Legislature(2005 - 2006)SENATE FINANCE 532

03/14/2006 09:00 AM FINANCE

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 303(FIN) Out of Committee
Heard & Held
Moved SB 250 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    SENATE FINANCE COMMITTEE                                                                                  
                         March 14, 2006                                                                                       
                           9:02 a.m.                                                                                          
CALL TO ORDER                                                                                                               
Co-Chair  Lyda   Green  convened  the  meeting   at  approximately                                                              
9:02:39 AM.                                                                                                                   
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice Chair                                                                                                   
Senator Fred Dyson                                                                                                              
Senator Bert Stedman                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Also Attending:   GEORGE WUERCH,  Chair, Knik Arm Bridge  and Toll                                                            
Authority;  BILL  GREENE, Project  Counsel,  Knik  Arm Bridge  and                                                              
Toll Authority;  RYAN MAKINSTER,  Staff to  Senator John  Cowdery;                                                              
TOM MAHER,  Staff to Senator  Therriault; PAT DAVIDSON,  Director,                                                              
Division   of   Legislative  Audit;   BARBARA   MASON,   Executive                                                              
Director,  Alaska   Council  on   Domestic  Violence   and  Sexual                                                              
Assault;  BRENDA  STANFILL, Executive  Director,  Interior  Alaska                                                              
Center  for  Nonviolent  Living,  and  Chair,  Alaska  Network  on                                                              
Domestic Violence and Sexual Assault;                                                                                           
Attending  via Teleconference:    From Anchorage:  STEVE  WALLACE;                                                            
JAMES  CANTOR,   Chief  Assistant   Attorney  General,   Statewide                                                              
Section  Supervisor,   Transportation  Section,   Civil  Division,                                                              
Department  of Law;  From an  offnet  location: STEPHANIE  KESLER,                                                              
Government   Hills  Community   Council;   DAN  COFFEY,   Attorney                                                              
representing    Diamond    Parking;   JOHN    TORGERSON,    Deputy                                                              
Commissioner, Department of Transportation and Public Facilities                                                                
SUMMARY INFORMATION                                                                                                         
SB 303-KNIK ARM BRIDGE AND TOLL AUTHORITY                                                                                       
The Committee heard  from the Knik Arm Bridge  and Toll Authority,                                                              
the  Department  of  Transportation  and  Public  Facilities,  the                                                              
Department  of  Law,  and affected  residents.  An  amendment  was                                                              
adopted and the bill was reported from Committee.                                                                               
SB 304-AIRPORT PARKING SHUTTLES/AIRPORT CHARGES                                                                                 
The  Committee   heard  from  the   sponsor,  the   Department  of                                                              
Transportation  and Public  Facilities and  a parking lot  vendor.                                                              
The bill was reported from Committee.                                                                                           
SB 250-DOMESTIC VIOLENCE/SEXUAL ASSAULT COUNCIL                                                                                 
The   Committee  heard   from  the   sponsor,   the  Division   of                                                              
Legislative  Audit, the Council  on Domestic  Violence and  Sexual                                                              
Assault,  and  the   Network  on  Domestic  Violence   and  Sexual                                                              
Assault. The bill was reported from Committee.                                                                                  
9:03:05 AM                                                                                                                    
     CS FOR SENATE BILL NO. 303(TRA)                                                                                            
     "An Act amending  the Knik Arm Bridge and  Toll Authority Act                                                              
     and  the powers  and authority  of the  authority to  finance                                                              
     construction and  maintenance of the Knik Arm  Bridge, to set                                                              
     and collect  tolls, and to  carry out its duties,  and making                                                              
     conforming   changes  to  statutes   relating  to   issuance,                                                              
     renewal, or  reinstatement of  driver's licenses and  to levy                                                              
     on permanent  fund dividends; and providing for  an effective                                                              
This was  the first hearing  for this bill  in the  Senate Finance                                                              
GEORGE  WUERCH,   Chair,  Knik  Arm  Bridge  and   Toll  Authority                                                              
(KABATA),   testified  that   the  legislation   passed  in   2003                                                              
establishing the toll  authority was one of the best  bills of its                                                              
kind in  the nation. However, some  improvements could be  made to                                                              
address  issues   identified  in  other  areas  of   the  country.                                                              
Additionally,  a provision  in the  current  statute requires  the                                                              
Authority to  obtain from  the legislature a  "debt ceiling"  of a                                                              
proposed $500 million, which is requested in this legislation.                                                                  
9:05:33 AM                                                                                                                    
BILL  GREENE,   Project   Counsel,  Knik   Arm  Bridge  and   Toll                                                              
Authority, informed  he is retained  under contract by  the Alaska                                                              
Attorney  General's   office.  He   noted  he  had   provided  the                                                              
Committee with  information pertaining  to this bill,  including a                                                              
statement of the purpose of the bill and a sectional analysis.                                                                  
Mr. Greene  reminded that  the Legislature enacted  a law  in 2003                                                              
that created the  Authority to construct a bridge  across the Knik                                                              
Arm, linking  the Matanuska-Susitna  Borough and the  Municipality                                                              
of   Anchorage   to  improve   the   transportation   system   and                                                              
infrastructure  in the Upper  Cook Inlet area  and to  support the                                                              
growth and development of the state.                                                                                            
Mr. Greene  disclosed  that over  the past two  years, KABATA  has                                                              
consulted with  financial consultants, transportation  departments                                                              
of  other states,  other  toll  authorities, the  Federal  Highway                                                              
Administration,  and others.  The Authority  has learned  that the                                                              
financing sectors  require significant  specificity, more  than is                                                              
currently   provided  in   statute.   This   legislation  is   the                                                              
culmination of these  efforts. It is a housekeeping  bill intended                                                              
to clarify and specify the powers of KABATA.                                                                                    
9:09:10 AM                                                                                                                    
Mr.  Greene acknowledged  that federal  funding  is available  for                                                              
this project. However,  regardless of the amount  of that funding,                                                              
private sector  funds and  other public  funds would be  necessary                                                              
to finance  the project. KABATA  requests the authority  to engage                                                              
in  securing   this  financing.   This  bill  would   provide  the                                                              
Authority   the  ability   to  enter  into   public  and   private                                                              
partnerships  for  equity  financing and  debt  financing.  KABATA                                                              
would also  have the ability to  establish the amount of  the toll                                                              
charges and to collect those tolls and other fines.                                                                             
9:10:45 AM                                                                                                                    
Mr. Greene  stressed the importance  of the provision in  the bill                                                              
that would allow  the Authority to set the limit  of the amount of                                                              
revenue bonds  it could  issue. Existing  statute provides  KABATA                                                              
must request this authorization from the Legislature.                                                                           
9:11:29 AM                                                                                                                    
Co-Chair  Green   recalled  discussions  in   another  legislative                                                              
committee about the  reason this bill is necessary.  She requested                                                              
an  explanation of  the  "shortcomings or  inequities  or lack  of                                                              
authority" of the current statute.                                                                                              
9:11:59 AM                                                                                                                    
Mr.  Wuerch reiterated  the  proposed changes  are  the result  of                                                              
"lessons   learned"   from   the   experiences   of   other   toll                                                              
authorities.  The Federal  Highway  Administration  has enacted  a                                                              
new financing  program, the Transportation  Infrastructure Finance                                                              
and Innovation Act  (TIFIA), to finance loans, lines  of credit or                                                              
investment  equity  for  projects.   Some  toll  authorities  that                                                              
received this  financing were sued  with the charge  alleging that                                                              
the  authorities  did  not have  authorization  from  their  state                                                              
legislatures to borrow  from the federal government.  As a result,                                                              
changes  to the  TIFIA rules  now  provide that  unless a  state's                                                              
statute  specifies  the TIFIA  program  with  regard to  the  toll                                                              
authority, the  authority's application  for funding would  not be                                                              
Mr.  Wuerch  gave  the  Tacoma Narrows  Bridge  in  the  state  of                                                              
Washington as an  example. Funding for construction  of a new span                                                              
from  private investors  was  nearly  secured when  the  governing                                                              
authority   was  found  to   not  have   authorization  from   the                                                              
Washington  Legislature   to  secure  the  federal   funding  also                                                              
necessary  for  the  project.  He  provided  other  examples  with                                                              
similar situations.                                                                                                             
9:14:27 AM                                                                                                                    
Mr.  Wuerch remarked  that  the  estimated cost  of  the Knik  Arm                                                              
crossing  is $600 million.  Governor Frank  Murkowski submitted  a                                                              
request to the  legislature to appropriate $94  million in federal                                                              
funding  and  approximately   nine  percent  of   that  amount  in                                                              
matching  State general  funds  to total  about  $100 million.  If                                                              
appropriated,  the Authority  would  need to  raise the  remaining                                                              
$500  million   to  fund  the  project.   Preliminary  discussions                                                              
indicate  this would  be possible.  If  it were  found within  the                                                              
next  12 months  to not  be possible  and  that additional  public                                                              
funding  was   necessary,  an   appropriation  request   would  be                                                              
submitted the following legislative session.                                                                                    
Mr. Wuerch  predicted that  a toll fee  of $3 would  generate $1.5                                                              
billion  over  the 30  years.  The  revenue stream  would  justify                                                              
financing the $500  million KABATA was requesting  the legislature                                                              
authorize it to borrow.                                                                                                         
9:15:55 AM                                                                                                                    
Co-Chair Green  asked if this  legislation would enable  KABATA to                                                              
"more easily arrange  for funding, borrowing and  security for the                                                              
Mr. Wuerch answered that the assessment was correct.                                                                            
9:16:07 AM                                                                                                                    
Senator  Hoffman asked  the  State's liability  in  the event  the                                                              
Authority  was  unable to  repay  the  bonds  issued to  fund  the                                                              
9:16:36 AM                                                                                                                    
Mr. Wuerch deferred to the Department of Revenue.                                                                               
9:16:54 AM                                                                                                                    
TOM   BOUTIN,   Deputy  Commissioner,   Department   of   Revenue,                                                              
responded  that the  bonds issued  for  this project  would be  "a                                                              
typical  standalone  revenue  bond   structure".  The  expectation                                                              
would be that no  bonds associated with the state  of Alaska would                                                              
default.  This  has  never  occurred.   However,  protections  are                                                              
included  in   the  structure   such  as   a  requirement   for  a                                                              
feasibility  study  by  a nationally  recognized  consulting  firm                                                              
that  deals  solely with  toll  road  projects. This  study  would                                                              
determine whether  adequate revenue would  be generated to  fund a                                                              
debt  service reserve,  fund  operations  and other  requirements.                                                              
Additionally, fund  insurance would be purchased  from a financial                                                              
guarantor to protect,  not the State, but rather  the bondholders.                                                              
This structure  is similar  to that employed  for bonds  issued to                                                              
fund international airport projects.                                                                                            
9:18:48 AM                                                                                                                    
Senator Hoffman understood  the structure. He again  asked that if                                                              
the  Authority,  for whatever  reason,  was  unable to  repay  the                                                              
bonds, whether the State would be liable for the $.5 billion.                                                                   
9:19:17 AM                                                                                                                    
Mr.  Boutin  replied that  the  bondholders  would have  no  legal                                                              
claim  on any  State  resources,  apart from  the  bridge and  its                                                              
9:19:41 AM                                                                                                                    
Senator  Stedman asked  if the  "financial  layout" would  include                                                              
any provision to protect the purchaser of those bonds.                                                                          
9:19:59 AM                                                                                                                    
Mr.  Boutin  answered  yes;  that  financial  guarantee  insurance                                                              
would likely  be purchased utilizing  a portion of  bond proceeds.                                                              
Providers  of  this  insurance  would  research  the  project  and                                                              
determine whether  it was  an acceptable  risk. The project  would                                                              
be undertaken only after a due diligence was performed.                                                                         
9:21:24 AM                                                                                                                    
Senator Bunde understood  that the tolls are anticipated  to cover                                                              
operating  costs.  However,  should  the  tolls  not  cover  those                                                              
costs,  he predicted  that the State  would be  under pressure  to                                                              
supplant  the  bridge  costs under  threat  that  the  bondholders                                                              
would repossess the bridge.                                                                                                     
9:22:11 AM                                                                                                                    
Mr. Wuerch agreed  the concern is to implement a  method to insure                                                              
that  the  facility  would  continue  to  operate  and  serve  the                                                              
public. The  bridge would  be the asset  of KABATA,  and therefore                                                              
this effort  would be  essential. Discussions  were underway  with                                                              
the  Department   of  Transportation  and  Public   Facilities  to                                                              
determine the  delineation of the  State's responsibility  and the                                                              
Authority's.  The  Governor was  requesting  funding  to pave  the                                                              
road  in  the  Mat-Su  Borough   leading  to  Port  McKenzie,  the                                                              
proposed bridge  site. This  13 and one-half  mile road,  owned by                                                              
the  Borough, would  serve  the bridge.  The  Borough has  entered                                                              
into  an  agreement  with the  Department  to  assume  maintenance                                                              
responsibilities   of  the   road  once  it   is  upgraded.   This                                                              
arrangement  would lessen  the burden  of  the Authority.  Similar                                                              
arrangements could  be discussed for roads on  the eastern landing                                                              
of the bridge.                                                                                                                  
9:23:34 AM                                                                                                                    
Co-Chair  Green instructed  the  Committee to  limit questions  to                                                              
those specific to the legislation, and to not "revisit history".                                                                
9:23:52 AM                                                                                                                    
Co-Chair Wilken  characterized the  bridge as  a "project  for the                                                              
next generation",  which he was  "generally" in support.  However,                                                              
he  was concerned  that the  proposed "massive"  bridges would  be                                                              
constructed  at  the  expense  of  needed  infrastructure  in  the                                                              
remainder of the state.                                                                                                         
9:25:25 AM                                                                                                                    
Co-Chair  Wilken had  understood that  until July  2004, the  Knik                                                              
Arm Bridge  crossing and the Gravina  Island Bridge to  be located                                                              
in Ketchikan  would be funded with  "added money" not  included in                                                              
the  normal  federal  allocation  for  highways.  Changes  to  the                                                              
appropriation were  made and these funds would be  included in the                                                              
normal  allocation.  He asked  for  clarification  that the  funds                                                              
would be provided  "in total" and that the Legislature  would have                                                              
the responsibility  to allocate "as we see fit",  as traditionally                                                              
9:27:07 AM                                                                                                                    
Mr.  Wuerch emphasized  that the  State and  the Legislature  have                                                              
complete  authority to allocate  the funds.  The funds  originally                                                              
"earmarked"  for the  two  bridge projects  do  not require  State                                                              
matching  funds, under  the normal  formula  system. However,  the                                                              
Department  has opted  to request  treatment of  them as such  and                                                              
request State general funds to supplant the federal funding.                                                                    
9:27:48 AM                                                                                                                    
Co-Chair  Wilken   announced  he   had  sent   a  letter   to  the                                                              
Commissioner  of  the  Department  of  Transportation  and  Public                                                              
Facilities  approximately  six  weeks  ago  stating  he  would  be                                                              
unable  to  support  these  projects   until  he  had  received  a                                                              
financial  plan  indicating  how  they would  be  constructed  and                                                              
financed without  diverting funds otherwise intended  for projects                                                              
located in  the Interior  for the next  five years.  Senator Bunde                                                              
voiced concerns  that if bonds  were not sold, expectations  would                                                              
be  to finance  these  projects  at the  expense  of other  needed                                                              
9:29:24 AM                                                                                                                    
Co-Chair  Wilken directed  attention  to language  inserted to  AS                                                              
19.75.111(a)(8),  amended  through  Section 1  on  page  2 of  the                                                              
bill.  He interpreted  the  original  statutory language  and  the                                                              
proposed inserted  language to imply  that federal funds  were not                                                              
anticipated when the Authority was established.                                                                                 
9:30:11 AM                                                                                                                    
Mr. Greene stated  that the original bill allowed  KABATA to incur                                                              
indebtedness.   In  research   undertaken  since,   it  has   been                                                              
determined  that  the proposed  language  is necessary  to  comply                                                              
with  the federal  TIFIA  requirements.  The most  common  problem                                                              
encountered by  other toll  authorities is insufficient  statutory                                                              
language  to specify  authority.  This legislation  would  provide                                                              
the needed clarity  and specificity. It would allow  the Authority                                                              
to secure financial debt to fund this project.                                                                                  
9:32:28 AM                                                                                                                    
Senator Stedman counseled  on the need for members  to deemphasize                                                              
the  impact on  one's election  district when  setting policy  for                                                              
statewide  infrastructure.   A  presentation  was   given  by  the                                                              
Department  on the  proposed  bridges  to address  the  "political                                                              
agenda" and  to show  that the predicted  impacts in  future years                                                              
were "unrealistic" and would not materialize.                                                                                   
Senator  Stedman explained  that the  federal appropriation  would                                                              
be  $112 million  more than  was  provided in  the previous  year.                                                              
These funds  are not categorized  for surface transportation,  nor                                                              
are they  National Highway  System "formula  dollars". Rather  the                                                              
funds are included  in the Highway Priority Projects  Program, the                                                              
Bridge  Discretionary  Program,   the  Transportation  Improvement                                                              
Program,  and  the National  Corridor  Infrastructure  Improvement                                                              
Senator  Stedman  stressed  the   need  to  obtain  a  "clear  and                                                              
accurate  representation of  what we're faced  with" in  financing                                                              
these  proposed  bridges.  Co-Chair Wilken's  assertion  that  the                                                              
Department is furthering a political agenda was incorrect.                                                                      
Senator Stedman  informed that  he has  contacted the  Division of                                                              
Legal  and Research  Services,  and  the Division  of  Legislative                                                              
Finance  to  assist  in  understanding  the  impacts.  The  Alaska                                                              
Congressional  delegation had  differed  from that  of the  Alaska                                                              
Department  of   Transportation  and  Public  Facilities   in  the                                                              
assessment of impact.  Agreements for most issues  have since been                                                              
reached. However,  if Legislative  policies were adopted  based on                                                              
political  agendas "that  are driven  deep in  the bowels  of" the                                                              
Department, no projects would be undertaken.                                                                                    
9:35:44 AM                                                                                                                    
Co-Chair  Green returned  the discussion  to  this legislation:  a                                                              
housekeeping  bill  that  would  prepare the  Authority  to  enter                                                              
discussions with TIFIA personnel and private lenders.                                                                           
9:36:12 AM                                                                                                                    
Co-Chair  Green referenced  inserted language  to AS  19.75.111(7)                                                              
amended through  Section 1  of the  bill on page  2, line  21 that                                                              
would extend authority  to issue "and refund" bonds.  She asked if                                                              
this is similar to refinancing of bonds.                                                                                        
Co-Chair Green's assessment was confirmed.                                                                                      
Co-Chair Green next  directed attention to subparagraphs  (11) and                                                              
(12)  of the same  section  on page 3,  lines 10  through 18.  She                                                              
asked if  these provisions  were specific to  the toll  and bridge                                                              
facilities or whether  the Authority's ability to  bring civil and                                                              
criminal actions  to collect tolls  or fees, and  obligate revenue                                                              
generated from  the facilities,  could be  extended to  assets not                                                              
related to the bridge.                                                                                                          
9:37:30 AM                                                                                                                    
Mr. Wuerch replied  these provisions apply solely  to the proposed                                                              
9:37:40 AM                                                                                                                    
Co-Chair Green asked  if other authorities in the  state have this                                                              
ability, such as the Alaska Railroad Corporation.                                                                               
9:37:54 AM                                                                                                                    
Mr. Wuerch  clarified  that the  Alaska Railroad  is an entity  of                                                              
the  State  government.  The  provision  in  this  legislation  is                                                              
similar to  that employed by the  Railroad, although the  Knik Arm                                                              
Bridge  and  Toll  Authority would  have  more  "independence"  in                                                              
bonding  activities.   This  is   because  KABATA  would   oversee                                                              
primarily   an  infrastructure   facility  whereas  the   Railroad                                                              
entails more operational functions.                                                                                             
9:38:32 AM                                                                                                                    
Co-Chair  Green  asked about  the  treatment  of any  excess  toll                                                              
9:38:53 AM                                                                                                                    
Mr.  Wuerch  responded   that  the  funds  would   remain  in  the                                                              
possession of the  Authority for expenditure on  future expansions                                                              
or major repairs.                                                                                                               
9:39:11 AM                                                                                                                    
Senator Bunde  remarked that  KABATA would not  pay a  dividend to                                                              
the State.  Additionally, adoption of  this bill would  not commit                                                              
any federal funding to the project.                                                                                             
Co-Chair Green affirmed.                                                                                                        
9:39:43 AM                                                                                                                    
Senator  Olson   asked  if  this   legislation  would   allow  the                                                              
Authority to  change the toll  rate. He questioned  the conclusion                                                              
that $3  would be  sufficient to  generate revenue  to repay  debt                                                              
and  fund maintenance  and operations.  The  appropriate toll  fee                                                              
for  the  Whittier  Tunnel was  originally  calculated  at  $1.50;                                                              
however, the toll is currently $12.                                                                                             
9:40:33 AM                                                                                                                    
Mr.  Wuerch responded  that lenders  and  investors are  concerned                                                              
about  which  entities   could  change  a  toll   structure.  This                                                              
legislation  would  provide that  only  the Authority's  board  of                                                              
directors could make such changes.                                                                                              
Mr. Wuerch  agreed that  $3 would be  inadequate. That  figure was                                                              
calculated  using  an  assumption  that  $200  million  of  public                                                              
funding  would be  provided rather  than  the currently  requested                                                              
$100 million.                                                                                                                   
9:42:14 AM                                                                                                                    
Senator Olson  noted that other  cost projections for  this bridge                                                              
estimate  the amount  would be  greater than  $1.5 billion  rather                                                              
than the  $600 million claimed  by KABATA. Cost  overruns incurred                                                              
during   the   expansion   and   upgrade  of   the   Ted   Stevens                                                              
International  Airport   amount  to  "hundreds  of   millions"  of                                                              
dollars more  than anticipated. He  asked how he could  assure his                                                              
constituents  that the  project  would not  stop  with the  bridge                                                              
only halfway constructed.                                                                                                       
9:43:43 AM                                                                                                                    
Mr. Wuerch disclosed  that the Board "wrestles with"  the issue of                                                              
whether the cost  estimates are accurate. Three  engineering firms                                                              
have been  hired and  economist projections  of population  growth                                                              
have  been   consulted  to  achieve   the  revised   $600  million                                                              
estimate.  This estimate  includes $100  million specifically  for                                                              
inflation. Attempts  were made to  anticipate and  avoid problems.                                                              
The "investment  community" would not participate  in this project                                                              
without sufficient assurances.                                                                                                  
9:46:03 AM                                                                                                                    
Co-Chair Wilken pointed  to language in the bill  pertaining to an                                                              
individual's inability  to obtain or  renew a driver's  license if                                                              
unpaid tolls or  fees were owed. He suggested  that the imposition                                                              
of this  provision of  30 days after  the due date  of the  fee or                                                              
toll  should be  60  or  90 days.  The  shorter time  frame  could                                                              
result  in  undue bureaucracy.  Two  or  three months  of  overdue                                                              
remittance would demonstrate intent to avoid payment.                                                                           
9:47:02 AM                                                                                                                    
Mr. Wuerch did not object to extending the period to 60 days.                                                                   
9:47:38 AM                                                                                                                    
Amendment  #1: This  amendment deletes  "30" and  inserts "60"  to                                                              
subsection  (c)   of  Sec.19.75.915.  Liability  for   payment  of                                                              
tolls.,  inserted through  Section  9  on page  10,  line 22.  The                                                              
amended language reads as follows.                                                                                              
          (c) Upon agreement between the authority and the                                                                      
     commissioner of administration, a vehicle owner liable for                                                                 
     an unpaid  toll or fee due  the authority may, after  60 days                                                              
     after the  due date, be barred  from obtaining or  renewing a                                                              
     driver's  license  or  a  vehicle  registration  or  license,                                                              
     regardless   of  whether   the  vehicle   was  used   at  the                                                              
     authority's  facilities or  incurred the  toll or fee,  until                                                              
     the toll or fee is paid in full.                                                                                           
Co-Chair Wilken moved for adoption.                                                                                             
There was no objection and the amendment was ADOPTED.                                                                           
9:48:00 AM                                                                                                                    
STEVE  WALLACE testified  via teleconference  from Anchorage  that                                                              
he owns a house  located at Erickson Street on  Government Hill in                                                              
Anchorage, which  is the proposed  site of the eastern  landing of                                                              
the bridge.  He is dependant on  the expeditious progress  of this                                                              
project to determine  whether his property would  be condemned and                                                              
purchased by  the Authority. Meanwhile,  he is unable to  sell his                                                              
home  at  a  time  of  high  real  estate  values.  KABATA's  cost                                                              
estimates could  not be verified;  rather a study  commissioned by                                                              
the Department  of Transportation and Public  Facilities estimates                                                              
the  cost could  be as  high  as $1.9  billion.  The $600  million                                                              
projection  includes only  the  bridge and  does  not include  the                                                              
cost of road infrastructure on both shores.                                                                                     
9:51:52 AM                                                                                                                    
Co-Chair  Green interrupted  to direct  the witness  to limit  his                                                              
comments to this bill.                                                                                                          
9:52:03 AM                                                                                                                    
Mr.  Wallace stressed  that  this  legislation would  make  KABATA                                                              
more  independent. The  Committee should  review the  "underlying"                                                              
cost  of  the  project before  granting  "free  reign"  to  secure                                                              
financing.  The Authority  would be  "completely independent"  and                                                              
without "political oversight".                                                                                                  
9:52:58 AM                                                                                                                    
JAMES  CANTOR,   Chief  Assistant   Attorney  General,   Statewide                                                              
Section  Supervisor,   Transportation  Section,   Civil  Division,                                                              
Department  of Law  testified  via teleconference  from  Anchorage                                                              
that he was available to answer questions.                                                                                      
It was  determined that  the Committee had  no questions  for this                                                              
9:53:14 AM                                                                                                                    
STEPHANIE KESLER,  Government Hills  Community Council,  testified                                                              
via teleconference  from an offnet location, that  the Legislature                                                              
has a  fiduciary obligation to understand  the "true" cost  of the                                                              
proposed bridge. A  "fair" comparison must be made  of the current                                                              
estimates  to previous  estimates, including  the differences  and                                                              
items omitted in the updated version.                                                                                           
9:55:20 AM                                                                                                                    
Co-Chair Green  asked whether  any Member had  reason to  hold the                                                              
bill in Committee.                                                                                                              
9:55:28 AM                                                                                                                    
Senator Stedman  offered a  motion to report  CS SB 303  (TRA), as                                                              
amended  from   Committee  with  individual   recommendations  and                                                              
accompanying fiscal notes.                                                                                                      
Without objection  CS SB 303 (FIN)  was MOVED from  Committee with                                                              
zero fiscal  notes #1  from the  Department of Transportation  and                                                              
Public  Facilities,   and  #2  from  the  Department   of  Natural                                                              
9:55:49 AM                                                                                                                    
     SENATE BILL NO. 304                                                                                                        
     "An  Act  relating  to  the  privileges  of  airport  parking                                                              
     shuttles and  to fees or charges  imposed on a person  who is                                                              
     not a  lessee or holder  of a privilege  to use  the property                                                              
     or a facility of an airport."                                                                                              
This was  the first hearing  for this bill  in the  Senate Finance                                                              
RYAN MAKINSTER,  Staff to  Senator John  Cowdery, paraphrased  the                                                              
sponsor statement, which reads as follows.                                                                                      
     Under  Alaska law,  commercial vehicles  that deliver  people                                                              
     to  the airport  fall  into one  of  six general  categories:                                                              
     limos,  tour   buses,  standard  bus  service,   off  airport                                                              
     shuttles,  off  airport  car  rental  shuttles  and  courtesy                                                              
     vehicles.  Depending  upon  the vehicle's  classification,  a                                                              
     fee is charged  for what is essentially use  of the airport's                                                              
     curb  and roadway.  The authority  for the  setting of  these                                                              
     specific rates  can be found in AS 02.15.090,  which requires                                                              
     the fees charged  to be "reasonable and uniform  for the same                                                              
     class  of privileges  and services…  and (to be  established)                                                              
     with due  regard to  the property  and improvements  used and                                                              
     the expense of operation by the state."                                                                                    
     At  present,   the  rates   charged  by  the   Department  of                                                              
     Transportation  [and Public  Facilities] for these  different                                                              
     vehicles  to  utilize  the  airport  curb  at  the  Anchorage                                                              
     International  Airport  varies   from  $50  per  year  for  a                                                              
     courtesy  vehicle, taxi,  or  limo, to  $100 per  year for  a                                                              
     tour passenger  vehicle, up  to a maximum  of $1000  per year                                                              
     for a regularly scheduled bus.                                                                                             
     In early 2005,  the Department of Transportation  [and Public                                                              
     Facilities]  proposed regulations,  which would charge  "off-                                                              
     airport valet  parking services" a  tax equal to 8%  of their                                                              
     gross  revenues.  This  change  would  constitute  a  drastic                                                              
     shift from  the statutory language,  which requires  that the                                                              
     fees charged  be "reasonable and  uniform for the  same class                                                              
     of privileges  and services."  While other courtesy  services                                                              
     such as  free hotel  shuttles are charged  a $50  per vehicle                                                              
     fee, the  proposal would charge  free parking shuttles  8% of                                                              
     gross sales  or $250 annual  minimum (whichever  is greater).                                                              
     The  two services  are  essentially  the same  class  because                                                              
     both are "a  free courtesy"; both offer an  airport patron an                                                              
     off-site  service  and  both   require  the  same  amount  of                                                              
     accommodations on [the] part of the Airport.                                                                               
     The purpose  of SB 304 is to  clarify the law with  regard to                                                              
     the  charging  of  off-airport  businesses  who  simply  drop                                                              
     patrons a the  curb or pick them up upon  return and reflects                                                              
     the  sentiment that  the Department  should set rates,  which                                                              
     are based on  use and not as a percentage  of gross revenues.                                                              
     SB 304  simply and specifically  directs the  Department that                                                              
     charges  for usage  must be  consistent  with other  services                                                              
     that receive  similar privileges and accommodations,  may not                                                              
     be on a gross revenue basis and shall not have the effect                                                                  
     of singling out one type of accommodations because it may                                                                  
     currently or in the future compete with the airport.                                                                       
9:58:45 AM                                                                                                                    
Senator  Bunde  asked  if  the  theory  that  off-airport  parking                                                              
competes with on-site parking was a factor in this situation.                                                                   
9:59:12 AM                                                                                                                    
Mr. Makinster  responded that the  Sponsor surmised this  could be                                                              
so. The  Department of  Transportation and  Public Facilities  has                                                              
also suggested  that ramp  fees and  fees assessed on  concessions                                                              
located on-site could  increase to offset the loss  of revenues to                                                              
off-site  parking  facilities.  The  intent  of this  bill  is  to                                                              
provide  equality for  all commercial  curbside users,  regardless                                                              
of whether the users directly compete with the airport.                                                                         
9:59:33 AM                                                                                                                    
Senator Bunde  expressed that if  additional costs  were incurred,                                                              
perhaps  the fees  for  all commercial  curbside  users should  be                                                              
9:59:50 AM                                                                                                                    
Mr. Makinster  remarked that regardless  of whether the  rates are                                                              
considered  too  high,  those  rates should  be  uniform  for  all                                                              
10:00:07 AM                                                                                                                   
Senator Olson asked  if this issue pertains in any  way to federal                                                              
regulation of international airports.                                                                                           
10:00:25 AM                                                                                                                   
Mr. Makinster  was unaware  of any federal  rules related  to this                                                              
issue. State  statute provides the  airport authority  the ability                                                              
to set  fee rates,  although statute  does not require  additional                                                              
fees  be established.  Ramp fees  must  be assessed  in an  amount                                                              
adequate to  cover bonding fees  used to fund the  on-site parking                                                              
10:01:13 AM                                                                                                                   
Senator  Olson  asked whether  additional  maintenance  costs  are                                                              
incurred  from  the commercial  use  of  the airport  by  off-site                                                              
10:01:30 AM                                                                                                                   
Mr. Makinster  was unsure.  The Department  had not indicated  any                                                              
specific  expenses. The  intention of  this bill  is that  if such                                                              
use  incurred  additional  costs,  a  reasonable  rate  should  be                                                              
assessed for all users.                                                                                                         
10:02:03 AM                                                                                                                   
Co-Chair  Wilken asked  how the  issue of commercial  use  by off-                                                              
site  businesses  is addressed  at  other  airports, such  as  the                                                              
Seattle-Tacoma International Airport.                                                                                           
10:02:16 AM                                                                                                                   
Mr. Makinster  replied that the  fees are assessed  differently at                                                              
different airports.  Some levy different fees to  off-site parking                                                              
vendors; others  have determined that  a tax of the  percentage of                                                              
gross sales is  an acceptable practice. This  legislation proposes                                                              
to  levy a  uniform rate  on services.  Court  rulings have  found                                                              
that  an  assessment of  a  percentage  of  gross sales  for  off-                                                              
airport parking operations is allowable.                                                                                        
10:03:08 AM                                                                                                                   
Co-Chair Green  clarified these  court cases  were filed  in other                                                              
10:03:11 AM                                                                                                                   
Mr. Makinster affirmed.                                                                                                         
10:03:15 AM                                                                                                                   
Senator   Dyson  relayed   concerns  about   the  rate   structure                                                              
expressed  by small  businesses that  transport customers  between                                                              
the Ted  Stevens International  Airport and outlying  communities,                                                              
such  as Eagle  River.  He asked  whether  this legislation  would                                                              
alleviate those concerns.                                                                                                       
10:03:47 AM                                                                                                                   
Mr. Makinster responded  that a business that provides  parking in                                                              
such  a community  and  transportation  to  and from  the  airport                                                              
would  be  subject  to  the  percent  of  gross  sales  fee.  This                                                              
legislation would not  address the current fee structure  of $50 -                                                              
$1000  based  generally  on  vehicle   size.  It  would  make  the                                                              
targeting  of  certain  user  groups   more  difficult  and  would                                                              
provide bargaining power for all groups.                                                                                        
10:04:42 AM                                                                                                                   
Senator Bunde  noted the  fiscal note for  this bill  mentions the                                                              
possibility of increased  costs in the event the  percent of gross                                                              
sales were  not permitted.  He questioned the  impact of  the off-                                                              
site  parking  shuttles  to the  airport  facilities,  unless  the                                                              
impact  is  calculated  as  a loss  of  parking  revenues  to  the                                                              
airport from competition.                                                                                                       
10:05:15 AM                                                                                                                   
Mr. Makinster  stated that this  legislation would incur  no cost,                                                              
as the  percent of  gross tax  has not  been implemented  to date.                                                              
The explanatory  statement accompanying  the fiscal  note pertains                                                              
to the  anticipated cost of this  bill if the  proposed regulation                                                              
was adopted.                                                                                                                    
10:05:37 AM                                                                                                                   
Senator Bunde concluded, "A decrease of an increase is a cut."                                                                  
10:05:51 AM                                                                                                                   
Co-Chair  Wilken   hypothesized  a  businessperson   contemplating                                                              
establishing  an  off-site  parking  facility.  This  entrepreneur                                                              
would  likely  develop  a  business  plan  incorporating  the  fee                                                              
structure  of the nearby  airport. Co-Chair  Wilken requested  the                                                              
fee structure  for the airports  in Portland, Oregon  and Seattle,                                                              
10:06:33 AM                                                                                                                   
Mr. Makinster indicated he would provide this information.                                                                      
10:06:36 AM                                                                                                                   
MIKE NEELY,  Regional Vice  President, Diamond Parking,  testified                                                              
that  the former  Mayor Wuerch  of the  Municipality of  Anchorage                                                              
had  been  instrumental  in  facilitating  a land  swap  in  which                                                              
Diamond Parking obtained  the site of the Spenard  community dump.                                                              
Although  rehabilitated,   the  use   of  this  land   is  limited                                                              
primarily for parking.                                                                                                          
Mr. Neely asserted  that Diamond Parking sells a  service. In this                                                              
location,  customers  park  their   vehicle  and  Diamond  Parking                                                              
transports them and  their luggage to the airport  terminal. While                                                              
not  as convenient  as parking  on-site,  the cost  is lower.  The                                                              
parking facility  is staffed 24  hours a day,  365 days a  year by                                                              
25 to 30 total employees.                                                                                                       
Mr.  Neely stated  that Diamond  Parking must  purchase an  annual                                                              
ramp pass for  each of the five  vehicles at total cost  of $2,500                                                              
a year.  Now the Airport  intends to collect  a percentage  of the                                                              
company's  revenue   as  well.  This  would  make   the  operation                                                              
unprofitable.  Other commercial  users  are only  charged for  the                                                              
ramp   pass  and   the  parking   businesses   would  be   treated                                                              
differently.   He  understood  that   Diamond  Parking   must  pay                                                              
10:10:34 AM                                                                                                                   
Mr. Neely informed  that other airports, primarily  located on the                                                              
East  Coast and  the  Midwest  levy a  fee  on the  percentage  of                                                              
income. The airport  in Spokane, Washington charges  $400 per bus.                                                              
Most airports in  the Pacific Northwest charge per  trip, based on                                                              
the size of the  vehicle and the number of passengers  the vehicle                                                              
is equipped to transport.                                                                                                       
10:11:39 AM                                                                                                                   
Mr.  Neely had  proposed  two options  to  airport officials.  One                                                              
suggestion  was to  levy  a fee  for each  vehicle  parked at  the                                                              
Diamond  Parking  facility. A  customer  parking  at the  facility                                                              
would  be  transported once  to  the  airport  and once  from  the                                                              
airport  upon  their return,  regardless  of  the number  of  days                                                              
their vehicle was on the lot.                                                                                                   
Mr.  Neely told  of another  suggestion  to charge  the company  a                                                              
toll  for each  trip  to the  airport. The  airport  at Salt  Lake                                                              
City, Utah  utilizes a system  in which transponders  installed on                                                              
each vehicle  emit a signal to a  receiver located at  the gate to                                                              
the airport  terminal. At the end  of each month the  total number                                                              
of  trips is  calculated  and the  carrier  is  assessed a  charge                                                              
based  on  the  number  of times  its  vehicles  traveled  to  the                                                              
airport. Diamond  Parking offered to  fund installation of  such a                                                              
system  at the  Anchorage  airport  with the  capital  expenditure                                                              
deducted from its toll charges until the debt was paid.                                                                         
10:13:56 AM                                                                                                                   
Senator Olson asked  if Diamond Parking is being  "singled out" or                                                              
whether other entities  would be levied a fee of  eight percent of                                                              
10:14:19 AM                                                                                                                   
Mr. Neely replied  that his company is the only  business involved                                                              
in off-site  parking for this  airport. It therefore  appears that                                                              
Diamond  Parking is  targeted. Airport  officials  claim that  the                                                              
fee  would  also   apply  to  new  similar   commercial  ventures.                                                              
However, several  hotels located near the airport  reserve parking                                                              
spaces  for travelers  but  would  not be  subjected  to the  same                                                              
charges.  If the percent  of revenue  fee were  assessed to  these                                                              
hotels, Diamond Parking would not be singled out.                                                                               
10:15:26 AM                                                                                                                   
Co-Chair  Wilken asked  if the  affect of  this legislation  would                                                              
place  off-site   parking  with  valet  services   into  the  same                                                              
category as  off-airport shuttle  services, rather then  with off-                                                              
airport car rentals.                                                                                                            
10:16:20 AM                                                                                                                   
Mr. Makinster clarified  the proposed regulation  would categorize                                                              
off-airport parking  and valet services  with the  off-airport car                                                              
rental fee structure.  The intent of this bill would  be to retain                                                              
off-airport valet  parking separately  from the car  rental group.                                                              
The  legislation  would  not specify  that  the  parking  services                                                              
would  be  categorized  with  the   shuttle  services,  but  would                                                              
provide   that  the  parking   services   could  not  be   treated                                                              
significantly differently than other commercial operators.                                                                      
10:17:05 AM                                                                                                                   
Co-Chair Wilken  understood that the Department  of Transportation                                                              
and  Public  Facilities  had  recommended  in  "early  2005"  that                                                              
Diamond Parking  and other off-site parking facilities  should pay                                                              
fees  in   the  same  manner  levied   to  off  site   car  rental                                                              
10:17:32 AM                                                                                                                   
Mr. Makinster affirmed.                                                                                                         
10:17:35 AM                                                                                                                   
DAN COFFEY, Attorney  representing Diamond Parking,  testified via                                                              
teleconference  from an offnet  location about  an effort  made by                                                              
the Airport  several years ago to  impose a tax on  the percentage                                                              
of  receipts of  car rental  businesses. Dollar  Rental and  other                                                              
small companies  were located off  the Airport premises  and could                                                              
not  be levied  this  fee.  A "more  reasonable"  alternative  was                                                              
considered  in which  a charge  was imposed  for shuttle  services                                                              
between the  airport and  the off-site  car rental locations.  The                                                              
level and volume  of business was  so minimal that a flat  fee was                                                              
instead  adopted. Currently,  off-site  car  rental companies  are                                                              
the  only businesses  subject  to a  percentage  of gross  revenue                                                              
Mr. Coffey stated  that at the time of the land  trade between the                                                              
Municipality  of  Anchorage  and   Diamond  Parking,  the  Airport                                                              
determined  it would be  unable to  generate revenue from  Diamond                                                              
Parking operations.  Rather  than attempt  to utilize its  on-site                                                              
parking  facilities  to compete  with  the private  business,  the                                                              
Airport   "went  after   Diamond"  and   proposed  extending   the                                                              
percentage  of revenue  charge to  parking facilities  as well  as                                                              
the car  rental businesses. This  fee would be "huge"  in relation                                                              
to the curbside access.                                                                                                         
Mr. Coffey  remarked that Airport  officials contend  this Diamond                                                              
Parking facility  is dependant upon the Airport.  He rejected this                                                              
argument, stating  that off-site  parking operators should  not be                                                              
required to subsidize  the cost of the entire Airport  if they are                                                              
only utilizing the access roads and curb.                                                                                       
Mr. Coffey  requested that off-site  parking operators  be treated                                                              
the  same as  other  commercial  curbside  users. Fees  should  be                                                              
commensurate with other off-site airport use.                                                                                   
10:22:49 AM                                                                                                                   
JOHN  TORGERSON, Deputy  Commissioner of  Aviation, Department  of                                                              
Transportation    and    Public    Facilities,    testified    via                                                              
teleconference  from an  offnet location  that this  issue is  not                                                              
new. The  US Supreme Court ruled  in 1998 that the  methodology of                                                              
fees  assessed  on  a  percentage   of  revenue  is  legal.  Other                                                              
airports nationally  and in other countries practice  this. Annual                                                              
operating costs  of the  airports in  Anchorage and Fairbanks  are                                                              
approximately  $65 million.  Carriers contribute  to funding  this                                                              
expense  as leaseholders  and  through terminal  rentals,  landing                                                              
fees and other charges.                                                                                                         
Mr. Torgerson informed  that the proposed percent  of revenue fees                                                              
that would  be imposed  on the off-site  parking facilities  would                                                              
have no  fiscal impact to  the Airport.  The issue is  not between                                                              
government and the  private sector but rather between  the private                                                              
vendors  utilizing the  airport facilities.  The regulations  were                                                              
actually adopted  in 1995 and have been subject  to administrative                                                              
appeal. The  process was underway  to select a hearing  officer to                                                              
determine  if   the  Airport  is  constitutionally   permitted  to                                                              
collect  this  fee.  Twenty-five   airlines  participated  in  the                                                              
residual  agreement to  establish  the fee  structure and  several                                                              
other businesses  service the airport. Due to  time constraints it                                                              
was  unlikely that  representatives  of these  interests would  be                                                              
testifying at this hearing.                                                                                                     
Mr.  Torgerson  reported  that  while  maintenance  costs  of  the                                                              
commercial  curbside  use  would be  negligible,  Diamond  Parking                                                              
operations  would result  in a loss  of revenue  to the  Anchorage                                                              
airport.  The sponsor  of  this  bill claims  it  would treat  all                                                              
businesses equally.  Instead, businesses located on-site  would be                                                              
required to contribute  more to the repayment of  the bonds issued                                                              
for  expansion and  renovations  to offset  the  lost parking  fee                                                              
revenues.  Diamond   Parking  is  the  only  business   to  charge                                                              
customers  for  off-site  airport  parking. He  agreed  that  some                                                              
hotels advertise  airport parking,  but provide this  service free                                                              
to paying guests.                                                                                                               
10:33:02 AM                                                                                                                   
Senator Bunde  empathized  with the private  businesses and  asked                                                              
if additional  income must  be generated  to operate the  airports                                                              
why all shuttle operations should not be charged.                                                                               
10:34:05 AM                                                                                                                   
Mr. Torgerson surmised  that at the time the  classifications were                                                              
established,  Airport  and  Department  officials  recognized  the                                                              
uses of  the airport facility,  including maintenance, as  well as                                                              
loss of revenue to the airport, and set fees accordingly.                                                                       
10:34:48 AM                                                                                                                   
Co-Chair  Green asked  whether the  witness  supported or  opposed                                                              
this bill.                                                                                                                      
10:34:55 AM                                                                                                                   
Mr. Torgerson  responded that  the Department,  "on behalf  of the                                                              
airlines" was opposed to the bill.                                                                                              
10:34:57 AM                                                                                                                   
Senator  Olson   asked  why  an  eight-percent  charge   of  gross                                                              
revenues was not  levied on all commercial airport  users, such as                                                              
the  airline carriers,  if such  a  fee were  imposed on  off-site                                                              
parking operations.                                                                                                             
10:35:32 AM                                                                                                                   
Mr. Torgerson  informed that  the Airport  Board was currently  in                                                              
negotiations  with airlines  over  the fee  amounts. Air  carriers                                                              
pay  the entire  $65  million  in  annual operating  expenses.  As                                                              
these  expenses increase,  the  fees must  be  increased as  well.                                                              
Alaska Airlines is  the "highest payer" at the  Anchorage airport.                                                              
All  carriers  contribute  to the  operating  and  bond  repayment                                                              
10:36:20 AM                                                                                                                   
Senator  Olson then  asked why  hotels and  other businesses  that                                                              
provide airport  shuttle service, in addition to  parking vendors,                                                              
would not be assessed a charge based on a percent of revenues.                                                                  
10:37:08 AM                                                                                                                   
Mr.  Torgerson   replied   that  hotels   are  categorized   in  a                                                              
"different class"  and are  charged for their  use of  the airport                                                              
facilities differently.  There is no intention to  charge hotels a                                                              
percent of revenue fee.                                                                                                         
10:37:34 AM                                                                                                                   
Senator  Olson  expressed  concern  about  expecting  "successful"                                                              
businesses  to  pay   for  the  cost  overruns   incurred  in  the                                                              
expansion and  reconstruction of the  Airport. This was  unfair to                                                              
small businesses.                                                                                                               
10:38:22 AM                                                                                                                   
Mr.  Torgerson responded  that  the  proposed percent  of  revenue                                                              
fees pertains  to operating  expenses and  has little  relation to                                                              
construction  costs. Repayment  of the  bonds issued  to fund  the                                                              
expansion and reconstruction  is included in the  landing fees and                                                              
other  fees  levied  to  leased  space  within  the  terminal.  He                                                              
anticipated the leases  would increase to $52 per  square foot for                                                              
space within the terminal.                                                                                                      
Mr. Torgerson  stressed the issue  of equalization.  Recipients of                                                              
the "benefits  that the Airport  provides" should  contribute. Car                                                              
rental agencies  located on the  Airport premises pay  ten percent                                                              
of  gross revenue  to  help support  the  operating  costs of  the                                                              
Airport.  If  all  the car  rental  companies  relocated  to  off-                                                              
airport sites, the operating costs must still be paid.                                                                          
10:39:48 AM                                                                                                                   
Senator Olson  understood, yet questioned  the imposition  of high                                                              
fees  on businesses  that  cause  little "wear  and  tear" to  the                                                              
10:40:10 AM                                                                                                                   
Senator  Olson  asked  the  number of  businesses  that  would  be                                                              
affected by the  proposed eight percent of gross  revenue fee, and                                                              
what  businesses would  not be  affected. He  also questioned  how                                                              
the Department would  audit the records of the  affected companies                                                              
to verify  the amount  of gross  revenue reported.  He asked  if a                                                              
search warrant would be required.                                                                                               
10:41:08 AM                                                                                                                   
Mr.  Torgerson  explained  that  the Department  charges  on  fair                                                              
market value  across Alaska. This  is accomplished  either through                                                              
a flat  fee or  a percentage  of gross  revenues fee. The  federal                                                              
government allows these different methodologies.                                                                                
10:42:22 AM                                                                                                                   
Senator  Olson  told  of  a  small   business  that  offers  pizza                                                              
delivery  from  Anchorage  to  Bush   communities  via  small  air                                                              
10:43:07 AM                                                                                                                   
Mr. Torgerson  stated that the figure  of eight percent  is levied                                                              
on commercial users of all airports in the state.                                                                               
10:43:48 AM                                                                                                                   
Co-Chair Green ordered the bill HELD in Committee.                                                                              
10:44:06 AM                                                                                                                   
     HOUSE CS FOR SENATE BILL NO. 250(STA)                                                                                      
     "An  Act extending  the termination  date of  the Council  on                                                              
     Domestic Violence and Sexual Assault."                                                                                     
This was  the first hearing  for this bill  in the  Senate Finance                                                              
TOM  MAHER,  Staff   to  Senator  Therriault,  read   the  sponsor                                                              
statement into the record as follows.                                                                                           
     This  legislation  stems from  recommendations  contained  in                                                              
     the Legislative  Audit Report entitled, "Council  on Domestic                                                              
     Violence  and Sexual Assault  Sunset Audit", dated  September                                                              
     23, 2005.                                                                                                                  
     Legislative  Audit  also  recommended  that  the  Legislature                                                              
     amend  Council   statutes  related  to  the   appointment  of                                                              
     Council  members.   Current  law  requires  the   Network  on                                                              
     Domestic  Violence  and  Sexual  Assault  (Network),  a  non-                                                              
     profit  corporation,   to  submit   a  list  of   recommended                                                              
     candidates  to the Governor  for appointment  when  a vacancy                                                              
     occurs.  Further, statutes  require  that  the Governor  fill                                                              
     any  unexpired term  of a Council  member after  consultation                                                              
     with the Network.                                                                                                          
     The Network  annually receives a  grant from the  Council for                                                              
     a  legal advocacy  project  and  the appearance  of  conflict                                                              
     exists  when a  Council member  reviews, evaluates,  approves                                                              
     and  monitors  a grant  to  the same  nonprofit  organization                                                              
     that  may   have  been  responsible  for   recommending  that                                                              
     individual be  appointed to the Council. SB  250 deletes both                                                              
     statutory   references  that   produce  this  appearance   of                                                              
     This audit  was conducted under  revisions made  last session                                                              
     to  the  sunset  process.  The  standard  sunset  period  for                                                              
     occupational boards  and non-occupational boards  was changed                                                              
     from  "not to  exceed four  years"  to "not  to exceed  eight                                                              
     years".   Additionally,   to   better   measure   operational                                                              
     performance,  two new  criteria  were added  to statute  that                                                              
     must be  considered in the course  of a sunset review  by the                                                              
        · The extent to which the board, commission, or agency                                                                  
          has effectively attained its objectives and the                                                                       
          efficiency with which it has operated.                                                                                
        · The extent to which the board, commission, or agency                                                                  
          duplicates the activities of another governmental                                                                     
          agency or the private sector.                                                                                         
Mr.  Maher noted  that  the Senate  Health,  Education and  Social                                                              
Services Committee  reported this  legislation from  its committee                                                              
with  no changes.  The fiscal  note  for this  bill reflects  that                                                              
implementation would incur no additional costs.                                                                                 
10:47:44 AM                                                                                                                   
Senator Hoffman asked about the aforementioned conflicts.                                                                       
10:47:55 AM                                                                                                                   
PAT DAVIDSON, Director,  Division of Legislative  Audit, responded                                                              
that the  statutory language  is "relatively  soft"; the  governor                                                              
is required  to accept  the list  of recommendations submitted  by                                                              
the Network.  This legislation would  not require the  governor to                                                              
select  from those  nominees  for appointment  to  the Council  on                                                              
Domestic Violence  and Sexual Assault (CDVSA). The  governor could                                                              
appoint others.                                                                                                                 
Ms.  Davidson expressed  concern that  the Network  is a  grantee,                                                              
specifically  some  of the  discretionary  grants  it receives.  A                                                              
non-profit   organization   codified   in  statutes   makes   that                                                              
organization  "first  among equals"  and  does  not appear  to  be                                                              
10:49:13 AM                                                                                                                   
BARBARA  MASON, Executive  Director,  Alaska  Council on  Domestic                                                              
Violence and  Sexual Assault,  provided an  overview of  the CDVSA                                                              
as follows.                                                                                                                     
     The Mission  of the Council  on Domestic Violence  and Sexual                                                              
     Assault is  to implement a  statewide system of  services for                                                              
     the  protection  of  individuals  and  families  affected  by                                                              
     domestic violence and sexual assault.                                                                                      
     The Council is a Governmental entity housed in the                                                                         
     Department of Public Safety.                                                                                               
         · The Council is made up of seven members consisting of                                                                
           representatives   from   the  departments   of   Public                                                              
           Safety,  Law, Education  and Early Development,  Health                                                              
           and   Social  Services,   and   three  public   members                                                              
           appointed by the Governor.                                                                                           
           As the Executive Director it is my job to move                                                                       
           forward the work of the Council.                                                                                     
         · One of our tasks is to administer the funds received                                                                 
           from the State of Alaska and the Federal Government.                                                                 
         · We    administer   the    state   certified    Batterer                                                              
           Intervention Program (BIPS).                                                                                         
         · We also use a proprietary database to capture                                                                        
           information from funded CDVSA programs in order to                                                                   
           comply with the data requirements from our funding                                                                   
      In conclusion I would like to state that the Council                                                                      
      supports SB 250 as written.                                                                                               
      Difference between the Council and the Network is really                                                                  
      very simple.                                                                                                              
         · Administers the State and Fed. Funds                                                                                 
         · Is a government entity                                                                                               
         · Represents the programs receiving the funds                                                                          
         · Is a private non-profit                                                                                              
      The common goal between the two is to provide safety and                                                                  
      intervention for those affected by DV/SA.                                                                                 
10:50:46 AM                                                                                                                   
PEGGY  BROWN,  Executive  Director,  Alaska  Network  on  Domestic                                                              
Violence  and   Sexual  Assault,  testified  that   the  nonprofit                                                              
statewide  organization represents  over 20  member programs.  The                                                              
Network has  historically had a  viable working relationship  with                                                              
the  CDVSA.  Neither the  Council  nor  the Network  disputed  the                                                              
"value" of  the proposed  provision that  would allow  the Network                                                              
to  provide  a list  of  nominees  for  the  public seats  of  the                                                              
Council to the governor.                                                                                                        
Ms. Brown  quoted testimony  provided by  the commissioner  of the                                                              
Department of  Public Safety to  the Senate Health,  Education and                                                              
Social  Services  Committee: "As  a  matter of  practicality,  the                                                              
governor  should  consult  with   the  Network  before  appointing                                                              
public members to CDVSA."                                                                                                       
Ms.  Brown  asserted   the  Network  should  remain   codified  in                                                              
statute. The  governor "is in no  way, shape or form bound  by any                                                              
recommendation"  made by  the Network.  Rather, of  the past  five                                                              
recommendations,   two  had  been   selected.  Additionally,   the                                                              
Network  is  "first among  equals".  It  is  the "expert  in  this                                                              
field" for the State,  the "voices of the victims"  it serves, and                                                              
provides a  service to the  governor in making recommendations  of                                                              
knowledgeable  persons  who  are   not  perpetrators  for  Council                                                              
seats. The  Network undertakes  a screening  process in  selecting                                                              
those it  recommends for appointment  to the Council.  In choosing                                                              
those  to recommend,  the Network  attempts  to provide  "adequate                                                              
representation"  of  rural  and   urban  residants;  survivors  of                                                              
domestic  violence  or  sexual   assault  and  those  who  provide                                                              
services to victims.                                                                                                            
10:55:01 AM                                                                                                                   
Ms. Brown  pointed out  that in  addition to  the Network  and the                                                              
Council  not opposing  the nomination  process,  the governor  has                                                              
not identified a problem either.                                                                                                
10:55:52 AM                                                                                                                   
Senator  Olson  asked if  the  witness  supported or  opposed  the                                                              
10:56:08 AM                                                                                                                   
Ms. Brown  was against the removal  of the Network  from statutory                                                              
10:56:22 AM                                                                                                                   
BRENDA STANFILL,  Executive Director,  Interior Alaska  Center for                                                              
Nonviolent  Living,   and  Chair,   Alaska  Network   on  Domestic                                                              
Violence and  Sexual Assault, testified  in Juneau that  Ms. Brown                                                              
spoke of  behalf of others present  at this hearing.  Victims must                                                              
be  "heard" on  the Council.  Because  the Council  itself is  not                                                              
authorized  to appoint public  representatives  to its Board,  the                                                              
Network provides recommendations of qualified candidates.                                                                       
Ms.  Stanfill  requested  amending  the  bill  in  the  event  the                                                              
Network was removed  from statute, to provide clear  definition of                                                              
qualifications and representations of the public members.                                                                       
10:57:36 AM                                                                                                                   
Co-Chair Green referenced  the recommendations of  the Division of                                                              
Legislative Audit  and requested updates on the  implementation of                                                              
these changes.                                                                                                                  
10:58:35 AM                                                                                                                   
Co-Chair  Wilken  offered  a  motion   to  report  the  bill  from                                                              
Committee   with  individual   recommendations  and   accompanying                                                              
fiscal note.                                                                                                                    
There was  no objection and SB  250 was MOVED from  Committee with                                                              
zero fiscal note #1 from the Department of Public Safety.                                                                       
Co-Chair Lyda Green adjourned the meeting at 10:58:47 AM                                                                      

Document Name Date/Time Subjects