Legislature(1999 - 2000)
02/22/2000 01:07 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE
February 22, 2000
1:07 p.m.
MEMBERS PRESENT
Representative Andrew Halcro, Chairman
Representative Beverly Masek
Representative Bill Hudson
Representative John Cowdery
Representative Allen Kemplen
Representative Albert Kookesh
Representative Vic Kohring
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
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."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 319
SHORT TITLE: TRANSPORTATION REVENUE ANTICIPATION BONDS
Jrn-Date Jrn-Page Action
1/26/00 2007 (H) READ THE FIRST TIME - REFERRALS
1/26/00 2007 (H) TRA, FIN
1/26/00 2007 (H) FISCAL NOTE (REV)
1/26/00 2007 (H) ZERO FISCAL NOTE (DOT)
1/26/00 2007 (H) GOVERNOR'S TRANSMITTAL LETTER
1/26/00 2007 (H) REFERRED TO TRANSPORTATION
2/17/00 (H) TRA AT 1:00 PM CAPITOL 17
2/17/00 (H) <Bill Postponed to 2/22>
2/22/00 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
JOSEPH L. PERKINS, Commissioner
Department of Transportation & Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
POSITION STATEMENT: Presented HB 319.
DEVEN MITCHELL, Debt Manager
Treasury Division
Department of Revenue
PO Box 110405
Juneau, Alaska 99811-0405
POSITION STATEMENT: Answered a question regarding the
department's fiscal note in relation to HB 319.
DAN ELLIOT
HC Box 5196
Wasilla, Alaska 99687
POSITION STATEMENT: Testified in support of HB 319.
JOE LeBEAU
PO Box 872922
Wasilla, Alaska 99687-2922
POSITION STATEMENT: Testified in support of HB 319.
WAYNE WEIHING
PO Box 1193
Ward Cove, Alaska 99928
POSITION STATEMENT: Testified in support of HB 319.
FRANK DILLON, Executive Vice President
Alaska Trucking Association
3443 Minnesota Drive
Anchorage, Alaska 99501
POSITION STATEMENT: Testified on HB 319.
ROBERT VENABLES, President
Haines Chamber of Commerce
(Address Not Provided)
POSITION STATEMENT: Testified in support of HB 319.
BRUCE GILBERT (PH)
PO Box 318
Haines, Alaska 99827
POSITION STATEMENT: Testified in support of HB 319.
JOHN MIELKE, Mayor
City of Skagway
PO Box 415
Skagway, Alaska 99840
POSITION STATEMENT: Testified in support of HB 319.
NANCY WATERMAN
PO Box 20993
Juneau, Alaska 99802
POSITION STATEMENT: Testified in support of HB 319.
JEFF SLOSS
740 5th Street
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 319.
JAMIE PARSONS
9218 Emily Way
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 319.
MIKE MILLER, President
Alaska General Contractors
7101 DeBarr Road
Anchorage, Alaska 99504
POSITION STATEMENT: Testified on HB 319.
PAULETTE SIMPSON
402 Alaska Belle
Douglas, Alaska 99824
POSITION STATEMENT: Testified on HB 319.
CLIFF LOBAUGH
3340 Fritz Cove Road
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 319.
JAN WRENTMORE, Lobbyist
City of Skagway
PO Box 271
Skagway, Alaska 99840
POSITION STATEMENT: Testified in support of HB 319.
JOSEPH M. BEEDLE, Representative
Goldbelt, Incorporated
9097 Glacier Highway
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 319.
ROBERT JACOBSON (PH), Representative
Alaska Coastal Airlines, Skagway Air Service, Haines Airways, and
Wings of Alaska Airlines
845 Goldbelt Avenue
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 319.
ACTION NARRATIVE
TAPE 00-10, SIDE A
Number 0001
CHAIRMAN ANDREW HALCRO called the House Transportation Standing
Committee meeting to order at 1:07 p.m. Members present at the
call to order were Representatives Halcro, Cowdery, Kemplen, and
Kookesh. Representatives Masek, Hudson and Kohring arrived as the
meeting was in progress.
HB 319 - TRANSPORTATION REVENUE ANTICIPATION BONDS
CHAIRMAN HALCRO announced the first order of business as House Bill
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."
Number 0070
JOSEPH L. PERKINS, Commissioner, Department of Transportation &
Public Facilities, came before the committee and read the following
into the record:
Thank you Mr. Chairman. I'm pleased to be here today to
introduce HB 319, a bond package that will provide
funding to expedite construction of needed transportation
projects across the state. Mr. Chairman, our ability to
expand, diversify and strengthen our economy through
approved transportation can be enhanced depending on
action on this bill. Over the past five years, we've
invested over $2 billion improving and expanding Alaska's
transportation system. This includes highways, airports,
marine highway, harbors and trails. This investment that
we've made is possible thanks to the federal highway
transportation dollars, which have increased from
approximately $200 million to $350 million a year in the
last three years. The Governor's top transportation
priority, as announced about five years ago, was
reconstructing our National Highway System [NHS], which
includes the Seward, the Sterling, the Glenn, the Parks,
the Dalton, the Richardson and the Alaska highways.
Reconstructing these to current standards for grade,
width and alignment. In the last five years, we've
upgraded 210 miles of the National Highway System and
have 125 more miles in the STIP [Statewide Transportation
Improvement Program] for upgrading over the next three
years. After all this work is complete, we'll only have
about 150 more miles of NHS to rebuild. That's not
counting the Dalton Highway. We will be continuing the
priority on this program. The Alaska Highway is now up
to standard and we will complete the rehabilitation of
the Seward Highway, as well as major portions of the
Glenn and Parks Highways over the next three years.
Unlike most states, our National Highway System also
includes the 1,900-mile Marine Highway System. This
system is undergoing massive change as we implement the
Southeast Alaska Transportation Plan. Not counting the
[M/V] Kennicott, the average age of our state ferries is
over 30 years. That's going to change with the addition
of new high-speed ferries which will travel faster and
more often between our communities. One of these
high-speed ferries, which will cost approximately $35
million each, will be ordered this fall. Two more are
included in the bond package. Under our 'gravel to
pavement program,' we paved 52 miles of gravel road last
summer, and we have 100 miles of gravel road scheduled
for this coming season. It's time that Alaskans got out
of the mud and into the twenty-first century, and we're
gonna help them get there. Across rural Alaska, we've
invested $300 million into 261 rural airports in the last
5 years, and we've opened up Alaska with more than 150
new trails and recreation projects. Under the regular
transportation program through our STIP, we will continue
to address many of the state's transportation needs. Yet
even with these improvements, Alaska's transportation
needs are not being met. We estimated addressing all
identifiable projects, new construction projects, that we
have needs in excess of $7.5 billion. Now, these are
identified projects in our needs-list.
This year, we have an innovate opportunity to expedite
construction of some large, much needed highway projects.
Major transportation construction projects in every
region face the same hurdle in that each phase of the
work much be fully funded before the project can begin.
Fully funding a large project is difficult when so many
needs across the state are competing for the same pot of
federal dollars. But now, the federal government has
created a mechanism for states to acquire full bond
funding for projects ahead of the usual schedule of
annual federal allocations. The 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 cost eligible for federal reimbursement. The
passage of TEA-21 [Transportation Equity Act for the 21st
Century] removed other hurdles to issuing debt against
future federal-aid. Essentially, these programs are
borrowing to build projects now and paying it back with
future federal money. HB 319 is a $350 million
accelerated transportation bond initiative that will
allow us to take advantage of this new federally
authorized flexibility just like other states have done,
such as New Mexico, Massachusetts, Ohio, Colorado and
other states, which are currently just starting the
program, Florida, Virginia, California and a lot of other
states will be on the market soon. We, in Alaska, can
enjoy the economic and safety benefits of projects now by
selling bonds funded by the flow of future federal
dollars. We anticipate debt service payments on the
bonds will amount to approximately 10 percent of our
annual highway program. This is about $35 million per
year. HB 319 allows 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. This is different than the airport bonds, which we
sold last year. These were revenue bonds paid for by the
airport enterprise fund. These bonds we're talking about
will be paid with future federal funds, but will be
secondarily backed by the full faith and credit of the
state's general fund. This backing should give us an
excellent interest rate on the market.
The process for doing this is relatively simple. First,
we identify the federal-aid project on the STIP. Second,
we get approval for advanced construction from FHWA, the
Federal Highway Administration. This preserves the
project's eligibility for future federal dollars. Third,
we issue bonds and start construction. Now, federal
funds are used to pay the debt service. This is
approximately $35 million, as I've said, per year over 15
years. State matching funds, approximately 10 percent,
are not paid up front, but are paid in with each payment
of debt service.
There are many benefits to this bond initiative. First,
money is saved because we avoid the cost of construction
inflation by building project now instead of years into
the future. This helps offset the interest paid on the
bonds. Second, it 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 [M/V] Kennicott. The impact
on projects for the rest of the state when we funded the
[M/V] Kennicott was substantial. Third, it will allow us
to do critical projects that are needed now to address
safety, congestion, and economic development, rather than
waiting many years for the projects to be funded in the
regular STIP. Fourth, with the use of interest earnings
we believe we can generate sufficient funds to pay most
of, if not all, of the state match requirement. We would
provide matching funds with each debt service payment,
not a lump sum up front. This alone would be savings in
excess of $3.5 million in state general fund dollars per
year. I think, this is very, very important because
basically what you have is we are using the interest off
of the money we've borrowed to pay the match. So, our
match request would be decreased each year about $3.5
million. I guess, you could really say the feds are sort
of paying the match. Fifth, it would increase the
percentage of work being contracted to the private sector
for design. And sixth, it does not negatively impact the
current STIP. Debt service payments wouldn't start for
three years.
The accelerated transportation bond package includes 11
specific projects in different regions of our state. Let
me briefly describe them to you.
Congestion is a major problem in Anchorage. We intend to
reduce it with two major construction projects utilizing
this financing. The first project is the Glenn Highway
near Merrill Field. The bottleneck there is due to the
fact that we have six lanes coming in from Wasilla and
Palmer narrowing to four lanes by the airport, and then
after you pass the airport widening out to six lanes
again. We will be spending $65 million to reconstruct
this section of the Glenn Highway from Gambell Street to
McCarrey, as recommended in the AMATS [Anchorage
Metropolitan Area Transportation Study] 1991 long-range
transportation plan. This project will consist of adding
capacity and new interchanges to improve the flow and
traffic into and out of downtown Anchorage. Construction
should begin by the summer of 2003.
The second Anchorage project is the upgrade of "C"
Street. We have already completed the first phase of
this project, which was that portion from Tudor Road to
Potter Drive. It is already improving the traffic flow
from south Anchorage and downtown. Phase II of the "C"
Street reconstruction will add two new lanes from Potter
Drive to Dimond [Boulevard], including lighting and
pedestrian facilities. We'll also construct a new road
link south of Dimond to Minnesota Drive. Construction of
this phase will be in the year 2001 or next year. The
final phase of the "C" Street reconstruction is the
extension from Dimond to Minnesota. We will be
constructing four lanes from Dimond to Minnesota
including lighting, pedestrian facilities, and a
separated railroad crossing at "C" Street. We'll also be
constructing interchanges at "C" Street and Minnesota and
at 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. These projects should go a
long way to relieving some of the congestions problems in
Anchorage.
We also intend to do something to improve the commute for
drivers commuting to and from Anchorage. In addition to
many projects we've completed and future projects we've
scheduled on the Seward and Parks Highways, we would
undertake a major project in the Mat-Su area. This
project will consist of constructing an interchange at
the intersection of the Glenn and Parks Highway, which
will tie in with the construction now underway from the
Parks-Glenn intersection to Wasilla. We will also be
four-laning and upgrading the Glenn Highway from the
interchange all the way into Palmer. In addition to the
daily commuter benefits, this project will help with the
congestion problems associated with the state fair.
Construction of this phase will begin in 2002. The
project will cost approximately $60 million. When you
add this projects to the Anchorage projects, you get a
total investment in South Central Alaska of $195 million.
Another urban area that is included in this
transportation initiative is Fairbanks. We intend to
spend $55 million in the Fairbanks area on three
projects. The first of these projects is the widening
and reconstruction of University Avenue. This
$20-million project will consist of widening University
Avenue to five lanes, intersection improvements at
University and Geist Road and the widening of the
bicycle/pedestrian path on the Chena River Bridge.
The second Fairbanks project is the reconstruction of
Illinois and Barnette Street. 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 projects is a reconstruction of
downtown Fairbanks streets. Downtown Fairbanks is
experiencing major infrastructure investment including a
new court house 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.
In Southeast Alaska, we plan to add two new high-speed
ferries to the Alaska Marine Highway System to accelerate
the implementation of the Southeast Alaska Transportation
Plan. These ferries are in addition to the new
high-speed ferry already funded for the Sitka corridor.
The total cost of the two ferries is $70 million. One of
the new ferries will serve Lynn Canal. This ferry will
greatly improve transportation to and from our state
capitol. The other new ferry will serve travelers
between Ketchikan and Wrangell.
We also have some important rural projects in the bond
package. In Kotzebue, we will be reconstructing Shore
Avenue and upgrading Ted Stevens Way. Currently, Shore
Avenue, which is the front street of Kotzebue, has
extensive erosion. This will correct the erosion problem
plus fix their roads.
In Nome, we'll be rehabilitating Bering and Front
Streets.
In Bethel, we will relevel and pave Chief Eddie Hoffman
Highway, which is a highway that runs from the airport to
town.
In Dillingham, we will pave 15 miles of the Dillingham to
Aleknagik Road, which is the entrance to the largest
state park in Alaska.
Why did we pick these projects? Number one, they are
needed. They're the ones most ready to go. They're
large dollar projects and they can be done now. They
also represent the diverse transportation needs of this
state. This won't address all of the transportation
needs of this state. But it helps. Remember, there's a
$7.5 billion backlog.
Can the state handle this much engineering and
construction in a short period of time? I think they
can. I think you should ask the contractors, the labor
leaders, and the consulting firms, and I believe they
will agree with me.
Mr. Chairman, we need to take this opportunity to build
these needed projects now, so that Alaskans don't have to
wait years in order to experience their benefit. We can
do it responsibly and with much less state general fund
match than would be needed, if we built them the old
fashioned way. It's a 'win-win' situation, and it's the
right thing to do. Thank you and I'll take questions.
Number 1167
REPRESENTATIVE JOHN COWDERY asked Commissioner Perkins whether he's
asking for authorization for $350 million in bonds.
COMMISSIONER PERKINS replied, "Yes." The Administration is asking
for general obligation bonds, which would go to a vote of the
people this November.
REPRESENTATIVE COWDERY asked Commissioner Perkins whether federal
pay-backs are really guaranteed.
COMMISSIONER PERKINS replied, he thinks, that it's a good guarantee
if Wall Street will buy them. He cited examples in the states of
California, Florida and Virginia, whereby Wall Street has bought
their bonds at 100 percent.
REPRESENTATIVE COWDERY asked Commissioner Perkins whether the
streets he mentioned earlier in relation to Fairbanks are local or
state.
COMMISSIONER PERKINS replied they are mainly local streets. Right
now, there is a tremendous amount of private investment in downtown
Fairbanks, and the department would like to "fix it up" just like
they did for 5th and 6th Streets in downtown Anchorage.
REPRESENTATIVE COWDERY asked Commissioner Perkins whether the state
would maintain those roads.
COMMISSIONER PERKINS replied maintenance would stay with the city.
REPRESENTATIVE COWDERY asked Commissioner Perkins whether there is
a problem with binding one legislature to another in terms of
matching funds.
COMMISSIONER PERKINS replied these are bonds that would be paid
back with federal funds. Therefore, if a legislature didn't want
to use federal funds, they could use general funds.
REPRESENTATIVE COWDERY asked Commissioner Perkins whether using
general funds is the same as binding future legislatures.
COMMISSIONER PERKINS replied he doesn't think so, but he will check
on it and respond back.
Number 1315
CHAIRMAN HALCRO asked Commissioner Perkins how he would respond to
those who would say that the legislature is basically spending
federal highway dollars of future legislatures. In other words, if
the bonds are in anticipation of getting paid back through yearly
dispersement of federal highway funds, how does this legislature
get around the fact that it is basically spending money that future
legislatures should be able to spend, especially as they relate to
transportation projects that might be different than what is
committed in the proposed legislation.
COMMISSIONER PERKINS replied the proposed legislation requires a
vote of the people, and it's the people who ultimately tell a
legislature what to do and what not to do.
Number 1356
REPRESENTATIVE ALBERT KOOKESH stated it's the people who will
decide whether or not to bind future legislatures by way of a vote.
COMMISSIONER PERKINS pointed out that these are general obligation
bonds, which is no different than other general obligation bonds
the state has issued; the concern, therefore, has probably already
been addressed.
Number 1387
REPRESENTATIVE BILL HUDSON asked Commissioner Perkins whether the
state would sell the bonds to Wall Street all at one time then use
the realized income to repay the obligation. Is that legal at the
federal level?
COMMISSIONER PERKINS replied when the bonds are sold they become
state money, not federal money. The proposed legislation calls for
federal money to repay the obligation. He said,
I would envision us selling $350 million. We put it in
the bank. We're not going to spend it all the first
year. We'll spend maybe 50 or 60 of it, but it will
probably stretch out to where you'll get 5 or 6 percent
interest on three or four hundred million over one year,
when you take the whole period. But what this does is
kick 20 to 30 million of interest that we're going to
make. And what I'm saying is we can take that interest
money and use it for match. Now, you match each payment,
so three years down the pipe when you make the first
payment of $36 million on the bonds. Now, that
thirty-six or thirty-five or whatever it is, it's
somewhere in that ballpark, that's going to include our
state match so it probably only be thirty-two fed and
then another three million of state match. The state
match, in my opinion, can come from this interest pot
that we have that we got over the money. That would
preclude the legislature having to appropriate state's
match for that year. Now, our initial calculations show
that if we do this, when we look at cash flows, that
we're going to be very, very close to having enough
interest money to pay the state match all the way through
for the whole 15 years. And they probably would be
15-year bonds.
Number 1544
REPRESENTATIVE HUDSON said he would like to see statistical
information relating to this issue, especially since it puts the
good faith and credit of the state on the line. He said,
We are, essentially, putting the good faith and credit of
the state over a long period of time on the line. I'm
not saying that's bad. I'm saying that may be even good.
But we need to know right up front that we are
essentially obligating the payment after we sell these
bonds at any rate of that amount of money that we're
borrowing plus the interest over the next whatever years
it is, 20, 30 years. And so the question that
Representative Cowdery and I think also yourself Mr.
Chairman raised is one that needs to be looked at is that
if we can we legally bind future legislatures to that
debt? I think we can, but we do need to have legal
council at least tell us whether we can or not.
COMMISSIONER PERKINS reiterated that these are general obligation
bonds, which the state has sold before. He pointed out that the
first payment would be federal dollars. He often wonders, however,
what would be the full faith and credit of the state if the federal
government "went down the tube."
REPRESENTATIVE HUDSON replied the state would probably be better
off in some cases.
Number 1614
REPRESENTATIVE ALLEN KEMPLEN referred to the Anchorage
International Airport construction project where costs have
escalated because of increased demands and limited supplies of
contractors. He asked Commissioner Perkins to comment on whether
or not the contracting community can absorb this type of
significant infusion of capital dollars without "drying up"
available talent and "driving up" cost.
COMMISSIONER PERKINS replied $350 million over a three to four year
period is not that big of a program. Furthermore, there is a
difference between this type of work and airport work. He pointed
out that airport work is referred to as vertical construction,
which involves pipe fitters and carpenters. This type of work is
referred to as horizontal construction, which involves earthwork
and bridging. They are different types of labor. He further
stated that current bids indicate a competitive climate. In
addition, he has been informed by the contracting community that
the proposed legislation is not a "big deal." The same is true for
the engineering side. He doesn't see that this would be a large
impact on the state. In fact, it would be a relatively small
impact, especially if the portion pertaining to the fast ferries
was removed.
Number 1855
REPRESENTATIVE KEMPLEN indicated that he wants to be more
comfortable with the fact that these projects would not "overheat"
the market. He would hate to see an import of labor from the Lower
48.
COMMISSIONER PERKINS replied it is very difficult to import labor
because wages and benefits are not as competitive as they used to
be. He said, "This is not the day of the pipeline. This is a
different era." The department is seeing Alaskans and Alaskan
companies bid on these types of projects. Furthermore, there isn't
much of a labor pool in the Lower 48 anymore that would come to
Alaska.
Number 1915
REPRESENTATIVE KEMPLEN said capital spending has been increasing
substantially in the state. Federal dollars have increased 50
percent over the last two years, to a great extent because Senator
Ted Stevens is chairman of the Senate Appropriations Committee. He
wants to be more comfortable with knowing that the state is not
"overheating" its capital economy. He would like to see numbers
rather than anecdotes.
REPRESENTATIVE KEMPLEN asked Commissioner Perkins where the
department plans to get additional money to fund the operation and
maintenance for these new roads and ferries.
COMMISSIONER PERKINS replied the cost of operation and maintenance
needs to be looked at on a project-by-project basis. He cited the
airport project is less than a mile long, which would take an
additional 15 minutes to plow in the winter. The "C" Street
project would remove a few onerous stop lights for the plows. The
downtown streets in Fairbanks would be maintained by the city; the
state would not incur any costs. The cost for the fast ferries has
been laid out in detail in the Southeast Transportation Plan. The
paving of the dirt road in Dillingham would save about 50 percent
of the maintenance costs currently spent on grading. The
straightening out of the Bethel road would reduce costs. He
pointed out that there are no new roads in the proposed
legislation, except for maybe the extension on "C" Street.
Number 2100
REPRESENTATIVE KEMPLEN asked Commissioner Perkins whether the
department has conducted a quantitative analysis of the additional
costs that would be incurred.
COMMISSIONER PERKINS replied, "No." He doesn't see any sense in
doing that; it would be a waste of time.
REPRESENTATIVE KEMPLEN stated he would like to learn more about the
costs of maintaining roads. In that way, he is better prepared to
explain the department's budget to his constituents.
COMMISSIONER PERKINS acknowledged Representative Kemplen's concern
and indicated that he would provide him some information.
Number 2173
REPRESENTATIVE KEMPLEN asked Commissioner Perkins whether the Glenn
Highway-Gambell Street project has been certified as "ready to go,"
given the impact on the adjacent businesses. He indicated that the
Municipality of Anchorage is not comfortable with moving that
project forward expeditiously.
COMMISSIONER PERKINS replied, as far as he is concerned, it is
ready to go, except for the final environmental work. As indicated
earlier, the start date for that project would be 2003. There are
a lot of people who would indicate that this is a critical project,
particularly those who commute from Eagle River and the Mat-Su
Valley.
Number 2314
REPRESENTATIVE KEMPLEN stated his constituents are not as
comfortable in moving that project forward expeditiously. He wants
to be assured that there is a sense of agreement before asking the
people to vote on it and "locking it in."
Number 2361
REPRESENTATIVE BEVERLY MASEK stated she is concerned about TEA-21
dollars shrinking, thereby putting the bonds in jeopardy. The
state would still be liable.
COMMISSIONER PERKINS answered Alaska is like every other state in
the Union. He said,
I think my first explanation--I think the Wall Street
folks are better than we are at looking in the future
because they buy these things. We are backing ours up
with the full faith and credit to the state. We're about
the only ones doing that. New Mexico sold all their
bonds with nothing backing them up and they sold them.
So, the people on Wall Street at looking at the federal
highway program as something that is increasing every
year. Now, one reason is because they have to spend all
the money that comes into the trust fund. For instance,
there was an extra $3 billion this last year came into
the highway trust fund, of that, we'll get an increase in
our program somewhere around $16 million. So, I foresee,
unless the citizens of the U.S. quit driving cars or
unless Congress did away with the gas tax, which I don't
think they will ever do, I see this program getting
larger each year. Now, as far as our percentage, we did
okay, but we don't do all that well. We get, of the
money available for these formula programs, we get about
1 percent total. Now, whether or not that'll continue,
I don't know, but I would think it would, even if you cut
it to a half of a percent we'd still get $175 million.
So, I don't see us ever going back on the full faith and
credit of this state. You're always going to have a
federal highway program there, but all the projections
are is to--is for that program to keep growing and I
don't think even in the years coming--coming up that
you're going to see a Congress, unless they're mad at us,
that decreasing this less than 1 percent. So, I
would--it's hard to project 15 years in the future, but
I don't see a change in this...
TAPE 00-10, SIDE B
Number 0001
REPRESENTATIVE MASEK stated Alaska has a smaller population and not
as many road miles as the rest of the states. If the state's
congressional delegation happens to be in the minority and has to
compete with the rest of the states for money, she doesn't feel
that this [proposal] is looking out for the state's best interest,
which could jeopardize future funding.
REPRESENTATIVE MASEK asked Commissioner Perkins to explain the
private investments he mentioned earlier in relation to the project
in downtown Fairbanks.
COMMISSIONER PERKINS replied there is a new hotel, and a new court
house. Fairbanks wants to revitalize their downtown. He said,
"We've helped Anchorage do theirs. I think it's only fair we help
Fairbanks do theirs. We've also helped Juneau do theirs."
Number 0069
REPRESENTATIVE MASEK asked Commissioner Perkins whether he has had
any discussion(s) with these private investors.
COMMISSIONER PERKINS replied no. They aren't investing in roads;
they are investing in buildings, and they already have done so.
Number 0147
REPRESENTATIVE MASEK referred to the fiscal note submitted by the
Department of Revenue and asked whether there has been a ruling yet
from the Federal Highway Administration.
COMMISSIONER PERKINS replied there will not be a ruling per se. He
explained that one individual from the Federal Highway
Administration has indicated that this can't be done, but this is
not federal money. As far as the state is concerned, it can be
done.
REPRESENTATIVE MASEK asked Commissioner Perkins whether he has any
idea what the department's capital budget will look like.
COMMISSIONER PERKINS replied each project is contained in an
amendment to the capital budget that will be submitted shortly.
REPRESENTATIVE MASEK asked Commissioner Perkins to supply that
amendment to the committee as well.
COMMISSIONER PERKINS indicated that he would.
Number 0178
CHAIRMAN HALCRO asked Mr. Deven Mitchell [Department of Revenue]
whether it's correct to say that the $3.7 million general fund
match assumes the state will not be able to use bond-revenues or
interest generated.
DEVEN MITCHELL, Debt Manager, Treasury Division, Department of
Revenue, replied, "Correct." He said,
If, on an annual basis, we supplied the state match to
federal dollars used for principle and interest costs
that would be the expense that we might incur.
Number 0208
REPRESENTATIVE HUDSON asked Commissioner Perkins whether it was an
arbitrary capitulation to not back the proposed alternative of a
road.
COMMISSIONER PERKINS replied there is a difference between economic
and financial feasibility, as was discovered when the state
researched the Susitna hydroelectric project. The state discovered
that it was economically feasible but not financially feasible. He
said,
It is our feeling that the road is the most economically
feasible alternative in the long term for Juneau access.
However, it is also our feeling that it is not
financially feasible at this time. In the future it may
be and could be brought up again, but we don't have $240
million to put into that project when we weighed all of
the statewide needs, some of which were in this bond
issue.
Number 0274
REPRESENTATIVE HUDSON said,
Obviously, we can borrow $350 million, and I'm assuming
we could borrow more. And you indicated that the way we
do this is quite simple. We identify the project, we get
the approval, and we build it. I put those three down
there. It sounded pretty good to me. I know having been
in almost your shoes it's not that quite easy. But I
guess what I'm interested in or concerned in is that the
preferred alternative whether it's a road all the way up
to Skagway or not, and I understand all of the pros and
cons on that issue. I've listened to the communities on
the upper end. I've listened to half of my constituents
on one side of the issue and half on the other side and
things of this nature. But I've always felt that when
you go through some sort of a major project review you
come up with some sort of a suggested long-term best
course of action to take. And, what I'm wondering is, if
you had or of there was still any opening or options to
look at say a road to Katzehin [River] and just a 15 or
20 or 30 minute short shuttle ferry across, where you
would pay less type of a situation to move across. And
it would be almost like having a full road in and out of
the community here. And I bring this up because a number
of my constituents and then I felt it this summer myself
when my wife, Lucy, and I put our truck, she and I on the
ferry with our camper. We were heading down to Montana
on a little vacation. I think the biggest part of the
vacation was getting from here to Skagway because of
the...It's the most expensive 50 or 60 miles of highway,
I think, in Alaska. If they had to pay a comparable fee
to drive from Anchorage to Homer, it would cost them
about $600. Maybe a little less, but I mean five or six
hundred dollars to go down there and back. The same
thing to my good friends over there. [He pointed to
Representative Albert Kookesh.] We either have to do
something with the fares for the people who live on the
route or we have to keep an open mind about whether or
not the fast ferry...The fast ferry and the Malaspina,
I'm not sure what we're doing with a combination there.
Fast ferry is one-third the capacity and yet it now
appears it's only going to make one run a day. The
Malaspina can do that and it's got three times the
capacity. Wouldn't we have been better off to at least
seriously think before we leaped into the fast ferry
option about moving the Malaspina to a shuttle route to
say on up into Berners Bay, for example, and perhaps to
run that road from Haines down a little bit further and
then maybe consider a connecting ferry between Haines and
Skagway in addition to the mainliners coming on through?
Was any of that kind of dialoguing or discussion taking
place?
COMMISSIONER PERKINS replied, yes, all 14 alternatives were looked
at. The most economically feasible option is the full road. He
said,
You know what we have right now of utilizing this fast
ferry, and I think we got to look at the utilization of
it. It would be in conjunction with the [M/V] Malaspina
in the winter. But our problem in going to Haines and
Skagway is winter service. Right now, if you want to go
to Skagway or Haines, I think, you've got two days a week
you can do it. The fast ferry we plan to run in the
wintertime daily, which is a major improvement on
transportation. Now, no matter if you had decided today
that you're going to build a road and that you started
and fronted the money and this legislature approved it,
you're talking ten years and maybe longer than ten years
based on our experience with Whittier, where the U.S.
Supreme Court was the final decision maker on whether or
not we could build that railroad. So, there's got to be
something in the interim. And, basically, what we're
saying is the road is the preferred alternative. We
don't have the money to do it right now, but we're going
to put an interim solution on which we think will improve
this next--well within two years because that ferry will
be delivered in two years. It will provide daily winter
service plus it'll augment the Malaspina in the summer.
Now, that's a short-term solution. That is not the
long-term solution. The long-term solution, ultimately,
according to our studies is a road. Now, all we need to
do is come up with $240 million to keep the road going,
and then it's still going to be ten years before you get
it finished by the time...
Number 0488
REPRESENTATIVE HUDSON stated he appreciates the fact that the
department has a bottleneck and that it is taking steps to "uncork"
it. He's not adverse to a fast ferry. In fact, he proposed such
an "animal" a few years ago. He asked Commissioner Perkins whether
it would be acceptable to the Administration for those who want a
road to pursue funding in the form of revenue bonds or rolls, or
whether he thinks the issue is "dead."
COMMISSIONER PERKINS replied the department doesn't object to
anybody looking at whatever they would like to. The reason the
bond proposition is before the committee is because of the
experiences in the Lower 48 and Wall Street. He further stated
that the department doesn't want the payment to be much higher than
10 percent, otherwise there would be a greater percentage of the
federal payment, which is already dedicated up front.
Number 0584
REPRESENTATIVE COWDERY asked Commissioner Perkins his thoughts on
project labor agreements in relation to the proposed legislation.
COMMISSIONER PERKINS replied he doesn't know of any discussion(s)
relating to project labor agreements, and he doesn't know of any
project labor agreement for highway work. He doesn't anticipate it
in the future either.
Number 0665
REPRESENTATIVE COWDERY asked Commissioner Perkins whether the fast
ferry is being built outside.
COMMISSIONER PERKINS replied it is not being built yet. The
department will have an RFP [request for proposal] ready in April,
and the contract is scheduled to be awarded in the August-September
time frame. He said,
What we would like to do is we would put an option on
this contract to buy two more so, we would let the
contract for the one, but with an option to buy two.
Then if the people, if you all approve, and the people
approve this bond bill then we would add those two to the
contract. But we would get a bid price and somewhere or
another we need to consider in our evaluation for bids
what that price is. So, we would be buying three of
these, if this gets approved. I think we would save some
money, sizeable amount of money, by buying three from the
same company plus we would get three identical ones, the
same parts, 'interchangability' and all of this. So, it
really hinges on what happens to the bill both in the
legislature and the vote of the people. If you all
approve it, I will put it in the contract. Probably put
it in anyway 'cause we'll put the contract out before you
all make a final decision. And then if you don't approve
it or if the people vote it down we just won't implement
that option.
Number 0665
REPRESENTATIVE COWDERY asked Commissioner Perkins whether there
would be a competitive bid for the ferries.
COMMISSIONER PERKINS replied it would be a bid that includes
ranking based on a combination of both design and price.
Number 0755
REPRESENTATIVE COWDERY asked Commissioner Perkins whether he
anticipates any project labor agreements connected with the
building of the ferries.
COMMISSIONER PERKINS replied no. He further stated that a fast
ferry has never been built in the U.S. before, which will probably
spawn a lot of interest and innovative ideas. It could also be the
start of a new business in this country; a lot of states are
looking at fast ferries. He said, "I think we're on the cutting
edge of developing perhaps a new industry in the United States."
Number 0844
REPRESENTATIVE COWDERY said he's glad to hear that neither contract
would be based on a project labor agreement.
REPRESENTATIVE COWDERY asked Commissioner Perkins to provide him
with statistical information on population versus road miles,
including the marine highway.
COMMISSIONER PERKINS acknowledged the request.
Number 0899
REPRESENTATIVE VIC KOHRING commended Commissioner Perkins for his
efforts. He likes his proactive and aggressive approach in trying
to get these projects funded. He conceptually supports the
proposed legislation.
Number 0922
CHAIRMAN HALCRO asked Commissioner Perkins to give a brief overview
on the problems associated with the intersection of Lake Otis and
Tudor Roads [in Anchorage].
COMMISSIONER PERKINS explained that the Municipality of Anchorage
recently moved the retaining wall and put a new lane for turning
right, which helped but it did not solve the problem. The problem
is, the state doesn't have the right-of-way at that intersection,
which involves a church, a complete shopping mall and a few gas
stations. He noted that AMATS is looking at Raspberry Road, but a
study of that nature will take time. He announced that he would
have included a project in the proposed legislation if he had one
that was anywhere ready to go, given the time frames involved.
CHAIRMAN HALCRO opened the meeting to public testimony.
Number 1130
DAN ELLIOT testified via teleconference from Mat-Su in support of
HB 319. He is in favor of the proposed legislation because the
state's infrastructure is important, especially when the state can
make use of federal assistance when it is falling behind in needs.
He thinks that the fast ferry is a much better way to handle the
transportation needs of Southeast. It's either that or to move the
capitol up north. He is also in favor of the Parks-Glenn Highway
interchange project and assumes that the other projects are of
equal benefit. Having been in a laborer union for the past
twenty-five years, he said, he knows that the Parks-Glenn Highway
interchange is not a large project, even though it seems like a lot
of money. It's mostly bulldozer and truck work. He thinks that
the bonds are a very good way to go to handle the current needs.
In conclusion, the people in the Upper Valley like himself are in
favor of the proposed legislation.
Number 1221
JOE LeBEAU testified via teleconference from Mat-Su in support of
HB 319. He is especially in support of the high-speed ferries. He
would like to see trails and bike paths included as well. He has
driven on most of the roads included in the proposed legislation,
except for the one in Dillingham. He indicated that the roads in
Kotzebue and Nome clearly need repair, and that the Parks-Glenn
Highway interchange certainly could use some redevelopment. He's
not certain about the four-lane interchange from the Parks Highway
to Palmer, however. In conclusion, he would like to see additional
ferry terminals built closer to town so that people could walk.
Number 1360
WAYNE WEIHING testified via teleconference from Ketchikan in
support of HB 319. As a long-term resident of Southeast Alaska, a
fast ferry is a wonderful way to address the need for better
service. He also mentioned that Ketchikan has a shipyard that does
a lot of maintenance and annual work on the state ferries. They
have been very competitive with other shipyards. He would like to
think that a competitive bid on the proposed fast ferries would
bring economic stability to Ketchikan.
Number 1482
FRANK DILLON, Executive Vice President, Alaska Trucking
Association, testified via teleconference from Anchorage. He is
also chairman of the Anchorage Chamber of Commerce Transportation
Committee, and the Citizens Air Quality Advisory Board, which
advises AMATS. In regards to the future, it's a pretty good bet
that the state will continue to get highway funding and probably at
a pretty good rate of return. The projects listed in the proposed
legislation have been around for the last ten years, and in most
cases the needs have grown worse. The time frames that
Commissioner Perkins referred to in his opening remarks are quite
reasonable. The questions raised earlier in relation to this being
a good fiscal deal for the state need to be pursued, but according
to his understanding, it can't get much better. In fact, it almost
sounds too good to be true. In conclusion, the association
supports the proposed legislation and would like to see it move
forward. The association would also like to see the construction
seasons extended so that these projects can be completed sooner.
Number 1672
ROBERT VENABLES, President, Haines Chamber of Commerce, testified
via teleconference from Haines in support of HB 319. He is
especially in support of the allocation for the high-speed ferries.
The current transportation system, as most people know, is
inadequate. The proposed legislation, in his opinion, would make
the provisions necessary to meet the current needs and allow for
growth as it occurs. Access has been and continues to be a vital
issue for Haines, Skagway, Juneau and the entire state; it's
important that the ferries are included with the other projects.
He noted that access to the capitol from Haines is a statewide
need. In addition, the road option, in his opinion, is fiscally
irresponsible and potentially destabilizing to the economy and
environment of Haines. In conclusion, he thanked the chairman and
committee members for their support and asked that they support the
proposed legislation.
Number 1761
BRUCE GILBERT (PH) testified via teleconference from Haines. He
saw a need for more service in upper Lynn Canal in 1985, at which
time, he built a catamaran to act as a ferry between Haines and
Echo Cove. He made 57 trips, but unfortunately lost $40,000 as a
result. He further mentioned that in 1994 at a Passenger Vessel
Association meeting in Fort Lauderdale, Florida the Europeans and
Aussies presented the idea of a fast ferry. He also mentioned that
he attended the Boston International Fast Ferry Conference a year
ago where the Aussies indicated that a fast ferry built in
Australia would cost $12 million, while one built in the United
States would cost $16 million. It was also indicated that 20
percent could be saved if a ferry is bought through a private party
rather than a public party. He suggested pursuing that course of
action. In conclusion, he hopes that the state passes the proposed
legislation.
Number 1957
JOHN MIELKE, Mayor, City of Skagway, testified via teleconference
from Skagway in support of HB 319. He thinks that it's the right
thing to do and that the timing is right. It also meets the
transportation needs much sooner than any other purpose. It
affects a huge portion of the state and is good for everybody.
Number 2004
NANCY WATERMAN came before the committee to testify. She supports
legislative approval to allow for a popular vote on issuing bonds.
Public participation in transportation decisions is good, and this
proposed legislation would encourage that.
Number 2075
JEFF SLOSS came before the committee to testify. He has been
associated with Alaska Discovery Wilderness Tours for about 19
years, the oldest recreational guiding company in the state. He
echoes the previous comments in support of the proposed
legislation, especially as they relate to the fast ferries. The
fast ferries are long overdue; they would really help to serve the
transportation needs of the region.
Number 2162
JAMIE PARSONS came before the committee to testify. He served as
Juneau's mayor from 1991 to 1994. He also served on the Alaska
Committee from 1994 to 1997. His basic message is, the process has
been shortchanged. Today is the first time that he has heard the
official position of Department of Transportation & Public
Facilities, and that their preferred access to Juneau is a road.
After five years of extensive study and information gathering, the
department developed a draft that features four fast ferry options
and a road up the east side of Lynn Canal to Skagway with a shuttle
service to Haines. Prior to 1998, department officials conducted
an open house type of meeting in Skagway, Haines and Juneau, and
for some unexplained reason their technical staff has been denied
the opportunity to discuss the results and how the department
proposes to address the issues that were raised. Yet on January 24
Governor Knowles announced his own plan - a smaller, faster ferry
with 31 deck spaces - a concept that had never been contemplated
before. The "Juneau Access" study records a daily count of over
600 vehicles a day, which increases threefold in the summer. The
fast ferry alternative carries over 100 vehicles. In his opinion,
the fast ferry option recommended by the Governor is not going to
meet needs. There are a lot of questions about the Governor's
fast-ferry proposal: How will the proposal increase capacity
sufficient to meet existing travel demands? How will it increase
flexibility of travel? How will it lower the cost of operating in
upper Lynn Canal? How will it reduce travel time? In his opinion,
the department needs to resume the Juneau Access EIS process that
was shelved in 1997, throw in the Governor's proposal and see how
it measures up with the other options, and then present the
findings to this committee. That way, the final outcome is based
on technical merit and a public process.
Number 2429
MIKE MILLER, President, Alaska General Contractors [AGC], came
before the committee to testify. AGC supports the concept of the
proposed legislation. It would allow for the full-use of the
contracting season. That way, projects can be bid on earlier in
the year allowing for preparation and mobilization problems to be
sorted out earlier.
TAPE 00-11, SIDE A
Number 0001
MR. MILLER continued. In reference to the issue of an influx of
outside labor, chances are a person would stay south, given the
choices available. Those being, Las Vegas or San Francisco. He
doesn't think that this will create an influx of workers.
Likewise, the downturn in oil construction/work is around $400
million, so an new infusion of $75 million to $125 million over the
next couple of years is not a "big deal." The capacity is there in
terms of companies and labor. He noted that for the last few
highway projects that AGC has bid on there were between 5 to 11
bidders, which illustrates the capacity and desire for this type of
work. In addition, the maintenance for these additional lane miles
is considerably less than the maintenance on the current lanes that
are congested or require a lane to be shut down to do any work. In
the long term, he thinks it will be a cost-savings. In conclusion,
the AGC supports the concept of this type of funding and asks that
the committee members support the proposed legislation.
Number 0141
REPRESENTATIVE HUDSON asked Mr. Miller whether it's normal in the
industry to save money by bidding on a multi-work project as
opposed to bidding on a project piece-by-piece.
MR. MILLER replied there is an effective limit, which is the
capacity of the contractors in an area. For example, the number of
contractors that can bid on a $50 million project is substantially
less than the number of contractors that can bid on five $10
million projects. He thinks that the projects in the proposed
legislation would be "whole and phased" for market availability.
Number 0227
REPRESENTATIVE HUDSON explained that he is interested in the small
contractor. He wants to make sure that the small contractor can
get a piece of the projects in the proposed legislation as well.
Number 0300
REPRESENTATIVE COWDERY stated there is a limit to how small a job
can be done effectively.
REPRESENTATIVE HUDSON stated his point is that nothing in the
proposed legislation would preclude equal opportunity for all
sizes.
REPRESENTATIVE COWDERY replied except for bonding ability.
MR. MILLER pointed out that bonding capacity would preclude some
companies from taking on larger work than they should.
Number 0385
PAULETTE SIMPSON came before the committee to testify. As a
twenty-three year resident of Juneau, she would never want to be
perceived as arguing against $35 million worth of transportation
funding. However, she believes that the bond package, particularly
the fast ferries, would have an economic consequence to both the
riders of the Alaska Marine Highway System and the state, which
needs to be studied. She believes that good decisions are based on
two components - vision and a good public process. The fast
ferries took a lot of residents by surprise because the only thing
that they had seen in the way of good public process was the Juneau
DEIS - the $5 million, six year long study that supported a road as
an alternative, which was technically based and very well
researched. Her personal interest in this issue is because her
family has maintained a second home in Haines for about 20 years.
They ride the ferries and it's staggering to her that a family of
four has to spend $306 to take their car to Haines. She said,
We know how much the alternatives that were studied would
have cost the state and cost the user, but we don't know
that about this $35 million fast ferry. We don't have
any data to backup that decision whatsoever. So, you
can't really answer the question, How much will the
subsidies be that the state has to provide to the Marine
Highway System to run it, and how much will the cost to
the users be? Will it be significantly increased because
it is a faster ferry, presumably, consumes more gas? We
don't know any of that, and I think that really before we
move forward with this the public deserves to have the
benefit of that research.
MS. SIMPSON further stated she doesn't consider her family to be
economically disadvantaged, but they can't afford to make too many
more of these trips. She further stated that future legislatures
and generations should not be "chained to the weight" of staggering
subsidies. It will be expensive to operate and maintain these
ferries. The bonds purchase the ferries, but they do not operate
and maintain them. It's up to the committee members to "look down
the road" to determine and evaluate whether or not the money and
political-will is there to continue these types of subsidies. She
hopes that it will not be because of political pressures rather
than the right reasons that only the rich will be able to travel.
In conclusion, she said, "I think you owe it to the public to use
some vision and there certainly was vision that went into the
development of this DEIS and to have some good public process
attached to it before you put this forward to the public."
Number 0704
CLIFF LOBAUGH came before the committee to testify. He is
testifying today as a private citizen who has been involved with
this issue since the 1960s. In reference to the marine
transportation aspects, he explained that the first contract and
study relating to Juneau's access was done by the Chamber of
Commerce in 1890. The all-marine route was chosen, which
ultimately was started with the Egan Administration, and has been
favored by every administration since. He noted that the concept
of a fast ferry was initiated about ten years ago. He even visited
Catalina Island last year to see their fast ferry since everybody
has been talking about it. He fully supports the marine
transportation system. It doesn't require causeways, tunnels,
shuttle ferries, bridges, avalanche mitigation, maintenance of
additional roads, and many other environmental concerns. The
problem is, it favors people instead of cars so it doesn't have
that much support. But it has a lot of support in Southeast; the
region is used to favoring people.
Number 0884
JAN WRENTMORE, Lobbyist, City of Skagway, came before the committee
to testify. Skagway is very excited about the idea of the fast
ferries. It's important for the rest of the state to realize that
Southeast is a marine environment, and that a fast ferry is the
only reasonable and expedient alternative to provide access. The
bonds are a good idea. The only other option is to wait ten years
for some of these improvements.
Number 0959
JOSEPH M. BEEDLE, Representative, Goldbelt, Incorporated, came
before the committee to testify. He will speak in favor of the
proposed legislation with one small change. That being, to utilize
the existing road system as part of the Southeast Transportation
Plan. In other words, "let's use the roads where they exist, and
let's use the ferries where roads don't exist." He is also
concerned that the subsidy for the ferries will fall below its
current level because the legislature will start to replace
existing ferries. He is concerned that the "recipe" for the
solution does not include roads as part of the solution, when 30
miles of road is chipped sealed to Berners Bay beyond the existing
ferry terminal, which is more than one-third of the distance to get
to Haines and Skagway. If a supplemental ferry terminal can be
located at Berners Bay, the M/V Malaspina can easily make the trip
in 12 hours. It takes approximately 18 hours now. A fast ferry
could make multiple trips and provide for this "pent up" demand.
Last session, this legislature authorized but did not appropriate
money for a terminal at Berners Bay. He recommended that the
proposed legislation be amended to include the use of existing
roads in Juneau going north to Berners Bay. With that amendment,
he will speak in favor of the proposed legislation.
Number 0884
ROBERT JACOBSON (PH), Representative, Alaska Coastal Airlines;
Skagway Air Service; Haines Airways; and Wings of Alaska Airlines,
came before the committee to testify. It was 16 years ago that the
state funded a demonstration project where $33,000 a day was spent
to test a fast ferry, which was very devastating. The project
directly competed with the air carries. He said, "If anybody
wanted to pay the air carries $33,000 a day, I guarantee you that
we can fly the people for free year round." The air carriers are
concerned about the competition that the fast ferries will present,
especially for the Lynn Canal market in relation to mail, passenger
and freight. He suspects that with the fast ferries the cost will
go up significantly, when air carriers are not provided with a
dollar-to-dollar subsidy. Personally, he supports a road. In that
regard, air carriers can compete fairly. In other words, people
can choose to drive or fly. The government can choose to ship mail
by road or by air. The fast ferries are a different issue,
however. They create competition head-to-head.
Number 1280
CHAIRMAN HALCRO asked Mr. Jacobson (ph) what a round trip ticket
costs between Juneau and Haines.
MR. JACOBSON (PH) replied $79 [one way], of which, 11 percent to 12
percent is federal excise tax.
CHAIRMAN HALCRO asked Mr. Jacobson (ph) whether that is considered
regular fare.
MR. JACOBSON (PH) replied, "Yes."
REPRESENTATIVE KOOKESH pointed out that he pays $150 for a round
trip ticket and 40 cents per pound for shipping between Juneau and
Angoon. He doesn't think he should have to apologize for trying to
find a cheaper way to travel or ship freight.
MR. JACOBSON (PH) indicated that he doesn't disagree with
Representative Kookesh. He is a very good customer. His point is,
when a person can ride on the ferry for 40 percent of the true
price, that person is not paying the full fare. Air carriers do
not have that type of benefit.
CHAIRMAN HALCRO called on Commissioner Perkins, and asked him to
address the concern raised earlier regarding the "cutting-off" of
communications in relation to the "Juneau Access" project.
COMMISSIONER PERKINS replied the comments referred to the time
between when the draft EIS was released, comments were received,
and the time of the decision. The draft received well over 5,000
comments, of which, all were taken into account. But there is no
requirement to hold a second group of public hearings. The next
step would be to submit a final EIS to the Federal Highway
Administration. However, after looking at the options suggested
during the public review, it was decided that the project is not
financially feasible; the department never went to the stage of
submitting a final EIS to the federal government. He said,
So, we have missed no public reviews. We have made our
decision of the preferred alternative and it not being
financially feasible prior to submitting the final draft
which it would have gone back out for public review.
That's sort of where we stand. We have had...I mean
5,000 comments is a lot of comments to get in on one
draft document.
Number 1523
CHAIRMAN HALCRO asked Commissioner Perkins whether the EIS in
regards to the road has ever been completed.
COMMISSIONER PERKINS replied the EIS for the road will be submitted
to the Federal Highway Administration along with the preferred
alternative, which is a road. He said,
Now, if you was to do this whole process and if we hadn't
said, 'Hey, we're not financially going into a road.'
The next step is to get all the permits. We are talking
about well over probably two more million dollars to get
the permits. Now, the permits would be needed to have
this final, final document that the feds would do a
record of decision. We're not going into the permitting
phase, but we are gonna submit what we have right now
with a preferred alternative to the Federal Highway
Administration. If we don't do this, then they could ask
us to repay that $5 million that we've spent to date.
Number 1592
REPRESENTATIVE HUDSON wondered why $6 million was spent to develop
a preferred alternative when all of the technical studies indicate
that a road should be built in the long term. It seems like a
waste of millions of dollars and expectations for both sides.
COMMISSIONER PERKINS replied the legislature directed and
authorized the funding for the department to conduct a "Juneau
Access" study. He cited that the state spent $149 million on an
environmental impact study for the Susitna hydroelectric project.
He said,
Certainly, we didn't make the investment in Susitna, and
now we're saying that we don't think we can afford to
make the investment in Juneau access as it stands now.
Now, if the money was to come from somewhere else, then
that probably is a different story. But we don't have it
in our program. We think the needs are greater in other
parts of the state for the available money then putting
$240 million in the Juneau access.
Number 1719
REPRESENTATIVE KEMPLEN asked Commissioner Perkins what would be the
cost for the interchange at Bragaw and Airport Heights.
COMMISSIONER PERKINS replied he doesn't have that information with
him. He would provide it to him later.
Number 1766
REPRESENTATIVE COWDERY suggested holding the proposed legislation
in committee; it has generated a lot of questions.
CHAIRMAN HALCRO announced that he has a list of nine questions that
he will submit to the department. He expects written responses to
them, at which time, he will bring the proposed legislation up
again. The only sticking point seems to be the questions
surrounding the fast ferries. He will also re-open public
testimony when the proposed legislation is brought up again.
CHAIRMAN HALCRO asked Commissioner Perkins to discuss the concerns
regarding the subsidaztion of the fast ferries and its impact on
private enterprise.
COMMISSIONER PERKINS replied the ferry runs at about 61 percent
revenue and about 39 percent state appropriations for maintenance
and operations. He further stated that the issue relates to road
maintenance, which the state puts a lot of money into. The
difference is, the state charges a fee to travel on the ferries,
but it does not charge a fee to travel on the roads. He pointed
out that a fee cannot be charged on roads built with federal money.
In relation to competition, there have been attempts, but he
doesn't think there is any way that a private enterprise can make
money substituting the ferry system. In relation to the impact on
air carriers, it's hard for him to discuss because they don't haul
cars, when a lot of the traffic on the ferries are vehicles. He
sees air carriers as providing one service - the movement of
passengers. In some cases the ferries do compete with private air
carriers, but he doesn't know the answer because the ferries would
still be needed to move vehicles.
Number 2003
REPRESENTATIVE KEMPLEN asked Commissioner Perkins why a fee can be
charged for the Whittier tunnel; it was built with federal funds.
COMMISSIONER PERKINS replied a fee can be charged for certain
bridges and tunnels because of operational costs associated with
them. He further noted that an authority was just granted through
TEA-21 to allow for a toll for interstates.
Number 2069
REPRESENTATIVE KEMPLEN asked Commissioner Perkins whether the
Dalton Highway is part of the National Highway System. If so,
would it qualify for a toll under the new authority?
COMMISSIONER PERKINS replied, yes, the Dalton Highway is part of
the National Highway System, but he's not sure whether or not it
would qualify for a toll.
CHAIRMAN HALCRO announced that the bill would be held over until
the answers to his nine questions have been submitted by the
department.
ADJOURNMENT
There being no further business before the committee, Chairman
Halcro adjourned the House Transportation Standing Committee
meeting at 3:20 p.m.
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