Legislature(1999 - 2000)

03/31/2000 01:45 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE                                                                                                         
March 31, 2000                                                                                                                  
1:45 P.M.                                                                                                                       
TAPE HFC 00 - 96, Side 1.                                                                                                       
TAPE HFC 00 - 96, Side 2.                                                                                                       
TAPE HFC 00 - 97, Side 1.                                                                                                       
CALL TO ORDER                                                                                                                   
Co-Chair Therriault called the House Finance Committee                                                                          
meeting to order at 1:45 P.M.                                                                                                   
Co-Chair Therriault   Representative Foster                                                                                     
Co-Chair Mulder    Representative Grussendorf                                                                                   
Representative Austerman  Representative G. Davis                                                                               
Representative Bunde   Representative Phillips                                                                                  
Representative J. Davies                                                                                                        
Representative Williams and Representative Moses were not                                                                       
present for the meeting.                                                                                                        
ALSO PRESENT                                                                                                                    
Representative Reggie Joule; Representative Tom Brice;                                                                          
Christine Hess, Staff, Representative Reggie Joule; Joseph                                                                      
Perkins, Commissioner, Department of Transportation and                                                                         
Public Facilities; Renee Gayhart, Program Specialist,                                                                           
Division of Mental Health and Developmental Disabilities,                                                                       
Department of Health and Social Services; Robert Doll,                                                                          
General Manger, Ferry Operations, Southeast Region,                                                                             
Department of Transportation and Public Transportation;                                                                         
Clarke Gruening, Chair, Alaska Permanent Fund, Juneau.                                                                          
TESTIFIED VIA TELECONFERENCE                                                                                                    
David Maltman, Director, Governor's Council on Disabilities                                                                     
and Special Education, Anchorage; Ernest Dummann, Hickle                                                                        
Appointee to the Governor's Council on Disabilities and                                                                         
Special Education, Anchorage; Kathleen Fitzgerald,                                                                              
Anchorage; Shelly Showalter, Fairbanks; Theresa Reger,                                                                          
Kenai; Susan Stafford, Kenai; Dennis Haas, Kenai; Lynette                                                                       
Haas, Kenai; Holly Kristiansen, Kenai; Wini Crosby, Kenai;                                                                      
Frank Dillon, Alaska Trucking Association, Anchorage; Blake                                                                     
Johnson, Labor Union, Anchorage; Dick Cattanach, Associated                                                                     
General Contractors, Anchorage; John Whitley, Legislative                                                                       
Chair, Associated General Contractors, Anchorage; Frank                                                                         
Dillion, Alaska Trucking Association, Anchorage; Blake                                                                          
Johnson, Anchorage; Dick Cattanach, Anchorage; John Whitley,                                                                    
Legislature Chair, Alaska Governor's Council, Anchorage.                                                                        
HB 18 An Act making a special appropriation from the                                                                            
earnings reserve account to the principal of the                                                                                
permanent fund; and providing for an effective                                                                                  
CS HB 18 (FIN) was reported out of Committee with                                                                               
a "do not pass" recommendation.                                                                                                 
HB 319 An Act providing for and relating to the issuance                                                                        
of state guaranteed transportation revenue                                                                                      
anticipation bonds for the purpose of paying the                                                                                
cost of transportation projects that qualify for                                                                                
federal highway aid and the allocation of those                                                                                 
bond proceeds; and providing for an effective                                                                                   
HB 319 was HEARD and HELD in Committee for further                                                                              
HB 346 An Act relating to services for persons with                                                                             
developmental disabilities.                                                                                                     
CS HB 346 (HESS) was reported out of Committee                                                                                  
with a "do pass" recommendation and with a zero                                                                                 
fiscal note by the Department of Health and Social                                                                              
Services dated 3/6/00.                                                                                                          
HB 349 An Act relating to powers of the Board of Game,                                                                          
means of access for hunting, trapping, and                                                                                      
fishing, the definition of `means' and `methods,'                                                                               
and hunting safety education and game conservation                                                                              
education programs; relating to the purposes of                                                                                 
game refuges, fish and game critical habitat                                                                                    
areas, and public use areas.                                                                                                    
HB 349 was POSTPONDED for hearing until a latter                                                                                
HOUSE BILL NO. 346                                                                                                              
An Act relating to services for persons with                                                                                    
developmental disabilities.                                                                                                     
REPRESENTATIVE REGGI JOULE noted that the bill would address                                                                    
the needs of individuals with developmental disabilities and                                                                    
their families by requiring the Division of Mental Health                                                                       
and Developmental Disabilities to conduct periodic reviews                                                                      
of their waitlist and by requiring an annual report to the                                                                      
Legislature and Governor regarding the same.  Representative                                                                    
Joule noted that recently, there have been more individuals                                                                     
with developmental disabilities requesting services than                                                                        
there are available resources.                                                                                                  
In 1989, the Division of Mental Health and Developmental                                                                        
Disabilities started a waitlist for those individuals.  The                                                                     
waitlist is the Division's way of prioritizing individual                                                                       
requests. Presently, there are 786 people on the                                                                                
developmental disabilities waitlist with 333 on the Infant                                                                      
Learning Program waitlist.                                                                                                      
The Hess Committee Substitute makes minor changes to the                                                                        
original bill and the title was changed to more accurately                                                                      
represent the purpose of the bill. The second amendment                                                                         
changes Section 1(d)(3) by deleting language that the                                                                           
Division would not be required to collect. That section now                                                                     
asks for the basic demographic information across all                                                                           
regions about the age, sex, and racial and ethnic background                                                                    
of the individuals on the waiting list. The last amendment                                                                      
would change section 1 (d)(8) to allow the Department to                                                                        
provide copies of the Department's policies, manuals and                                                                        
procedures in either written or electronic form. The                                                                            
amendment added the option of providing the data in                                                                             
electronic format.                                                                                                              
Representative Joule advised that the need for services for                                                                     
individuals with developmental disabilities will continue to                                                                    
grow faster than available resources. In order to meet the                                                                      
needs of individuals with developmental disabilities and                                                                        
their families, addressing the waitlist and available                                                                           
services must continue.  The bill would require the                                                                             
collection and dissemination of data to relevant parties.                                                                       
Representative Joule pointed out that there is a zero fiscal                                                                    
In order to make the best use of available resources and to                                                                     
ensure fair administration of the waitlist, the bill will                                                                       
establish periodic reviews along with an annual report to                                                                       
the Legislature and Governor.  The periodic reviews will                                                                        
ensure those individuals with developmental disabilities and                                                                    
their families that the waitlist is being fairly                                                                                
administered, reviewed, and updated on a regular basis.                                                                         
Additionally, the bill will require the Division to                                                                             
establish written procedures and consumer information which                                                                     
would be available to aid the general public.                                                                                   
Representative Joule pointed out that at this time, this is                                                                     
a $50 million dollar industry without uniform statewide                                                                         
information available to the public who accesses and uses                                                                       
the service.                                                                                                                    
Representative Phillips pointed out that the benefits of the                                                                    
program would fall in line with the missions and measures of                                                                    
that Division.                                                                                                                  
DAVID MALTMAN, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,                                                                        
GOVERNOR'S COUNCIL ON DISABILITIES AND SPECIAL EDUCATION,                                                                       
ANCHORAGE, testified in support of the legislation. He                                                                          
deferred testimony to Mr. Dummann, the Chair of the Council.                                                                    
ERNEST DUMMANN, (TESTIFIED VIA TELECONFERENCE), CHAIRMAN OF                                                                     
THE GOVERNOR'S COUNCIL ON DISABIITIES AND SPECIAL EDUCATION,                                                                    
ANCHORAGE, advised that he had been appointed to that                                                                           
Council by Governor Hickle in 1991, to speak for those                                                                          
people that can not speak for themselves.  He stressed that                                                                     
the current system and State agencies which these people                                                                        
have had to work with for maintaining their homes, has                                                                          
"broken down" many families and consumers.  Government has                                                                      
been inefficient and non-responding.  He stated that the                                                                        
present system has failed.  He emphasized that passage of                                                                       
the proposed legislation would provide family members                                                                           
answers that they deserve.  He urged support for HB 346.                                                                        
KATHLEEN FITZGERALD (TESTIFIED VIA TELECONFERENCE),                                                                             
COALITION OF ALASKA, ANCHORAGE, noted that this would be an                                                                     
exciting piece of legislation for the State.  She requested                                                                     
that the Committee pass the bill so as to enhance a system                                                                      
that has been without answers for many people statewide.                                                                        
She stressed the importance of this legislation.                                                                                
SHELLY SHOWALTER (TESTIFIED VIA TELECONFERENCE), FAIRBANKS,                                                                     
testified in support of the legislation.                                                                                        
THERESA REGER, (TESTIFIED VIA TELECONFERENCE), KENAI,                                                                           
testified in support of the legislation.  She commented how                                                                     
her child had disappeared off the waitlist during the past                                                                      
three years.  He had been on the list for fourteen years.                                                                       
She urged support of the bill.  Representative Phillips                                                                         
asked if some people were removed from the list because of                                                                      
their age.  Ms. Reger replied that was not the case for her.                                                                    
SUSAN STAFFORD, (TESTIFIED VIA TELECONFERENCE), KENAI, spoke                                                                    
in support of the legislation.                                                                                                  
DENNIS HAAS, (TESTIFIED VIA TELECONFERENCE), KENAI, noted                                                                       
his frustration on being on the waitlist for over ten years                                                                     
for services for his daughter.  He emphasized that the                                                                          
proposed bill would formalize the process, making it more                                                                       
consistent in determining the eligibility of State services.                                                                    
LYNETTE HAAS, (TESTIFIED VIA TELECONFERENCE), KENAI,                                                                            
explained that as she worked for a local nonprofit agency,                                                                      
Frontier Community Services, when she became more confused                                                                      
with the waitlist situation where doing family support work.                                                                    
She agreed that sometimes it was better just not knowing as                                                                     
a parent.  She stressed how confusing the waitlist system                                                                       
has become and urged support of the legislation.                                                                                
HOLLY KRISTIANSEN, (TESTIFIED VIA TELECONFERENCE), KENAI,                                                                       
testified in support of passage of HB 366.  She stressed how                                                                    
"sad" it is that Alaska's children sit and wait for                                                                             
placement during such critical times of their development.                                                                      
She emphasized that there needs to be procedures to address                                                                     
these concerns. There should be a current process for                                                                           
offering a quality of life for people and accountability to                                                                     
those people.                                                                                                                   
Representative Phillips asked if there was an "aged out"                                                                        
period and if that was the reason why some people got                                                                           
dropped off the list.  Ms. Kristiansen did not believe that                                                                     
was what was happening. She stated that in the case of her                                                                      
four-year-old son, because he was receiving services that                                                                       
were privately paid for, he was taken off the early                                                                             
intervention program.                                                                                                           
WINI CROSBY, (TESTIFIED VIA TELECONFERENCE), KENAI, noted                                                                       
that she worked with people with disabilities.  She                                                                             
addressed that fact that these people are confused.  She                                                                        
explained that the current system is crisis driven.  People                                                                     
get steadily pushed down the list until they become chronic                                                                     
and then they move to the top of the list. She recommended                                                                      
that the Committee support anything that could make the list                                                                    
more "understandable" to the people with disabilities and                                                                       
their families.  She urged support of the bill.                                                                                 
RENE GAYHART, DIVISION OF MENTAL HEALTH AND DEVELOPMENTAL                                                                       
DISABILITIES, PROGRAM SPECIALIST, DEPARTMENT OF HEALTH AND                                                                      
SOCIAL SERVICES, JUNEAU, stated that the waitlist exists                                                                        
because insufficient resources are available to meet the                                                                        
service needs of all consumers eligible for developmental                                                                       
disabilities (DD) services.  Historically, the Division has                                                                     
had few opportunities to report accurate information about                                                                      
the waitlist to the Governor and the Legislature, as well as                                                                    
to consumers and other stakeholders.  For the first time                                                                        
since the inception of the waitlist in 1989, in the spring                                                                      
of 1999, the Division proactively took on the responsibility                                                                    
of a comprehensive assessment of that list.  The results of                                                                     
the assessment proved to be of great value to consumers,                                                                        
families, and other stakeholders of the DD service delivery                                                                     
Ms. Gayhart added that the bill would provide an ongoing                                                                        
opportunity to submit regular and accurate information in a                                                                     
manner that may guide decision-making and program planning.                                                                     
The opportunity to have the information available in the                                                                        
public arena would eliminate inaccuracies and                                                                                   
misunderstandings about the waitlist and the Division's                                                                         
policies and practices relating to the needs of its                                                                             
Co-Chair Therriault asked why a list had not been created in                                                                    
the past.  Ms. Gayhart replied that there is nothing                                                                            
preventing the Division from doing a list.  She noted that                                                                      
she had been working on a comprehensive program review this                                                                     
past year.  She did not understand why it had not been done                                                                     
in the past, but noted that it is now current and up to                                                                         
date.  There is a new system which will be available by July                                                                    
2000.  Co-Chair Therriault asked if the bill was needed.                                                                        
Ms. Gayhart commented that the bill would be a good thing to                                                                    
have in place for the long term through an administration                                                                       
Representative J. Davies stated that the intention of the                                                                       
bill is to guarantee that the report stays available so that                                                                    
future "break-downs" don't occur.                                                                                               
Representative Foster MOVED to report CS HB 346 (HES) out of                                                                    
Committee with the individual recommendations and with the                                                                      
accompanying fiscal note.  There being NO OBJECTION, it was                                                                     
so ordered.                                                                                                                     
CS HB 346 (HES) was reported out of Committee with a "do                                                                        
pass" recommendation and with a zero fiscal note by the                                                                         
Department of Health and Social Services dated 3/6/00.                                                                          
HOUSE BILL NO. 18                                                                                                               
An Act making a special appropriation from the earnings                                                                         
reserves account to the principal of the permanent                                                                              
fund; and providing for an effective date.                                                                                      
Co-Chair Mulder MOVED to RESCIND previous action taken on                                                                       
passing HB 18 out of Committee.  Representative J. Davies                                                                       
Representative Bunde asked for further discussion on the                                                                        
motion.  He noted that he was anxious with "locking away"                                                                       
access to money when faced with other challenges.                                                                               
Co-Chair Mulder stated that the discussion could not occur                                                                      
without rescinding the motion.                                                                                                  
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Phillips, Austerman, Bunde, G. Davis, Foster,                                                                         
Therriault, Mulder                                                                                                              
OPPOSED:  J. Davies, Grussendorf                                                                                                
Representative Moses and Representative Williams were not                                                                       
present for the vote.                                                                                                           
The MOTION PASSED (7-2).                                                                                                        
Co-Chair Mulder explained that there is sufficient resources                                                                    
remaining in the permanent fund reserve to not threaten the                                                                     
fund in the future.  Without an adequate balance in the                                                                         
earnings reserve account, if there was a prolonged or                                                                           
extended bare stock market, there would be a risk of not                                                                        
having available funds to actually pay a permanent fund                                                                         
dividend.  He stated that the $250 million dollar number                                                                        
would not threaten the dividend.                                                                                                
Co-Chair Therriault asked the balance in the earnings                                                                           
reserve.  Co-Chair Mulder replied that $4.1 billion dollars                                                                     
remained in the earnings reserve. Representative J. Davies                                                                      
asked if that was actual cash.  Co-Chair Mulder understood                                                                      
that was unrealized gains.                                                                                                      
CLARKE GRUENING, CHAIR, ALASKA PERMANENT FUND, JUNEAU,                                                                          
stated that there are two accountings kept at the fund.  One                                                                    
is the realized and the other is the unrealized earnings                                                                        
reserve.  The realized portion is invested like the rest of                                                                     
the fund.  It is part of the earnings reserve and mirrors                                                                       
the asset allocation of the entire fund.                                                                                        
Representative J. Davies asked if that amount included the                                                                      
amount to be paid out in this year's dividend.  Mr. Gruening                                                                    
replied that is managed by the fund in coordination with                                                                        
Department of Revenue.                                                                                                          
Representative J. Davies asked if there were sufficient                                                                         
funds to pay the current dividend.  Additionally, he                                                                            
questioned if something similar were adopted, would there be                                                                    
sufficient funds.  He noted that last year, testimony was                                                                       
heard that the account needed a $6 billion dollars reserve                                                                      
to act as a shock absorber.                                                                                                     
Representative Grussendorf voiced concern with the "one up                                                                      
manship".  Co-Chair Therriault noted that there had been an                                                                     
amendment adopted to address Representative Grussendorf's                                                                       
concern during a previous meeting.                                                                                              
Representative Phillips stated that she would oppose the                                                                        
legislation until there has been an opportunity to look at a                                                                    
long-range plan for the State.  She emphasized that passing                                                                     
such legislation would be bad policy.                                                                                           
Co-Chair Mulder MOVED to report CS HB 18 (FIN) out of                                                                           
Committee with individual recommendations.  Representative                                                                      
J. Davies OBJECTED.                                                                                                             
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Phillips, Austerman, Bunde, Foster, Mulder,                                                                           
OPPOSED:  J. Davies, G. Davis, Grussendorf                                                                                      
Representative Williams and Representative Moses were not                                                                       
present for the vote.                                                                                                           
The MOTION PASSED (6-3).                                                                                                        
CS HB 18 (FIN) was reported out of Committee with a "do not                                                                     
pass" recommendation.                                                                                                           
HOUSE BILL NO. 319                                                                                                              
An Act providing for and relating to the issuance of                                                                            
state guaranteed transportation revenue anticipation                                                                            
bonds for the purpose of paying the cost of                                                                                     
transportation projects that qualify for federal                                                                                
highway aid and the allocation of those bond proceeds;                                                                          
and providing for an effective date.                                                                                            
JOSEPH PERKINS, COMMISSIONER, DEPARTMENT OF TRANSPORTATION                                                                      
AND PUBLIC UTILITIES, stated the State's ability to expand,                                                                     
diversify and strengthen our economy through improved                                                                           
transportation could be enhanced through the mechanism                                                                          
provided in the proposed legislation.                                                                                           
This year, we have an opportunity to expedite construction                                                                      
of some large and much needed highway projects through a                                                                        
relatively new federally approved funding mechanism.  The                                                                       
mechanism allows states to acquire full bond funding for                                                                        
projects ahead of the usual schedule of annual federal                                                                          
allocations.  The National Highway System (NHS) Act of 1995                                                                     
revised Title 23 and lifted limitations on the use of                                                                           
federal highway funds for bond issuance and debt service by                                                                     
making the costs eligible for federal-aid reimbursement.                                                                        
Essentially, the State would be borrowing to build projects                                                                     
now and paying back with future federal money.                                                                                  
Commissioner Perkins commented that HB 319 is a $350 million                                                                    
accelerated transportation bond initiative that would allow                                                                     
the State to take advantage of the new federally authorized                                                                     
flexibility like other states have done.  Alaska will be                                                                        
about to enjoy the economic and safety benefits of projects                                                                     
now, by selling bonds funded by the flow of future federal                                                                      
Commissioner Perkins stated that it is anticipated that debt                                                                    
service payments on the bonds will amount to approximately                                                                      
10% of our annual highway program, which will be between                                                                        
$35-$37 million dollars per year.  HB 319 calls for the                                                                         
issuance of general obligation bonds because our State                                                                          
Constitution requires a vote of the people for the State to                                                                     
incur long term debt. The bonds will be paid with future                                                                        
federal funds but will be backed by the full faith and                                                                          
credit of the State's general fund.  The backing will give                                                                      
the State an excellent bond rating which translates into                                                                        
good interest rates.  He noted that the bond market has                                                                         
embraced these bonds in other states.                                                                                           
It is anticipated that within the first three years, there                                                                      
will be enough investment earnings to cover the full State                                                                      
general fund match requirement.  It is expected to save                                                                         
approximately $48 million dollars in general funds, which                                                                       
will still satisfy the arbitrage restrictions of the Internal                                                                   
Revenue Service (IRS).                                                                                                          
Commissioner Perkins enumerated that in addition to the                                                                         
substantial savings in general fund there are many benefits                                                                     
to the bond initiative:                                                                                                         
? First:  Money is saved because we avoid the cost of                                                                           
construction inflation by building projects now instead                                                                         
of years into the future.  This helps offset the interest                                                                       
paid on bonds.                                                                                                                  
? Second:  The money will fund large, capital intensive                                                                         
projects without affecting smaller projects. Level debt                                                                         
service evens the flow of federal funds for projects                                                                            
throughout the State by avoiding the peaks and valleys in                                                                       
funding large projects most recently experienced with the                                                                       
building of the $80 million dollar Kennicott ferry.  The                                                                        
impact on projects for rest of the State was substantial                                                                        
when that vessel was funded.                                                                                                    
? Third:  It will allow the Department to do critical                                                                           
projects that are needed now to address safety,                                                                                 
congestion and economic output rather than wait years for                                                                       
the projects to be funded.                                                                                                      
? Fifth:  It would increase the percentage of work being                                                                        
contracted to the private sector for design.                                                                                    
? Sixth:  It does not negatively impact the current                                                                             
Statewide Transportation Improvement Program (STIP).                                                                            
Debt service payments would not start until September                                                                           
2003.  In fact, it could allow some projects further out                                                                        
in the STIP to be advanced.                                                                                                     
Commissioner Perkins continued, the accelerated                                                                                 
transportation bond package includes 11 specific projects in                                                                    
different regions of the State.                                                                                                 
He noted that congestion is a major problem in Anchorage.                                                                       
It will be reduced with two major construction projects                                                                         
utilizing this financing.                                                                                                       
(TAPE CHANGE, HFC 00 - 96, Side 2).                                                                                             
Commissioner Perkins noted that the first project would be                                                                      
Glenn Highway near Merrill Field.  The bottleneck there is                                                                      
due to the fact that we have six lanes narrowing to four                                                                        
lanes and then widening to six lanes again.  We will be                                                                         
spending $65 million to reconstruct the Glenn Highway from                                                                      
Gambell Street to McCarrey, as recommended in the Anchorage                                                                     
Metropolitan Area Transportation Study (AMATS) 1991 long                                                                        
range transportation plan.  The project will consist of                                                                         
adding capacity and new interchanges to improve the flow of                                                                     
traffic into and out of downtown Anchorage.  The                                                                                
construction should begin in summer of 2003.                                                                                    
Commissioner Perkins continued, the second Anchorage project                                                                    
is the upgrade of C-Street. The first phase of that project                                                                     
has already been completed, which was the portion from Tudor                                                                    
Road to Potter Drive.  Phase II of the C-Street                                                                                 
reconstruction will add 2 new lanes from Potter Drive to                                                                        
Dimond Blvd., including lighting and pedestrian facilities.                                                                     
The Department will construct a new road link south of                                                                          
Dimond to Minnesota Drive.  Construction of this phase will                                                                     
begin in 2001.                                                                                                                  
The final phase of the C-street reconstruction is the                                                                           
extension from Dimond to Minnesota.  The Department will be                                                                     
constructing four lanes from Dimond to Minnesota, including                                                                     
a separated railroad crossing on C Street.  We will also be                                                                     
constructing interchanges at C Street and Minnesota, and                                                                        
O'Malley and Old Seward.  Construction of this phase will                                                                       
begin in 2002. The second and third phases will cost a total                                                                    
of $70 million.                                                                                                                 
Commissioner Perkins noted that a major project in the Mat-                                                                     
Su area will consist of constructing an interchange at the                                                                      
intersection of the Glenn Highway and the Parks Highway,                                                                        
which will tie in with the construction now underway from                                                                       
the Parks/Glenn Intersection to Wasilla.  Additionally, the                                                                     
Department will be adding four lanes and upgrading the Glenn                                                                    
Highway from the interchange all the way into Palmer.                                                                           
Construction of this phase will begin in 2002 and the                                                                           
project will cost $60 million dollars.                                                                                          
Co-Chair Mulder agreed that the Gamble Street to McGeary                                                                        
projects needs to happen.  He asked how long would it take                                                                      
to address the widening without the legislation.                                                                                
Commissioner Perkins stated that it would take ten years.                                                                       
Co-Chair Mulder did not believe that funding the problem                                                                        
would make it go away.  He asked if the property would be                                                                       
purchased.  Commissioner Perkins stated that it would, and                                                                      
that they would be able to buy it all at once.  He conceded                                                                     
that there are ways of procuring properties.   Commissioner                                                                     
Perkins stated that the right of way is a very expensive                                                                        
Vice Chair Bunde asked if the decline in the State's                                                                            
population growth had been considered.  Commissioner Perkins                                                                    
replied that had been taken into account, however, to                                                                           
accommodate the current crisis, it should have been                                                                             
addressed a couple of years ago.  He stressed that more cars                                                                    
are being purchased even though there is a reduction in                                                                         
population.  Additionally, the Department must move the                                                                         
commercial traffic from outside of Anchorage.                                                                                   
Vice Chair Bunde recommended that more change need to be                                                                        
made than just adding more lanes.  Commissioner Perkins                                                                         
proposed that the State takes a good look at "commuter rail"                                                                    
systems to implement a good, high-speed service.                                                                                
Alternative methods need to be investigated and constructed.                                                                    
Vice Chair Bunde pointed out that the proposed idea uses                                                                        
money that the State does not have.  He asked if the                                                                            
Commissioner foresaw the State needing to back the bonds at                                                                     
some point in time.  Commissioner Perkins did not foresee                                                                       
that occurring as long as there is a federal gas tax.  The                                                                      
bonds could not be issued for any other kind of federal                                                                         
receipts because we do not have trust funds.  The reason                                                                        
that these funds became available was because U.S.Congress                                                                      
passed a law stating that the trust fund had to be spent                                                                        
down.  He emphasized that Senator Stevens cannot under                                                                          
appropriated.  This is what interests the bond people.                                                                          
There is a guaranteed level of appropriation which brought                                                                      
Wall Street into the program.  Commissioner Perkins advised                                                                     
that the worst thing that could happen would be less                                                                            
gasoline use in the United States.  That revenue will come                                                                      
into the trust fund.                                                                                                            
Commissioner Perkins added that our share could come down                                                                       
with less driving in the U.S. or Congress repealing the gas                                                                     
tax.  Vice Chair Bunde clarified that the intent was to take                                                                    
ten years of construction and fold it down into a three to                                                                      
four year project.  Commissioner Perkins referenced the                                                                         
handout distributed to Committee members.  [Copy on File].                                                                      
He stated that the amount of money being requested for this                                                                     
project is not that much. The Corp of Engineers has no                                                                          
problem with the proposal, nor does the engineering                                                                             
community.  It will not supercede any other projects. There                                                                     
are many different kinds of contractors.  He did not see a                                                                      
major impact.                                                                                                                   
Representative J. Davies commented on the different types of                                                                    
contractors.  He added that by putting out the bond provides                                                                    
a certainty for our contractors planning.  He believed that                                                                     
the bonding approach would help.  Representative J. Davies                                                                      
pointed out that if the State waits for 10 years, there                                                                         
would be more encroachments and ultimately it will be more                                                                      
expensive to build.                                                                                                             
Commissioner Perkins noted that the Department was working                                                                      
on three projects in the Fairbanks area. The first is                                                                           
University Avenue.  This $20 million project will consist of                                                                    
widening University Avenue to 5 lanes, intersection                                                                             
improvements at University and Geist Road, a separated                                                                          
railroad crossing, and the widening of the Chena River                                                                          
The second Fairbanks project is the reconstruction of                                                                           
Illinois and Barnette streets.  This $25 million project                                                                        
will improve traffic flow to Downtown Fairbanks and will                                                                        
include sidewalks and landscaping and a new bridge across                                                                       
the Chena River.                                                                                                                
The final Fairbanks project is a reconstruction of downtown                                                                     
Fairbanks streets.  Downtown Fairbanks is experiencing major                                                                    
infrastructure investments, including a new courthouse and a                                                                    
new hotel.  This $10 million project will complement that                                                                       
investment and will include major improvements to streets,                                                                      
sidewalks, lighting, and landscaping in downtown Fairbanks.                                                                     
Representative J. Davies reinforced that cleaning up the                                                                        
University Avenue Bridge area is an important safety issue.                                                                     
He noted that area is the main bicycle connector and is a                                                                       
major safety concern at this time.                                                                                              
Representative G. Davis inquired about the money going to                                                                       
the downtown streets in Fairbanks.  He asked who maintained                                                                     
that work.  Commissioner Perkins replied that project was                                                                       
like the one on 5th and 6th Streets in Anchorage. The                                                                           
Department does maintain them.                                                                                                  
Representative Phillips pointed out that the Legislature is                                                                     
receiving "mixed messages" from the Mat-Su area.  Those                                                                         
residents want to "cut government to the bone" while at the                                                                     
same time, demand that these types of projects be funded in                                                                     
their area.                                                                                                                     
Commissioner Perkins noted that the Alaska Marine Highway                                                                       
System is undergoing major changes as the Department                                                                            
implements the Southeast Alaska Transportation Plan,                                                                            
bringing that system to a new level of service and                                                                              
efficiency with the addition of new shuttle ferries that                                                                        
will travel faster and more often.  He noted that a new                                                                         
shuttle ferry to service Sitka would be ordered this fall.                                                                      
Two more are included in this bond package to accelerate the                                                                    
implementation of the plan.                                                                                                     
Commissioner Perkins pointed out that one of the new ferries                                                                    
would serve in the north Lynn Canal, in and out of Juneau.                                                                      
The other ferry will serve travelers between Ketchikan and                                                                      
Wrangell.  These ferries will follow the initial shuttle                                                                        
design so that they can be easily redeployed where needed.                                                                      
The long-term viability of the Marine Highway System is                                                                         
dependent on the use of these smaller more efficient shuttle                                                                    
Commissioner Perkins stated that the Department also has a                                                                      
few important rural projects in the bond package.                                                                               
? In Kotzebue, reconstructing Shore Avenue and upgrading                                                                        
Ted Stevens Way.  Shore Avenue.  The project provides                                                                           
beach protection and enhancements such as                                                                                       
bicycle/pedestrian accommodations and viewing platforms.                                                                        
Ted Stevens Way, approximately 2 miles of upgrade                                                                               
including grade raining, widening, drainage and                                                                                 
surfacing, with minor erosion protection in the tidal                                                                           
area and accommodation of bicycle/pedestrian traffic.                                                                           
? In Nome, rehabilitating Bering, Seppala, and Front                                                                            
Streets which includes minor drainage improvements and                                                                          
enhancements along Front St. such as sidewalk widening,                                                                         
lighting and scenic overlook with historical and                                                                                
interpretive signs.                                                                                                             
? In Bethel, releveling and paving Chief Eddie Hoffman                                                                          
? In Dillingham, paving 15 miles of the Dillingham to                                                                           
Aleknagik Road, and includes Aleknagik Lake Wayside and                                                                         
trailhead parking lot.                                                                                                          
Commissioner Perkins commented, why did the Department                                                                          
choose these projects, because they are needed.  These                                                                          
projects are ones that can be built within 5-6 years and                                                                        
most are large dollar projects.  They represent the diverse                                                                     
transportation needs of this State.                                                                                             
Commissioner Perkins advised that the Department hopes to                                                                       
make more investment earnings than needed for the match, so                                                                     
the additional amount can be used to pay debt service,                                                                          
thereby, reducing the impact on future STIPS.                                                                                   
Commissioner Perkins noted that the State could handle this                                                                     
much engineering and construction in a short period of time.                                                                    
He stated that to ask the contractors, labor leaders, and                                                                       
consulting firms, the State typically receives 3-5 bids on                                                                      
each of our construction projects.  He concluded that there                                                                     
is sufficient competition.                                                                                                      
Co-Chair Mulder asked if all the projects included in the                                                                       
list had been included in the STIP.  Commissioner Perkins                                                                       
replied that they were not all included.  Co-Chair Mulder                                                                       
inquired which projects were not included.  Commissioner                                                                        
Perkins replied the intersection in Palmer, Wasilla, the C                                                                      
Street interchange, the Fairbanks Downtown project, and the                                                                     
two shuttle ferries.                                                                                                            
Co-Chair Mulder asked if these projects were "on line" and                                                                      
ready to go.  Commissioner Perkins replied that they are not                                                                    
all ready to go, but there has been sufficient work done on                                                                     
each of them and that they could come up quickly.  Co-Chair                                                                     
Mulder asked if they had local support.  Commissioner                                                                           
Perkins replied that they are mostly supported but noted                                                                        
that it is impossible to get total support on any project.                                                                      
Co-Chair Mulder grilled Commissioner Perkins on the support                                                                     
for the fast ferries.  Commissioner Perkins replied that                                                                        
they were recommended and included in the Southeast Plan.                                                                       
They were "bought into" by all the communities in Southeast                                                                     
Alaska.   Nothing proposed was not included in that plan.                                                                       
He reiterated that there is a lot of support for the fast                                                                       
ferries in Southeast.  Commissioner Perkins noted that there                                                                    
was a letter included in the member's file from Mayor Egan,                                                                     
Juneau, indicating Juneau's support for the ferries.                                                                            
Co-Chair Mulder asked if there was a preference for the                                                                         
ferries over a road.  Commissioner Perkins remarked that                                                                        
concern has become confused with the fast ferries.  He                                                                          
stressed that the Department does not have the money to do                                                                      
the road.  The Department has indicated that the road is the                                                                    
preferable way to go, but the Department elects not to fund                                                                     
the road right now.  Regardless, a road would not be                                                                            
completed for ten years.  The option before the Committee is                                                                    
to take the shuttle ferry and put it on the route, with the                                                                     
Malaspina.  That fast vessel could ultimately be used in                                                                        
other places in the State.  Currently, the Department is                                                                        
working on a Prince Williams Sound Plan, which would include                                                                    
a fast ferry and get rid of some of the older vessels.                                                                          
(TAPE CHANGE HFC 00 - 97, Side 1).                                                                                              
Co-Chair Mulder voiced concern that the "road of fast                                                                           
ferries" would end up costing the State the same amount as a                                                                    
road.  Commissioner Perkins spoke to the routes which the                                                                       
fast ferries would navigate.  When the Prince William Sound                                                                     
Plan is complete, there will be a recommendation for doing                                                                      
things differently.  The oldest boat on that run is the                                                                         
Bartlett and it is the most expensive boat to run.                                                                              
Co-Chair Mulder suggested that it would be more cost                                                                            
efficient to try one fast ferry first before buying two.                                                                        
Commissioner Perkins responded that if these were new state                                                                     
of the art boats, that would be a major consideration,                                                                          
however, they are not.  He enumerated the design and the                                                                        
efficiency of these boats and the places that they are                                                                          
currently being successfully used.                                                                                              
ROBERT J. DOLL, GENERAL MANAGER, FERRY OPERATIONS, SOUTHEAST                                                                    
REGION, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,                                                                     
stated that the value to high speed is a long distance.  The                                                                    
shorter the distances become, the less the value.  He                                                                           
pointed out the large distance between the communities in                                                                       
Southeast Alaska.  He reiterated that the only way to handle                                                                    
that concern is with speed.                                                                                                     
Co-Chair Mulder concurred with Senator Torgerson, who has                                                                       
stated that there must be improved service at less cost.                                                                        
Mr. Doll noted that there has been a comparison in the cost                                                                     
of operating the high-speed ferry and the Malaspina in Lynn                                                                     
Canal.  On that route, the high-speed ferry burned fuel at                                                                      
$2500 dollars; the Malaspina used $2000 dollars worth.                                                                          
However, in that same period of time, crew costs were much                                                                      
less on the high-speed ferry.  The technology of the high-                                                                      
speed ferry not only allows the system to get the passengers                                                                    
where they want to go quickly, but it also reduces the cost                                                                     
of operating the Alaska Marine Highway System.                                                                                  
Co-Chair Mulder asked which ferries would be taken off line.                                                                    
Captain Doll responded that the most likely one would be the                                                                    
Bartlett in the summer of 2002; the Aurora would be                                                                             
substituted for that ferry. The other ships have been                                                                           
projected out for a ten-year period.  If the fast ferry was                                                                     
operating year round, the mainliners would be operating only                                                                    
in the summertime.                                                                                                              
Co-Chair Mulder asked if the Department could guarantee that                                                                    
the operating costs for the Marine Highway would go down                                                                        
from where they are currently at.  Captain Doll stated that                                                                     
he could not guarantee it for the first year of operation,                                                                      
but that he could for subsequent years.                                                                                         
Representative Grussendorf interjected that the Southeast                                                                       
communities do support the fast ferry.  He noted that the                                                                       
fast ferry system would not be just for Juneau, as it                                                                           
services most of the other communities.  The Alaska Marine                                                                      
Highway System is an entire ferry road system.                                                                                  
Vice Chair Bunde inquired the size of the fast ferry crews.                                                                     
Captain Doll replied that there must be a competent ship                                                                        
operator, which presents a "challenge".  The State needs to                                                                     
hold on to that personnel during the wintertime while they                                                                      
are "laying over".  Discussion has been started with the                                                                        
Unions, and they have expressed their support to this                                                                           
Co-Chair Mulder questioned the financing element and paying                                                                     
off the bonds.  He asked the amount of "lost opportunity"                                                                       
resulting from the years of paying off these bonds.                                                                             
Commissioner Perkins replied that the match is paid with the                                                                    
payment.  The match each year would be part of the $35                                                                          
million dollars.  He added that $3.5 million dollars would                                                                      
be saved each year through a reduction in the match                                                                             
requirement.  He pointed out that this is State money.                                                                          
FRANK DILLON, (TESTIFIED VIA TELECONFERENCE), ALASKA                                                                            
TRUCKING ASSOCIATION, ANCHORAGE, testified in support of the                                                                    
legislation. He maintained that the legislation is a good                                                                       
deal and acknowledged that there would be minimal risk for a                                                                    
large payoff.   He noted that there are a lot of projects                                                                       
with strong social value which would receive wide support.                                                                      
He interjected that traffic problems could be solved by                                                                         
adding lanes. Mr. Dillion pointed out that the match is                                                                         
almost the same as that collected through fuel taxes.                                                                           
BLAKE JOHNSON, (TESTIFIED VIA TELECONFERENCE), LABOR UNION,                                                                     
ANCHORAGE, spoke in support of the legislation.  He stressed                                                                    
that the legislation would provide a prudent way of letting                                                                     
voters decide to fund the roads.                                                                                                
DICK CATTANACH, (TESTIFIED VIA TELECONFERENCE), ASSOCIATED                                                                      
GENERAL CONTRACTORS, ANCHORAGE, testified in support of the                                                                     
proposed legislation.  He maintained that the legislation                                                                       
provides a good solution at almost no cost.                                                                                     
In response to a question by Co-Chair Therriault, Mr.                                                                           
Cattanach commented that there is possibility that the                                                                          
economy could become "overheated". He stressed that the                                                                         
general contracting members have the capability to do the                                                                       
Co-Chair Therriault asked if the fast ferries could be                                                                          
removed from the package, while still addressing the                                                                            
regional concerns.  Commissioner Perkins responded that                                                                         
there is not that much left to accomplish in Southeast                                                                          
Alaska for the three year STIP.                                                                                                 
Co-Chair Mulder questioned the North Douglas access project.                                                                    
Commissioner Perkins observed that there is money available                                                                     
for the North Douglas access.   That money has been made                                                                        
available to the City and Borough of Juneau.  He emphasized                                                                     
that the State does not have anything to do with the                                                                            
project.  That is a City project, other than passing to                                                                         
them, the earmarked funds.                                                                                                      
JOHN WHITLEY, (TESTIFIED VIA TELECONFERENCE), LEGISLATIVE                                                                       
CHAIR, ASSOCIATED GENERAL CONTRACTORS (AGC), ANCHORAGE,                                                                         
testified in support of the legislation.                                                                                        
In response to a question by Co-Chair Mulder, Captain Doll                                                                      
noted that current contracts do not specifically address the                                                                    
kinds of operative concepts that are in place.  He stated                                                                       
that he would want a commitment from the ferry out of Sitka,                                                                    
to live in Sitka and not to bid out of that assignment as                                                                       
other crews have done. Those kinds of work rules have not                                                                       
yet been put in place.  He added that they are also                                                                             
considering a 40-hour workweek.  Concerns such as these will                                                                    
be embodied in a contract.                                                                                                      
Co-Chair Mulder asked if it would be dangerous to                                                                               
appropriate the contracts at this time.  Captain Doll                                                                           
replied that it could be written as a new contract or it                                                                        
could be supplemental to the current contracts.                                                                                 
Co-Chair Mulder requested a ten-year cost projection from                                                                       
the Department of how the additional ferry would result in                                                                      
reduced costs. Captain Doll stressed that it would be                                                                           
difficult to match revenues to the costs of operating the                                                                       
old ships.  He stressed that the State of Alaska needs to                                                                       
get away from labor intensive ships.                                                                                            
Representative Grussendorf interjected that the cost for a                                                                      
single lane highway mile amounts to approximately $4,000                                                                        
dollars in maintenance costs.                                                                                                   
Commissioner Perkins stressed that the Southeast Plan has                                                                       
been under consideration for four years. The high-speed                                                                         
ferries are part of the implementation of that plan. He                                                                         
stressed that the quicker the plan is implemented, the                                                                          
faster the benefits would be available.                                                                                         
Co-Chair Therriault expressed concern that maintenance is                                                                       
being deferred by new projects. Commissioner Perkins                                                                            
explained that there are $30 million dollars in maintenance                                                                     
costs and that "patching and paving" can reduce maintenance                                                                     
costs which are being prioritized.                                                                                              
HB 319 was HELD in Committee for further consideration.                                                                         
The meeting was adjourned at 4:00 p.m.                                                                                          
H.F.C. 18 3/31/00 pm                                                                                                            

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