Legislature(1997 - 1998)
05/01/1997 09:10 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 42(STA) "An Act relating to the fiscal operations of the Alaska Railroad Corporation; and providing for an effective date." Senator Randy Phillips spoke on behalf of the bill. He noted that work draft (O-LS0182\K, Utermohle, 4/26/97) had previously been adopted for working purposes. He moved amendment #1, page 1, line 2, and without objection it was adopted. He further moved amendment #2, page 2, line 21; page 3, line 12 and without objection it was adopted. James Baldwin, Assistant Attorney General was invited to join the committee. Senator Parnell said there were problems with debt service and said he had asked for an opinion from house counsel for the Alaska Railroad. Mr. Baldwin said he had spoken with AKRR counsel. He explained the debt service and that it could be under operating expenses of the railroad. The railroad felt there was a cost to what was happening. He said subsection (6), page 4 explained the inclusion of the debt service. It was suggested that an amendment be made on page 4, line 10 to insert: "...but only for expenditures to satisfy debt service of the corporation...". Senator Parnell moved this as amendment #3 and without objection it was adopted. John Binkley, Board Member, Alaska Railroad testified before the committee via teleconference from Fairbanks. Co-chair Sharp explained amendments #1, #2 and #3. In response, Mr. Binkley felt the amendments complimented the bill. Senator Phillips said as far as he was concerned matters concerning the bill were now taken care of by the amendments but that Alaska Railroad would always testify against the bill anyway. Mr. Binkley said that debt issue aside, there were structural problems with the bill. The railroad operated as a business entity but was under a constraint to operate efficiently. It would cause problems to have their business year end the same as the fiscal year. That would mean ending in the peak of the season when they are doing 70% of their business. A closeout in December would be better because it would not hinder business operations at that time. It was extremely burdensome to make changes during peak time and the corporation always tried to make decisions based on sound principles. He did note for the committee that up until now there had been dozens of lawsuits against the corporation but the State had never been made a party. Under the bill liability would transfer from the Alaska Railroad to the State and they would have to assume the railroad liability. Because AKRR had it's own board the operation has run more like a private business. It should not become another State entity. Mr. Randy Welker, Legislative Auditor, was invited to join the committee. He said under the Executive Budget Act there should be no concern for AKRR. The proposed budget appropriated everything to AKRR. Senator Phillips posed the liability question. Mr. Welker said he would have to defer to the involved attorneys. Mr. Baldwin commented on general liability. He said it would be a possibility the State would be held liable in any suits. However, he felt it would be up to the Court to consider how separate the corporation is from the State. Bill Hupperich, associate general counsel, AKRR testified before the committee via teleconference from Anchorage. He said he concurred with Mr. Binkley's testimony. He said under this bill the railroad would lose status as an enterprise and no longer be separate from the State. Senator Phillips said the railroad could be handled the same as AHFC and AIDEA. He noted they were doing just fine under the State. Mr. Hupperich explained the different tax exemptions and said the railroad could not issue more than $10 million debt per year if under the State. Senator Phillips moved CSSB 42(FIN) with individual recommendations and accompanying fiscal notes and without objection it was reported out. (The committee took a brief at ease.)
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