Legislature(2003 - 2004)

02/27/2003 09:03 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                         February 27, 2003                                                                                    
                              9:03 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-03 # 11, Side A                                                                                                             
SFC 03 # 11, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 9:03 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice Chair                                                                                                   
Senator Ben Stevens                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Robin Taylor                                                                                                            
                                                                                                                                
Also Attending:   LARRY PERSILY, Deputy Commissioner,  Department of                                                          
Revenue;  PAM  VARNEY,   Executive  Director,  Legislative   Affairs                                                            
Agency; TIM LAMKIN, Staff to Senator Gary Wilken;                                                                               
                                                                                                                                
Attending  via  Teleconference:   From  Fairbanks:  LARRY  BREDEMAN,                                                          
Tanana Chiefs Conference                                                                                                        
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB  51-BONDS OF BOND BANK AUTHORITY                                                                                             
                                                                                                                                
The Committee  heard testimony from  the Department of Revenue.  The                                                            
bill was reported from Committee.                                                                                               
                                                                                                                                
CHANGE IN LONGEVITY POLICY                                                                                                      
                                                                                                                                
The Committee  heard from the Legislative  Affairs Agency  regarding                                                            
this administrative  matter  of business.  The  Committee adopted  a                                                            
policy.                                                                                                                         
                                                                                                                                
SCR  1-SUPPORT ROADS/HOT SPRINGS LOOP ROAD                                                                                      
                                                                                                                                
The  Committee  heard  from  the  sponsor,  and  the  Tanana  Chiefs                                                            
Conference.  Two  amendments  were  considered  and  adopted  and  a                                                            
committee substitute was reported from Committee.                                                                               
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 51                                                                                                         
     "An  Act  relating  to  revenue  bonds  issued  by  the  Alaska                                                            
     Municipal  Bond Bank  Authority and the  total amount  of bonds                                                            
     and notes  outstanding of that authority; and  providing for an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
Co-Chair Wilken gave a  brief overview of the legislation, sponsored                                                            
by  the Senate  Rules  Committee  by  request  of the  Governor,  as                                                            
follows.                                                                                                                        
                                                                                                                                
     SB  51  increases  the  Alaska  Municipal   Bond  Bank's  total                                                            
     borrowing   limit  from  $300  million  to  $500   million.  In                                                            
     addition, the amount  of revenue bonds may be issued in any one                                                            
     fiscal year  is increased from $50 million to  $75 million. The                                                            
     current limits have not been raised since 1983 and 1984.                                                                   
                                                                                                                                
LARRY PERSILY,  Deputy Commissioner,  Department of Revenue,  gave a                                                            
history of the  Alaska Municipal Bond Bank Authority  (MBBA) created                                                            
in 1975 to  assist municipalities  in issuing debt for projects.  By                                                            
working through  the bond bank authority, he stated,  municipalities                                                            
could obtain lower interest  rates on debt and lower issuance costs.                                                            
He stressed  that the debt  is not the State's,  but rather  general                                                            
obligation bonds or revenue bonds issued by municipalities.                                                                     
                                                                                                                                
Mr. Persily listed  the first statutory borrowing  limit of the MBBA                                                            
as the $50 million annual  limit on the amount of revenue bonds that                                                            
could be issued  during any one year, which has not  increased in 20                                                            
years.   He furthered that  the second statutory  limit is  the $300                                                            
million  maximum  total general  obligation  and revenue  debt  that                                                            
could  be carried  by the MBBA  at any  one time.  This statute,  he                                                            
reminded has been in place since 1984.                                                                                          
                                                                                                                                
Mr.  Persily  assured  that  the MBBA  has  sufficient  reserves  to                                                            
continue financing  at the proposed higher levels.  He informed that                                                            
the MBBA reserves are utilized  to pay the costs of the Authority as                                                            
well as pay annual dividends to the State treasury.                                                                             
                                                                                                                                
Mr. Persily  reported that the Authority  has issued $27  million in                                                            
revenue  bonds in  FY 03  to  date with  an additional  $50  million                                                            
possible.  He remarked this  would be a record  amount, although  it                                                            
would be above the statutory annual limit of $50 million.                                                                       
                                                                                                                                
Mr. Persily  furthered that  the total debt  amount of the  MBBA was                                                            
$235  million  in   January  2003.  He  stated  that   the  possible                                                            
additional  issuances in the remainder  of FY 03, plus issuances  in                                                            
FY  04, would  increase  the total  debt and  the  $300 limit  would                                                            
almost be reached.                                                                                                              
                                                                                                                                
Mr. Persily  listed the  proposed projects  for which revenue  bonds                                                            
have been issued in FY 03 as follows.                                                                                           
                                                                                                                                
    Juneau hospital expansion                      $25 million                                                                  
     Juneau port improvements                        5.6 million                                                                
     Valdez hospital replacement                     19 million                                                                 
     Lake Peninsula Borough dock project              1 million                                                                 
     City of Homer seawall                            1 million                                                                 
     City of Homer dock improvements                  1 million                                                                 
     Kenai Peninsula Borough solid waste project*                                                                               
     City of Fairbanks fire protection facility*                                                                                
     *amount not available                                                                                                      
                                                                                                                                
Mr. Persily  then  listed the proposed  projects  for which  general                                                            
obligation bonds have been issued in FY 03 as follows.                                                                          
                                                                                                                                
     Northwest Arctic Borough school projects*                                                                                  
     City of Petersburg refinancing existing debt         $1 million                                                            
     Aleutians East Borough school project*                                                                                     
     Kodiak Island Borough refinancing existing debt  $3 million                                                                
     *amount not provided                                                                                                       
                                                                                                                                
Co-Chair Green  asked how additional revenue would  be generated and                                                            
additional  expense incurred  yet no  changes are  reflected in  the                                                            
fiscal note, which is zero.                                                                                                     
                                                                                                                                
Mr. Persily compared  preparation of the annual budget  for the MBBA                                                            
to that  of projecting  oil prices;  it is  difficult to  accurately                                                            
estimate  the future activity.  He explained  that in years  of less                                                            
than anticipated  issuance activity,  the MBBA expends fewer  funds,                                                            
and in years  of higher activity,  a supplemental budget  request is                                                            
submitted to  cover the additional  expenses. Therefore,  he stated,                                                            
the fiscal note does not  reflect additional funds, as the intention                                                            
would be to  request supplemental  funds if activities in  FY 04 are                                                            
higher  than  anticipated.  He  exampled  that  the  FY  03  initial                                                            
appropriation  was  $522,700  and  because of  higher  activity  the                                                            
Department  has requested  $142,000  supplemental  funding to  cover                                                            
bond issuance expenses.                                                                                                         
                                                                                                                                
Co-Chair  Green  asked if  the FY  03 supplemental   request is  for                                                            
reimbursement of funds already expended.                                                                                        
                                                                                                                                
Mr. Persily  corrected  that the funds  have not  yet been  expended                                                            
although  they would be expended  by the end  of March 2003  if this                                                            
legislation were  to pass, thus allowing additional  bond issuances.                                                            
                                                                                                                                
Co-Chair Green wanted to  know the consequences if this bill did not                                                            
pass into law and the supplemental request was approved.                                                                        
                                                                                                                                
Co-Chair Wilken commented that this bill should pass.                                                                           
                                                                                                                                
Mr. Persily responded that  once $50 million limit was reached those                                                            
remaining  communities requesting  bond issuance  in FY 03  would be                                                            
instructed to reapply the following fiscal year.                                                                                
                                                                                                                                
Senator Hoffman asked the delinquency rates.                                                                                    
                                                                                                                                
Mr. Persily  assured  that no  community  has every  defaulted  on a                                                            
Municipal Bond Bank loan.                                                                                                       
                                                                                                                                
Senator Hoffman  clarified his request for the instances  of overdue                                                            
payments.                                                                                                                       
                                                                                                                                
Mr. Persily would provide this information.                                                                                     
                                                                                                                                
Senator Olson  pointed out  that the increase  from $300 million  to                                                            
$500 million would  almost double the amount of bonded  indebtedness                                                            
of  the MBBA.  He asked  the  impact  this would  have  on the  bond                                                            
rating.                                                                                                                         
                                                                                                                                
Mr.  Persily  responded  that  the  MBBA  currently  has  sufficient                                                            
reserves to  cover a $500 million  debt, and therefore the  increase                                                            
would not jeopardize  the bond rating.  He furthered that  each bond                                                            
issuance is rated  individually based upon the specific  project and                                                            
municipality involved.                                                                                                          
                                                                                                                                
Mr.  Persily  then  elaborated   on  the  decision  to  request  the                                                            
authority  for a limit  that would  be viable  for several years  to                                                            
avoid the  need to make  repeated requests  over the same period  of                                                            
time.  He also noted  that several  municipalities  are now  funding                                                            
projects rather  than obtaining funding  from the State and  federal                                                            
governments. Therefore, he expected more bonds would be issued.                                                                 
                                                                                                                                
Senator Taylor offered a motion to report SB 51 from Committee.                                                                 
                                                                                                                                
Without  objection  SB  51  moved  from  Committee  with  individual                                                            
recommendations  and  zero fiscal  note #1  from  the Department  of                                                            
Community and Economic  Development and zero fiscal note #2 from the                                                            
Department of Revenue.                                                                                                          
                                                                                                                                
                                                                                                                                
CHANGE IN LONGEVITY POLICY                                                                                                      
                                                                                                                                
                                                                                                                                
PAM  VARNEY,   Executive  Director,   Legislative  Affairs   Agency,                                                            
testified that  the Senate and House  of Representatives  employment                                                            
policy has  been in effect since 1988  "and has worked well  for the                                                            
Legislature with the exception  of longevity steps J through M." She                                                            
cited AS 39.27.022(d),  which permits a committee of the Legislature                                                            
to  determine whether  longevity  pay  increments would  be  granted                                                            
under  this  statute  to  employees  under  the  authority  of  that                                                            
committee.  She requested  the Senate  Finance  Committee not  adopt                                                            
this portion of the statute, but rather adopt a separate policy.                                                                
                                                                                                                                
Ms. Varney informed  the Members of the other committees  that voted                                                            
to not  adopt this  policy: Senate  Rules Committee  on February  3,                                                            
2003; House  Rules Committee on February  4; Legislative  Council on                                                            
February 20; Administrative  Regulation Review Committee on February                                                            
19.  She  furthered  that  the  House  Finance   Committee  and  the                                                            
Legislative  Budget and Audit Committee  have scheduled this  matter                                                            
for  consideration.  She noted  that  if  all committees  take  this                                                            
action, the  Legislature would have  a consistent policy  throughout                                                            
the Legislative Branch.                                                                                                         
                                                                                                                                
Ms. Varney specified the  difficulties with the term "continuous" as                                                            
contained  in current statute.  She explained  that some staff  work                                                            
for  different  legislators  at  various  wage  steps,  or  work  at                                                            
different  pay  ranges  during  the  legislative   session  and  the                                                            
interim.  These  employees,   she  stated,  would  not  qualify  for                                                            
scheduled   step  increases  because   the  salary  steps   are  not                                                            
continuous.                                                                                                                     
                                                                                                                                
Ms. Varney referenced proposed  language, which does not include the                                                            
word "continuous." [Copy on file.]                                                                                              
                                                                                                                                
Senator  Olson asked  the disadvantages  of adopting  the  different                                                            
policy.                                                                                                                         
                                                                                                                                
Ms. Varney  was unaware  of opposition  and could  not perceive  any                                                            
disadvantages.  She  stressed   that  staff  to  both  Majority  and                                                            
Minority legislators are  affected, as well as those in nonpolitical                                                            
positions.                                                                                                                      
                                                                                                                                
Co-Chair Green  offered a motion that  the Senate Finance  Committee                                                            
not  adopt  AS 39.27.022-Pay  increments  for  longevity  for  State                                                            
service but  instead adopt their own  plan, which better  applies to                                                            
legislative  service.  This new  policy is  before  the Members  and                                                            
would be effective January 16, 2003.                                                                                            
                                                                                                                                
There was no objection and the motion PASSED.                                                                                   
                                                                                                                                
                                                                                                                                
     CS FOR SENATE CONCURRENT RESOLUTION NO. 1(STA)                                                                             
     Relating   to  economic  development  generated   by  new  road                                                            
     construction  and  to the design  and construction  of the  Hot                                                            
     Springs Loop  Road to connect Chena Hot Springs  and Circle Hot                                                            
     Springs,   of  a  highway  along  the  Bradfield/Iskut   Rivers                                                            
     transportation  corridor,  of the Knik  Arm Crossing, and  of a                                                            
     road from Illiamna Bay to Pile Bay.                                                                                        
                                                                                                                                
                                                                                                                                
TIM LAMKIN staff to Co-Chair Wilken, read the sponsor statement                                                                 
into the record as follows.                                                                                                     
                                                                                                                                
     Senate Concurrent Resolution 1                                                                                             
     "Relating  to  economic  development   generated  by  new  road                                                            
     construction  and  to the design  and construction  of the  Hot                                                            
     Springs Loop  Road to connect Chena Hot Springs  and Circle Hot                                                            
     Springs."                                                                                                                  
                                                                                                                                
     SCR 1 is submitted  to advance economic development in Interior                                                            
     Alaska.                                                                                                                    
                                                                                                                                
     This resolution addresses the following:                                                                                   
     1)  There is considerable  tourism activity  at both Chena  and                                                            
         Circle Hot Springs.  Connecting these  two sites will  spur                                                            
         further   tourism   activity   at   both   locations,   and                                                            
         potentially at new sites established along the way.                                                                    
     2)  Local residents also frequent these  locations, not only to                                                            
         enjoy the  hot  springs'  facilities,  but also  to  access                                                            
         fishing, hunting, camping  and hiking areas  that intersect                                                            
         the routes to both hot springs.  Extending the road to form                                                            
         a loop  will extend  and improve  access  to these  Alaskan                                                            
         resources and pastimes.                                                                                                
     3)  The increased   traffic  along this  Loop  Road  will  lend                                                            
         itself to increased  commercial and industrial  activities,                                                            
         including   resource    extraction   and   entrepreneurial                                                             
         ventures, thus  promoting job  opportunities and  long-term                                                            
         economic growth to the area and to the State.                                                                          
                                                                                                                                
     Across  Alaska there may be many  worthwhile road construction                                                             
     projects  currently  under consideration  to  improve  Alaska's                                                            
     highway infrastructure.  However, SCR 1 does not intend to give                                                            
     preference  to any one  project. Instead,  it aims to  identify                                                            
     and  evaluate  one  model  project  that  would  significantly                                                             
     improve  the quality of life  and potential for development  in                                                            
     Interior  Alaska  and  encourage further  like  discussions  in                                                            
     other areas of our State.                                                                                                  
                                                                                                                                
Co-Chair  Wilken referenced  maps of the  proposed Hot Springs  Loop                                                            
Road and  additional proposed  projects that  had been added  to the                                                            
resolution  in  the  Senate  State  Affairs  committee  substitute.                                                             
[Copies on file.]                                                                                                               
                                                                                                                                
Hot Springs Loop Road                                                                                                         
                                                                                                                                
Co-Chair  Wilken  indicated  the location  of  Central,  Circle  and                                                            
Circle Hot  Springs approximately  130 miles north of Fairbanks.  He                                                            
informed that  the hot springs have been a destination  for trappers                                                            
and travelers  from around  the world  for 80 to  90 years.  He next                                                            
located  Chena  Hot  Springs   on  the  map,  about  60  miles  from                                                            
Fairbanks,  which he stated has been  developed into an "absolutely                                                             
world class destination"  for viewing the Aurora Borealis or bathing                                                            
in the hot springs.  He pointed out the 260-mile distance  to travel                                                            
to both locations. He explained  the proposal to link the two roads,                                                            
creating  a  loop.  This,  he stated  would  make  travel  to  these                                                            
destinations a manageable two-day, two-night trip.                                                                              
                                                                                                                                
Co-Chair  Wilken  noted  the  relation  of the  existing  roads  and                                                            
proposed  road  within the  Fairbanks  North  Star Borough  and  the                                                            
federally owned Steese National Conservation Area.                                                                              
                                                                                                                                
Bradfield/Iskut Corridor                                                                                                      
                                                                                                                                
Co-Chair  Wilken informed  that  this project  was  included in  the                                                            
resolution at the request of Senator Taylor.                                                                                    
                                                                                                                                
Senator  Taylor  indicated   that  Southeast  transportation   plans                                                            
propose extending the road  system on Wrangell Island to Fools Inlet                                                            
on the  southern end of  the island, with  a shuttle ferry  carrying                                                            
vehicles and passengers  to the Cleveland Peninsula on the mainland.                                                            
He continued  that the  plans include  constructing  a 12 mile  long                                                            
road along  the Tyee  power  lines of the  Four Dam  Pool, which  is                                                            
currently under  construction, to  link with existing logging  roads                                                            
on Revillagigedo  Island  leading into  Ketchikan.   He stated  that                                                            
another  shuttle   ferry  would  connect  Wrangell   to  roads  into                                                            
Petersburg.                                                                                                                     
                                                                                                                                
Senator Taylor next pointed  out the Dick Sykes Logging Camp and the                                                            
26 miles  of logging road  built from the  camp along the  Bradfield                                                            
River. He declared  that this area has been clear-cut  logged and is                                                            
not "pristine  wilderness." He informed  that 11 more miles  of road                                                            
would reach  the Canadian  border, and 23  additional miles  of road                                                            
would  link  to an  existing  mine.  He  told of  large  ore  trucks                                                            
utilizing the  existing road along the Iskut River  between the mine                                                            
and Highway  37,  which he  said is  the newest  highway in  British                                                            
Columbia, Canada.                                                                                                               
                                                                                                                                
Senator  Taylor reported  that an  average of 72  trucks with  empty                                                            
refrigeration  containers  travel southbound  on  this highway  each                                                            
day. He also told  of "well over 100 million salmon"  that could not                                                            
be processed and transported to market.                                                                                         
                                                                                                                                
Senator  Taylor emphasized  this road has  been under consideration                                                             
for  over  40 years,  with  both  the  United  States  and  Canadian                                                            
governments  constructing portions  of the  road. He expressed  that                                                            
the roads should be connected.  He stated that other potential sites                                                            
for a road connection between  Southeast Alaska and British Columbia                                                            
would  not be  permitted  because  they are  located  in  designated                                                            
wilderness areas.                                                                                                               
                                                                                                                                
Senator  Taylor   noted  that  the   proposed  road  would   require                                                            
construction of a "small tunnel at the upper end".                                                                              
                                                                                                                                
Senator  Taylor surmised  that  the construction  of  this road  and                                                            
accompanying  shuttle ferry  would "totally  turn around our  marine                                                            
highway system"  and "we would no longer be paying  the high subsidy                                                            
that we currently pay."                                                                                                         
                                                                                                                                
Senator Taylor  informed that approximately $1.5 million  in federal                                                            
highway funds are being  utilized for "the initial scoping". He told                                                            
of meetings with Canadian officials on this matter.                                                                             
                                                                                                                                
Co-Chair Wilken asked if the existing roads are public roads.                                                                   
                                                                                                                                
Senator  Taylor replied  that  "guarded access"  is  granted to  the                                                            
Canadian  portion  of the  road because  of  the types  of  vehicles                                                            
currently  traveling to  and from  the mine. He  furthered that  the                                                            
Alaskan  portion  of the  road  is a  U.S.  Forest Service  road  is                                                            
available to the public although it is overgrown.                                                                               
                                                                                                                                
Co-Chair  Wilken asked  an estimate  of  the cost  to complete  this                                                            
project.                                                                                                                        
                                                                                                                                
Senator Taylor  spoke about a haul road for transporting  resources.                                                            
He indicated  that one engineering  firm conducted a survey  in 1986                                                            
and estimated the cost  would be $29 million, including construction                                                            
of the tunnel. He qualified  that additional costs would be incurred                                                            
to update this  cost study. He complained about the  air surveys and                                                            
cost estimates  performed  by the Department  of Transportation  and                                                            
Public Facilities,  arguing  that the $180  million to $350  million                                                            
estimates derived from  these surveys are over projected. Therefore,                                                            
he concluded  that  no official  accurate  estimate  exists at  this                                                            
time, and he projected  the cost of a "paved road  quality" would be                                                            
approximately  $200 million.  He added that  a "utility grade"  road                                                            
would cost approximately $50 to $60 million.                                                                                    
                                                                                                                                
Senator  Taylor expressed  that mining companies  are interested  in                                                            
establishing  operations  in the proposed  area,  but are  currently                                                            
prevented from  doing so because of  the lack of electrical  service                                                            
and  road connection.  He  asserted the  proposed  road would  bring                                                            
energy supplies and road access into Southeast Alaska.                                                                          
                                                                                                                                
Co-Chair  Green  clarified  this project  requires  a  joint  effort                                                            
between Alaska and Canada.                                                                                                      
                                                                                                                                
Senator  Taylor affirmed  and  told of  an 1825  treaty between  the                                                            
Russians  and the British  relating to trapping  and trading  rights                                                            
and access to the Pacific Ocean.                                                                                                
                                                                                                                                
Senator Olson  asked the total population that would  be affected by                                                            
this project, noting the number of communities impacted.                                                                        
                                                                                                                                
Senator Taylor asserted  that the 7,000 residents of Prince of Wales                                                            
Island  as well as  Juneau residents  would benefit  from this  road                                                            
connection.  He relayed  that  road travel  between  Juneau and  the                                                            
Lower 48  requires ferry  transportation to  Skagway and  calculated                                                            
that the  new corridor would  eliminate 350  miles from the  current                                                            
route. He concluded  that a minimum of 70,000 people  would benefit.                                                            
                                                                                                                                
Senator Olson  asked the cost of maintaining  this road.  He pointed                                                            
to the steep grade at the site of the proposed road.                                                                            
                                                                                                                                
Senator  Taylor  did not  have  an estimate  of  maintenance  costs.                                                            
However, he pointed  out that the mining company maintains  the road                                                            
between the mine and Highway  37 year-round. He spoke to the limited                                                            
snowfall in the  current year and surmised that maintenance  of this                                                            
road would  be no less costly than  other roads in Southeast  Alaska                                                            
and would  be less  expensive than  the road to  Valdez or the  road                                                            
from Skagway.                                                                                                                   
                                                                                                                                
Senator  Taylor  then  commented   on legislation   passed  in  1986                                                            
relating  to  the  Whittier  Tunnel and  Bradfield  Haul  Road,  and                                                            
authorized  the Alaska Industrial  Development and Export  Authority                                                            
(AIDEA) to  issue revenue  bonds for toll  roads. He indicated  that                                                            
this generated $29 million.                                                                                                     
                                                                                                                                
LARRY   BREDEMAN,   Tanana   Chiefs   Conference,    testified   via                                                            
teleconference from Fairbanks,  representing Circle City in favor of                                                            
the Hot Springs  Loop Road. He also  supported the inclusion  of the                                                            
proposed Wrangell road in this resolution.                                                                                      
                                                                                                                                
Mr. Bredeman spoke  to concerns that the Hot Springs  Loop Road must                                                            
be paved. He  pointed out that rental  vehicles are restricted  from                                                            
driving  on unpaved  roads. He  asserted that  pavement would  allow                                                            
economic  development  and  he  encouraged  the  pavement  of  roads                                                            
statewide.                                                                                                                      
                                                                                                                                
Co-Chair Wilken expressed  that he would research whether car rental                                                            
agencies classify  the High Float Road as gravel.  He noted that the                                                            
road  between Circle  and  Central is  one of  only  two roads  that                                                            
access to the Yukon River.                                                                                                      
                                                                                                                                
Senator Olson asked if  the witness, as representative of the Tanana                                                            
Chiefs Conference  (TCC), has received indication  of any opposition                                                            
from  residents   preferring   to  remain   isolated  from   surface                                                            
connection to Fairbanks.                                                                                                        
                                                                                                                                
Mr. Bredeman  replied  that he  has not  received  comments of  such                                                            
concerns. He  noted that due to hardships  in the fishing  industry,                                                            
residents  are seeking alternative  revenue  sources. He  reiterated                                                            
that  the largest  concern  voiced to  him is  the  need to  upgrade                                                            
existing roads before constructing new roads.                                                                                   
                                                                                                                                
Senator Olson  asked the opinions of the non-Native  population that                                                            
would be affected.                                                                                                              
                                                                                                                                
Mr.  Bredeman  surmised  that  some prefer  no  changes  to  Alaska;                                                            
however, he did not have documentation of such opposition.                                                                      
                                                                                                                                
Senator Bunde  understood this is substantial investment.  While the                                                            
federal  government   would  fund  a  significant   portion  of  the                                                            
construction, he pointed  out that maintenance expenses would be the                                                            
responsibility  of the State.  He asked if  area residents  would be                                                            
willing to contribute to these expenses.                                                                                        
                                                                                                                                
Mr. Bredeman  replied that he is willing  to forgo a portion  of his                                                            
permanent fund dividend  to pay such expenses. He suggested he could                                                            
conduct a survey  of affected residents to determine  whether others                                                            
would agree.                                                                                                                    
                                                                                                                                
Senator Hoffman  asked if  the communities  or the TCC have  adopted                                                            
any official resolution supporting this project.                                                                                
                                                                                                                                
Mr. Bredeman  replied that no resolution  has been adopted  to date.                                                            
                                                                                                                                
Knik Arm Crossing                                                                                                             
                                                                                                                                
Co-Chair Wilken opined,  "This will change the face of South Central                                                            
Alaska. It's a huge project."                                                                                                   
                                                                                                                                
Co-Chair  Green furthered,  "It does speak  for itself and  has been                                                            
widely publicized."  She told of the potential for  nearby residents                                                            
to  become  trapped by  the  recent  Miller's  Reach Fire,  and  the                                                            
realization that this area does not have an escape route.                                                                       
                                                                                                                                
Co-Chair  Green demonstrated  on the  map that  this crossing  would                                                            
complete  a loop. She indicated  the distance  between the  proposed                                                            
crossing  and the  City  of Anchorage  is less  than  one mile.  She                                                            
predicted   that    utilizing   this   crossing   would    eliminate                                                            
approximately  two and  one-half hours  driving  time for  travelers                                                            
from Fairbanks, Talkeetna and other northern origins.                                                                           
                                                                                                                                
Co-Chair  Green added  that the  possible  addition of  a rail  line                                                            
would  create a  direct route  for timber  and other  products  from                                                            
Fairbanks,  Healy and the Northern  Susitna Valley, into  Anchorage.                                                            
                                                                                                                                
Co-Chair Wilken  asked the location  of Port McKenzie and  the Goose                                                            
Bay State Game Refuge in relation to the proposed crossing.                                                                     
                                                                                                                                
                                                                                                                                
SFC 03 # 11, Side B 09:50 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Senator Bunde indicated the locations on the map.                                                                               
                                                                                                                                
Senator  Taylor  asked  how  the proposed  crossing  would  link  to                                                            
existing roads in Anchorage.                                                                                                    
                                                                                                                                
Senator B. Stevens detailed  the route across Ship Creek and Gambell                                                            
Road, following a bluff and linking to an existing road.                                                                        
                                                                                                                                
Senator B. Stevens  then emphasized that the population  in the Mat-                                                            
Su region is  one of the fastest growing  in the State. He  informed                                                            
that currently  people from Wasilla  and the Palmer area  commute to                                                            
Anchorage  for their  means of  economic sustainability.  He  stated                                                            
that this crossing  would create a  mechanism that would  reduce the                                                            
commute to about one-third the amount of time.                                                                                  
                                                                                                                                
Senator  B.  Stevens   furthered  that  Anchorage  is  "essentially                                                             
bordered by water  on three sides and Bicentennial  Park on the east                                                            
side and our ability  for potential growth in the  Anchorage Bowl is                                                            
at capacity."  He asserted that this corridor is essential  to allow                                                            
continued  growth in  the Mat-Su  Valley without  overburdening  the                                                            
current road  system. He opined, "The  benefits of this project  are                                                            
huge."                                                                                                                          
                                                                                                                                
Co-Chair  Wilken  asked  if  shipping  activity   occurs  above  the                                                            
location of the proposed crossing in the Knik Arm.                                                                              
                                                                                                                                
Senator B. Stevens explained  the shipment of gravel from a location                                                            
north of  Goose Bay to the  Port of Anchorage.  He stated this  is a                                                            
"small  tug  and barge  operation"  which  operates  year-round.  He                                                            
reported  that large  shipping  operations  do not  travel past  the                                                            
port.                                                                                                                           
                                                                                                                                
Co-Chair Green  added that shipping  activity on the Mat-Su  side of                                                            
the Knik  Arm  is centered  at Port  McKenzie, which  is  undergoing                                                            
upgrades to its road access infrastructure.  .                                                                                  
                                                                                                                                
Senator  B. Stevens  assured that  no additional  dredging from  the                                                            
U.S. Corps of Engineers would be required.                                                                                      
                                                                                                                                
Co-Chair Wilken  next asked the ownership  of the land north  of the                                                            
Knik Arm, which would be accessed by the proposed crossing.                                                                     
                                                                                                                                
Senator  B. Stevens  informed  that most  of the  land is  privately                                                            
owned.  He   stated  that  much  of   the  land  is  developed   for                                                            
agriculture, that many  cabins are located in the area, as well as a                                                            
growth of residential housing.                                                                                                  
                                                                                                                                
Co-Chair  Green interjected  that  the population  is "still  rather                                                            
sparse". She  noted that much of the  land is divided into  640-acre                                                            
parcels and 320-acre parcels with some active farms and diaries.                                                                
                                                                                                                                
Senator  Olson  pointed  to the  map  and the  appearance  that  the                                                            
distance  between Wasilla  "proper"  and Downtown  Anchorage is  the                                                            
same along  the existing Glenn Highway  route as along the  proposed                                                            
Knik Arm Crossing route.                                                                                                        
                                                                                                                                
Co-Chair Green  indicated areas on the map where the  distance would                                                            
be shorter,  agreeing that for many  other areas the distance  would                                                            
not be shorter. However,  she pointed out that the diversion of some                                                            
traffic to  the proposed route would  reduce the number of  vehicles                                                            
traveling on the  Glenn Highway, which would lessen  the travel time                                                            
along that route as well.                                                                                                       
                                                                                                                                
Senator Taylor asked the estimated cost of this project.                                                                        
                                                                                                                                
Co-Chair Green responded  that a current estimate was not available.                                                            
                                                                                                                                
Co-Chair  Wilken expressed  that the expense  would be significant,                                                             
indicating the total project  includes more elements than the bridge                                                            
itself.                                                                                                                         
                                                                                                                                
Senator Bunde asked if  opposition to the project has been expressed                                                            
by  those  residing  in the  now-isolated   areas who  do  not  want                                                            
increased access from Anchorage.                                                                                                
                                                                                                                                
Co-Chair Green had not received notification of such concerns.                                                                  
                                                                                                                                
Pile Bay to Iliamna Bay                                                                                                       
                                                                                                                                
Co-Chair  Wilken informed  that  this proposal  is  included in  the                                                            
committee substitute at the request of Senator Dyson.                                                                           
                                                                                                                                
Senator Bunde  described the disrepair  of the existing gravel  road                                                            
crossing, which  is "little used"  at present to portage  commercial                                                            
fishing  vessels  between  Cook  Inlet  to Lake  Illiamna  and  down                                                            
Kvichak River  to Bristol Bay. He  informed the low usage  is due to                                                            
narrow passages on steep hillsides.                                                                                             
                                                                                                                                
Senator Hoffman  affirmed  he has traveled  this route and  upgrades                                                            
and repairs are necessary.                                                                                                      
                                                                                                                                
Senator  B. Stevens  furthered that  the road is  primarily used  as                                                            
portage  for the Bristol  Bay gillnetting  fleet  between Homer  and                                                            
Seldovia fishing  grounds and Bristol  Bay. He informed that  a span                                                            
of bridge with a 12-foot  width restriction is an impediment for the                                                            
newer, wider fishing  boats. He stated that the route  had been used                                                            
more in the past before the construction of the wider boats.                                                                    
                                                                                                                                
Co-Chair Wilken  requested Senator  Dyson to prepare information  on                                                            
the impacted residents and economic development for the region.                                                                 
                                                                                                                                
Senator Hoffman  commented  that the affected  area had been  in his                                                            
election district before redistricting occurred.                                                                                
                                                                                                                                
Amendment #1:  This amendment inserts language on  page 3, following                                                            
line 12 of the committee substitute to read as follows.                                                                         
                                                                                                                                
     WHEREAS  the  Donlin  Creek Road  project  has been  a  project                                                            
     identified  as a  project that  will greatly  enhance  economic                                                            
     development  and  establish a  transportation  corridor in  the                                                            
     Kuskokwim  area, which  will have a  profound effect on  future                                                            
     development in the region.                                                                                                 
                                                                                                                                
This amendment  also inserts language  on page 3, following  line 28                                                            
of the committee substitute to read as follows.                                                                                 
                                                                                                                                
     FURTHER RESOLVED that the Alaska State Legislature supports                                                                
     the continued effort for construction of the Donlin Creek                                                                  
     Road.                                                                                                                      
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Senator  Hoffman  asserted  that construction   of this  road  would                                                            
access the largest  economic development potential  in rural Alaska.                                                            
He compared the  3 million ounces of proven reserve  at Fort Knox to                                                            
the proven  reserves  of Donlin  Creek of approximately  28  million                                                            
ounces. He  listed economic benefits  to the region: employ  500-600                                                            
during construction;  employ 450-550  in operation with the  average                                                            
salary of $49,000  and annual total salaries of $25  to $40 million;                                                            
$50 to  $80 million  annual expenditures  in  the region;  estimated                                                            
annual production of 1 to 1.4 million ounces.                                                                                   
                                                                                                                                
Senator Hoffman described  the proposed 15-mile road between Crooked                                                            
Creek and Donlin Creek.                                                                                                         
                                                                                                                                
Senator Bunde commented  that the other proposed projects are public                                                            
roads and noted this road  would be on private land. He asked if the                                                            
road would become public or be a private road.                                                                                  
                                                                                                                                
Senator Hoffman responded that he would research the matter.                                                                    
                                                                                                                                
Senator Taylor  remarked that the State has "assisted"  other mining                                                            
activities, exampling  the construction of the port  and road to the                                                            
Red Dog Mine.  He informed that this project was funded  through the                                                            
issuance of bonds and that  tolls are now collected. He spoke of the                                                            
Statewide  Transportation Improvement  Plan  (STIP) and opined  that                                                            
the State is less involved  in selecting road projects. He supported                                                            
the  use of  toll  roads to  finance  the  construction  of all  the                                                            
proposed projects included in this resolution.                                                                                  
                                                                                                                                
Co-Chair  Wilken  removed  his  objection   and  the  amendment  was                                                            
ADOPTED.                                                                                                                        
                                                                                                                                
Amendment  #2:  This  amendment  inserts  new language  on  page  3,                                                            
following line  28 of the committee  substitute to read as  follows.                                                            
                                                                                                                                
     FURTHER  RESOLVED that  the Alaska  State Legislature  supports                                                            
     the design and construction  of a road to Rock Creek, bypassing                                                            
     Moon Light  Springs, for the development of mineral  extraction                                                            
     on the Seward Peninsula.                                                                                                   
                                                                                                                                
Senator Olson moved for adoption.                                                                                               
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Senator Olson  spoke to  the amendment informing  that Novagold  has                                                            
identified mining reserves  in the affected area, within three miles                                                            
outside the City of Nome  boundary. He explained that current access                                                            
to Rock  Creek is  by the Glacier  Creek Road,  which travels  along                                                            
Moon Light  Springs, the city's drinking  water supply. He  detailed                                                            
the proposal to construct  a three-mile road between the Nome Teller                                                            
Road and the Glacier Creek Road, bypassing the spring.                                                                          
                                                                                                                                
Senator Olson  warned of  the potential contamination  of the  water                                                            
supply if an accident involving  tanker trucks traveling to the mine                                                            
were to occur.                                                                                                                  
                                                                                                                                
Co-Chair  Wilken  removed  his  objection   and  the  amendment  was                                                            
ADOPTED.                                                                                                                        
                                                                                                                                
Senator  Taylor offered  a  motion to  report  CS SCR  1 (FIN)  from                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator  Bunde  objected  for discussion.  He  expressed  he  wanted                                                            
consideration of other funding sources for these projects.                                                                      
                                                                                                                                
Co-Chair  Wilken agreed  and explained  the attempts  of the  Alaska                                                            
Congressional Delegation  to secure a six-year appropriation of $450                                                            
million to  the Denali  Commission for "the  Rural Road Initiative"                                                             
that  would require  no matching  funds.  He recommended  that  this                                                            
resolution  should  be  in effect  at  the time  the  U.S.  Congress                                                            
reauthorizes federal highway funding for the Denali Commission.                                                                 
                                                                                                                                
Senator Taylor commented  on maintenance expenses of these roads. He                                                            
told of  road maintenance  in British Columbia,  which is  privately                                                            
contracted and inspected by government personnel.                                                                               
                                                                                                                                
Senator Bunde  removed his objection  and CS SCR 1 (FIN)  moved from                                                            
Committee  with individual  recommendations  and  accompanying  zero                                                            
fiscal  note #1 from  the Department  of Transportation  and  Public                                                            
Facilities.                                                                                                                     
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 10:14 AM                                                                          

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