Legislature(2001 - 2002)
03/26/2002 09:19 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.