Legislature(1993 - 1994)

03/16/1994 09:10 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         March 16, 1994                                        
                            9:10 a.m.                                          
  TAPES                                                                        
                                                                               
  SFC-94, #32, Side 1 (000-end)                                                
  SFC-94, #32, Side 2 (000-end)                                                
  SFC-94, #34, Side 1 (000-325)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-chair Drue Pearce  convened the meeting  at approximately                 
  9:10 a.m.                                                                    
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to  Co-chairs Pearce and Frank,  Senators Kelly,                 
  Rieger, and Sharp were present.  Senators Jacko and Kerttula                 
  arrived soon after the meeting began.                                        
                                                                               
  ALSO  ATTENDING:   Senate  President  Rick  Halford;  George                 
  Utermohle and Jerry Luckhaupt, staff counsel, Legal Services                 
  Division, Legislative  Affairs Agency; Col.  Bill Valentine,                 
  Division  of  Fish  and Game  Enforcement,  Dept.  of Public                 
  Safety; David Ingram, Commercial Fisheries Entry Commission,                 
  Dept. of Fish  and Game; Mark Hickey, Contract  Lobbyist for                 
  the Alaska Railroad; Kelly Goode and Dave Thompson, aides to                 
  Senator Halford; and  aides to  committee members and  other                 
  members of the legislature.                                                  
                                                                               
  ALSO PARTICIPATING VIA TELECONFERENCE:                                       
                                                                               
       Mark LoPatin of LoPatin & Company       -    Detroit,                   
  Michigan                                                                     
                                                                               
       Ken Vassar of Wohlforth, Argetsinger,                                   
            Johnson & Brecht                   -    Anchorage,                 
  Alaska                                                                       
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB 148 -  ALASKA RAILROAD CORPORATION                                        
                                                                               
            Comments were presented by  Dave Skidmore and Mark                 
            Hickey.  Extended discussion of both SB 148 and SB                 
            338 followed.   The bill was subsequently  HELD in                 
            committee  pending  receipt   of  an  opinion  and                 
            proposed new language from legal  services as well                 
            as testimony from directors of the railroad.                       
                                                                               
  SB 266 -  DIRECT-ENTRY MIDWIVES/BD & PRACTICES                               
                                                                               
            Co-chair Pearce  sought and received  authority to                 
                                                                               
                                                                               
            WAIVE SB 266 from committee.                                       
                                                                               
  SB 308 -  ADMIN ACTION RE LAND/RESOURCES/PROPERTY                            
                                                                               
            Co-chair Pearce  announced that  David Rogers  had                 
            been   hired  to   meet  with   land-use  entities                 
            regarding the bill.   Subcommittee  work will  not                 
            commence until recommendations from those meetings                 
            have been reviewed and evaluated.                                  
                                                                               
  SB 316 -  FISHING VIOLATIONS:FINES/BURDEN OF PROOF                           
                                                                               
            Testimony  was  presented by  Dave  Thompson, Col.                 
            Bill Valentine, and  George Utermohole.  CSSB  316                 
            (Res) was  REPORTED OUT  of committee  with a  "do                 
            pass" recommendation, $10.4  fiscal note from  the                 
            Dept. of Public Safety, and a $60.1 note  from the                 
            Dept. of Law.                                                      
                                                                               
  SB 321 -  FINGERPRINTING AND CRIME RECORDS                                   
                                                                               
            Testimony was presented by Kelly  Goode.  CSSB 321                 
            (Fin) was  REPORTED OUT  of committee  with a  "do                 
            pass"  recommendation and  zero fiscal  notes from                 
            the Dept. of  Public Safety.   A zero fiscal  note                 
            from the  Dept. of Corrections was  later attached                 
            to the bill as well.                                               
                                                                               
  SB 338 -  ALASKA RR REVENUE BONDS:SHIP CREEK                                 
                                                                               
            Discussion  was  had  with   Mark  Hickey  and  by                 
            teleconference with  Mark LoPatin and  Ken Vassar.                 
            The  bill  was   subsequently  HELD  in  committee                 
            pending discussion with directors of the railroad.                 
                                                                               
                                                                               
  SB 321 - FINGERPRINTING AND CRIME RECORDS                                    
                                                                               
       An  Act  relating to  the taking  of  a legible  set of                 
       fingerprints  when a  person is arrested,  upon initial                 
       appearance or arraignment,  upon the conviction of  the                 
       person,  and  when   the  person   is  received  at   a                 
       correctional  facility, and providing  that the  set of                 
       fingerprints  shall be  provided to  the Department  of                 
       Public Safety;  relating to criminal  and crime records                 
       and information; requiring the reporting of information                 
       concerning  homicides and  suspected  homicides to  the                 
       Department of Public Safety for analysis; requiring the                 
       Department  of Public  Safety  to  participate  in  the                 
       Federal   Bureau   of  Investigation,   Violent  Crimes                 
       Apprehension Program.                                                   
                                                                               
  Co-chair Pearce  directed  that SB  321  be brought  on  for                 
                                                                               
                                                                               
  discussion and referenced a draft committee substitute (work                 
  draft 8-LS1649\R, Luckhaupt, 3/15/94).                                       
                                                                               
  KELLY GOODE, aide  to Senate President Halford,  came before                 
  committee.  She explained  that the proposed bill imposes  a                 
  statutory  requirement  that   fingerprints  be  taken  upon                 
  arrest.    It  further  requires law  enforcement  agencies,                 
  statewide,  to participate  in  the  FBI  violent  criminals                 
  apprehension program.  That program involves a national data                 
  base established for the purpose  of locating serial killers                 
  nationwide.                                                                  
                                                                               
  Ms. Goode  next spoke  to  four changes  between the  Senate                 
  Judiciary version and the draft "R" version:                                 
                                                                               
       1.   Changes fingerprinting  language to  Dept. of  Law                 
  language                                                                     
            taken from SB 276.                                                 
                                                                               
       2.   Adopts  the transitional  period  contained in  SB                 
  276.                                                                         
            The first  year felonies  would be  fingerprinted,                 
            and  the   second  year  misdemeanants   would  be                 
            fingerprinted.                                                     
                                                                               
       3.   Removes language including violent  sexual assault                 
  in                                                                           
            homicides in the VICAP program.                                    
                                                                               
       4.   Provides that local law enforcement agencies be                    
            given forms by the Dept. of Public Safety on which                 
            to  submit  discovery  homicide   information  for                 
            matching with federal criteria.                                    
                                                                               
  A  further  technical  change  was  made changing  the  word                 
  "crimes" to "criminals."                                                     
                                                                               
  Co-chair Pearce  voiced her understanding that  fiscal notes                 
  for the "R" version would remain  zero.  Ms. Goode concurred                 
  and advised  that the  Dept.  of Corrections  would also  be                 
  submitting a zero note.                                                      
                                                                               
  Senator Kerttula MOVED for  adoption of CSSB 321  (Fin), "R"                 
  version.   No objection having  been raised, CSSB  321 (Fin)                 
  was ADOPTED.                                                                 
                                                                               
  Co-chair Pearce called for additional testimony on the bill.                 
  None was forthcoming.  Senator Kerttula MOVED  that CSSB 321                 
  (Fin) pass from  committee with individual  recommendations.                 
  No objection having been raised, CSSB 321 (Fin) was REPORTED                 
  OUT of committee with  two zero fiscal notes from  the Dept.                 
  of Public Safety (one  for the State Troopers and  the other                 
  for criminal records).  A zero fiscal note from the Dept. of                 
  Corrections was subsequently  attached to the bill  on March                 
                                                                               
                                                                               
  18, 1994.   Co-chairs Pearce and  Frank and Senators  Kelly,                 
  Kerttula, and Sharp  signed the committee report  with a "do                 
  pass"   recommendation.      Senator   Rieger   signed   "no                 
  recommendation."                                                             
                                                                               
                                                                               
  SENATE BILL NO. 316                                                          
                                                                               
            An   Act   relating  to   commercial  fishing                      
            penalties.                                                         
                                                                               
  Co-chair  Pearce  directed that  SB  316 be  brought  on for                 
  discussion and  referenced CSSB  316 (Res),  a $10.4  fiscal                 
  note from  the Dept. of Public Safety, a $60.1 note from the                 
  Dept.  of  Law,  a  sectional  analysis, comments  from  the                 
  commercial fisheries entry commission, and information  from                 
  the Division of  Fish and Wildlife Protection  regarding the                 
  Bristol Bay Enforcement Program.                                             
                                                                               
  DAVE THOMPSON, aide  to Senate President Halford,  explained                 
  that  the  proposed  bill would  tighten  commercial fishing                 
  penalties and increase the burden of proof on fishermen with                 
  respect to evidentiary materials.   There has been no stated                 
  opposition to the bill up to this time.                                      
                                                                               
  Data compiled by the Dept. of Public Safety indicates that a                 
  small group of  fishermen are repeat  offenders who make  it                 
  difficult for honest  fishermen to ply their  trade.  During                 
  the 1993 fishing season in Bristol Bay,  90 repeat offenders                 
  were cited.  In  one case the history of  offenses went back                 
  to 1986.  That individual had broken the law 18 times.  Data                 
  supports the  contention that  habitual violators  cause the                 
  bulk of the  problems in commercial  fishing.  The  proposed                 
  bill targets those individuals.                                              
                                                                               
  Changes  contemplated  by  the  bill  would  add  three  new                 
  subsections:                                                                 
                                                                               
       1.   Allow  for  suspension  of  one  or  more  of  the                 
  individual's                                                                 
            commercial fishing privileges  for a period of  at                 
  least          two years.                                                    
                                                                               
       2.   Allow  for  suspension  of  one   or  more  of  an                 
  individual's                                                                 
            commercial fishing  privileges and licenses  for a                 
  period         of at least four years.                                       
                                                                               
       3.   Allow for  forfeiture  of  commercial  or  fishing                 
  privileges          and  licenses upon  a person's  fifth or                 
                      subsequent  conviction  in   a  ten-year                 
                      period.                                                  
                                                                               
                                                                               
  The bill also  doubles the fines  and changes the burden  of                 
  proof from a  "preponderance of"  to "clear and  convincing"                 
  evidence with respect  to fish found  on board a vessel  and                 
  whether or not they have been taken illegally.                               
                                                                               
  Data  gathered  by   the  Division  of  Fish   and  Wildlife                 
  Protection  Services  shows  that in  1993  the  Bristol Bay                 
  fishery had an all-time high  number of violations resulting                 
  in 509 criminal  charges.  Gross fines exceeded  $1 million.                 
  There was also more  than a 100% increase in  "closed water"                 
  cases, exceeding the previous high by more than 210 cases.                   
                                                                               
  In the course  of plea bargaining, misdemeanors  are reduced                 
  to violations.  When that occurs, there is no record of  the                 
  wrong-doing.    It is  thus  difficult to  effect subsequent                 
  fines, much less attach an individual's fishing permit.  The                 
  number  of cases  in  Bristol Bay  are increasing  while the                 
  fines  per case are decreasing.  Both judges and prosecutors                 
  are culpable.   A fine of  $1.0 against an illegal  catch of                 
  $10.0 creates an economic  incentive to break the law.   The                 
  Division of Fish and Wildlife Protection made a great effort                 
  to increase surveillance and "crack down on violators."                      
                                                                               
  Senator  Rieger inquired  concerning the  difference between                 
  "clear and convincing evidence" and a "preponderance" of the                 
  evidence.  Mr.  Thompson voiced  his understanding that  the                 
  change increases  the burden  of proof  upon the  fisherman.                 
  BILL  VALENTINE,  Director, Division  of  Fish  and Wildlife                 
  Protection, Dept. of Public  Safety, came before  committee.                 
  He explained that under a preponderance of the evidence, all                 
  the fisherman needs to  verify his argument is one  more bit                 
  of  evidence  than  the  department  has  in  proof  of  the                 
  violation.   An additional  crewman who  says that  the fish                 
  were not  caught in  violation would  tip the  scale in  his                 
  favor.  Much  more would be  needed to establish "clear  and                 
  convincing"  evidence.    The   fisherman  would  need   the                 
  testimony of  workers on  a tender,  other fishermen,  etc.,                 
  individuals other than those crewing his boat.                               
                                                                               
  Senator Rieger  noted that language speaks not  only to fish                 
  found aboard a  vessel but also  fish "found at the  fishing                 
  site."  He  then  inquired  as to  the  extent  of  existing                 
  language.   Mr.  Valentine  advised  that  current  language                 
  speaks to "the  preponderance at  the site or  on board  the                 
  vessel."  He added that he had not been party to  a scenario                 
  in  which a  whole  season's worth  of  fish would  be at  a                 
  particular site.   In the  Bristol Bay salmon  fishery, fish                 
  are generally delivered daily to preserve freshness.                         
                                                                               
  Senator Rieger  next pointed to language in Sec. 3, relating                 
  to forfeiture of fish taken  as a result of commission of  a                 
  violation.    He  then  asked  if   failure  to  have  one's                 
  identification  aboard   the  vessel   would  constitute   a                 
  violation.   Mr. Valentine acknowledged that it would be but                 
                                                                               
                                                                               
  stressed that lower-level, small  violations are covered  by                 
  the uniform bail  schedule.   That is similar  to a  traffic                 
  ticket  involving an  established fine  and "mail-in  bail."                 
  Those  offenders  cannot  be  charged  at  a  higher  level.                 
  Senator Rieger  voiced his  understanding that  uniform bail                 
  provisions  would   override  forfeiture.     Mr.  Valentine                 
  concurred.    He clarified  that no  forfeitures or  loss of                 
  fishing  privileges are  associated  with small  violations.                 
  That  is  the   distinction  between   a  violation  and   a                 
  misdemeanor.   Senator  Rieger  referenced  Sec. 3  language                 
  calling  for  forfeiture  for  violations  and  again raised                 
  questions.   Mr. Valentine  explained that  the language  in                 
  question relates to higher violations for commercial fishing                 
  in closed waters, commercial fishing during a closed period,                 
  etc.  Those violations have a direct impact on the fishery.                  
                                                                               
  GEORGE  UTERMOHLE,  Legislative  Counsel,   Legal  Services,                 
  Legislative Affairs Agency, came before  committee.  He said                 
  that preponderance  of the  evidence standards  require that                 
  the  evidence be  more  likely than  not  that the  evidence                 
  supports  a  particular conclusion.    Clear  and convincing                 
  evidence  is a  higher standard requiring  more than  just a                 
  reasonable probability.  It must create in the fact finder a                 
  clear conviction that the facts exist.  The highest standard                 
  is "beyond a reasonable doubt."                                              
                                                                               
  Senator  Jacko MOVED that CSSB 316 (Res) pass from committee                 
  with individual recommendations.   No objection having  been                 
  raised, CSSB 316 (Res) was REPORTED  OUT of committee with a                 
  $10.4 fiscal  note from  the Dept.  of Public  Safety and  a                 
  $60.1 note  from the  Dept. of  Law.   Co-chairs Pearce  and                 
  Frank  and  Senators  Jacko,  Kelly,  and Sharp  signed  the                 
  committee report with a "do  pass" recommendation.  Senators                 
  Kerttula and Rieger signed "no recommendation."                              
                                                                               
                                                                               
  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  on for                 
  discussion.   She noted that it  was introduced by committee                 
  in the  first session  of the current  legislature, and  she                 
  referenced 1993 adoption of   work draft CSSB 148  (Fin) (8-                 
  LS0583\X,  Utermohle 4/12/93)  and Amendments  1 through  3.                 
  Co-chair Pearce next  directed attention to an  updated work                 
  draft (8-LS0583\I,  Utermohle 3/11/94)  which she  explained                 
  incorporates the  previously adopted  amendments.   Co-chair                 
  Frank MOVED for adoption  of CSSB 148 (Fin), "I"  version in                 
  place of the previously  adopted "X" version.   No objection                 
  having  been  raised,  CSSB  148  (Fin),  "I"  version,  was                 
  ADOPTED.                                                                     
                                                                               
                                                                               
  Co-chair Pearce referenced  a pending Amendment No.  4 and a                 
  March  11, 1994, memorandum  (copy on file)  thereto.  DAVID                 
  SKIDMORE, aide to Senator Frank, came before committee.   He                 
  explained  that  the  proposed  bill  would  bar  the  chief                 
  executive  officer of  the Alaska Railroad  Corporation from                 
  serving as the  member of  the railroad  board of  directors                 
  required  by  statute  to  have  certain types  of  railroad                 
  experience.    If   the  bill   were  to  become   effective                 
  immediately, it would render Mr.  Hatfield's position on the                 
  board illegal.  Amendment No.  4 creates a transition period                 
  to delay the  effective date of  that provision of the  bill                 
  until  the Governor  appoints a board  member who  fills the                 
  railroad  experience qualification.    The Amendment  states                 
  that  the Governor  is  to appoint  an  individual with  the                 
  necessary  qualifications,  this  fall,  should  either  Mr.                 
  Chapados or Mr. Lounsbury  fail to continue to serve  on the                 
  board.                                                                       
                                                                               
  Co-chair Pearce noted  that Amendment No. 4  was drafted for                 
  incorporation  within  the  previously adopted  version  "X"                 
  which has  since been  replaced by  version "I."   She  then                 
  voiced   need  to  conceptually   adopt  the  amendment  for                 
  inclusion in  the proper  place within  CSSB 148  (Fin), "I"                 
  version.  Co-chair Frank MOVED for adoption of Amendment No.                 
  4.  No  objection having  been raised, Amendment  No. 4  was                 
  CONCEPTUALLY ADOPTED into CSSB 148 (Fin).                                    
                                                                               
  MARK HICKEY, next testified on behalf of the Alaska Railroad                 
  Corporation.    He  remarked  that  the newly-adopted  draft                 
  addresses a  number of concerns raised by  the railroad, but                 
  three areas of concern remain:                                               
                                                                               
       1.   Sec.  7,  page   3,  contains  language   allowing                 
  participation                                                                
            by  board members  by  teleconference.    This  is                 
            current practice.  Sec. 7 may not be necessary.                    
                                                                               
       2.   Sec. 8, page 4, lines 8 through 12, raises concern                 
            regarding the debt limit, particularly in light of                 
            SB  338.   There appears  to be a  problem between                 
            these two pieces  of legislation.   Although  non-                 
            recourse revenue bonds are  proposed, debt of  the                 
            railroad will  be  issued and  the  railroad  will                 
            already have exceeded "the total aggregate limit."                 
            A  possible fix  might  involve exemption  of non-                 
            recourse revenue  bonds from  this language.   The                 
            language was included as a way to deal with equity                 
            participation  in  non-transportation  activities.                 
            Since that is addressed by subsection (6), another                 
            means of curing  the problem would be  deletion of                 
            subsection (3) (lines 8 through 12).                               
                                                                               
       3.   Sec.  8, page 4, line 18, contains a limitation to                 
                                                                               
                                                                               
  prevent        the   railroad   from  obtaining   an  equity                 
                 position  in  a  non-transportation activity.                 
                 The board of directors  adopted a policy that                 
                 the  railroad   would  not   enter  such   an                 
                 arrangement.  That policy remains in  effect.                 
                 Placing this  language in statute  may create                 
                 potential for litigation.                                     
                                                                               
  Mr. Hickey next referenced provisions relating to the Nenana                 
  land  fill  and informed  members  that the  railroad  is no                 
  longer pursuing the project.  Parties involved found that it                 
  was   not  financially   feasible,  and   there  was   local                 
  opposition.                                                                  
                                                                               
  Speaking  to the  above-noted limitation  on  debt, Co-chair                 
  Frank explained that  it arose from  the fact that  statutes                 
  presently require  that  the  railroad  receive  legislative                 
  approval  prior  to   issuance  of   bonds.    The   Senator                 
  acknowledged  numerous methods of issuing  debt.  It was the                 
  intent of the legislature, when it authorized acquisition of                 
  the railroad  from the  federal government,  to include  the                 
  legislature "in  the loop"  when the  railroad issued  debt.                 
  Mr. Hickey noted that  the original bill required that  debt                 
  exceeding $1 million be approved by the legislature.                         
                                                                               
  Discussion followed  between Co-chair  Frank and  Mr. Hickey                 
  regarding language associated  with issuance of  debt rather                 
  than bonds.  The Co-chair said he would not support allowing                 
  the railroad to issue  debt of any kind while  maintaining a                 
  limitation on bonds.                                                         
                                                                               
  Senator Rieger  advised of his  preference for incorporation                 
  of the railroad as  a stock corporation and issuance  of all                 
  shares of common stock to the state.  That represents a step                 
  toward  independence  and  eventual  privatization  of   the                 
  railroad.   He observed  that the proposed  bill provides  a                 
  good vehicle for  development of that structure.  Chapter 40                 
  would then become the by-laws of the corporation, instead of                 
  statute.    Mr.  Hickey  explained  that,  at  the  time  of                 
  purchase,  there was  discussion of  a similar  arrangement.                 
  One of the  principal concepts involved the  permanent fund,                 
  and  that  raised   many  concerns.     That  approach   was                 
  subsequently dismissed,  and the state conducted a "straight                 
  purchase."  The railroad board has  not devoted time to this                 
  issue.  The  approach raises many questions "about  how this                 
  would ultimately work  down stream."   Senator Kelly  voiced                 
  his  understanding  that selling  the  railroad would  be in                 
  direct conflict with  the intent of  the proposed bill.   He                 
  suggested  that  entities seeking  to purchase  the railroad                 
  would not buy  it "to  run trains" but  to develop  railroad                 
  land.  That is where the value is.   Co-chair Frank observed                 
  that  "that  would be  fine" if  the entities  were private.                 
  Senator Rieger concurred, advising that  if the railroad was                 
  private, the  legislature would not be  adjudicating endless                 
                                                                               
                                                                               
  issues   relating   to  competition   with   truckers,  land                 
  developers, etc.  Privatization would relieve 20 to 40 hours                 
  of  finance committee time  per session.   He suggested that                 
  that effort be set in motion.                                                
                                                                               
  End:      SFC-94, #32, Side 1                                                
  Begin:    SFC-94, #32, Side 2                                                
                                                                               
  Mr. Hickey stressed need to consider transportation services                 
  provided by the railroad and the importance of that service.                 
  He concurred that private entities would be "very interested                 
  in portions of the real estate . . . ."  A mechanism has yet                 
  to  be   developed  that   would   ensure  continuation   of                 
  transportation services under  privatization.  That is  what                 
  precipitated purchase  of the  railroad by  the state.   The                 
  transportation services save  the state considerable  moneys                 
  in terms of what moves on the railroad versus on the highway                 
  system.  Real  estate assets are  key to continuance of  the                 
  transportation role.  Freight was an overall loss during the                 
  past year.  That service, even when well run, in marginal.                   
                                                                               
  Senator  Rieger commented  on  inability  to  secure  tariff                 
  charges  to  evaluate  the  economics  of  railroad  freight                 
  service with respect  to the private sector.   Senator Kelly                 
  suggested   that   lack    of   competition   to    railroad                 
  transportation would  result in  problems were  the railroad                 
  privatized.    He  pointed to  lack  of  airline competition                 
  between Juneau and Anchorage as an example.                                  
                                                                               
  Co-chair Pearce referenced page 4,  line 9, noted provisions                 
  precluding  aggregated  debt  exceeding   $50  million,  and                 
  concurred that  passage of SB  338 would "arguable  put them                 
  over that limit."  Senator  Kelly suggested that addition of                 
  "excluding  non-recourse  revenue  bonds"   would  cure  the                 
  problem.  Co-chair Pearce voiced  her understanding that the                 
  proposed language would preclude  the railroad from  issuing                 
  bonds of  more than  $50 million  for its own  use, but  the                 
  current "federal window of  opportunity" could be exploited.                 
  In  response to a  question from  Senator Kelly,  Mr. Hickey                 
  explained that the state wrote the majority of the  transfer                 
  act.  It  sought to ensure  that the railroad  would have  a                 
  wide range of authority, equal to public entities elsewhere,                 
  to engage in railroad related projects  to support the goals                 
  and viability of the railroad without a state subsidy.                       
                                                                               
  Co-chair Frank advised  that his staff had been working with                 
  legal services  on issues relating to  legislative approval.                 
  Mr.   Utermohle   has  said,   and   will  provide   written                 
  confirmation, that subsection (3) ceilings set forth at page                 
  4, lines 8 through 12, would  not apply to debt specifically                 
  authorized by  the  legislature.   Co-chair Frank  suggested                 
  that  language  offered by  Senator  Kelly would  provide an                 
  exclusion  from legislative  approval  for all  non-recourse                 
  bonds. Both Co-chair Pearce and Senator Kelly noted language                 
                                                                               
                                                                               
  within Sec. 8  (2) requiring  legislative approval prior  to                 
  issuing bonds.   Co-chair Frank raised concern  that another                 
  form  of debt would  be utilized.   Co-chair  Frank stressed                 
  need to work  with legislative  attorneys on development  of                 
  workable language.  Senator Kelly voiced committee intent to                 
  ensure that if the  railroad issues the $55 million  in non-                 
  recourse revenue bonds, the issue is  excluded from the debt                 
  cap.   Senator  Rieger  voiced  his belief  that  draft  "I"                 
  language  is sufficient to  accomplish committee intent, and                 
  no amendment would be necessary.  Co-chair Pearce asked that                 
  Mr. Utermohole provide a written opinion.                                    
                                                                               
  Senator Rieger inquired  concerning the  net profit for  the                 
  railroad over the past  year.  Mr.  Hickey advised of a  net                 
  loss of $2.6  million comprised of  $800.0 in freight and  a                 
  one-time  write  down of  $1.8  based on  reorganization and                 
  early-out  retirement payments  to  reduce  the work  force.                 
  Senator  Rieger  remarked  that the  railroad  should  pay a                 
  dividend  similar  to AHFC.    Mr. Hickey  spoke  briefly to                 
  continued losses in passenger services.   Since that service                 
  returns a considerable  dividend to the state,  the railroad                 
  has  covered  the  loss from  operating  moneys  rather than                 
  seeking a subsidy.                                                           
                                                                               
  Senator Sharp voiced his understanding that the transfer act                 
  provided  tax  exempt  status   for  financing  of  railroad                 
  upgrades and railroad related activities.  He then suggested                 
  that the tax exempt benefit might be  lost if it is used for                 
  other financing.  Mr. Hickey noted that railroad real estate                 
  (and  flexibility  in  its  development)  was   critical  to                 
  purchase of  the railroad and its viability.   Senator Sharp                 
  voiced need for  testimony from the chief  executive officer                 
  and railroad board  of directors on both SB 148  and SB 338.                 
  Discussion  of  the relationship  of the  two bills  and the                 
  railroad's position on them followed.                                        
                                                                               
  Co-chair Frank  directed  attention to  Sec.  10  provisions                 
  relating  to the  regional  land fill  at  Nenana and  noted                 
  earlier comments that it could be removed from the bill.  He                 
  expressed  reluctance to  do  so  without consultation  with                 
  legislators  from  that   area.    Mr.  Hickey   voiced  his                 
  understanding that there is a  possibility discussion of the                 
  landfill will resume in the near term, at the proposed site.                 
  There is potential over the next  two to five years that the                 
  project might make sense.                                                    
                                                                               
  Senator  Rieger pointed  to  information  from the  railroad                 
  charting   the  corporation's   real  estate   revenue  plan                 
  projected for 1993 through 1998 and cautioned that until the                 
  railroad is privatized, the legislature will "have many more                 
  hours at this table  discussing the equity of each  of those                 
  projects . . . ."                                                            
                                                                               
                                                                               
  SENATE BILL NO. 266                                                          
                                                                               
       An Act  extending the termination date of  the Board of                 
       Certified Direct-Entry Midwives; relating to the  scope                 
       of  practice of  certified  direct-entry midwives;  and                 
       providing for an effective date.                                        
                                                                               
  Co-chair Pearce referenced a request from Senator Leman that                 
  Senate Finance Committee waive referral of SB 266.  The bill                 
  issued by  the Senate  Labor and  Commerce Committee  simply                 
  extends  the  board  from  1994  to  1998.    Senator  Kelly                 
  requested  that  Senator  Leman  be  asked  to  ensure  that                 
  additional language  incorporated within the  original bill,                 
  allowing midwives  to regulate themselves, is not reinserted                 
  when CSSB 266 (L&C) reaches the House.  Co-chair Pearce said                 
  she would advise Senator Leman of the request.  No objection                 
  having been raised, Senate Finance  Committee referral of SB                 
  266 was WAIVED.                                                              
                                                                               
                                                                               
  SENATE BILL NO. 338                                                          
                                                                               
       An Act relating  to the issuance  of revenue bonds  for                 
       acquisition and  construction of  the Alaska  Discovery                 
       Center   for  the  Ship  Creek  Project  in  Anchorage;                 
       relating to a  study of  the feasibility and  financial                 
       viability of the Alaska  Discovery Center; relating  to                 
       construction  of  the   Alaska  Discovery  Center;  and                 
       providing for an effective date.                                        
                                                                               
  Co-chair  Pearce directed  that  SB 338  be  brought on  for                 
  discussion,  referenced  correspondence  of  this date  from                 
  Wohlforth,  Argetsinger, Johnson & Brecht as  well as a copy                 
  of the 1984 session law establishing the railroad, and noted                 
  the  teleconference   participation  of   Ken  Vassar   from                 
  Anchorage and Mark LoPatin from Detroit.                                     
                                                                               
  The Co-chair next directed attention to CSSB 338 (L&C), page                 
  1,  line  7,  and noted  need  to  correct  the session  law                 
  citation from  sec. 1(a) to  sec. 1(b).   NOTE - The  proper                 
  citation was  subsequently determined to be sec. 1(a)(1)(B).                 
  Senator  Kelly MOVED  to  effect the  technical change.   No                 
  objection having been raised, IT WAS SO ORDERED.                             
                                                                               
  MARK LoPATIN, of LoPatin & Company, spoke via teleconference                 
  from Detroit, Michigan.  He concurred in dovetailing aspects                 
  of SB 148 and SB  338.  He stressed need to  ensure that the                 
  railroad  understands  that   approval  of   SB  338  as   a                 
  legislative action should not impinge on the $10 million and                 
  $50 million limitations set forth in SB 148.                                 
                                                                               
  Addressing concerns raised by Senator Sharp regarding use of                 
                                                                               
                                                                               
  tax  exempt   financing  for  other  than  railroad  related                 
  purposes, Mr.  LoPatin acknowledged  that the  benefit is  a                 
  quirk in federal law which was part of the original transfer                 
  act.  He stressed that the federal government has no ability                 
  to prevent the  railroad, as  an agency of  the state,  from                 
  selling  tax  exempt  bonds  for  railroad purposes.    That                 
  includes rolling  stock, track,  storage, etc.   That  right                 
  will not be  impacted by "our using it."  If the benefit was                 
  abused or disappeared,  the railroad would continue  to have                 
  the federal  right  to  sell tax  exempt  bonds  for  public                 
  purposes/railroad purposes.   Mr. LoPatin  acknowledged that                 
  the federal government could eliminate  the benefit, but, in                 
  doing so, it would be eliminating the benefit for all public                 
  agencies.    He advised  that  he  could not  conceive  of a                 
  situation where it would "just apply  to the railroad."  The                 
  railroad receives this  benefit because it  is owned by  the                 
  State of Alaska.  The benefit allows the railroad to "go out                 
  and   do  non-railroad   purposes."     The   transfer   act                 
  contemplated  non-railroad  oriented  activities that  would                 
  generate revenue to support railroad oriented activity.                      
                                                                               
  In response to questions from  Co-chair Frank, Senator Kelly                 
  advised that provisions of  CSSB 338 (L&C) were intended  to                 
  guard against "a half  built building."  The bottom  line is                 
  that  if  the project  does  not  work, the  railroad  has a                 
  building which can be used for something.                                    
                                                                               
  Discussion followed regarding lease  arrangements and owner,                 
  bondholder, and railroad interest in  the project in case of                 
  default.   Mr.  LoPatin acknowledged  that  the  bondholders                 
  would stand in  primary position to  take over operation  of                 
  the facility.  They would not  do so without assurance of  a                 
  return on  capital.   They would,  however, continue  to pay                 
  rent to the railroad,  or they too would be in  default, and                 
  the railroad would  own the facility,  free and clear.   The                 
  railroad's  interest  is  prior  to  and superior  to  other                 
  interests.                                                                   
                                                                               
  Discussion  followed  concerning  lease  terms  for  the 120                 
  acres.  Mr. LoPatin explained that  the owner of the project                 
  is responsible  for rent payments  to the railroad.   Should                 
  the owner default, the bondholders have  a period of time to                 
  cure the default.   If they decline to do so, their interest                 
  is extinguished.    The railroad,  state,  and  municipality                 
  would  be  under  no  legal  or  moral  obligation  to  make                 
  payments.    He  further  advised  that  he  would  have  no                 
  objection to language, suggested by Co-chair Frank, that the                 
  state  and/or the railroad  would be under  no obligation to                 
  cure the default.                                                            
                                                                               
  End:      SFC-94, #32, Side 2                                                
  Begin:    SFC-94, #34, Side 1                                                
                                                                               
  Co-chair Frank  inquired concerning  fair market  aspects of                 
                                                                               
                                                                               
  the  rental  agreements  with  the  railroad.   Mr.  LoPatin                 
  explained that as each piece of  land is "carved out," there                 
  is a new  appraisal, and  a new rental  rate is  structured.                 
  Discussion of lease assignments followed.                                    
                                                                               
  Senator Sharp noted  that it appears that,  statutorily, the                 
  board of directors  of the  Alaska Railroad  is required  to                 
  exercise substantial discretionary power over the project in                 
  review  of  studies  to  determine  whether  the  center  is                 
  feasible and  financially viable,  etc.   He then  suggested                 
  that  the  foregoing  exudes  a   sense  of  direct  project                 
  involvement  and  responsibility.    He  further  questioned                 
  language  at  page  2,  line  3,  stating  that  the "Alaska                 
  Railroad Corporation  may loan the proceeds from the sale of                 
  revenue bonds  . . . ."   Mr. LoPatin  directed attention to                 
  correspondence  (copy   appended  as   Attachment  A)   from                 
  Wohlforth,  Argetsinger, Johnson  &  Brecht  and noted  that                 
  requirements  for a feasibility study make a strong case for                 
  the fact that the railroad has  no obligation to repay these                 
  bonds.  They are purely revenue bonds.                                       
                                                                               
  KEN VASSAR, Wohlforth, Argetsinger,  Johnson & Brecht,  next                 
  testified   via   teleconference   from   Anchorage.      He                 
  acknowledged  the connection  between the  railroad and  the                 
  project but stressed that the  connection does not translate                 
  to a legal  or moral obligation  with respect to the  bonds.                 
  The legislation is extremely clear on that point.  The bonds                 
  are  payable solely from revenues  pledged for the bonds and                 
  not from any other  source.  Railroad control of  aspects of                 
  the project does not impact that issue.                                      
                                                                               
  As  background information,  Mr.  Vassar explained  that  in                 
  order for the bonds to be tax exempt, they must be issued by                 
  the railroad.  The proceeds of bond sales will accrue to the                 
  railroad  which will,  in  turn, lend  the  proceeds to  the                 
  developer.   Repayment of  the loan and  land lease payments                 
  will  be  made from  revenues from  the  project.   The loan                 
  payments will  then repay  the bonds.   Mr.  Vassar stressed                 
  that the proposed bonds will not create state debt.                          
                                                                               
  Senator Sharp again voiced  need to hear from the  railroad.                 
  Co-chair Pearce asked if the railroad board had taken action                 
  on the project.   Mr. Hickey responded negatively.   He said                 
  the board had reviewed the project, and there is support for                 
  the overall proposal.  The board has not yet made a decision                 
  as to  whether or  not the  railroad will  issue the  bonds.                 
  That  decision  will not  be made  until  a number  of thing                 
  happen,   including   the  independent   feasibility  study.                 
  Senator Kelly asked if the board  was "gun-shy."  Mr. Hickey                 
  acknowledged that since the proposed project represents "the                 
  first use of this authority," the board has reservations.                    
                                                                               
  In response  to questions  from Co-chair  Frank, Mr.  Vassar                 
  described  the  sequence  of events  should  the  project be                 
                                                                               
                                                                               
  approved.  The  railroad corporation would issue  its bonds,                 
  and underwriters selected  by the corporation would  buy the                 
  bonds.   Proceeds from  the sale of  bonds would  flow to  a                 
  trustee--a large bank with trust powers, capable of handling                 
  the  accounts and  doing the  paperwork.  The  trustee would                 
  deposit the proceeds of  the bond sale into an  account that                 
  would be used to make the loan to the developer.  Mr. Vassar                 
  voiced his  belief  that  the  bank would  handle  the  loan                 
  similar  to a construction  loan with release  of funds upon                 
  completion  of   phases  until  the  project   is  complete.                 
  Following  distribution  of  the  loan,  the  trustee  would                 
  thereafter be responsible for collection  of revenues to pay                 
  back bond holders.                                                           
                                                                               
  Co-chair Pearce  noted that  the board  must feel  a certain                 
  level  of  comfort  with  the  LoPatin  proposal  since  the                 
  railroad  hired  Mr. LoPatin  to  "do the  development" over                 
  strenuous objections by  AEDC and others in Anchorage.   She                 
  then directed that  SB 148 and  SB 338 be HELD  in committee                 
  pending future discussion  with Mr. Hatfield and  members of                 
  the board of directors of the railroad.                                      
                                                                               
                                                                               
  SENATE BILL NO. 308                                                          
                                                                               
       An   Act   modifying   administrative  procedures   and                 
       decisions by  state agencies  that relate  to uses  and                 
       dispositions of  state land,  property, and  resources,                 
       and  to the interests  within them, and  that relate to                 
       land,  property, and  resources, and  to the  interests                 
       within them, that are subject to the coastal management                 
       program; and providing for an effective date.                           
                                                                               
  Co-chair Pearce  noted that  the committee  had hired  David                 
  Rogers to work on oil and gas issues associated with SB 308.                 
  He is presently in Anchorage meeting with land-use entities.                 
  Subcommittee  work  on  the  bill  will not  commence  until                 
  recommendations  from  the   Anchorage  meetings  have  been                 
  reviewed and evaluated.                                                      
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:10 a.m.                        
                                                                               

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