Legislature(1993 - 1994)
03/30/1993 03:36 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE TRANSPORTATION COMMITTEE March 30, 1993 3:36 p.m. MEMBERS PRESENT Senator Bert Sharp, Chairman Senator Randy Phillips, Vice Chairman Senator Tim Kelly Senator Georgianna Lincoln Senator Jay Kerttula MEMBERS ABSENT All members present COMMITTEE CALENDAR SENATE BILL NO. 148 "An Act relating to the Alaska Railroad Corporation; and providing for an effective date." SB 157 (PROHIBITED HIGHWAY ADVERTISING) WAS SCHEDULED, BUT NOT HEARD THIS DATE. PREVIOUS SENATE COMMITTEE ACTION SB 148 - See Transportation minutes dated 3/11/93, 3/23/93. SB 157 - See Transportation minutes dated 3/23/93. WITNESS REGISTER John Kelsey Valdez, AK POSITION STATEMENT: Has concerns with SB 148 Phyliss Johnson, General Counsel Alaska Railroad Corporation P.O. Box 107500 Anchorage, AK 99510-7500 POSITION STATEMENT: Outlined concerns with SB 148 George Utermohle, Legal Counsel Division of Legal Services Legislative Affairs Agency 130 Seward St. Juneau, AK 99801 POSITION STATEMENT: Offered information on SB 148 Senator Steve Frank, Co-chair Senate Finance Committee State Capitol Juneau, AK 99801 POSITION STATEMENT: Offered information on SB 148 Dave Skidmore, Staff to Senator Frank State Capitol Juneau, AK POSITION STATEMENT: Offered information on SB 148 Leon Van Wyhe Alaska Resource Conservation Center Box 10087 Fairbanks, AK 99710 POSITION STATEMENT: Opposed to SB 148 Jack Burton, President Alaska Federation of Government Employees Moose Pass, AK POSITION STATEMENT: Opposed to SB 148 Wayne Carpenter, Executive Director Seward Chamber of Commerce P.O. Box 749 Seward, AK 99664 POSITION STATEMENT: Opposed to SB 148 Frank Chapados, Member of the Board of Directors Alaska Railroad Corporation Box 74825 Fairbanks, AK 99707 POSITION STATEMENT: Opposed to SB 148 Cathy Shultz Fairbanks Hotel & Motel Association Box 2107 Fairbanks, AK 99707 POSITION STATEMENT: Supports SB 148 Pat Pourchot, Executive Director Alaska Commonwealth North 935 W. 3rd Anchorage, AK 99501 POSITION STATEMENT: Opposed to SB 148 Hank Warren P.O. Box 770848 Eagle River, AK 99577 POSITION STATEMENT: Opposed to SB 148 Bonnie Bailey Chugiak-Eagle River Chamber of Commerce P.O. Box 770353 Eagle River, AK 99577 POSITION STATEMENT: Read resolution opposing SB 148 Joe Fields Box 71047 Fairbanks, AK 99707 POSITION STATEMENT: Opposed to SB 148 ACTION NARRATIVE TAPE 93-17, SIDE A Number 001 CHAIRMAN SHARP called the Senate Transportation Committee to order at 3:55 p.m. He opened the public hearing on SB 148 (ALASKA RAILROAD CORPORATION) stating that there were several witnesses waiting to testify over the teleconference network. JOHN KELSEY, a Valdez businessman testifying from Valdez, said that in 1982 he was appointed to Alaska Railroad Transfer Advisory Commission. Many of the provisions of SB 148 were discussed in great detail by that commission, and it was generally the consensus of the membership that by placing too many restrictions upon the Alaska Railroad Corporation would affect the economic well-being of that entity. Mr. Kelsey said the advisory commission was directed by legislation to attempt to find another railroad corporation to purchase the Alaska Railroad, but they were unable to find a buyer. In informal conversations with potential bidders, concerns were evidenced about the possibility of the state placing restrictions, by virtue of sale provisions, that would adversely affect the operation. Mr. Kelsey believes that many of the provisions of SB 148 might very well have the effect of inhibiting profit to the Alaska Railroad Corporation. He recommended caution in placing restrictions upon the Alaska Railroad as it is presently structured. Number 075 CHAIRMAN SHARP asked if committee members had any comments on a proposed committee substitute that had been drafted as the result of a Saturday work session on the legislation. SENATOR KELLY stated that he did not think the committee substitute, as drafted, came out like was agreed to at that work session. He noted there had been a consensus that the current board should be held harmless, and he wasn't sure that the committee substitute addressed that adequately. Number 121 PHYLLIS JOHNSON, General Counsel, Alaska Railroad Corporation, expressed the railroad's appreciation for the opportunity to participate in the work session on SB 148 and to identify several areas of concern. Some of their concerns have been addressed in the committee substitute, however, there are several areas where it doesn't track or completely reflect their understanding of the concerns that were discussed and the consensus reached in that work session. Ms. Johnson outlined the following significant concerns that the railroad corporation has with the committee substitute: use of language regarding railroad and railroad related transportation services; debt limit language; municipal taxation issue; Open Meetings Act consideration and teleconferencing; and composition of the board. Ms. Johnson pointed out that other state entities such as the Alaska Housing Finance Corporation, the University of Alaska and the Alaska Power Authority do not require their executive directors to file conflict of interest statements, and they question why the railroad is being treated a little differently. Number 252 There was extensive discussion between the committee members and George Utermohle, Legislative Legal Counsel on the $10 million debt limitation language and just what the consensus of the committee was on that language. The discussion centered around inserting the following exception language to paragraph (3) on page 8, line 2: "debt incurred for the acquisition and maintenance of railroad rolling stock, locomotives, construction and maintenance equipment, track structure, and other railroad related physical plant." CHAIRMAN SHARP asked if the language was added to paragraph (3), would it exclude from the limitation all activities involved in the railroad operation. GEORGE UTERMOHLE answered that if it were added, it would essentially withdraw avocation for that provision to capital acquisitions of the railroad. It would not seemingly apply to operation expenses of the railroad and nonrailroad or nontransportation activities or expenditures. Number 412 SENATOR FRANK, Co-chair of the Senate Finance Committee, said it was his understanding that during the work session it was agreed to have a $10 million cap with an exception for rolling stock, engines, etc., but not an exception for any other emergencies. However, he added that the $10 million figure might be too high, but he would be comfortable with that amount. Number 425 CHAIRMAN SHARP requested that Mr. Utermohle include the exception language in the next draft of the committee substitute. Number 432 Discussion then turned to the teleconferencing of board meetings. SENATOR KELLY said at the work session committee members were concerned that the railroad wouldn't allow a commissioner in Juneau, during a legislative session, to teleconference. The railroad said they were going to address that at their meeting, but committee members felt it important that the issue be particularly addressed during session. SENATOR KERTTULA agreed with Senator Kelly's comments, saying he thought that at least during the legislative session it makes sense to teleconference. It was agreed that on page 4, line 31, to delete "and by the public" and to insert after the word "teleconference" the phrase "during legislative sessions." Number 515 The committee next discussed the makeup of the board, and the fact that the committee substitute does not grandfather in the current seven members. The consensus at the work session was to let current members remain on the board as long as they like, but also to have management represented on the board because labor is represented on the board. Overall consensus was that in the future to not have the 10 years of railroad experience member be the CEO, that those two be separate. Number 540 GEORGE UTERMOHLE said in addressing the concern about whether the CEO of the corporation is either the executive of another railroad or has 10 years of railroad experience, the committee substitute gets at that by saying the CEO may not be either of those persons, and neither of those persons may be the CEO. However, it does not grandfather in the existing members of the board. Should the current CEO be one of those two members of the board, he is not grandfathered in under this bill. He said the only persons that need to be grandfathered in at this point are the three people involved: the CEO and the one or two appointees who satisfy the conditions of having 10 years of railroad experience and/or currently an executive of a railroad. PHYLISS JOHNSON added that his portion of the legislation is very confusing. She said the concern was to grandfather in the existing board members, but there are other seats that are involved as well. SENATOR KELLY suggested saying that all members of the board have to file conflict of interest forms, and the CEO can't be the chair or vice chair of the board. CHAIRMAN SHARP requested that Mr. Utermohle rework that section of the bill. TAPE 93-17, SIDE B Number 001 There was brief discussion on the taxation section on page 2, lines 3 through 7, and concerns expressed about putting any undo restrictions on the railroad's ability to lease their land. The railroad has requested that section be deleted from the bill, however, the committee members agreed to leave that section in and request that the Senate Finance Committee look at the issue and make that decision. Number 075 SENATORS PHILLIPS and LINCOLN expressed their concern regarding the railroad getting into other types of business, but both agreed that they were more comfortable with the provision in the purpose section of the bill which provides that the corporation shall obtain approval from the legislature before obtaining an equity position in nontransportation activities. Discussion then turned to the language which appears several times in the committee substitute relating to railroad and railroad related transportation services, which would include leasing. PHYLISS JOHNSON spoke to the language on page 8, beginning on line 9, "use assets of the corporation to obtain an equity position in a nontransportation activity", etc., which she said is a whole new area of definition of an activity the railroad cannot engage in without legislative approval. She said by inserting that language, the intention was to take out the other language in the bill where the purpose was limited to railroad and railroad related, etc. DAVID SKIDMORE, staff to Senator Frank, clarified that the new language on page 8 referred to by Ms. Johnson, plus the accompanying definition on page 10 of "nontransportation activities" would remove the necessity of keeping in language in other portions of the bill that refer to the purpose of providing railroad and railroad related transportation services. The committee agreed to instruct the drafter to delete the new language relating to railroad and railroad related transportation services which is contained in Section 5 on page 4, in Section 10 on page 5, and in Section 13 beginning on page 8. Number 275 LEON VAN WYHE, representing the Alaska Resource Conservation Center, testifying from Fairbanks, spoke to a joint venture the center is involved in, which is the development of a regional landfill at Mile 388 on the Alaska Railroad mainline near Clear, Alaska. The facility will be able to service a vast majority of Alaskan citizens via the railroad system, the state highway system and the Tanana-Yukon river system. He said the way SB 148 is written, it will effectively stop all progress on the project. Number 342 SENATOR KELLY commented he thinks that with the way the bill is drafted the project can go forward. However, he suggested that the drafter to take a close look at it, and, if it is necessary, the bill be changed to make certain that this type of joint venture is encouraged. CHAIRMAN SHARP said the committee would get more information on the project and make sure that it is adequately addressed. Number 380 JACK BURTON, President of the Alaska Federation of Government Employees, testifying from Moose Pass, said he represents approximately 250 employees of the Alaska Railroad. He said the employees of the railroad are very upset with SB 148 and have a vested interest in its outcome. These employees have no desire to be dug back into another government\political mess. They have just spent years under direct government management and it was choking the life out of the Alaska Railroad. Number 475 WAYNE CARPENTER, Executive Director of the Seward Chamber of Commerce, testifying from Anchorage, spoke to the importance of the Alaska Railroad to Seward. He said for the railroad to operate effectively in the marketplace, it needs a degree of autonomy. The impact of SB 148 will very effectively hamstring that opportunity and could have very far-reaching effects. Mr. Carpenter said the Seward Chamber of Commerce feels that the Alaska Railroad Corporation already imposes substantial legislative control on the railroad's actions. He urged defeat of SB 148. Number 535 SENATOR PHILLIPS pointed out that many of Mr. Carpenter's concerns have been addressed in the new committee substitute. SENATOR KERTTULA added for the record that he thinks the bill is still onerous. Number 555 FRANK CHAPADOS, a member of the Board of Directors of the Alaska Railroad, testifying from Fairbanks, said the purchase of the Alaska Railroad by the state in 1985 and operation of the line through an independent public corporation has proven to be one of the most successful public policy actions in recent time. Mr. Chapados urged great caution and careful consideration before passing sweeping adjustments as those currently proposed in SB 148. He said the provisions restricting railroad debt over $1 million, coupled with the railroad and railroad related transportation services limitations could make it quite difficult for the railroad to respond to transportation market opportunities. In addition, the added taxation exposure for real property of the railroad will lead to increased costs. Number 638 CATHY SHULTZ, representing the Fairbanks Hotel and Motel Association, voiced support for SB 148, saying citizens of Alaska should expect that a corporation owned by the state should reasonably have to report to the legislative body when its activities go beyond its usual scope of business. She encouraged the committee to retain the language in the bill which requires that the railroad corporation come before the legislature before entering into an equity position in future ventures. TAPE 93-18, SIDE A Number 010 PAT POURCHOT, Executive Director of Commonwealth North, testifying from Anchorage, stated their board's strong concern with many of the provisions contained in SB 148 and the proposed committee substitute. Mr. Pourchot outlined some areas of concern such as the limitation on debt, which has been opposed by Commonwealth North, and the railroad related transportation services language, which they agree should be deleted from the work draft. Concluding his comments, Mr. Pourchot said Commonwealth North feels that the best way to ensure that the railroad operates with the independent conditions of the 1984 Act is to allow the board and managers to run the railroad with a positive bottom line. The Alaskan people are fortunate to have the railroad operating as a viable, profit-making entity. The public must ensure that Alaska's elected officials insulate the Corporation's operations from political meddling, he said. Number 087 HANK WARREN, a resident of Eagle River testifying from Anchorage, said in the early eighties he was co-chairman of the Anchorage-Eagle River Chamber of Commerce committee which met to make recommendations to the state regarding the purchase of the railroad. The main recommendations made by that committee were that (1) the state should purchase the railroad; (2) the railroad should be organized as an independent corporation under the control of the board of directors; (3) the railroad should operate as a business and be competitive in the marketplace; (4) the railroad should be entirely free of any political or special interest pressure; and (5) the railroad should operate so that its bottom line would make it attractive for purchase by private interests. Mr. Warren said it is his opinion that in operating under the provision of the 1984 Act and its board of directors, the Alaska Railroad has done extremely well and has provided jobs for hundreds of Alaskans. He said it is strange that we have an entity that is doing what we intended for it to do, and now the legislature wants to tinker with its rules and make significant changes. He urged defeat of the legislation. Number 177 BONNIE BAILEY, representing Bruce Marion, President of the Chugiak-Eagle River Chamber of Commerce and testifying from Anchorage, read into the record a resolution passed by the Chamber of Commerce in opposition to HB 202 and SB 148. Number 206 JOE FIELDS, testifying from Fairbanks, voiced concern that the legislation might limit the ability of the Alaska Railroad to interrelate with private industry, and he urged that great care and caution be exercised so as not to cause unnecessary harm to a successful element of Alaska's infrastructure. Number 234 CHAIRMAN SHARP closed the public hearing on SB 148 and stated that a new committee substitute making the proposed changes would be before the committee at its next meeting on Thursday, April 2. There being no further business to come before the committee, the meeting was adjourned at 5:25 p.m.