Legislature(1993 - 1994)

04/08/1993 08:20 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          April 8, 1993                                        
                            8:20 a.m.                                          
  TAPES                                                                        
                                                                               
  SFC-93, #55, Side 1 (000-end)                                                
  SFC-93, #55, Side 2 (575-end)                                                
  SFC-93, #57, Side 1 (000-337)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Drue  Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 8:20 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to  Co-chairs Pearce and Frank,  Senators Jacko,                 
  Rieger, and Sharp  were present.  Senator Kelly arrived soon                 
  after the meeting began.  Senator Kerttula did not attend.                   
                                                                               
  ALSO  ATTENDING:   Robert  Knight,  Mayor,  Nenana,  Alaska;                 
  Bernie Karl, Chairman and CEO, Alaska  Resource Conservation                 
  Center, Inc.;  Chris Gates,  Director, Division  of Economic                 
  Development, Dept. of Commerce and Economic Development; Tom                 
  Lawson, Business/Regional Development, Division  of Economic                 
  Development,  Dept. of  Commerce  and Economic  Development;                 
  Judy  Knight,  Director,  Division  of Employment  Security,                 
  Dept.  of   Labor;  John   Walsh,  Deputy   Director/Juneau,                 
  Community and Rural Development Division, Dept. of Community                 
  and  Regional  Affairs;  Mark  Mickelson,  JTPA/SDA  Program                 
  Manager, Community and Rural Development Division, Dept.  of                 
  Community  and  Regional  Affairs; Dave  Skidmore,  aide  to                 
  Senator  Frank;  and aides  to  committee members  and other                 
  members of the legislature.                                                  
                                                                               
  PARTICIPATING  VIA  TELECONFERENCE FROM  ANCHORAGE:   Robert                 
  Hatfield, President  and CEO,  Alaska Railroad  Corporation;                 
  Phyllis   Johnson,   General   Counsel,    Alaska   Railroad                 
  Corporation.                                                                 
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 57     -    An Act relating  to employment  contributions                 
  and to              extending  the  pilot  project  for  the                 
                      state training  and employment  program;                 
                      and providing for an effective date.                     
                                                                               
                 The bill was REPORTED OUT of committee with a                 
                 "do pass" recommendation and zero SFC  fiscal                 
                 notes  for  the  Dept.  of  Labor,  Dept.  of                 
                 Community  and  Regional  Affairs (Training),                 
                 and Dept.  of Community and  Regional Affairs                 
                 Dept.  of  Community  and   Regional  Affairs                 
                                                                               
                                                                               
                 (Rural Dev. Service).                                         
                                                                               
  SB 76     -    Act    preventing    persons    with   felony                 
  convictions from              being  involved  in charitable                 
                                gaming    activities   as    a                 
                                permittee,     licensee,    or                 
                                employee  in  a  managerial or                 
                                supervisory    capacity;   and                 
                                relating  to "political  uses"                 
                                and  "political organizations"                 
                                as those terms are used in the                 
                                charitable gaming statutes.                    
                                                                               
                 The  bill  was  scheduled  but not  heard  by                 
                 committee.                                                    
                                                                               
  SB 142    -    Act relating to the Alaska regional  economic                 
                 assistance  program;  and  providing  for  an                 
                 effective date.                                               
                                                                               
                 Testimony was provided by Chris Gates and Tom                 
                 Lawson of  the Dept. of Commerce and Economic                 
                 Development.    CSSB  142  (C&RA)  was   then                 
                 REPORTED OUT of committee  with a new, $250.0                 
                 SFC fiscal note for the Dept. of Commerce and                 
                 Economic Development.                                         
                                                                               
  SB 148    -    Act   relating   to   the   Alaska   Railroad                 
  Corporation;             and  providing  for   an  effective                 
                           date.                                               
                                                                               
                 Testimony was  presented by  Bernie Karl  and                 
                 Robert  Knight  and  via   teleconference  by                 
                 Robert  Hatfield  and Phyllis  Johnson.   The                 
                 bill   was    subsequently   scheduled    for                 
                 additional hearing April 10, 1993.                            
                                                                               
  SB 173    -    Act relating  to health  insurance for  small                 
                 employers;  and  providing  for an  effective                 
                 date.                                                         
                                                                               
                 CSSB  173  (Finance)   was  REPORTED  OUT  of                 
                 committee with  a zero  fiscal note from  the                 
                 Dept. of Commerce and Economic Development.                   
                                                                               
                                                                               
  SENATE BILL NO. 76                                                           
                                                                               
       An Act  preventing persons with felony convictions from                 
       being involved  in  charitable gaming  activities as  a                 
       permittee,  licensee, or  employee in  a managerial  or                 
       supervisory capacity; and relating to `political  uses'                 
       and `political  organizations' as those terms  are used                 
                                                                               
                                                                               
       in the charitable gaming statutes.                                      
                                                                               
  Co-chair Pearce  announced  that SB  76 would  not be  heard                 
  today.                                                                       
                                                                               
                                                                               
  SENATE BILL NO. 148                                                          
                                                                               
       An Act relating to the Alaska Railroad Corporation; and                 
       providing for an effective date.                                        
                                                                               
  Co-chair  Pearce  directed  that SB  148  be  brought before                 
  committee for discussion and referenced the following backup                 
  material (copies on file  in the original SFC bill  file for                 
  SB 148):                                                                     
                                                                               
       1.   A memorandum from staff in Co-chair Frank's office                 
            comparing  the   original  bill   with  CSSB   148                 
            (Transportation).                                                  
                                                                               
       2.   Amendment No. 1, providing approval for a regional                 
            sanitary land fill at mile 388.                                    
                                                                               
       3.   April   7,   1993,   correspondence  from   Robert                 
  Hatfield,           President  and   CEO,  Alaska   Railroad                 
                      Corporation.                                             
                                                                               
  She   further  advised   that  SB   148   reflects  railroad                 
  legislation introduced by the Senate Finance Committee.                      
                                                                               
  BERNIE  KARL,   Chairman  and  CEO,   Alaska  Resource   and                 
  Conservation Center, Inc., and ROBERT KNIGHT, Mayor, City of                 
  Nenana,  came  before  committee.    Mr.  Karl  acknowledged                 
  committee concern regarding certain railroad operations  but                 
  cautioned that  under the  proposed legislation the  private                 
  sector would not  be able to  freely joint-venture with  the                 
  railroad.    The   City  of  Nenana,  the   Alaska  Railroad                 
  Corporation, and  Alaska Resource Conservation  Center, Inc.                 
  are presently  involved in  a joint-venture  to establish  a                 
  regional land fill.  The project would serve 80% of Alaska's                 
  population.  Restricting or eliminating  railroad ability to                 
  hold an equity interest would seriously harm the project.                    
                                                                               
  Mr.  Karl  voiced his  understanding  that the  railroad act                 
  mandates that the  Alaska Railroad  Corporation not come  to                 
  the legislature  for funding.   It  is to  generate its  own                 
  income.   The  railroad cannot  be expected  to utilize  its                 
  assets to generate  income when the legislature  passes laws                 
  restricting or  prohibiting use of those assets.  Should the                 
  proposed legislation pass, two options arise:                                
                                                                               
       1.   The  railroad should  immediately  be put  up  for                 
  sale.                                                                        
                                                                               
                                                                               
       2.   The Dept. of Transportation and Public  Facilities                 
  should         take over management and operate the railroad                 
                 strictly as a means of transportation.                        
                                                                               
  Mr. Karl voiced his belief that passage of the proposed bill                 
  would  not  bring  about  the  intended  results  since  the                 
  railroad would no longer be able  to function.  The railroad                 
  does not  generate  sufficient revenues  from  transport  of                 
  freight.  It  must utilize its assets for additional income.                 
                                                                               
                                                                               
  On October  9, 1993,  approximately 12  landfills along  the                 
  railbelt will close as  the result of federal legislation.                   
  Costs  associated with  meeting federal  requirements  for a                 
  closure fund, water  and methane gas monitoring,  etc. would                 
  total  in the  millions.   A  regional  landfill will  allow                 
  communities  to  close  local  landfills  by the  October  9                 
  deadline while providing  a site  for disposal of  municipal                 
  waste.                                                                       
                                                                               
  Mr. Karl noted that every man, woman, and child creates five                 
  pounds  of  waste per  day.    If the  regional  landfill is                 
  developed,   everyone   will   derive  long-term   benefits.                 
  Communities will have twenty-five-year contracts and a fixed                 
  cost  for waste  disposal.   Alaska  has  never managed  its                 
  waste.  The Alaska Railroad has  1,835 acres well suited for                 
  a regional landfill.  It is  located at Clear (in the middle                 
  of the state),  is served by  rail, and can accommodate  all                 
  the  communities  including  Anchorage.    The  landfill  is                 
  designed to  consist of small, "digester"  cells--2.5 acres.                 
  Cells will be  closed out in three to five years.  The cells                 
  will  be  studied in  conjunction  with the  University, and                 
  methane gas emanating from them will  be used by communities                 
  in close  proximity to the  landfill.   Mr. Karl  questioned                 
  whether  the landfill would become a reality if the railroad                 
  is not allowed an interest in the project.                                   
                                                                               
  Mr.  Karl acknowledged  concerns  regarding liability.    He                 
  suggested  that  the liability  belongs  to the  state.   If                 
  Alaska does  not have  a responsible  regional landfill  for                 
  proper handling of  waste, improper  disposal problems  will                 
  follow.  Mr.  Karl next attested to ongoing EPA suits in the                 
  Fairbanks area.                                                              
                                                                               
  Mr. Karl suggested  that SB 148  be tabled until next  year.                 
  He again acknowledged concern regarding railroad  operations                 
  but stressed need  for railroad involvement in  the landfill                 
  project.                                                                     
                                                                               
  Co-chair Pearce  noted  that the  three-year period  between                 
  issue of federal landfill  regulations and impending closure                 
  of many  local sites  left ample  time for  the railroad  to                 
  bring the  proposed project  to the legislature.   Mr.  Karl                 
                                                                               
                                                                               
  advised  of need  for the  strength and  credibility  of the                 
  railroad to back the project.                                                
                                                                               
  Further discussion  followed between Co-chair  Frank and Mr.                 
  Karl concerning the  impact of impending federal  closure of                 
  landfills.                                                                   
  In  response  to a  question  from Senator  Kelly,  Mr. Karl                 
  explained that  the state  is attempting  to obtain  primacy                 
  over municipal waste.                                                        
                                                                               
  Additional  discussion  of  the  workings  of  the  proposed                 
  landfill followed.  The railroad  would be an equity  owner,                 
  would receive a fee for hauling  waste, and would share one-                 
  third of  the profit  from the  landfill.   Twenty-five-year                 
  contracts will also provide stability  for communities.  Mr.                 
  Karl stressed that funding for the project would be borrowed                 
  from a commercial bank.                                                      
                                                                               
  Co-chair Pearce called  for additional comments.   None were                 
  forthcoming.    She then  directed that  SB  148 be  HELD in                 
  committee pending comments  from the  executive director  of                 
  the railroad, later in the meeting.                                          
                                                                               
                                                                               
  SENATE BILL NO. 57                                                           
                                                                               
       An  Act  relating to  employment  contributions  and to                 
       extending the pilot project for  the state training and                 
       employment  program;  and  providing for  an  effective                 
       date.                                                                   
                                                                               
  Co-chair  Pearce  directed that  SB  57  be brought  on  for                 
  discussion.    She then  called for  amendments.   None were                 
  offered.    Senator  Rieger  MOVED  that  SB  57  pass  from                 
  committee with  individual recommendations.   Co-chair Frank                 
  raised a question  concerning operation of the program.  Co-                 
  chair  Pearce  explained  that the  Dept.  of  Community and                 
  Regional Affairs and Dept. of Labor continue  to support the                 
  direct grant within  the budget for  the Dept. of  Community                 
  and Regional Affairs but  would not support a change  in the                 
  bill.  No objection  having been raised, SB 57  was REPORTED                 
  OUT of committee with zero SFC fiscal notes for the Dept. of                 
  Labor,  Dept. of Community  and Regional  Affairs (Service),                 
  and Dept. of Community and Regional Affairs (Training).  All                 
  members present signed the committee report with a "do pass"                 
  recommendation.   Senator Kerttula  was absent  and did  not                 
  sign.                                                                        
                                                                               
                                                                               
  SENATE BILL NO. 142                                                          
                                                                               
       An  Act  relating  to   the  Alaska  regional  economic                 
                                                                               
                                                                               
       assistance  program;  and  providing  for an  effective                 
       date.                                                                   
                                                                               
  Co-chair  Pearce  directed that  SB  142 be  brought  on for                 
  discussion.                                                                  
  Senator  Jacko explained  that the Alaska  regional economic                 
  assistance program was statutorily established  in 1988.  It                 
  currently includes  13 ARDORs  funded through  the Dept.  of                 
  Commerce and  Economic  Development.   ARDORs are  nonprofit                 
  organizations  that provide  a link  and effective  delivery                 
  system  between   private,  state,   and  federal   economic                 
  development   resources  for   local  residents   and  small                 
  businesses.                                                                  
                                                                               
  The bill  effects three  changes in  the law.   The  current                 
  $50.0 maximum each ARDOR may receive is increased to $100.0.                 
  Present law also  requires a  dollar-for-dollar match.   The                 
  proposed   bill   provides   flexibility  in   state   match                 
  requirements based upon the  capability of each organization                 
  to  raise  matching funds.   Under  section  3 of  the bill,                 
  contracts between state agencies and  ARDORS are exempt from                 
  the state procurement process.  Language within secs. 1  and                 
  2 limits the civil tort liability of ARDOR board members and                 
  staff.                                                                       
                                                                               
  Senator  Jacko explained  that current  funding for  ARDORs,                 
  particularly  in  rural Alaska,  is  inadequate to  ensure a                 
  necessary level  of operation.   Hence  need for the  above-                 
  noted increase from $50.0 to $100.0.                                         
                                                                               
  A total of $1.4  million annually will be needed  for the 13                 
  designated ARDORs and the  new ARDOR being organized in  the                 
  Matansuka-Susitna  Borough.     There   is  $650.0   in  the                 
  Governor's FY 94 operating  budget.  The $750.0  fiscal note                 
  brings the total to $1.4 million.                                            
                                                                               
  Senator Jacko directed attention to a sectional analysis for                 
  the bill as well as accompanying letters of support.                         
                                                                               
  CHRIS  GATES,  Director, Division  of  Economic Development,                 
  Dept. of Commerce and Economic  Development, and TOM LAWSON,                 
  Business/Regional   Development,   Division    of   Economic                 
  Development,  Dept.  of Commerce  and  Economic Development,                 
  came before committee.   Mr. Gates  spoke in support of  the                 
  legislation,  advising that  it would  "help local  economic                 
  development organizations do  their job better in  rural and                 
  urban Alaska."                                                               
                                                                               
  Mr.  Gates  explained  that  the   13  existing  ARDORs  are                 
  functioning well.  He noted  potential for new organizations                 
  in Mat-Su and the Tanana area near Fairbanks.  Approximately                 
  93%  of  Alaska's  population is  presently  represented  by                 
  ARDORs.    It   is  the  only  "ground-up"   based  economic                 
  development  tool  between  the state  and  local  entities.                 
                                                                               
                                                                               
  There  are in excess of  200, local board members attempting                 
  to  create jobs  and  development within  their  areas.   He                 
  pointed to a listing of  projects and jobs and  specifically                 
  noted businesses and economic activity in rural communities.                 
  ARDORs  are  also involved  in  the schools,  teaching basic                 
  business fundamentals to students.                                           
                                                                               
  In  response to  a  request from  Senator  Jacko, Mr.  Gates                 
  explained that section  3 of  the bill allows  the state  to                 
  contract with ARDORs  "to do  specific projects or  specific                 
  economic development  things within the  communities without                 
  going  through the  normal competitive  bidding situations."                 
  He   then   presented   several   examples  of   contractual                 
  arrangements.                                                                
                                                                               
  Speaking  to   limited  liability   provisions,  Mr.   Gates                 
  explained  that they  protect volunteer  board members  from                 
  liability relating  to hazards associated  with the physical                 
  facility.                                                                    
                                                                               
  Co-chair Frank voiced his belief  that ARDORs meet needs  in                 
  certain  areas  but  questioned   need  for  an   additional                 
  organization  in  Fairbanks  which  already  has  a  borough                 
  government,  city  government,   the  Fairbanks   industrial                 
  development corporation, small business assistance center at                 
  the University of  Alaska, etc.    He suggested that  ARDORs                 
  may well serve rural  and regional needs.  However,  it does                 
  not appear to  make sense to establish them within organized                 
  and developed municipalities.                                                
                                                                               
  Co-chair  Pearce attested  to beneficial  activities by  the                 
  Anchorage ARDOR which markets the international airport  and                 
  works  with  the  city  and   state  to  bring  industry  to                 
  Anchorage.    Co-chair Frank  questioned  whether the  state                 
  should  be  funding  well  organized  ARDORs  in  Anchorage,                 
  Fairbanks, and the  Southeast Conference.  Mr.  Gates voiced                 
  support for  the  organizations, stressing  that  the  small                 
  amount of state funding is a catalyst for federal grants and                 
  private moneys.  The state funds approximately 16% while the                 
  ARDORs garner federal and private moneys totalling 84%.  The                 
  Fairbanks ARDOR  has provided  technical  assistance to  472                 
  businesses and  nonprofits.  Mr.  Gates next listed  some of                 
  the projects in Fairbanks.  Both  Co-chair Frank and Senator                 
  Sharp  took  exception  to  the  claim  that  the ARDOR  had                 
  assisted  with the  hospital  expansion  project.   Co-chair                 
  Frank noted that the hospital foundation has been active for                 
  thirty years and probably did  not need assistance.  Senator                 
  Sharp suggested  that  ARDOR  connection  to  many  projects                 
  merely consists of an ARDOR representative on the board.  He                 
  questioned whether  the ARDOR  had actively participated  in                 
  economically beneficial aspects of the organizations.                        
                                                                               
  Senator Jacko agreed  that some  ARDORs are more  successful                 
  than others and that some regions of the state probably need                 
                                                                               
                                                                               
  them more than others.   He stressed need for  ARDOR efforts                 
  in rural areas.  Co-chair Frank agreed.                                      
                                                                               
  In response to  an inquiry from  Co-chair Pearce, Mr.  Gates                 
  directed attention  to language within section  4, requiring                 
  the department to  establish a  formula that determines  the                 
  amount of the  required match based  upon the capability  of                 
  each organization to generate  money from nonstate  sources.                 
  A  sliding scale would  allow rural ARDORs  easier access to                 
  funding.   Urban ARDORs that  can more easily generate match                 
  moneys would work on a one-to-one match.                                     
                                                                               
  Co-chair Frank  expressed  a  preference  for  reducing  the                 
  $750.0 fiscal  note and focusing  the program on  areas less                 
  capable of raising funds locally.                                            
                                                                               
  Discussion followed concerning  organization and  activities                 
  of  the  Fairbanks ARDOR.    Senator  Sharp  asked that  the                 
  department present a  list of  projects initiated by  ARDORs                 
  and that the  list indicate whether  the projects are "in  a                 
  profit making mode."  Mr. Gates advised  that Alaska derived                 
  $3.5 million in private and  federal economic development as                 
  a result of ARDORs.                                                          
                                                                               
  End, SFC-93, #55, Side 1                                                     
  Begin, SFC-93, #55, Side 2                                                   
                                                                               
  Co-chair Pearce suggested that language at section 4 specify                 
  that the department establish a formula for determining both                 
  the amount of  the match as  well as the maximum  amount for                 
  which each ARDOR could apply.  She expressed concern that as                 
  budgets become increasingly tight, $100.0 in funding for all                 
  15 ARDORs will  be more difficult  to obtain.  The  Co-chair                 
  further  suggested  that  a  $250.0   note  be  prepared  to                 
  accompany  the  bill, allowing  the conference  committee to                 
  determine the  level of funding during budget deliberations.                 
  Mr. Gates advised that a priority for assisting ARDORs could                 
  be  established  to  meet the  foregoing  intent.   Co-chair                 
  Pearce  stressed need to  have something on  paper to inform                 
  each  ARDOR of the  amount it is  eligible to  receive.  She                 
  then directed  attention to page  2, line 16,  and suggested                 
  that the following be added after "determines:"                              
                                                                               
       both the maximum an ARDOR can apply for and                             
                                                                               
  Mr.  Gates explained that both  the priority for funding and                 
  the match would  allow the  department to prioritize  scarce                 
  resources.  He then suggested  adding the following at  page                 
  2, line 17, following "match:"                                               
                                                                               
       both determines the amount of the  match required,                      
       and the priority for funding.                                           
                                                                               
  Senator Rieger voiced discomfort over  addition of the above                 
                                                                               
                                                                               
  new  language.    He  noted  that  the  legislative  opinion                 
  regarding  priorities may deviate  dramatically from that of                 
  the executive branch.                                                        
                                                                               
  Mr.  Gates  explained that  the  department views  ARDORs in                 
  terms of three types:                                                        
                                                                               
       1.   Urban (railbelt)                                                   
       2.   Suburban                                                           
       3.   Rural                                                              
                                                                               
  The  13 existing ARDORs  are broken  down into  those areas.                 
  The program  could specifically  target  suburban and  rural                 
  ARDORs.    Co-chair  Pearce  voiced reluctance  to  preclude                 
  railbelt ARDORs.   The department should be  able to respond                 
  to  ARDORs  that  help   those  who  are  willing   to  help                 
  themselves.                                                                  
                                                                               
  Discussion followed  between Co-chair  Pearce and  Mr. Gates                 
  concerning the method of distribution  of moneys should full                 
  funding not be provided.                                                     
                                                                               
  Both Senators Rieger  and Jacko expressed a  preference that                 
  language within section  4 remain as  set forth in CSSB  142                 
  (CRA).    Senator Jacko  said  that  if the  fiscal  note is                 
  reduced   to  $250.0,   the   program   would  become   more                 
  competitive, and  ARDORs would  have to  bring forth  better                 
  proposals.  He said he had no problem with that.                             
                                                                               
  Senator Sharp asked  if any  of the 13  existing ARDORs  had                 
  experienced problems  coming up with the needed  match.  Mr.                 
  Gates explained that Bering Straits in Nome has had "quite a                 
  bit  of difficulty  . .  ."   He stressed  that the  private                 
  sector base does not generally exist in  rural areas.  It is                 
  thus difficult to  raise private matches without  an economy                 
  to draw from.   The department has thus endeavored  to allow                 
  in-kind,  airline tickets,  etc., to  serve as  part  of the                 
  match.                                                                       
                                                                               
  Co-chair Pearce called for additional questions or comments.                 
  None  were  forthcoming.    Co-chair  Frank MOVED  that  the                 
  committee prepare a  new fiscal note to  accompany the bill,                 
  reducing funding from $750.0 to $250.0.  No objection having                 
  been raised, IT WAS SO ORDERED.                                              
                                                                               
  Co-chair  Pearce called  for  additional testimony  from the                 
  public.   None was  forthcoming.   She then  queried members                 
  regarding disposition  of the  bill.   Co-chair Frank  MOVED                 
  that  CSSB  142 (CRA)  pass  from committee  with individual                 
  recommendations and the  $250.0 fiscal  note.  No  objection                 
  having  been raised,  CSSB  142 (CRA)  was  REPORTED OUT  of                 
  committee with a  $250.0 SFC  fiscal note for  the Dept.  of                 
  Commerce  and Economic  Development.   Co-chairs  Frank  and                 
  Pearce  and Senator Jacko signed the committee report with a                 
                                                                               
                                                                               
  "do pass" recommendation.  Senators Kelly, Sharp, and Rieger                 
  signed "no recommendation."                                                  
                                                                               
  TELECONFERENCE                                                               
                                                                               
                                                                               
  SENATE BILL NO. 148                                                          
                                                                               
       An Act relating to the Alaska Railroad Corporation; and                 
       providing for an effective date.                                        
                                                                               
  Co-chair Pearce directed  that discussion  revert to SB  148                 
  and noted that  ROBERT HATFIELD,  President and CEO,  Alaska                 
  Railroad Corporation, and  PHYLLIS JOHNSON, General Counsel,                 
  Alaska  Railroad Corporation, were  available to testify via                 
  TELECONFERENCE from Anchorage.                                               
                                                                               
  Senator Sharp provided  an overview  of changes between  the                 
  original bill and CSSB 148 (TRA):                                            
                                                                               
       1.   Modification of language regarding board members,                  
            making requirements less restrictive.                              
                                                                               
       2.   A  loosening  of restrictions  on  use of  debt to                 
  allow                                                                        
            debt financing of all railroad operations.                         
                                                                               
  The Senator specifically  noted that  the issue of  property                 
  taxes was  not  addressed within  the Senate  Transportation                 
  version.                                                                     
                                                                               
  Co-chair  Pearce referenced  April  7, 1993,  correspondence                 
  (copy on file in the SFC file  for SB 148) from Mr. Hatfield                 
  and asked that  he speak  to points therein.   Mr.  Hatfield                 
  indicated that CSSB 148 (TRA) represents an improvement over                 
  the original bill in that it clarifies many provisions.                      
                                                                               
  Mr. Hatfield  voiced his understanding  that the legislation                 
  was introduced  in response  to committee  concern regarding                 
  the railroad's equity  position in a  hotel, as a result  of                 
  its real estate  holdings.  A  major complaint was that  the                 
  railroad's tax status  impacted the  project.  Mr.  Hatfield                 
  explained  that  at  its upcoming  meeting,  the  board will                 
  consider  taking the  equity issue  "off  the table."   That                 
  action,   as   well   as   legislative  efforts   tightening                 
  restriction on ability to leverage railroad land, will place                 
  the railroad  in the position of paying taxes on the land as                 
  though it was private, fully  unencumbered property, yet not                 
  being able to  use it as such.  Mr.  Hatfield suggested that                 
  it be one way or the other.  If the land is to be taxed, the                 
  railroad  should   be  able   to  manage   it  unilaterally.                 
  Requiring the payment  of approximately  $400.0 per year  in                 
  taxes without the  ability to leverage the land  and recover                 
                                                                               
                                                                               
  costs is unfair.                                                             
                                                                               
  Mr.  Hatfield  next  spoke to  borrowing  policies  and debt                 
  limitations.   The  railroad  board carefully  considers all                 
  major expenditures, including land  and site improvements as                 
  well as  acquisition of rolling  stock.  The  two-day public                 
  session each fall reviews plans for both the coming year and                 
  the next five years.  Expenditures in excess of $500.0 go to                 
  the board  for final  approval.  There  is thus  substantial                 
  public, board, and financial community oversight.                            
                                                                               
  Referring to statutory creation of the railroad corporation,                 
  Mr.  Hatfield  noted  that  it  is financially  and  legally                 
  independent of the  state.  Language further  indicates that                 
  the state does  not stand  behind indebtedness or  liability                 
  the  corporation  might  incur.    Debt  provisions  of  the                 
  proposed  bill  are  thus  adequately  covered  by  existing                 
  statutes.                                                                    
                                                                               
  Mr. Hatfield next advised that  current conflict of interest                 
  requirements  for  board members  are more  restrictive then                 
  APOC provisions set forth  in the proposed bill.   He voiced                 
  support  for the prohibition  precluding the chief executive                 
  officer from  serving as  chairman or  vice-chairman of  the                 
  board.                                                                       
                                                                               
  In his concluding remarks, Mr.  Hatfield reiterated that the                 
  board is ready to implement a policy that would preclude the                 
  railroad from taking  equity positions  in hotels and  other                 
  nontransportation                                                            
  related activities.   That is the issue  behind the proposed                 
  bill.  Since other  bill provisions are covered by  existing                 
  law, there  appears to be  little need for  the legislation.                 
  He asked that the railroad be allowed to prove itself.                       
                                                                               
  Mr. Hatfield further noted need for  the railroad to be able                 
  to conduct site preparation in order to lease its land.                      
                                                                               
  Senator Rieger  directed attention to  language dealing with                 
  tax  provisions  and  asked if  railroad  property  would be                 
  taxable if leased at  less than fair-market value.   Phyllis                 
  Johnson,  General  Counsel, Alaska  Railroad, said  that the                 
  railroad is required  to lease  at fair-market value  unless                 
  the land  is leased  to the  state or  a subdivision  of the                 
  state.                                                                       
                                                                               
  Senator Kelly  MOVED that "fair  value" be amended  to "fair                 
  market value"  at page 2, line 29.  No objection having been                 
  raised, the motion CARRIED, and Amendment No. 1 was ADOPTED.                 
                                                                               
                                                                               
  Co-chair  Pearce  directed  attention  to  March  19,  1993,                 
  correspondence,   (copy  appended   to   these  minutes   as                 
  Attachment A) which  she noted sets forth  intended railroad                 
                                                                               
                                                                               
  policy that the corporation not assume an equity position in                 
  nontransportation                                                            
  related activities.  She then asked if the proposed landfill                 
  project    would    fall    within    the   definition    of                 
  nontransportation                                                            
  related activity.  Ms. Johnson voiced her legal opinion that                 
  the  project  would  not be  prohibited.    She acknowledged                 
  conflicting  opinions  in this  area.   Co-chair  Frank took                 
  exception to Ms. Johnson's opinion that the landfill project                 
  would fall outside the proposed prohibition.                                 
                                                                               
  Co-chair  Frank then MOVED  for adoption of  Amendment No. 2                 
  which would specifically  authorize the railroad  to acquire                 
  an  equity  position in  the  regional sanitary  landfill at                 
  Nenana.  Senator  Kelly MOVED  to AMEND Amendment  No. 2  by                 
  authorizing the railroad  to "incur debt  and" equity.   Co-                 
  chair Pearce called  for a show of hands on  adoption of the                 
  amendment to Amendment  No. 2.   The motion CARRIED and  the                 
  Amendment  to Amendment No. 2  was ADOPTED.  [See subsequent                 
  action rescinding adoption, page 12 of these minutes.]                       
                                                                               
  Co-chair Pearce next called for a  show of hands on adoption                 
  of Amendment No.  2,  authorizing railroad  participation in                 
  the  Nenana  landfill  project.    The motion  CARRIED,  and                 
  Amendment No. 2 was ADOPTED.                                                 
                                                                               
  Senator Rieger cited language at page 5, lines 3 through 15,                 
  and noted that  the prohibition to be incorporated within AS                 
  42.40.285(6)  speaks to  utilization of  assets  rather than                 
  debt to  obtain  an equity  position.   He  then  questioned                 
  whether  the  above   amendment  to  Amendment  No.   2  was                 
  necessary.     Co-chair  Frank   suggested  that   foregoing                 
  committee  action on  the Amendment  to Amendment  No. 2  be                 
  considered  adoption  of  a  conceptual  amendment,  leaving                 
  discretion  to legal staff to insert  the proper language in                 
  the proper place within the bill.   Senator Kelly voiced his                 
  intent  to ensure that the  railroad could incur debt "above                 
  the  $10  million  if  they  needed  it  for  this  specific                 
  project."  The proposed project is separate  from limits set                 
  forth within the legislation.                                                
                                                                               
  Questions  were  raised  by  Co-chair Frank  concerning  the                 
  amount of debt that  might be incurred for the  project, and                 
  Mr. Karl  again came before  committee.   He explained  that                 
  since  engineering  for   the  project  has  not   yet  been                 
  completed, it would  not be prudent to estimate total costs.                 
  He said that the landfill would be developed in phases.  The                 
  cost of developing the first cell would be $5 million.                       
                                                                               
  DAVE  SKIDMORE,  aide  to Senator  Frank,  next  came before                 
  committee.    Referencing   Senator  Rieger's  concern,  Mr.                 
  Skidmore acknowledged  that should  the committee  desire to                 
  authorize the  railroad  to  incur  debt on  behalf  of  the                 
  project,  reference to AS  42.40.285(3) at page  4, lines 24                 
                                                                               
                                                                               
  through 28,   should be made.   If the committee intends  to                 
  authorize  debt  beyond  $10  million,  an exception  to  AS                 
  42.40.285(3) should also be cited.                                           
                                                                               
  Mr. Hatfield advised  that the  railroad would have  minimal                 
  cash or  debt invested  in the  project as  it is  currently                 
  structured.    The  railroad would  secure  the  permits and                 
  prepare the land.                                                            
                                                                               
  Senator  Kelly MOVED  to RESCIND  committee action  adopting                 
  Amendment No. 2.  No objection having been raised, IT WAS SO                 
  ORDERED.    Senator Kelly  then  MOVED to  RESCIND committee                 
  action  adopting the  Amendment  to  Amendment  No. 2.    No                 
  objection having  been raised, IT  WAS SO ORDERED.   Senator                 
  Kelly  then MOVED  for adoption  of Amendment  No.  2.    No                 
  objection having been raised, Amendment No. 2 was ADOPTED.                   
                                                                               
  Senator Kelly  asked  what  the  City  of  Nenana  would  be                 
  devoting to the  project.   Mr. Karl said  that the  project                 
  would utilize the city  dock.  Nenana will use  the interior                 
  river  systems for moving  municipal waste.   The  city will                 
  take care of that transportation effort.                                     
                                                                               
  End, SFC-93, #55, Side 2                                                     
  Begin, SFC-93, #57, Side 1                                                   
                                                                               
  Mr. Karl acknowledged  that the City of Nenana  would profit                 
  from the landfill.   The city  is also working on  long-term                 
  liability and  insurance aspects.   It will share  an equity                 
  position, a portion of  the insurance cost, and part  of the                 
  liability.                                                                   
                                                                               
  Mr. Hatfield directed attention to language within Amendment                 
  No.  2  and  questioned  use  of   the  word  "sanitary"  in                 
  connection with the regional landfill.  Mr. Karl voiced need                 
  to designate the  project a  "regional landfill" since  that                 
  term is accepted by EPA as a  means of "taking care of large                 
  regions."  Further comments followed  regarding the scope of                 
  different phases of the project as well  a spin-off, strand-                 
  board plant.                                                                 
                                                                               
  In response to a question from  Senator Sharp, Mr. Karl said                 
  it is not  the intent  that the project  become a  hazardous                 
  waste  landfill.  He acknowledged that  the railroad has the                 
  capability of moving hazardous waste out of the state.                       
                                                                               
  Mr. Hatfield again  expressed concern  regarding use of  the                 
  word  "sanitary," advising that the term "regional landfill"                 
  is more  broadly interpreted.   Mr.  Karl acknowledged  that                 
  "regional landfill" is  the proper  term and suggested  that                 
  "sanitary" be  removed.  Senator  Kelly MOVED to  delete the                 
  word "sanitary" from  Amendment No.  2. No objection  having                 
  been raised, IT WAS SO ORDERED.                                              
                                                                               
                                                                               
  Co-chair Pearce  redirected attention  to Sec.  11, page  5,                 
  lines 23 through 30, and asked  that Ms. Johnson again speak                 
  to   a   definition    of   "nontransportation    activity,"                 
  specifically  as  it  relates  to  subsection  (i)  and  the                 
  movement, handling,  or distribution  of people  or personal                 
  property.  She expressed committee  intent that just because                 
  the railroad hauls a  commodity such as logs, does  not mean                 
  that it can become involved in a sawmill or lumber business.                 
  Ms.  Johnson  suggested  that  there  is no  foregone  legal                 
  conclusion regarding  whether or  not the  proposed landfill                 
  would be  included within  the above-noted  term.   It is  a                 
  possibility,  and  an  argument  could be  made.    She then                 
  acknowledged  an  opinion from  legislative  counsel, George                 
  Utermohle, indicating that the railroad  would be prohibited                 
  from obtaining  an equity  position in  the project  without                 
  legislative  approval  since   the  landfill  represents   a                 
  nontransportation activity.                                                  
                                                                               
  On behalf of Co-chair Frank, who was temporarily absent from                 
  the meeting, Co-chair  Pearce expressed the intent  that the                 
  railroad  not  become involved  in  businesses that  are not                 
  transportation related.  The landfill would fall within that                 
  prohibition.    For  that reason  it  has  specifically been                 
  addressed within an amendment to the bill.                                   
                                                                               
  Co-chair Pearce announced her intent to HOLD the legislation                 
  in  committee  for further  discussion  of taxation  issues.                 
  Senator Rieger voiced his belief  that the legislature would                 
  continue its involvement  in the railroad due  to complaints                 
  from the public  regarding whether  it is competing  fairly.                 
  He said that the  proper approach is for the  legislature to                 
  authorize the  railroad to issue stock and ensure that "some                 
  of  that  stock  is  in private  hands."    Co-chair  Pearce                 
  concurred.    Senator   Kelly  voiced  opposition   to  that                 
  approach.                                                                    
                                                                               
  Comments by Mr. Hatfield followed regarding commuter service                 
  to Alyeska.                                                                  
                                                                               
  Mr. Hatfield next spoke to site preparation by the  railroad                 
  prior to lease of  its land and sought clarification  of the                 
  committee's  position on  that effort.   He  asked that  the                 
  railroad be allowed  to conduct  site work (grading,  street                 
  work, utility connection, etc).  Co-chair  Pearce responded,                 
  "Okay, fine."  She then announced  that the bill would again                 
  be brought before committee at the Saturday morning meeting.                 
                                                                               
                                                                               
  SENATE BILL NO. 173                                                          
                                                                               
       An  Act   relating  to   health  insurance   for  small                 
       employers; and providing for an effective date.                         
                                                                               
                                                                               
  Co-chair  Pearce  directed that  SB  173 be  brought  on for                 
  discussion.                                                                  
  Senator Rieger explained that a version of the proposed bill                 
  moved most  of the way through the session last year.  Since                 
  that  time, a  number  of changes  were  recommended by  the                 
  National  Association  of  Insurance Commissioners.    Those                 
  changes have been incorporated within the legislation.                       
                                                                               
  Senator  Rieger said  the bill  would  allow the  pooling of                 
  small employer health insurance risk  into a group insurance                 
  pool for  risk which  exceeds the  limits of  any individual                 
  group  policy.   It  thus  allows  a number  of  small group                 
  insurance  policies  to  behave  more  like a  larger  group                 
  insurance policy.   The  net effect  is  to provide  greater                 
  availability  of  health  insurance to  small  employers and                 
  their employees.                                                             
                                                                               
  Senator Rieger next  directed attention to Amendment  No. 1,                 
  saying that it  provides a  definition of "gross  premiums."                 
  He further referenced  Amendment No. 2 which,  he explained,                 
  would change the  sunset date  from 1997 to  1998 to  better                 
  correspond  with  the  1993  effective  date  of  the  bill.                 
  Senator Rieger then formally MOVED for adoption of Amendment                 
  No. 1.  No objection having been raised, Amendment No. 1 was                 
  ADOPTED.    Senator  Rieger  next   MOVED  for  adoption  of                 
  Amendment No. 2.  No objection having been raised, Amendment                 
  No. 2 was ADOPTED.                                                           
                                                                               
  Co-chair Pearce called for additional testimony on the bill.                 
  Senator   Sharp  voiced   his  recollection   that  numerous                 
  amendments were proposed when the bill was before the Senate                 
  Labor and Commerce  Committee.  Senator Rieger  concurred in                 
  that understanding.  He explained  that many amendments were                 
  adopted for the  initial version of  the bill.   Legislation                 
  incorporating those amendments  was then  reintroduced as  a                 
  separate bill.                                                               
                                                                               
  Senator  Rieger  MOVED  that CSSB  173  (Finance)  pass from                 
  committee  with individual  recommendations.   No  objection                 
  having been  raised, CSSB 173 (Finance) was  REPORTED OUT of                 
  committee with a zero fiscal note from the Dept. of Commerce                 
  and Economic Development.   All  members present signed  the                 
  committee report with a "do pass" recommendation.  (Co-chair                 
  Frank and Senator Kerttula were absent and did not sign.)                    
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 10:20 a.m.                        
                                                                               

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