Legislature(1995 - 1996)
04/02/1996 01:43 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE TRANSPORTATION April 2, 1996 1:43 p.m. MEMBERS PRESENT Senator Steve Rieger, Chairman Senator Robin Taylor, Vice Chair Senator Lyda Green Senator Al Adams Senator Georgianna Lincoln MEMBERS ABSENT All members present. OTHERS MEMBERS PRESENT Senator Drue Pearce COMMITTEE CALENDAR HOUSE BILL NO. 498 "An Act naming the Betty Cato Bridge in Valdez." SENATE BILL NO. 313 "An Act relating to the international airports in Anchorage and Fairbanks and establishing the Alaska International Airport Authority; and providing for an effective date." PREVIOUS SENATE ACTION HB 498 - No previous action to record. SB 313 - No previous action to record. WITNESS REGISTER Joe Perkins, Commissioner Department of Transportation & Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 POSITION STATEMENT: Stated that the current method of operation at both international airports did not require revision. Mort Plum, Director Anchorage International Airport Department of Transportation & Public Facilities PO Box 196960 Anchorage, Alaska 99519-6960 POSITION STATEMENT: Reviewed the operations of the Anchorage International Airport. John Ungar, Controller Alaska International Airport System PO Box 196960 Anchorage, Alaska 99519-6960 POSITION STATEMENT: Answered questions. Steve Smirnoff, Special Assistant Mayor Rick Mystrom PO Box 196650 Anchorage, Alaska 99519-6650 POSITION STATEMENT: Discussed the findings and recommendations of Mayor Mystrom's Task Force. Doyle Ruff, Manager Fairbanks International Airport PO Box 60369 Fairbanks, Alaska 99706-0369 POSITION STATEMENT: Reviewed the Fairbanks International Airport. Don Valesko, Business Manager/Secretary-Treasurer Public Employees Local 71 9510 Arctic Boulevard Anchorage, Alaska 99503 POSITION STATEMENT: Expressed many concerns with SB 313. Ronald Rathbun, Sr. 6905 Cape Lisburne Anchorage, Alaska 99504 POSITION STATEMENT: Urged the committee to vote against SB 313. Brian Bell ????????? Anchorage, Alaska POSITION STATEMENT: Encouraged the airport authority concept and the hiring of a professional airport manager. Craig Pearson, Airport Public Safety Officer Fairbanks International Airport Fairbanks, Alaska POSITION STATEMENT: Opposed SB 313. Don Shannon 232 Bentley Fairbanks, Alaska 99701 POSITION STATEMENT: Opposed SB 313. Barbara Young PO Box 772442 Eagle River, Alaska POSITION STATEMENT: Urged the committee not to pass SB 313 out of committee. Jim Sampson, Mayor Fairbanks Northstar Borough 1000 Bennett Road Fairbanks, Alaska POSITION STATEMENT: Opposed SB 313. Martin Spinde, State Airport Employee & Tenant 2902 Kingfisher Drive Anchorage, Alaska 99511 POSITION STATEMENT: Urged the committee not to pass SB 313. Don Davis 2265 Weasel Way North Pole, Alaska 99705 POSITION STATEMENT: Opposed SB 313. ACTION NARRATIVE TAPE 96-10, SIDE A HB 498 BETTY CATO BRIDGE IN VALDEZ CHAIRMAN RIEGER called the Senate Transportation meeting to order at 1:43 p.m. and introduced HB 498 as the first order of business before the committee. SENATOR LINCOLN informed the committee that Representative Kubina was not present today and asked her to carry HB 498 for him. HB 498 names a bridge in Valdez. There is a zero fiscal note. She also pointed out that the city of Valdez has endorsed the naming of the Betty Cato Bridge which is the bridge over the mineral creek on West Egan Drive. Senator Lincoln moved that HB 498 be moved out of committee with individual recommendations and the accompanying zero fiscal note. CHAIRMAN RIEGER asked if anyone present wanted to testify on HB 498. Hearing no one, he asked if there was any objection to moving the bill from committee. Hearing no objection, HB 498 was forwarded out of committee. SB 313 ALASKA INTERNATIONAL AIRPORT AUTHORITY Number 029 CHAIRMAN RIEGER introduced SB 313 as the next order of business before the committee. JOE PERKINS, Commissioner in the Department of Transportation & Public Facilities, stated that the Fairbanks and Anchorage International Airports should be operated in a businesslike manner with the best interest of the residents of Alaska in mind. Two- thirds of Alaska's residents utilize Alaska's airport systems. Commissioner Perkins believed that the department should not fix something that is not broken. The department does not believe that the current method used to operate both international airports requires revision. Commissioner Perkins said that creating an authority would create another level of bureaucracy. Furthermore, the creation of an authority would create a period of turmoil and confusion which cannot be afforded in this competitive environment. In Commissioner Perkins' opinion, this administration has dramatically improved the operations in these international airports and will continue to do so. Commissioner Perkins informed the committee that Mr. Plum was present in Juneau to briefly review the status of the airport operations. Number 093 MORT PLUM, Director of the Anchorage International Airport (AIA), informed the committee that he would present a brief overview of where Anchorage International Airport is and intends to head in the future. Mr. Plum informed the committee that more than 85 percent of the people that come to Alaska pass through AIA. Mr. Plum reviewed the "Anchorage International Airport success in changing times" document dated April, 1996 which was submitted to the committee. He emphasized that one of the aspects of the mission of AIA is to manage, operate and market the airport in a businesslike manner. Cargo is one of the highlights of AIA. He discussed AIA as a major economic engine for the state. AIA is poised for expansion. Mr. Plum noted that the Master Plan for AIA reviews how today's decisions will effect the airport in the future. The Master Plan has concourse C slated for terminal expansion, some of the runways scheduled to be lengthened, negotiations for the construction of air cargo facilities, and continues the water clean-up around Mt. Hood. Mr. Plum stated that as long as he was director AIA would play a key role in Alaska's growth. Number 282 CHAIRMAN RIEGER inquired as to the revenue from concessions, especially from the duty free shop, and how that revenue compared to the revenue generated from landing fees or other revenues. MORT PLUM did not have those figures, but noted that Mr. Ungar was on teleconference. Mr. Plum believed that revenues amounted to about $7 million last year. JOHN UNGAR, Controller for the Alaska International Airport System, informed the committee that the concessions fees totalled $5.9 million last year and $1.2 of those were from the duty free shop. Landing fees generated about $13.6 million in revenue. CHAIRMAN RIEGER asked if the passenger facilities charge needed legislative approval or could that be done administratively. MORT PLUM said that the consultant is determining that. SENATOR PEARCE informed the committee that she did not intend to testify today. She noted that SB 313 was introduced at the request of the work group that Mayor Mystrom put together. Senator Pearce believed that Joe Griffith and/or Steve Smirnoff was on-line to speak for the work group. JOE GRIFFITH deferred to Steve Smirnoff. STEVE SMIRNOFF, Special Assistant to Anchorage Mayor Rick Mystrom, informed the committee that a scheduling conflict prevented Mayor Mystrom from being before the committee. Mr. Smirnoff thanked Senator Pearce for introducing SB 313. The formation of the Alaska International Airport Authority (AIAA) is a much needed step to establish an airport system that will be operated as a business as well as removing the political process. Mr. Smirnoff emphasized that the support for formation of the AIAA does not reflect on the professionalism of the current or past airport administration. The goal is to establish long-term stability. The AIA has enormous potential as a cargo hub and facility. Mr. Smirnoff noted those competitors that are waiting in the wings. The AIAA would provide a stable, businesslike environment for major investment. In conclusion, Mr. Smirnoff thanked Mr. Griffith for his contributions to this issue. SENATOR ADAMS stated that Mr. Smirnoff's argument regarding stability and economic friendliness was not very convincing; the State of Alaska has that. He pointed out that the Municipality of Anchorage has a hard time taking care of its highways and roads. He questioned whether or not the municipality or an authority could take care of the airports. Senator Adams expressed concern with creating another bureaucracy; the state lacks control in such circumstances such as the Alaska Railroad or the Commercial Fishing & Agriculture Bank (CFAB). He questioned the effect this might have on the funding for rural airports. Furthermore, there is no oversight or accountability from the legislature or the Governor as the bill is currently written. Number 373 JOE GRIFFITH, Chairman of Mayor Mystrom's Task Force, noted that Mayor Mystrom is looking for the management of the airport in a businesslike manner for the benefit of all its clients. Mr. Griffith informed the committee that he is CFO for Chugach Electric and Vice-Chair of the Chamber of Commerce which is why he was chosen to Chair the task force. The charge of the task force was to objectively evaluate the current AIA's structure in order to identify any areas needing change, discuss alternatives, and make recommendations to state and local officials. The task force recognized that Anchorage could not deal with this issue alone and therefore, people from Fairbanks were included in the eight months of study and review. Mr. Griffith said that the task force found airport management to be inconsistent due to the frequent politically motivated changes in airport management. These frequent changes created a lack of organizational stability. Furthermore, airport management decisions were found to be politically influenced and not necessarily reflecting the best courses of action to maximize the airport's economic potential and satisfaction of the customers. In many cases, the task force found no clear line of authority or responsibility as several state agencies have management or support responsibilities for certain aspects of the airport functions. Overall, the system was not operated in a businesslike fashion because it is placed in a state bureaucratic system which is not designed to operate in a business environment. The task force recommended the following: *The creation of a single airport authority to operate the Fairbanks and Anchorage airports and to take the appropriate implementation steps. *The commissioner of DOTPF should be consulted with and made an integral part of the considerations leading to the creation of the authority. *Labor organizations should be briefed on the results of the task force and the future activities that lead to a change to organization or management. *The development of the implementation legislation should be closely monitored to ensure that the recommendations of the task force are accurately presented in the legislation. *The success of the process should be recognized and be continued in a manner to provide an open and meaningful forum for discussion of the airport and related issues during the transition to another form of organization. Mr. Griffith informed the committee that the task force had not taken a formal position on the proposed legislation, although, it is welcomed and being reviewed. Number 242 SENATOR LINCOLN said that the fiscal note indicates that the board of directors will consist of seven members. The fiscal note also indicates travel between Anchorage and Fairbanks. Senator Lincoln assumed that the board would be comprised of persons from Fairbanks and Anchorage. JOE GRIFFITH explained that the legislation had two members from the Municipality of Anchorage, two members from the Fairbanks Northstar Borough, three other members of which at least two are residents of Alaska. The three members must also meet certain requirements. Mr. Griffith stated that there would be travel between Fairbanks and Anchorage. SENATOR LINCOLN asked Mr. Griffith if he planned to have someone from rural or bush Alaska serve on this commission or board. JOE GRIFFITH indicated that the legislators who crafted this bill could possibly speak to that question. As currently written, SB 313 does not exclude those in the bush, but the bill does not specifically place a bush member on the board. SENATOR PEARCE referred to page 2, line 24 of SB 313 which says that two of the three remaining members would have to be residents of the state. The Governor would have the ability to name those two members from other areas besides Anchorage or Fairbanks. CHAIRMAN RIEGER asked Mr. Griffith if he had any specifics regarding the task force's findings relating to airport management. JOE GRIFFITH identified the appointment of management in a political process which changed with the political climate as the biggest criticism. CHAIRMAN RIEGER asked if Mr. Griffith's reference to the political climate referred to the change of governor, from administration to administration. JOE GRIFFITH replied yes and noted that the management was politically appointed. Mr. Griffith believed that the airport manager had changed more often than the governor had. Number 471 DOYLE RUFF, Manager of the Fairbanks International Airport (FIA), informed the committee that he has been a member of the American Association of Airport Executives as well as an Airport Counselor in Anchorage for over 13 years. He said that being involved in these groups has helped with the stability of the airport management in Fairbanks. Mr. Ruff reviewed the "Fairbanks International Airport" document dated April, 1996 which was submitted to the committee. He emphasized that in total international cargo tonnage, Anchorage ranks second in the nation and Fairbanks ranks tenth. Mr. Ruff pointed out that FIA experienced growth in the following areas: international cargo weight, all-cargo weight, total passengers, and total operations. FIA is also a major economic engine for Alaska. TAPE 96-10, SIDE B Number 591 Mr. Ruff echoed Mr. Plum's comments regarding the presence of competition, especially from Russia. He emphasized the need to keep the business in Alaska and the United States. The Master Plan identifies the following areas of growth: international cargo, domestic passenger and cargo traffic. DON VALESKO, Business Manager/Secretary-Treasurer of the Public Employee's Local 71, informed the committee that approximately 200 members of the Local 71 work at these two airports. Mr. Valesko said that he represented the people that take care of the buildings, the runways, operate the equipment, etc. Mr. Valesko gave a history of the port authority and that concept with regards to AIA and FIA. Historically in Anchorage, there has been opposition to operating the airport as a port authority. Number 533 Mr. Valesko expressed concern with a report, by a group coordinated through Mayor Mystrom and Mayor Sampson's offices, advocating a port authority. The report addressed the needs of the vendors, not the needs of the users or Alaskans. Mr. Valesko emphasized that bush Alaska depends on the Anchorage and Fairbanks airports as a vital transportation and supply link. An authority combining the two airports may not consider the needs of those in the bush. As drafted, SB 313 takes the employees out from existing law with the "may" language. Under SB 313, are these employees public or private employees? Mr. Valesko informed the committee that the membership of the Local 71 have expressed concerned with SB 313. As a citizen of Alaska, Mr. Valesko was concerned with the additional cost of creating an authority when the state is said to be in the midst of a fiscal gap. He pointed out that the salaries of commissioners are set in statute and are around $80,000; while the groups created by the government such as the Alaska Housing Finance Corporation, the Alaska Railroad Corporation, and the Alaska Permanent Fund Corporation receive a salary at almost twice that of commissioners. Creating an authority would necessitate spending more. With regards to the previous testimony that labor would be briefed, Mr. Valesko said that there had been one meeting on March 11th. That meeting informed Mr. Valesko and other labor organizations present that there would be further dialogue regarding an authority and that legislation may be introduced next year. The next week, the legislation was introduced. Mr. Valesko indicated bad faith. With regards to the management of FIA and AIA, the management is local. Mr. Valesko disagreed with the idea that the local communities were not receiving representation in the airports. CHAIRMAN RIEGER announced that nine people remain to testify. Therefore, he requested that testimony be limited to about four minutes. Number 456 RONALD RATHBUN SR., testifying from Anchorage, believed SB 313 to be bad legislation. He echoed the previous statement regarding how unnecessary it is to fix something that is not broken. Section 1 is incorrect. FIA is in the process of negotiating long-term contracts which proves that the current system works. Mr. Rathbun said that the airport has been controlled by politics. He referred to Section 22, lines 3-4 when saying that the airport authority is being granted statehood. Mr. Rathbun discussed the economic and political impact of displacing airport employees under this authority. Mr. Rathbun urged the committee to vote no on SB 313. BRIAN BELL, called in from Anchorage, informed the committee that he had worked for Federal Express for 14 years and previous to that had worked for Alaska Airlines, Mark Air, and Wings. Mr. Bell holds a BS degree in Air Transportation Management as well as a Masters degree in Aeronautical Science. Mr. Bell stated that Fed- Ex favored an airport authority, not a port authority. Fed-Ex is also not in support of the city running the airport. With regard to airport morale, Mr. Bell explained that a major change with the airport director creates dissatisfaction and difficulty in doing business when management constantly changes. Mr. Bell was astonished that the state would appoint a person to run a multi-million dollar airport. He emphasized the need for a professional airport manager to be hired. There are huge possibilities with distribution warehousing, catalog services, heavy aircraft maintenance and others which would increase employment opportunities. He reiterated that changing the manager every three or four years does not make sense. There is no problem with labor being present as they are currently contracted. Mr. Bell viewed the authority as generating revenue and employment. He did not believe that Anchorage and Fairbanks should compete against each other. Mr. Bell encouraged the airport authority concept and reiterated the need to hire professional airport managers. Number 333 CRAIG PEARSON, Public Safety Officer at FIA, informed the committee that he represented 79 public safety officers at both AIA and FIA who opposed SB 313. There is no fiscal note to SB 313, but he believed that there would be more administrative positions created which would increase costs. Mr. Pearson said that Mr. Bell had a good comment regarding the need to hire professional managers. Currently, the managers are professional but Mr. Pearson did believe that there have been times when the management has not been professional. He said that there are statutorial solutions. With regards to the competition between the two airports, Mr. Pearson believed that was good. The competition is limited and seems to be working well. Mr. Pearson expressed concern with continuing to support the rural state airports. He informed the committee that the public safety officers train the rural airports in firefighting and operations. The system has worked well so far. Under an authority, there is no public accountability to where the money goes. Mr. Pearson was not opposed to changing the system for economic development, although that economic development seems to be occurring now. Mr. Pearson said that they were opposed to the creation of another level of bureaucracy. Number 282 DON SHANNON, testifying from Fairbanks, opposed SB 313. The airport system works well now. Both airports have experienced steady growth in the past five years. The Fairbanks airport has exceptional management. He echoed the sentiments regarding not fixing something that is not broken. CHAIRMAN RIEGER asked Mr. Clarence Bolden to testify next. The teleconference moderator informed the committee that Mr. Bolden had to leave. Mr. Bolden left written testimony which the teleconference moderator said would be faxed to the committee. BARBARA YOUNG, testifying from Anchorage, explained that AIA currently generates revenue for the state which is placed in the general fund of the state in order to help other airports in the state. How would this revenue source be replaced if the state no longer has this income? Ms. Young expressed concern with the state employees at the airport; SB 313 does not address how the state will negotiate with the unions that represent these employees. Ms. Young urged the committee not to pass SB 313 out of committee. JIM SAMPSON, Mayor of the Fairbanks Northstar Borough, explained that 12 or 15 months ago Mayor Mystrom of Anchorage invited him to participate in discussions regarding AIA. Over that time, Mayor Mystrom's task force had reviewed a number of alternatives and ultimately recommended an airport authority. Mayor Mystrom understood the importance of FIA to Fairbanks as is AIA to Anchorage. Mayor Sampson said that he had not had the opportunity to read SB 313 in its entirety; however Mayor Sampson did not share Mayor Mystrom's frustration. He was satisfied with FIA, its structural organization, and its management. Mayor Sampson noted that Fairbanks has historically opposed efforts to combine FIA and AIA. Mayor Sampson opposed the legislation. He said that Fairbanks would help Anchorage in any way possible that did not negatively effect Fairbanks. Mayor Sampson believed that this time could be better spent addressing the airport leasing problems that concern Fairbanks. Number 183 MARTIN SPINDE, a State Airport Employee & Tenant, believed that DOTPF was operating the airport effectively. DOTPF has established a balance between economic development and providing for the general aviation needs for Alaska. He was concerned that with the establishment of an airport authority, a corporate entity would sacrifice general aviation in the name of corporate business development. Mr. Spinde said that there should be a balance between a business and service style of management which DOTPF recognizes. He expressed concern that Anchorage had uncovered another revenue source and proceeded without much public input. He did not believe that replacing DOTPF with a corporate authority would remove political influence from the decision-making processes at FIA and AIA. The airport authority would minimize the power of the Alaska Legislature and Alaskan voters who have rejected the idea of an airport authority in the past. Mr. Spinde urged the committee not to pass SB 313 out of committee. DON DAVIS, testifying from Fairbanks, opposed SB 313. Mr. Davis believed that FIA and AIA are both doing well and the future looks promising. SB 313 appears to form a heavy bureaucracy that places more groups trying to get a piece of the pie. He indicated that corruption could be a problem. Mr. Davis felt that having board members appointed by the Governor would increase the political influence in the airport. Mr. Davis noted that those wanting change would be receiving something very different than they wished. CHAIRMAN RIEGER asked if anyone else in the audience wanted to testify. Hearing no one, the meeting was adjourned at 3:10 p.m.