Legislature(2001 - 2002)
04/24/2001 01:17 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 123-FEDERALLY FUNDED PROJECTS OF RAILROAD CHAIR KOHRING announced that the next order of business would be CS FOR SENATE BILL NO. 123(FIN), "An Act relating to the program of federally funded construction projects of the Alaska Railroad Corporation." KRISTY TIBBLES, Staff to Senator Drue Pearce, Alaska State Legislature, came forth on behalf of Senator Pearce, sponsor of SB 123. She stated: Senate Bill 123 requires the Alaska Railroad Corporation to obtain legislative approval for their Program of Projects, which is a list of federally funded projects required by the FTA [Federal Transit Administration] and the Federal Highway Administration. The committee substitute for SB 123 represents a collaborative effort with the Alaska Railroad Corporation [ARRC], which will require approval for major construction projects that would impact our communities, while excluding regular maintenance projects, minor construction and realignment projects, and projects outside of communities that are entirely on federal land. Senate Bill 123 will require the ARRC board of directors to present their Program of Projects to the legislature on the first day of every regular session. The Program of Projects will then be referred to both the Senate and House finance committees for review, and the legislature may disapprove of any project by law during the first 60 days of the session. Failure of the legislature to disapprove by law is approval for the expenditure of the funds. Senate Bill 123 was introduced in response to the Alaska Railroad Corporation's multimillion-dollar rail station project at the Ted Stevens International Airport in Anchorage. Senator Pearce believes that requiring the Alaska Railroad Corporation to obtain legislative approval for future projects will better ensure that those Alaskan residents affected will be better informed and have the opportunity for a review process in a timely manner. Number 2062 REPRESENTATIVE MASEK asked what changes had been made in the [Senate] committee substitute (CS). MS. TIBBLES responded that the original version required the Alaska Railroad Corporation to pass a law in order to build facilities over $10 million and for track realignment projects over a certain amount. It has been changed so that rather than [the corporation] passing the bill to get its projects done, it will present its projects to [the legislature], and if anyone disapproves, [the legislature] will have to introduce a bill to stop the project. She added that Senator Pearce believes it will take an outcry by the public to stop a project; however, her intent is to have more public review. Number 2130 JOSEPH FIELDS, Fairbanks Chamber of Commerce, Transportation Committee, testified via teleconference. He stated that [the Fairbanks Chamber of Commerce] has been in opposition to SB 123 all along. He said they have some concerns about whether the Alaska Railroad [Corporation] is an independent organization of the state or is an agency. He stated: There's probably a lot to be said about the concern the people have over projects developing without overview by the public, but I think in ... most of the cases we've seen, including the airport project in Anchorage, they've had a substantial amount of information available for a quite a long time in the public. The last several months there [have] been many, many meetings over realignment in Fairbanks. We're concerned about that kind of a project. We're concerned about the timing in this bill, and how long it would take to get support for federal funding, which is available at specific times and not available on a scheduled (indisc.) legislature necessarily. I believe the railroad has a good operation, and they have responded, I think, properly to the concerns about public notice and public information, and they're continuing to improve their position on a regular basis. We have a new CEO [Chief Executive Officer] of the railroad who has a background in operations that will be conducive to the public knowing more about what's going on. So I would strongly urge you to either vote against this bill or in any way not to move it forward. The Chamber of Commerce transportation committee ... wrote a resolution in that regard. Number 2195 REPRESENTATIVE KOOKESH asked Mr. Fields whether the railroad receives any state funds for projects. MR. FIELDS responded he doesn't believe it has received any since first becoming a corporation of the state. He added that he doesn't believe it has any matching funds. REPRESENTATIVE KOOKESH said that is what he understood, and he doesn't know why the legislature would want to bring a new "animal into our midst when we barely can manage those animals we have now." He said he doesn't see why this is a needed Act. Number 2253 WENDY LINDSKOOG, Alaska Railroad Corporation (ARRC), came forth to testify on SB 123. She clarified that ARRC does not receive any state funding for its matching money; it is all done though its internal funds. REPRESENTATIVE WILSON asked Ms. Lindskoog where the ARRC stands on this bill. MS. LINDSKOOG offered that if ARRC really had it's choice, it would not like to see the legislation passed. She added that Senator Pearce has worked closely with ARRC on this legislation, and at this point it is a bill that ARRC can live with. She said Senator Pearce has taken out many of the concerns in terms of basic maintenance, maintenance facilities, repairs of bridges, emergency repairs, rolling stock, signalization, and a number of other crucial railroad functions. With those exempted, this bill really deals with the "megaprojects": facilities over $5 million and realignments over $10 million. She noted that ARRC would like a better level of coordination between the railroad and the legislature so that everyone is better informed. Number 2339 REPRESENTATIVE JEANNETTE JAMES, Alaska State Legislature, came forth and stated that she understands why this bill is before the committee. She said it is partly because of the failure of the railroad to be as open as it should be; however, she doesn't necessarily believe this legislation fixes that. She added that the people she represents in Fairbanks are opposed to this. Representative James said she thinks it would be wise if the ARRC made a yearly presentation to the legislature on what it is planning to do and what its parameters are. The only problem with this, she said, is the 60-day requirement whereby [the legislature] can say no to the project. REPRESENTATIVE JAMES asked when ARRC gets the permission [to do a project]. She said there was some indication this may be a deterrent for getting federal money for different projects. She pointed out that she agrees that the railroad has an obligation to keep the communities fully informed; however, she thinks those decisions should be made at the local level. She added that she would not want to wait a whole year if something came up. She noted that she has had several pieces of legislation that authorize delineation of a [rail] corridor from Fairbanks to the Seward Peninsula. TAPE 01-32, SIDE B [A short section was indiscernible due to tape malfunction.] Number 2441 CHAIR KOHRING remarked that he shares Representative James' sentiments, and is not sure [the legislature] needs to rush the passage of this legislation. He stated that he would call having the legislature coming in and getting involved in this process "micromanagement." He noted that he would prefer a recommendation by the legislature to ARRC that it be more cognizant of the concerns of the public. REPRESENTATIVE ANDREW HALCRO, Alaska State Legislature, came forth and stated that there have been several good points brought up in the testimony. He noted that [Mr. Fields] had said there has been a tremendous amount of information that has been available for a while. Representative Halcro remarked that information is good, but to have the ability to effect change is a separate issue. He remarked that this project is particularly frustrating for him. He shared: I was elected in November of 1998. The next month, in December, I got an invitation to join former Governor Sheffield for lunch to talk about railroad issues, because at that time I was vice chair of the [House] Transportation Committee through our organization meeting. So I had lunch with [former] Governor Sheffield one afternoon, and we talked about a wide range of things, and then the subject came up of this airport rail station. ... And I said to him, ... "Governor, I think this is probably one of the worst ideas I've ever heard." I said, "I have spent my entire life working at the Anchorage International Airport, ... and I see no reason why you should spend $28 million in taxpayers' money building this thing. It's not going to be used ... and it's going to take up needed space." And he said, "No, no, no. 8,000 people work at the Anchorage airport; people are going to love this thing; it's going to be great." And I said to him, "OK, so where are you now?" And he said, "Well, right now we're in the feasibility study. We're going to get a contract to create this feasibility study, and then we're going to make a determination from there." And I said, "Governor, if the feasibility study comes back and it shows that this is a questionable value and will be of questionable use, what is your plan?" And he said, "Well, we're going to consider that." He certainly didn't tell me that if the report came back and said that this project would be underutilized and not needed ... it wouldn't be built; he didn't really give a commitment. Number 2284 REPRESENTATIVE HALCRO continued: ... Seven months later, in July of 1999, Northern Economics released their market analysis, which is a fairly lengthy piece of information. Part of my discussion at lunch with Governor Sheffield was his assertion that 8,000 people work at the airport. And I said, "You're absolutely right, Governor: I'm one of them. But I don't work at the terminal. So tell me, if I'm going to take this train to the airport and I get to the terminal, how do I get to my office, which is about a mile and a half from the terminal?" ... Well, he didn't have an answer. So when the study came out in July of 1999, certainly, a number of my concerns that I voiced to former Governor Sheffield were put in print. For instance, Mr. Chair, a quote here, "The consultant team does not think a study that was done in 1996 or data from the People Mover justify a targeted commuter service for airport employees in the near future. Airport employees travel to and from the airport at different times and live in many different areas, suggesting that ridership on any commuter line would be low at any given point in time" - thus proving my assertion at lunch that this wouldn't be used. Number 2206 REPRESENTATIVE HALCRO continued: As a matter of fact, Mr. Chair, about four years ago People Mover reinstated service to the airport, and everybody thought it would be wonderful - the tourists will use it, the employees will use it. Well, that route in the Anchorage People Mover service has the lowest ridership of any route in the People Mover service. According to the report, [it] proves that mass transit is not conducive to those that work at the airport. ... I sent a two-page letter addressed on my company letterhead to the company that put out this proposal and I gave them my comments. I raised many questions, saying that this market analysis raises more questions than it gives you answers. ... If anything, this document says that this $28 million project is a waste of money and will not be used. I submitted written comment. Nothing happened, [and the] project was approved and moved forward. Number 2150 REPRESENTATIVE HALCRO continued: So we have now, underway, a project that's going to build a $28 million facility at the Ted Stevens International Airport that, even by their own admission, railroad officials can't tell you how they're going to utilize. A little over a year ago at this very table, when I sat where you sit now, Mr. Chair, I had an overview on this proposal. And I had a representative from the railroad sitting in this very chair, and I looked down the table at him and I said, "Your report here says that by the year 2004, 80,000 local residents are going to use this train to get to the airport. Where are these people going to come from?" And you know what his answer was, Mr. Chair? "I don't know." ... Once again, his answers shed no more light on the feasibility of this ... project than this report, and I think it highlighted the frustration that with the $28 million taxpayer project, the legislature had no oversight. ... My constituents, this summer, came to me and complained [and] said, "Why are we building this?" You know what my response was? "Well, I sent a pretty tersely written letter when they had public comment period." ... Certainly, with our congressional representation and the money that's available for transportation projects, the railroad is going to have access to all kinds of dollars. In my community, my district is not the last that will have one of these projects built within the boundaries. And I think it's completely fair for the legislature to have the ability to say, "Wait a minute, ... have you done your homework?" ... I wrote a ... piece in the Anchorage Daily News - it was published, actually, on January 1 this year - that outlined how I thought that this project was poorly conceived and a waste of money. I got an e- mail from a gentleman who had just retired from the Department of Transportation, who said that while they were shuffling this project through the public process through the permitting process, ... he has never seen anything like it in his entire career at [DOT&PF]. He said there was no public input. He said this thing was on the fast track from day one. Number 2062 REPRESENTATIVE HALCRO went on to say: Now, after ... the main focus of the project has already been approved and is proceeding forward, ... the railroad is talking about realigning tracks that approach the airport - to make accommodations for these rail cars. Now, what you have is suddenly a project that just at the airport is expanding to area neighborhoods, and the neighbors themselves say they feel that they don't have any say in the matter. And so I think there is a huge gap between ... the railroad having the ability to proceed on a project, ... because it's completely [federally funded], and the mandate that they have some kind of legislative approval. ... Certainly, I think there's been a great deal of compromise that's gone on. And I think the bill now allows us to be defensive rather than offensive. ... I don't think that this is going to hinder the railroad's ability to come up with a list of capital improvement projects and fund those projects. ... I think that this can work within the timeframe that the railroad needs, and I don't think it's too much to ask. Number 1857 CHAIR KOHRING remarked that he needs to hear more justifying reasons from the sponsor and those who advocate this legislation. SENATOR DRUE PEARCE, Alaska State Legislature, came forth as sponsor of SB 123. She stated: Back when the transfer of the railroad from the federal government to the state government took place, the folks in the legislature at the time worked to make the railroad as autonomous as possible. We have seen some good things come of that. Those of us who have been in the legislature for a long time have seen some things that perhaps weren't so great. I will remind you that this is an asset that's owned by all the people of the state. Each of you are shareholders in the Alaska Railroad, ... in their successes and their less stellar moments. ... The railroad is not under the Executive Budget Act. ... It is the most autonomous of the corporations of the state. I personally believe that over the years the railroad has used ... its unique status to its advantage. ... I can't fault them for that, but I do know that at times, over the years, when it serves them well to be state agencies - i.e., not having to pay property taxes in the local communities and not having to go through some of the processes as a private entity would do - they certainly put on that public hat and (indisc.) it down the road of not paying taxes. On the other hand, when it has behooved them to be private entities - i.e., when they wanted to hold their rates and fees secret and not even share them with the legislature - they've ridden that horse. ... I don't blame them for any of that, but I do question some of the decisions that have been made in terms of the expansion in buildings that have been done at the railroad. Over the years, there have been a number of audits done [on the] previous chairman of the railroad corporation, previous presidents of the railroad, previous board members. But we've had a number of times where the legislature has questioned some the buildings [and] some of the business practices of the railroad, and our auditors have found that, indeed, we had good reason to question those efforts. Number 1702 SENATOR PEARCE continued, stating: ... Let me come to the project at hand, that being the Anchorage airport project. We spent upwards of $28 million, with another perhaps $18 million to go to elevate the rail through my district to get to this terminal - which at present isn't going to attach to anything because the airport project has its own problems - ... without ever having a single hearing in the state of Alaska where Alaskans could say whether or not they wanted this project - not at the state level, not at the local level. But these are federal dollars. What the bill calls for [is] the railroad has to present to the federal government each year a Program for Progress. It's much like the STIP [Statewide Transportation Improvement Program] in a lot of respects. We're asking that that Program of Progress be brought to the legislature each year so the federally funded projects, most of which have to be matched ... by the railroad, which is state money, ... are approved unless the legislature actually takes action by law to disapprove the project. ... [Therefore], ... there is someplace in the state where Alaskans who believe that a project should not go forward have an opportunity to an elected body to say so, if it is a federally funded project. I believe in the future that the railroad may well have to come to the legislature for matching funds on some of their projects anyway, because some of the things they're looking at in the future are going to cost tens and even hundreds of millions [of] dollars. ... They've been lucky in that they've been able to match all of the projects out of their cash flow. That doesn't mean that's not state funds. I believe that $26, $28 million for this terminal - with an addition [of] perhaps as much as $18 [million] taken out of the revenue stream - could definitely have been used better in other places. And I think the legislature would have acted, frankly, on this terminal project had we had an opportunity. ... They got the money; then they did a marketing analysis. The marketing analysis, as Representative Halcro said, is full of holes. ... We would have been better off to build a port facility in one of Representative Kookesh's cities than we are to build a hole in the ground. ... I've worked with the railroad. I'm not going to sit here and say that they like the bill, because obviously they'd rather continue doing business as they always have. On the other hand, they do admit that this project was ill-conceived and that there was no real process whereby anybody in Alaska ever got to say, "We don't want this." ... Number 1489 SENATOR PEARCE continued: This bill does not allow one person to stop a project, because you have to pass a law. You've got to have 21 [Representatives] on this side, 11 [Senators] on our side, and [the] governor - who wouldn't veto it - before you could ever actually stop a project. So, it's a huge hurdle to go over, but it will force them to come before us. And, Mr. Chairman, in terms of a memorandum of agreement, you can't really do one of those with the legislature. And because we have two board members that are appointed by the governor and our commissioners ... allowed this project to go forward, I don't think a memorandum of agreement would be worth its weight in anything. Furthermore, I believe this is a public corporation, and somewhere along the way their major projects that are using federal funds should have to come to an elected body for approval. This is one that fell through the cracks. REPRESENTATIVE KOOKESH remarked that he seems to hear two different stories. He said he thought the person from the railroad had said that only projects above a certain dollar mark would come to the legislature, while Senator Pearce had said all the projects would. SENATOR PEARCE responded that ARRC brings the program to [the legislature]; it is a federal document, but [the legislature] can only approve those over a certain amount. Number 1375 REPRESENTATIVE MASEK stated that she could understand where Senator Pearce is coming from. She asked whether this bill would only allow the legislative body to get involved if they disagreed with the projects. She said it is not a bill that is meant to go over every project, and there are hardly any projects in the past that have had problems. SENATOR PEARCE responded that over the years there have been a number of projects [with problems]. REPRESENTATIVE MASEK remarked that the legislature has not taken action on anything in the past. This would provide a vehicle to do so if there were troubles. She added that the federal budget comes out in the late fall; therefore, no project would be deterred because of the federal funding mechanism as the bill is written. SENATOR PEARCE replied that this treats these projects the same as [the legislature] treats federal highway and airport projects in the budget. She noted that she couldn't find a project in [the federal] program where [the legislature] would have stopped construction. REPRESENTATIVE MASEK stated that based on those comments, she thinks the intent of this bill is something that is needed, especially with the state's growth. Number 1167 EILEEN REILLY, Alaska Railroad Corporation, testified via teleconference. She stated: This [legislation] is something the railroad can live with, and I think Senator Pearce characterized correctly that it is probably something we'd rather not live with, but we certainly could. The exemptions are really important. There are some projects that we go into preliminary engineering without having the construction dollars that we phase in. When we see our federal funds in October, we build that following season. So it is important for us, and it would have an impact [to] not [be] able to go into construction until we have those construction dollars approved in October, have the legislature go through their process, and wait 60 days. REPRESENTATIVE KOOKESH explained some of his concerns. First, he doesn't think either this legislature or ARRC needs another layer of bureaucracy. Second, he is concerned about the federal funding. And third, he is concerned that [the committee] hasn't heard from the railroad board; at the same time, however, he believes [the legislature] needs to develop a relationship with ARRC. Number 0995 CHAIR KOHRING concurred with Representative Kookesh and stated that he thinks this is an extra layer of bureaucracy. He added that he thinks [the legislature] is rushing into this, and is "nipping at the heels" of the Executive Budget Act, which could lead to micromanaging. REPRESENTATIVE MASEK remarked that this bill does apply to the exemption of ongoing projects. She stated that she thinks it is good policy for legislative leaders to ensure these huge projects, which may have a big impact on people in the state. She added that she doesn't see this as holding up any projects [for ARRC]. Rather, it is giving the legislative body the ability to act upon projects when and if needed. REPRESENTATIVE SCALZI concurred. He stated that there is a lack of public oversight in a public entity. Number 0718 REPRESENTATIVE WILSON moved to report CSSB 123(FIN) out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSSB 123(FIN) was reported from the House Transportation Standing Committee.