Legislature(1995 - 1996)

08/19/1996 01:00 PM Senate MHS

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
     SENATE TASK FORCE ON THE ALASKA MARINE HIGHWAY SYSTEM                     
                         Seward, Alaska                                        
                        August 19, 1996                                        
                           1:00 p.m.                                           
                                                                               
  TASK FORCE MEMBERS                                                           
                                                                               
 Senator Robin Taylor                                                          
 Senator Drue Pearce                                                           
 Senator John Torgerson                                                        
                                                                               
  ALSO IN ATTENDANCE                                                           
                                                                               
 Representative Gary Davis                                                     
 Patty Walen, City Manager & Port Director, Homer, AK                          
 John Burns, representing the Alaska Railroad                                  
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Gary Hayden, System Director                                                  
 Alaska Marine Highway System                                                  
                                                                               
 Damon Jorgensen, Port Engineer                                                
 Alaska Marine Highway System                                                  
                                                                               
 Mike Downing, Marine Superintendent                                           
 Alaska Marine Highway System                                                  
                                                                               
 Captain Kelly Mitchell                                                        
 Alaska Marine Highway System                                                  
                                                                               
 Mayor Tim Volstad                                                             
 Seldovia, AK                                                                  
                                                                               
 Mayor Louis Bencardino                                                        
 Seward, AK                                                                    
                                                                               
 Jim Pruitt, President of Seward Ship's Drydock, Inc.                          
 Seward, AK                                                                    
                                                                               
 Dennis Erlandson, Port Harbor Director                                        
 Homer, AK                                                                     
                                                                               
 Don Braun, City Administrator                                                 
 Chignik, AK                                                                   
                                                                               
  ACTION NARRATIVE                                                             
 TAPE ONE, SIDE A                                                              
                                                                               
  SENATOR TAYLOR , chairing the Senate Task Force on the Alaska Marine         
 Highway System in Seward, called the meeting to order and announced           
 the presence of Senator Torgerson, as well as noting that Myrna               
 Maynard would be representing Senator Pearce and participating via            
 teleconference from Anchorage.  He said the task force would first            
 go over questions that were raised at the last meeting and the                
 responses sent back by Mr. Hayden.                                            
                                                                               
  SENATOR   TORGERSON  referred to a packet of requested information           
 including the 1991 master plan, the shore condition survey, the bar           
 survey, service alternatives, etc., which he had just recently                
 received from Mr. Hayden.  He said he had not had an opportunity to           
 completely go through all of the material so he would defer a lot             
 of his questions until he could look it over.                                 
                                                                               
  SENATOR TORGERSON  said he had requested the meeting to be held in           
 Seward and he, personally, wanted to focus on some of the issues              
 raised on the Tustemena and also the ocean going vessel that will             
 be coming on line in a few years.  He noted he recently traveled on           
 the Tustemena from Valdez to Seward which gave him the opportunity            
 to speak with the crew about the system and to get their input on             
 issues they would like to see addressed by the task force.  He                
 added it is his intent to write a letter to Mr. Haden outlining               
 those concerns.  He would also like some discussion on the issue of           
 home porting in Seward, as well as discussion on the construction             
 of the new dock facility, which is a partnership project between              
 the City of Seward, the cruise ship industry, the Alaska Railroad,            
 and a requested $3,000,000 in federal funds that was requested in             
 the budget.                                                                   
                                                                               
  GARY HAYDEN , System Director, Alaska Marine Highway System,                 
 Department of Transportation & Pubic Facilities, speaking to the              
 home porting issue, stated he currently does not have any plans,              
 nor is he making plans to recommend the home port of Seward be                
 changed.  He said it is an issue that seems to come up every once             
 in awhile, but he reiterated that it is not an issue that is being            
 worked on today.                                                              
                                                                               
 Addressing the new dock facility in Seward, Mr. Hayden said the               
 Tustemena originally was docking in downtown Seward and was later             
 moved out to the railroad dock.  He said when that move was made,             
 there was a deterioration in the facilities and service to the                
 city, so he agrees that the facilities need to be upgraded,                   
 however, it then comes to the question of how it is going to be               
 paid for.  Currently, it is in the Surface Transportation                     
 Improvement Priority list (STIP), however, it is in one of the                
 outer years, which he understands is inconsistent with what the               
 city's needs are for the cruise ship dock, as well as the                     
 railroad's needs.  He said it is a matter of finding money within             
 the federal highway system appropriation to move that project                 
 along.  However, all of the capital monies that the department will           
 be receiving next year from the federal highway system will be                
 going into the new vessel, so he doesn't see that happening in                
 1998.                                                                         
                                                                               
  SENATOR TORGERSON  said the money was approved in the budget, but            
 what was needed from the Administration was to amend the STIP to              
 put it in there.   MR. HAYDEN  related that on the previous day he            
 asked Tom Brigham, Director of the Division of Statewide Planning,            
 about the project.  He was told there will be a meeting at the end            
 of the month to look at the STIP projects for next year, and Mr.              
 Brigham offered that if they have more updated information than               
 they had last year, it will be taken to the table and talked about            
 again.  He added that the last time he saw the project there were             
 preliminary drawings that were sketches to that point, and he does            
 not know where the project has evolved to in the last 12 months.              
                                                                               
  SENATOR TORGERSON  pointed out that the dock expansion isn't just a          
 ferry expansion; the cruise ships that come through that port feed            
 all of Alaska economically.  He reiterated that the marine highway            
 portion qualifies for the $3,000,000 that is already in the budget,           
 and it comes down to amending the STIP.   MR. HAYDEN  assured Senator         
 Torgerson that if there is more information available, he will take           
 it back to the commissioner and the people who make the decisions             
 about the priorities.                                                         
                                                                               
  MR. HAYDEN  noted that in addition to the packet he sent out to the          
 task force members on August 13, he was also providing them with a            
 summary of the Southwest Alaska ferry traffic analysis, a copy of             
 the system's budget briefing, and an explanation of his goal of               
 $1.6 million in cost reductions.                                              
                                                                               
  SENATOR TAYLOR  said in looking back through the budget from the             
 year before, Mr. Hayden's numbers show a $259,200 general fund                
 reduction by the legislature, when, in fact, the total amount                 
 appropriated by the legislature this year to the ferry system was             
 $20,000 higher than in the previous year.  He asked if they were              
 using different numbers.   MR. HAYDEN  explained the $1.6 million is          
 made up of two things.  One was reductions in the appropriation               
 that goes to the front part of the budget.  Also there were cost              
 increases in risk management and labor that the system faced which            
 were partially funded.  He said Senator Taylor is correct that the            
 number is larger, however, when they went through the whole                   
 budgeting process, they had cuts at two points, and then they also            
 had the two points of partially funded cost increases.  Since that            
 time, the arbitrator's decision on unearned wages is having cost              
 increases that weren't even considered during the budget cycle.               
                                                                               
  SENATOR TAYLOR  commented that as this is being explained to the             
 public, we probably should be more accurate and should be                     
 reflecting that they have had increased costs, not budget                     
 reduction.   MR. HAYDEN  agreed, and said he has been fairly cautious         
 in trying to use the term of "cost containment," which is, in his             
 mind, a combination of a little less to spend and higher costs that           
 were not fully funded.  He added that he does not want to                     
 characterize this as a budget cut and that is why he prepared the             
 new document.   SENATOR TAYLOR  said he just wanted to make it clear          
 that the majority did not go in and dramatically cut the ferry                
 system; the majority may not have appropriated an additional                  
 increase of $1.69 million that the governor would have liked to               
 have had, but the actual number of dollars appropriated was higher.           
                                                                               
                                                                               
  SENATOR TORGERSON  said during budget hearings concern was expressed         
 about the $997,000 increase in the Alaska Marine Highway's share to           
 Risk Management, and he asked if Mr. Hayden got any additional                
 back-up, or if he thinks it is a good number.   MR. HAYDEN  explained         
 that it is his understanding from Risk Management that the Marine             
 Highway's expenditures resulting from personal injuries were going            
 up; that more was being paid out than was being paid in and the               
 reserve had been depleted.  Therefore, they increased the risk                
 management charge by $997,000.  He added that if there is some way            
 to lower that number, he would like to work on it. There are a                
 couple of things the legislature hasn't had the opportunity to talk           
 about, but there would need to be a public discussion about it                
 because some of the employee unions are opposed to it.  One option            
 would be having AMS employees covered by Workers Compensation.                
                                                                               
  SENATOR TORGERSON  asked if there was a liability savings with the           
 closing of the bars on the system.   MR. HAYDEN  responded that there         
 wasn't.                                                                       
                                                                               
  SENATOR TORGERSON  noted that a lot of ferry workers aren't in any           
 kind of RIP program, and he asked which unions the RIP program                
 applies to within his department.   MR. HAYDEN  answered that he has          
 asked that question of the DOT administrative director, but he does           
 not have a complete answer at this point.  However, he said he                
 would be real surprised if the vessel employees would qualify under           
 the four basic tests that have to be met, particularly when there             
 has to be a savings shown.  He said he hoped to have that                     
 information by the next meeting of the task force.                            
                                                                               
  SENATOR TAYLOR  said he received a copy of a memorandum dated April          
 30 from Gary Egan, who is the ocean class vessel project manager,             
 and in the memo it clearly indicates that he had been advised by              
 Mr. Hayden that the ferries would no longer be providing full bar             
 service and that included the ocean class vessel.  Mr. Egan then              
 issued a letter to HMI advising them to have their subcontractor              
 stop any further work on the design, procurement and markup of the            
 bar, and he had proposed that the area previously occupied by the             
 bar be reconfigured into a reading room.  Senator Taylor pointed              
 out that was several days before the legislature adjourned, and he            
 asked Mr. Hayden why wasn't the Transportation Committee or the               
 Finance Committee or any of the people interested in a $85 million            
 ferry told about this decision during the legislative session.   MR.          
 HAYDEN  replied that the issue of whether or not they would be able           
 to provide bar service on the ferries was discussed during the                
 legislative session at the Senate and House finance subcommittee              
 level, and it was mentioned as one of the possibilities for cost              
 reduction if their budget was at a certain level.  He didn't know             
 the date the commissioner signed the decision document on closing             
 the bars, but he had the direction that that was the way they were            
 going and that is why that decision was made at this particular               
 time.                                                                         
                                                                               
  SENATOR TAYLOR  said he checked with the people on the Senate                
 Finance Subcommittee, and they didn't indicate to him that they               
 felt it was an either/or situation or that a choice was being made.           
 They said at the meeting Mr. Hayden outlined a whole series of                
 different things that would occur to the system if certain funding            
 levels weren't met.  The people that he talked with did not feel              
 that they were making any intentional decision through the funding            
 level that a specific activity would no longer take place.  He said           
 several of the vessels currently operating have been around for               
 about 33 years, and the decision that Mr. Hayden made was                     
 apparently based upon some overall thoughts about the budget at               
 that time.  Now he and the commissioner have made a decision that             
 is going to affect the new $85 million vessel for the next 30 some            
 years of its operation by intentionally removing the bar from it              
 and reconfiguring the space for something else.  He told Mr. Hayden           
 he thinks it's a very dramatic and major decision that he has made,           
 and the people involved on finance at the subcommittee level                  
 certainly did not feel they were briefed that if, in fact, he                 
 didn't get a sufficient level of funding, that the bars were going            
 to disappear and that the bar on the new ferry was going to                   
 disappear.                                                                    
                                                                               
  MR. HAYDEN  said during the budget deliberation talks that was on            
 the list of budget impacts.  The charge they have is to live within           
 their means, and so they look for strategies as to how to reduce              
 their costs.  One of the ways to reduce the costs was to reduce the           
 manning levels.  He said there aren't a lot of tools available to             
 the system when you take into consideration the contracts, the                
 mandatory service levels as to where you can make decisions to                
 reduce costs.  The closing of the bars was one of those as there              
 are several other action items that are their list that they are              
 working on to do.  He said he is sorry that the legislative people            
 who were reviewing it didn't understand what they were talking                
 about, but they did talk about it.                                            
                                                                               
  SENATOR TAYLOR  reiterated that he doesn't think anybody in the              
 legislature, at least anyone he is aware of, had the least idea               
 that a major change was going to made in the design of the services           
 to be provided on that new $85 million ferry.  He told Mr. Hayden             
 if he can find somebody in the legislature that he thinks knew that           
 and would be willing to testify or write a letter to him to that              
 effect, he would be happy to reverse that comment publicly.   MR.             
 HAYDEN  responded that he doesn't make threats, that he tries to go           
 the legislature and speak the truth on these budget impacts.                  
                                                                               
  SENATOR TAYLOR  asked Mr. Hayden if he would agree that as far as he         
 knows nobody in the legislature was aware of the fact that he                 
 pulled the bar off of the new ferry before that session adjourned.            
  MR. HAYDEN  agreed with his statement.                                       
                                                                               
  SENATOR TAYLOR  asked Mr. Hayden what revenue source he is looking           
 to on the new vessel that will replace the revenues lost off the              
 bar.   MR. HAYDEN  responded it would be in food service.                     
                                                                               
  SENATOR TAYLOR  asked Mr. Hayden what savings the system had after           
 they reduced the bar service on the Aurora.  He noted at the last             
 hearing a captain on the Aurora said they had lost revenue of                 
 $3,000 a week since the bar went down.    MR. HAYDEN  responded that          
 they saved on the time that the person was doing bartending and               
 that person is now doing food services, which saves in overtime in            
 that department.  He added they could have reduced the manning by             
 one person on both the Aurora and the LaConte and still have met              
 Coast Guard requirements, however, they didn't do so.  Mr. Hayden             
 also pointed out that in 1995, overall the system lost $127,000               
 through providing bar service.                                                
                                                                               
 There was extensive discussion on information provided by Mr.                 
 Hayden relating to figures representing personnel costs, as well as           
 a breakdown on the revenue and expense by vessel.                             
                                                                               
  SENATOR TORGERSON  asked why the bar was being closed on the                 
 Columbia if it is making money.   MR. HAYDEN  clarified that the bar          
 isn't being closed on the Columbia.  He also noted that the                   
 Bartlett and the Tustemena will continue to sell beer and wine, but           
 they will not have full-time bartenders or bartender positions; a             
 steward will make the sale on those two vessels.                              
                                                                               
  SENATOR TAYLOR  suggested that if they are really looking to save            
 money off of some personnel within the system and they have people            
 who do specific functions, it would seem if there were an                     
 accounting method by which a cost could be attached to those                  
 functions and a revenue source from them, that the person to be               
 laid would be the person who costs the most and generates the least           
 amount of money.  Instead, it appears to him they are going at it             
 backwards.  He said he doesn't know of an employee on the vessel              
 who generates as much money as the bartender does from services               
 provided on board the vessel and who takes less money to subsidize            
 his or her position.  He said he is trying to figure out why we               
 would want to have less revenue for our ferry service, and this               
 will have a significant impact on revenues.   MR. HAYDEN  responded           
 that the revenue will go down, but so will the costs.                         
                                                                               
  TAPE ONE, SIDE B                                                             
 Number 001                                                                    
                                                                               
  SENATOR TORGERSON  inquired as to the number of lay-offs on the              
 vessels Mr. Hayden anticipates to realize his goal of $1.6 million            
 in cost  reduction.   MR. HAYDEN  responded that he is not                    
 necessarily looking at vessels for laying off people.  He is                  
 looking at other items such as overtime reductions, spending less             
 money in overall operations, food services, manning levels during             
 the winter months, as well as one other vessel position.                      
                                                                               
  SENATOR TAYLOR  then opened the meeting to public comment.                   
                                                                               
  TIM VOLSTAD , Mayor of Seldovia, referring to a handout relating to          
 Southwest Alaska ports, observed that Cordova and Kodiak need the             
 Tustemena; however, Valdez, Homer and Seward have a road.  He said            
 Seldovia needs the Tustemena.  He questioned why, when the Bartlett           
 and other ferries are running in Prince William Sound, the                    
 Tustemena needs to come to Seward in the summer months.  He                   
 pointed out that Seldovia has had very little service during the              
 winter months for the last five years, and he questioned how much             
 service it will have this coming winter season.  He also asked if             
 the new $85 million ocean class vessel will be servicing the Kenai            
 Peninsula.                                                                    
                                                                               
  MR. HAYDEN  responding to the Seward and Valdez issue, said he would         
 provide Mayor Volstad with a copy of the systems' annual traffic              
 volume report that shows what the volume is in that area.  He also            
 said this winter the Tustemena will be serving Homer, Kodiak and              
 Seldovia, as well as the Cordova/Valdez run.  The Tustemena just              
 finished a five-phase project and there is no federal project                 
 planned for it this winter.  It was out of service last year for              
 the installation of a new engine.  He added that the thing that               
 will affect the Tustemena in the future will be regulatory projects           
 and demands that get placed on the system.  Concerning the new                
 vessel, it will serve Southeast Alaska as a mainline vessel,                  
 primarily in the summer months, and it will be available and is               
 being designed to fill in for the Tustemena when the Tustemena is             
 off line like it was last winter, but it will not initiate any new            
 service on the Kenai Peninsula.                                               
                                                                               
  SENATOR TORGERSON  commented that Seldovia is land locked and not            
 having ferry service seven months a year is a major concern to the            
 mayor.                                                                        
                                                                               
  LOUIS BENCARDINO , Mayor of Seward, said over the years the ferry            
 system has put in docks in other communities, whereas Seward has              
 always leased docking facilities to the system.  Now, when they               
 want to upgrade and build a new facility, they seem to have a                 
 problem getting the support from the ferry system.  The City of               
 Seward has been working on a partnership project that involves the            
 cruise ship industry and the Alaska Railroad, and the only they               
 needed was a portion from the state.  He referred to the money that           
 was allocated for a project in his area, the Hope Bridge that came            
 in at $10 million under bid, and expressed his displeasure that the           
 $10 million was quickly reallocated to another district before his            
 community had a chance to secure that money for a project in their            
 own district like the docking facility.                                       
 Mayor Bencardino also spoke to his concern with taking the vessels            
 of the Alaska Marine Highway System out of state for maintenance.             
 He said it doesn't make sense to spend money to take care of people           
 in Louisiana when there are people in Alaska out of jobs.                     
                                                                               
 Mayor Bencardino said he knows the STIP program for the dock could            
 have been moved up if the Administration had wanted to do so, but             
 it seems like when we have something that makes sense, we have a              
 hard time getting the state working with us.  He reiterated that              
 the City of Seward has got private enterprise working with them and           
 then the state lets them down.                                                
                                                                               
  MR. HAYDEN  said he understands Seward's desire to have the state            
 fund their joint-use facility, which he doesn't disagree with.  The           
 dilemma he and DOT find themselves in is that the state gets $220             
 million a year in federal highway funds, however, the list of                 
 priorities and needs and concerns is pretty significant.  He thinks           
 it is over a billion dollars worth of competition that goes into              
 that, so it is a matter of setting those priorities for competing             
 needs, which is a difficult task to do.    MAYOR BENCARDINO                   
 interjected that the $10 million from the Hope Bridge project                 
 should have keyed in to take care of problems in his district, but            
 that didn't happen.  He said when he talked to the commissioner               
 about the dock project, he felt that the commissioner thought it              
 was a good idea, but that he didn't get the support from either the           
 people under him or the people above him.   MR. HAYDEN  responded             
 that he doesn't make those decisions, although he does get to                 
 participate in the scoring and discussion about the community road            
 projects.                                                                     
                                                                               
  MR. HAYDEN  asked Mayor Bencardino where the project is in securing          
 the other funds.   MAYOR BENCARDINO  responded that everything came           
 to stop when the state failed to support the project, although they           
 still have got the commitment from the other entities.  He also               
 restated his concern that the City of Seward was not able to retain           
 at least part of the $10 million from the Hope Bridge project so              
 that they could have gone forward with this project.   MR. HAYDEN             
 assured Mayor Bencardino that he would talk to the commissioner               
 about his concern about the out-of-district movement of funds.                
                                                                               
 The discussion then turned to Mayor Bencardino's concern that                 
 vessels are being sent out of state for maintenance.  He questioned           
 why Washington State can do its own maintenance, and yet Alaska               
 sends its vessels to Louisiana.   MR. HAYDEN  pointed out that Alaska         
 uses federal monies for maintenance and the Federal Highway                   
 Administration requires that the project has to be competitively              
 bid.   DAMON JORGENSEN , Port Engineer, Alaska Marine Highway System,         
 clarified that the Washington State ferries do not use any federal            
 money whatsoever for the overhaul or the construction of their                
 ferry system; they use state tax money and all of their federal               
 money goes towards the highway projects.   MIKE DOWNING , Marine              
 Superintendent, Alaska Marine Highway System, added that last year            
 the largest single federal project that the system did, outside of            
 the ocean class vessel, was in Seward, which was a $7.8 million               
 contract on the repowering of the Tustemena.                                  
                                                                               
  REPRESENTATIVE GARY DAVIS  asked Mayor Bencardino where the City of          
 Seward is at as far as detailed drawings on the new docking                   
 facility.   MAYOR BENCARDINO  said they had P&D do a draft plan, but          
 they have been hesitant to spend any more money until they know               
 they are getting the support from the state.   REPRESENTATIVE DAVIS           
 advised that he thought it would be beneficial to have at least a             
 cost estimate on the specifications for the project ready.                    
                                                                               
  JIM PRUITT , President of Seward Ship's Drydock, Inc., in Seward,            
 said Seward Ship's Drydock and Seward's facility is capable of                
 drydocking all of the Alaska Marine Highway System ferries except             
 the Aurora and the LaConte, which are inland ferries.                         
                                                                               
 He spoke to an incident where his company was the successful low              
 bidder for a maintenance project on the Aurora a few years ago.               
 However, on its way to Seward the Aurora got into heavy seas in the           
 Gulf of Alaska and was directed to go to Ketchikan for repairs.               
 Since then the Aurora and LaConte have come up for bid with federal           
 money in them and overhaul state money, however, Seward Ship's                
 Drydock was told it was not going to be allowed to bid on the                 
 Aurora because it is an inland ferry and it can't make that                   
 crossing.  His company has talked to masters that have been with              
 the Alaska Marine Highway System, as well as having had a lot of              
 sea time experience, and they have been told that the Aurora can              
 safety be brought across the gulf.  They have also talked to the              
 Alaska Marine Highway System numerous times and they get varying              
 opinions, depending on who they talk to, whether this vessel can be           
 brought across or can't.                                                      
                                                                               
 Mr. Pruitt said the reason for building the Ketchikan facility and            
 the Seward facility was to keep these vessels in state, and there             
 has been legislation passed to keep accomplish this as well, but              
 unfortunately, because of the wording in the legislation in it can            
 be interpreted in different ways.  He suggested there needs to                
 clarification on that legislation to where those vessels can be               
 kept in state.  He said his company would like the opportunity to             
 participate in the fair bidding process and be able to work on                
 Alaska ferries with Alaskans.                                                 
                                                                               
  MR. HAYDEN  said he talked to the port captain the previous week             
 about the Aurora crossing the gulf and he received an explanation             
 that it was a safety issue, and it was also a safety issue in                 
 conjunction with the sponsons and the structural integrity of the             
 vessel.  He had asked Captain Sande, who was bringing the Aurora              
 across the gulf the last time, if he would bring it across this               
 time.  Captain Sande said there was no way he was going to bring              
 that vessel across the gulf because of the slamming, because of the           
 sponsons sticking out and catching water and slamming.  The captain           
 thought that last time that he was going to lose the ship.                    
                                                                               
 Mr. Hayden pointed out it is a matter of not only bringing it                 
 across the gulf but also taking it back.  Also, the window of                 
 opportunity on the Aurora project is very tight schedule to the               
 fire safety work and get it back so that they can then do the                 
 LaConte.  These projects have to be done in a timely manner so that           
 there isn't an interruption in service.                                       
                                                                               
  TAPE 2, SIDE A                                                               
 Number 001                                                                    
                                                                               
  SENATOR TAYLOR  asked how they can justify sending a vessel to               
 Portland if they are worried about an inland ferry in outside                 
 waters.   MR. HAYDEN  responded that he has been with the system for          
 two years and he hasn't seen a vessel go to Portland, but he said             
 he would research the passage time, the sea states, wave heights,             
 windows of opportunity, etc., all the factors that go into it.  The           
 problem he has is ordering the captain of the Aurora to put his               
 vessel in what he considers to be an unsafe condition.                        
                                                                               
  SENATOR TAYLOR  asked that if there are some federal dollars                 
 involved, but the low bid on the Aurora turns out to be Seward, do            
 they lose the federal money because they refuse to bring the Aurora           
 across the gulf.   MR. HAYDEN  answered no, because it was written in         
 the bid specs that way.                                                       
                                                                               
  SENATOR TORGERSON  asked if Mr. Hayden could get a second opinion on         
 the safety of crossing the gulf.   MR. HAYDEN  agreed that he would           
 get another opinion in writing.                                               
                                                                               
  CAPTAIN KELLY MITCHELL , Alaska Marine Highway System, testifying            
 from Juneau, clarified it was not Captain Sande that attempted to             
 cross the gulf on the Aurora, it was Captain Hopkins, who he                  
 respects as an ocean master that has also sailed on the Tustemena.            
 He said he has discussed this issue a number of times with Mr.                
 Pruitt, and the issue is a matter of safety and the delivery and              
 redelivery of the vessel back to Southeast.  It is not a matter of            
 length or size of the vessel, it's the whole configuration.  A 35             
 foot fishing vessel is much more seaworthy in open ocean conditions           
 than a sponson hull ferry vessel that's certificated for inland               
 lakes and bays.                                                               
                                                                               
  SENATOR TAYLOR  observed that since the new vessel will be using up          
 the federal funds allocated to the system for a period of two                 
 years, maintenance during that two-year period will be all general            
 fund dollars.  He then asked why it would be necessary to send a              
 vessel outside for the next two years.   MR. HADEN  answered that he          
 hasn't entered those years when he has all state general fund                 
 monies.  This winter the Aurora and the LaConte are receiving fire            
 safety, as well as an upgrade to the Matanuska.  Those three                  
 vessels, for this winter, are federally funded.  Two of them are              
 funded out of FY 96 funds and one is funded in FY 97 funds.                   
                                                                               
 SENATOR TAYLOR  again asked if there is any reason why the vessels            
 that will require maintenance during that two-year period will have           
 to go outside of the state.   MR. HAYDEN  responded that they are             
 going to live under the terms of their statute, and that's what               
 they have been doing.   SENATOR TAYLOR  commented that he was the             
 person who drafted that statute and this state has never lived                
 under the terms of that statute.   MR. HAYDEN  said where the vessels         
 go depends to some extent on what type of work is being done on               
 them.  He doesn't know what the maintenance schedule during that              
 time period is, but he thinks the probability of going out from               
 competitive bid is pretty low.                                                
                                                                               
  DENNIS ERLANDSON , Port Harbor Director, City of Homer, said one of          
 the questions and one of the concerns the City of Homer has is the            
 condition of the ferry dock, which is now part of the city's                  
 responsibility.  This past February a letter was sent to the                  
 commissioner expressing the concern and also the possibility of a             
 design team being formed with the city and the other users of the             
 dock.  He said as he reads the CIP for the ferry service there is             
 a reconnaissance project identified at the end of the century to              
 start the process of deciding whether or not a dock has to be                 
 built.  He expressed concern that by the year 2000 the dock may be            
 at a point where it is not usable and serviceable, and he suggested           
 looking at that time line and trying to speed it up.  His concern             
 for the city is how long do they have to keep the dock going before           
 they start working together as a group and go after a design                  
 project.                                                                      
                                                                               
 Mr. Erlandson also pointed out that the new ferry will be larger              
 than the Tustemena, which now services Homer on a regular basis,              
 and if the Tustemena was to be out service and had to be replaced             
 with the new vessel, there would be concern about bringing the                
 larger ferry into the existing facility.                                      
                                                                               
  MR. HAYDEN  said as result a of Mr. Erlandson's letter, the dock got         
 placed on the reconnaissance phase.  He added there is nothing that           
 inhibits them from sitting down and talking about those needs                 
 whenever the city wants to.  It's a matter of getting the need                
 identified, coming up with some solutions and getting in line.                
                                                                               
  DON BRAUN , City Administrator, City of Chignik, said the Tustemena          
 serves the City of Chignik and the four other surrounding                     
 communities and they consider it a vital link in their economy.  He           
 said they share Seldovia's concern about the uncertainty of                   
 scheduling.  He said, in general, the AMS has attempted to address            
 their concerns and they are appreciative of that.  He pointed out             
 that right now fishing drives Chignik's economy, but he envisions             
 that tourism will eventually come more into play, and he asked that           
 be factored into the scheduling of ferry service to their area.               
                                                                               
 Mr. Braun said the City of Chignik has a partnership with the Corps           
 of Engineers that involves state funds for a boat harbor; however,            
 they can't get the state highway people to talk to the state boat             
 harbor people.  He suggested they work to integrate programs even             
 if there is a slippage in time.  He also noted the City of Chignik            
 has been working on getting a new docking facility in Chignik and             
 that DOT has been responsive and has been working with them in this           
 effort.                                                                       
                                                                               
  MR. HAYDEN  said in developing the winter schedule they tried to             
 identify all the community needs and to have the communities                  
 understand the other community needs.  He stressed the need to keep           
 working together so that everybody understands what those feeding             
 powers are in the Tustemena because it can only make so many port             
 calls in a 7-day period.                                                      
                                                                               
 There being no further witnesses to testify,  SENATOR TAYLOR  said he         
 still had several questions that he would submit in writing to Mr.            
 Hayden.  Concerning the bar removal, he like to see the survey that           
 was conducted on Prince of Wales Island, the one used as                      
 justification for pulling the bar off the Aurora, as well as a                
 tabulation of comments cards the system has been receiving from               
 passengers on the ferries concerning removing the bars.  He                   
 reiterated his concern that the system can't get the winter                   
 schedules out in a timely manner.                                             
                                                                               
  SENATOR TAYLOR  asked if they not now moving forward to close the            
 bar on the Columbia, is there any likelihood they can be dissuaded            
 from doing that with any of the other vessels before the September            
 15 deadline.   MR. HADEN  said he asked that same question last week          
 in the context of how does he deal with the operation within the              
 revenues and the monies that he has available to him; whether or              
 not to change that decision, or whether or not to continue forward            
 with the decision.  He said he took a neutral stand, and he was               
 given direction to continue with the closure of the bars.  He added           
 that he would pass on the task force's comments once again.                   
                                                                               
  SENATOR TAYLOR  said that if they really want to lose that income            
 out of the bars, he could promise where he is going to take it the            
 next legislative session; it's all coming out of administration.              
 He said if we are going to start firing people that are generating            
 an income that's keeping that ferry running, then he is going to              
 start firing people that are taking money that's not keeping that             
 ferry running, that's tieing it up in Bellingham and other places.            
 He suggested Mr. Hayden take that one back up to Commissioner                 
 Perkins, as well as suggesting that maybe the commissioner should             
 be at the next hearing to explain to people like Mr. Bencardino and           
 others how $10 million gets transferred to another district while             
 a project like the Seward dock goes down the drain.                           
                                                                               
 There being no further business to come before the task force, the            
 meeting was adjourned.                                                        
                                                                               

Document Name Date/Time Subjects