Legislature(2001 - 2002)
04/26/2001 01:43 PM Senate TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 130-ALASKA MARINE HIGHWAY AUTHORITY
SENATOR ROBIN TAYLOR, sponsor of SB 130, gave the following
explanation of the measure.
SB 130 is essentially the same measure that he introduced about 10
years ago when he was a member of the House. Senator Lloyd Jones
introduced a companion bill in the Senate. The concept originated
from studies done on Southeast Alaska transportation over the last
25 years. Those studies have concluded that transportation issues
should be removed from the influence of politics by establishing an
autonomous board that would hire staff. An autonomous board would
also provide for continuity and hopefully develop an intermodal
system of transportation to interconnect the expanding road system
of Southeast Alaska. None of that has occurred in the last 37
years. Unfortunately, that operation, in the words of Jim Ayers,
"is in a death spiral."
SENATOR TAYLOR said that without continuity in transportation, he
doesn't believe the ferry system will continue to exist, even as a
shadow of what it was in the past. The entire economy of Southeast
Alaska depends upon a certain level of service that may or may not
be available. If those communities are going to survive and have a
viable transportation link, this bill is crucial. This matter
always come down to a confrontation between the legislative and
executive branches. Every governor wants to be able to appoint the
people who will run the Alaska Marine Highway System (AMHS). This
administration has been no more successful in that effort than has
any previous administration. Senator Taylor expressed concern that
the head of the entire transportation system and the people who run
it change every four years and the replacements have no background
in that system. That has led to a lack of continuity, a lack of
expertise, and wildly vacillating concepts.
SENATOR TAYLOR noted he is not aware of any marine highway system
in the world that is building high speed ferries for normal runs.
High speed ferries are being built for critical runs where the
existing system has no capacity left. Passengers are paying two to
three times the cost to get to their destination quicker.
Number 467
CHAIRMAN COWDERY asked if the high speed ferries are capable of
running in big seas.
SENATOR TAYLOR said that every system he has contacted does not
operate fast ferries in adverse weather conditions. In addition,
staff from the Department of Transportation and Public Facilities
(DOTPF) have said they would not be able to operate a fast ferry
several days each year; high seas are a major factor, as well as
cost and maintenance. High speed ferries are probably an
innovative idea that will develop over time to where they will be
less expensive to operate. He pointed out that issue should be
resolved by a board of directors with expertise in public
transportation, and specifically marine transportation.
CHAIRMAN COWDERY noted that Senators Ward, Taylor, Wilken were
present and that Senator Elton was ill. He then took public
testimony.
Number 664
MR. GEORGE CAPACCI, General Manager of the Alaska Marine Highway
System, read the following prepared statement to the committee.
It is important that I be here today to express my
concerns about the proposed marine highway authority
contained in SB 130. These concerns are essentially the
same as Commissioner Perkins presented in 1997, with some
important updates about the management and direction of
the Alaska Marine Highway.
Let me begin with a review of why the Alaska Marine
Highway Authority is not in the best interest of our
customers, the citizens of Alaska, and the Alaska Marine
Highway employees.
First off, the authority creates more problems than it
solves. SB 130 diminishes public accountability. Under
the present system, the marine highway system management
is accountable to the public. Concerns and requests are
responded to quickly and completely. They have to be.
Elected officials are responsible for the management of
the marine highway and elected officials have to be
responsive to the public they serve. Sometimes that is a
time consuming and cumbersome process but it is the most
responsive way to handle the people's business. The
establishment of an authority would diminish the publics'
accountability of marine highway management by inserting
an appointed board between management and the people.
Marine highway management will no longer answer directly
for the elected governor or for any other elected
representatives. The board, and not the governor nor the
legislature, will make management decisions. Once
appointed, board members will not be accountable to the
public. A board member may be removed only for cause.
The accountability of the marine highway management to
the communities they serve will be substantially reduced.
We believe this is not desirable.
SB 130 diminishes public influence on decision making.
Alaskans know who is in charge of the marine highway
system. When things are running well, they know who to
compliment. When things aren't going so well, they know
who to contact. Believe me, they know who to contact.
This bill changes all of that. When accountability of
elected officials changes, public access to the decision
making process also changes. Although a person or a
community may ask the board of directors of the system
for a schedule change or a special run, there may be
little or no pressure to respond. The CEO is insulated
from the effect of public pressure.
Current community input to the fleet's schedule is an
ongoing effort. Annually we solicit this input and
adjust our schedule as much as possible to meet those
demands. We believe Alaskans appreciate direct access to
the public systems that most affect their lives, and this
bill will have a substantial negative impact on that
access.
The Alaska Marine Highway System is not broken. The
marketing and pricing study was recently completed.
There is a lot that is right about the Alaska Marine
Highway System. The ships have an enviable safety
record, they generally run on time, they provide safe,
economical, comfortable and reliable transportation
service to our traveling public. The currently
completed, back in September of last year, marketing and
pricing study, found that 93 percent of our customers
rate their AMHS experience as good or very good. The
study also concluded of the top ten locations visited by
summer of 1999 visitors, five locations - Anchorage, Mat-
Su/Denali, Fairbanks, Valdez and the Kenai Peninsula are
not even in Southeast Alaska. So five of the top ten
locations are not even in Southeast Alaska. This points
out that we are carrying visitors and passengers
throughout the state of Alaska. The entire state's
economy therefore benefits from the marine highway's
passengers.
Of course, I'll be the first to admit some problems
occur. They are inevitable in an operation that is as
vulnerable to as many variables as the marine highway
system is. It is a system that has a large and varied
constituency, and everyone has an opinion as to what
should be done and how it should be operated. But,
overall, the system is doing what it was designed to do
in the mid-60s - transporting people and vehicles
throughout coastal Alaska in the context of an intermodal
transportation network. It is a credit to the hard
working crewmembers and dedicated staff that we operate
as well as we do.
SB 130 adds another administrative layer. This bill
would set up another administrative layer over which
neither the governor nor the legislature will have
control. We believe that is bad public policy. But,
even worse, it doesn't fix anything. There is nothing in
the bill that encourages stability or financial support
by the legislature. There is nothing in the bill that
addresses the increasing capital needs of an aging fleet.
There are major challenges at marine highways that we are
addressing with strong leadership and action. One of the
biggest problems that you can help relieve is the time
and energy that now is being spent controlling the damage
caused by anxiety over our future. That is a problem
that you can materially affect by telling the whole story
in this very successful state adventure by demonstrating
your support for its future and helping us fix the
problems that we have. The system is nearly 40 years
old. The ships are aging, the system is running the same
type of operation it did 38 years ago with more public
service. In 1976, for example, Sitka was provided with
268 trips and in 1999 that number was 325 trips. Today
we are responding to the challenges of shrinking funding
and increasing regulatory demands.
I'd like to talk a little bit about AMHS maritime
experience. Although it isn't specifically stated in the
proposed legislation, an implicit purpose for an
authority is apparently to insulate the marine highway
system from inexperienced managers appointed through the
political patronage process. The 1989 "Acres Report"
recommended that additional experienced mariners should
be hired as managers to better understand the operation
of the maritime vessels. AMHS has done that and more.
From myself, the director of the Southeast region,
through the vessel operations managers, the marine
engineering manager, the port captain, assistant port
captain, the ISM/STCW coordinator, the three port
engineers, the eight vessel construction managers, and
the state's only naval architect and our safety officer,
the Alaska Marine Highway System is staffed with marine
professionals with over 500 years of vessel operation and
maintenance experience. Most of my staff, my senior
level staff, have the title "captain" in front of their
names and we can refer to them because of their master
mariners documents. This staff exists to support the
Alaska Marine Highway vessels and conducts its daily
business to that end.
The Southeast Transportation Plan and the Prince William
Sound Transportation Plan point toward the future. The
Southeast Alaska Transportation Plan was a comprehensive
plan that was developed through extensive public
participation. The basic tenant of the SATP is a series
of shuttle vessels connecting Southeast communities
coupled with a version of the exiting mainline vessels to
improve the overall transportation system for our
customers. The same holds true for the Prince William
Sound Transportation Plan. A vessel capable of 30 plus
knots is needed to solve the elemental time and distance
equation to provide daily service in Southeast Alaska and
Prince William Sound. The residents of Prince William
Sound communities strongly support our transportation
planning efforts. The residents of Southeast Alaska have
uniformly supported a Southeast transportation plan. The
Southeast Transportation Plan and the Prince William
Sound Transportation Plan are not perfect but they are
good plans and the best our public process can produce
for essential transportation improvements. These plans
have wide public support and endorsement. We need your
support to implement these transportation plans.
I believe a firm foundation is being laid for future
statewide transportation services including the essential
Alaska Marine Highway System. Vessels are being upgraded
to comply with ever increasing international and federal
safety regulations. Our crews are undergoing
standardized training mandated by the international
regulations to be the most professional mariners
possible.
An authority would further isolate the marine highway
system from capital funds. The marine highway system is
presently managed by DOT/PF personnel as an integral part
of Alaska's intermodal transportation system. The
majority of the routes have been designated by Congress
as part of the national highway system. As an operating
arm of the department, the system receives federal
highway funds from the department. By separating the
system from DOT, as an authority, operating independently
from the rest of the Department of Transportation, the
debate for funding the marine highway system capital
improvement projects could conceivably shift more toward
the legislature for resolution. This will force the
marine highway system to compete more aggressively with
individual communities throughout the state, other DOT
regions, and other agencies for its share of the federal
highway funds, rather than sharing them as one component
of Alaska's intermodal transportation system.
While the commissioner of DOT would serve on the board of
directors of this new authority, it is unrealistic to
think that an organizational component, which is separate
form the rest of the agency, and for which the
commissioner no longer has primary responsibility, will
receive the same level of consideration for federal
highway funds as it receives as a line agency within the
department.
The authority itself provides no mechanism to reduce
subsidies. The marine highway system presently derives
about 55 percent of its operating funds from revenues,
with the remaining 45 percent of its operating budget
appropriated from the general fund by the legislature.
The marine highway provides an essential public good,
transportation, that cannot be provided by the [private]
sector. As such, providing a state operating subsidy is
an appropriate role for government. This subsidy is
essential for continuing service year round at a
reasonable price. Nothing in this proposed legislation
is directed toward changing that funding relationship.
The proposed authority is not designated to be self-
sufficient. It will continue to require annual
legislative appropriations for operations and capital
improvements. What then is the justification for
establishing it as a state corporation? An authority
will require additional subsidy to fund its increased
overhead costs.
Additionally, administrative costs are likely to
increase. The marine highway system is already unfairly
criticized for its large size of central office staff.
In truth, the Juneau office staff has diminished in
recent years despite extensive additional international
and national safety and training regulations, which need
implementation, monitoring, and oversight. If the marine
highway system is split from the rest of DOT into a
quasi-independent authority, it will lose the
administrative support presently provided by the
department, and the administrative costs for the marine
highway system will certainly increase. Personnel and
accounting services, which are now provided in part by
headquarters, would fall entirely on the authority
itself, so would engineering services now being provided
by the Southeast region. The system would further be
removed from the Federal Highway Administration. The
relations with DOT and the Federal Highway Administration
would be complicated since our CFR Title 23 for the
administration of the Federal Highway funding programs is
the responsibility of the state highway agency, which is
the Department of Transportation.
Separate accounting and data processing systems would
almost certainly be necessary. That authority would not
be exempt from the Executive Budget Act, state
procurement code, and other state mandated rules and
regulations.
Finally, and thankfully, in summary, the proposed marine
highway authority would be a move in the wrong direction
as far as transportation in Alaska is concerned. We all
recognize that the marine highway system cannot continue
to operate as if it were still in the 1960s. Times have
changed and the needs of Alaska's communities and the
traveling public have changed. The transportation
network along Alaska's coastline has changed. The
changes needed in the marine highway system are
evolutionary as the system adapts to meet the demands of
our varied customers. However, SB 130 takes us in the
wrong direction. With the help of the legislature, we
will continue to work to ensure the marine highway system
truly functions as an integral system and element in a
well designed state transportation system. I am working
to bring about this evolutionary change to improve the
marine highway system but this transition must be well
thought out and have the support of the people of Alaska.
This takes time and the worst action we can take now is
to create another level of unneeded bureaucracy as this
bill proposes to do. Thank you for allowing that many
pages and I would be happy to answer any questions you
might have.
Number 1400
CHAIRMAN COWDERY asked if the ferry systems in other states are
privately owned and, if so, how they deal with federal subsidies.
MR. CAPACCI said there are a number of ferry systems throughout the
country, both publicly and privately owned. Most of the publicly
owned ferry systems get federal dollars to improve and construct
their vessels. Their operating funds come from their own revenues
and from their state legislatures. Those systems are very
different from Alaska's. Alaska has passenger ships that also
carry cars and are not used as commuter systems. Most other state
ferry systems do not have to deal with long distances.
SENATOR WARD asked for a copy of Mr. Capacci's written comments. He
also asked if any other ferry systems are run by an authority.
MR. CAPACCI said he is not aware of all the authorities, but a
number of bodies advise the Washington Legislature and do studies
for it, such as tariff pricing studies. He does not believe that
Washington State has a true authority that directs the CEO of that
ferry system.
SENATOR WARD asked if the existing authorities are port
authorities.
MR. CAPACCI said he would have to do more research on that
question.
SENATOR WARD commented that he asked because Mr. Capacci said he
was not in favor of authorities. He then noted the Governor has
proposed new regulations on cruiseships to deal with waste. He
asked if the ferry system is already complying with the Governor's
proposed regulations.
MR. CAPACCI replied, "Through the Chair, yes - Senator Ward there
are a number of different ...."
SENATOR WARD responded, "Okay, that's fine, thank you."
MR. CAPACCI said, "...but yes."
SENATOR WARD asked if the AMHS has the ability to acquire state
lands so that it can develop, sell or lease those lands in order to
supplement its operations, similar to the Alaska Railroad
Corporation (ARRC).
MR. CAPACCI said he did not know what possibilities exist along
that line.
SENATOR WARD asked if Mr. Capacci has read Sec.19.55.210, regarding
acquisition of land and easements, on page 6 of SB 130. He noted
that one of the cornerstones of this bill is to transfer 1.4
million acres of state land to this new authority to offset some of
the operational costs. He again asked if the AMHS has the
authority to accept land now.
MR. CAPACCI said he did not see that section in the previous
edition of the bill. He repeated that he is not sure whether the
AMHS can accept land at this time. He noted that is an intriguing
idea.
SENATOR WARD said, regarding Mr. Capacci's comment, that an
authority would separate the people from the operations, that he
believes an authority would bring the two into closer contact. He
asked if that would be eliminated if the members of the authority
are elected rather than appointed.
MR. CAPACCI said he would have to give that question more thought.
SENATOR WARD said to serve on other authorities, candidates must
fit certain criteria, such as geographic location. He felt that
should solve the public input problem and asked Mr. Capacci if that
is what he is proposing.
Number 1693
MR. CAPACCI said he does not know that the Port of Bellingham's
authority runs a maritime transportation system. DOTPF deals with
the facilities in Bellingham but he is only aware of the terminal
facilities that they operate.
SENATOR WARD asked Mr. Capacci if he is familiar with that
authority.
MR. CAPACCI said he is aware they have an authority with elected
officials.
SENATOR WARD again asked if that would alleviate Mr. Capacci's
concern about public participation.
MR. CAPACCI said he is not sure how that authority relates to the
public and how responsive it is to the public. He noted that
authority is not developing a transportation system. It makes
decisions about the shore side facilities.
CHAIRMAN COWDERY said he is glad the marine highway system is
already conforming to the proposed cruiseship regulations on waste
disposal.
MR. CAPACCI said there will be expenses.
CHAIRMAN COWDERY said the marine highway system must not be
conforming then.
MR. CAPACCI said, "We do conform with the outflows but the testing
requirements and the reporting requirements and the monitoring
requirements are going to be additional administrative and
additional costs if the periodicity is changed. The sampling that
we do - we weren't initially sampling effluent, we had other
measures of whether the systems are effective or not, but we took
it upon ourselves to sample those outflows and found that they were
within specifications so, if a lot of those bills get enacted,
there's going to be some expenses involved in that, yes sir."
There being no further testimony or questions, SENATOR TAYLOR moved
SB 130 from committee with individual recommendations. There being
no objection, the motion carried.
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