Legislature(2003 - 2004)
04/15/2004 09:06 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 15, 2004
9:06 AM
TAPES
SFC-04 # 82, Side A
SFC 04 # 82, Side B
SFC 04 # 83, Side A
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:06
AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Fred Dyson
Senator Ben Stevens
Senator Con Bunde, Vice-Chair
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: MARC ANTRIM, Commissioner, Department of
Corrections; DENNIS MICHEL, Staff to Senator Gene Therriault
Attending via Teleconference: From Offnet Sites: ALEX FRASER,
Credit Analyst, Standard & Poor's; GABRIEL PETEK, Credit
Analyst, Standard & Poor's; AL STOREY, Alaska State Troopers,
Department of Public Safety; SARA FISHER-GOAD, Financial
Analyst, Alaska Energy Authority and Alaska Industrial
Development & Export Authority, Department of Community and
Economic Development; JIM MCMILLAN, Deputy Director, Credit,
Alaska Industrial Development & Export Authority, Department of
Community and Economic Development; MIKE HARPER, Deputy Director
- Rural Energy, Alaska Industrial Development & Export
Authority, Department of Community and Economic Development;
From Anchorage: TOM WILSON, Director, Public Transportation,
Municipality of Anchorage
SUMMARY INFORMATION
SB 65-CORRECTIONAL FACILITY EXPANSION
In conjunction with this bill, the committee heard a
presentation regarding the State's Credit Outlook from Standard
& Poor's, a credit rating agency. The Department of Corrections
presented testimony pertaining to the bill, and the bill was
held in Committee.
SB 255-ILLEGAL USE TRAFFIC PREEMPTION DEVICE
The Committee heard from the bill's sponsor, adopted a committee
substitute, and considered two amendments with one being
adopted. The bill was reported from Committee.
SB 337-ENERGY PROGRAMS & FUNDS
The Committee heard from the Department of Community and
Economic Development and reported the bill from Committee.
SENATE BILL NO. 65
"An Act authorizing the Department of Corrections to enter
into agreements with municipalities for new or expanded
public correctional facilities in the Fairbanks North Star
Borough, the Matanuska-Susitna Borough, Bethel, and the
Municipality of Anchorage."
This was the second hearing for this bill in the Senate Finance
Committee.
State of Alaska Credit Outlook Presentation
Credit Analyst, Standard and Poor's
Co-Chair Green shared with the Committee that she had recently
heard a Standard & Poor's (S&P) report regarding the State's
financial condition and funding mechanism options that might be
available to fund in-State correctional facilities. She noted
that numerous municipalities and boroughs have offered to
participate in a "bonding process" to further the correctional
facility objective; however, she explained, she has received
conflicting reports about how this endeavor might impact "the
State's bonded-indebtedness" or credit rating. Therefore, she
continued, to clarify the information, she requested S&P to
present to the Committee in this regard. She noted that, as
standard, S&P would also provide the members with general
financial information.
ALEX FRASER, State and Local Government Analysts Manager,
Southwest and Western Regions of the United States, Standard &
Poor's, testified via teleconference from an offnet site in
Dallas, Texas, and stated that this is an opportunity for the
Members to ask questions relating to the State's credit ratings
as well as an opportunity for S&P to follow-up on their
presentation to the Conference of Alaskans. He stated that the
focus of that presentation was "to stress the need for the State
to develop, and continue to develop, a long-term strategy to
balance revenues and expenses." That, he attested, "is a very
key credit consideration for any government, particularly a
state like Alaska, where there is such a need to look at some of
those long-term events in the revenue streams." Continuing, he
shared that leasing and public finance are mechanisms that "have
gained acceptance" during the past twenty-five years and have
"become a critical mechanism" for those states that "have
limited ability to issue general obligation (GO) debt." He
disclosed that various authorities have been created with
financing being "dependent on regular, annual appropriations
from the state or other government to meet the debt service
payments."
Mr. Fraser stated that, "it is critical" that any lease-
financing arrangement be supported by both the legislative and
executive branches, as, he stressed, "this adds a large degree
of support to the ultimate credit decision, if we know that the
project being contemplated" has garnered long-term support. He
attested that, while it is expected that the terms of the bonds
would be supported for the life of the bonds, it has been
experienced that a future body questioned a decision of earlier
bodies. He stressed that "any disruption in the lease payment is
taken into account, often taken quite harshly on the general
obligation credit." Therefore, he continued, the development of
a flaw could negatively impact a state's GO rating. He avowed
that rather than endorsing any particular project, S&P usually
becomes involved "at the point" where the financing is about to
be undertaken.
Senator Dyson asked whether a state's implementation of a
Constitutional spending limit might affect its credit rating.
Mr. Fraser "supposed" that, "having mechanisms to enforce fiscal
discipline would be good;" however, he stated that a balance
must be obtained that would allow "flexibility." He stated that
without the complete details of the program, it is difficult to
provide an answer.
GABRIEL PETEK, Primary Analyst for Alaska, Standard & Poor's,
testified via teleconference from an offnet site in San
Francisco, California, and responded that, were a spending limit
in place, S&P would "focus on the progress that the State could
make toward achieving structural balance, whether that were
achieved" as the result of "a change in the State's revenue base
or through spending controls." He acknowledged the efforts the
State has implemented in regards to spending controls over the
past several years. He attested that S&P does "not take a real
pointed position on how it's achieved, it's more our interest
that" structural balance is achieved." He stated that, "the only
caveat about a spending limit is to the extent that the emphasis
or the priority became meeting the policy or meeting the targets
of the spending limit plan as opposed to focusing on the bottom
line of structural balance or the fundamentals." Sometimes, he
shared, states get into trouble when they, in order to
demonstrate an accomplishment in an accounting base, move some
payments from one month into the next month in order to perhaps
"move it into the next fiscal year in order to adhere to some
spending plan that has been put in place." He declared that a
policy like that does not lend to improving the fundamental
credit quality of a state. Therefore, he summarized that S&P's
focus is on the structural quality of the budget in regards to
ongoing revenue and expenditures.
Senator Hoffman asked whether the State's ability to manage the
Permanent Fund and the Earnings Reserve Account (ERA) favorably
affects the State's credit rating.
Mr. Petek replied "absolutely." He shared that 92-percent of all
states' credit ratings range from a AA- rating to AAA rating,
and that of all the states, 34 percent, including Alaska, have
an AA rating. He continued that, while Alaska has "a strong and
high credit rating," it's within the normal range for states. He
opined that were states recognized as a sector, they would be
one of the highest credit quality sectors that S&P follows. At
the same time, he warned, there are issues that Alaska must
address "in the not too distance future" in regards to its
credit; specifically its structural budget gap, which he pointed
out "is much larger than any other state." He stressed that, "if
it were not for the State's Permanent Fund and other underlying
resources and, more recently, the Constitutional Budget Reserve
(CBR) … it would be unlikely that the State's rating would be at
the current level." While noting that the State's prudent
management of its resources is reflected favorably in its AA
credit rating, he communicated that S&P's two-year time horizon
on its bond rating for Alaska would either be stable, positive
or negative depending on the current trend. He specified that
the State currently has a AA rating with a stable outlook;
however, he cautioned that "at the time when the CRB is
projected to be depleted within that two-year horizon, that
stable outlook" could potentially be downgraded to a negative
outlook were changes not made to the budget.
Senator Hoffman asked why "the substantial funds" in the
Permanent Fund Earnings Reserve Account (ERA) would not be a
factor, as he continued, that account could be accessed with a
simple majority vote were the State to have a budget deficit.
Continuing, he asked whether funds like the ERA could be
factored into the rating scenario.
Mr. Petek responded that while such funds are considered, they
would be "treated as a one-time non-recurring resource that
could provide a buffer;" however, he commented that S&P does not
recognize that "as equating to structural budget balance."
Furthermore, he continued, were "the State to rely on the
earnings from the Permanent Fund as an on-going revenue source"
in such a manner as proposed by the Percent of Market Value
(POMV) plan's concept of treating it "like an endowment fund,"
S&P would recognize it as a reasonable idea and "would be
comfortable in analyzing that in the context." He noted that
endowment funds are factored into the ratings of universities
and other institutions and that analysts are comfortable with
including them in the process as procedures have been
established for their inclusion. He stated, therefore, that the
State's incorporation of the POMV would be "one way to approach
this;" however, he qualified that while the POMV could be a
"reasonable approach" to the issue, S&P does not desire to
comment on policy proposals as it desires to remain objection.
He continued that, "absent a defined plan, and just having the
Permanent Fund available… is less desirable," as S&P would
desire some "specific approach to utilizing the earnings."
Mr. Fraser commented that POMV would be viewed as a stream of
payments rather than as one lump sum.
Senator Hoffman clarified that his comments did not pertain to
changing the manner through which the Permanent Fund might be
invested under POMV. Rather, he attested, his comments were that
"the Permanent Fund earnings are not a one-time account" as both
the Permanent Fund and the earnings are permanent. Furthermore,
he attested, the earnings go into the Permanent Fund Earnings
Reserve Account and "the Legislature has not decided to spent
those earnings on government but has spend them on dividends and
inflation proofing." He characterized the account as a re-
occurring account, whose revenues should be viewed accordingly,
and, he stressed that the State's "rating should remain on the
positive note rather than being viewed in a negative light
because the CBR is on the decline."
Mr. Fraser responded that were the Permanent Fund to produce a
predictable flow of funds, or "regular payments based on some
formula" it would be viewed similar to endowments and other
credits. He stated that this would provide a "relatively strong
revenue stream; it would be very predictable from year-to-year,
and would be a strength."
Mr. Petek informed the Committee that in recent internal S&P
committee reviews, there has been an interest "in having a
detailed explanation about where this State stands with this
structural gap and if, there is movement on that front."
Senator B. Stevens asked whether the presenters have taken into
consideration that "it appears" there would not be a structural
budget gap in FY 04.
Mr. Petek responded yes, that they had recently received an
updated revenue trends report. He referenced his earlier
comments regarding the two-year time horizon ratings outlook
forecast, and commented that "that probably won't happen until
the CBR is projected to be depleted within that timeframe, so to
the extent oil prices and revenues remain strong as they are, I
guess it buys a little extra time. But the fact of the matter
is, its probably temporary." He stated that it would not "be
conservative fiscal planning to assume the revenues would remain
at the current levels."
Senator B. Stevens noted that he would "tend to agree with that
statement." Continuing, he asked the presenters their views on
recent State discussions regarding modifying "the existing tax
structure that surrounds the oil industry"; specifically, he
asked how the State's bond rating might be affected were the
State "to restructure the oil industry and generate more money"
from oil even though, he acknowledged, that the State would
remain dependent on this one revenue source.
Mr. Petek responded that the details of the proposal would be a
factor. He continued that the revenues currently being received
from that industry, the State's reliance on that industry, and
future expansions in that industry and other industries such as
tourism and service sectors are currently factored into the S&P
credit reports. He opined that restructuring of the oil
industry's tax structure might align with the current report;
however, he commented that S&P could be more specific once the
details of the proposal were available.
Senator B. Stevens acknowledged the response. He communicated
the understanding that, from comments he had originally heard in
Fairbanks at the Conference of Alaskans and again today, the
CBR, which is not a guaranteed annual funding stream but which
could be accessed by the Legislature, is viewed as a
contributing factor to the State's stable credit rating.
However, he voiced being confused regarding the S&P position of
not factoring into the credit report, the ERA and the unrealized
gain of the ERA "which are statutorily eligible for and
classified as funds available for appropriation." Therefore, he
asked for further explanation regarding why the ERA, which
consists of the realized earnings account that amounts to
approximately one billion and the unrealized earnings account of
approximately $3.5 billion are not factored into the S&P bond
rating analysis.
Mr. Petek supposed that the State could divert the money that is
specified for the Permanent Fund Dividend payments to the
general fund; however, he stated that S&P "looks at things as
they actually play out" as opposed to "what is legally
available," as it is recognized "that there are practical
limitations sometimes to utilizing all resources available."
Mr. Fraser agreed. He noted that were those balances deposited
into the CBR, it might "forestall for a few more years the point
at which the rating could be reconsidered due to the structural
budget imbalance."
Senator B. Stevens voiced that it is difficult to understand why
the CBR, which was established in 1990, and whose balance is
currently near the average balance of those 14 years, "has not
evolved into a funding mechanism instead of a structural
imbalance." Although voicing understanding of the S&P position
on the ERA, he reiterated that, "it is classified as funds
available for appropriation."
Senator Bunde understood that the ERA funds are not classified
by S&P as part of the State's revenue stream because the State
has not previously "shown the interest or the willingness" to
access those funds.
Mr. Petek responded that that "would be a fair way" to state it.
Senator Bunde asked whether implementing statutory language to
provide a regular revenue stream from those earnings would have
a positive impact on the State's bond rating, even though he
admitted, statutory language could be altered from one
Legislature to the next.
Mr. Fraser underscored Senator Bunde's last comment by stating
that S&P has witnessed a number of policy changes pertaining to
such things as rainy day funds in states throughout the country.
However, he voiced that any revenue stream being reviewed as
part of an overall structural budget is evaluated for such
things as "any concentration in one source, its predictability,
its volatility" and other factors.
Senator Bunde surmised therefore that, in order to ensure the
State's high credit rating, the State could constitutionally
institute such things as the POMV program and dedicate those
earnings to State government or it could statutory use some of
the excess earnings of the Permanent Fund. Both of these
avenues, he declared, "would be considered a revenue stream to
government" and would assist in ensuring the State's good credit
rating.
Mr. Fraser stated that the details of these two options would
require review; however, he stated that were the end result to
be "structural balance, regardless of how we got there, that
would be the important thing."
Senator B. Stevens, following-up to Senator Bunde's questioning
voiced the understanding that the State would not be able to
claim the ERA as a stable funding source unless the State
established a law specifying that a specific amount of the ERA
would be used to create a sustainable funding stream for
government. Continuing, he questioned the reasoning behind the
credit rating position that the State would have to spend the
money in order for it to be deemed as a sustainable funding
source as opposed to not factoring that money in, in light of
the Legislature's current ability to access the funds in the
event of a shortfall.
Mr. Petek responded that the difference in the two scenarios is
that one would be viewed as a savings account that would be
considered as a one-time funding source as opposed to one being
treated as an ongoing portion of the revenue base for the State.
He exampled that were "the ongoing revenue base short of the
ongoing expenditures, and the reliance is on an existing reserve
fund, then it's viewed more like sort of plugging the gap verses
having a predictable, projected, and forecasted stream of
revenue from the earnings that would be built into the budget as
an on-going source." Therefore, he stated that the rating is
calculated on how the reserve would be treated.
Co-Chair Green concurred with Senator B. Stevens's understanding
that the State would be required to spend out of a fund in order
for it to be classified as revenue.
[Note: With the exception of the following excerpt, the
remainder of the discussion with Standard & Poor's addressed the
State's prison situation. Those minutes are forthcoming.]
Senator Bunde inquired as to whether the presenters could
comment on how Governor Frank Murkowski's recent POMV proposal
might address the State's credit rating concern.
Mr. Petek stated that S&P is aware of the proposal. He
reiterated, "that the POMV concept is something that we are
accustomed to seeing with institutions that have large
endowments." Therefore, he continued, "it could actually provide
an ongoing source of revenue that could help address this budget
gap." However, he stressed that rather than voicing a position
on public policy issues, S&P would "focus on the bottom line."
Senator Bunde stated that the Governor's proposal includes
dedicating a portion of the POMV funds to the Permanent Fund
dividend, thus making them inaccessible for government spending.
He asked whether this would positively or negatively affect the
State's credit rating.
Mr. Petek responded that the POMV concept would provide
predictability, as it would not "fluctuate dramatically with
market returns from one year to the next." Therefore, he
continued it would be a "credit enhancer." He stated that he
could not comment on the proposal's dividend component.
Senator Bunde asked whether dedicating half of the POMV funds to
a dividend would negatively affect the credit rating as opposed
to the POMV funds being fully utilized to fund State government.
Mr. Petek remarked that due to the fact that none of the funds
have ever been utilized to fund State government, it would be
positive.
Senator Bunde concurred.
Senator Dyson understood that the State's credit rating is
affected by "the lack of economic diversity" in that it is so
dependent on oil revenue. Following up on Senator B. Stevens
earlier questioning in this regard, he asked for further
clarification as to whether the State's credit rating could be
positively impacted were changes made to make the oil industry
more viable with a longer-term future.
Mr. Petek responded that it might; however, he expressed that
the concept is "too general" and that the particulars would be
required.
Mr. Fraser interjected that "on the corporate side," Exxon Mobil
Corporation, which is "a very strong company and very dependent
on oil revenues," has a credit rating of AAA. Therefore, he
stated that the particulars of the proposal would be important.
Senator Dyson voiced the understanding that, regardless of
whether larger oil reserves became available for exploration or
development and transportation route developed that would
guarantee a longer life span and improved delivery methods, it
would not enhance the State's credit rating as the State would
continue to be a "single factor economy."
Mr. Fraser responded that "were the returns to the State so
massive that it really outweighed everything else then there
really wouldn't be any constraint there on the rating."
The bill was HELD in Committee.
CS FOR SENATE BILL NO. 255(STA)
"An Act relating to traffic preemption devices."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that this legislation would "reserve the
use of traffic preemption devices for legitimate authorized
users" such as emergency response providers and road maintenance
and public transit vehicles. He specified that CS SB 255(STA),
Version 23-LS1397\Q was before the Committee, and he reminded
that previous concerns regarded whether to use the word "or" or
"and" on lines six and seven of Section 16, subsection (a) on
page one of the bill that reads as follows.
(a) A person commits the crime of unlawful possession or
use of a traffic preemption device if the person possesses
or uses a traffic preemption device and that person is not
at the time of the possession or use operating an emergency
vehicle.
Co-Chair Wilken also noted that another concern was whether to
include public transit vehicles in the exemption, as specified
in Section 1, subsection (b)(2) on page one, line 13 through
page two, line one that reads as follows.
(2) a person operating a motor vehicle involved in highway
maintenance or public transit that has been authorized by
the Department of Transportation and Public Facilities or a
municipality to possess or use a traffic preemption device.
Co-Chair Wilken noted that the Department of Health and Social
Services supports this legislation.
DENNIS MICHEL, Staff to Senator Gene Therriault, the bill's
sponsor, noted that he had worked with Co-Chair Green's staff to
address the concern regarding the language "possession or use of
a traffic preemption device" as specified in Section 1(a).
Continuing, he noted that changing this language to "possession
and use of a traffic preemption device" would present "a
loophole in prosecuting people caught using these devices." He
pointed out that "these devices have no other use than to
preempt traffic."
Co-Chair Green acknowledged that she is comfortable with the
bill's existing language.
Senator Dyson stated that, while he appreciates the logic of the
discussion, he "fundamentally disapproves" of criminalizing the
action of possessing "a piece of hardware" as it furthers "our
culture's" tendency to penalize people who have done nothing
wrong. He likened this situation to anti-gun activists who
claim, "that owning a weapon, that is only designed for defense
as in shooting people, ought to be outlawed." In summary, he
voiced being uneasy about "the slippery slope of criminalizing
something when no negative behavior has ever been demonstrated."
Senator Olson voiced similar concerns in that a person who might
possess but not be able to operate such a device "would be held
outside of the standard of being innocent until proven guilty."
There being no further discussion regarding the language in
Section 1(a), Co-Chair Wilken directed the discussion to Section
1(b)(2).
Mr. Michel communicated that utilizing traffic preemptive
devices for public transit needs is not uncommon and "does have
some merit" as these devices are currently utilized to address
traffic problems in such cities as Portland Oregon, Seattle
Washington, and Chicago Illinois.
Co-Chair Wilken noted that the bill's sponsor has provided
Members with "An Overview of Transit Signal Priority"
publication [copy on file] that reviews these and other cities'
experiences with the traffic exemption devices.
TOM WILSON, Director, Public Transportation, Municipality of
Anchorage, testified via teleconference from Anchorage, and
explained that the Municipality's transit system has identified
the implementation of traffic preemptive devices as something
they would like to pursue at some point. He stated that a common
complaint of most transit systems is "that buses don't run
frequently enough and that there is too much time" between
scheduled runs. He stated that implementation of developing
technology such as traffic preemptive devices could assist in
addressing these concerns. He stated that although "long-term
field studies" have been not conducted in the United States,
information does indicate that "significant advantages and
efficiencies" could result by the implementation of "low
priority" traffic preemptive devices as opposed to "high
priority devices, which would be reserved for police and fire."
Mr. Wilson explained that the low priority systems utilized in
some cities are automated and have resulted in "significant
reductions in trip times." Continuing, he noted that the
benefits derived from trip time reductions would include such
things as an increased use of the public transit system;
decreased use of single occupancy vehicles on the roadways;
decreased road maintenance; and reduced emissions. He stated
that because of these benefits, "it would be an unfortunate
oversight to preclude" public transit system from the ability to
utilize these devices. He stated that the Anchorage transit
system would coordinate use of these devices with a number of
municipality ad hoc committees to include the traffic engineer,
the traffic department, and the police and fire agencies.
Senator Dyson voiced concern that allowing the transit system to
utilize these devices might result in a scenario wherein two
lanes of private citizen traffic might be backed up while a city
bus, going another direction, preempts the traffic signal in its
favor. Therefore, he asked how the program could be implemented
to address the competing needs of private citizens.
Mr. Wilson responded that this "is a commonly raised concern,"
and he noted that existing studies indicate when the system is
"adequately designed" there is "little or no impact on the
travel times of other motorists." Continuing, he explained that
rather than being a manual system operated by individual buses,
the device could be tailored to specific areas and would be
operated by a centralized traffic management center.
Furthermore, he stated that once the parameters of the system
are established and entered into a traffic management computer,
activation rules would limit its use to those times, for
instance, when a bus was running ten minutes behind schedule. In
conclusion, he stressed that studies indicate there to be little
impact on other traffic and that motorists in the vicinity of a
bus might benefit by taking advantage of the situation.
Senator Dyson voiced disappointment that the response did not
include utilization of the device in low traffic times to
provide a bus with a green light as opposed to requiring it to
wait at an "arbitrary" red light when there was no cross
traffic. Therefore, he surmised that routinely the devices are
limited to high traffic times. In conclusion, he stated that the
response did not assure him that the device's impact on the
motorists would be minimal.
Mr. Wilson voiced the understanding that the system would allow
for protocols to be established in the computer system.
Therefore, he continued, Senator Dyson's concerns "could be
addressed in that fashion." He stressed that "the predominant
application" of the devices has been to address congestion
rather than wait times. He informed the Committee that transit
vehicles normally spend 15-percent of their trip time waiting at
traffic signals, and therefore, he noted, studies indicate that
this device would "significantly reduce" that wait time by up to
40-percent on average. This, he stated, would reduce a 60-minute
round-trip to 55-minutes and therefore, providing "a more
competitive service."
Senator Dyson disclosed that he would be more comfortable with
the implementation of traffic devices were they approved through
a local citizen or local assembly vote process. He noted that
the residents of Anchorage have not, historically, been
supportive of the local transit authority. He asked whether the
communities that have implemented the device did so upon voter
consideration.
Mr. Wilson responded that everything he had seen indicated that
the device was "implemented through local ordinances and local
processes, but not necessarily subject to a vote."
Mr. Michel noted that language in Section 1(b)(2) on page one of
the bill specifies that implementation of the preemptive device
must be authorized by the local municipality. He opined that
this language, which reads as follows, should address Senator
Dyson's concern.
(2) a person operating a motor vehicle involved in highway
maintenance or public transit that has been authorized by
the Department of Transportation and Public Facilities or a
municipality to possess or use a traffic preemption device.
Co-Chair Wilken observed that the language includes the word
"or" and could therefore allow for authorization either by the
Department of Transportation and Public Facilities (DOT) or the
municipality.
Mr. Michel concurred but stated that due to the fact that DOT
does not have a bus system, the authorization would be by the
municipality.
Senator Bunde commented that this language would "not allow for
a vote of the people."
Senator Bunde understood that the Anchorage transit system does
not currently own any traffic preemptive devices.
Mr. Wilson responded that is correct. He noted that a limited
number of intersections in the Municipality are equipped with
the devices of which only the fire department could activate. He
was unsure as to whether the police department was equipped with
the devices.
Senator Bunde asked for a cost estimate for outfitting the bus
transit system.
Mr. Wilson responded that an initial cost study indicates that
the transit system's portion of the total cost of purchasing
transmitters, receivers, and computers would amount to three
million dollars. He noted that the majority of the transit
system's expenses would be eligible to receive federal
"intelligent transportation system" funding "which frequently
requires no local match."
Senator Olson asked how the Municipality of Anchorage with a
population of less than 300,000 could compare its transportation
needs to those of "much larger cosmopolitan areas."
Mr. Wilson responded that rather than comparing Anchorage to
those larger cities that have these devices, the intent was to
provide examples of the affects of the traffic preemption
devices. He pointed out that this is an emerging technology of
which, currently, only larger areas have implemented.
AL STOREY, Alaska State Troopers, Department of Public Safety,
testified via teleconference from an offnet site to comment that
the Department is in support of restricting the use of these
devices to emergency vehicles in order to address the concern
that unrestricted use could corrupt an entire traffic management
system and result in chaotic and dangerous situations. He noted
that while the fire and police department devices have priority
status with the signaling system, a situation could arise
wherein an individual could trigger a device prior to a police
officers approach to a signal and create confusion.
Co-Chair Wilken noted that, in addition to these devices being
used in Anchorage, the city of Fairbanks has utilized these
traffic devices effectively for more than ten years.
Senator Dyson asked whether the bill's definition of an
emergency vehicle is sufficient as he questioned whether someone
such as a supervising officer in a non-official vehicle might
require use of the device in an emergency.
Mr. Storey explained that there is a very restrictive criterion
regarding the use of the device. He allowed that while an
extreme "aggravated" situation such as a hostage situation might
support expanding the authorized use of the device, he would be
surprised were, as a matter of routine business, the restrictive
criteria and usage guidelines expanded.
Senator Dyson questioned whether the definition of a emergency
vehicle should be broadened to include a person such as the
volunteer fire department chief, in addition to the current
definition that limits use to fire, police, or medical emergency
vehicles.
Mr. Storey replied that although volunteer firefighters and
others who must respond to emergency situations are important,
the decision to broaden the definition should be a Committee
decision.
Senator Bunde asked how the system would function were two
emergency vehicles approaching an intersection from different
directions.
Mr. Storey remarked that fire and police vehicle transmitter
devices could be programmed to supercede signals from lower
priority devices utilized in transit system buses or maintenance
vehicles. He voiced the hope that the priority vehicle devices
would also supercede illegal devices. In response to Senator
Bunde's question, he stated that were two priority vehicles to
approach a common intersection there might be conflict; however,
he noted that the emergency vehicle drivers could coordinate
their positions via their communication radios and use of
professional courtesy.
Senator Bunde, noting that he is unfamiliar with these devices,
asked whether the ones available on the market emit low priority
signals. Furthermore, he questioned the need for this
legislation were the high priority emergency devices to
supercede low priority devices.
Mr. Storey responded that the purpose of this legislation is to
offset criminal acts of those who possess these devices and who
might use them, for instance, to "corrupt the traffic management
system" in order to get to work on time. He noted that there is
also the possibility that priority emergency vehicles signals
might be interfered with, as he was unsure of the priority
configuration of "bootlegged" devices.
Mr. Michel informed the Committee that volunteer firefighters
utilize a blue light system on their vehicles. Continuing, he
noted that while these volunteers are trained and authorized to
use these lights, they are not authorized to exceed posted speed
limits. He recommended against broadening the scope of the
definition to include persons such as volunteers.
Mr. Michel further explained that a tier system is incorporated
into the traffic preemption device system that would disallow a
low priority vehicle such as a snowplow or transit bus from
interfering with an emergency vehicle signal. However, he
stressed, that without this legislation, it would be unclear as
to whether bootlegged devices could interfere with emergency
vehicle devices. He clarified that when two high priority
vehicles approach a signaled intersection, "it is a first come,
first served basis."
Senator Dyson stated that he would accept the language in
Section 1(a). However, he suggested language in Section 1(b)(2)
be altered.
Conceptual Amendment #1: This amendment deletes the word
"municipality" in Section 1, subsection (b) (2) on page one,
line 15, and replaces it with "municipal or city assembly." The
amended language would read as follows.
(2) a person operating a motor vehicle involved in highway
maintenance or public transit that has been authorized by
the Department of Transportation and Public Facilities or a
municipal or city assembly to possess or use a traffic
preemptive device.
Senator Dyson moved for the adoption of Amendment #1. He
informed that this amendment would provide local citizenry the
ability to have a public process through which to weigh in on
whether to allow their local transit system to have these
devices.
Senator Bunde objected to inform that he would be presenting an
amendment that would remove the entire public transit language
from the legislation. He recalled that Mr. Wilson had testified
that the transit system "has no present plans" to implement
these devices. Continuing, he noted that he would be open to the
idea in the future, were the citizens of Anchorage provided the
opportunity to participate in the decision were the transit
system to advance this effort.
Senator Bunde removed his objection.
There being no further objection, Amendment #1 was ADOPTED.
Conceptual Amendment #2: This amendment deletes the language "or
public transit", and "or a municipal or city assembly" as
amended by Amendment #1, in Section 1, subsection (b)(2) on page
one, lines 14 and 15. The language would read as follows.
(2) a person operating a motor vehicle involved in highway
maintenance that has been authorized by the Department of
Transportation and Public Facilities to possess or use a
traffic preemptive device.
Senator Bunde moved for the adoption of Amendment #2.
Senator Wilken objected.
Senator Bunde stated that this amendment would remove the
transit system from the legislation due to the fact that there
is currently no plan underway to institute these devices in
Anchorage's transit system and, therefore, authorization is not
currently required. Continuing, he noted that this issue could
be readdressed in the future. He declared that he does not agree
that these transit devices would not "inconvenience" other
motorists.
Co-Chair Wilken maintained his objection, as he stated he is
comfortable with allowing the transit system to remain in the
bill; especially in light of the language added by Amendment #1.
Senator Olson commented that, as a physician, it is difficult to
discuss emergency vehicles and transit buses in the same
conversation.
SFC 04 # 83, Side A 10:42 AM
A roll call was taken on the motion.
IN FAVOR: Senator Olson and Senator Bunde
OPPOSED: Senator Hoffman, Senator B. Stevens, Senator Dyson, Co-
Chair Green, and Co-Chair Wilken
The motion FAILED (2-5)
Amendment #2 FAILED to be adopted.
Co-Chair Green moved to report the bill, as amended, from
Committee with individual recommendations and accompanying
fiscal notes.
Co-Chair Wilken objected in order to request that Members read
the analysis included with the new fiscal note provided by the
Public Defenders Office of the Department of Administration.
Co-Chair Wilken removed his objection.
There being no further objection, CS SB 255 (FIN) was REPORTED
from Committee with zero fiscal note #1, dated February 9, 2004
and zero fiscal note #2, dated February 6, 2004 from the
Department of Public Safety; zero fiscal note #3, dated February
10, 2004 from the Department of Law; and a new indeterminate
fiscal note, dated April 6, 2004 from the Department of
Administration.
CS FOR SENATE BILL NO. 337(L&C)
"An Act relating to the powers of the Alaska Energy
Authority to make grants and loans, to enter into
contracts, and to improve, equip, operate, and maintain
bulk fuel, waste energy, energy conservation, energy
efficiency, and alternative energy facilities and
equipment; relating to the bulk fuel revolving loan fund;
relating to the Alaska Energy Authority's liability for the
provision of technical assistance to rural utilities;
relating to the Alaska Energy Authority's investment of the
power development fund; repealing the electrical service
extension fund; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken, noted that this legislation, which is sponsored
by Senate Rules by the Request of the Governor, pertains to the
powers of the Alaska Energy Authority and would amend statutory
provisions of the Authority's Energy Loan Program (ELP).
SARA FISHER-GOAD, Financial Analyst, Alaska Industrial
Development & Export Authority (AIDEA) and Alaska Energy
Authority (AEA), Department of Community and Economic
Development, testified via teleconference from an offnet site,
and stated that this legislation would allow the Power Project
Fund (PPF) to authorize loans for waste energy and energy
conservation, energy efficiency, and alternative energy
facilities and equipment.
Co-Chair Wilken noted that Members' packets contain an AIDEA/AEA
letter [copy on file] dated March 16, 2004 and addressed to the
Committee co-chairs, that outlines the projects affected by this
legislation.
Ms. Goad stated that the changes proposed to the PPF would
expand the definition of eligible energy efficiency projects in
order to include projects such as lighting retrofits. She also
noted that the bill would repeal the Loan Committee that
approves the PPP loans and incorporate the credit approval
process that includes an appeal process to the Board of
Directors, as currently utilized by AIDEA.
Ms. Goad stated that another program affected by the legislation
would be the Bulk Fuel Revolving Loan Fund (BFRLF) that provides
"short-term loans to assist small rural communities in
purchasing annual bulk fuel supplies." She qualified that while
the Department of Law recently interpreted the definition of
eligible borrowers to be communities and private individuals,
the bill would allow funds to be provided to other entities such
as corporations, cooperatives, and joint ventures. This
expansion, she attested would "not expand the definition of
eligible borrower beyond the long-standing interpretation and
practice that included other entities such as corporations."
Ms. Goad noted that while AEA has been investing the Power
Development Fund since 1993, this bill would affirm its ability
to do so by, with the concurrence of the Department of Revenue,
providing AEA with the necessary statutory authority. She
pointed out that all earnings of the Fund are remitted to the
State's general fund.
Ms. Goad noted that this bill would clarify AEA's general power
of authority to issue grants and contracts in that, "as acting
as an agent for rural communities, AEA manages power projects,
bulk fuel projects and alternate energy projects." She noted
that AEA receives and expends federal funds from entities such
as the Denali Commission and the US Department of the Energy
through the State's appropriation process.
Ms. Goad also stated that the bill "clarifies that AEA's
statutory mandate to provide technical assistance may not be
used as an independent basis for tort liability against AEA."
However, she noted that, "AEA would continue to be liable for
negligence if it fails to use reasonable care in the providing
the technical assistance."
Ms. Goad stated that the bill would also repeal the inactive
Electrical Service Extension Fund. She urged the Committee to
act favorably in regard to this bill.
Co-Chair Wilken noted that the repealing language regarding the
Electrical Service Extension Fund is located on page seven,
Section 12, of the bill. Furthermore, he noted that the Fund
money, amounting to approximately $85,000, would be transferred
to the general fund.
Senator Dyson asked whether "changing lighting systems" would
qualify as an energy efficiency project.
JIM MCMILLAN, Deputy Director, Credit and Business Development,
Alaska Energy Authority, Department of Community and Economic
Development, testified via teleconference from an offnet site,
and responded that, while projects of this nature have been
denied in the past, this bill would allow for retrofitting of
lighting to save energy costs to qualify for the PPF program.
Senator Dyson understood therefore that transitioning "from
incandescent lighting to something with a better power factor"
would be allowed.
Senator Olson asked for further information regarding the
repealing of the Bulk Fuel Revolving Fund, AS 42.45.250(l)(1),
as specified in the bill in Section 11, on page seven, line ten;
specifically as this might affect bulk fuel storage facilities
that store in excess of 10,000 gallons of fuel.
Mr. McMillan responded that the intent of this language is to
"clean up" State statutes as the definition of "bulk fuel
storage facility" is not included anywhere in State statutes. He
stressed that repealing the section would not have any affect on
the program's operation.
Senator Olson asked whether a minimum of 10,000 gallons of fuel
must be purchased in order to quality for the Loan program.
Mr. McMillan responded in the negative.
MIKE HARPER, Deputy Director - Rural Energy, Alaska Industrial
Development & Export Authority, Department of Community and
Economic Development, testified via teleconference from an
offset site to state that this legislation "is fairly straight
forward" and would provide the Authority "with the ability to
move forward and to carry out" the Loan Program's mission for
"building projects in rural Alaska."
Senator Bunde shared that he had heard from a fuel storage
constituent who operates in Western Alaska and who had shared
that there is a strong business interconnection between Western
Alaska and Central Alaska. He stated that these fuel sales are
important and are a priority in that, due to weather and being
required to ship via barge, the fuel must be shipped before the
onset of winter. On another note, he mentioned that another
person, who was having difficulty in paying for fuel, wrote a
letter saying that paying for his fuel would jeopardize his
cable, as it would be shut off if he did not pay that bill.
Senator Dyson noted that, in the past, he had conducted waste-
heat recovery studies in approximately fifteen villages in
Western Alaska, and he concluded that efforts to improve energy
situations by utilizing such things as power plants waste heat
to heat schools, is a "win-win situation." Therefore, he spoke
to his conflict of interest and stated that he has "a lot of
enthusiasm for what's being done."
Senator Dyson moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, CS SB 337(L&C) was REPORTED from
Committee with zero fiscal note #1, dated December 18, 2003 from
the Department of Revenue, and zero fiscal note #2, dated
February 3, 2004, from the Department of Community and Economic
Development.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 10:55 AM.
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