Legislature(1993 - 1994)
03/17/1993 08:50 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
March 17, 1993
8:50 a.m.
TAPES
SFC-93, #37, Side 2 (181-end)
SFC-93, #39, Side 1 (000-end)
SFC-93, #39, Side 2 (000-end)
SFC-93, #41, Side 1 (000-end)
SFC-93, #41, Side 2 (575-370)
CALL TO ORDER
Senator Steve Frank, Co-chair, convened the meeting at
approximately 8:50 a.m.
PRESENT
In addition to Co-chair Frank, Senators Rieger, Kelly, and
Sharp were present. Senator Kerttula arrived soon after the
meeting began. Co-chair Pearce and Senator Jacko did not
attend.
ALSO ATTENDING: Representative Larson; Representative
Foster; Representative Brice; Representative Martin; Edgar
Blatchford, Commissioner, Dept. of Community and Regional
Affairs; David Cuddy, First National Bank of Anchorage;
Keith Gerken, Deputy Commissioner, Dept. of Transportation
and Public Facilities; John Horn, Regional Director,
Northern Region, Dept. of Transportation and Public
Services; Col. John Murphy, Director, Division of Alaska
State Troopers; Darcie Beck, Alaska Environmental Lobby;
Juanita Hensley, Chief, Driver Services, Division of Motor
Vehicles, Dept. of Public Safety; Chip Thoma; Rick Solie,
aide to Senator Frank; Ken Erickson, aide to Senator Pearce;
Josh Fink, aide to Senator Kelly; and additional aides to
committee members and other members of the legislature.
ALSO ATTENDING AND TESTIFYING ON BEHALF OF THE KEY CAMPAIGN:
Steve Lesko; Mike Saville; Virginia (Ginny) Sargent; Linda
Giani; Cheryl Scott; Brenda Trumble; Elaine Hurley; Joy
Davis, Access Alaska; and William Gumlikpuk.
SUMMARY INFORMATION
SB 82 - Act relating to the Dalton Highway.
Testimony was presented by Commissioner
Blatchford, DC&RA; Keith Gerken and John
Horn, DOTPF; John Murphy, DPS; Darsie Beck,
Alaska Environmental Lobby; Chip Thoma; and
Rick Solie. The bill was subsequently HELD
in committee for additional work on the
fiscal notes.
SB 84 - Act relating to fees for identification cards
and certain motor vehicle licenses and permits;
to licenses issued to drivers and to
revocation of a license to drive; and
providing for an effective date.
Testimony was presented by Juanita Hensley,
DPS, and Josh Fink. The bill was
subsequently HELD in committee for work on
the fiscal notes and possible amendments.
SB 97 - Act relating to enhanced 911 emergency
reporting systems; and providing for an
effective date.
CSSB 97 (Finance) was REPORTED OUT of
committee with a "do pass" recommendation and
zero fiscal note from the Dept. of Commerce
and Economic Development.
KEY CAMPAIGN
After convening the meeting, Co-chair Frank welcomed
representatives of the Key Campaign and asked that they
commence their presentation.
STEVE LESKO, President, Alaska State Association on
Developmental Disabilities, first came before committee. He
noted that this is the sixth year of the Key Campaign--a
united coalition of individuals from both rural and urban
Alaska. The coalition represents 114 communities. Mr.
Lesko next referred to representatives presently before
committee and explained that they "and a thousand more who
we represent and care about are basically advocates for
children, adolescents, and adults who experience
developmental disabilities." He stressed that the coalition
believes that community is the key. A community is a place
for everybody. He further stressed that "No one, not one
single human being . . . is in need of, is entitled to be,
or must be institutionalized." Community is the place for
everybody. With minimal support, families and individuals
that experience developmental disabilities can live within
community. Community has been proven by state-generated
statistics to be decreasing in cost. It is the most cost-
effective method of meeting genuine needs. And it is the
only method in terms of quality of life.
Mr. Lesko said that the campaign has over 400 reasons to
come before committee at this time. The 400 individuals all
have a name, face, family, friends, and a community. They
have a single thing in common: They are statistics on the
state waiting list that is growing daily. By the end of the
calendar year, it is estimated it will exceed 500.
In his concluding remarks, Mr. Lesko voiced need for a new,
optimistic vision for Alaska. Success can only be measured
in terms of how government, the legislature, the state, the
nation, and the world at large respond to the legitimate
needs of citizens who cannot assist themselves without help.
He requested the committee's help in achieving the vision of
a positive future for all Alaskans. Mr. Lesko again
stressed that "community is for everyone."
MIKE SAVILLE next came before committee. He noted that,
last year, his appeal was contained within a request that
the legislature share in the responsibility of providing
services to Alaskan families. As a result, programs for the
developmentally disabled were spared some of cuts sustained
by other programs.
This year the campaign is asking that the legislature not
only spare the Campaign from cuts, but also improve the
quality of services and increase the number of services
provided. Services for the disabled are approximately 16%
behind the 1986 level, in terms of real dollars. Mr.
Saville said his program alone is experiencing insurance
increases in excess of 16%. Every home that is leased to
provide residential services is experiencing an increase of
approximately $100 a month. Utilities and the cost of food
are also increasing as are other daily essentials.
Mr. Saville reiterated that there are 400 people on the
waiting list. At this time last year, that number was 150.
By the end of this year, it will be 500. Every day another
family falls into crisis and is added to the list. Existing
programs have stretched every available resource. Community
programs are less expensive and more effective. For the
last three years, the individual costs of programs have been
dropping. That is the only thing that has kept programs
even with the cost of living. Mr. Saville requested that
for the coming year the committee consider building "some
maintenance of effort" into the budget. He asked that
members help take responsibility for providing the quality
of life that everyone deserves.
BRENDA TRUMBLE from Klawock, Prince of Wales Island, next
came before committee. She told members that when her son,
Logan, was five weeks old and received his DPT vaccination,
he sustained neurological damage resulting in cerebral
palsy. Ms. Trumble attested to the benefits of state
programs such as infant learning, special education
services, respite, family support dollars, etc. She said
her family had been fortunate in receiving assistance
programs when they were needed. She further attested to the
difficulties associated with the six months she spent on the
state waiting list. Family support services ensure that
Logan partakes in swimming, basketball, and other after-
school activities. He is doing very well.
Mrs. Trumble next spoke to the situation for the remainder
of the family. She said her husband is a Vietnam veteran
and college graduate who was with the same employer for
fifteen years. Three years ago he chose to become self-
employed and started a business of his own. After coverage
under COBRA for eighteen months, the insurance company chose
to drop coverage on Logan. Once dropped from coverage,
those with disabilities are unable to get insurance. The
only option was to spend down family resources to become
Medicaid eligible in order to receive medical services for
Logan. That means the family can put nothing aside for
retirement, can have no savings or other money in the bank,
can have no life insurance, and cannot even have a burial
plot. The family is under constant, very unpleasant
scrutiny.
Mrs. Trumble voiced need for waivers that would allow
Medicaid eligibility to be based on the resources of the
disabled individual rather than the individual's family.
She spoke to continued attempts to maintain health insurance
for other members of the family at a cost of $478.00 per
month.
The family's older son wants to go to college in two years.
The family has no resources with which to send him. He is
not allowed to work or save money for himself. Mrs. Trumble
urged support for Project Choice and funding for the
disabled.
End, SFC-93, #37, Side 2
Begin, SFC-93, #39, Side 1
CHERYL SCOTT, from Anchorage, next came before committee
accompanied by her son, Justin. She said that she and her
husband have three children. Her husband works for the FAA.
Justin is the youngest child. He was adopted at 2-1/2 years
of age. At the time the adoption was finalized, a package
of support came with him. It included a monthly subsidy (a
monthly check from the state) to cover expenses that
Medicaid does not cover. The family has excellent insurance
through the federal government. Justin's medical expenses
are thus well covered. Justin is also covered by Medicaid.
That arrangement was part of the adoption package because of
his multiple disabilities and the fact that his mother, when
she was alive, qualified for AFDC. Justin comes from a
background of alcohol abuse. His mother was third
generation. He came from a single parent family. Until he
was adopted, he had never been in a family situation.
Mrs. Scott advised that the family feels lucky to have
Justin as a member. He has made a great change in the
family lifestyle. Having Justin as a part of the family has
been very expensive, but his care has been provided for by
the state. Not every adoptive family receives those types
of benefits, even though they may have a child with the same
degree of disability as Justin. The adoption worker in
Justin's case was willing to negotiate what was needed to
keep Justin within the family.
Mrs. Scott spoke to the fact that there are other families
in Alaska that have given birth to children like Justin.
These families cannot access the same services her family
was provided when Justin was adopted. The inequality is
unbelievable. Families are being forced to put their
children on waiting lists for entry into foster care or
institutions in order to get the support they need.
Families are being torn apart. Parents divorce or turn to
drink and/or drugs because they cannot cope with the
financial responsibilities associated with having a disabled
child.
(Co-chair Frank noted the presence of Representatives Larson
and Martin.)
ELAINE HURLEY, from Anchorage, next came before committee
accompanied by her daughter, Brienna. She advised that she
represents the family to which the prior speaker referred.
She explained that she gave birth to a child with
disabilities. She is therefore not entitled to the same
financial support as the Scott family which adopted a
disabled child. Medicaid eligibility standards force
families to either place their child in an institution or
spend down, quit their jobs, and become poverty stricken to
provide for their child. With a child the parent knows
needs medical coverage, there is not much choice.
Ms. Hurley advised that she had spoken before committee last
year. At that time, she was married. She and her husband
had to quit their jobs and become dependent to qualify for
medical coverage of their daughter. Ms. Hurley said that
due to the emotional, medical, and financial strain, she is
now a single parent. She questioned the worth of a system
that will pay tens of thousands of dollars for her daughter
if she is institutionalized, but will not pay medical
benefits if the child remains at home. There is something
wrong with a system that, in the name of cost containment,
will pay more to institutionalize a child than to allow the
child to remain with his or her parents. Because families
lack medical waivers and medical options, there is no
choice. In other states there are. They have Medicaid
options and waivers. SB 5 (MEDICAID FOR CERTAIN DISABLED
CHILDREN) would enable parents to go back to work. By not
enabling parents to stick by their disabled children, the
quality of life for the disabled person, the parents, and
the family in general is impacted.
Ms. Hurley noted legislative attempts to cut the budget.
She then questioned how the state could "justify doing other
things but not putting people first." She urged that
committee members allow those with disabilities to "have the
quality of life as well."
JOY DAVIS, Access Alaska, next came before committee. She
said she is the mother of three. Two are her biological
children and the third is her fourteen-year-old Athabascan
daughter. Ms. Davis explained that she works part-time for
Access Alaska. She said she could only maintain part-time
employment so that her children can obtain medical benefits
and she, herself, remains eligible for personal care
attendant services. She termed attendant care "vital" to
the life of her family. She said she believes in the work
ethic and wants her children to also. She expressed concern
that, without that care, her fourteen-year-old would become
the nurturing element to her younger children. At this
point, because of the way state resources are developed, Ms.
Davis advised that she does not receive respite care for her
children, although she qualifies for that care herself.
Inability to provide for the basic physical needs of her
children and loss of respite services is devastating for a
mother with no finger or hand dexterity.
Ms. Davis said she had no problem with paying for personal
attendant care services, but she has concern that these
services and the number of care hours available are being
cut back. She said that in the course of her work, she
often has to explain to people in circumstances similar to
her own that the services are not available. The state
should not be focusing on the status quo when services are
not adequate for those already receiving them, and there are
400 to 500 individuals on waiting lists. It is not
appropriate to tell them to wait.
(Co-chairman Frank noted the presence of Representative
Brice.)
WILLIAM GUMLIKPUCK of Knewthweluk, Alaska, next came before
committee. He told of his nine-year-old son, Willie, and
the many surgeries and complications suffered by the boy
since the age of two. Following surgery in Seattle, Willie
became sick easily and has spent time in all the hospitals
in Anchorage and in the Dillingham Hospital as well. He has
now been home with the family for approximately three years
and is a much happier boy. The bush area needs residential
homes. Hope Cottage utilizes the respite program. Mr.
Gumlikpuck distributed pictures of Willie for committee
viewing.
VIRGINIA (Ginny) SARGENT of Kodiak, Alaska, next came before
committee. She advised of an effort in Kodiak to take
"needy children away from mental health." The community
sent a task force out to look for an agency to come in and
help take care of these children. At this point, the effort
has taken twelve people from mental health. Ms. Sargent
advised that it is her goal to "take the rest of them away
from that place." She advised that residents had no care
and no life. They went from one group home to another and
merely sat. They did not go out in the community and work,
and sometimes were not even given lunch. These individuals
deserve a life of their own. The effort now has a home for
these young people. It must now renovate and purchase the
structure.
LINDA GIANI of Wasilla, Alaska, next testified before
committee. She noted that she had recently witnessed a
motorcycle accident in Anchorage in which a young man was
badly injured. No one knows in the course of each day what
turn his or her life might take. Services requested by the
Key Campaign are not merely for "this small group or even
just for a waiting list." Services are needed on behalf of
the state as a whole. Services must be in place. It is too
late when a crises occurs, and there is nothing out there.
Ms. Giani advised that her son is approximately eighteen
years old. He is severely mentally and physically disabled.
The family has struggled through divorce, remarriage,
multiple problems. The two other children in the family
"have given up things all of their lives." Ms. Giani
explained that when her husband was first stationed in
Alaska with the military was the first time in fifteen years
any services were provided. The family received respite
care at that time. Those services over the last eight years
allowed the family to keep Brian at home until his
eighteenth birthday this summer. Ms. Giani said that her
health and part-time respite services are not good enough to
provide him the care he needs. The family is on a waiting
list for full-time placement in a residential home. The
family will truly be in crises on June 30, 1993, when parti-
time services may end and the family may not be able to find
another provider to care for Brian.
JOY DAVIS of Anchorage again came before committee,
attesting to need for assistance on behalf of Key Campaign
members and their families.
At the conclusion of the Key Campaign presentation, Co-
chairman Frank directed that the meeting be briefly
recessed.
RECESS - 9:30 A.M.
RECONVENE - 9:45 A.M.
The Alaskan Economy from a Banker's Perspective
Upon reconvening the meeting, Co-chair Frank noted the
presence of MR. DAVID CUDDY, First National Bank of
Anchorage, and asked that Mr. Cuddy speak to committee
concerning the state economy. Mr. Cuddy voiced his belief
that Alaska's economy will be good in 1993 and "probably
1994." Projections indicating a budget gap have produced a
reluctance in terms of investment or expansion. Business
people are attempting to determine whether Alaska is headed
for another "bust situation." Mr. Cuddy said that he tells
his customers that change is certain; they should determine
how to take advantage of opportunities and adapt to future
changes.
Mr. Cuddy quoted John Kenneth Galbraith, noting that "There
are two types of economists: Those who don't know, and
those that know they don't know." He told committee members
that while he did not know what the future might bring, he
attempts to remain conversant with factors that will
determine the future. One of the major factors is state
government. Mr. Cuddy voiced concern over recent comments
by the Governor and three of his commissioners that there ts
not a great need to cut spending, but what must instead be
done is to maximize revenues. Maximizing revenues is likely
to mean more taxes.
Mr. Cuddy suggested that Alaska study what has happened in
California. The Wall Street Journal reports that profiles
of those now arriving in California indicate they are under
twenty-five years of age, uneducated, and have few job
skills. Profiles of those leaving the state show that they
are over forty, upper income, and better educated.
California had a great economy and active defense and
electronics industries. It continued to increase spending
and sustained a $7 billion budget deficit three years ago.
The state solved the problem by increasing taxes. The
following year, the budget showed an $11 billion deficit.
Last year the state temporarily issued script in an attempt
to balance the budget. Mr. Cuddy cautioned that Alaska
should not follow the model set in California. While Alaska
has experienced a robust economic decade, with several
problem years, the current administration is discussing tax
increases as a means of balancing the budget. He voiced
concern over the profile for Alaska, if it follows the
pattern set in California.
Senator Kerttula asked how establishment of Wal-Mart and
Costco stores would impact smaller retailers long supported
by local banks. Mr. Cuddy told members that the only ones
to survive will be those that can focus on service and/or
offer unique products not available from larger delivery
systems. He further advised that he had talked with
representatives of large chain operations, asking what they
see in Alaska that causes them to locate here. The answer
is that they have a price delivery system with which no one
can compete. They buy in such volumes, and their shipping
charges are so cheap, there is no way a local business can
compete. Mr. Cuddy reiterated his belief that smaller
retailers would be forced to close as chain stores move into
the state. He added, "Nobody thinks that there's enough new
business and enough new buyers out there to support it all."
Mr. Cuddy commented on anticipated business from outlying
communities, and the fact that chains hope to intercept
trade that now benefits Seattle.
Senator Kerttula inquired regarding trade with Russia. Mr.
Cuddy explained that his father and sister have focused on
Russian development, traveling annually to that area.
Exchange Russians are working at First National in
Anchorage, and numerous Russian contacts have been made.
First National is "posturing" itself to become the U.S.
banking contact in dealing with the eastern part of Russia.
Mr. Cuddy said that he did not foresee anything happening in
the immediate future. The situation is extremely unstable.
The bank is merely building a contact network for a more
stable time. Someday, Russia and Alaska will have a good
trade situation, but not tomorrow.
Senator Kerttula attested to Alaska's position as an
exporter of raw materials and suggested that the state
appears to be moving toward heavy minerals. He then asked
if Mr. Cuddy was aware of upcoming development. Mr. Cuddy
responded negatively. He acknowledged that the bank has
many gold miners as customers. He further noted that
Engelhard Industries is considering closing its offices in
Alaska because of insufficient volume. First National has
been approached to serve as Engelhard's agent for receipt of
gold and subsequent shipment out of state.
Senator Jacko asked if Mr. Cuddy could point to a particular
industry as a bright spot for Alaska. Mr. Cuddy told
members that he recently chaired the Anchorage mayor's
committee on military housing which determined there is a
lack of housing for the military. Senator Stevens has
indicated that Alaska is the military's first choice for
placement of troops returning from Europe and the Pacific
Rim. Mr. Cuddy suggested that if problems arise in the
Alaskan economy, and the state loses population, there is a
ready source of new people to fill empty houses in the form
of returning troops. The state will probably not face the
same "bust" situation as 1986 because of that backup. That
is a bright spot, as is tourism.
Senator Jacko voiced his understanding that loans and other
banking requirements of the fishing industry have not, in
the past, been met by Alaska banks. Financing has primarily
come from Seattle-based and overseas institutions. He then
asked if there was opportunity for improvement. Will
Alaskan banks become more involved? Why have they not been
involved in the past? Mr. Cuddy responded that the state
has a better program for permit loans than do banks.
Senator Jacko interjected that this comments related more to
processors and larger fishing boats. Mr. Cuddy remarked
that most of the processors are based in Seattle. Companies
with corporate offices in Seattle tend to have ongoing
business relationships with banks in that area. Much Alaska
fishing is owned and controlled by forces outside the state.
Referring to locally owned vessels, Mr. Cuddy advised that
loans involve analysis of risk. First National makes a
number of fishing boat and gear loans, particularly in the
Cordova, Sitka, and Kodiak offices. Its loans have
increased more than any other Alaskan bank in the last three
years. Speaking as the president of the Alaska Bankers
Association, Mr. Cuddy suggested that local banks "have seen
a lot of losses taken in fishing" and are concerned about
reports that the bottom fish industry is becoming fished
out. Projected salmon prices and increasing competition are
also causes for concern. The Cordova office is experiencing
"a near high" in delinquencies for fishery loans because of
the recent "tough season."
Senator Jacko attested to construction projects in Dutch
Harbor (hotel, shopping mall, and cold storage facility) and
asked if Alaskan banks are involved. Mr. Cuddy said that a
customer has approached the bank with a proposal for
construction of a floating housing facility at Dutch Harbor.
That is the kind of project the bank would be interested in
reviewing.
Mr. Cuddy noted that sometimes project developers go
elsewhere for financing. He advised that, in the 1980s,
several other banks became very aggressive in lending.
First National thus gained a reputation for being very
conservative.
End, SFC-93, #39, Side 1
Begin, SFC-93, #39, Side 2
Senator Kelly inquired regarding the impact on Anchorage and
Fairbanks of the cutback of 2,800 Alaskan troops. Mr. Cuddy
said he could not respond to the inquiry. He advised that
the military housing committee he chaired submitted its
report to the mayor on February 15. Announcement of troop
cutbacks occurred after that time.
Senator Frank inquired regarding the bank's current lending
posture relative to the past ten to fifteen years. Mr.
Cuddy explained that the bank cut back on lending in 1984
because of concerns for the local economy. From 1984 to
1989, First National's loans dropped off substantially.
Since 1989, the bank has added 50% to its loan portfolio.
There are no alternate investments available since U.S.
Treasury bonds are yielding approximately 4%. The bank is
paying 3% for certificates of deposit. With reserve
requirements and overhead, there is no profit in those
transactions. The bank is thus aggressively looking for new
loans. One of the areas being expanded is real estate.
First National's competition does not generally like to make
long-term real estate loans. The bank has thus experienced
quite an increase in commercial-income real estate and
residential real estate in the last three years.
Mr. Cuddy advised that First National would like to become
more heavily involved in installment loans, but car and boat
dealers intercept many loans that used to be made by banks.
The bank is looking at ways to buy "the paper" after dealers
have made these loans. Installment loans tend to be only
three to five years in term. Mr. Cuddy voiced his belief
that if the Alaska economy experiences a problem, it will
not occur in the next two years.
In response to a question from Senator Sharp, Mr. Cuddy
explained that any time the bank can sell a loan to AHFC,
AIDEA, or another investor, it does so because the interest
rate tends to be better and the term longer. The only real
competitor for real estate loans is National Bank of Alaska.
Last year NBA took a very conservative posture and cut its
term to ten years. During that time, First National picked
up a lot of loans. Since then, NBA has extended the term to
15 years and is aggressively competing again.
Senator Kerttula posed a general question regarding the
national banking community. Mr. Cuddy noted the difference
between savings and loans and commercial banking
institutions. Savings and loans were not properly examined
by the government, and huge losses occurred for which
taxpayers have paid the bill. Commercial banks are funded
out of their own insurance premiums. Taxpayers have not
paid anything for commercial bank failures. Mr. Cuddy noted
that First National and National Bank of Alaska have both
had to pay higher premiums because of failures at other
banks.
Headlines indicate that the banking industry made huge
profits last year. The reason for that is that bonds and
investments made three years ago at high yields continued to
earn those yields while the cost of funds dropped off
dramatically. Most banks thus made nice profits. That only
happens 50% of the time. The other half of the time the
reverse is true. In a period of increasing interest rates,
loans made at 4% today will be loser transactions when the
cost of funds increases. When that happens, more banks are
likely to have problems. The federal government has never
been competent to analyze banks. Last year, regulators
spent five weeks at First National and reviewed less than a
dozen loans. They spent the majority of the time checking
to see that forms were correctly filled out and regulations
were met. Mr. Cuddy concurred that there may be a number of
time bombs awaiting a reverse interest rate situation and an
accumulation of bad loans.
SENATE BILL NO. 71
An Act relating to emergency medical services; and
repealing obsolete references to the Statewide
Health Coordinating Council and health systems
agencies.
Co-chair Frank announced that the bill would be held in
committee as staff continues to work on fiscal notes. He
further advised that Senator Rieger would be proposing
amendments for incorporation within the Finance Committee
Substitute.
SENATE BILL NO. 82
An Act relating to the Dalton Highway.
Co-chair Frank directed that SB 82 be brought on for
discussion. He remarked that legislation relating to
opening the Dalton Highway to public use had been before the
legislature for a number of years. At the present time, a
portion of the road is theoretically closed to public use
although the closure is not enforced. Permits for travel on
the road are issued to commercial or industrial users.
The proposed bill would open the road to a terminus near the
Arctic Ocean. The last few miles are on oil company land
leased from the state. It is the intent to have the Dept.
of Transportation and Public Facilities work with oil
companies to develop an access route through those leases so
that the public can travel all the way to the Arctic Ocean.
That access route is not mandated, however. It is the
intent of the sponsor to have the department exercise its
authority to close the road during months of the year when
it is determined to be unsafe due to cold weather.
KEITH GERKEN, Deputy Commissioner, Dept. of Transportation
and Public Facilities, came before committee, accompanied by
JOHN HORN, Regional Director, Northern Region, Dept. of
Transportation and Public Facilities. Mr. Gerken advised
that the department has long supported opening the road.
Opening it to the public would be consistent with state
policy on all other routes. More practical considerations
relate to the current insufficient amount of capital
improvement on the route. The principal source of capital
improvement moneys is federal highway dollars. Those
dollars cannot be spent on a road that is not open to the
public. Opening the northern half of the Dalton Highway
will allow the department an opportunity to use federal
moneys to maintain the road so that this extremely expensive
asset does not further deteriorate.
The department fiscal note is zero. Currently, commercial
traffic on the road is what determines the amount of needed
maintenance. Increased traffic projections from tourism and
recreational use do not indicate that department costs will
be impacted.
For a number of years, the department has cooperated with
the federal Bureau of Land Management on development
opportunities along the route. The BLM is very interested
and willing to work on a plan to make facilities available
for camping, parking, scenic viewing, etc.
In response to a question from Senator Kelly concerning
availability of restaurants and gas stops along the highway,
Mr. Horn said fuel, food, and lodging are available at the
Yukon River, Cold Foot, and Deadhorse. While long distances
lie between those locations, the distances are not beyond
the gas tank capacity of most vehicles traveling the road.
The longest stretch is slightly over 200 miles. As people
begin to use the road, and commercial need for additional
facilities arises, they will be built. But the need must
first be developed. Senator Sharp advised that the Senate
Transportation Committee was provided information indicating
the BLM has a "pretty elaborate plan set up for waysides and
campgrounds," once the road is opened and demand justifies
development.
Further discussion followed between Senator Kelly and Mr.
Horn regarding ownership of existing fuel, food, and lodging
facilities. Mr. Horn noted Native corporation, service
company, and private ownership. Mr. Gerken voiced his
understanding that land upon which facilities are located is
leased from BLM on a long-term basis.
Senator Rieger raised questions concerning state liability
for the condition of the road and maintenance
responsibilities. Has an action based on lack of
maintenance ever been brought against the state? Mr. Gerken
acknowledged that such actions had been brought. Courts
generally "look at that as whether or not we're doing what
we can with what we're given." The majority of the traffic
on the road, both today and after it is opened, will
continue to be commercial. State liability thus already
exists. He acknowledged that a greater number of people
traveling the road would increase already existing
liability.
Mr. Gerken told members that while the condition of the road
is often described as primitive, it is not. The road is
constructed to federal, secondary standards. While it is
not paved, it is quite adequate in terms of width,
alignment, and grade. It is acknowledged to have a few
problems, and access to federal dollars for the northern end
would help correct situations where grades should not be as
steep as they currently are. Unless the weather is
particularly bad, speed on the Dalton is not a problem.
Truckers move quite quickly across it. Tourists will as
well. The road is passable and safe. In terms of standards
and maintenance, it is perhaps safer than the Taylor or
Denali Highways. It is built to better standards. State
liability should thus not change significantly.
Senator Rieger next asked what the opening of the Dalton
would mean in terms of the statewide ISTEA allocation. Mr.
Gerken explained that the Dalton falls within the definition
of core roads. It will thus have to compete against other
major highways for available federal dollars. The state
will not receive more federal highway funding because it has
more road miles on which to spend it. The department is
attempting to establish statewide priorities in terms of
which routes need attention most. The Dalton would compete
and may take funding from other projects. It will not
impact borough allocations.
Discussion followed between Senator Kelly and Mr. Horn
regarding pipeline construction camps. Mr. Horn explained
that most camps have been closed or co-located with the
seven pump stations along the pipeline. The department also
has six maintenance stations along the route. Further
discussion followed between Senator Kelly and Mr. Horn
concerning airstrips along the road.
Senator Sharp voiced his understanding that the portion of
the road presently closed to the public and ineligible for
ISTEA money consists of approximately the last 200 miles.
Mr. Horn advised that it is technically closed at Disaster
Creek. Further discussion relating to past checkpoints
followed. Mr. Horn acknowledged that there had been no
checkpoint for the last two or three years. DOTPF never had
enforcement authority along the road. Due to staffing cuts,
enforcement by the Alaska State Troopers was rare.
Essentially, anyone wishing to drive the road has done so.
Further, commercial permits were easily obtained. In
addition, recent statutes opened the area to mining
development.
Senator Sharp next raised a question about use of federal
dollars versus general funds on the portion of the road to
be opened. Mr. Horn advised of a recent $5 million project
utilizing general funds. He said it was the first funded by
general funds since 1984/85. The road requires resurfacing
every three years. The $5 million was used to resurface
"Deadhorse south about 53 miles." By raising the grade and
narrowing the road to 32 feet, that portion of the road
"essentially blows itself clean now." In the past, it
required two people to control drifting during the winter.
A steady, cyclical CIP budget for the road will reduce the
cost of everyday maintenance. The road wears out in three
years and maintenance costs increase. Mr. Horn attested to
other points along the road where drifting is a problem.
Mr. Horn commented that the road to slightly north of Cold
Foot has been opened since 1983 with no major impact. The
forecasted impact on the environment and predicted
breakdowns and major accidents have not occurred.
Commercial facilities will locate along the highway as need
arises. Mr. Horn further attested to the fact that the
farther one ventures from civilization, the more individuals
help each other.
If ISTEA funds are not going to be used on the northern
portion of the Dalton, the department needs $100.0 a mile
every four years to maintain an adequate, safe surface.
That translates to approximately $5 million in general funds
annually. Senator Kelly asked what the state is currently
paying to maintain the northern portion of the Dalton. Mr.
Horn answered that prior to the 35% cut, last year, the
department spent approximately $7 million a year. The
reduction funded maintenance at $4.3 million. That was
inadequate, hence the $1.2 million supplemental and moneys
from the Commissioner's "non-routine emergency maintenance
fund." Since January, approximately half of the $2.5 cut
has been added back. That maintains the road and the
facilities needed to maintain the road. It does not include
maintenance of airports along the route.
COL. JOHN MURPHY, Director, Division of Alaska State
Troopers, Dept. of Public Safety, next came before
committee. Co-chair Frank voiced his understanding that the
Dept. of Public Safety could meet increased demand for fish
and wildlife and highway enforcement with the fiscal notes
that accompanied the bill. The Co-chair then said that he
did not totally agree with the level of the notes and asked
that Col. Murphy speak to increases in the trooper component
as well as fish and wildlife protection.
Col. Murphy explained that funding anticipates a full-time
trooper at seven mile and two troopers out of Fairbanks who
would travel the highway on a rotation basis. Troopers do
not currently conduct roving patrols along the Dalton, but a
supervisor travels it. DOTPF has housing at seven mile.
The department proposes to locate a trooper there as well.
End, SFC-93, #39, Side 2
Begin, SFC-93, #41, Side 1
With increased traffic, there would be need for a trooper on
the road twelve to sixteen hours a day. The department
bases projected need on past haul road experience with
commercial traffic.
Addressing fish and wildlife protection needs, Col. Murphy
advised that an enforcement officer would be based at Cold
Foot. Enforcement personnel is currently stationed there,
but the department intended to transfer the position this
summer. If the road is opened, resulting hunting and
fishing pressure would necessitate that the position remain
at Cold Foot. A part-time position would also be needed to
assist during the busy season, and an aircraft would be
required for search and rescue as problem situations arise.
First-year costs are substantial due to need for the
aircraft and other equipment (a snow machine and four, four-
wheel-drive vehicles). Costs drop dramatically the second
year.
Senator Sharp acknowledged the department's desire to reach
adequate staffing levels but questioned whether SB 82 is the
proper vehicle. He voiced his understanding that there are
presently no troopers on the road, and he took exception to
the proposal to go from "zero to four on the back of this
legislation." The Senator questioned whether opening of the
road would initially justify other than merely emergency
response capability. The Department of Fish and Game has
indicated no greater incidence of violation along the Dalton
than other locations statewide. In fact there may be less
because of the five-mile no hunting zones on either side of
the road which permit only bow and arrow hunting. Senator
Sharp suggested that the Department of Public Safety fiscal
note reflects "overkill" in terms of funding.
Senator Kelly asked if other highways in Alaska are
unpatrolled. Col. Murphy answered that the Elliott Highway
and some others are not patrolled "very often." The
troopers do not patrol those areas unless called, or they
patrol on a monthly cycle.
Col. Murphy added that the department is not enforcing
commercial vehicle regulations along the Dalton. If the
road is open to the public and more private vehicles travel
the Dalton, the department will need to work with commercial
truckers to ensure that their equipment is safe. There is
much more commercial traffic along the Dalton than on other
infrequently patrolled highways. Senator Kelly and Co-chair
Frank suggested that costs of commercial vehicle inspections
should be covered by program receipts. Senator Sharp noted
that the weigh station at Fox would be the proper site for
vehicle safety inspections.
Co-chair Frank acknowledged questions raised by Senator
Lincoln when the bill was before the Senate Transportation
Committee. He then directed attention to a packet of
information (March 17, 1993, memo from Rick Solie to Senator
Frank--copy on file in the SFC SB 82 file) which he
explained attempts to address those concerns.
RICK SOLIE, aide to Senator Frank, next came before
committee. He enumerated seven questions raised by Senator
Lincoln, read the brief response set forth in the memo, and
pointed to attached, in-depth backup materials.
Speaking to the oil industry's position on proposed opening
of the road, Mr. Solie voiced his understanding that as long
as the road is not opened "all the way to the Arctic Ocean,"
the position would be neutral. Language in the bill thus
speaks to "a terminus near the Arctic Ocean." Oil company
concern is that opening the road to the Ocean might
jeopardize operational security.
Mr. Solie next directed attention to correspondence from the
Department of Fish and Game (included within the packet)
indicating that there might be a positive impact from
opening the road "because some of the caribou herds actually
could use a little more harvest." It does not appear there
will be an adverse effect from additional hunting.
EDGAR BLATCHFORD, Commissioner, Department of Community and
Regional Affairs, next came before committee. Co-chairman
Frank voiced his understanding that the administration has
requested the Commissioner to negotiate a settlement between
the state and the Tanana Chiefs. The Commissioner explained
that, last summer, several commissioners and the Attorney
General met with representatives of TCC and the law firm
representing the North Slope Borough. The state immediately
dismissed the suggested creation of a federal/state
commission to regulate ingress and egress out of the North
Slope. Since that time, there have been additional
discussions with TCC. The Commissioner explained that
travel by both himself and TCC representatives to
Washington, D.C., was unproductive because senior officials
at the Bureau of Land Management were reluctant to recommend
any action until after the November election. Exchange of
correspondence with TCC is ongoing. The administration's
understanding is that TCC will try to bring the other
parties together, i.e. the North Slope Borough and villages,
etc. Discussion continued regarding "how we can open the
road."
DARSIE BECK, Alaska Environmental Lobby, next came before
committee. He voiced opposition to opening the highway,
advising that it would substantially impact wildlife and the
fragile eco-system of areas north of the Brooks Range.
Hunting pressures, both legal and illegal, will increase,
and off-road vehicular traffic will lead to serious erosion
problems. There will also be increasing pressure to build
new roads from the Dalton to distant points. The BLM's
ambitious recreation plan will attract additional traffic
and magnify negative impacts on the land and wildlife.
Mr. Beck noted the following intent accompanying legislation
that authorized construction of the Dalton Highway:
It is the sense of the legislature that the
construction of the highway will not impair
natural wilderness adjacent to the highway, will
not unreasonably interfere with subsistence
hunting, fishing, trapping, and gathering.
Opening of the highway to public use would violate that
intent.
Senator Rieger pointed to earlier-mentioned correspondence
from the Department of Fish and Game indicating that
increased harvest would be good for the long-term health of
the caribou herd. Mr. Beck disputed that statement.
Co-chairman Frank noted references by Mr. Beck to off-road
vehicular traffic. The Senator then voiced his
understanding that the Dalton has protection against off-
road use that no other state highway enjoys. The five-mile
corridor on each side of the highway is a substantial
prohibition. Co-chairman Frank voiced surprise that the
environmental community would object to "just letting people
drive a road."
Mr. Beck acknowledged statutory protection. He further
noted testimony that there is little or no enforcement along
the road. Co-chairman Frank concurred that there may be
violations by a small number of people. He voiced concern,
however, that the stand taken by the environmental lobby
indicates that "The people of Alaska won't follow the law."
Law enforcement in any state is based upon voluntary
compliance. Mr. Beck advised that the environmental
community is opposed to the opening on the philosophical
grounds that it "increases use of resources that don't need
to be used right now." The environmental community supports
tourism, but this appears to be irresponsible tourism.
Senator Rieger posed questions regarding penalties
associated with off-road violations along the road, and
suggested that if the fine is minor, perhaps the committee
should review the penalties. Co-chairman Frank predicted
that most tourists would either fly to the North Slope or
travel via tour bus. He then voiced his belief that it was
philosophically wrong for a portion of the road, constructed
with public funds, to be closed to the public.
CHIP THOMA next came before committee, advising of his
experience as a truck driver on the Dalton during the
winters of 1974, 75, and 76. He said that wind-driven
drifts and white-out conditions prevail much of the time.
He voiced his belief that the state should not have agreed
to take over the road. It should have remained a private
road maintained by the oil companies.
Mr. Thoma suggested that opening the road would provide "a
whole new moose highway" for residents of Fairbanks. He
then voiced support for efforts by the Tanana Chiefs and
North Slope Borough to close the road.
Co-chairman Frank took exception to Mr. Thoma's comment that
the purpose of the proposed bill was to expand access for
Fairbanks moose hunters. He reiterated that the impetus
behind the bill is philosophical: A public road maintained
with public dollars should be opened to the public. There
is no policy reason for keeping the Dalton closed "half way
up." No overriding problems have arisen as a result of
having it open as far as it is now. The people of Alaska
should have the opportunity to drive a road that was paid
for and is maintained by public dollars. The Co-chairman
further advised that he had worked with the departments of
Fish and Game, Public Safety, and Transportation and Public
Facilities to address legitimate concerns.
Mr. Thoma said that he was not asserting that ulterior
motives were involved. He stressed that from October 1 to
April 1 there is no tourist value to the road. The issue of
concern is safety. The reason for the road is to drive
goods and services to Prudhoe Bay. Co-chairman Frank
commented that departments charged with responsibility along
the road do not feel there is undue risk. The commissioner
has authority to close the road if conditions are unsafe.
The Department of Transportation and Public Facilities has
general authority to open and close any road for safety
reasons.
KEITH GERKEN, Deputy Commissioner, Department of
Transportation and Public Facilities, again came before
committee. He concurred in comments by the Co-chairman
regarding authority to open and close roads. The department
has, in the past, issued notices of closure to commercial
traffic. In response to a question from Senator Kelly
regarding inclusion of specific language to that effect
within the bill, Co-chairman Frank said that he did not want
the legislature to arbitrarily set times for openings and
closing.
The Co-chairman announced that SB 82 would be HELD in
committee for additional work on the fiscal notes.
Discussion followed between Senator Kelly and Co-chairman
Frank regarding the approach to fiscal note work. The Co-
chairman advised that he did not intend to zero the notes.
SENATE BILL NO. 84
An Act relating to fees for identification cards
and certain motor vehicle licenses and permits; to
licenses issued to drivers and to revocation of a
license to drive; and providing for an effective
date.
Co-chairman Frank directed that SB 84 be brought on for
discussion.
Senator Kelly acknowledged a problem with the $215.7 fiscal
note from the Department of Public Safety but noted
projected revenue of $815.0, resulting in a net gain to the
state.
JOSH FINK, aide to Senator Kelly, came before committee. He
explained that similar legislation passed the House last
session. It is supported by the Dept. of Public Safety,
Dept. of Health and Social Services, the health and human
services commission of the Municipality of Anchorage,
Mothers Against Drunk Driving, Bristol Bay Area Health
Corporation, and the Alcoholic Beverage Control Board.
The bill is intended to have a preventative and deterrent
impact on use of fraudulent licenses for the purchase of
alcohol by minors. A hologram would be placed on licenses
to prevent tampering. The phrase "under twenty-one" would
be inscribed across the face of licenses for minors to make
it easier for alcohol providers to identify those who are
underage. Those who are caught using fraudulent
identification to purchase alcohol would be subject to
revocation of driving privileges for 60 days.
JUANITA HENSLEY, Chief, Driver Services, Dept. of Public
Safety, next came before committee. She voiced support for
the bill as well as "anything that we can do to save lives
and prevent alcohol deaths."
Directing attention to the department fiscal note, Co-
chairman Frank asked why three additional people would be
needed to administer the program. Mrs. Hensley explained
that the department estimates an additional 1,500 license
revocations a year. One bar in Anchorage annually
confiscates approximately 400 licenses from minors
attempting to purchase alcohol. The department estimate is
extremely conservative. There is no way of knowing how many
licenses will actually be involved. Approximately 500 to
700 per year are turned over to the ABC Board and
subsequently forwarded to the department.
Senator Kelly suggested that licenses for minors bearing a
hologram and the above noted inscription would reduce the
number of young people attempting to enter bars or purchase
alcohol. Mrs. Hensley explained that young people will
sometimes use the birth certificate of an older brother or
sister to obtain a fraudulent duplicate license. A license
inscription identifying a minor as being "under twenty-one"
is not going to stop that behavior.
Last year's budget contained funding for technical upgrades
within the department. That funding will purchase an
imaging system for the Anchorage field office. This pilot
project for driver license photos will allow the department
to retrieve the photo of the driver for comparison with the
applicant.
In response to a question from Senator Rieger, Mrs. Hensley
concurred that while there was no problem with the proposed
bill, it would not close some already identified loopholes.
End, SFC-93, #41, Side 1
Begin, SFC-93, #41, Side 2
Discussion followed between Co-chairman Frank and Mrs.
Hensley regarding existing penalties associated with use of
false identification. The normal penalty is ten days with
ten days suspended and a $100 fine. Unless the false
identification is used to defraud someone of money, the
lesser misdemeanor violation rather than felony forgery is
most often utilized because prosecutors simply do not have
the time to pursue a felony conviction.
Co-chairman Frank asked if the three positions requested by
the department relate to revocation hearings. Mrs. Hensley
answered that one would be an administrative hearing
officer. The request is based on the fact that 25% of those
arrested for DWI request an administrative hearing. The
other two are entry-level document processor II positions to
process the other 75% of the paper work, etc.
Further discussion followed between the Co-chairman and Mrs.
Hensley regarding issues in dispute when an administrative
hearing is requested. Mrs. Hensley noted:
1. Did the individual obtain false identification?
2. Was false identification used to purchase alcohol?
3. Should the license be revoked?
Additional discussion followed concerning processes involved
in conducting administrative hearings. The proposed bill
specifies that the hearing will be held telephonically. The
hearing officer will be based in Anchorage. The department
would like to see this provision applied to DWI law as well.
Co-chairman Frank concurred in that approach.
Senator Kelly suggested that forfeiture of an individual's
permanent fund dividend be added as a penalty in addition to
the proposed 60-day revocation of license under the proposed
bill.
Mrs. Hensley noted that the cost of a duplicate driver's
license is presently $3. The proposed bill increases it to
$5. From the department's standpoint, it takes more time to
issue a duplicate license than to renew a license. If the
fee was raised to $10, it would generate an additional
$312.0.
Senator Rieger inquired regarding the revenue fund source
set forth on the department fiscal note. Mrs. Hensley
explained that reinstatement fees contribute to the program
receipts. Further discussion of incoming program receipts
followed.
Senator Kelly requested that staff prepare an amendment
requiring that someone caught using false identification to
purchase alcohol would forfeit his or her permanent fund
check.
Mrs. Hensley noted that the number of licenses suspended or
revoked each year is extremely high. Approximately 5,700
are suspended for DWI, 8,300 for court revocation, 6,200 for
accident involvement with no insurance, and 400 to 600 for
fraudulent driver licenses.
Co-chairman Frank next inquired concerning Court System and
Dept. of Correction costs associated with the proposed bill.
Senator Kelly suggested that only a small percentage would
continue to drive once the license was revoked. Mrs.
Hensley noted that a driver's license is extremely important
to minors. It is hoped that the threat of revocation will
prevent them from using false identification. While the
potential is there for them to continue to drive following
revocation, studies indicate that they drive more carefully
for fear of getting caught.
In the course of discussion relating to charges for driving
licenses and duplicate licenses, Mrs. Hensley advised that
the proposed hologram would add approximately $0.25 to the
cost of the license. Senator Kelly noted that the fee
charged for an Alaska driver's license is much less than
that paid in other states. Mrs. Hensley noted that the fee
in Alaska equates to $2 a year ($10 for a five year period).
She referenced a list of states and the fees charged
thereby, and concurred that Alaska's is among the lowest in
the nation. Costs range from $1.75 to $6.25 per year.
Co-chairman Frank asked if the department had considered
increasing the five-year license period to relieve the
workload on the department. Mrs. Hensley said that the
department had looked at renewal by mail. Problems
associated with a longer term, ten-year, license are age,
changes in vision, health, etc.
Senator Rieger suggested that two-year vehicle registration
rather than the current annual renewal would save costs.
Co-chairman Frank concurred, advising that exploration of
that possibility ran into difficulty in terms of vehicle
emission testing in Anchorage and Fairbanks. Mrs. Hensley
acknowledged that the department presently has authority for
registration every two years. It has encountered problems
with both ion testing and yearly property taxes the
department collects on behalf of some municipalities.
Co-chairman Frank directed that the bill be HELD in
committee while cost features of the fiscal note and
possible amendments are reviewed.
SENATE BILL NO. 97
An Act relating to enhanced 911 emergency
reporting systems; and providing for an effective
date.
Co-chairman Frank directed that SB 97 be brought on for
discussion.
KEN ERICKSON, aide to Senator Pearce, came before committee.
He directed attention to a work draft committee substitute
for the bill (8-LS0293\O, Cramer, 3/16/93), and explained
that it would allow emergency dispatchers to better assist
people who call 911. Victims of crime, the young, and the
elderly are often unable to give adequate directions when
they dial the emergency number. If enacted, SB 97 would
create a mechanism to fund enhanced 911 reporting systems.
The bill is permissive. Enhanced systems provide an
expansion of benefits of existing 911 services. New
benefits include:
1. Immediate visual display of the location and
telephone number of the caller.
2. Automatic routing to the appropriate emergency
response unit.
3. Faster response time.
4. Curtailment of abuses of the emergency system by
documentation of callers.
The legislation provides immunity from liability (except for
intentional acts of misconduct or gross negligence) to
municipalities and suppliers of 911 services. For the
purposes of a dispatcher furnishing name and address
information to emergency response units, the bill waives
telephone customer privacy rights afforded by an unlisted
number.
The difference between the proposed draft and the Senate
Labor and Commerce version rests in removal of section two
which exempted from public record, transcriptions and
recordings of 911 phone calls. Emergency systems currently
work well without that extra protection. There is thus no
reason to change the status quo. The section was originally
requested by the Anchorage telephone utility. The utility
has since decided the section is unnecessary.
Senator Rieger inquired regarding what kind of information
might be divulged as a result of removal of section two.
Senator Kelly noted that 911 information has been public up
until this time.
Senator Kelly MOVED for adoption of the draft committee
substitute dated 3-16-93. No objection having been raised,
CSSB 97 (Finance) was ADOPTED. Senator Kelly subsequently
MOVED that CSSB 97 (Finance) pass from committee with
individual recommendations and the accompanying zero fiscal
note from the Dept. of Commerce and Economic Development.
No objection having been raised, IT WAS SO ORDERED. All
members signing the committee report (Co-chairs Frank and
Pearce and Senators Kelly, Rieger, and Sharp) signed "do
pass."
ADJOURNMENT
The meeting was adjourned at approximately 11:55 a.m.
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