nevertheless, she
stated, "I think this really demonstrated ... the critical
nature ... of the system." She emphasized the importance of
ridership and said Alaskans throughout the state are utilizing
the marine highway system for business, pleasure, and
relocation.
REPRESENTATIVE SULLIVAN-LEONARD responded that she thinks it is
important to highlight that [support], because the State of
Alaska would be investing millions of dollars for this "semi-
private corporation." She opined that the stakeholders need to
have not only "a say in it," but also "a stake in it, both
financially and otherwise."
1:40:43 PM
CO-CHAIR STUTES invited committee comments. She restated that
the final action of the committee would be to decide whether to
pursue the requested legislation to discuss the possibility of a
public/private partnership with the Alaska Marine Highway
System.
1:41:05 PM
REPRESENTATIVE KOPP emphasized his enthusiasm for the idea of
having a professional board rather than "trying to get 60
legislators up to speed on the complex issues of the Marine
Highway System ...." He asked committee members to imagine the
legislature trying to run the Anchorage International Airport.
He said it would be a disaster. He said it is the number four
air cargo airport in the world, and it is self-sustaining. He
highlighted the efficiency of working out labor contracts
without the Department of Administration. He concluded, "It's
hard to imagine ... the various chambers of commerce and the
individual communities that rely on this as a business driver -
an economic driver - not ... being excited about this."
1:42:27 PM
CO-CHAIR STUTES said another huge benefit would be in having a
static board, as opposed to the potential turnover of
commissioner every four years, which affects the stability of
agencies.
1:43:11 PM
REPRESENTATIVE CLAMAN said he supports moving forward with the
public/private structure being discussed. He said he thinks it
is a positive step. In the last few years, AMHS has been
restricted in its ability to maximize revenue because it is
waiting on the legislature to approve its budget and cannot even
put a schedule in place without the budget. He mentioned the
interest and value [of the ferry system] to coastal communities,
and he said coming from Anchorage, he hears more about people in
Prince William Sound accessing the ferry, but "it is an enormous
part of how our entire transportation structure works." He said
that he strongly supported moving forward with a bill and
starting the process.
1:44:08 PM
REPRESENTATIVE NEUMAN said he would like to learn more and
receive more information. He said there is a lot to know in
order to form a state corporation, for example, labor
negotiations and the setting of community taxation rates. He
credited former Representative Peggy Wilson for her work on the
Transportation Advisory Board, which ensures the state gathers
information from communities around the state. He said he does
not think he has enough information currently. He said
committee members are responsible for reading the information
from McDowell Group. He recollected that Ms. Bell had said the
legislature would likely spend a couple [legislatures] figuring
everything out, and he said he could understand that. He
questioned how the legislature would come up with a couple
hundred million dollars for a fund. He concluded, "I like the
work that they're doing here, and we'll see what kind of
questions come up next time."
1:45:42 PM
REPRESENTATIVE DRUMMOND related that she had ridden the ferry a
couple of times before she was elected in 2012, and in just six
years she has seen how the scheduling has changed. It has
become more difficult for her to get herself and her belongings
to Juneau because of those changes, which she said were caused
by management and budget issues. She said she can only imagine
the frustrations of people who depend on the ferry for their
everyday transportation. She said, "I think we should write
this bill, get us all onboard, and let her rip." She commented
on the number of individuals, organizations, and communities on
the list formerly mentioned by Representative Sullivan-Leonard,
and she opined that the committee needs to "not hamstring them
and just get to work on this as quickly as we can."
1:47:23 PM
CO-CHAIR WOOL said he thinks this is a good idea. He offered
his understanding that public/private corporations have
different types of funding available to them and are not as
attached to state government, thus they can make negotiations.
For example, they could outsource the beverage service on the
ferries. He echoed Representative Drummond's statement to "let
her rip."
CO-CHAIR STUTES stated that she would entertain a motion from
the committee.
1:48:29 PM
REPRESENTATIVE Wool moved that the House Transportation Standing
Committee draft committee sponsored legislation establishing the
Alaska Marine Highway Corporation.
1:48:39 PM
REPRESENTATIVE NEUMAN objected.
1:48:40 PM
A roll call vote was taken. Representatives Drummond, Claman,
Kopp, Wool, and Stutes voted in favor of the motion that the
House Transportation Standing Committee draft committee
sponsored legislation establishing the Alaska Marine Highway
Corporation. Representatives Sullivan-Leonard and Neuman voted
against it. Therefore, the motion carried by a vote of 5-2.
1:49:57 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 1:50
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Southeast Conference Bill Sponsorship Request 3.6.18.pdf |
HTRA 3/8/2018 1:15:00 PM |
Alaska Marine Highway |
| AMHS Reform Presentation 2.15.18.pdf |
HTRA 3/8/2018 1:15:00 PM |
|
| Additional Documents - The Case for AMHS Reform 2.15.18.pdf |
HTRA 3/8/2018 1:15:00 PM |