Legislature(2003 - 2004)
04/24/2003 01:37 PM Senate TRA
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ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
April 24, 2003
1:37 p.m.
MEMBERS PRESENT
Senator John Cowdery, Chair
Senator Thomas Wagoner, Vice Chair
Senator Gene Therriault
Senator Georgianna Lincoln
Senator Donny Olson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 125
"An Act relating to protests of state contract awards, to claims
on state contracts and to hearings under the State Procurement
Code; making conforming amendments in the State Procurement
Code; and providing for an effective date."
SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 81
"An Act relating to motor vehicle emissions; and providing for
an effective date."
SCHEDULED BUT NOT HEARD
CS FOR HOUSE BILL NO. 127(STA)
"An Act relating to roadside memorials within the right-of-way
of a state highway."
MOVED SCS CSHB 127(TRA) OUT OF COMMITTEE
SENATE BILL NO. 112
"An Act increasing the motor fuel tax and repealing the special
tax rates on blended fuels; and providing for an effective
date."
MOVED CSSB 112(TRA) OUT OF COMMITTEE
PREVIOUS ACTION
SB 112 - See Transportation minutes dated 4/3/03, 4/15/03
HB 127 - No previous action to record.
WITNESS REGISTER
Ryan Colgan
Staff to Representative Jim Whitaker
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 127
Barbara Dowdy
1041 Steele Creek Road
Fairbanks, AK 99709
POSITION STATEMENT: Testified on HB 127
John MacKinnon
Department of Transportation &
Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Answered questions on HB 127 and SB 112
Sandy Gilespie
521 W. 20th Ave
Anchorage, AK 99503
POSITION STATEMENT: Testified on HB 127
Rachelle Dowdy
521 W. 20th Ave
Anchorage, AK 99503
POSITION STATEMENT: Testified on HB 127
Kevin Jardell
Assistant Commissioner,
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Testified on SB 112
Paul Fuhs
Horizon Shipping Lines
No address provided
POSITION STATEMENT: Testified on SB 112
Wendy Lindskoog
Director, External Affairs
Alaska Railroad Corporation
P.O. Box 107500
Anchorage, AK 99510-7500
POSITION STATEMENT: Testified on SB 112
John Binkley
Chairman of the Board
Alaska Railroad Corporation
P.O. Box 107500
Anchorage, AK 99510-7500
POSITION STATEMENT: Testified on SB 112
Phyllis Johnson
Legal Counsel
Alaska Railroad Corporation,
No address provided
POSITION STATEMENT: Answered questions on SB 112
Landa B. Baily
Special Assistant to the Commissioner
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Testified on SB 112
ACTION NARRATIVE
TAPE 03-16, SIDE A
CHAIR JOHN COWDERY called the Senate Transportation Standing
Committee meeting to order at 1:37 p.m. Senators Thomas Wagoner,
Gene Therriault, Georgianna Lincoln, Donny Olson and Chair John
Cowdery were present. The first order of business was HB 127.
HB 127-ROADSIDE MEMORIALS
RYAN COLGAN, staff to Representative Jim Whitaker, introduced HB
127. He explained the genesis of the bill was a public notice of
regulation change issued by the Department of Transportation and
Public Facilities (DOTPF) to address their perception that:
· Road sign memorials were in conflict with the outdoor
advertising statutes
· The state might lose federal highway funds if memorials
were placed in highway rights-of-way - although West
Virginia has a memorial program and has not lost funding.
HB 127 exempts personal roadside memorials from the outdoor
advertising statutes and restricts them to those that are safe
and that don't interfere with the right-of-way. The person
placing the memorial must post contact information on the
memorial and provide that information to the department along
with the location of the memorial. If DOTPF asks that the
memorial be changed or moved, the contact person would be
required to do so at no cost to the state. If a memorial doesn't
meet the requirements set forth in HB 127, they may be
considered an illegal encroachment and treated as such.
SENATOR GEORGIANNA LINCOLN expressed support for the bill, but
was concerned about limiting the program to those who had died
in a traffic accident as set forth on page 1, line 8. She was
aware of and didn't want to exclude memorials to people that
have died on roadways, but not as a result of a traffic
accident.
MR. COLGAN said he didn't know whether that had been considered.
He acknowledged there are different types of memorials in
rights-of-way that were erected for a variety of reasons and
that people use them as a way to grieve the loss of someone.
SENATOR DONNY OLSON noted there are federal highway funds and
federal funds and asked whether other states have been exempt
from both types of funding cuts.
MR. COLGAN advised they aren't exemptions. The federal
government simply hasn't withheld federal highway funding from
the state with a roadside memorial program. The concern arises
as a result of the Highway Beautification Act that allows the
federal government to withhold federal highway funds if there is
an encroachment on the right-of-way.
CHAIR COWDERY stated the Highway Beautification Program resulted
from Lady Bird Johnson's efforts to reduce the number and size
of billboards erected along highways.
SENATOR LINCOLN asked if the sponsor would consider deleting "in
a traffic accident" from page 1, line 8 because it wouldn't
detract from the intent of the bill, but would allow others to
be included. She cited an incident where a man's family erected
a roadside memorial after he was shot and killed at an
intersection on a Fairbanks highway. Current wording would
exclude that memorial.
MR. COLGAN replied he hadn't discussed that with the sponsor,
but was aware of the circumstance.
SENATOR GENE THERRIAULT said he wasn't sure he would support
broadening the language.
SENATOR LINCOLN advised she would present an amendment for
consideration to delete, "in a traffic accident" and didn't
believe doing so would be too inclusive.
SENATOR THERRIAULT pointed out that anyone killed in the general
vicinity could be included if that language were deleted.
CHAIR COWDERY agreed that broadening the language too much had
adverse implications.
SENATOR THOMAS WAGONER opined cemeteries are the place for
memorials. This is an emotional issue to which he is
sympathetic, but he is not in favor of roadside memorials.
SENATOR LINCOLN said she was appreciative of the concern and she
would try to develop language that would not be unreasonably
inclusive.
SENATOR THERRIAULT noted they should always be aware of the law
of unintended consequences.
SENATOR LINCOLN agreed.
BARBARA DOWDY read a statement from Sheryl Riley into the record
relating Heather Dowdy's story. She was a vibrant, productive
17-year-old student who was ready to graduate from high school
when she was hit and killed by a drunk driver.
BARBARA DOWDY, Heather's mother, testified she is a member of
the MADD chapter in Fairbanks and she fully supports passage of
HB 127. She and her family have erected a memorial on the Old
Steese Highway that is very personal to them and represents the
essence of Heather's life. A DOTPF sign could never adequately
express those personal sentiments. Roadside memorials let people
know that a loved one is remembered and their passing is
noticed. She received a letter from the Lady Bird Johnson's
staff stating that the highway beautification program was never
intended to become an issue to grieving families. Junkyards and
billboards should not be compared to and considered with
roadside memorials.
2:00 p.m.
SENATOR THERRIAULT advised Ms. Dowdy that activity that is
conducted on private property, such as the junkyard she
mentioned, is different than the issue of memorials placed in
the road right-of-way.
SANDY GILESPIE said she was Heather's sister-in-law. She read a
statement supporting HB 127 and specifically noted a number of
memorials in the Anchorage and Fairbanks areas.
RACHAEL DOWDY, Heather's sister, outlined the last day of
Heather's life. After the accident, family and friends placed a
roadside memorial in her memory to help in their healing
process. Roadside memorials remind people that driving
fatalities are personal and they have anecdotal evidence that
Heather's memorial has changed at least one person's drinking
and driving behavior. They are sure the standard DOTPF sign
would not have the same affect.
2:10 p.m.
SENATOR OLSON asked how DOTPF stood on the issue.
JOHN MACKINNON, Deputy Commissioner of the Department of
Transportation and Public Facilities, stated the department
worked with the sponsor and they did not oppose the bill.
SENATOR THERRIAULT asked the sponsor to comment on changing
language on page 1, line 8 to read "as a result of a traffic
accident" rather than "in a traffic accident" because a person
might die on the way to the hospital of in the hospital.
MR. COLGAN stated the sponsor would likely support that
amendment.
SENATOR THERRIAULT made a motion to adopt a conceptual amendment
to make it clear that the memorials were for individuals who
died as a result of a traffic accident.
Conceptual amendment 1 was adopted with no objection.
SENATOR LINCOLN said she would work with legislative legal to
expand the scope somewhat, but didn't object to the bill moving
to the next committee.
She made a motion to move CSHB 127(STA) as conceptually amended
[SCS CSHB 127(TRA)] from committee with individual
recommendations. There being no objection, it was so ordered.
SB 112-MOTOR FUEL TAX:GOVT AGENCY REFUNDS
CHAIR JOHN COWDERY stated SB 112 was a governor's bill. He noted
there was a committee substitute (CS) \Q version and a proposed
amendment relating to tax refunds for government agencies that
purchase fuel.
KEVIN JARDELL, Assistant Commissioner of the Department of
Administration (DOA), said the State of Alaska began using a
single credit card last year, which allows the state to receive
itemized statements. He explained that fuel retailers pay a
motor fuel tax to wholesalers, but they are eligible to recoup
those taxes on any fuel they sell to a government agency. The
proposed CS is a technical adjustment that would allow the
credit card issuer to apply for the fuel tax rebate in a lump
sum and repay the various fuel retailers. This would save the
state administrative costs and would allow flexibility in where
fuel is purchased.
CHAIR COWDERY asked for a motion to adopt the proposed CS.
SENATOR THOMAS WAGONER made a motion to adopt CSSB 112 \Q
version. There being no objection, it was so ordered.
CHAIR COWDERY asked for a motion to adopt the proposed amendment
relating to tax refunds for government agency purchases of fuel.
SENATOR GEORGIANNA LINCOLN pointed out the proposed amendment
refers to the original bill and not the CS that was just
adopted.
SENATOR GENE THERRIAULT added the amendment could be moved
conceptually and the drafters could insert the language into the
CS where it was appropriate.
TAPE 03.16 SIDE B
2:23 p.m.
SENATOR LINCOLN asked if the amendment included the Alaska
Railroad.
SENATOR THERRIAULT said the amendment is specifically related to
the issue to which Mr. Jardell spoke.
MR. JARDELL agreed and said the specific section with the
railroad would overrule any inclusion in the subsection. The CS
wouldn't change the manor that the railroad is taxed or the fee
charged; the railroad would pay the tax.
SENATOR THERRIAULT made a motion to adopt conceptual amendment 1
to the CSSB 112 \Q to insert "and relating to tax refunds for
government agency purchases of fuel" where the drafters deem it
to be appropriate. There was no objection to the amendment.
PAUL FUHS, Horizon Shipping Lines representative, stated they
are closely associated with truckers and are concerned about the
overall impact of all the fees that are currently proposed on
the transportation industry. Individual truckers in the state
are losing business to the outside and they also find they are
in direct competition with the Alaska Railroad, which is a state
agency that also receives subsidies from the federal government.
All the fees will make it more and more difficult for Alaskan
truckers to remain competitive.
CHAIR COWDERY said the Railroad previously testified that they
have no way of recouping the 20 cents per gallon increase [levy]
on their fuel. He didn't disagree, but everyone was faced with
paying more.
MR. FUHS agreed that everyone rides fuel costs up and down, but
they are speaking to the differential that all the new fees
create on the Alaska trucking industry compared to outside
truckers and the railroad.
SENATOR THERRIAULT asked if he supported the railroad paying the
fuel tax.
MR. FUHS said he wasn't authorized by Horizon Shipping Lines to
support the imposition of taxes on any other entity.
SENATOR DONNY OLSON asked if it was correct that Horizon
Shipping did not support the bill.
MR. FUHS said he was asking the committee to consider the new
and increased fees in totality because they will ultimately be
passed on to the consumer.
SENATOR THOMAS WAGONER said it's standard to pass fees on to the
end user.
MR. FUHS agreed and said the fees could really be viewed as
sales taxes or income taxes, but their real concern is that it
makes them less competitive as Alaskan businesses.
SENATOR THERRIAULT questioned whether this precluded the state
from levying a tax on rail operations above and beyond what
other modes of transportation pay.
WENDY LINDSKOOG, Director of External Affairs of the Alaska
Railroad Corporation, said Phyllis Johnson and John Binkley were
available on line to give testimony and answer questions.
JOHN BINKLEY, Chairman of the Board for the Alaska Railroad
Corporation, said he didn't hear the specific question, but he
had testimony he would like to offer.
SENATOR THERRIAULT asked about the reported restriction that
federal law imposes on states as far as levying taxes on rail
operations.
MR. BINKLEY deferred to Ms. Johnson.
PHYLLIS JOHNSON, legal counsel to the Alaska Railroad
Corporation, said she didn't have the act in front of her, but
she thought he was referring to the 4 R Act. That is the
Railroad Revitalization and Regulatory and Reform Act of 1976.
She advised that they portray the act in more black and white
terms than the specific provision indicates because it has been
construed from a number of court decisions from jurisdictions
across the country. In effect it means you cannot impose a more
restrictive or burdensome tax on one mode of transportation than
on another mode of transportation. She said she could provide
court decisions if that was desirable.
SENATOR THERRIAULT said he would appreciate receiving the court
decisions.
CHAIR COWDERY stated this was raised previously and the legal
opinion he received was that it doesn't apply because the Alaska
Railroad is a state owned entity and not federal. He asked Ms.
Johnson if she had a copy of the opinion presented at the last
hearing.
MS. JOHNSON replied she had an opinion from Mr. Utermohle.
CHAIR COWDERY asked if she disagreed.
MS. JOHNSON advised the Utermohle opinion doesn't address the
whole question. It is certainly true that the state owns the
railroad and there is considerable latitude in terms of
intrastate activity. However, when it comes to activity that
does or can affect interstate commerce, federal acts come into
play. The federal position would probably be that if the
railroad were to operate in interstate commerce then it must
adhere to nationwide rules. That is where imposing a higher tax
on a railroad than competing forms of transportation comes into
play.
CHAIR COWDERY advised he met with Governor Murkowski and Jim
Clark recently and he is under the assumption that the
administration supports SB 112 and believes the state is within
its rights.
SENATOR LINCOLN stated she had the April 3, 2003 legal services
opinion from Kathryn Kurtz, but she didn't have anything from
Mr. Utermohle.
CHAIR COWDERY said he would see she got a copy.
2:40 p.m.
MR. BINKLEY reported there are two issues on SB 112. First is a
policy issue that the Legislature should review and the second
is the legal issue spoken to earlier.
The purpose of the transportation tax is to ensure that those
entities that use the facilities pay their fair share for the
cost of construction and maintenance over time. In terms of
aviation, the state has an extensive airport system and air
carriers benefit tremendously through the use of the airports.
It's appropriate that they pay a tax on the fuel they consume to
help offset the costs. The same reasoning applies to marine use
of state facilities. With respect to highways, it's certainly
appropriate that a fuel tax is levied to offset the millions of
dollars that DOTPF spends constructing and maintaining highways.
In contrast, the State of Alaska pays nothing toward the
construction, maintenance or operation of rail facilities or any
of the facilities that contribute to maintaining the fleet of
railroad equipment. In addition, railroad transportation saves
the state millions of dollars in construction and maintenance
costs. For instance, the railroad has hauled about 4 million
tons of gravel between Palmer and Anchorage so far this year. It
would have taken 400,000 trips for the typical 20-ton belly-
dumper trucks to have moved that amount of gravel in a 150 day
span. That translates to over 2,600 trucks going back and forth
to Palmer every day.
CHAIR COWDERY interjected the comment that they would charge the
fuel tax on the trucks if they didn't use rail.
MR. BINKLEY said the state would reap a tremendous amount in
terms of fuel tax if that were the case, but it's likely that
the highway would not only need more maintenance, it would need
to be expanded by several lanes to accommodate the increased
traffic.
He pointed out the railroad builds, maintains and uses its
facilities without state input. As a matter of policy, he sees
no reason that the railroad should be taxed to use their own
facilities and equipment unless the state is willing to
contribute as well.
When the government agreed to sell the railroad to the State of
Alaska at a price that was well below its value, they did so
because they felt there was greater value in doing so than in
liquidating the line. There is however, a provision under the
federal Alaska Railroad Transfer Act that requires that all the
earnings from the railroad go back into the line to ensure that
the federal government continues to have a viable transportation
system to use in Alaska.
CHAIR COWDERY announced he voted against purchasing the
railroad. He then asked if the railroad couldn't have operating
costs because he understood fuel costs to be operating costs.
MR. BINKLEY said that could be argued but, it could be construed
as simply a taking of the revenue of the Alaska Railroad. The
state could conceivably raise the tax on the railroad to any
level and take all the earnings, but the federal government
wouldn't agree that that was simply a cost of doing business. He
said that is a legal question and the railroad certainly wants
to comply with both state and federal law.
With regard to Mr. Fuhs' complaint that the railroad is a
competitor, he reminded everyone that the federal government
heavily subsidizes the shipping industry in terms of dredging
Cook Inlet and docks and harbor development.
CHAIR COWDERY asked whether he thought the same applied to the
railroad.
MR. BINKLEY replied it did.
SENATOR OLSON asked Mr. Binkley whether he would consider SB 112
to be unconstitutional.
MR. BINKLEY said it wasn't unconstitutional, but there were
federal statutes that would question whether it could be done.
MR. OLSON asked if it is correct that case law would not be on
the side of the bill.
MR. BINKLEY said that is correct according to the railroad's
legal counsel.
CHAIR COWDERY said he understood that attorney Jim Clark [Chief
of Staff] and Governor Murkowski supported the bill.
SENATOR LINCOLN asked him to speak to the April 2, 2003 memo
from legislative counsel, George Utermohle, that said, "Also it
would be worth checking with bond council to determine whether
the tax would have adverse consequences on the ability of the
Alaska Railroad to issue bonds and whether the tax would create
problems with respect to bonds that may have already been
issued."
MR. BINKLEY said they are concerned about that, but they need to
borrow money to expand and grow the railroad the same as private
corporations. To the extent that financial institutions rely on
their corporate earnings and to the extent that the state might
have changed the covenants that the railroad signed, there could
be implications to those financial institutions.
They fully support current legislation to expand the Alaska
Railroad to provide more economic opportunity in the state.
However, it is inconsistent for the state to expect the railroad
to spend a great deal of capital to expand while the state cuts
the dollars they have for the expansion. The railroad has an
operating budget and a capital budget. The capital budget is
financed with earnings so they must make a profit or they won't
have money to spend on capital projects the following year.
2:52 p.m.
SENATOR LINCOLN said the Senate Resources Committee recently
heard and passed a bill urging the Alaska Railroad to expand the
rails from Fairbanks north to the Canadian rail line. She asked
if the $1.2 million per year for fuel costs was still accurate
and based on what he said about bonding, would that have an
impact on the expansion of the railroad to Canada.
MR. BINKLEY replied he thought the fuel calculations were still
accurate and the ability to bond would impact potential
expansion. Anything that pulls earnings from the Railroad
Corporation and into the general fund restricts their ability to
expand and grow the railroad to provide for economic development
in Alaska. The extent is difficult to gage, but it does make
them less profitable and less able to do the expansion projects
that everyone thinks are important.
CHAIR COWDERY advised he had a note from the Department of
Revenue that said the attorney general and Governor Murkowski
support a tax on the railroad and believe they have the right to
support the tax.
SENATOR LINCOLN said she would like to hear from someone from
the administration.
CHAIR COWDERY said no one from the administration was available.
SENATOR LINCOLN asked if the Chair understood the note to say
that the administration supported the amended version of CSSB
112.
CHAIR COWDERY said, ".... I'm not using just the note. I talked
to Jim Clark and everybody Monday, in the Governor's office in
Anchorage, and they indicated to me and she just reaffirmed what
I was told." Furthermore, they think they have the right to
implement a fuel tax.
He asked Ms. Baily to comment.
LANDA BAILY from the Department of Revenue clearly stated she
was not speaking for the Department of Law. She understood that
the Governor heard and understood the legislative message that
the railroad had to participate in the state's current fiscal
state of affairs and be a part of the solution. She couldn't be
more specific than to say that the Governor and his full cabinet
were looking at the various ways that might happen.
She said Assistant Attorney General, Mike Barnhill, was
available to answer questions as well.
CHAIR COWDERY said they were out of time and asked for the will
of the committee.
SENATOR LINCOLN asked Ms. Baily if she understood that the
administration supported the committee substitute as presented.
MS. BAILY said she was unable to make that interpretation at
that time.
SENATOR THERRIAULT noted the packet on the federal 4 R Act had
annotations on different state litigation and he appreciated the
attorney general's office sending someone over to respond to
questions. However, because the motor fuel tax issue is the
primary focus of the bill and he wanted the bill to go to the
Finance Committee, he was willing to advance the bill with the
question unanswered. He asked that the attorney general's
office give a full review of the federal act and the
implications for restriction that it would or would not place on
the State of Alaska.
SENATOR WAGONER stated the same reservation then made a motion
to move CSSB 112\Q version as amended from committee with
individual recommendations and attached fiscal notes.
SENATOR LINCOLN objected to the motion.
She said she didn't realize the committee was hearing the bill
that day and a copy of Mr. Utermohle's memo was not included in
her packet. There were too many unanswered questions from the
railroad, the truckers association and others. Although the bill
has associated finance questions, it is a transportation bill
and the committee didn't do all the work it should have, which
is why she was maintaining her objection to moving the bill from
committee.
CHAIR COWDERY called for a roll call. The motion passed with
Senators Therriault, Wagoner and Cowdery voting yea and Senators
Lincoln and Olson voting nay. CSSB 112(TRA) as amended moved
from committee.
CHAIR COWDERY announced SB 125 and HB 81 would be heard at the
next meeting. He adjourned the meeting at 3:03 p.m.
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