Legislature(2001 - 2002)

03/26/2002 09:19 AM FIN

Audio Topic
* first hearing in first committee of referral
+ 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                                                            
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                                                            
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                                                            
Senator  Green asked  if there is  a provision  that would  prohibit                                                            
these  taxes from  being specified  as  a funding  source for  these                                                            
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                                                            
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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