Legislature(2001 - 2002)
03/26/2002 09:19 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. 111(TRA)
"An Act relating to the issuance of certificates of
participation to finance deferred maintenance and construction
projects for certain public harbor facilities; giving notice
of and approving the entry into, and the issuance of
certificates of participation in, lease- financing agreements
for those public harbor facility projects; repealing a
provision relating to the financing of construction and
renovation of facilities for certain ports and harbors; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
SENATOR ROBIN TAYLOR, sponsor of the bill, explained this is
"primarily a bond package bill" to fund construction and facility
upgrade projects in municipal ports and harbors the Department of
Transportation and Public Facilities has identified. He stated the
facilities' needs, according to engineering surveys and Department
estimates, amount to $44,521,500.
Senator Taylor stressed that the goal of upgrading the harbors in
such places as Sitka, Petersburg, Valdez and other ports throughout
the State, is to enable the State "to turn over all future
maintenance responsibilities and ownership of these harbors to the
individual communities." He asserted that the investment of the
State's capital now would reduce future maintenance requests.
Co-Chair Kelly asked Senator Taylor to explain the Certificates of
Participation process.
Senator Taylor explained that by issuing a Certificate of
Participation (COP), the State of Alaska guarantees the funding;
however, the security is found within the project itself and the
project, in essence, is owned by the certificate holder during the
time the project is being paid off.
Senator Taylor clarified this is the current funding mechanism,
however, announced he would prefer the use of general obligation
(GO) bonds with the decision made by Alaska's voters as to whether
these are the projects to fund. He stated the bill is crafted using
the COP funding because this is the process considered the prior
fiscal year.
Senator Green noted the backup material indicates the City of Nome
is in need of additional funding for capital improvements to its
dock; however, she understood that the City of Nome owns the dock.
Senator Taylor corrected that the State owns the dock in Nome.
Senator Green referred the Committee to page 1,Section 1, line 10
of the bill that indicates both Nome and Adak own their docks.
Senator Taylor voiced that the Nome harbor and dock project was
fully funded and deleted from the most recent project list
identified by the Department.
Co-Chair Kelly informed the Committee that the list [copy on file]
is in need of being updated.
Senator Taylor noted there was a unique problem in the Adak harbor
because that harbor was conveyed to the Adak Native Corporation by
the federal government, however, a funding mechanism was found to
rebuild their small boat harbor.
LOREN GERHARD, Chair, Juneau Docks and Harbors Board, and Executive
Director, Southeast Conference, testified in support of this bill
as many Southeast Conference community members' harbors are in need
of repair. He voiced appreciation for the Legislature's role in
completing harbor improvements in such places as Ketchikan, Sitka
and Craig. He informed the Committee that many communities "are
hard-pressed" to find funds to allocate to harbor deferred
maintenance. He stressed that harbors are an integral component of
a communities' economy as they generate significant commerce from
such things as commercial fishing, sport fishing, and tourism. He
noted that once the improvements allowed under this bill are
completed, the transfer of the dock systems to the communities
"would remove the responsibility to the State and would allow
communities to establish priorities" for docks and harbors. On
behalf of the Southeast Conference members, he urged the Committee
to approve this bill.
Senator Austerman noted this bill reflects an approximate $7
million allocation for Juneau and requested clarification that the
responsibility for all of Juneau's harbors would be transferred
from the State of Alaska to the City and Borough of Juneau.
Mr. Gerhard responded that is correct.
Senator Austerman asked if the list of City and Borough of Juneau
harbors included in the bill encompasses all of the city's harbors.
Mr. Gerhard replied that the list is complete.
BUDD SIMPSON, citizen of Juneau, member, Juneau Docks and Harbors
Board, and Chair, Juneau Docks and Harbors Board Capital
Improvement Projects Committee, noted that Juneau's harbors, all of
which are owned by the State, have not received any State funding
since 1989 and are "in dire need" of deferred maintenance. He
commented that the City has funded some harbor maintenance projects
through local users' fees.
BRAD PIERCE, Senior Economist, Office of Management & Budget,
Office of the Governor, stated this bill is drafted as a COP that
"is essentially a revenue bond" using marine motor fuel tax
receipts of approximately $6.1 million. He explained that the
fiscal note for all the projects is expected to total $45 million.
Mr. Pierce shared that the Administration views this as a "user
pay" scenario, which they advocate to be the funding source instead
of a GO bond. He characterized the harbors and docks as valuable
assets that pay for themselves through such things as moorage fees.
He furthered that the user-pay principle established in this
situation could set "an important precedent to identify this fund
source and use it to pay for these bonds, where we wouldn't have to
use our GO capacity for this." He voiced the possibility that these
user fees could also be used in the future to fund other projects.
He summarized that the Administration "is very much in favor of the
revenue bond approach," specified in the drafting of this bill.
Mr. Pierce conveyed that the Governor supports using GO bonds for
such things as school construction.
Senator Green asked how the Marine Fuel Tax revenue is currently
used.
Mr. Pierce responded, "there are two segregated accounts within the
general fund:" one consists of revenue generated from a Highway
Motor Fuel Tax and the other from the Marine Motor Fuel Tax. He
commented that both accounts are specifically identified in
statute.
Senator Green asked if there is a provision that would prohibit
these taxes from being specified as a funding source for these
projects.
Mr. Pierce stated these taxes could be used for this purpose.
Senator Green asked if the Marine Fuel Tax is in effect Statewide.
Mr. Pierce responded users in coastal communities and other areas
of the state where boats are used pay the tax.
Senator Green voiced that some users do not have ports or harbors
in their area.
Mr. Pierce concurred.
GOVERNOR BILL SHEFFIELD, Representative, Port of Anchorage,
testified offnet from Anchorage to notify the Committee that the
Port of Anchorage is undergoing a six million dollar FY 02 State
Capital Budget appropriation upgrade project in conjunction with a
$160 million expansion and rehabilitation project. He related to
the Committee that the Port of Anchorage is a regional port that
serves 80 percent of the State of Alaska and 90 percent of the
people of the State. He conveyed that the Port's business increases
two percent a year and in twenty years the business volume would be
double its current level. He stressed that the demands of this
growth applies pressure for continuing expansion and improvements.
He conveyed the need for continuing financial support from the
State for infrastructure improvements to maintain efficiency and to
ensure reasonable freight rates.
Governor Sheffield shared that upon completion of the current
projects, the Port of Anchorage would be 51 percent federally
financed with the remainder of funding contributed by the State,
the Municipality of Anchorage, and other minor funding mechanisms.
He urged the inclusion of the Port of Anchorage in this bond bill
and explained how this bill's proposed funding allotment would
coordinate with other funding sources in financing future Port
projects.
PAUL ANDERSON, Mayor Pro Tem, City of Petersburg, testified via
teleconference from Petersburg, in support of the updated monetary
numbers reflected in the bill as Petersburg's harbors are old and
in need of upgrades.
SFC 02 # 43, Side A 11:06 AM
GREG MEISSNER, Member, Wrangell Harbor Board, testified via
teleconference from Wrangell to voice support for this bill.
JAMES STOUGH, Member, Wrangell City Council, testified via
teleconference from Wrangell, to voice support for this bill.
DAN HICKMAN, Member, Petersburg Harbor Board, testified via
teleconference from Petersburg in support of the bill. He asked the
Committee to move this bill forward, and indicated that the City of
Petersburg is looking forward to assuming ownership of the harbors.
Co-Chair Donley commented that the Administration does not appear
to realize the importance of the Port of Anchorage to the Railbelt
and Bush Alaska. He stated that the efficiency of the Port directly
impacts the rates that a vast majority of consumers pay for
groceries and other goods that enter the State through the Port. He
stated that the Legislature should recognize that the Port of
Anchorage and the Anchorage and Fairbanks airports are systems that
affect a lot of people and areas.
The bill was ordered HELD in Committee.
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