Legislature(1997 - 1998)
02/19/1997 01:08 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 19, 1997
1:08 p.m.
MEMBERS PRESENT
Representative Bill Williams, Chairman
Representative Beverly Masek, Vice Chairman
Representative John Cowdery
Representative Jerry Sanders
Representative Kim Elton
Representative Al Kookesh
MEMBERS ABSENT
Representative Bill Hudson
OTHER HOUSE MEMBERS PRESENT
Representative Joe Green
COMMITTEE CALENDAR
*HOUSE BILL NO. 95
"An Act relating to motor vehicle registration, licensing, and
insurance; and providing for an effective date."
- HEARD AND HELD
OVERVIEW: ALASKA MARINE HIGHWAY SYSTEM
HOUSE BILL NO. 55
"An Act relating to the fiscal operations of the Alaska Railroad
Corporation and to land acquired by the State of Alaska under the
Alaska Railroad Transfer Act of 1982 or otherwise acquired for
railroad purposes; and providing for an effective date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 95
SHORT TITLE: MOTOR VEHICLE INSURANCE & LICENSING
SPONSOR(S): REPRESENTATIVE(S) GREEN,Bunde,Rokeberg
JRN-DATE JRN-PG ACTION
01/29/97 168 (H) READ THE FIRST TIME - REFERRAL(S)
01/29/97 168 (H) TRANSPORTATION, JUDICIARY
02/05/97 252 (H) COSPONSOR(S): BUNDE
02/10/97 297 (H) COSPONSOR(S): ROKEBERG
02/19/97 (H) TRA AT 1:00 PM CAPITOL 17
BILL: HB 55
SHORT TITLE: ALASKA RR BUDGET AND LAND
SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT
JRN-DATE JRN-PG ACTION
01/13/97 42 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 42 (H) TRANSPORTATION, FINANCE
01/15/97 78 (H) STA REFERRAL ADDED
02/05/97 (H) TRA AT 1:00 PM CAPITOL 17
02/05/97 (H) MINUTE(TRA)
02/10/97 (H) TRA AT 1:00 PM CAPITOL 17
02/10/97 (H) MINUTE(TRA)
02/17/97 (H) TRA AT 1:00 PM CAPITOL 17
02/17/97 (H) MINUTE(TRA)
02/19/97 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
KRISTY TIBBLES, Legislative Secretary
to Representative Joe Green
Alaska State Legislature
Capitol Building Room, 118
Juneau, Alaska 99802
Telephone: (907) 465-4831
POSITION STATEMENT: Sponsor testimony on HB 95.
JUANITA HENSLEY, Chief Driver Services
Division of Motor Vehicles
Department of Public Safety
P.O. Box 20020
Juneau, Alaska 99811
Telephone: (907) 465-4361
POSITION STATEMENT: Testified in support of HB 95.
JOE YOUNG
3126 Bettles Bay Loop
Anchorage, Alaska 99515
Telephone: (907) 277-0515
POSITION STATEMENT: Testified on HB 95.
RICH KASTELLER, representative
Insurite
address and telephone number not provided
JOHN GEORGE, National Association of Independent Insurers
3328 Fritz Cove Road
Juneau, Alaska 99801
Telephone: (907) 789-0172
POSITION STATEMENT: Testified on HB 95.
MICHAEL LESSMEIER, State Farm Insurance Company
One Sealaska Plaza
Suite 303
Juneau, Alaska 99802
Telephone: (907) 586-5912
POSITION STATEMENT: Testified on HB 95.
GARY HAYDEN, Systems Director
Alaska Marine Highway System
Department of Transportation & Public Facilities
3132 Channel Drive
Juneau, Alaska 99801
Telephone: (907) 465-8827
POSITION STATEMENT: Presented the marine highway overview.
JOE PERKINS, Commissioner
Department of Transportation & Public Facilities
3132 Channel Drive
Juneau, Alaska 99801
Telephone: (907) 465-8827
POSITION STATEMENT: Spoke on the marine highway overview
Testified against HB 55.
CHRIS KNIGHT, Researcher
to Representative Terry Martin
Alaska State Legislature
Capitol Building, Room 502
Juneau, Alaska 99901
Telephone: (907) 465-3783
POSITION STATEMENT: Testified on HB 55.
JIM BALDWIN, Assistant Attorney General
Governmental Affairs Section
Department of Law
P.O. Box 110300
Juneau Alaska 99811
Telephone: (907) 465-3600
POSITION STATEMENT: Testified on HB 55.
ACTION NARRATIVE
TAPE 97-9, SIDE A
Number 001
CHAIRMAN BILL WILLIAMS called the House Transportation Standing
Committee to order at 1:08 p.m. Members present at the call to
order were Representatives Williams, Masek, Cowdery, Sanders and
Elton. Representative Kookesh arrived at 1:15 p.m. Representative
Hudson was absent.
HB 95 - MOTOR VEHICLE INSURANCE & LICENSING
Number 056
CHAIRMAN WILLIAMS announced the first order of business was HB 95,
"An Act relating to motor vehicle registration, licensing, and
insurance; and providing for an effective date."
Number 088
KRISTY TIBBLES, Legislative Secretary to Representative Joe Green,
read the following sponsor statement into the record:
"HB 95 will allow the Department of Public Safety to create and
maintain an insured motorist identification database for the
purpose of verifying compliance with the mandatory motor vehicle
insurance provisions of AS 28.22. The program will cross-index
drivers licenses and vehicle registrations with insurance policy
records, provided monthly by all insurance companies doing business
in Alaska. Using this database, a statewide list of uninsured
motorists will be generated and warning letters will be mailed,
requiring motorists to provide proof of insurance or to obtain
insurance. The database system will allow peace officers making
routine traffic stops to electronically verify that a person has
valid auto insurance.
"The Department will contract with a third party agent to establish
the insured motorist identification database. To provide
confidentiality of records, a provision in the bill prohibits
public disclosure of the information in the database. The cost for
maintaining the database will be covered by a surcharge on all
vehicle registrations.
"The uninsured motorist database has had a significant impact on
the uninsured motorist population in Utah. Since its
implementation in 1995, statistical data show that Utah's uninsured
motorist population 322,898, 23.18 percent of all Utah registered
vehicles have been reduced by 43 percent to under 140,000
motorists. If we apply Utah's percentages to Alaska's 630,423
registered vehicles, 145,000 may be uninsured. A 43 percent
reduction like Utah had would result in 64,298 fewer uninsured
motorists on Alaska's highways."
Number 267
REPRESENTATIVE JOHN COWDERY asked if his understanding was correct
that existing law requires mandatory insurance but unless there is
an accident it is unknown as to whether the driver is insured.
MS. TIBBLES replied that was her understanding.
Number 307
JUANITA HENSLEY, Chief Driver Services, Division of Motor Vehicles,
Department of Public Safety, stated that there is a self
certification mandatory management program in the state of Alaska.
She stated it allows a person to self certify that they have
liability coverage of their vehicle at the registration but does
not require proof. She stated that it requires the division to
suspend the drivers license of anyone who is involved in a motor
vehicle accident of over $500, if the driver can not prove that
they are insured. She stated that it is an after the fact
situation as opposed to showing proof of insurance at the point of
registering the car.
Number 372
REPRESENTATIVE COWDERY asked if his understanding was correct that
the existing law states that everybody is supposed to be insured
but it is not found out until after a tragedy the person was not
insured.
Number 394
MS. HENSLEY replied that is correct, we do not verify that the
person is insured until they have had an accident.
Number 422
CHAIRMAN WILLIAMS asked for a motion to accept the proposed
committee substitute.
Number 436
REPRESENTATIVE BEVERLY MASEK moved to adopt CSHB 95(TRA) Version E
as a working draft. There being no objection, CSHB 95(TRA),
Version E was adopted.
Number 465
MS. HENSLEY stated that the reason the Department of Public Safety
supports the bill because it is an efficiency measure, if the
department is able to verify on line, that the vehicle is insured
it would save the department an immense amount of paper work.
Number 531
REPRESENTATIVE COWDERY asked if the bill addresses a person who
owns multiple vehicles and suspends the insurance at certain times.
Number 559
MS. HENSLEY replied if it is a situation like a motor home that
would be registered on a seasonal basis than the vehicle would only
need to verify insurance only for that period of time that you
would be driving it. She stated that the department does issue a
seasonal registration for vehicles.
Number 628
REPRESENTATIVE COWDERY asked if liability would be an issue, since
he has four vehicles and he suspends the insurance only for six or
eight months while he is not driving.
Number 686
MS. HENSLEY replied that it would not be any different then what is
being done today, if before the vehicle was driven the insurance
was reinstated. She stated that she did not think that it needs to
be spelled out in statute but would not be adverse to adopting
regulations to handle that.
Number 731
REPRESENTATIVE COWDERY stated that he thinks it is a good bill but
he does not want it to cause problems.
Number 772
MS. HENSLEY replied that it is not unlike owners of airplanes that
suspend the insurance in the winter months.
Number 787
CHAIRMAN WILLIAMS asked if there was a fiscal note with the bill.
Number 804
MS. HENSLEY replied that once the amendments are adopted and a
committee substitute is developed than the division will have a
fiscal note for the committee.
Number 851
REPRESENTATIVE COWDERY moved to adopt Amendment 1.
Number 883
MS. HENSLEY stated that Amendment 1 would increase the registration
surcharge fee from $1 to $2 but it will still be $1 a year because
the registration would be for two years. She stated that it would
be cost effective to register for two years and charge the fee for
the two years. She stated that by contracting with a third party
agent it will go through a bidding process and a $1 a year will not
be enough to support the 630,000 vehicles registered in Alaska.
Number 927
REPRESENTATIVE KIM ELTON stated that it was his understanding that
motor vehicle registration fees are not reappropriated to the
Division of Motor of Vehicles. He asked if the division is not
getting the full amount now what makes the division think that it
will get the full amount plus $2.
Number 966
MS. HENSLEY replied that the Division of Motor Vehicles collects
about $36 million a year of which $29 million is deposited in the
general fund, the remainder $7 million is collected for
municipality taxes and remanded back to the municipalities. She
stated that we are collecting $29 million a year and have a budget
of $8.1 million. She stated that the division collects four times
the amount that they are appropriated back. She stated that the
division is at the mercy of the legislature and that the division
tries come up with a mechanism for it to pay for itself so that
those funds can be reappropriated back in general funds.
Number 1029
REPRESENTATIVE ELTON stated "I'll probably vote for the amendment.
It probably means nothing, I mean we could pay for several of these
systems if we would just reappropriate to them the money that they
are bringing in and I think it is kind of foolish that we are doing
this because I think it just means that we are going to increase
revenues to the general fund and I just like to remind all my
majority colleagues that this is essentially a tax that we're
adding, this isn't a user fee because the user fees are already put
in the general fund for expenditure elsewhere." He stated that he
would imagine that most of the costs are front-end costs for
establishing the hardware and software system, and asked that if
this was correct does the division anticipate the fee going away or
being reduced.
Number 1079
MS. HENSLEY replied that she did not see the fee going away because
it is a fee to maintain the database. She stated that according to
the bill, the insurance industry is required to submit to the
division on a monthly basis, updates of any new vehicles or
policies being added or any changes in existing policies. She
stated that it would also require that the company maintains
current technology.
Number 1141
CHAIRMAN WILLIAMS asked if there was an objection to Amendment 1.
Number 1151
REPRESENTATIVE ELTON stated that he objected to Amendment 1. He
stated that we are collecting more than enough money to accomplish
the program and this is essentially a tax increase because it will
go into the general fund and the same amount of money will be
reappropriated as in the past. He said, "I don't think this is
going to kill the bill if we deny this hidden tax."
Number 1190
REPRESENTATIVE COWDERY stated that we won't appropriate as much in
the future because the workload in the department will diminish.
He stated that he does not look at Amendment 1 as a tax and the
bill assures responsibility for the public.
Number 1279
REPRESENTATIVE ELTON stated that he is in total support of the bill
but he does not support paying four times more to register his
vehicle than it takes to operate the program. He stated that
Amendment 1 is not going to go to establish this system.
Number 1321
MS. HENSLEY stated that it is correct that the division does
collect a lot more taxes or fees than allowed in the budget. She
stated that last year the division had to delete 13 positions from
the budget, four were within the drivers services unit that
processes accidents for at fault drivers to make sure that the
victims are paid. She stated that the program was eliminated due
to budget under funding, the bill will create the efficiencies to
add part of that program back.
Number 1402
CHAIRMAN WILLIAMS asked if the fiscal note that will be presented
if the bill is passed out will be positive or negative.
Number 1412
MS. HENSLEY stated that it would probably be a wash, in that it
will show program receipts coming in and then out to pay for the
maintenance of such programs resulting in a net end of zero.
Number 1440
CHAIRMAN WILLIAMS stated that the bill is not going to the finance
committee.
Number 1450
MS. HENSLEY replied that is correct it is not referred to the
finance committee and with the fiscal note it would have to be
referred to the committee.
Number 1453
CHAIRMAN WILLIAMS called for a role call vote. Voting for
Amendment 1 were Representatives Cowdery, Sanders and Williams.
Voting against Amendment 1 were Representative Kookesh, Elton and
Masek. Chairman Williams announced that Amendment 1 failed.
Number 1525
REPRESENTATIVE ELTON made a motion to adopt Amendment 2.
Number 1545
MS. HENSLEY stated that Amendment 2 is a technical amendment of
Section 5, where it allows the division to verify if a person has
insurance. She stated that if the license was suspended under the
point system and then reinstated it could be verified
electronically.
Number 1570
CHAIRMAN WILLIAMS asked if there was an objection. Hearing none,
Amendment 2 passed.
Number 1580
MS. HENSLEY stated that the fiscal note will reflect because of
Amendment 1 failing, approximately $300,000 coming in general fund
revenues because it still maintains the $1 processing fee but it
will also show an additional $300,000 needed for the program
itself. She stated that the fiscal note will be for $300,000.
Number 1601
REPRESENTATIVE MASEK asked that on page 1, Line 7, it states that
every month the insurance agencies have to report to the Department
of Public Safety.
Number 1624
MS. HENSLEY replied that the seventh day of each calendar month the
insurance industry will provide to the division a form that a
person has insurance on the vehicle.
Number 1647
REPRESENTATIVE MASEK asked if she could tell what the reporting
period is currently under statute.
Number 1655
MS. HENSLEY stated that there is no reporting requirement other
than the fact that a person just signs their registration
indicating that they have insurance.
REPRESENTATIVE MASEK asked if the system has been working.
MS. HENSLEY stated that it is a system that is labor intensive and
it is not efficient for the state to operate, it would be faster
and more accurate to get information electronically.
Number 1696
REPRESENTATIVE MASEK asked if it puts a big burden on private
industry and the insurance companies to have to report once a
month.
Number 1705
MS. HENSLEY stated that she could not address what the burden would
be but because there is going to be more drivers being insured, the
uninsured motorists claims will lessen.
Number 1735
REPRESENTATIVE COWDERY said "You said it is a monthly reported
requirement by the insurance industry but say I am financing homes
or something like that, they issue a policy and there is no more --
say for a twelve month period and then if the policy is cancelled
or something like that for whatever reason or the premium is not
paid to renew the insurance companies generally are required to
notify the lender of this circumstances. Would that be more
appropriate or is that what we got -- that you're proposing the
same thing."
Number 1775
MS. HENSLEY replied that if a person is required to file a
certificate of SR22 insurance, it requires a piece of paper to be
sent to the division. She stated that under the bill it would be
reported under a electronic format and it can be verified
electronically that they have the SR22 insurance and the paper slip
does not need to be maintained by the division. She said that if
a person cancels it, the statute requires them to report it within
ten days after cancellation through the submission paperwork, under
the bill, the database would just have to be updated.
Number 1842
JOE YOUNG, testified via teleconference from Anchorage, that he is
a licensed driver for 28 years and his wife has been a licensed
driver for 14 years, during which time they have been involved in
10 accidents, six of which were uninsured drivers. He stated that
he can not afford not to have insurance and being that 60 percent
of the people he has been in accidents with have been uninsured, he
pays the extra for the premiums and deductibles. He stated that
uninsured motorists are not responsible drivers and would like
drivers to have insurance and be required to show proof of
insurance.
Number 1957
RICH KASTELLER, representative, Insurite, the vendor that runs the
Utah uninsured motorist database, testified via teleconference from
Salt Lake City, that he would and answer any questions.
Number 2005
REPRESENTATIVE COWDERY asked what his affiliation was.
Number 2016
MR. KASTELLER stated that Insurite is a private industry that has
been contracted with the state of Utah to administer and oversee
the uninsured motorist database.
Number 2062
JOHN GEORGE, National Association of Independent Insurers, a
property casualty trade association, stated that Allstate, USAA and
Geico, that write a considerable amount of automobile insurance are
members. He stated that his clients are concerned because a
renewal date on an insurance contract is an asset. He stated, "If
you know that someone's insurance is going to expire on June 1st,
and you want to write insurance, if you can find out that
information than I am going to go out and solicit your business."
He said that the bill states there would be confidentiality but if
it is in a computer database, hackers can go in and get the
information out. He stated that employees could print out and sell
the information to a third party.
Number 2123
MR. GEORGE stated that it costs about $6 per policy for them to
obtain this information separately and report it to the state or to
the private database. He stated that the cost has to be passed on
to the policy holders, and adding $6 dollars makes the cost even
more unaffordable to the insurers. He stated that they are
currently having trouble convicting people who commit felonies,
therefore how could we expect to prosecute uninsured drivers. He
stated that people ought to have insurance but he does not think
this bill is the answer.
Number 2218
REPRESENTATIVE COWDERY stated that enforcement would have the
ability to suspend drivers licenses and asked what would be a
better way to require responsible drivers.
Number 2253
MR. GEORGE replied that without creating a big bureaucracy it
probably could not be done. He stated that there are people
driving with suspended licenses. He stated that he did not think
there is a law that could be passed to make a substantial
difference beyond what is done now and he does not feel that Alaska
has a rampant uninsured motorist problem.
Number 2322
MS. HENSLEY stated that the insurance companies currently maintain
their information on computer systems so if hackers were out to get
into the database they would be able to get into the insurance
companies computers. She stated this bill will create efficiencies
for the division.
Number 2385
MICHAEL LESSMEIER, State Farm Insurance Company, stated that he was
involved in the mandatory insurance debate in Alaska in 1983. He
stated that the issue of the uninsured driver is not an easy issue
to solve. He stated that in practice a lot of the solutions do not
work because not matter what is done a percentage of the public is
not going to be forced to buy insurance. He questioned how much
money should be spent to change the percentage of insured drivers
by a small amount. He stated that the solution that the
legislature came up with in 1983 was the Motor Vehicle
Responsibilities Act which would suspend an irresponsible person's
drivers license. He stated that the division does not enforce this
anymore. He stated that it was required to have two points of
proof for the mandatory insurance.
TAPE 97-9, SIDE B
Number 006
MR. LESSMEIER stated that it was required that if some one was
uninsured that the license was supposed to be suspended for 90
days. He stated that there was a requirement of mandated offers of
uninsured and underinsured motorist coverage. He stated that no
matter what is done there will be people that are uninsured and if
the division is not even enforcing the present law, how can it be
expected to enforce the new law. He stated the bill will not
change the number of uninsured drivers very much. He stated that
he would encourage the committee not to pass a law that imposes
significant burdens on private industry just to computerize the
state.
Number 113
CHAIRMAN WILLIAMS stated that it is his intention to hold the bill
until Wednesday of next week.
#
OVERVIEW: ALASKA MARINE HIGHWAY SYSTEM
Number 306
GARY HAYDEN, Systems Director, Alaska Marine Highway System,
Department of Transportation & Public Facilities, stated that the
economic impacts of the Marine Highway System are both statewide
and regional. He stated that the Marine Highway System returns
$171 million into the state's economy as a result of the $28
million state general fund support appropriated into the Marine
Highway System. He stated that the Alaska Marine Highway System
employs 860 Alaskans with a payroll of $45 million dollars. He
stated that there are a lot of demands by the different constituent
groups that the department strives to meet the needs of and
sometimes they fall short.
Number 372
MR. HAYDEN stated that the DOT/PF's objective is to provide service
to the traveling public but in providing the service they are
affected by numerous factors. He said, "Labor contracts set 75
percent of our operations, those are on a three year cycle, and
then our asset management because the aging of the fleet the
increase regulatory environment that we are operating on. The fact
that we bring the boats out to do increasing maintenance with age.
Those affect how much service we can provide." He stated that the
way the vessels are run affects the employees, public and the
service. He stated that the DOT/PF receives general fund support
appropriation of 40 percent of the expenditures and the other 60
percent is generated by the revenues from sales and tariffs. He
stated that if costs and revenues are kept in balance the service
will fluctuate depending on what the level of the two vectors are.
He stated that in the process of trying to balance it the public
can be affected. He stated that the DOT/PF would like to run all
the ships 12 months a year, 52 weeks a year to provide the service
to the public, however we do not have the revenue to support it and
the cost would be way out of budget.
Number 475
MR. HAYDEN stated that there are seven labor agreements that
affected the operation of the Marine Highway System during the last
12 months. He stated that two near strike occurrences have
affected the operations and they are currently at an impasse with
the Marine Engineering Beneficial Union. He stated that
expenditures have increased as well as the cost of doing business.
He stated that currently they are fighting cost containment equal
to $1.6 million as a result of risk management and cost of living
increases.
Number 573
MR. HAYDEN stated that they have had a general fund decrease this
year of $346,000 from the department's allocation and $259,00 from
the conference committee. He stated that general funds have been
reduced by $344,000.
Number 586
MR. HAYDEN stated that in the summer time there are 68,000 people
traveling versus 11,000 traveling in the winter creating the
challenge of capacity to meet the demand. He stated that in the
summer, in order to meet the capacity the frequency falls off. He
stated in the winter the vessels are out of service because they
need to be repaired and the department does not have the money to
run them all year and the traffic demand is not there to support a
higher frequency rate. He stated that daytime arrivals can be
arranged by slowing the vessels down and making fewer port calls.
He stated that the public would rather have more ports of call per
week than the daylight port calls.
Number 840
MR. HAYDEN stated that the most frequent port calls are between
Valdez and Cordova, followed by Whittier because the distance
between ports are closer. He stated that in the Southwest system,
Valdez is the primary destination, followed by Whittier, Cordova
and Homer. He stated that traffic was off about 4 percent for 1996
but he is expecting traffic to grow because 1998 is the Gold Rush
Centennial.
Number 885
MR. HAYDEN stated that the marine highway fund was created in 1991
and it became operational in 1992 at $32 million with a $6 million
supplemental appropriation in 1991. He stated that currently the
fund is at $28.4 million but the service level has fallen off to be
consistent with the funding levels. He stated that the vessel
replacement fund and the marine highway fund generated interest for
the general fund is over $13.5 million.
Number 958
MR. HAYDEN stated that the mainline vessels help support the feeder
vessels which as a result have lower tariff rates. He stated that
the state has invested $129 million over the last ten years and
over the next four to five years it is projected another $100
million will be invested, so there will need to be consideration
for having to capitalize the marine highway fund if it is spun off
into a separate authority.
Number 1000
MR. HAYDEN stated that the public has stated that they would like
to have some consistency in the schedule. He stated that last
years schedule was run in conjunction with the communities wishes
and it will be run again this summer. He stated that the double
shuffle in Lynn Canal will continue and in the month of May the
North and South bound sailings will be eliminated due to economics.
Number 1081
MR. HAYDEN stated that buying a reservation system will not meet
the needs of the passengers so the department has decided to create
their own. He stated that the system will be pc network based,
that will allow access for travel agents to readily use the system.
Number 1120
MR. HAYDEN stated that the question with the Malaspina is if the
state will make the investment to update ferry with the
international requirements to be able to go into Prince Rupert and
if not, then what is to be done with the ferry. He stated that
meeting the requirements would cost $53 million in capital
expenditures, therefore, the department is trying to figure out how
to redeploy the ship. He stated "The constraints on eight vessels
versus nine vessels is anything that we do for nine vessels, I
would consider as an interim solution to the transportation needs
in the Southeast and that if there is an expansion in service the
vessels will have to change, the capacities will have to grow,
there will have to be additional infrastructure of capitalization."
He stated that the department has given a day boat contract in Lynn
Canal to the unions and are waiting for a response. He stated that
the department has suggested bringing the manning levels on the
Malaspina from 47 to 18 and having a one crew system. He stated
that they have removed the language that would prohibit contracting
out and they are deciding whether to cater out or to not provide a
food service on that voyage. He stated that the department has
requested additional funds in the capital budget request to do
additional overhaul and maintenance on the engine, so they will
continue to run for a few more years. He stated that in the end
the legislature will have part of the decision on what happens to
the authorization and on general fund support.
Number 1296
REPRESENTATIVE COWDERY asked if the reservation system was going to
be improved.
Number 1309
MR. HAYDEN replied that Reservation Management System 3 is under
design and should be implemented in May, the software would then be
purchased over the summer and staff would be trained next fall.
Number 1331
CHAIRMAN WILLIAMS asked how long the reservation system has been in
the process.
Number 1346
MR. HAYDEN stated that he has been working with the department for
two years and the contractor was working shortly after that.
CHAIRMAN WILLIAMS asked if money had been appropriated.
Number 1357
MR. HAYDEN replied that there was money appropriated and it had to
be in the stipulation. He stated that it is being funded using
federal highway funds.
Number 1387
CHAIRMAN WILLIAMS stated, "It seems like before I got here we were
talking about the reservation system." He asked if Mr. Hayden
could get a copy of the appropriation to the committee to let them
know how long it has taken. He stated that it should have been
done for this season.
MR. HAYDEN stated that he wished he had it on line today as well.
CHAIRMAN WILLIAMS stated, "It seems like we were bogged down in the
past and we are the ones that are hurt, people call the reservation
system and then they are told that the ferries are full and they go
down to the dock and they get on anyway and half the ferry is
empty."
Number 1450
MR. HAYDEN stated that it is because the reservation system is over
ten years old and it is difficult to make changes to the program.
He stated, "When our reservation agent pulls up an itinerary for
someone who is in Haines and they want to go to Prince Rupert, the
computer screen that comes up only shows the trips that are the
direct routes on the single ship going from Haines to Prince
Rupert. However, in the last two years in order to provide more
service within the region we have changed some of the ships so they
turn in Juneau and go over to Sitka and we provide service to Sitka
and back depending on what time of year it is the vessel is either
doing it on the north bound leg or the south bound leg. So the
reservation agent, being a new reservation agent did not take the
next step and look for connecting trips." He stated that once he
was made aware of it, the system was corrected by telling the
agents how to check the connecting routes. He stated that the new
reservation system will show all of the connecting ships and
transfers that are available.
Number 1574
REPRESENTATIVE ELTON asked if he could explain what community
marketing $500,000 meant.
Number 1586
MR. HAYDEN stated that in the past the department has not actively
pursued tour groups, hotels, or bus companies to use the ferries.
He stated that now with nine ships there needs to be a 15 percent
increase in traffic to break even. He stated that he does not see
this currently existing, therefore, in order to meet the projected
15 percent it may be necessary to meet with the communities that
the ferries travel to, to come up with a selling plan.
Number 1692
REPRESENTATIVE ELTON asked if the communities are going to pay the
$500,000.
MR. HAYDEN stated that it is the department's proposal at this
point, more capacity would benefit the communities and he would
like them to help with the cost of marketing.
Number 1722
REPRESENTATIVE COWDERY asked what the plan is for the new ferry's
routes.
MR. HAYDEN replied that during June, July and August, it would be
deployed in the Southeast with probably three different options of
either running it out of Prince Rupert, running it parallel with
the Columbia out of Bellingham or deploying it in the region
between Ketchikan, Juneau and Sitka. He stated that after June of
the first year they will provide a trans-gulf sailing connecting
Southeast and Southwest Alaska. He stated that the department does
not yet know where the ferry would travel in Southwest Alaska. He
stated that when the Tustumena is off line in the winter the new
ferry would pick up that service.
Number 1821
JOE PERKINS, Commissioner, Department of Transportation and Public
Safety, stated that when the department starts looking at what to
do with the Malaspina and with the new ferry, the Department starts
to look at the entire way the ferry system is run. He stated that
the new ferry will affect the entire fleet and the marine highway
system.
Number 1899
CHAIRMAN WILLIAMS asked if Mr. Hayden could give the committee some
information on the Marine Engineers Beneficial Association (MEBA).
Number 1926
MR. HAYDEN stated currently the department is at an impasse with
MEBA, they have taken their strike vote and they can strike at any
time they want to. He stated that he has both the state's and
MEBA's proposals. He stated that there is a disagreement over
wages, sick leave and out of state workers' compensation in
relation to the cost of living differential. He stated that on the
wage package the state has offered one-half the Consumer Price
Index (CPI) starting on July 1, 1997 and one-half of the CPI on
July 1, 1998 for a total of 3 percent. He stated, "The Inland
Boatmen's Union (IBU) is asking for 4.5 percent in their written
proposal and they like for that to go back retroactive to July 1,
1996, their contract expired November 1, 1996. We are not
interested in going back retroactively amending the existing
contract, or the contract was expired and give them additional
funding and they received a pay raise in 1994 that the other two
unions did not receive. The next point is sick leave. They are
all on a personal leave bank and that conversion was made several
years ago in a previous agreement and they have asked us in their
written proposal, that I have given you, for us to capitalize at
the tune of 131 hours per employee over three years. We have
stated that we have already contributed to their sick leave bank
and are not interested in recapitalizing it. The third item is out
of state and instate pay equity issue, from their prospective,
after they watched what was happening in the legislature last year,
they were concerned that the legislature was going to do away with
the cost of living differential, that was paid to them for living
in the state, so they have proposed, on page two of their proposal,
to amend Section 172(C) and to give all the instate workers or to
give everyone a 5 percent pay raise, per year, for three years and
then to help offset that increased cost, they are proposing to
decrease the cost of living amount by 5 percent per year for three
years. Those two numbers are not in balance and in the other part
of that they are proposing to give out of state workers a 5 percent
pay raise and we said that we were not interested in doing that
either." He stated that is what the impasse is over and the
department is scheduled to meet with a federal mediator on March 6,
1997.
Number 2195
MR. HAYDEN stated that the cost of the department's proposal is
$222 thousand over two years and MEBA's proposal is $2.3 million
over the life of the contract.
Number 2257
REPRESENTATIVE ELTON stated, "the total cost of the MEBA package is
$2.3 million and the total cost of yours is for $222 thousand. Is
your's for two years and their's for three years."
Number 2287
MR. HAYDEN replied that the both contracts would expire on July 1,
1999. He stated, "the difference is that they want it to be
retroactive from July 1, 1996 and have a pay raise for that time
period and have another pay raise on November 1, 1996 when that
contract expired."
Number 2357
CHAIRMAN WILLIAMS stated that the DOT/PF received two letters. He
asked if he was familiar with the letter from Lew Williams.
Number 2459
MR. HAYDEN stated that he met with Mr. Williams and would reiterate
his response to the letter. He stated that the issued is not
selling the Malaspina but what to do with it when it can no longer
be used to go to Prince Rupert.
TAPE 97-10, SIDE A
Number 040
CHAIRMAN WILLIAMS stated that the committee would have another
meeting at which he would like to have the department's response
written out being that the Malaspina is such a hot issue. He asked
that Mr. Hayden get a written response to the committee.
Number 130
MR. HAYDEN requested that he needs sufficient time to prepare a
written response due to his responsibilities.
Number 193
CHAIRMAN WILLIAMS stated that there was a letter from Andrea
Barkley sent to the Senate Transportation Standing Committee that
the committee would like to have a response to. He stated that the
ferry system is a hot issue and he would like to get the issues out
in the open as to how the system is working. He stated that he
wants the system to work and he knows that the department has to
run the system. He stated, "I want to give you as much help as I
can from this committee be it a forum or questions from the users,
I will meet and talk with at least two mayors that are going to be
coming to your committee meeting next week."
Number 387
MR. HAYDEN stated that he would appreciate the committee's
assistance to the Marine Highway System. He stated that he would
summarize the issues concerning the Marine Highway System to be
cost, revenue and service. He stated that they are trying to be
responsive to the public, however in the process of doing so the
department is trying to contain the cost which affects employees'
jobs.
Number 487
CHAIRMAN WILLIAMS stated that he agreed and he would like to talk
to some of the employees.
Number 522
MR. HAYDEN stated, "I would like to say the Alaska Marine Highway
System is live and well, people are being moved, and we are still
providing a service to over 400,000 people and transporting their
cars through Southeast and in the process there is a struggle at
doing that and that is want the discussion is all about is how to
improve that service."
Number 576
REPRESENTATIVE COWDERY stated that he had never heard a complaint
from anyone who had ridden the ferry except that they could not get
a reservation. He asked if the department had considered a
passenger only ferry.
Number 687
MR. HAYDEN replied that the private sector is stepping into the
passenger only market and he stated the question is now what the
role is for the state transportation system and how can they mirror
the private sector's service.
Number 750
REPRESENTATIVE COWDERY asked if he thought the private sector is
going to take away the business.
Number 780
MR. HAYDEN stated that he thought the private sector could
compliment the service that the Marine Highway System provides. He
stated that there are passengers that the system can not
accommodate. He stated "In some corridors we have been asked to
totally vacate that corridor and when we do, you have to look at
making that decision in the context of the whole region and the
rest of the fleet and what that does to your revenue."
Number 842
REPRESENTATIVE COWDERY asked if there were other places where the
ferry system is operated entirely by the private sector.
Number 860
MR. HAYDEN replied that the European ferry market is run by the
private sector but it is a volume driven sector in that a high
volume of people are always being transported. He stated that the
private sector could generate the revenue in the summertime in
Southeast Alaska, however, they would not be here in the wintertime
so the question is the economics for the private operator. He
stated that Alaska Statutes prohibit the Marine Highway System from
competing with the private sector.
Number 990
REPRESENTATIVE COWDERY asked if the private sector could operate
the whole system better than it is operated now.
Number 1001
MR. HAYDEN stated that if is difficult to answer. He stated that
a foreign crew could be put on the vessels to run them cheaper,
however, the state would lose the benefit of having Alaskans
employed and having the system run by people who live here and are
sensitive to the needs of the communities.
HB 55 - ALASKA RR BUDGET AND LAND
Number 1116
CHAIRMAN WILLIAMS stated the committee would hear testimony on HB
55. "An Act relating to the fiscal operations of the Alaska
Railroad Corporation and to land acquired by the State of Alaska
under the Alaska Railroad Transfer Act of 1982 or otherwise
acquired for railroad purposes; and providing for an effective
date."
CHRIS KNIGHT, Researcher to Representative Terry Martin, stated
that the committee substitute would place the Alaska Railroad
Corporation under the Executive Budget Act. He stated that it
would give the legislature and the government the process of open
communication with the Alaska Railroad corporation that does not
exist currently.
Number 1143
REPRESENTATIVE MASEK moved to adopt CSHB 55(TRA) for the purpose of
discussion. There being no objection it was so ordered.
Number 1164
REPRESENTATIVE COWDERY asked that the railroad land has been
increased from 36,000 acres to 44,000 acres of land.
Number 1182
MR. KNIGHT replied that the number is 43,000 acres of land. He
stated that 50 to 60 percent of that has yet to be transferred to
the Alaska Railroad Corporation at this time.
Number 1211
CHAIRMAN WILLIAMS asked what is going to be done with the land
portion of the bill.
Number 1223
MR. KNIGHT replied that it is up to the chairman of the Legislative
Audit Committee to work out the land portion of the bill.
Number 1288
JOE PERKINS, Commissioner, Department of Transportation & Public
Facilities, stated that the administration is not in favor of the
bill. He stated that the Alaska Railroad, since the transfer from
the federal government, has acted with a deficit for only two of
those years. He stated that the Alaska Railroad provides both
public and business purposes and in order to function effectively
as a business the railroad needs the flexibility to make business
decisions unencumbered by yearly appropriation schedules. He
stated that the railroad borrows funding from banks and is
dependant on this revenue to manage cash flow. He stated that the
railroad also enters into long term lease agreements which would be
hampered by the uncertainty of legislative approval for repayment
on a yearly basis. He stated that at the present time railroad
profits would go back into rolling stock and railroad costs.
Number 1383
COMMISSIONER PERKINS stated that state ownership of the railroad
has been extremely successful, and does not think changes and risks
should be made on a successful operation. He stated that there are
other ways to provide additional legislative oversight.
Number 1506
JIM BALDWIN Assistant Attorney General, Governmental Affairs
Section, Department of Law stated that he was employed by the
attorney general's office when bill was first enacted many years
ago. He referred to a study done by the law firm of Wicwire, Lewis
and Shorr on whether the railroad should be subject to the
appropriation of the legislature. He stated that the result of the
study was that other means of oversight should be adopted which
could be found under the Enabling Act of the railroad such as,
submission of capitol spending plan, review by the governor on
fiscal decisions of the railroad, but not the appropriation of the
legislature. He stated that this bill will present legal problems.
He stated that the railroad has been in business for a while and
has incurred a certain amount of indebtiness. He stated that this
was done through commercial banks being the railroad's creditors.
He stated that these arrangements are without a non-appropriation
risk. He stated that a non-appropriation risk means that when
money is lent to a public entity, they have to assume that the
legislature may not appropriate funds to pay the obligations, so
many of these agreements state that there is no backing of the
agreement if the legislature fails to appropriate. He stated that
the bill will have to make a provision for this circumstance so
that there is not a possibility of a default in any of these
agreements or so that the lenders don't become uncomfortable with
the arrangement and declare default.
Number 1680
CHAIRMAN WILLIAMS asked how the legislature would be liable for
what the railroad does. He asked that if the railroad did not make
any money would the state be liable.
Number 1693
MR. BALDWIN stated that anyone who does business with the railroad
is limited to go after only the assets of the railroad.
Number 1750
CHAIRMAN WILLIAMS stated, "They would go back to the railroad which
the state owns, and take the railroad for whatever it is but we own
it. So how do we get around the problem, that if your going to go
out and invest money and do anything that you want to do, whenever
you want to do it and we are sitting back here letting the railroad
run and do anything it wants to do and we have no control."
Number 1775
MR. BALDWIN replied that there can be different ways of controlling
corporations, some are closely held, having the legislature approve
all projects. He stated that the railroad has service contracts
and questions would be raised as to what would happen to those
contracts under the Executive Budget Act.
Number 1857
CHAIRMAN WILLIAMS stated that the legislature feels very
uncomfortable in the direction that the railroad is going, we have
no control over what happens to the railroad and we have a lot at
stake.
Number 1877
MR. KNIGHT replied that Mr. Baldwin's concern of getting investors
to sign contracts is a little far fetched, the legislature would
not nickel and dime their budget. He stated the appropriation
would be an aggregate amount and not be detailed as to what the CEO
and board of directors could choose to spend it on.
Number 1921
REPRESENTATIVE COWDERY asked if Mr. Baldwin thought banks would
call the loans that are in existence with the railroad.
Number 1851
MR. BALDWIN replied that they probably would not but he would
recommend that the bill have a savings provision in it for existing
contracts and agreements.
Number 1974
REPRESENTATIVE COWDERY stated that in the case of a claim against
the railroad all of Alaska looses since it is an asset of the
state.
Number 2042
CHAIRMAN WILLIAMS asked what happens if a loan can't be repaid.
Number 2064
MR. BALDWIN replied that the reason it is set up as a public
corporation is to limit any loss to the corporation and not have it
be a general debt of the state.
Number 2080
CHAIRMAN WILLIAMS stated that a bank will not lend money without
collateral.
Number 2092
MR. BALDWIN stated that the collateral is usually a stream of
revenue. He stated that bond ratings may not drop but this issue
was considered in the past and the legislature decided they wanted
the railroad to act more like a private business.
CHAIRMAN WILLIAMS stated that the committee is out of time and the
bill will be taken up at the next meeting.
ADJOURNMENT
Number 2120
CHAIRMAN WILLIAMS adjourned the House Transportation Standing
Committee at 3:15 p.m.
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