Legislature(2021 - 2022)BELTZ 105 (TSBldg)

03/25/2021 01:30 PM TRANSPORTATION

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 103 AMHS OPERATION & PLANNING BOARD TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
*+ SB 105 ROAD SERVICE AREA CONSOLIDATION TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE TRANSPORTATION STANDING COMMITTEE                                                                          
                         March 25, 2021                                                                                         
                           1:32 p.m.                                                                                            
                                                                                                                                
                             DRAFT                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Robert Myers, Chair                                                                                                     
Senator Mike Shower, Vice Chair                                                                                                 
Senator Click Bishop                                                                                                            
Senator Peter Micciche                                                                                                          
Senator Jesse Kiehl                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 103                                                                                                             
"An Act repealing the Alaska Marine Transportation Advisory                                                                     
Board; establishing the Alaska Marine Highway System Operation                                                                  
and Planning Board; and providing for an effective date."                                                                       
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 105                                                                                                             
"An Act relating to road service area consolidation."                                                                           
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 103                                                                                                                  
SHORT TITLE: AMHS OPERATION & PLANNING BOARD                                                                                    
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
03/10/21       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/10/21       (S)       TRA                                                                                                    
03/25/21       (S)       TRA AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 105                                                                                                                  
SHORT TITLE: ROAD SERVICE AREA CONSOLIDATION                                                                                    
SPONSOR(s): MYERS                                                                                                               
                                                                                                                                
03/10/21       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/10/21       (S)       TRA, CRA                                                                                               
03/25/21       (S)       TRA AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ANDY MILLS, Special Assistant to the Commissioner                                                                               
Department of Transportation and Public Facilities (DOTPF)                                                                      
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:  Presented   SB  103   on  behalf   of  the                                                             
administration.                                                                                                                 
                                                                                                                                
ROB CARPENTER, Deputy Commissioner of Surface Transportation                                                                    
Department of Transportation and Public Facilities (DOTPF)                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  on SB  103 on  behalf of                                                             
the administration.                                                                                                             
                                                                                                                                
MICHAELLA ANDERSON, Staff                                                                                                       
Senator Robert Myers                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:  On behalf  of  the  sponsor, presented  the                                                             
sponsor statement and sectional analysis for SB 105.                                                                            
                                                                                                                                
MICHAEL BREDLIE, Rural Services Manager                                                                                         
Fairbanks North Star Borough (FNSB)                                                                                             
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  on SB  105 on  behalf of                                                             
the borough administration.                                                                                                     
                                                                                                                                
JILL DOLAN, Attorney                                                                                                            
Fairbanks North Star Borough                                                                                                    
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  on SB  105 on  behalf of                                                             
the Fairbanks North Star Borough.                                                                                               
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
                                                                                                                                
1:32:50 PM                                                                                                                    
CHAIR  ROBERT MYERS  called  the  Senate Transportation  Standing                                                             
Committee meeting  to order at 1:32  p.m. Present at the  call to                                                               
order  were Senators  Kiehl, Shower,  and  Chair Myers.  Senators                                                               
Micciche and Bishop arrived as the meeting was in progress.                                                                     
                                                                                                                                
             SB 103-AMHS OPERATION & PLANNING BOARD                                                                         
                                                                                                                                
1:33:25 PM                                                                                                                    
CHAIR MYERS  announced the consideration  of SENATE BILL  NO. 103                                                               
"An  Act  repealing  the Alaska  Marine  Transportation  Advisory                                                               
Board; establishing  the Alaska  Marine Highway  System Operation                                                               
and Planning Board; and providing for an effective date."                                                                       
                                                                                                                                
1:34:14 PM                                                                                                                    
ANDY MILLS, Special Assistant to  the Commissioner, Department of                                                               
Transportation  and Public  Facilities  (DOTPF), Juneau,  Alaska,                                                               
stated that  SB 103 would  restructure the Alaska  Marine Highway                                                               
Advisory  Board  (MTAB)  based  on  recommendations  from  AMHS's                                                               
Reshaping Work  Group. This  group was  formed by  the governor's                                                               
Administrative Order  (AO) 313.  The group  held 29  meetings and                                                               
produced an October  2020 report that made  29 recommendations to                                                               
the governor, including one to restructure the board.                                                                           
                                                                                                                                
He explained  that the Alaska  Marine Highway System  Operation &                                                               
Planning  Board (OPB)  would  be better  suited  to address  AMHS                                                               
issues than MTAB  because it would have  additional resources and                                                               
information.                                                                                                                    
                                                                                                                                
1:35:24 PM                                                                                                                    
SENATOR MICCICHE joined the meeting.                                                                                            
                                                                                                                                
1:35:32 PM                                                                                                                    
MR.  MILLS referred  to page  14 of  AMHS's Reshaping  Work Group                                                               
report.  He  read,  "The  current   MTAB  is  formed  of  capable                                                               
individuals but not structured to  effectively challenge and help                                                               
the Alaska Marine Highway System  with the large marine operation                                                               
planning  and  execution  issues  that it  confronts."  The  work                                                               
group's recommendation  was to produce  a board that  could focus                                                               
on operations and planning; one  that would be well-grounded with                                                               
outside advice focused on business  and financial practices. This                                                               
board would change member credential and reporting requirements.                                                                
                                                                                                                                
1:36:33 PM                                                                                                                    
MR. MILLS paraphrased the sectional analysis for SB 103:                                                                        
                                                                                                                                
     Section 1   AS 19.65.011  is amended to change the name                                                                    
     of  the  Alaska  Marine Transportation  Advisory  Board                                                                    
     (MTAB) to  the Alaska  Marine Highway  System Operation                                                                    
     and  Planning   Board.  A  short-term  plan   (for  the                                                                    
     development  and  improvement   of  the  Alaska  marine                                                                    
     highway  system)  is  also added  to  the  department's                                                                    
     current statutory  responsibility for development  of a                                                                    
     long-term plan.                                                                                                            
                                                                                                                                
1:37:42 PM                                                                                                                    
                                                                                                                                
     Section  2    AS  19.65  is  amended  by adding  a  new                                                                    
     subsection to  establish the new Alaska  Marine Highway                                                                    
     System Operation and Planning  Board in subsection 210;                                                                    
     outline Board  membership and terms in  subsection 220;                                                                    
     speak  to  officers and  a  quorum  in subsection  230;                                                                    
     stipulated  meeting rules  in  subsection 240;  address                                                                    
     per  diem  and  expenses  in  subsection  250;  address                                                                    
     record inspection/copying in  subsection 260; establish                                                                    
     the Department  of Law as the  Boards' legal assistance                                                                    
     in subsection 270; document  the Boards' powers, duties                                                                    
     and  functions in  subsection 280;  establish that  the                                                                    
     Department of  Transportation & Public  Facilities will                                                                    
     provide staff  support to the Board  in subsection 290;                                                                    
     and define  the word 'Board'  for purposes of  AS 19.65                                                                    
     in subsection 295.                                                                                                         
                                                                                                                                
1:40:37 PM                                                                                                                    
                                                                                                                                
     Section  3    repeals  existing subsections  110    195                                                                    
     within chapter 65 which speak to the old MTAB.                                                                             
                                                                                                                                
     Section 4    adds a  new section to the  uncodified law                                                                    
     of  the State  of Alaska  to establish  staggered terms                                                                    
     for  Board  members  and   identify  that  former  MTAB                                                                    
     members are  not prohibited  from being  reappointed to                                                                    
     the  new Alaska  Marine  Highway  System Operation  and                                                                    
     Planning Board.                                                                                                            
                                                                                                                                
     Section 5  - adds a  new section to the  uncodified law                                                                    
     of  the State  of  Alaska to  establish  a deadline  of                                                                    
     September 1, 2021, for the  Board's initial reports, as                                                                    
     required  under  Section  2 of  the  proposal,  to  the                                                                    
     governor.                                                                                                                  
                                                                                                                                
     Section 6 - establishes an immediate effective date.                                                                       
                                                                                                                                
1:42:01 PM                                                                                                                    
SENATOR BISHOP joined the meeting.                                                                                              
                                                                                                                                
1:42:07 PM                                                                                                                    
SENATOR MICCICHE stated that previously, an ex officio member                                                                   
from each body served on MTAB. He asked whether including ex                                                                    
officio  legislature members  was considered  or if  there was  a                                                               
specific reason not to include them.                                                                                            
                                                                                                                                
MR.  MILLS  explained  that  the work  group  did  not  recommend                                                               
members from  the legislature serve  on the board. He  was unsure                                                               
why  but  he  thought  part  of   the  reason  was  to  pivot  to                                                               
restructure and  operate the Alaska Marine  Highway System (AMHS)                                                               
more  as   a  business.   He  suggested   that  the   work  group                                                               
acknowledged that a different skillset was required.                                                                            
                                                                                                                                
1:43:33 PM                                                                                                                    
SENATOR  SHOWER stated  his intention  to amend  the bill  to add                                                               
legislative members  to the Operating  and Planning  Board (OPB).                                                               
He expressed  frustration at missteps  the AMHS  previously made,                                                               
including purchasing  Alaska [fast ferries] that  were later sold                                                               
at  a  loss, in  part  because  offramps were  not  appropriately                                                               
designed.  Currently, the  legislature  subsidizes a  significant                                                               
portion  of  the ferry  system  costs.  He  wondered if  the  new                                                               
management  structure   would  fail  because  the   board  lacked                                                               
sufficient  authority  and  the   management  structure  did  not                                                               
include a chief executive officer.  He expressed concern that the                                                               
state continues to spend money  on a system that is unsustainable                                                               
over  time.  He recalled  that  the  [Inter-Island Ferry  serving                                                               
Hollis  and Ketchikan]  consisted of  70 percent  private funding                                                               
and 30  percent state funding. That  system uses a hub  and spoke                                                               
model with  smaller vessels, he  said. He asked what  actions OPB                                                               
could take  besides studying  issues and  compiling a  report. He                                                               
said  it seems  as though  the Department  of Transportation  and                                                               
Public  Facilities  (DOTPF) would  still  run  the system  so  he                                                               
wasn't sure OPB would work.                                                                                                     
                                                                                                                                
MR. MILLS  pointed out that  Senator Shower mentioned  the Alaska                                                               
Class  ferries;  however,  it  was the  fast  ferries  that  were                                                               
purchased and sold.  He agreed this raises a  key question. OPB's                                                               
effort was  designed with  board member  expertise to  inform its                                                               
decisions  rather than  for AMHS's  competent operational  staff,                                                               
busy with the day-to-day system  operations, trying to squeeze in                                                               
time to analyze meaningful changes  to the system. He deferred to                                                               
the deputy commissioner to speak to the board's authority.                                                                      
                                                                                                                                
1:47:20 PM                                                                                                                    
ROB  CARPENTER, Deputy  Commissioner  of Surface  Transportation,                                                               
Department  of  Transportation  and  Public  Facilities  (DOTPF),                                                               
Juneau,  Alaska, on  behalf of  the administration,  acknowledged                                                               
that  the work  group struggled  to identify  ways to  accomplish                                                               
meaningful changes, barring  going to a corporate  model, such as                                                               
the ones  used by  the Alaska Permanent  Fund Corporation  or the                                                               
Alaska  Railroad  Corporation.  He   envisioned  that  as  Deputy                                                               
Commissioner, he  would serve  as DOTPF's  designee, acting  as a                                                               
liaison  producing  documents  and  providing  direction  to  the                                                               
board. He compared  that to an advisory board  that would provide                                                               
input but not  integrate or work with the agency  on its mission.                                                               
He highlighted  the benefits of  keeping AMHS within  the agency,                                                               
including  allowing the  department  to  address the  multi-modal                                                               
aspects  of  Alaska's  transportation  system.  If  AMHS  were  a                                                               
separate  corporation,  it  would   not  have  the  advantage  of                                                               
conducting planning across all modes  and all regions. He offered                                                               
his  belief  that having  DOTPF  staff  serve  on the  board  was                                                               
instrumental  to  give the  board  power  and authority.  Second,                                                               
besides the  board members with marine  experience, other members                                                               
will bring business experience to  the board. These members could                                                               
propose  business decisions  to  create  efficiencies that  could                                                               
make  AMHS   more  effective  and   able  to   achieve  long-term                                                               
sustainability.  He hoped  that OPB  would have  sufficient power                                                               
and authority to be effective.                                                                                                  
                                                                                                                                
1:50:03 PM                                                                                                                    
SENATOR  SHOWER highlighted  that two  ports are  located in  the                                                               
Mat-Su district. Although he supports  the ferry system, which is                                                               
necessary  because of  Alaska's  size, he  was  unsure what  that                                                               
system  should  ultimately  resemble.  He opined  that  AMHS  was                                                               
failing  so   perhaps  another  approach  could   achieve  better                                                               
results.                                                                                                                        
                                                                                                                                
1:52:16 PM                                                                                                                    
SENATOR  KIEHL agreed  with Senator  Shower that  the board  must                                                               
effectively  challenge and  help the  department. He  pointed out                                                               
the similarities between  MTAB and the new OPB  established by SB
103. SB  103 would set  up OPB as  an 11-member board.  Just like                                                               
MTAB,  OPB members  will  serve at  the  governor's pleasure,  be                                                               
staffed  by   DOTPF  and  advise  DOTPF's   deputy  commissioner.                                                               
However, OPB  ultimately will  not make  any decisions.  While he                                                               
appreciated the  expertise the  new board  members will  bring to                                                               
the  board,   nothing  currently   prevents  the   governor  from                                                               
appointing  people with  expertise. He  asked how  the department                                                               
could  better integrate  this  group and  deeply  involve OPB  in                                                               
long-term  planning. He  asked if  OPB would  have a  substantive                                                               
role in  the Statewide Transportation Improvement  Program (STIP)                                                               
process so  the board could  also consider things such  as system                                                               
maintenance.  He  was unsure  if  OPB  could participate  in  the                                                               
budget  process.  He  suggested   that  someone  other  than  the                                                               
governor  should appoint  some  members to  better insulate  them                                                               
from turnover. He  asked what could be done to  involve the board                                                               
in the department's actual work.                                                                                                
                                                                                                                                
1:54:30 PM                                                                                                                    
MR.   MILLS  directed   attention  to   the  specific   reporting                                                               
requirements  on  page 4  of  SB  103. These  requirements  would                                                               
ensure  that the  board  cannot omit  crucial  elements, such  as                                                               
cost-saving   or   income-producing   business   or   procurement                                                               
practices.  He  related his  understanding  that  given the  work                                                               
group's recommendations,  the administration  considers OPB  as a                                                               
starting point. The administration was  open to discuss ways this                                                               
board could truly impact AMHS's  operations and planning to allow                                                               
it to change  AMHS's trajectory. He emphasized that  this was not                                                               
a  rehashing work  group  designed to  maintain  the status  quo;                                                               
rather it was evident that OPB  could make changes to improve the                                                               
system for the coastal communities that AMHS serves.                                                                            
                                                                                                                                
1:56:24 PM                                                                                                                    
SENATOR MICCICHE  said he agrees  with the board  composition and                                                               
member   expertise  except   for  the   members  established   in                                                               
subparagraph  (C),   which  read   "two  members,  one   of  whom                                                               
represents  an Alaska  native organization  or tribe  and one  of                                                               
whom represents a  community served by the  Alaska marine highway                                                               
system;". Instead, this language  should read "representatives of                                                               
communities  served  by  the  AMHS, with  one  of  those  members                                                               
representing an  Alaska native  organization." He  explained that                                                               
the qualifications  in subparagraphs (A) through  (E) were system                                                               
related but the Alaska Native  representative must also represent                                                               
a coastal community served by AMHS.                                                                                             
                                                                                                                                
He acknowledged  that the  board was viewed  as a  starting point                                                               
but  expressed concerned  about  the lack  of  a definitive  work                                                               
product.  In his  experience working  in the  private sector,  to                                                               
effectively  solve  problems  the private  sector  would  outline                                                               
tasks  and  establish  deadlines  for   the  board  to  meet.  He                                                               
suggested that  the bill should  establish specific  work product                                                               
deadlines  for  OPB's  serious   consideration  on  a  much  more                                                               
aggressive schedule.  Since AMHS's  problems require  action now,                                                               
AMHS  could garner  statewide support  by  highlighting that  OPB                                                               
recognizes it needs more effective  ways to conduct business; and                                                               
that  it  would  aggressively  pursue those  changes  to  deliver                                                               
outcomes in a reasonable amount of time.                                                                                        
                                                                                                                                
1:59:30 PM                                                                                                                    
MR. CARPENTER  highlighted that  OPB needs  to be  in place  as a                                                               
sounding board but it must also  be an apolitical board driven by                                                               
business-oriented  members interested  in making  decisions using                                                               
aggressive timelines. He related  that AMHS's current maintenance                                                               
and recapitalization plans must be considered by the new board.                                                                 
                                                                                                                                
2:00:52 PM                                                                                                                    
CHAIR  MYERS  recalled  the work  group  essentially  recommended                                                               
trying to  minimize politics for  the board. Since  board members                                                               
would  serve three-year  terms  under SB  103,  a governor  could                                                               
replace all board members during  a single gubernatorial term. He                                                               
suggested establishing longer board terms,  such as five or eight                                                               
years to avoid wholesale board turnover.                                                                                        
                                                                                                                                
MR.  MILLS responded  that  he  could not  speak  for Boards  and                                                               
Commissions  but  he  recalled  that their  staff  suggested  the                                                               
standard three-year  terms. However, the administration  was open                                                               
to consider longer terms.                                                                                                       
                                                                                                                                
2:02:07 PM                                                                                                                    
CHAIR MYERS noted  that in SB 103, updates to  the long-term plan                                                               
were reduced  from five  years to  three years.  However, placing                                                               
updates  too  close together  would  change  it from  a  planning                                                               
process  to a  planning-to-plan process.  Participants would  not                                                               
have  time  to think  through  and  reflect  on the  updates.  He                                                               
suggested keeping the updates at five years.                                                                                    
                                                                                                                                
MR. MILLS  responded that five  years was  a long time  for board                                                               
service. He related  his understanding that the  impetus was that                                                               
a short-term plan  would apply pressure to the  group to actively                                                               
work on specific issues.                                                                                                        
                                                                                                                                
CHAIR MYERS  was unsure that  applying pressure to the  board was                                                               
as important as applying pressure to DOTPF.                                                                                     
                                                                                                                                
2:04:10 PM                                                                                                                    
SENATOR BISHOP asked  if the board would be  actively involved in                                                               
developing AMHS's budget.                                                                                                       
                                                                                                                                
MR.  CARPENTER responded  that he  envisioned  OPB would  operate                                                               
similarly to  the way  the Alaska  Mental Health  Trust Authority                                                               
(AMHTA) or the  University of Alaska, Board  of Regents operates.                                                               
OPB would compile  a one-year budget and  make recommendations to                                                               
the   governor   to   provide  the   legislature   with   another                                                               
perspective,  which  may help  to  depoliticize  the process.  He                                                               
recalled that  any changes or  deviations made to  AMHTA's budget                                                               
requires an  explanation by the  legislature or the  governor. He                                                               
said  the planning  process should  include some  type of  budget                                                               
interaction, which is not yet in the bill.                                                                                      
                                                                                                                                
SENATOR  BISHOP  suggested  that  to achieve  real  outcomes  and                                                               
quantify  suggestions  would  require  the  board  to  develop  a                                                               
budget. He said it makes sense to  base it on a five-year plan to                                                               
coincide with the STIP funding.                                                                                                 
                                                                                                                                
2:07:14 PM                                                                                                                    
SENATOR KIEHL  agreed with Senator  Bishop. He recalled  that the                                                               
Board of  Education serves at  the pleasure of the  governor. The                                                               
board is  briefed on the  governor's proposed budget and  then it                                                               
votes to  approve it. He suggested  the bill would need  a little                                                               
structural change to accomplish this.                                                                                           
                                                                                                                                
2:08:16 PM                                                                                                                    
SENATOR SHOWER asked which agency  or person has the authority to                                                               
execute the board's recommendations.                                                                                            
                                                                                                                                
MR. CARPENTER  answered that under  SB 103, OPB would  submit its                                                               
recommendations to DOTPF's commissioner  who would make the final                                                               
decisions. He recommended  that a person from DOTPF  serve on the                                                               
board to  act as a liaison  between the agency and  the governor.                                                               
He envisioned that person would work  with the board to develop a                                                               
consensus on  issues and  ways to  accomplish them.  This liaison                                                               
could also  provide information and guidance  to the commissioner                                                               
and the governor on the approach  and rationale the board used to                                                               
make board recommendations.                                                                                                     
                                                                                                                                
SENATOR SHOWER  agreed that  it is critical  to involve  DOTPF in                                                               
the  process;  however,  the commissioner  will  ultimately  make                                                               
decisions, which is  what has happened for a long  time. It might                                                               
be time to consider a  different model but the commissioner could                                                               
still have someone serve on the board to coordinate efforts.                                                                    
                                                                                                                                
[SB 103 was held in committee.]                                                                                                 
                                                                                                                                
             SB 105-ROAD SERVICE AREA CONSOLIDATION                                                                         
                                                                                                                                
2:11:40 PM                                                                                                                    
CHAIR MYERS  announced the consideration  of SENATE BILL  NO. 105                                                               
"An Act relating to road service area consolidation."                                                                           
                                                                                                                                
CHAIR MYERS  stated that  SB 105 was  requested by  the Fairbanks                                                               
North Star Borough.                                                                                                             
                                                                                                                                
2:12:11 PM                                                                                                                    
MICHAELLA  ANDERSON, Staff,  Senator Robert  Myers, Alaska  State                                                               
Legislature,   Juneau,  Alaska,   on  behalf   of  the   sponsor,                                                               
paraphrased the sponsor statement:                                                                                              
                                                                                                                                
     Senate  Bill 105  provides second  class boroughs  with                                                                    
     the  ability to  consolidate two  or more  road service                                                                    
     areas  (RSAs) if  the  boards  representing those  RSAs                                                                    
     request consolidation  and no new parcels  are added to                                                                    
     the single new service area.                                                                                               
                                                                                                                                
     A   road  service   area  is   a  taxing   jurisdiction                                                                    
     established  at  the request  of  the  voters within  a                                                                    
     geographical  area to  provide certain  services within                                                                    
     their   specific    area.   Voters    establish   their                                                                    
     boundaries,  the  maximum  mill levy  imposed  on  real                                                                    
     property for the purpose  of road maintenance services,                                                                    
     and  a   board  that  determines  the   level  of  road                                                                    
     maintenance   services  and   directs  contractors   to                                                                    
     perform  these  services.  Members  of  the  board  are                                                                    
     nominated  by the  mayor and  confirmed by  the borough                                                                    
     assembly.                                                                                                                  
                                                                                                                                
     Beginning  in 1972,  and in  the  years that  followed,                                                                    
     RSAs  benefited from  state shared  revenues (SSR)  for                                                                    
     local   road   construction   and   improvements.   SSR                                                                    
     reductions  through the  1990s  prompted  RSAs to  hold                                                                    
     elections to  establish tax revenue caps  to supplement                                                                    
     the  reduced state  funding for  local roads.  Existing                                                                    
     RSAs  also  resisted  annexations of  new  parcels  and                                                                    
     roads to  their service areas leading  to the formation                                                                    
     of new RSAs.  Of the five second class  boroughs in the                                                                    
     State  of Alaska  that  have  RSAs (Fairbanks,  Mat-Su,                                                                    
     Kenai, Kodiak and Ketchikan),  the Fairbanks North Star                                                                    
     Borough has,  by far,  the most RSAs  at 103.  The next                                                                    
     largest borough by RSAs is the Mat-Su Borough with 16.                                                                     
                                                                                                                                
2:13:01 PM                                                                                                                    
MS.  ANDERSON said  municipalities currently  do not  receive any                                                               
state-shared  revenues   for  road  service  areas   (RSAs).  She                                                               
explained  that SB  105 would  address an  issue facing  the vast                                                               
majority of  RSAs in the  Fairbanks North Star Borough  (FNSB) by                                                               
adding a  new exception to  allow timely consolidation of  two or                                                               
more RSAs  without a vote  by their residents. Instead,  it would                                                               
allow the affected RSA boards to  agree to the changes as long as                                                               
no new parcels were added or removed.                                                                                           
                                                                                                                                
MS. ANDERSON continued to paraphrase the sponsor statement:                                                                     
                                                                                                                                
     While   greater  efficiencies   and   lower  costs   in                                                                    
     maintaining  local  roads  could  be  achieved  through                                                                    
     consolidating  some  RSAs,  borough assemblies  do  not                                                                    
     have  the  power  to  adjust  service  area  boundaries                                                                    
     without   voter   approval.  Separate   elections   are                                                                    
     required   for   each   of    the   RSAs   subject   to                                                                    
     consolidation,  and these  elections typically  fail to                                                                    
     turn-out  voters.  Consolidation  efforts led  by  RSAs                                                                    
     themselves,  as proposed  under SB  105, would  lead to                                                                    
     greater efficiency and  reduced costs through economies                                                                    
     of scale  and less  contract administration  by borough                                                                    
     administrators.                                                                                                            
                                                                                                                                
MS.  ANDERSON said  this  bill  does not  allow  FNSB's mayor  or                                                               
assembly  to  consolidate  RSAs  without  RSA  boards  requesting                                                               
consolidation.                                                                                                                  
                                                                                                                                
2:14:27 PM                                                                                                                    
MICHAEL  BREDLIE, Rural  Services Manager,  Fairbanks North  Star                                                               
Borough, Fairbanks,  Alaska, spoke  in favor of  SB 105.  He said                                                               
his  division manages  the road  service areas  (RSAs) throughout                                                               
the  Fairbanks  North Star  Borough  (FNSB).  As a  second  class                                                               
borough,  FNSB receives  its  road  construction and  maintenance                                                               
powers  through   service  areas.  Currently,  FNSB's   103  RSAs                                                               
maintain a total of 498 road miles.                                                                                             
                                                                                                                                
He  provided  a  brief  history  of  RSAs  in  the  borough.  The                                                               
borough's first RSA was established in  1965 and a second one was                                                               
added in 1969.  Between 1973 and 1979, 20  RSAs were established.                                                               
All but  two of  the 67  RSAs were  established between  1981 and                                                               
1986. In the 1990s, 13 RSAs  were established, with the final one                                                               
formed in 2002.                                                                                                                 
                                                                                                                                
MR.  BREDLIE  stated that  starting  in  1972, the  state  shared                                                               
revenue for local road construction  and improvements. During the                                                               
mid-1970s, the RSAs received $2,500  per mile for maintenance and                                                               
operations (M&O).  This became  the majority,  if not  the entire                                                               
revenue, received  by the  service areas. By  the 1990s,  the M&O                                                               
was reduced to $1,400 per  mile, which continued to decline until                                                               
2003 or 2004, when state revenue  sharing ended. At the time, the                                                               
reduction in state  revenue sharing prompted a number  of RSAs to                                                               
hold elections  to establish revenue  tax caps to  supplement and                                                               
replace their state revenue-sharing funds.  From 1991 to 1997, 74                                                               
RSAs instituted revenue tax caps.                                                                                               
                                                                                                                                
MR.  BREDLIE  related  his  understanding  that  RSA  commissions                                                               
resisted annexing new  parcels and roads to  their service areas.                                                               
In  response,  the administration  decided  to  form new  service                                                               
areas. This  increase in  RSAs appears  to correspond  with state                                                               
shared revenue that FNSB received from 1972 to 2004, he said.                                                                   
                                                                                                                                
He offered  his belief  that no  other borough  in the  state has                                                               
this  issue. Alaska  has  five second  class  boroughs with  road                                                               
service area powers. FNSB has  103 RSAs, the Mat-Su Borough (MSB)                                                               
has 16,  Ketchikan Gateway  Borough (KGB)  has 10,  Kodiak Island                                                               
Borough (KIB) has four and  the Kenai Peninsula Borough (KPB) has                                                               
one large RSA split into five regions.                                                                                          
                                                                                                                                
MR. BREDLIE  explained that FNBS's RSA  consolidation process was                                                               
difficult. First,  elections are  required to consolidate  two or                                                               
more  RSAs  if the  voters  reside  within the  existing  service                                                               
areas.  Next, the  borough  must hold  open  house meetings,  the                                                               
assembly  must approve  the election  ordinance to  authorize the                                                               
RSA  elections  for  residents in  the  service  areas.  Finally,                                                               
holding an election  to consolidate each service  area is costly,                                                               
he  said.   Currently,  FNSB  has  13   contractors  who  perform                                                               
maintenance in  its 103 RSAs.  Some contractors maintain  one RSA                                                               
and others maintain from 10 to 20 service areas.                                                                                
                                                                                                                                
2:18:40 PM                                                                                                                    
MR.  BREDLIE explained  that  consolidating  service areas  would                                                               
provide greater  efficiencies and better prices  for contractors,                                                               
which could result  in less contract administration.  In terms of                                                               
staff,  consolidating RSAs  could reduce  contract administration                                                               
costs and increase staff's presence  to assess road conditions in                                                               
RSAs. With  respect to RSA commissions,  consolidating RSAs would                                                               
reduce  the  number of  seats.  Currently,  266  of the  426  RSA                                                               
commissioner  seats are  filled,  which is  a 38-percent  vacancy                                                               
rate, he said.                                                                                                                  
                                                                                                                                
2:19:34 PM                                                                                                                    
CHAIR   MYERS  asked   how  much   money  FNSB   would  save   by                                                               
consolidating RSAs.                                                                                                             
                                                                                                                                
MR.  BREDLIE responded  that he  was unsure  but FNSB  would save                                                               
contractor and administrative costs.                                                                                            
                                                                                                                                
2:20:12 PM                                                                                                                    
SENATOR MICCICHE  asked what problems FNSB  encountered by adding                                                               
RSA consolidations to the ballot for municipal elections.                                                                       
                                                                                                                                
MR.  BREDLIE  answered  that  each RSA  election  would  be  held                                                               
outside  the municipal  election  because voters  are located  in                                                               
different  areas and  separate  taxing  jurisdictions. He  stated                                                               
that FNSB's Clerk's  Office incurs substantial time  and costs to                                                               
administer elections given the large number of RSAs.                                                                            
                                                                                                                                
2:21:34 PM                                                                                                                    
SENATOR  SHOWER  recalled  that a  similar  bill  was  previously                                                               
introduced.  He asked  whether FNSB  asked its  residents whether                                                               
they wanted to consolidate RSAs.                                                                                                
                                                                                                                                
MR.  BREDLIE answered  no. He  acknowledged  that former  Senator                                                               
Coghill introduced a bill during  the last legislature but it did                                                               
not pass.                                                                                                                       
                                                                                                                                
SENATOR  SHOWER  asked whether  the  purpose  of  SB 105  was  to                                                               
provide  FNSB  with a  method  to  consolidate its  RSAs  without                                                               
obtaining sufficient support from residents.                                                                                    
                                                                                                                                
MR.  BREDLIE responded  that SB  105  would give  the borough  an                                                               
additional  tool to  join two  or more  service areas  without an                                                               
election when the  road commissions agree. He  remarked that FNSB                                                               
would  still  reach out  to  residents;  that the  process  still                                                               
requires approval by RSA commissions and the assembly.                                                                          
                                                                                                                                
2:24:36 PM                                                                                                                    
SENATOR  SHOWER asked  who currently  appoints the  commissioners                                                               
and  whether  this  process  would   give  the  mayor  additional                                                               
authority.                                                                                                                      
                                                                                                                                
MR. BREDLIE  responded that the mayor  appoints commissioners and                                                               
the assembly confirms them.                                                                                                     
                                                                                                                                
SENATOR SHOWER  said it  seems as though  this process  will give                                                               
the mayor additional power.                                                                                                     
                                                                                                                                
2:25:28 PM                                                                                                                    
SENATOR BISHOP asked whether FNSB's Assembly supports SB 105.                                                                   
                                                                                                                                
MR. BREDLIE responded  that the request for SB  105 was initiated                                                               
by FNSB's  legislative committee, which is  comprised of assembly                                                               
members, the  mayor, and legal representatives.  He surmised that                                                               
assembly  members support  SB  105 since  the  assembly passed  a                                                               
resolution.                                                                                                                     
                                                                                                                                
SENATOR BISHOP asked for a copy of the resolution.                                                                              
                                                                                                                                
MR. BREDLIE agreed to provide it.                                                                                               
                                                                                                                                
2:26:32 PM                                                                                                                    
SENATOR  MICCICHE stated  that  RSA members  are  elected in  the                                                               
Kenai   Peninsula  Borough   (KPB).  KPB   regularly  experiences                                                               
problems with vacancies. He surmised  that people would prefer to                                                               
have  elected  officials make  the  final  decisions although  he                                                               
agreed  that some  power  would be  consolidated.  He offered  to                                                               
consult with KPB on whether it supports the concept.                                                                            
                                                                                                                                
2:27:42 PM                                                                                                                    
CHAIR MYERS asked  if FNSB passed an ordinance  earlier this year                                                               
for all road commissioner terms to expire in June 2021.                                                                         
                                                                                                                                
MR.  BREDLIE responded  that in  2019, an  ordinance changed  the                                                               
commissioner's  terms  from  two  to three  years  to  allow  for                                                               
staggered   terms.  In   the  meantime,   FNSB   will  send   out                                                               
applications to all  commissioners and draw to  decide which ones                                                               
are one, two or three year terms, he said.                                                                                      
                                                                                                                                
CHAIR MYERS related  his understanding that if this  bill were to                                                               
pass, every commissioner  would be appointed by  the mayor. Given                                                               
that the  mayor would like  to consolidate RSAs, the  mayor could                                                               
impose a litmus test for applicants.                                                                                            
                                                                                                                                
MR. BREDLIE  explained that half  of the commissions  expire each                                                               
year.  He related  that prefilled  applications are  sent to  all                                                               
commissioners  by April.  Once the  applications are  signed, the                                                               
applications are forwarded  to the mayor and to  the assembly. He                                                               
said he did  not envision that this process would  change but the                                                               
terms will be staggered.                                                                                                        
                                                                                                                                
2:31:00 PM                                                                                                                    
JILL DOLAN,  Attorney, Fairbanks  North Star  Borough, Fairbanks,                                                               
Alaska,  in response  to the  question  of whether  SB 105  would                                                               
ultimately  give  more power  to  the  mayor, said  any  boundary                                                               
change  must  be made  by  ordinance.  Although this  bill  would                                                               
require  that  service  area   boards  make  recommendations  and                                                               
request to consolidate  RSAs, the ultimate decision  will be made                                                               
by the elected officials.                                                                                                       
                                                                                                                                
2:31:51 PM                                                                                                                    
MS. DOLAN  explained that  the reason  FNSB cannot  run elections                                                               
for service areas with the  regular municipal election is because                                                               
the  precinct  boundaries do  not  align  with the  service  area                                                               
boundaries.  The borough  must  determine  voter eligibility  for                                                               
each  service  area.  She  explained  that  to  consolidate  RSAs                                                               
requires elections be held in  each service areas being combined,                                                               
which means  that ballots  are separately  accounted for  in each                                                               
RSA election.                                                                                                                   
                                                                                                                                
2:32:25 PM                                                                                                                    
SENATOR  SHOWER said  the 2020  election  included local,  state,                                                               
federal elections  in Alaska. Thus,  voters were  handed multiple                                                               
ballots. He was  unsure why the RSA elections could  not be given                                                               
on the same day as municipal elections.                                                                                         
                                                                                                                                
MS. DOLAN  responded that municipal and  state election districts                                                               
share  the  same precinct  boundaries.  She  said FNSB's  Clerk's                                                               
Office  runs  the elections.  Voters  request  their ballots  for                                                               
service area  elections in  person. The  clerk must  determine in                                                               
which  RSA area  the person  resides since  the ballots  for each                                                               
service  area must  be counted  separately.  The municipal  clerk                                                               
advised that RSA elections should  not be held at concurrent with                                                               
municipal elections, she said.                                                                                                  
                                                                                                                                
2:34:37 PM                                                                                                                    
SENATOR MICCICHE  asked how many  households were located  in the                                                               
largest service area.                                                                                                           
                                                                                                                                
MR.  BREDLIE answered  that the  College RSA  maintains about  20                                                               
miles of road serving over 1,000 households.                                                                                    
                                                                                                                                
[SB 105 was held in committee.]                                                                                                 
                                                                                                                                
2:36:00 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair   Myers  adjourned   the  Senate   Transportation  Standing                                                               
Committee meeting at 2:36 p.m.                                                                                                  

Document Name Date/Time Subjects
SB 103 Sponsor Statement Version A 3.9.2021.pdf STRA 3/25/2021 1:30:00 PM
SB 103
SB 103 Sectional Analysis 3.9.2021.pdf STRA 3/25/2021 1:30:00 PM
SB 103
SB 103 Fiscal Note DOTPF.PDF STRA 3/25/2021 1:30:00 PM
SB 103
SB105 Sponsor Statement 3.24.21.pdf STRA 3/25/2021 1:30:00 PM
SB 105
SB105 Sectional Analysis Version A 3.24.21.pdf STRA 3/25/2021 1:30:00 PM
SB 105
SB105 Fiscal Note DCCED.pdf STRA 3/25/2021 1:30:00 PM
SB 105
FNSB Road Service Area Map.pdf STRA 3/25/2021 1:30:00 PM
SB 105
FNSB support for SB105_3.24.21.pdf STRA 3/25/2021 1:30:00 PM
SB 105