Legislature(2019 - 2020)ADAMS ROOM 519
02/10/2020 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB205 || HB206 | |
| Fy 21 Budget Overview for the Department of Transportation and Public Facilities; and Alaska Marine Highway System Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 205 | TELECONFERENCED | |
| += | HB 206 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 205
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; making
appropriations under art. IX, sec. 17(c), Constitution
of the State of Alaska, from the constitutional budget
reserve fund; and providing for an effective date."
HOUSE BILL NO. 206
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:51:53 PM
^FY 21 BUDGET OVERVIEW FOR THE DEPARTMENT OF TRANSPORTATION
AND PUBLIC FACILITIES; AND ALASKA MARINE HIGHWAY SYSTEM
UPDATE
1:52:01 PM
JOHN MACKINNON, COMMISSIONER, DEPARTMENT OF TRANSPORTATION
AND PUBLIC FACILITIES, introduced himself and listed
department staff present for questions. He provided a
PowerPoint presentation titled "Alaska Department of
Transportation and Public Facilities: House Finance
Committee, DOT&PF Overview and AMHS Update," dated February
10, 2020 (copy on file). He began on slide 2 and reviewed
the FY 21 operating budget comparison showing a relatively
flat budget. The budget included an increase of $4.7
million for the Alaska Marine Highway System (AMHS). He
noted that other differences shown on the slide reflected
the replacement of undesignated general funds (UGF) with
designated general funds (DGF). He explained that the
department was working to replace UGF with DGF wherever
possible. The intent of the additional funding for AMHS was
to close some of the service gaps resulting from the prior
year budget. The hope was to increase from 254 to 263 total
weeks of service. The proposed budget showed about $145
million to $146 million UGF.
1:54:18 PM
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, reviewed a
fund source breakdown on slide 3. He noted that the bottom
table on the slide showed which funds made up the UGF, DGF,
other, and federal fund categories. He highlighted a note
underneath the top table defining which fund sources were
identified as duplicate funds. He elaborated that the
operating budget included $245 million in duplicate funds.
He explained that the duplicate funds included funding
collected from elsewhere in the budget either from the DOT
budget or another department.
1:55:14 PM
Commissioner MacKinnon reviewed the proposed FY 21
operating budget on slide 4. The slide showed the
department's various fund sources and how they were used.
He noted that Mr. Pannone had developed the slide to
illustrate how the funding flowed. He referenced slide 3
that showed $145 million in UGF, which was about 25 percent
of the department's total operating budget.
Commissioner MacKinnon moved to slide 5 showing a 10-year
operating history. He pointed to a significant increase in
DGF and decrease in UGF in FY 18 due to a AMHS fund source
swap. He detailed that the department had swapped general
funds with AMHS funds, which had been reversed the
following year (reflected on the chart). The slide showed a
decrease in UGF from FY 19 and FY 20 due to a reduction of
close to $43 million in the AMHS budget. There was an
increase in other funds attributed to about $41 million in
interagency receipt authority due to the creation of the
Division of Facilities Services. He intended to address the
issue in more detail in a later slide.
1:56:41 PM
Commissioner MacKinnon reviewed slide 6 and stated that
highways and aviation components pertained to DOT's
maintenance of roads and airports in the state. He
addressed some of the challenges the department was facing,
including empty authority. He referenced $37 million of
motor fuel tax receipts to fund the highways and aviation
components and explained that those kinds of numbers were
not being realized. He stated explained that with more
efficient vehicles and around 400 electric vehicles in the
state, people were using less gas. He expounded that at 8
cents per gallon coming into the state for motor fuel tax,
the department was not receiving the expected revenue. The
reductions in revenue had resulted in some reductions in
DOT's maintenance abilities. He shared that the department
had closed another maintenance station in the past year,
which was the fifth maintenance station closed since 2014.
He explained that the closure of a maintenance station
meant that adjacent maintenance stations had more miles of
road to take care of.
Co-Chair Johnston noted there was legislation in the other
body attempting to increase the gas tax and registration
tax. She remarked that she frequently heard people asking
why Alaska did not have toll roads. She believed most of
the roads in the state were federally funded. She asked if
it meant toll roads were not an option when the majority of
a road had been federally funded.
Commissioner MacKinnon answered that if the federal highway
program had put money into a road, the state could not turn
it into a toll road. He explained that the department could
not turn an existing facility into a toll facility. He
elaborated that if the state were to build a new road, add
lanes to an existing road, or build a bridge with federal
funds, it could have a toll facility provided it was part
of the initial plan.
Co-Chair Johnston surmised that many of the additions to
new lanes were funded by federal dollars.
Commissioner MacKinnon affirmed.
Representative Merrick highlighted turnover issues
experienced in various departments. She asked what was
causing the problem in DOT.
Commissioner MacKinnon answered that the issue was not
unique to Alaska. He had met with transportation officials
in the western states the past May and had learned they
also faced challenges with recruitment and retention. He
noted the problem was more pervasive in the maintenance and
operations side than in the technical fields, although the
problem existed in the latter area as well. The issue
existed with Local 71 equipment operators - the state spent
time training individuals and within a couple of years the
individuals went to work for a municipality earning $5 more
per hour. The same problem existed in airport, police, and
fire. He stated that the Department of Public Safety sent
recruits to the academy to become police officers. He
explained that training covered police, fire, and emergency
medical services. The individuals were not trained by the
state without some commitment on their part; however, after
they fulfilled their obligation, individuals went to work
for the troopers or local government at a fairly
substantial pay increase.
2:01:03 PM
Vice-Chair Ortiz referenced the top bullet point about the
decline in motor fuel receipts on slide 6. He asked
Commissioner MacKinnon to repeat the number of electric
vehicles in Alaska.
Commissioner MacKinnon believed there were 400 electric
vehicles in Alaska.
Vice-Chair Ortiz asked how many vehicles there were in the
state.
Commissioner MacKinnon replied that there was about one
vehicle per person. He detailed that with electric, hybrid,
and fuel efficient vehicles, even though the miles driven
were close to the same as five years earlier, current
vehicles were much more efficient and burned less fuel.
Vice-Chair Ortiz asked for verification that DOT had seen a
significant reduction in tax revenue because of the change.
Commissioner MacKinnon replied in the affirmative. He
elaborated that the change had resulted in unrealized
revenue the department had expected to receive.
Co-Chair Foster asked Commissioner MacKinnon to repeat the
shortfall figure resulting from lost receipts.
Commissioner MacKinnon replied that the shortfall was $1.3
[million].
Representative Knopp referenced the closure of Silvertip
[maintenance station] on the Kenai Peninsula. He believed
the department worked the stretch of highway from Crown
Point to Girdwood. He highlighted there had been some
unprecedented storms in the area in the current year. He
noted that no one on the peninsula had been happy about the
situation. He remarked that DOT had received significant
feedback on its statement that occasional road closures
were acceptable. He highlighted that a couple of positions
in the Homer and Soldotna stations had been lost. He
remarked that in the past, maintenance had been provided
around the clock; however, there was now a gap in service.
He asked for the accuracy of his statements.
Commissioner MacKinnon answered that with the cuts in the
past year, which included closing Silvertip and
transferring its positions, eight unfilled positions were
eliminated. He did not see Homer on the list of lost
positions, but Bethel, Quartz Creek, and Soldotna had lost
positions in the central peninsula region.
Representative Knopp asked if they were unfilled positions.
Commissioner MacKinnon replied in the affirmative.
Representative Knopp stated it was his understanding that
they had lost some manpower. He remarked that previously
there had been around the clock coverage, which was no
longer the case. He noted that a loss of manpower would not
result from unfilled positions.
2:04:16 PM
Commissioner MacKinnon replied that the current coverage in
terms of hours was close to what it had been when Silvertip
was open. There had been two periods of time during the day
without coverage; however, it had become more continuous
throughout the day.
Representative Knopp clarified that his comments expanded
beyond the one stretch of highway on the peninsula. He
asked if a savings had occurred with the closure of
Silvertip. He remarked that workers had longer hours and
travel time. He was concerned that essential services were
being cut in the way of winter storms. He suggested that
some nonessential services in the summer months could have
been cut. He wondered if the anticipated savings had been
realized by making the cuts.
Commissioner MacKinnon replied that they would have to wait
for winter to end in order to know. There had been closures
on the Seward Highway in the Anchorage to Girdwood stretch
due to blizzards, not rockfall. There had been a six-day
closure on the Klondike Highway the previous week. He
reported that about six roads had closures for a period of
time between a couple of hours and an entire day due to the
weather. He remarked that there had been easy winters for
the past couple of years; however, the current winter had
not proven to be easy thus far. He elaborated that there
had been a number of problems including drifting and heavy
snow, road closures, and the sideswiping into an ore and
fuel truck on the Klondike Highway that had caused a
problem. He relayed that DOT would know whether its budget
was sufficient or lacking once the winter was over.
Representative Wool referenced the motor fuel tax issue. He
asked if activity on the North Slope went the coffers of
the motor fuel tax. Alternatively, he asked if the tax was
only assessed on public roads.
Commissioner MacKinnon replied that he did not know the
answer, but he did not think so.
Representative Wool recalled that the topic had been a
factor in a committee meeting on the motor fuel tax. He did
not know whether various mines, such as Red Dog, had to pay
the motor fuel tax.
2:07:12 PM
Commissioner MacKinnon answered that since most of the
roads were private, he suspected the mines were not paying
into the tax. He returned to slide 6 and continued to
address challenges related to highways and aviation. He
reiterated his earlier statement that turnover and
recruitment continued to be a problem in Alaska and in many
other states. The increase in commodity cost was an issue
having to do with the maintenance of the state's roads. He
elaborated that the price of salt and aggregate sand and
gravel continued to increase. Consequently, DOT had scaled
back on its purchase of the commodities. He noted it was
not something that put the department in a comfortable
position; however, DOT had significantly improved its
ability to manage snow and ice control as opposed to moving
the snow off. One of the management methods was to spread
liquid on roads prior to a snow, which was an effective
measure for preventing the snow from sticking to the road.
Commissioner MacKinnon continued to address slide 6. He
highlighted the challenge related to changing weather
patterns. He noted that the current winter had been harder
than others in recent years. Additionally, there had been
some issues with rockfalls on the Seward Highway between
Anchorage and Girdwood. He reported it was believed that
the earthquake in November of 2018 had loosened up the rock
more than it had been, which meant that rain and
freeze/thaw events caused rocks to fall, which could be
deadly. The department was addressing the issue with a
highway safety improvement project where they would put
mesh on the rock to hold it. He added that DOT had also
identified numerous other sites where work was needed.
2:09:15 PM
Commissioner MacKinnon reviewed a ten-year history of
highways and aviation components on slide 7. He pointed out
that in FY 18, DOT had begun to reduce its reliance on UGF
by swapping DGF. The funding source was mostly motor fuel
tax, which had not been realized as anticipated. He
reiterated his earlier testimony that the reduced motor
fuel tax revenue was attributed to increased vehicle
efficiency, in addition to hybrid and electric vehicles.
Commissioner MacKinnon turned to slide 8 regarding other
department challenges. He noted he had discussed the
problem of recruitment and retention earlier in the
presentation. He shared that DOT was a large department
with about 3,300 employees between AMHS, maintenance and
operations of the highways and aviation, and the
engineering construction side responsible for the federal
highways and aviation program. He relayed that 3,300
represented about 20 percent of all state employees. He
shared that issues related to recruitment and retention
were related to more than pay. He noted that the Department
of Administration had some new initiatives it was working
on [related to recruitment and retention]. Additionally,
DOT was also dealing with the Per- and polyfluoroalkyl
substances (PFAS) issue at the state's certificated
airports. He explained that PFAS had become a national
issue.
Commissioner MacKinnon continued to address challenges
facing the department on slide 8. He discussed that the
Division of Facilities Services was established several
years back as part of the effort to consolidate services
and put all of the facilities under DOT. The department had
700 of its own facilities ranging from large maintenance
stations to fuel sheds. Under the consolidation, the
department was up to 1,200 facilities, which included 500
from other agencies. He elaborated that the number would
continue to grow. He noted that DOT was managing the
growing pains; however, it was challenging because growth
was not occurring organically, but by leaps and bounds. He
explained that the growth had caused a few problems. He
continued to remind staff that it was the Division of
Facilities Services, with an emphasis on the word
"services." The division was providing the service to other
state agencies for the facilities.
Co-Chair Johnston looked at the weigh station image on
slide 8. She had observed that most weigh stations were
closed. She asked if weight was currently determined
automatically under the roadbed. She asked if DOT was
looking at divesting from some of the weigh station
facilities.
Commissioner MacKinnon answered that weigh stations were
closed certain hours of the day and open during others. The
purpose of the weigh stations was to get an idea of the
volume of the trucks passing over them. He reported that
the department kept track of the information. He shared
that DOT recorded the weights of trucks when they came out
of the yards. He explained that the weigh stations were
typically open at night when the weights of the trucks were
not being recorded in the yards.
2:13:26 PM
Co-Chair Johnston observed that the stations seemed to be
closed at night on the Seward Highway. She asked for
verification that the modernization entailed getting the
truck weights at their point of departure.
Commissioner MacKinnon replied in the affirmative.
Representative Wool asked what percentage of the
department's resources went to the facilities services
component.
Commissioner MacKinnon deferred the question to Mr.
Pannone.
Mr. Pannone answered that the Division of Facilities
Services had a budget of about $41 million in interagency
receipts. He explained that the interagency receipts were
comprised of funds the department collected from agencies
that had "onboarded" to the service. The department's
overall budget also included facilities components showing
what DOT paid to the Division of Facilities Services. He
offered to provide the information.
Representative Wool clarified that he was more interested
in interagency receipts. For example, the legislature had
been talking to the Department of Corrections (DOC) about
reopening the Palmer Correctional Center and DOC had to go
through DOT. He wondered how laborious the process was and
whether DOT had abundant resources to handle the reopening
of the facility immediately.
Commissioner MacKinnon had not seen anything from DOC, he
had only heard rumors. He shared that DOT had a recent
issue with one of the other departments questioning what
the cost of a capital project would be. At first blush it
looked like there were some additional costs, but when they
dialed into the budget, they found contingencies that were
not real charges until needed. The department had talked
with other agencies about increasing their delegation of
authority from the standard $200,000 in certain cases.
There were a number of past situations where the
delegations had not gone well. He stated that the staff in
the Division of Facilities Services were in the
construction business and knew how to bid and operate the
projects. He explained that without that background, it
could lead to a negative and more costly experience. He
reiterated that he had not heard from DOC.
2:16:35 PM
Vice-Chair Ortiz looked at slide 7 related to highways and
aviation components. He observed that in FY 15 the
component had been funded at about $144 million, which had
begun to decline to its current budget of about $122
million. He asked if the reduced funding had impacted the
Statewide Transportation Improvement Program (STIP) and its
projects. He asked if the spending reduction had resulted
in a potential growth in expenses for the state in the
future due to deferred maintenance.
Commissioner MacKinnon answered there was not a simple
answer. He explained that STIP was a separate component
from state maintenance and operation of roads and airports.
He detailed that STIP was federal funding for construction
projects for new transportation facilities. He expounded
that for a number of years, DOT had been able to use
federal highway funds for certain maintenance projects. The
department kept its winter response maintenance workers
busy in the summer months - DOT did not want to lay off the
workers during part of the year as it would add to
recruitment and retention problems. He continued that DOT
was able to use federal programs for replacement of
guardrails or a cracked ceiling. He stated it was
especially important on the Dalton Highway. The department
had to keep tight track of work staff was doing under the
federally funded program; it could not take workers off the
federal payroll and put them on the state maintenance side.
Commissioner MacKinnon continued answering the question and
referenced an earlier slide showing a potholed road (slide
6). He detailed that the image was taken on the Dalton
Highway in August. He elaborated that rainfall in the area
had been much higher than normal. He explained that DOT's
maintenance crews were shorthanded as it was and had been
busy doing federal projects on the Dalton. Consequently,
the blading and smoothing of dirt roads had been neglected
due to budget reasons. The department had replaced much of
its general fund funding for highways and aviation with
federal funds.
2:19:33 PM
Vice-Chair Ortiz asked if there was an increasing problem
with higher costs due to deferred maintenance issues.
Commissioner MacKinnon answered in the affirmative. He
elaborated that required critical components, like culverts
and biennial bridge inspections, were conducted on the
federal side. However, when it came to routine potholes on
roads such as the South Tongass Highway, deferred
maintenance was a big issue.
2:20:32 PM
MARY SIROKY, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, addressed AMHS on
slide 9. She spoke to the challenges facing AMHS, including
aging terminals and vessels. She detailed that some of the
vessels were 55 years old and still had their original
engines, which had made keeping them in operation a
significant challenge. There were some significant gaps in
service as a result of a $43 million reduction to the FY 20
operating budget. The gaps in service were exacerbated by
vessels breaking down and the Matanuska not coming out of
its overhaul as quickly as possible.
Ms. Siroky shared that AMHS was faced with changes in
federal law. The department had been told in the current
year that it needed to have armed presence to support
border patrol workers responsible for providing inspections
as passengers traveled from Prince Rupert in Canada on a
marine highway vessel headed for Ketchikan. She stated it
was a significant challenge the department needed to figure
out how to fund.
Ms. Siroky relayed that there were three marine collective
bargaining unions, all with different contracts. She
expounded that some unions worked two weeks on, two weeks
off and others worked one week on, one week off. She
explained that the different contract provisions made it
difficult to dispatch employees to boats and determine how
best to use resources effectively. She reported that
turnover and recruitment had been a challenge over the past
several years. She detailed it had been difficult to keep
enough vessel employees employed in order to avoid losing
them in the winter. She explained that the unions operated
on a seniority based system; therefore, if a young person
came in and did a great job in the summer months, they may
not be the one with a job in the fall and winter.
Co-Chair Johnston asked when each of the collective
bargaining agreements expired.
Ms. Siroky replied that the IBU [Inlandboatmen's Union] had
gone on strike the past summer. The department was in the
process of working out the final details of an agreement
with IBU, which would hopefully be signed soon. The
department was in active negotiations with the Masters,
Mates and Pilots and the Marine Engineers' Beneficial
Association; DOT hoped to have agreements for the
legislature to review prior to the end of session.
Co-Chair Johnston noted there were three unions.
Ms. Sirkoy answered that IBU had gone on strike and the
department was working with the union [on a contract
agreement].
Co-Chair Johnston asked if any of the unions had
apprenticeship programs. She remarked that some of the
positions required training. She was interested in the
recruiting aspect and asked if the responsibility fell on
the state or if there was a partnership.
Ms. Siroky answered that there was not an apprenticeship
program for the AMHS. There were jobs that required
additional skills such as an engineer, a master, and a
master with pilotage.
Representative Josephson looked at slide 13 and observed
there were five vessels that were 16 years old or younger.
He believed one of the vessels was serving the
Metlakatla/Ketchikan route. He asked why the other four
were not operating.
Ms. Siroky answered that the Cheenega and the Fairweather
were both aluminum vessels, meaning their lifespan was
significantly different than for steel hulled vessels. The
two vessels were very expensive to operate. She explained
that the vessels had been built and operated under the high
speed vessel code. She relayed that the Tazlina had
recently come out of the yard and had not been in operation
the past summer [note: Ms. Siroky made a correction later
that this statement pertained to the Hubbard, not the
Tazlina].
Representative Josephson shared that he had only read
summaries of the Northern Economics Report. He believed the
report specified that some routes were not as attractive as
private routes. He asked about the administration's
position on the public policy behind having a ferry system
for coastal Alaska. He asked if the administration thought
the state should have a ferry system.
Ms. Siroky answered that she did not believe the
administration had ever said the state should not have a
marine highway system. She reported that the
administration, by way of DOT, had requested the Northern
Economics study, also referred to within the department as
the "reshaping study." The study had brought together a
large amount of information. The governor had formed a
small taskforce to review and balance the study with all of
the modes of transportation the state was responsible for.
The state provided the infrastructure for roads and
runways. She explained that the marine highway system was
the only system where the state provided the
transportation. She remarked that as the state developed a
plan for AMHS going forward, it was important to look at it
in the context of how the state dealt with all
transportation. She explained that the taskforce would help
outline the big policy issues and address how to reconcile
them.
2:29:23 PM
Mr. Pannone reviewed slide 10 showing a 10-year lookback of
the AMHS operating budget. He pointed out that between
FY 11 and FY 19 there had been a gradual reduction of $16.2
million in the AMHS operating budget. The reduction from
FY 19 to FY 20 was $43 million.
Ms. Siroky turned to slide 11 and provided an FY 20 AMHS
service overview. She noted that DOT had been asked to talk
to the committee about the ferry service it had hoped to
provide with the FY 20 operating budget and reduction of
$43 million. The department had planned to provide just
under 284 weeks of service. She reported that through
December 31, 146 weeks of service had been provided. The
department estimated it would provide 250 weeks of service
by the end of June. She explained the reasons for the
discrepancy. First, the [IBU] strike had cost a full eight
weeks of service. Second, the Matanuska had stayed in the
shipyard longer. Third, the Columbia had not been put in
layup as early in order to provide mainline service when
the Matanuska did not return as quickly as possible, which
had cost the department funding it did not have; therefore,
service had been reduced elsewhere. Fourth, the LeConte had
needed a significant amount of steel work. She elaborated
that a six-week overhaul had turned into a seven-month
overhaul. Lastly, the Matanuska had broken down.
2:32:11 PM
Vice-Chair Ortiz looked at the plan for 280 weeks of
service and the reality of 146 weeks of service [through
December 31, 2019]. He asked if the Lituya accounted for 52
of the 146 weeks of service. He noted the Lituya ran year-
round from Ketchikan to Metlakatla only.
MATT MCLAREN, AMHS BUSINESS DEVELOPMENT MANAGER, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES (via
teleconference), answered that the Lituya accounted for 50
of the weeks of service. He clarified that the 146.6 weeks
of service was for the first half of the fiscal year;
therefore, the full 50 weeks for the Lituya was not
included in that number. He explained that the 50 weeks was
included in the estimated total of 250.3.
Representative Wool considered the 383.9 planned weeks of
service for FY 20. He asked how much of a reduction the
number represented when compared to FY 18.
Mr. McLaren replied that the department had provided 329.1
weeks of service in FY 19, 317.5 in FY 18, and 329.6 in
FY 17.
Ms. Siroky discussed the status of the vessels on slide 12.
She noted it was likely not a very pretty picture. She
provided details on the various vessels. The Lituya was
operating. The Columbia was scheduled to come out of
overhaul on May 6. The Tazlina, the new ACF vessel, was
scheduled to begin operating on March 5. She elaborated
that the Tazlina overhaul was time dependent as the
warranty ran out at the end of April. The department wanted
to ensure the vessel reached the yard with plenty of time
to deal with any unknown warranty issues. The Kennicott was
scheduled to run on April 16. The Tustumena was scheduled
to begin service again on May 1. The LeConte was scheduled
to run on May 20. She expounded that the LeConte went in
for repair and the replacement of eroded steel in November
(the schedule gave about seven months for the repair).
There had been problems with the Matanuska - there had been
some good news and the department was hoping for more. She
elaborated that DOT was hoping to get the vessel back in
operation by March 2. The Hubbard was currently having
forward doors installed, otherwise the department would
have considered operating the vessel while the Matanuska
was down. The Aurora, Malaspina, Fairweather, and Chenega
were currently in warm layup and had no crew on.
Ms. Siroky stated it was important for people to understand
that the ships in the yard were all having work done on
them. She clarified that just because a boat was not in
drydock did not mean that people were not taking engines
apart and looking at different parts and pieces of the
ship. The department did not want people to think that the
boats were tied up and nothing was happening.
2:37:04 PM
Representative Knopp thought Ms. Siroky had stated earlier
that the Tazlina had come out of the shipyard three weeks
back. He asked for verification that the vessel had never
been put in service.
Ms. Siroky corrected her earlier statement. She clarified
that she had meant to say that the Hubbard had never been
put into service the past summer.
Representative Knopp asked for the status of the Tazlina.
He believed the shipyard only had the ability to work on
one vessel at a time.
Ms. Siroky clarified that the shipyard had the ability to
work on many ships at a time. The Tazlina was currently in
its warranty overhaul and should be out on March 5. The
vessel had been put into overhaul ahead of time to ensure
there was time to do any warranty work by April 30 if any
problems arose. Any work done under the warranty would cost
the state nothing.
Representative Sullivan-Leonard looked at the 11 or 12
vessels that were currently being worked on or were in
layup. She surmised that it was positive that in the spring
and summer there would be at least eight vessels in service
during a season that was busy with tourists and the
movement of goods and services. She believed that if
vessels were going to be down, the current time was a good
time for it to happen.
Ms. Siroky answered it was the slight silver lining in the
situation. She was certain the people who had not been able
to travel would not see it that way; however, it was
fortunate that the Matanuska had not gone offline in the
middle of summer.
Representative Sullivan-Leonard stated that the DOT
subcommittee had discussed that the Columbia would be
filling a significant portion of the gap in service. She
asked if the Tazlina or Kennicott could be used to fill the
needs while the Columbia was out of service.
Ms. Siroky replied in the negative. She clarified that the
dates listed [on slide 12] were the dates the department
expected the ships to come out and DOT did not believe they
could come out any earlier. She explained that the bigger
shipyard required technicians with specific expertise to
come up and help. The technicians were scheduled to come up
to work on all of the vessels at one time. She used a
hypothetical example of a person with marine radar
expertise who would come up to work on all of the boats'
systems at one time. She elaborated that if the vessels
were located at a much larger shipyard there may be some
greater flexibility to get some boats out sooner.
2:41:16 PM
Representative Sullivan-Leonard considered the short-term
gap and asked if DOT was looking at having a private
company assist during the gap.
Ms. Siroky replied in the affirmative. The department had
issued a request for information the previous Monday for a
period of three or four days. The request was for
information about companies that may be able to operate in
northern Lynn Canal and service a set number of passengers.
She shared that they had received some interesting
responses. The department was circling back to those
companies and talking about getting some service in
northern Lynn Canal to reach villages and Haines and
Skagway. The department was also hoping for the ability to
move some palletized freight. The department recognized
that if there was the ability to move palletized freight,
the communities would need some time in order to get
freight where it needed to be to get to the communities.
She relayed that DOT was hoping to know by the end of the
week how it may be able to fill in for some needed service.
2:43:08 PM
Vice-Chair Ortiz considered recruitment and retention of
workers. He asked what happened to the workforce on the
Matanuska when the boat had gone out of service. He asked
if the workers were still with the boat and still employed.
Ms. Siroky answered that the crew on the boat were assigned
for a set period of time and had a set minimum number of
hours they were guaranteed to be paid. She explained that
when the Matanuska had broken down, crew members had stayed
on the boat and were being paid.
Vice-Chair Ortiz shared that a constituent who worked for
AMHS believed they were subject to losing their health
insurance because they were no longer employed. He thought
it had been in relationship to the Matanuska. He asked if
there had ever been a situation when a vessel had broken
down where employees had been put on hold without health
benefits. He thought it would be difficult for a person to
continue wanting to be employed if that was the situation.
Ms. Siroky replied that there had been discussion about
whether employees were covered by health insurance during
the [IBU] strike [the previous August]. She believed it had
been determined that the employees had healthcare. She
relayed that many vessel employees saved their leave to
help them get through the slow times of the year. She did
not know of specific people who thought they had a job and
were currently not working and without health insurance.
The department had received an email earlier in the day
listing the number of staff on each of the boats currently
in layup. She elaborated that each of the boats in layup
had between 5 and 15 crew members on board.
2:45:59 PM
Vice-Chair Ortiz considered the potential for the system to
try to help communities with some of the significant
problems caused by the breakdown of the system. He asked if
it would be possible to have an early sailing from Whittier
to Cordova. He had heard much concern about people needing
to move supplies to prepare for the fishing season.
Ms. Siroky answered that the department had heard the
concern many times during public comment on the AMHS spring
and summer schedule. The department had come up with a way
to get the Kennicott up to the area to help with the
fishing season in Cordova. She elaborated that DOT sent the
[Cordova] mayor an email a couple of weeks back advising
him that they did not believe they would meet his April
15th date, but they could get the vessel there by April
19th. The plan was to run back and forth trips from
Whittier to Cordova. The department was hoping to get the
finalized schedule out in the next week or two. She thought
people would realize the department had been creative in
trying to find ways to meet the significant gaps and needs.
Vice-Chair Ortiz asked if there would be anything done for
special coastal Alaska school events requiring travel. He
highlighted music festivals in Cordova and Sitka and a
basketball tournament in Juneau as examples. He pointed out
that large numbers of students had traditionally used AMHS
to travel to the events.
Ms. Siroky replied that the department's scheduler worked
with communities and schools to get event dates upfront in
order to try to build an accommodating schedule. She
believed the planned schedule took care of the Sitka music
festival, the high school tournaments, and the Gold Medal
basketball tournament. The department recognized that if
the Matanuska was not back online, the events would be
significant needs for the communities and some fill-in
service would be needed.
2:49:17 PM
Representative Carpenter looked at the eight vessels on the
left side of slide 12 and asked how many were out for
scheduled repair versus emergency repair. He asked when
each of the ships had gone offline.
Ms. Siroky answered that all of the boats had scheduled
repairs. The department had planned that the Columbia would
not operate over the winter. The vessel had been operated
longer than expected before going into the shipyard. The
Tustumena, Kennicott, and Tazlina were all in their regular
overhaul time slips, along with some out of revenue period
of time due to a lack of operating funding. The LeConte was
offline for a longer period due to a need for significant
steelwork. The Aurora had been laid up because the
department could not afford to fix both the LeConte and the
Aurora. Experts had looked at the two vessels and had
determined the LeConte would be cheaper and faster to
repair.
2:51:17 PM
Representative Wool stated that the Tazlina was a one-year
old boat and was virtually brand new by comparison to the
other boats. He asked if the department could predict how
long the boat's scheduled warranty overhaul would take. He
reasoned that the overhaul would not find the significant
rust that may be found on older boats.
Ms. Siroky answered that the department did not expect the
Tazlina's overhaul to take longer than normal. She
explained that the ship had been put into its overhaul
already, to give time to do any unanticipated work by the
April 30 warranty deadline.
Representative Wool assumed that the vessels were not all
the same size. He asked if the Tazlina could help with
service if the Matanuska broke down. He understood the
Tazlina was a smaller boat. He asked for the primary
differences between the two vessels.
Ms. Siroky answered that the Tazlina could fill in for the
Matanuska in northern Lynn Canal. She did not know about
the ship's ability to go to Bellingham. She noted there
were not crew quarters on the Tazlina, which made things
much more difficult to operate on a 24 hour/day route.
Representative Wool asked if the department ever left a
boat in reserve that was not under repair and not in use.
He reasoned that the boat could be used if problems arose
on another vessel. He remarked that the vessel could be
taken out of storage without requiring six months of
startup time. He noted that no one had anticipated the
Matanuska having problems.
Ms. Siroky answered that DOT had not had the luxury of
having a spare vessel ready to fill in for another vessel.
However, AMHS had been operating enough vessels to pick up
the slack or fill in for another vessel. She explained that
if the Matanuska had gone offline in the summer, the
Columbia may be operating and may fill in. In the past,
when DOT had run into situations "of this magnitude" there
had been more boats operating and more opportunities to
minimize the challenges.
2:55:21 PM
Representative Wool asked for verification that the new
door being installed on the Hubbard was different than what
the department believed was needed when the boat had been
ordered. He asked if the Hubbard had the same limits as the
Tazlina in terms of sleeping quarters and routes it could
pick up. He remarked that the two new boats were more
limited than the older fleet.
Ms. Siroky replied that the Hubbard and Tazlina had been
designed for the Juneau Access Project to be at a much
different state. She elaborated that the ferries had been
designed to operate out of Katzehin about 50 miles north of
Juneau. She explained that the boats would have the ability
to get to Haines and Skagway within 12 hours, which meant
crew would not have to be kept on board around the clock.
The road infrastructure had not come to fruition;
therefore, the boats were operating under a different
scenario than the original plan. The forward doors were a
modification to make the boats more efficient on a longer
run. She detailed that the boats were designed to be "roll
on, roll off" and the docks were not modified for that
option. She explained that there was a very narrow
turnaround on the boat. She had been told the forward doors
would increase the kinds of trucks that would fit on the
boats (e.g. large RVs) and the loading and offloading
efficiency, which would decrease the time spent at any
given port.
2:57:40 PM
Representative Wool surmised that because the road had
never been built, the department was modifying the boat to
adapt to other purposes. He referenced Ms. Siroky's earlier
statement that the state provided infrastructure for roads
and bridges, but the marine highway was the only
infrastructure where the transportation was provided. He
cited the Alaska Railroad as another example where the
maintenance and operation were provided. He understood the
railroad was a separate state corporation, but it was
affiliated with the state.
2:58:41 PM
Vice-Chair Ortiz considered the future for AMHS. He asked
what it meant to put a vessel in layup instead of making
repairs. He asked if it meant the vessels would never be
repaired.
Ms. Siroky answered that DOT had put out an RFP to hire a
broker to sell the Fairweather and Chenega. The Aurora and
Malaspina were in layup and were being kept warm. She
detailed that a contractor checked on the boats daily and
the department had not determined whether it would dispose
of the two vessels. The department was keeping its options
open and the vessels were being kept in good shape for
whatever decision was made.
Vice-Chair Ortiz remarked that the multitude of needs [in
coastal communities] had become very clear as the breakdown
of the system had occurred. He highlighted rural Southeast
Alaska, Cordova, and Southwest Alaska and stated the need
for transportation infrastructure was there. He asked for
verification that DOT would only sell the Malaspina if
there was an equivalent vessel to fill its spot.
Ms. Siroky answered in the negative. She clarified that DOT
had not yet decided to sell the [Aurora and Malaspina]
vessels. She stressed the importance of determining the
AMHS needs going forward - the individuals on the reshaping
study would help with the task - and she did not believe it
would be appropriate to say DOT would replace something
that already existed. She explained that replacing
something that already existed may not meet the true needs
of the system going forward.
Representative Knopp stated there was no denying there was
significant angst in Southeast Alaska in regard to the
current state of AMHS. He elaborated that the governor's
budget rolled out the previous year had come close to
eliminating the entire marine highway system. He described
the system's current status as zero ferry service with one
small boat operating. He asked if the Aurora and Malaspina,
currently in warm storage, could be used immediately if
desired. He noted that Ms. Siroky had stated the boats were
currently in warm storage. He added that she had not said
the two boats were undergoing any maintenance. He
referenced the statement that the Tazlina was undergoing
maintenance to try to beat the warranty expiration. He was
concerned by the maintenance issue and the fact that so
many vessels were broken at one time. He stated that the
commissioner and others responsible for managing fleets
knew that everything was on a rotational cycle. He was
dumbfounded that the system was in its present state. He
asked about the status of the effort to replace the
Tustumena. He highlighted that the legislature had
appropriated $240 million in federal highway funds in 2018
to go out to bid on a four-year project. He asked for the
status.
3:03:09 PM
Ms. Siroky answered that the Malaspina and the Aurora had
both been issued what the U.S. Coast Guard called an 835
notification or a no-sail notification. Issues had been
identified with the boats that required repairs before the
boats could sail. The steel replacement on the Aurora was
one of the issues and DOT had determined the cost would
exceed the $7 million it was spending on the LeConte. The
Malaspina had some significant steel issues and she
believed it would cost $10 million or more to fix the no-
sail issues found by the Coast Guard.
Ms. Siroky continued to address the question by
Representative Knopp. The department had determined it
would be irresponsible to operate the 57-year old
Malaspina, given that no spare parts were readily
available. She elaborated that it did not make sense to put
$10 million into a boat that would then need new engines at
a cost of $30 million. Additionally, bringing the ship up
to Coast Guard standards would cost another $4 million to
$5 million. There was an authorized amount for construction
of the Tustumena. The department would be looking to the
reshaping group for information on what the Tustumena
replacement should do and which communities it should
service. She elaborated that the information would factor
into the ship design. She asked Representative Knopp to
repeat his remaining question.
Representative Knopp asked about the earlier statement that
the Tazlina was undergoing maintenance to try to beat the
warranty expiration. He asked why the department was
holding onto the Aurora if it was in such bad condition. He
wondered why the department had not decided to put the boat
on the market. He surmised there must be a reason for
keeping boats in warm storage.
Ms. Siroky replied that each boat had its scheduled time in
the shipyard. She highlighted her earlier statement work on
ships overlapped in order to make the most efficient use of
technicians coming to Alaska to do the work. She stated
that nothing had gone their way in the current year. She
elaborated that there had been boats in layup, overhaul,
and out because of a lack of operating funding. In terms of
making a decision on the Aurora and Malaspina, DOT wanted
to wait until the reshaping group looked at the vessels.
The department did not feel it would be responsible to take
any options off the table at present.
3:06:46 PM
Vice-Chair Ortiz asked when the Malaspina had last been
overhauled in layup. He thought that it had been receiving
repair work in Portland relatively recently. He wondered if
he was confusing it with a different boat.
Ms. Siroky answered that the Matanuska had recently come
out of a two-year repower in Portland. She elaborated that
over $40 million had been spent on new engines. She
explained that the brand new engines were having issues.
While the situation was not ideal, the department was
grateful the engines were still under warranty.
Vice-Chair Ortiz asked for more detail on the Malaspina
maintenance timeline.
Ms. Siroky answered that every boat was required to undergo
an overhaul annually in order to receive a certificate of
inspection. The vessels were required to have a current
certificate of inspection from the Coast Guard to operate.
Vice-Chair Ortiz asked if the significant issues requiring
$45 million in work had been discovered during the boat's
layup in the past year.
Ms. Siroky answered that the Coast Guard had identified
some significant issues with a cost of about $10 million to
$15 million. The remainder of the $40 million cost resulted
from replacing the engines. She questioned the logic of
trying to operate a 57-year-old with original engines and
no spare parts. She stated that if it broke, it was broken.
She explained it was the reason the department had chosen
the Malaspina. The Matanuska had just come out of a $47
million repower and overhaul.
3:09:04 PM
Co-Chair Johnston asked if AMHS owned docks.
Ms. Siroky answered that the State of Alaska owned docks
through AMHS.
Co-Chair Johnston asked if the docks were under the purview
of AMHS or DOT.
Ms. Siroky answered that the docks were primarily managed
and maintained by AMHS.
Co-Chair Johnston asked how the docks were doing.
Ms. Siroky answered that the department was doing work on
the Gustavus and the Tenakee docks in the current year. She
relayed that work was scheduled on the docks in Skagway and
Haines. She did not know that any work was taking place on
the Cordova dock or out the [Aleutian] Chain. The
department owned the dock in Prince Rupert, which was in
pretty poor condition. The department had frequently
discussed repairing the dock and bringing it up to
standards; however, it had faced issues with Buy America
Steel and the Canadian location.
Co-Chair Johnston asked if the dock in Whittier was state-
owned.
Ms. Siroky answered that the department had a facility in
Whittier.
Co-Chair Johnston requested a list of the docks and their
status.
Ms. Siroky replied that the department would follow up with
the information.
Representative Carpenter asked for verification that even
without a budget issue, nine out of ten vessels were
currently offline. He asked which of the boats could run if
money was not an option.
Ms. Siroky replied it would be difficult to say. She noted
that the timing of the Columbia's overhaul was out of sync,
which had caused some problems. She deferred to Mr. McLaren
and asked which vessels had been operational the past
January through March.
Mr. McLaren answered that the department's current budget
only allowed for the operation of two vessels from mid-
January through the end of February. One of the two vessels
that had been scheduled for operation was the Matanuska,
which was currently offline. The budget provided for three
vessels from March 1 through mid-April, including the
Matanuska and the Tazlina (after the completion of its
warranty work at the beginning of March). He addressed
which vessels would be available the soonest. The shipyard
had reported that the Kennicott was a bit ahead of
schedule. He estimated that in a perfect funding world, it
may mean the Kennicott could be back in operation a week or
two earlier than expected. All of the other vessels needed
their work to be complete prior to coming back online.
3:13:14 PM
Representative Josephson asked if resources were unlimited
whether there would be vessels on the water. He thought the
burden should be on DOT to tell the legislature otherwise.
He viewed the issue as a resources problem with the
addition of some bad luck. He did not know whether there
was another time in the state's history where there had
been no operational boats, apart from the Lituya located
down by the Dixon entrance.
Ms. Siroky answered that if resources were not an issue the
department would have scheduled things differently and
there would be boats on the water.
Representative Wool looked at the ship graphics on slide 12
and asked if the Tazlina and Hubbard vessels were the same
model.
Ms. Siroky replied in the affirmative. She detailed that
the following pairs were sister ships: Hubbard and Tazlina,
Matanuska and Malaspina, and LeConte and Aurora.
Representative Wool asked if the forward door was being
installed on the Tazlina as well [as the Hubbard].
Ms. Siroky responded in the affirmative. The department
would schedule the Tazlina to have the forward installation
after DOT's operating budget was solidified. Once the
legislature passed the budget, the department would
determine how to best fit the work in.
Representative Wool stated his understanding that the state
had owned the Hubbard for a year, and it had not yet been
used. He asked how long it would take to have the new door
installed. He asked if it was a six-month or two-year
project. He remarked that the Tazlina had been used and the
Hubbard had not.
Ms. Siroky deferred the question to Mr. McLaren.
Mr. McLaren answered that the door project on the Hubbard
had just started. He detailed that the door had arrived in
December and the installation would take about three
months. The Hubbard had not been in operation due to the
department's funding levels; DOT could not afford to
operate both Alaska Class ferries, the Tazlina and Hubbard,
as well as the LeConte and Aurora.
Representative Wool asked if the Alaska Class vessels were
large enough to go from Whittier to Cordova. He asked if it
was doable for ferries without sleeping quarters. He
understood that the route was currently without service.
Ms. Siroky responded that the Hubbard and Tazlina were
capable of making the run from Whittier to Cordova and the
boats were compatible with the docks in those locations.
The challenge with operating either of the vessels in
Prince William Sound was the need to meet 12-hour work/rest
rules as dictated by the Coast Guard. The vessels could
potentially make the run from Cordova to Whittier in 12 to
14 hours, but the boats did not have a place to accommodate
the crew at night.
3:18:16 PM
Representative LeBon suggested that if a vessel were
running from Whittier to Cordova, it could stop in Valdez
to break up the trip.
Ms. Siroky agreed; however, the department would have to
put the crew up at night because the two vessels had no
crew quarters.
Representative LeBon suggested that accommodations could be
made for crew in Valdez.
Ms. Siroky agreed.
Representative Knopp asked for detail on the vessels'
purpose and their limited operations.
Ms. Siroky responded that the vessels were designed to work
out of Katzehin, a point about 57 miles north of Juneau, to
provide service to Haines and Skagway. The idea had been to
provide a lot of service on a daily basis within a 12-hour
period. She explained that moving many miles up the coast
constituted a major difference in how the boats could
operate.
Representative Knopp asked if it explained the $400,000
supplemental request for unexpected lodging for the
Tazlina.
Ms. Siroky answered in the affirmative. She elaborated that
when the Tazlina had been in operation over the past
summer, the department had been housing crew in Haines. She
relayed that the costs had been much higher than
anticipated.
Representative Knopp surmised the supplemental request was
to pay for the past bills but there was no request going
forward.
3:20:40 PM
Representative Wool remarked that the Alaska Class vessels
were for a route that did not exist because the road had
not been built. He asked whether the department had been
fairly certain the road would be built at the time the
boats were commissioned. He had not known the planned road
had been a done deal. He was unclear why the department had
decided to spend such a large amount of money to purchase
such route-specific vessels.
Ms. Siroky replied that the department had been optimistic
that the road would be constructed.
Ms. Siroky briefly pointed to slide 13 showing the age of
each vessels in the fleet. Highlighted the AMHS reshaping
study on slide 14. The goal was to identify potential
reductions in the state's obligation for AMHS.
Additionally, the goal was to determine how to operate as
effectively and efficiently as possible. The governor had
established a reshaping workgroup to be comprised of the
following: a representative from the aviation community, a
representative from the state's boards and highways, a
representative from the marine transportation, two
legislators (Representative Louise Stutes and Senator Bert
Stedman), a representative from the marine unions, and
three public members. The department was hoping the members
would be announced within the next two to three weeks.
3:23:30 PM
Vice-Chair Ortiz referenced the objective of the study to
identify potential reductions in the state's financial
obligation and/or liability related to AMHS (slide 14). He
had heard there was a specific number attached to the study
and asked for details.
Ms. Siroky replied that the department had asked Northern
Economics to look at the governor's original proposed
operating budget, which included a 70 to 75 percent
reduction. The department had asked Northern Economics to
evaluate the 11 scenarios to determine whether it was
possible to get close to the number.
Vice-Chair Ortiz asked if Ms. Siroky was referencing the
prior year's budget number.
Ms. Siroky answered she was referencing the budget proposed
by the governor the past year.
Vice-Chair Ortiz asked if the proposed number had been $19
million or $20 million.
Ms. Siroky believed the figure had been between $20 million
and $25 million in general funds.
Co-Chair Foster thanked the presenters.
HB 205 was HEARD and HELD in committee for further
consideration.
HB 206 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster reviewed the meeting schedule for the
following day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| FINAL - HFIN 02.10.2020 Overview AMHS Update.pdf |
HFIN 2/10/2020 1:30:00 PM |
DOT Budget Overview/Marine Hwy. Update |