Legislature(1993 - 1994)

03/01/1994 01:45 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               SENATE LABOR AND COMMERCE COMMITTEE                             
                         March 1, 1994                                         
                           1:45 P.M.                                           
 MEMBERS PRESENT                                                               
 Senator Tim Kelly, Chairman                                                   
 Senator Steve Rieger, Vice-Chairman                                           
 Senator Bert Sharp                                                            
 Senator Georgianna Lincoln                                                    
 Senator Judith Salo                                                           
  MEMBERS ABSENT                                                               
  COMMITTEE CALENDAR                                                           
 SENATE BILL NO. 289                                                           
 "An Act making appropriations to satisfy the agreed-upon monetary             
 terms of certain collective bargaining agreements for certain                 
 public employees; and providing for an effective date."                       
 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."                                                              
 HEARD THIS DATE.                                                              
      PREVIOUS ACTION                                                          
 SB 289 - See Labor & Commerce minutes dated 3/1/94.                           
 SB 338 - See Judiciary minutes dated 3/1/94.                                  
  WITNESS REGISTER                                                             
 Nancy Usera, Commissioner                                                     
 Department of Administration                                                  
 P.O. Box 110200                                                               
 Juneau, Ak. 99811-0200                                                        
  POSITION STATEMENT:   Commented on SB 289.                                   
 Mila Doyle, Labor Relations Analyst                                           
 Department of Administration                                                  
 Division of Personnel                                                         
 P.O. Box 110220                                                               
 Juneau, Ak. 99811-0220                                                        
  POSITION STATEMENT:   Commented on SB 289.                                   
 Josh Fink, Legislative Aide                                                   
 Senator Tim Kelly                                                             
 State Capitol                                                                 
 Juneau, Ak. 99801-1182                                                        
  POSITION STATEMENT:   Commented on SB 338.                                   
 Mark LoPatin                                                                  
 Ship Creek Landing                                                            
 6960 Orchard Lake Rd., Ste 239                                                
 West Bloomfield, Michigan 48322                                               
  POSITION STATEMENT:   Commented SB 338.                                      
 Ken Vasser                                                                    
  Wolforth, Argetsinger, Johnson, and Brecht                                   
 900 W. 5th, Ste 600                                                           
 Anchorage, Ak. 99501                                                          
  POSITION STATEMENT:   Commented on SB 338.                                   
 Mark Hickey                                                                   
 Alaska Railroad Corporation                                                   
 211 4th Street #108                                                           
 Juneau, Ak. 99801                                                             
  POSITION STATEMENT:   Commented on SB 338.                                   
 Bob LeResche                                                                  
 John Nuveen & Co.                                                             
 4270 Glacier Hwy.                                                             
 Juneau, Ak. 99801                                                             
  POSITION STATEMENT:   Commented on SB 338.                                   
  ACTION NARRATIVE                                                             
  TAPE 94-12, SIDE A                                                           
 Number 001                                                                    
  CHAIRMAN KELLY called the Senate Labor and Commerce Committee                
 meeting to order at 1:45 p.m. and announced  SB 289  (APPROP: COST OF    OF   
 CERTAIN LABOR AGREEMENTS) to be up for consideration.                         
 COMMISSIONER NANCY USERA, Department of Administration, said there            
 is one correction to the Funding Information section which should             
 say General Fund $92,000 and Other Funds, which are Marine Highway            
 Funds, should be $276,630.                                                    
 She said there was a packet for each of them that contained                   
 summaries of the two agreements.                                              
 In the Alaska Vocational Technical Center Teachers (AVTEC)                    
 agreement, she said, they are changing to a new teacher based                 
 salary schedule and are eliminating the automatic 3% salary                   
 increases.  Included in some of the changes was a management rights           
 clause which gives much more latitude to management in terms of               
 determining key things like overtime, work rules, and hours.                  
 Layoff procedures were clarified and sabbaticals for teachers were            
 only at the employer's discretion and only after 7 years of                   
 In terms of their goal to provide greater flexibility and more                
 productivity and accountability, there was a conversion.  The                 
 annual leave provision was eliminated and replaced with 5 personal            
 leave days instead.                                                           
 The dispute resolution procedure was clarified.  This contract also           
 delineates that additional education credits have to be job                   
 On health insurance they were able to get all of the units to make            
 a choice either on the employer provided plan which will be                   
 provided or they could convert to a trust of a comparable amount of           
 money and the union can provide its own insurance to its members.             
 SENATOR SALO asked if this was an entirely contribution defined               
 plan.  COMMISSIONER USERA answered that it was before.  SENATOR               
 SALO asked if the employee has any protection from the plan                   
 becoming absolutely watered down?  COMMISSIONER USERA said no and             
 explained that each unit was given their choice as she mentioned.             
 She said she believes that there is no benefit more important to an           
 employee than their health benefits.  Her interest is in trying to            
 provide the best, most meaningful benefits within the funds                   
 available to do that.  She recognizes that benefits of a laborer              
 would be different from those of a worker behind a desk.                      
 SENATOR RIEGER asked if it was the state's policy to target a cost            
 to the employer for his plan?  COMMISSIONER USERA answered no and             
 said the state's contribution was currently at $423.50.  One change           
 now is that everyone has to pay something to go to the doctor which           
 has made a big difference in cost containment.                                
 SENATOR RIEGER asked if it was policy to not increase the $423.50?            
 COMMISSIONER USERA said she couldn't imagine a plan that would pay            
 more than that.  She said there will be more and more effort                  
 towards cost containment because of national concern with health              
 As for the Licensed Alaska Marine Highway Engine Room Employees               
 (MEBA) agreement, she said, $38,800, an amalgamation of small                 
 things, is a supplemental associated with the current fiscal year.            
 They have also eliminated management's obligation to negotiate                
 permissive subjects of bargaining.                                            
 MEBA has three shore-side port engineers that are represented by              
 MEBA who are actually shore-side personnel and there were a number            
 of changes to their contract which better represents their hybrid             
 situation.  For instance they reduced paid holidays from 12 to 11,            
 they eliminated penalty pay for early call back from vacation, and            
 eliminated overtime except for preapproved hours only.                        
 They firmed up the language on the drug testing policy.                       
 Maintenance and care went from $40 to $45 per day.  Personal leave            
 is tied to a reopener of wages in the fall of 1994.                           
 The theme for these labor contracts has been to try to contain the            
 costs of each of these bargaining units, but to allow as much                 
 flexibility as possible in trying to rearrange the wages and                  
 benefits to increase productivity for the employers and still                 
 provide meaningful benefits for the employee.  Rather than lock in            
 a cost of living increase, they tied a reopener this year on wages            
 to the leave issue so if there would be an increase in wage there             
 would be a decrease in the leave associated with that.  For health            
 insurance, they were able to get them onto the employer plan with             
 a reopener in the fall of 1994.  The 2.9% cost of living increase             
 goes into effect the first of September.                                      
 COMMISSIONER USERA said she believed these agreements very                    
 effectively represent a cost containment, increases in                        
 productivity, and changes in some areas or incremental reductions.            
 Number 309                                                                    
 SENATOR SHARP asked what kind of work week the MEBA people were on?           
 MILA DOYLE, Labor Relations Analyst, said it depends on which                 
 system they are assigned.  Southeast employers work 84 hours pay              
 periods, week on, week off.  The southwest system employees work              
 120 and 186 hours - essentially every day on and a comparable                 
 amount of time off.                                                           
 SENATOR SHARP asked how many hours annually they worked.  MS. DOYLE           
 answered she couldn't give him an exact figure on that.  SENATOR              
 SHARP said he would like to see what the average hours worked would           
 be for a fifteen year employee.                                               
 SENATOR LINCOLN asked if she could explain the discipline for drug            
 testing.  COMMISSIONER USERA explained that a lot of the                      
 controversy lies in not having the language clear.                            
 SENATOR SHARP moved to adopt CSSB 289(L&C).  There were no                    
 objections and it was so ordered.                                             
 SENATOR KELLY moved to pass CSSB 289(L&C) from Committee.  There              
 were no objections and it was so ordered.                                     
 Number 378                                                                    
 to be up for consideration.                                                   
 JOSH FINK, Aide to Senator Kelly, reviewed the proposed CS to SB
 MR. FINK said he ran the finance section by the municipal bond bank           
 people and the people at AIDA and they indicated that the                     
 provisions should insure the bonds negligibly, if at all, affect              
 the state's financial rating.                                                 
 He said the differences between SB 338 and the CS are that it's not           
 the Alaska Discovery Center, but the Northern Crossroads Discovery            
 Center, so the title has been changed to reflect that.                        
 The language referring to the Board of Directors was tightened up.            
 and the performance bond in section 3 was changed to read "payment            
 and performance bond."                                                        
 Number 408                                                                    
 MARK LOPATIN, John Nuveen and Co., testified that one of the most             
 exciting things about this project is the opportunity to bring                
 international travelers, from London and Tokyo, to Anchorage.  The            
 area they are developing is at Ship Creek.  He said this bill is              
 for the Discovery Center and nothing else in that project.                    
 He pointed out the features of the proposed center.  He said there            
 was already ICT money identified for the walkway.  SENATOR LINCOLN            
 asked if this was the money Alaska had already received this year.            
 MR. LOPATIN said the walkway was a request from the Municipality of           
 Anchorage to the state which, then, becomes a request to the                  
 federal government.                                                           
 SENATOR KELLY asked if he had permission from the Anchorage                   
 Assembly for the project.  MR. LOPATIN answered yes and they had              
 made all the corrections that were required in planning and zoning.           
 SENATOR KELLY asked him why he wanted to take the bonds into the              
 private sector?  MR. LOPATIN said first of all it is a $54 million            
 project which is a very specialized use.  Railroad property,                  
 specifically, cannot be subordinated or pledged to a mortgage.  The           
 facility generates $41.6 million to the area economy. It was clear            
 creative financing tools were needed and Railroad bonds are very              
 unique - being sold on a tax exempt basis for private purposes.               
 SENATOR KELLY asked about the state's credit risk if the project              
 didn't get completed or didn't perform to expectations.                       
 KEN VASSER, testifying via teleconference, explained that the bonds           
 are payable from revenues from the project and are not obligations            
 of the State of Alaska.  SB 338 goes further and requires that the            
 bonds state on their face that they're are not a legal or moral               
 debt of the state.                                                            
 Number 561                                                                    
 SENATOR SHARP asked what would be the difference with AIDA bonds?             
 MR. VASSAR said that AIDA also has language saying the bonds are              
 not obligations of the state of Alaska.                                       
 SENATOR SHARP asked if the Railroad would be doing this and would             
 the bonds be insured?                                                         
 MARK HICKEY, Alaska Railroad, said he didn't know if the Railroad             
 had any other outstanding bonds at the time.                                  
  TAPE 94-12, SIDE B                                                           
 Number 580                                                                    
 SENATOR RIEGER asked if the Railroad would pledge any assets to               
 back the bonds.  MR. LOPATIN explained that the only assets or                
 revenue of the Railroad's that will be pledged to repay the bonds             
 will be from this project.                                                    
 SENATOR RIEGER asked who would own the Discovery Center.  MR.                 
 LOPATIN said the entity would own it.                                         
 SENATOR KELLY asked how confident he was that he could sell the               
 bonds.  MR. HICKEY explained he was convinced it couldn't be                  
 financed more traditionally.  Therefore, the financing has to be              
 creative and this project makes sense.  Economic Research                     
 Associates was hired to come up with figures the market would bear            
 and The Northern Crossroad Discovery Center was developed from                
 those figures.  He said he felt comfortable that this project would           
 be financed.                                                                  
 SENATOR LINCOLN asked why they are discussing the legislation now             
 instead of letting the Alaska Railroad Board first review it.                 
 SENATOR KELLY said he thought the legislature would have to pass              
 authorizing legislation before the LoPatin group would commit the             
 kind of money it would take to do a serious feasibility study.                
 SENATOR LINCOLN also commented that she hoped it wasn't his intent            
 to just benefit the educated and well to do in Anchorage as it says           
 in the handout for the Northern Crossroads Discovery Center.  She             
 also wondered what they meant by "person" to do the feasibility               
 study.  MR. HICKEY apologized and explained that Anchorage and                
 Alaska have a very high per capita income for the tourists who come           
 here, compared to other tourist locations.  That is what those                
 comments were in reference to.  He said the facility is designed to           
 accommodate 60% of the tourists who arrive during a three month               
 period.  The facility has to be large enough to move that many                
 people through in a short period of time.                                     
 During the other eight and a half months the facility would still             
 accommodate some tourists and more area residents, as well.  Rates            
 would drop substantially.  The area residents would pay less. The             
 project would be marketed differently for them.                               
 SENATOR LINCOLN asked if there was another way to get funding for             
 the moving walkway if the ICT money doesn't come through.  MR.                
 HICKEY said he didn't have final figures, but it will be dropped if           
 it can't be accommodated.                                                     
 SENATOR LINCOLN said she was concerned that the people employed by            
 the Center would be Alaskans.  MR. HICKEY said there would be                 
 approximately 350 employees and there was no reason to bring people           
 in from out of state.  They would hire native Alaskans to go along            
 with the mythology part of the package.  This would also be a union           
 A representative of the Union said they supported the project.                
 SENATOR SALO asked about the time line with the construction.  MR.            
 HICKEY said that construction would start in 1995 with an opening             
 in 1997.                                                                      
 Number 460                                                                    
 BOB LERESCHE, John Nuveen & Co., said the bonds this legislation              
 would authorize would be high yield bonds for a non-government                
 project.  It's an extremely common type of bond in the market                 
 today.  The bonds will probably be required to have reserves to               
 cover things like a year's debt service, capitalized interest,                
 working capital reserves, and insurance.  What the market will look           
 for in deciding how much to pay for these bonds are basically a               
 feasibility study, conducted by someone with whom the bond market             
 is familiar, predicting the revenues would be more than sufficient            
 to cover debt service at a certain coverage level.  The bond market           
 also would look at who would manage the project and at the Alaska             
 tourism industry.                                                             
 SENATOR LINCOLN said she needed clarification of page 2, line 30              
 stating the Railroad is not obligated to pay the bond or the                  
 interest, except for the revenue stream or assets pledged for the             
 bond.  MR. HICKEY answered that the revenue is admission tickets              
 and the assets are the Discovery Center itself - the brick and                
 mortar.  MR. LERESCHE said the Railroad will pay these bonds by               
 passing the money through their system, but they're obliged to pay            
 no more than they get from the owner of the Discovery Center.                 
 SENATOR KELLY moved to add the words "or firm" to "shall select the           
 person."  There were no objections and it was so ordered.                     
 SENATOR KELLY moved to add flexibility to go lower by inserting               
 "not more than" before "$55 million".  There were no objections and           
 it was so ordered.                                                            
 SENATOR RIEGER moved to adopt the CS with the two amendments to SB
 338.  There were no objections and it was so ordered.                         
 SENATOR RIEGER moved to pass CSSB 338 (L&C) from Committee with               
 individual recommendations.  SENATOR LINCOLN objected.  SENATORS              
 KELLY, RIEGER, SHARP, and SALO voted yes; SENATOR LINCOLN voted no.           
 The motion to pass CSSB 338(L&C) out of committee carried.                    
 SENATOR KELLY adjourned the meeting at 2:55 p.m.                              

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