Legislature(1997 - 1998)
03/19/1997 01:30 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 88 - ALASKA MARINE HIGHWAY AUTHORITY Number 040 CHAIRMAN WILLIAMS announced the committee would take up HOUSE BILL NO. 88 "An Act relating to ferries and ferry terminals, establishing the Alaska Marine Highway Authority, and relating to maintenance of state marine vessels; and providing for an effective date." He stated that there are three amendments and further public testimony. Number 215 REPRESENTATIVE BEVERLY MASEK moved to adopt Amendment 1 for discussion purposes. Number 226 CHAIRMAN WILLIAMS asked if there were any objections. Number 233 REPRESENTATIVE KIM ELTON objected. Number 256 REPRESENTATIVE BILL HUDSON stated that the motion was for discussion purposes only. REPRESENTATIVE ELTON stated that he was objecting so the committee would have a discussion and withdrew his objection. Number 273 PETER ECKLUND, Legislative Assistant to Representative Bill Williams, stated that Amendment 1 addresses the interport differential when the Marine Highway System bids out maintenance work. One of the things accounted in the bids is the interport differential for Alaskan based shipyards. He stated Amendment 1 would clarify some of the details which go into how the interport differential is calculated. Number 337 DOUG WARD, Project Manager, Alaska Ship and Dry Dock, testified via teleconference from Ketchikan, that the first part of the amendment is designed to take a business like approach to measuring the true interport costs when delivering a marine higway vessel from their home ports to a remote repair facility which is not their homeport. The amendment will have the department measure all of the costs related to conducting a repair at remote facilities so that the state can make a business like decision and know the true cost of performing that particular repair project. That is why an interport differential cost is added to a non-home port repair yard's total bid. He stated that the second part of the amendment, is asking for an equitable process to evaluate the interport cost to the bid amount. The evaluation process should measure the true interport cost, against the true value of the work. He stated that currently, the interport differential is measured against the bid amount, which is an inflated amount, there are a number of contingency items in the bids schedules that are not activated during the actual contract, therefore the contract value is often less then the bid amount. The intent is to measure the true cost, which is the true cost of the work. Number 499 MR. WARD stated that there seems to be a misunderstanding on the intent of Amendment 1. He stated that the Alaska Industrial Development and Export Authority (AIDEA) reports, state that performing these projects in Alaska are going to be twenty percent higher. He stated that if Alaska Ship and Dry Dock wins the competitive bid, it would be because it cost the state less then the next highest bidder. He stated that he did not understand AIDEA's argument. He stated that he also heard comments that Amendment 1 was going to change the bidding procedure of the state, so that it can no longer be reimbursed over certain pay items in the bid schedule. He stated that the interport differential does not address the inner workings and the flow of money between the federal and state highway department, is only used as a tool to evaluate the true cost after the bids have been left. He stated that he does not see how Amendment 1 would affect the various relationships between the funding entities. Number 639 MR. WARD stated that he understood that there was a legislative audit conducted on the interport differential cost and the assertion was made that the actual costs are coming in less than calculated interport differential, he stated that might be true under current departmental policy. He stated that the amendment is asking the department to change its policy so that all of the costs are put in there initially, so we get a true statement of the costs and we do not have a discrepancy of the final analysis. Number 689 REPRESENTATIVE ELTON asked if the amendment is added to the bill and the bill passes, he stated that he was referring to the interport differential, does the state go through and calculate all of these interport differential items that are identified in the amendment, and then is there an Alaska bidders preference that is applied. Number 744 MR. WARD replied in a federal aided project, the Alaska bidders preference is not applied to the bid amount because of federal procurement regulations. He stated that they are researching it to see if it can be changed. He stated that the interport differential is not so much designed to provide a preference for Alaska shipyards but to let the state know what the true costs of the repairs are. Number 795 REPRESENTATIVE ELTON stated that his initial preference would not to codify in statute, what the elements of the interport differential may be, but to do that through regulation so there is a little more flexibility and as times change it is easier to change the definition of interport differential. He asked what Mr. Ward's comfort level is in having this in statute versus having this in regulation. Number 848 MR. WARD replied that it was the intent to keep the amendment as broad and general as possible and not fully codify all the elements, but provide the department guidance of the types of costs to be considered. He stated that the next step would be to go into regulation to truly identify those costs and create a formula that provides consistency in determination. He stated that cost identification, methods of evaluation and funds that will be used, could come in under regulation without a statute for guidance, but we don't believe there is an incentive for the DOT/PF to accurately identify those costs, and they haven't to date. Number 906 REPRESENTATIVE HUDSON believed that there should be this definition of interport differential in the bill, so that we don't have a contractual conflict with a claim that the state is skewing it towards a higher bidder. He stated that he supports the amendment, the added employee cost and fuel cost ought to be included in the bid. He stated that he is a strong supporter of performing vessel maintenance, to the greatest extent, in Alaska. Number 985 REPRESENTATIVE JOHN COWDERY stated that he supports the amendment. Number 1060 MIKE DOWNING, Director, Division of Engineering and Operations, Department of Transportation and Public Facilities, asked if this is the same language in the amendment of SB 21. CHAIRMAN WILLIAMS replied, "Yes." Number 1084 MR. DOWNING stated that he did an analysis of the language and read the analysis into the record: "The first part is subsection C. This subsection refers to the commissioners responsibility under the existing subsection A to prepare a written determination, when a vessel is taken out of state for maintenance or repairs. They allow the basis for the determination as limited to an unresponsible proposed cost, or lack of shipyard qualifications, or equipment. The new subsection C further defines the consideration given to the cost of the proposed work by requiring it to be compared to the lower of either the budgeted cost or the anticipated actual cost, assuming that there would be a difference. The strict application of the subsection language, should have little to no effect on the way that the Alaska Maine Highway System conducts its business, regarding the maintenance and repair contracts. The occurrence of a condition where the negotiations for a state funded contract have failed because of an unreasonable proposed cost, is at the least very rare. There is a need for caution though, when a statute is proposed that reaches all the way to the negotiating table of the construction contract and effectively adjusts the character of those negotiations. The greater concern and likely difficulty, with subsection C, will come in determining what the provision means and when it is to be applied. If the expectation is that this subsection would apply to competitively bid contracts, then there may be unintended and negative consequences. In applying the subsection to competitive bid contracts, the state would be prevented from considering contingent or optional bid items in the basis of award and therefore, would not receive competitive pricing for these items. Further compounding this problem, is that the scope of needed repairs is often impossible to determine without dry docking or other service interruption. That is why you have the contingent and optional bid items. "Subsection D. This subsection defines what is to be included in the interport differential. The interport differential is the estimated cost of moving a vessel from its home port to the facility where the work will take place. An interport differential is considered by the Alaska Marine Highway System and other ship owners and contract or determinations, so that the costs to the owner of moving a vessel is included in the determination of the low bid. This way the owner knows which bidder is offering the true lowest price. The interport differential is only used in the basis of award, the actual cost to the owner for moving the vessel is not influenced in any way or in any way affected by the interport differential. Nor is the interport differential bid item ever awarded to the contractor since the cost is incurred by the owner. The key to an accurate interport differential is that it reflect only the incremental cost of moving to and being at a different port, the total cost is irrelevant. If our interport differential is developed such that the home port has a cost then it is no longer reflecting the incremental cost it has got total cost in it. If there are costs that are included that would also be occurring in the home port, that is where you would have the non-zero home port interport differential. For the Alaska Marine Highway System, the interport differential applies, primarily to federally funded contracts. For the most part, the state funded overhauls are negotiated within state shipyards and therefore, the interport differential is not considered in the basis of award, there is no calculation. In a federally funded contract we should examine the eligibility for reimbursement, a problem could develop if the interport differential causes a contract to be awarded for an amount greater then the Federal Highway Administration believes is fair and correct. If otherwise ineligible costs are included in the interport differential and an award occurs to the home port ship yard for the greater amount, the state may end up having to pay the difference. We should review the proposed amendment with the Federal Highway Administration for eligibility. An example of the potential problem, is that agency overhead is the required inclusion under this provision but is clearly not eligible for reimbursement. The legislative budget and audit committee is in the process of completing their report following an audit of the methods used by the Alaska Marine Highway System to determine the interport differential. Public funds have been expended to interview the Alaska Marine Highway System Staff, gather information, analyze contracts, policies and procedures and begin the drafting of a report. The amendment appears to assume that these efforts and expenditures will yield a result that is inconsequential. A more logical sequence would have the amendment follow the completion of the report. Both of these subsections have an effect on the contractors selection process for vessel contracts in favor of the Alaska home port shipyard. A continual challenge to the Alaska Marine Highway System in contracting for maintenance and repairs to the vessels, is the low number of bidders. Out of state shipyards are likely to view these new provisions as a further deterrent to bidding on the Alaska Marine Highway System work which may lead to less competitive pricing and less competition and higher pricing." REPRESENTATIVE HUDSON questioned the statement that the interport differential may tend to limit out of state bidders because they will see this as an advantage to the instate marine maintenance facility. He stated that we are looking at the total cost to the state whether the feds pay for it or the state pays for it as far as maintenance is concerned and if we apply the actual cost that we are going to have, which is what the section says, it seems like we would have to address it because it is part of the total cost. He stated that if it is a Ketchikan vessel and it is performed in Ketchikan we do not incur any of these costs, and asked if anything in the amendment affects the other costs that are measured. Number 1452 MR. DOWNING replied that an example of a cost that is in the list that would occur in Ketchikan or Seward, which are the two home ports, would be the agency overhead that occurs regardless of the location of the ship or the project. REPRESENTATIVE HUDSON asked if the agency referred to, meant the marine highway. MR. DOWNING replied yes, the marine highway. Number 1480 REPRESENTATIVE HUDSON stated the he hasn't heard anything that would sway him away from the amendment. Number 1488 REPRESENTATIVE COWDERY stated, "I see nothing wrong in us coming with a -- when you are analyzing bids with a true and accurate costs in awarding the bid to the cost to the people." He stated that after dry docking the additional problems that were found would be found whether the vessel was dry docked in Seattle, Ketchikan or Juneau. He stated that if it is going to be a cost to the state then the costs should be included in determining where it going to be done. Number 1571 MR. DOWNING replied that the department understands that the interport differential is a reasonable thing to include in the contract, in the process of determining the true lowest cost. He stated that we probably have the same goals in mind, the language of Amendment 1 was drafted without consultation with the Marine Highway System, we would have drafted language differently showing the incremental differences. REPRESENTATIVE HUDSON stated that he wanted Mr. Ward to respond to the agency overhead question. Number 1735 REPRESENTATIVE AL KOOKESH stated that it bothers him to have the Ketchikan entity that stands to gain by having us birth in Alaska, they are a private company. He said, "To have them draft language for us which describes interport differential, I am a little bit uncomfortable with that. To have a true interport differential we ought to have one that does not include things that are going to happen anyway." For example maintenance cost occurred during running time. He stated that maintenance costs are going to be occurred when you run it from Juneau to Ketchikan, it just will be less then if run to Seattle. He stated that difference will have to be determined, there is going to be agency overhead, dockage and port charges will be incurred. To have it only charged in an out of state port does not make sense. An interport differential ought to be the true difference between running to Ketchikan and running to Seattle. He stated that he was uncomfortable with the port in Ketchikan writing the definition, and the Alaska Marine Highway should be involved with the definition. Number 1710 CHAIRMAN WILLIAMS stated that Alaska Shipyard and Dry Dock more or less belong to the state of Alaska through AIDEA. Number 1720 REPRESENTATIVE KOOKESH stated that it is his understanding that the organization has changed hands four times during the last five years. He stated that it came to AIDEA almost by default. He stated that he hopes Alaska Shipyard and Dry Dock does get all the business but he just wants to be fair about it. Number 1729 MR. WARD stated that this amendment will not particularly change the overall bid process. In reference to codification and Mr. Downing's statement that the total cost of the interport differential is irrelevant, speaks to why we would want to have it in statute form. He stated that the Alaska Marine Highway System will be able have an opportunity to input language when the regulation is formed and truly define what each and everyone of those costs are and mutually accept the formula for calculating that cost. He stated that the formula could be standardized, therefore, in every project, every cost would be considered. He agreed with the concept that agency overhead occurs everywhere but it occurs in different places at different levels. Agency overhead should include contract managers travel to various yards to conduct contract administration activities or engineering for special problems that occur in the yard. He stated that we want to see that those costs are identified and evaluated consistently and equitably to give Alaskan shipyards a level playing field. Number 1878 MR. ECKLUND stated that people from the Alaskan Ship and Dry Dock stated some of their concerns to Chairman Williams and Senator Taylor, as Senator Taylor has a companion measure in the Senate, and it was Senator Taylor's office that drafted the amendment. Number 1908 REPRESENTATIVE JERRY SANDERS stated that he agreed with the amendment in concept because we should give every advantage to an Alaskan bidder that we can. He stated, "I did not realize that a contract manager would come under that as agency overhead and if that is true then I am kind of backing off and I am wondering what else that I don't understand is involved in this agency overhead, because if you are talking about the secretaries in the office and if you talking the commissioner then I understand it doesn't have a place in here. I have had a lot of dealings with contract managers and their trips south and if you're applying that then it I think it does need to be in here. I just need more explanation on it." Number 1967 JOE PERKINS, Commissioner, Department of Transportation and Public Facilities, stated that the DOT/PF is in favor of the interport differential because the department wants the business to go to Alaska. He stated that bidders have rights and if the overhead interpretation is not clear and concise it could result in a court case. He stated that if an overhead portion made an otherwise lowest bidder, in the lower 48, lose the contract, the bidder would have the right to protest the calculation and interpretation that Alaska makes of this law. He stated that a judge will have to decide on what the legislature meant and it can go either way. During this process the job is not going to get done. He stated that we are changing procurement law and the department would like to have the procurement lawyers look to see if they see future problems. He stated that he would prefer to identify the problems now, rather then be tied up by a lawsuit later on. Number 2043 CHAIRMAN WILLIAMS asked how long it would take to get it done. Number 2050 MR. PERKINS stated that it could be done in a week. Number 2058 CHAIRMAN WILLIAMS stated that this amendment has been more or less before the committee as it was talked about in the last meeting. He asked that the thought that other bidders would go away as a result of this process be addressed. Number 2090 MR. DOWNING stated that there are very few shipyards in the Northwest that can dry dock the ships that we own, consequently the number of bidders that we have is narrowly constricted. He stated that best dry dock in the Northwest is owned by the Ketchikan shipyard and it was built for the ferries. He stated that the challenge of getting other bidders to compete causes higher pricing. He stated that you get a lower bid with ten bidders then with two. It is fairly common to have two or three bidders on a project. He stated that recently bids were opened on the Matanuska life saving project, the Ketchikan shipyard was the low bidder, the next lowest came out of Tacoma, the difference between the two bids was less then the interport differential. He stated that the DOT/PF policy on the interport differential requires an interport differential to be included in the award of the contract. Since the home port for the Matanuska is Ketchikan the interport calculation for Ketchikan was zero and the cost of moving the ship to and from Puget Sound was calculated. The ship came off line in Bellingham and the department now has a protest from the bidder that the calculation should have been from Bellingham. Number 2181 CHAIRMAN WILLIAMS stated that he has worked for a company that bid on contracts and as long as the issues are known up front they are worked into the bid, if the contractor wants to stay in business. Number 2192 REPRESENTATIVE HUDSON stated that it may be worth while to entertain amendments by the administration in one of the subsequent hearings. Number 2220 REPRESENTATIVE KOOKESH stated he wouldn't have any objection to that. He stated that he thinks the interport differential amendment is a great idea, he just wanted to make sure the formula to figure it out was fair, he has no objection to adopting the amendment and then having future amendments come in later. Number 2236 REPRESENTATIVE HUDSON stated that in the case of emergency repairs the interport differential might actually harm Alaska and he agreed that maybe we do need to have some flexibility and have it embodied in statute but verified by regulations. The statutes being less detailed and the regulations ought to go throughout the regulatory process to look at all the different variables. Number 2269 REPRESENTATIVE ELTON stated that he would like to know how we are applying interport differential now and it seems like we made an application that benefits the shipyard which has the business and it would be helpful to know what the department is applying versus what is different with this language. Number 2304 MR. DOWNING stated that the department could do that. He stated that the interport differential only comes up under the federal aid contracts because they are the contracts that are bid on. It is rare that the department bids on an instate state funded maintenance contract and ends up in a condition where we apply the 5 percent bidder preference and the product preference and the other elements of the procurement code. He stated that when it comes to federal aid funds they are fairly strict in having a fair balance between bidders geographically. Number 2338 CHAIRMAN WILLIAMS stated if it pleases the committee we could pass this amendment as with Representative Hudson's suggestion. Number 2360 REPRESENTATIVE HUDSON made a motion to adopt Amendment 1. Number 2365 CHAIRMAN WILLIAMS asked if there was an objection. Hearing none, Amendment 1 was adopted. Number 2384 REPRESENTATIVE HUDSON made a motion to accept Amendment 2 for discussion purposes. Number 2387 CHAIRMAN WILLIAMS asked if there was an objection. Hearing none is was so ordered. Number 2398 MR. ECKLUND stated the there was some thought that the appointees to this authority should be subject to legislative confirmation and in talking to the legal department the best way to get them to fall under legislative confirmation was to give the authority some quasi-judicial powers. The intent of Amendment 2, is to subject the appointees to confirmation of the legislature, not including the commissioner. He stated that this is Mr. Utermohle's best effort to try and accomplish that, however, it is still questionable whether or not the language will accomplish that. Number 2440 REPRESENTATIVE ELTON stated that on page 2, line 8, one of the concerns regarding the appointed members language switch to directors is fine but he is not sure that the board should be completely dominated by people with maritime affairs. TAPE 97-16, SIDE B Number 005 CHAIRMAN WILLIAMS asked that comments be keep to the amendment. REPRESENTATIVE ELTON stated that he would not attempt to amend the amendment and that he would wait until the discussion of the full bill. Number 050 REPRESENTATIVE COWDERY made a motion to adopt Amendment 2. Number 054 CHAIRMAN WILLIAMS asked if there were any objections. Number 056 REPRESENTATIVE ELTON objected. Number 075 CHAIRMAN WILLIAMS asked for a roll call vote. Representatives Cowdery, Kookesh, Masek, Hudson, Sanders, Williams voted in favor of Amendment 2. Representative Elton voted against Amendment 2. Amendment 2 carried. Number 96 REPRESENTATIVE HUDSON made a motion to accept Amendment 3 for discussion purposes. Number 102 CHAIRMAN WILLIAMS asked if there was an objection. Hearing none it was so ordered. Number 106 MR. ECKLUND stated that the Amendment 3 on page 2, line 13, deletes "a maritime union" and inserts "the maritime union representing the largest number of onboard employees of the authority." He stated that this would be the Inland Boatmen's Union (IBU) since that particular union represents 85 percent of the onboard personnel, it was important that those employees were represented in the authority. Number 134 REPRESENTATIVE HUDSON asked for a minute to examine the amendment. He asked that essentially the unlicensed union would be the source of the union representation in all cases. He asked if this would preclude an Marine Engineers Beneficial Association (MEBA) member or and Master Mates and Pilots (MMP) member. Number 166 MR. ECKLUND stated that it would not preclude them because there would still be at least two people who are members of the unions but a least one person would have to be a member of the IBU, which is the largest union of the onboard employees. Number 188 REPRESENTATIVE HUDSON made a motion to move Amendment 3. Number 192 CHAIRMAN WILLIAMS asked if there was an objection. Number 197 REPRESENTATIVE ELTON objected. Number 200 CHAIRMAN WILLIAMS asked for a roll call vote. Representative Sanders, Hudson, Masek, Cowdery, Kookesh and Williams voted in favor of the amendment. Representative Elton voted against the amendment. Amendment 3 carried. Number 237 REPRESENTATIVE HUDSON stated that it is not the first time this type of bill has been before the legislature. He stated that he has taken great pains to listen to the department, to read the materials prepared by Mr. Ross by looking back at the Marine Transportation Plan of 1993. He has spoken with the Director of the Marine Highway System and heard of his plans to essentially underwrite a revised plan for Southeast Alaska. He stated that he can not support the move to a Marine Highway Authority in light of the overabundance of major problems. He felt that the authority will not solve but possibly exasperate the problem. He stated that until we know how we are going to solve our problems, by placing the added responsibility of converting over to a major authority, may do great harm to the Marine Highway System. He stated that we need to identify all the problems and set up a course of action. He stated that he would like to work with the marine highway employees, the department, and the communities. He stated that there is a private ferry that is being suggested for operations between Prince Whales Island Community and Wrangell or Ketchikan. There is the question of what to do with the Malaspina and identify what the new vessels course is going to be. He stated that in 1987 he wrote a White Paper, in which he called for this kind of plan. He stated that his vision of the system is to figure out how to make it be an economic generator out of the system. He stated that the Marine Highway System can provide a greater economic benefit to Wrangell, Ketchikan and Petersburg. He stated that if the schedule could be adjusted to have 45 more minutes at each of those communities. He stated that he is not sure that a board of directors could do more with the dynamics that the Marine Highway System has to have. He stated that if each member has its specific concerns it could result in a cumbersome resolution process. He stated that he is speaking from his experience with the Marine Highway System. He stated that during that time he was able to move with the dynamics, which might not be possible under a mixed board. He stated he would like to see the issue looked at carefully and have some broader hearings within the communities and ask the communities to tell us what they want from the Marine Highway System. He stated that some of the complaints are in the form of venting on the part of the crew members. He stated that he realizes the crew has many of the answers on how to make the system run more effective. There are vessels that are not on routes that they need to be on or there are two vessels right after each other. He stated that many of the unions are so frustrated with the system that they will take anything. He stated that the bill will preoccupy the director, the commissioner and the system, so that it will not solve problems. He stated that he has some suggestions such as moving all of the spare parts into Ketchikan. He stated that he would ask for a work committee to bring some unions in to have a workshop. Number 615 JOHN RITTERBACH, Member, Executive Board, Inland Boatmen's Union, and Purser, M/V Matanuska, testified via teleconference from Ketchikan, that he does not agree that an authority will take a lot of time and money to implement and that it is a bad time to make such a drastic change. He stated that a Marine Authority Board, made up of almost entirely of people with maritime experience, does not make another layer of government, it makes a government body that is knowledgeable to the affairs that it manages. It is made up of the very people that it serves, therefore it will be more responsive to the public that it serves. The director appointed by the board will come from the maritime industry not appointed by the governor, it will be taken out of politics. He stated that an authority will be more responsible to the public not less. He stated that there will be an initial cost in excess of what is in place, but with the increased efficiency in operation and more effective management these costs will result in being much lower than what is now in place. He stated that a large part of the Alaska Marine Highway System's budget is in management which can be reduced. He stated that he disagreed that this is a bad time to make changes. He stated that it is not the Alaska Marine Highway system that is broken, it is just the way that it is managed, we need to be pointed in the right direction. He stated that it is important to know what to ask for, which takes experience, something the present management team does not have. He stated that the Alaska Marine Highway System contributes to the economic development of the communities served and provides billions of dollars in revenue to many parts in the state. In two months we will be the largest employer in Ketchikan and with the M/V Kennicot we will be able to have a link for the first time from South Central Alaska to Bellingham. He stated that sometimes it takes money to make money. The Alaska Marine Highway Management is not asking for the funds to do the job because the administration has tied their hands from asking. He stated that he is proud to be a member of the Alaska Marine Highway and felt that the ships should be the pride of the Alaska Marine Highway, we don't deserve second rate repairs or second rate management, we are a vital part of the state economy. He stated that he urges passage of the bill and of full funding of the Alaska Marine Highway. Number 830 MR. RITTERBACH stated that he does not think that he is an employee who is venting anger at management. He feels that as an employee, he has close ties to seeing the decisions that management has made. He stated that during the time Representative Hudson was involved with the Alaska Marine Highway System it was managed very well, unlike now, which is the point of the bill, to get the Alaska Marine Highway System out of the hands of the politicians which sometimes appoints good managers and sometimes appoints bad ones. He stated that he does not believe that a board will create a great confusion. The only thing that is being changed is the upper end of the management. He stated that by adding the union to the board, will result in bringing the unions and management closer together. Number 970 BOB PICKRELL, Ketchikan Chamber of Transportation Committee, testified via teleconference from Ketchikan, that there is lack of management continuity when there is 23 directors and 23 commissioners of transportation during the 35 years history of the institution. He stated the new administration always thinks that they can do it better, but they don't refer to the files to find out what some of the suggestions have been in the past. He stated that authority will be a solution to this problem of management continuity. It has been proved in the past that the present system is not working. JIM VANHORN, Ketchikan Advisory Board, testified via teleconference from Ketchikan, that Mr. Pickrell and Mr. Ritterbach spoke eloquently on the matter and he had no further comment. Number 1104 CHAIRMAN WILLIAMS asked if anyone else wanted to testify, if not public testimony is closed. Number 117 REPRESENTATIVE ELTON stated that Representative Hudson articulated as well as anybody can the dangers of trying to address a discreet problem with a massive change. He stated that if this bill is adopted there is no guarantee that management approves. He stated that he also worked for a board, and the perception is that the politics of gubernatorial appointments is bad, a board balkanizes management authority. "You create little thiefdoms each representing their own little perspective. What happens instead of a broadening you get a narrowing of perspectives by board members and a good or a bad executive director lasts for a long time by making sure that he or she has 50 percent plus one of the board behind it." He stated that the executive director does not respond to the communities but responds to the board that hires, fires and grants pay raises. He stated that the bill does not come in time to help with the major decisions, the effective date of the bill is January 1, 1998. The decisions made on the Kennicot, will occur before the board is appointed. Number 1271 REPRESENTATIVE ELTON stated that he would like to propose an amendment. Number 1282 CHAIRMAN WILLIAMS stated that he plans on having another meeting on this and would like to have the amendment written up and presented at that time. Number 1295 REPRESENTATIVE ELTON stated that conceptually the amendment addresses the concern that the six appointed members must be state residents that must have experience with maritime affairs. The amendment would state "with the exception of the public member." He stated we no longer have a public member if that member has to have experience in maritime affairs. Number 1328 REPRESENTATIVE MASEK stated that she does have some ill feelings toward the bill and is trying to figure out if there is any merit in trying to put the Marine Highway under a separate authority. She stated that Representative Hudson did bring up some valid points. She stated that everyone involved can work together under the present system. It is important to not push something through that will not entirely answer all the problems that we are facing with the Marine Highway System. She stated that she has not heard much public testimony from the general public, it seems like it is a employee situation that brought the bill out. More communication is needed between the administration and the employees that are working on the marine highway. Number 1417 REPRESENTATIVE SANDERS stated that being from Anchorage and only have ridden the ferry three or four times, feels unprepared to comment on this. He stated that it is quite obvious that there are problems with the Marine Highway System and something needs to be done about it. He is glad the bill is in front of the committee and thinks that one way or another it will lead to a solution but would feel uncomfortable about moving the bill out today. Number 1465 CHAIRMAN WILLIAMS stated that we have been having problems with the ferry system for quite some time. He said, "things that get bad with a system just don't happen overnight." He stated that Senator Taylor put together the task force and had public hearings last year which is how the bill came about. Something has to be done and it is harder to be on the department's side when the public is asking the legislature why can't there be better ferry service. He stated that the ferry isn't making money as result of the lack of service, the public has found other ways to get to where they are going. The private sector ferries are a concern that could take over Prince of Whales, Petersburg and Wrangel. He stated they will be taking over Metlakatla. The private sector usually does a better job then the government, and when there are problems the private sector increases service, the ferry system is doing just the opposite. He stated that the director that started when the ferry system started going down in 1992 is still employed. He stated that he has worked with a board of directors for ten years and disagrees with the comments on working with directors. He has worked with a board in both the public and the private sector. He stated that a board has a good chance of changing the direction and that he likes the make-up of the board and Representative Elton's amendment of a public person on the board will add a diversity as will the three members that will come from marine unions. He stated that he would like to move the bill and would like to talk to the two representatives from Juneau to see if it was possible to make it a better situation. He believes the bill is not out of spite but out of need to correct an ongoing situation. He said, "It just didn't happen, we knew that there was something wrong with the ferry system and now we are going to wait for them to do something again." He stated that this is a companion bill to Senator Taylor's bill, who put together the task force and did all of the leg work to find out why the bars were closing, the food service going down and the moral on the ships going down. He stated that change should be good for this, if something isn't done we are going to lose it. Number 2008 REPRESENTATIVE ELTON stated the he thinks everybody agrees on two points. No system is well served when there is a revolving door of management, unfortunately the revolving door of management that Mr. Pickrell delineated for us also affects our management of rural airports and highways, it is destructive to all modes of transportation. He stated the second point is that it is extremely difficult to maintain any transportation system when the money goes away, as we are seeing it the rural airports and highway maintenance. He stated that we just have different answers to solving the problem. Number 2094 CHAIRMAN WILLIAMS stated that he will bring the bill up again on Monday and on Friday the committee will have a continuation of the Alaska Marine Highway overview to hear answers to the employees' questions.
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