Legislature(1999 - 2000)
03/25/1999 01:40 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
GENERAL SUBJECT(S): Overview ALASKA RAILROAD CORPORATION
The following overview was taken in log note format. Tapes and
handouts will be on file with the House Finance Committee through the
21st Legislative Session, contact 465-2156. After the 21st Legislative
Session they will be available through the Legislative Library at 465-
3808.
Time Meeting Convened: 1:40 p.m.
Tape HFC 99-53, Side 1.
Tape HFC 99-53, Side 2.
PRESENT:
x
Representative G. Davis
x
Co-Chair Therriault
x
Representative Foster
x
Co-Chair Mulder
x
Representative Grussendorf
Representative Austerman
x
Representative Kohring
x
Representative Bunde
x
Representative Moses
x
Representative J. Davies
X
Representative Williams
ALSO PRESENT:
GOVERNOR WILLIAM SHEFFIELD,CEO, ALASKA RAILROAD, ANCHORAGE; JIM
KUBITZ, VICE PRESIDENT, ALASKA RAILROAD, ANCHORAGE.
LOG
SPEAKER
DISCUSSION
000
Co-Chair
Therriault
Convened the HFC meeting at 1:40 P.M. for
the purpose to discuss the Alaska Railroad
Corporation.
Co-Chair
Therriault
Stated that HB 69 would be reported out to
the Chief Clerks office and that the bill
title had been tightened. Amendments will
be offered on the floor.
191
Representative J.
Davies
Asked about the tobacco bill. That
language is ambiguous. Memo has been
included in the packet clarifying HB 67.
274
Co-Chair Mulder
Took assumed the gavel. He stated that
Subcommittee reports will need to be
turned in before members leave for Easter
break. A statewide teleconference on the
operating budget will happen during the
weekday following Easter; not the weekend.
He suggested that it could be difficult to
have that hearing on Tuesday because the
LIO's might not have access to the draft.
Co-Chair Mulder
He introduced guests from the Alaska
Railroad to speak about long range plans
and intentional use of reserved monies.
433
GOVERNOR BILL
SHEFFIELD, CEO,
PRESIDENT, ALASKA
RAILROAD,
ANCHORAGE
Expressed his gratitude for being invited
to testify before the Committee. He
provided Committee members a handout
prepared by the Railroad.
Governor Sheffield
He provided a step by step overview of the
handout.
Governor Sheffield
Pointed out that the railroad is self
supporting and self sufficient. He
emphasized that the railroad is
professionally run.
Governor Sheffield
Spoke to the missions and values of that
system: and that Safety is the most
important aspect of railroad work.
615
Governor Sheffield
The railroad has worked hard at lowering
the injury rate.
Governor Sheffield
Service is critical; additionally, there
are yearly audits. The LBA Committee
audits the Railroad at least once a year.
698
Governor Sheffield
He noted that the state economy and the
railroad follow hand in hand. There has
been a downturn in the oil industry. The
oil traffic has historically used the
railroad extensively but with less oil,
the economy goes down.
759
Governor Sheffield
The railroad is in good financial shape;
they have paid down the debt and have
revampted business contracts with a major
restructuring since 1990.
810
Governor Sheffield
Governor Sheffield spoke to the 1998
highlights: 23% reduction in employee
injuries; Replaced 100,000 more ties;
Installed 350,000 tie anchors; and
Increased passenger useage, freight and
revenues.
900
Governor Sheffield
Estimated railroad net earnings of $9
million dollars.
995
Governor Sheffield
Spoke to the 1999 Goals.
Governor Sheffield
Anticipate another 25% down in injuries;
Cut expenses to meet potential drop in
freight volumne; 600,000 tons of export
coal moved.
1060
Governor Sheffield
Also, develop a real estate master plan;
Better use real estate to stabilize
revenues over the long-term; Increase
revenue in base freight business through
efficiency,to customer service; Manage
capital program successful.
1303
Governor Sheffield
He stated that Governor Knowles vision
plan of transportaiton is a fifth of the
national economy with more in Alaska. The
Railroad revenues supply match for rail
improvements.
1370
Governor Sheffield
Port of Seward: The railroad will build a
freight dock and a true passenger, state
ferry dock. Will be hauling crew ship
passengers from Seward to Anchorage which
is the key of the entire development.
1435
Governor Sheffield
Whittier Overpass: Is a safety measure
being undertaken by the Ak. Railroad.
This will be a safety measure. That road
will be rebuilt from the port to the
harbor. It will be open Spring 2000.
1496
Governor Sheffield
Denali Depot: It will be an enclosed,
full-service facility at the park
entrance. The railroad is working with
the Park Service for completion by 2001.
1550
Governor Sheffield
Fairbanks Intermodal: This will be built
soon for bus, rail, taxi facilities. It
will require that a study also be done in
Anchorage in order that the facilities
will join safely. It will be computer
dispatched, which will result in positive
train control and will cost $12.5 million
dollars.
1700
Governor Sheffield
Motive power: For new locomotives for
more power, and less operating cost.
There are only 32 locomotives. With six
engines on a coal train, that would equal
3 new. This will eventually equate to much
savings down the road, however, they cost
$2 million dollars each. The railroad has
been saving money and has money to place
down on the purchase.
1750
Governor Sheffield
Anchorage International Airport; Is
planing a $28 million rail facility. This
will happen during the airport remodel.
The train will load right up at the
airport and there will be a moving tunnel
and sidewalk. He emphasized that this
will be very handy and will help to
deliver more people by rail.
1858
Governor Sheffield
Line Changes: Cut running time from
Wasilla by 40 minutes which will help
frieght, and passenger service; sets stage
for communter rail; Girdwood will be on
track as well.
2000
Governor Sheffield
Summarized how it all fits together with
basic line changes improving train speed
and traffic capability,safety; New depots
and intermodal facilities serve growing
visitor industry; and Faster trains, good
facilities make better commuter service
possible.
Governor Sheffield
There is money in the federal budget for
Department of Transportation and Public
Facilities to connect to the best coal in
the world. The railroad wants to have a
right a way and then build the line.
There is also interest for the trains to
go to Canada.
2075
Governor Sheffield
Mentioned that the railroad had been built
to serve Interior Alaska.
2085
Co-Chair
Therriault
Questioned what was meant by line changes?
2094
Governor Sheffield
Cutting out curves, straightening them
which involves straightening out track.
2116
Co-Chair
Therriault
Asked if the entire complex of Denali
would be gone?
2141
Governor Sheffield
Did not know the entire plan and that
currently, the Ak Railroad was consulting
with an arcitect firm. He envisioned a
depot with greater and larger facilities.
2171
JIM KUBITZ, VICE
PRESIDENT, ALASKA
RAILROAD,
ANCHORAGE
There are many restrictions but there is
cooperation between the Park Center and
the Railroad. More land is being given to
help the project.
2224
Co-Chair
Therriault
Asked about the sewage treatment plant.
2234
Mr. Kubitz
Replied that it would not be only a hotel.
2242
Co-Chair
Therriault
In Fairbanks, considering moving the rail
yard so that land could be used for
additional purposes.
2265
Governor Sheffield
Plan to build it on Johnanson Road and the
railroad is working with Fairbanks now.
Department of Transportation and Public
Facilities could do an interchange so that
cars and trucks could easily access the
area and reroute traffic from Illinois
Street.
2307
Co-Chair
Therriault
Switching yards.
2317
Governor Sheffield
2323
Co-Chair
Therriault
How does the Railroad interact with the
Department of Transportation and Public
Facilities in right-of-way aquisition
2345
Mr. Kubitz
Usually is a permit.
2365
Representative J.
Davies
Question about the Denali access?
2372
Mr. Kubitz
Plan to add an additional visitor center
for bigger tourist functions and adding a
foot path.
TAPE CHANGE
HFC 99-53, SIDE 2.
000
Mr. Kubitz
Plan to move the road for better access.
053
Representative J.
Davies
How many passengers per year in Denali.
077
Governor Sheffield
700,000 passengers hauled per year on
various segments of the rail carriers.
Almost everyone who rides the train gets
to Denali eventually.
138
Representative J.
Davies
Asked if a large part of the ties were
fabricated in AK.
156
Governor Sheffield
30% are coming from Alaska. Hemlock is
used because it is the best of the soft
woods. Across the country, hardwoods are
used. Softwood can be used on the
straight surfaces. The problem rests in
treating them.
260
Governor Sheffield
There are people considering building a
treatment plant for this purpose. Each
year, the railroad is cutting down costs a
little with tie rotation.
340
Co-Chair Mulder
Where are the ties coming from in AK?
356
Governor Sheffield
Coming from Wrangell.
387
Co-Chair Mulder
What is the cost comparison of having it
made in Ak and shpping them out for
treating.
421
Governor Sheffield
The same or a little more. $40 per tie
when finished. He pointed out that 2/3 of
that cost is shipping and treatment.
470
Co-Chair Mulder
Asked if the Railroad had considered using
concrete ties
480
Governor Sheffield
Replied that the concrete ties can only be
used at the beginning and the end. The
best tie in general cases is a wood tie.
Concrete can crack. It depends on weather
conditions and the difference in
temperature between night and day in
Alaska is dramatic.
559
Vice-Chair Bunde
60 mph mile track
593
Governor Sheffield
Track speed is mostly 45-50 mph track.
622
Vice-Chair Bunde
Plans for moose at 60 mph
636
Governor Sheffield
Replied that this was a good year for not
hitting a lot of moose. A total of 80
moose were hit this year. Crews are
running trails off the track, and the
trains are slowing down; there is more
help. Less snow the last few years has
helped.
716
Vice-Chair Bunde
Pointed out that there are still some
times of year that are not good.
736
Governor Sheffield
Signalization will be built into the track
itself.
758
Representative
Williams
How far along is railroad in using Rodeo-
herbiside?
787
Governor Sheffield
Have applied for a permit and put it on
hold. Need more data and will reschedule
public hearings in six weeks. Only
applied for permit for Anchorage,
Fairbanks and outside of Palmer yard for a
ten mile stretch.
877
Governor Sheffield
Added that this is a safety issue, Have
not used Round-up since 1983. Weeds in
the road bed,are bad and dangerous for the
train hauling freight & passengers. This
is a process that the Alaska Railroad is
trying to explain to the Alaskan people.
The Railroad can not afford to spend $2
million dollars per year to get rid of the
weeds using other means.
998
Governor Sheffield
Engineers need to see where they are
going. 600 employees want better control
of the vegetation.
1039
Representative
Williams
Spoke in support in the use of chemicals.
Asked why the Railroad was waiting to use
it while it was costing the State $2
million dollars a year. He pointed out
that in 1993, Governor Hickel was trying
to use it along the highways. There was
talk about communities adopting a piece of
highway and being responsible for keeping
it week free. He understood that no one
had "adopted a mile" as originally
suggested. He encouraged to continue
using Rodeo.
1149
Governor Sheffield
There is a lot of information available on
herbicides and Round-Up. He acknowledged
that he was trying to accumulate that info
in order to make a determination.
1219
Representative
Grussendorf
Appreciated that he is investigating the
data. He asked about the $2.2 million
dollars in betting money. He questioned
the amount of federal funds that are
received for the railroad.
1261
Governor Sheffield
Have received $10 million dollars per year
for road bed rehab. That funding is not
reliable. Senator Stevens has been
influencial in having that appropriated.
And his term ends in 2 years.
1327
Representative
Grussendorf
Asked how reliable the other funding was.
1343
Governor Sheffield
The ISTEA bill included funding and then
the formula was changed and the State
Railroad received $4.8 million dollars per
year for 6 years. He stated that was a
good formula and the State now receives
$30 million for over six years which is
match money. $7 million dollars will go
toward the GPS system. The last of this
money will be received this year. There
has been money received for the line
changes. Track was welded
1437
Governor Sheffield
Everything the railroad is doing is to
make it safer and more efficient. That
makes the railroad more reliable and to
increase the earnings while serving the
customer better. Then earnings shall be
sufficient to maintain itself.
1510
Representative J.
Davies
Questioned future possibilities such as
Denali?
1531
Governor Sheffield
$1 million dollar study of that line. He
stated that he favored rail transportation
into the park. It could carry masses of
people. The park service has not
supported that. There is money available
to provide a study which will happen soon.
1611
Representative J.
Davies
Emphasis is clearly on safety.
1624
Governor Sheffield
Going to have a new grade separation at
"C" street in Anchorage. Encouraged the
Municipality to figure out a way for
separation. There were 2 derailments last
year. It cost over $1 million dollars and
much time spent because of those. One had
a machinery malfuction and the other was a
track separation.
1725
Governor Sheffield
He added that there has been a number of
derailments in Whittier because of the
weather mess.
1758
Co-Chair Mulder
Asked the appraised value of railroad?
1768
Governor Sheffield
$200 million dollars in assets on the
balance sheet. The State paid $22 million
for the railroad.
1797
Co-Chair Mulder
Asked if the holdings have increased?
1809
Governor Sheffield
Tremendous asset for the State. The
actual cash in the bank separating the
federal funds is $15 million dollars or
more. Federal funds amount to $20-$30
million dollars for spending for
construction projects; and there is $28
million dollars from the sale of a
railroad station. That is a federal grant.
1874
Co-Chair Mulder
He informed Committee members that "All
funds" have not included AHFC, AIDEA and
the Railroad. This is an effort to show
all funds in working with the
Administration.
1906
Governor Sheffield
None of that money came from the State.
1918
Co-Chair Mulder
Agreed, that revenue was lost from slow
down.
1925
Governor Sheffield
Will loose some from oil industry but will
be picking up some by tariff adjustment,
$1 million dollars. Last year shipped 290
tons of coal. Lost money from budget,
however, this year will reestablish.
1998
Co-Chair Mulder
Spoke to the real estate holdings. He
asked for a listing of all holdings.
2025
Mr.Kubitz
Replied that the Railroad owns 36,000
acres of land. 1/3 is operational
property; 1/3 is leased property or which
+ of that is leased; the remaining is
tracks of land are not big money land
generators. He offered to provide that
info to the Committee.
2080
Co-Chair Mulder
Asked when would the master plan be
finished?
2099
Mr. Kubitz
Replied that it is in the process except
for the completed portion of Ship Creek.
2118
Governor Sheffield
Also, the plan in the system has been
completed for Whittier; with a small plan
for the Chena landing area.
2138
Co-Chair Mulder
Road bed money requires 20% match
2148
Mr. Kubitz
Explained all the work that requires the
20% match required by the feds for the
railroad.
2165
Co-Chair Mulder
Asked how much debt currently?
2172
Governor Sheffield
$2 million dollars this year. Will rise
to $20 million dollars the end of this
year with the purchase of the new
locomotives.
2196
Governor Sheffield
Vegetation control is done by inmates
through an arrangment with Department of
Corrections. This has been done in the
past and the public usually does not know
it.
2254
Representative G.
Davis
Asked if Whittier was involved in the
Master Plan.
2268
Governor Sheffield
Whittier was involved with the plan and
was happy with it. After 5 years, the
railraod will share revenues with the
City. There is no tax base there.
2301
Representative G.
Davis
Asked if there was anyone interested in
buying the railroad at this time.
2323
Governor Sheffield
Has not received a letter for 2 years.
2335
Co-Chair Mulder
Voiced appreciation of the Alaska Railroad
for joining the Committee for the
overview.
2354
ADJOURNED
3:15 P.M.
HOUSE FINANCE COMMITTEE
LOG NOTES
H.F.C. 1 3/25/99
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