1996-10-21                     House Journal                      Page 4830
HB 136                                                                       
The following letter, dated June 29, 1996, was received:                       
                                                                               
Dear Speaker Phillips:                                                         
                                                                               
Under authority of art. II, sec. 15, of the Alaska Constitution, I have        
vetoed the following bill:                                                     
                                                                               
CS FOR HOUSE BILL NO. 136(FIN) am(efd fld)                                    
An Act relating to the establishment and operation of the Alaska              
Railroad Commission to determine whether sale of the Alaska                    
Railroad is in the best interest of the state.                                 
                                                                               

1996-10-21                     House Journal                      Page 4831
HB 136                                                                       
While this legislation does not mandate the sale of the Alaska                 
Railroad, it sets up a costly and time-consuming study of railroad             
assets and possible sale procedures.  Frankly, I dont think this type of       
study is merited, nor do I think a sale in the near future would be in         
the best interest of the state.                                                
                                                                               
                                                                               
The railroad has been acknowledged as a success. This state-owned              
corporation started more than 11 years ago in the red.  Since then it          
has consistently turned a profit and required no operating dollars from        
the state.  I think much of the success of the railroad can be attributed      
to the independent management structure, which was designed by the             
legislature in the act setting up the Railroad Corporation in 1984.            
                                                                               
                                                                               
Many of the questions surrounding management and finances of the               
railroad were addressed in a comprehensive evaluation directed by the          
legislature in 1994.  This study concluded that the railroad is                
performing well and meeting its statutory mandates.  I would commend           
this study for re-reading.                                                     
                                                                               
                                                                               
Although the act establishing the Railroad Corporation called for a            
report every five years, providing evidence of at least three sale             
attempts by the railroad, this language was deleted by the legislature         
in 1988.  Unchanged under the 1984 law is the provision that the state         
run the railroad with the intention it would be privatized at some later       
date.  I agree that this prospect must be provided for.  I also agree the      
Board should seriously consider and pursue any bonafide offer by a             
credible buyer.  Under the law, any sale proposal would be brought to          
the legislature for approval.  Such offers should be pursued in a normal       
business manner with necessary appraisals and studies funded by the            
parties to the potential sale.                                                 
                                                                               
                                                                               
The public interest must also be weighed in any sale proposal.  The            
railroad is uniquely Alaskan and has been responsive to the needs and          
desires of communities, businesses and citizens along its tracks while         
making a profit.  A private owner may or may not continue to operate           
this  way in  its pursuit  of   the bottom line.  As a result, it is not       

1996-10-21                     House Journal                      Page 4832
HB 136                                                                       
surprising many Alaska residents, businesses and municipalities in the         
Railbelt have urged my veto of this legislation.                               
                                                                               
							Sincerely,                                                              
							/s/                                                                     
							Tony Knowles                                                            
							Governor