Legislature(1995 - 1996)
04/02/1996 01:43 PM Senate TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE TRANSPORTATION
April 2, 1996
1:43 p.m.
MEMBERS PRESENT
Senator Steve Rieger, Chairman
Senator Robin Taylor, Vice Chair
Senator Lyda Green
Senator Al Adams
Senator Georgianna Lincoln
MEMBERS ABSENT
All members present.
OTHERS MEMBERS PRESENT
Senator Drue Pearce
COMMITTEE CALENDAR
HOUSE BILL NO. 498
"An Act naming the Betty Cato Bridge in Valdez."
SENATE BILL NO. 313
"An Act relating to the international airports in Anchorage and
Fairbanks and establishing the Alaska International Airport
Authority; and providing for an effective date."
PREVIOUS SENATE ACTION
HB 498 - No previous action to record.
SB 313 - No previous action to record.
WITNESS REGISTER
Joe Perkins, Commissioner
Department of Transportation & Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
POSITION STATEMENT: Stated that the current method of operation at
both international airports did not require
revision.
Mort Plum, Director
Anchorage International Airport
Department of Transportation & Public Facilities
PO Box 196960
Anchorage, Alaska 99519-6960
POSITION STATEMENT: Reviewed the operations of the Anchorage
International Airport.
John Ungar, Controller
Alaska International Airport System
PO Box 196960
Anchorage, Alaska 99519-6960
POSITION STATEMENT: Answered questions.
Steve Smirnoff, Special Assistant
Mayor Rick Mystrom
PO Box 196650
Anchorage, Alaska 99519-6650
POSITION STATEMENT: Discussed the findings and recommendations of
Mayor Mystrom's Task Force.
Doyle Ruff, Manager
Fairbanks International Airport
PO Box 60369
Fairbanks, Alaska 99706-0369
POSITION STATEMENT: Reviewed the Fairbanks International Airport.
Don Valesko, Business Manager/Secretary-Treasurer
Public Employees Local 71
9510 Arctic Boulevard
Anchorage, Alaska 99503
POSITION STATEMENT: Expressed many concerns with SB 313.
Ronald Rathbun, Sr.
6905 Cape Lisburne
Anchorage, Alaska 99504
POSITION STATEMENT: Urged the committee to vote against SB 313.
Brian Bell
?????????
Anchorage, Alaska
POSITION STATEMENT: Encouraged the airport authority concept and
the hiring of a professional airport manager.
Craig Pearson, Airport Public Safety Officer
Fairbanks International Airport
Fairbanks, Alaska
POSITION STATEMENT: Opposed SB 313.
Don Shannon
232 Bentley
Fairbanks, Alaska 99701
POSITION STATEMENT: Opposed SB 313.
Barbara Young
PO Box 772442
Eagle River, Alaska
POSITION STATEMENT: Urged the committee not to pass SB 313 out of
committee.
Jim Sampson, Mayor
Fairbanks Northstar Borough
1000 Bennett Road
Fairbanks, Alaska
POSITION STATEMENT: Opposed SB 313.
Martin Spinde, State Airport Employee & Tenant
2902 Kingfisher Drive
Anchorage, Alaska 99511
POSITION STATEMENT: Urged the committee not to pass SB 313.
Don Davis
2265 Weasel Way
North Pole, Alaska 99705
POSITION STATEMENT: Opposed SB 313.
ACTION NARRATIVE
TAPE 96-10, SIDE A
HB 498 BETTY CATO BRIDGE IN VALDEZ
CHAIRMAN RIEGER called the Senate Transportation meeting to order
at 1:43 p.m. and introduced HB 498 as the first order of business
before the committee.
SENATOR LINCOLN informed the committee that Representative Kubina
was not present today and asked her to carry HB 498 for him.
HB 498 names a bridge in Valdez. There is a zero fiscal note. She
also pointed out that the city of Valdez has endorsed the naming of
the Betty Cato Bridge which is the bridge over the mineral creek on
West Egan Drive. Senator Lincoln moved that HB 498 be moved out of
committee with individual recommendations and the accompanying zero
fiscal note.
CHAIRMAN RIEGER asked if anyone present wanted to testify on
HB 498. Hearing no one, he asked if there was any objection to
moving the bill from committee.
Hearing no objection, HB 498 was forwarded out of committee.
SB 313 ALASKA INTERNATIONAL AIRPORT AUTHORITY
Number 029
CHAIRMAN RIEGER introduced SB 313 as the next order of business
before the committee.
JOE PERKINS, Commissioner in the Department of Transportation &
Public Facilities, stated that the Fairbanks and Anchorage
International Airports should be operated in a businesslike manner
with the best interest of the residents of Alaska in mind. Two-
thirds of Alaska's residents utilize Alaska's airport systems.
Commissioner Perkins believed that the department should not fix
something that is not broken. The department does not believe that
the current method used to operate both international airports
requires revision. Commissioner Perkins said that creating an
authority would create another level of bureaucracy. Furthermore,
the creation of an authority would create a period of turmoil and
confusion which cannot be afforded in this competitive environment.
In Commissioner Perkins' opinion, this administration has
dramatically improved the operations in these international
airports and will continue to do so. Commissioner Perkins informed
the committee that Mr. Plum was present in Juneau to briefly review
the status of the airport operations.
Number 093
MORT PLUM, Director of the Anchorage International Airport (AIA),
informed the committee that he would present a brief overview of
where Anchorage International Airport is and intends to head in the
future. Mr. Plum informed the committee that more than 85 percent
of the people that come to Alaska pass through AIA. Mr. Plum
reviewed the "Anchorage International Airport success in changing
times" document dated April, 1996 which was submitted to the
committee. He emphasized that one of the aspects of the mission of
AIA is to manage, operate and market the airport in a businesslike
manner. Cargo is one of the highlights of AIA. He discussed AIA
as a major economic engine for the state. AIA is poised for
expansion. Mr. Plum noted that the Master Plan for AIA reviews how
today's decisions will effect the airport in the future. The
Master Plan has concourse C slated for terminal expansion, some of
the runways scheduled to be lengthened, negotiations for the
construction of air cargo facilities, and continues the water
clean-up around Mt. Hood. Mr. Plum stated that as long as he was
director AIA would play a key role in Alaska's growth.
Number 282
CHAIRMAN RIEGER inquired as to the revenue from concessions,
especially from the duty free shop, and how that revenue compared
to the revenue generated from landing fees or other revenues. MORT
PLUM did not have those figures, but noted that Mr. Ungar was on
teleconference. Mr. Plum believed that revenues amounted to about
$7 million last year.
JOHN UNGAR, Controller for the Alaska International Airport System,
informed the committee that the concessions fees totalled $5.9
million last year and $1.2 of those were from the duty free shop.
Landing fees generated about $13.6 million in revenue.
CHAIRMAN RIEGER asked if the passenger facilities charge needed
legislative approval or could that be done administratively. MORT
PLUM said that the consultant is determining that.
SENATOR PEARCE informed the committee that she did not intend to
testify today. She noted that SB 313 was introduced at the request
of the work group that Mayor Mystrom put together. Senator Pearce
believed that Joe Griffith and/or Steve Smirnoff was on-line to
speak for the work group.
JOE GRIFFITH deferred to Steve Smirnoff.
STEVE SMIRNOFF, Special Assistant to Anchorage Mayor Rick Mystrom,
informed the committee that a scheduling conflict prevented Mayor
Mystrom from being before the committee. Mr. Smirnoff thanked
Senator Pearce for introducing SB 313. The formation of the Alaska
International Airport Authority (AIAA) is a much needed step to
establish an airport system that will be operated as a business as
well as removing the political process. Mr. Smirnoff emphasized
that the support for formation of the AIAA does not reflect on the
professionalism of the current or past airport administration. The
goal is to establish long-term stability. The AIA has enormous
potential as a cargo hub and facility. Mr. Smirnoff noted those
competitors that are waiting in the wings. The AIAA would provide
a stable, businesslike environment for major investment. In
conclusion, Mr. Smirnoff thanked Mr. Griffith for his contributions
to this issue.
SENATOR ADAMS stated that Mr. Smirnoff's argument regarding
stability and economic friendliness was not very convincing; the
State of Alaska has that. He pointed out that the Municipality of
Anchorage has a hard time taking care of its highways and roads.
He questioned whether or not the municipality or an authority could
take care of the airports. Senator Adams expressed concern with
creating another bureaucracy; the state lacks control in such
circumstances such as the Alaska Railroad or the Commercial Fishing
& Agriculture Bank (CFAB). He questioned the effect this might
have on the funding for rural airports. Furthermore, there is no
oversight or accountability from the legislature or the Governor as
the bill is currently written.
Number 373
JOE GRIFFITH, Chairman of Mayor Mystrom's Task Force, noted that
Mayor Mystrom is looking for the management of the airport in a
businesslike manner for the benefit of all its clients. Mr.
Griffith informed the committee that he is CFO for Chugach Electric
and Vice-Chair of the Chamber of Commerce which is why he was
chosen to Chair the task force. The charge of the task force was
to objectively evaluate the current AIA's structure in order to
identify any areas needing change, discuss alternatives, and make
recommendations to state and local officials. The task force
recognized that Anchorage could not deal with this issue alone and
therefore, people from Fairbanks were included in the eight months
of study and review.
Mr. Griffith said that the task force found airport management to
be inconsistent due to the frequent politically motivated changes
in airport management. These frequent changes created a lack of
organizational stability. Furthermore, airport management
decisions were found to be politically influenced and not
necessarily reflecting the best courses of action to maximize the
airport's economic potential and satisfaction of the customers. In
many cases, the task force found no clear line of authority or
responsibility as several state agencies have management or support
responsibilities for certain aspects of the airport functions.
Overall, the system was not operated in a businesslike fashion
because it is placed in a state bureaucratic system which is not
designed to operate in a business environment.
The task force recommended the following:
*The creation of a single airport authority to operate the
Fairbanks and Anchorage airports and to take the appropriate
implementation steps.
*The commissioner of DOTPF should be consulted with and made
an integral part of the considerations leading to the creation
of the authority.
*Labor organizations should be briefed on the results of the
task force and the future activities that lead to a change to
organization or management.
*The development of the implementation legislation should be
closely monitored to ensure that the recommendations of the
task force are accurately presented in the legislation.
*The success of the process should be recognized and be
continued in a manner to provide an open and meaningful forum
for discussion of the airport and related issues during the
transition to another form of organization.
Mr. Griffith informed the committee that the task force had not
taken a formal position on the proposed legislation, although, it
is welcomed and being reviewed.
Number 242
SENATOR LINCOLN said that the fiscal note indicates that the board
of directors will consist of seven members. The fiscal note also
indicates travel between Anchorage and Fairbanks. Senator Lincoln
assumed that the board would be comprised of persons from Fairbanks
and Anchorage. JOE GRIFFITH explained that the legislation had two
members from the Municipality of Anchorage, two members from the
Fairbanks Northstar Borough, three other members of which at least
two are residents of Alaska. The three members must also meet
certain requirements. Mr. Griffith stated that there would be
travel between Fairbanks and Anchorage.
SENATOR LINCOLN asked Mr. Griffith if he planned to have someone
from rural or bush Alaska serve on this commission or board. JOE
GRIFFITH indicated that the legislators who crafted this bill could
possibly speak to that question. As currently written, SB 313 does
not exclude those in the bush, but the bill does not specifically
place a bush member on the board.
SENATOR PEARCE referred to page 2, line 24 of SB 313 which says
that two of the three remaining members would have to be residents
of the state. The Governor would have the ability to name those
two members from other areas besides Anchorage or Fairbanks.
CHAIRMAN RIEGER asked Mr. Griffith if he had any specifics
regarding the task force's findings relating to airport management.
JOE GRIFFITH identified the appointment of management in a
political process which changed with the political climate as the
biggest criticism.
CHAIRMAN RIEGER asked if Mr. Griffith's reference to the political
climate referred to the change of governor, from administration to
administration. JOE GRIFFITH replied yes and noted that the
management was politically appointed. Mr. Griffith believed that
the airport manager had changed more often than the governor had.
Number 471
DOYLE RUFF, Manager of the Fairbanks International Airport (FIA),
informed the committee that he has been a member of the American
Association of Airport Executives as well as an Airport Counselor
in Anchorage for over 13 years. He said that being involved in
these groups has helped with the stability of the airport
management in Fairbanks. Mr. Ruff reviewed the "Fairbanks
International Airport" document dated April, 1996 which was
submitted to the committee. He emphasized that in total
international cargo tonnage, Anchorage ranks second in the nation
and Fairbanks ranks tenth. Mr. Ruff pointed out that FIA
experienced growth in the following areas: international cargo
weight, all-cargo weight, total passengers, and total operations.
FIA is also a major economic engine for Alaska.
TAPE 96-10, SIDE B
Number 591
Mr. Ruff echoed Mr. Plum's comments regarding the presence of
competition, especially from Russia. He emphasized the need to
keep the business in Alaska and the United States. The Master Plan
identifies the following areas of growth: international cargo,
domestic passenger and cargo traffic.
DON VALESKO, Business Manager/Secretary-Treasurer of the Public
Employee's Local 71, informed the committee that approximately 200
members of the Local 71 work at these two airports. Mr. Valesko
said that he represented the people that take care of the
buildings, the runways, operate the equipment, etc. Mr. Valesko
gave a history of the port authority and that concept with regards
to AIA and FIA. Historically in Anchorage, there has been
opposition to operating the airport as a port authority.
Number 533
Mr. Valesko expressed concern with a report, by a group coordinated
through Mayor Mystrom and Mayor Sampson's offices, advocating a
port authority. The report addressed the needs of the vendors, not
the needs of the users or Alaskans. Mr. Valesko emphasized that
bush Alaska depends on the Anchorage and Fairbanks airports as a
vital transportation and supply link. An authority combining the
two airports may not consider the needs of those in the bush. As
drafted, SB 313 takes the employees out from existing law with the
"may" language. Under SB 313, are these employees public or
private employees? Mr. Valesko informed the committee that the
membership of the Local 71 have expressed concerned with SB 313.
As a citizen of Alaska, Mr. Valesko was concerned with the
additional cost of creating an authority when the state is said to
be in the midst of a fiscal gap. He pointed out that the salaries
of commissioners are set in statute and are around $80,000; while
the groups created by the government such as the Alaska Housing
Finance Corporation, the Alaska Railroad Corporation, and the
Alaska Permanent Fund Corporation receive a salary at almost twice
that of commissioners. Creating an authority would necessitate
spending more. With regards to the previous testimony that labor
would be briefed, Mr. Valesko said that there had been one meeting
on March 11th. That meeting informed Mr. Valesko and other labor
organizations present that there would be further dialogue
regarding an authority and that legislation may be introduced next
year. The next week, the legislation was introduced. Mr. Valesko
indicated bad faith. With regards to the management of FIA and
AIA, the management is local. Mr. Valesko disagreed with the idea
that the local communities were not receiving representation in the
airports.
CHAIRMAN RIEGER announced that nine people remain to testify.
Therefore, he requested that testimony be limited to about four
minutes.
Number 456
RONALD RATHBUN SR., testifying from Anchorage, believed SB 313 to
be bad legislation. He echoed the previous statement regarding how
unnecessary it is to fix something that is not broken. Section 1
is incorrect. FIA is in the process of negotiating long-term
contracts which proves that the current system works. Mr. Rathbun
said that the airport has been controlled by politics. He referred
to Section 22, lines 3-4 when saying that the airport authority is
being granted statehood. Mr. Rathbun discussed the economic and
political impact of displacing airport employees under this
authority. Mr. Rathbun urged the committee to vote no on SB 313.
BRIAN BELL, called in from Anchorage, informed the committee that
he had worked for Federal Express for 14 years and previous to that
had worked for Alaska Airlines, Mark Air, and Wings. Mr. Bell
holds a BS degree in Air Transportation Management as well as a
Masters degree in Aeronautical Science. Mr. Bell stated that Fed-
Ex favored an airport authority, not a port authority. Fed-Ex is
also not in support of the city running the airport.
With regard to airport morale, Mr. Bell explained that a major
change with the airport director creates dissatisfaction and
difficulty in doing business when management constantly changes.
Mr. Bell was astonished that the state would appoint a person to
run a multi-million dollar airport. He emphasized the need for a
professional airport manager to be hired. There are huge
possibilities with distribution warehousing, catalog services,
heavy aircraft maintenance and others which would increase
employment opportunities. He reiterated that changing the manager
every three or four years does not make sense. There is no problem
with labor being present as they are currently contracted. Mr.
Bell viewed the authority as generating revenue and employment. He
did not believe that Anchorage and Fairbanks should compete against
each other. Mr. Bell encouraged the airport authority concept and
reiterated the need to hire professional airport managers.
Number 333
CRAIG PEARSON, Public Safety Officer at FIA, informed the committee
that he represented 79 public safety officers at both AIA and FIA
who opposed SB 313. There is no fiscal note to SB 313, but he
believed that there would be more administrative positions created
which would increase costs. Mr. Pearson said that Mr. Bell had a
good comment regarding the need to hire professional managers.
Currently, the managers are professional but Mr. Pearson did
believe that there have been times when the management has not been
professional. He said that there are statutorial solutions. With
regards to the competition between the two airports, Mr. Pearson
believed that was good. The competition is limited and seems to be
working well.
Mr. Pearson expressed concern with continuing to support the rural
state airports. He informed the committee that the public safety
officers train the rural airports in firefighting and operations.
The system has worked well so far. Under an authority, there is no
public accountability to where the money goes. Mr. Pearson was not
opposed to changing the system for economic development, although
that economic development seems to be occurring now. Mr. Pearson
said that they were opposed to the creation of another level of
bureaucracy.
Number 282
DON SHANNON, testifying from Fairbanks, opposed SB 313. The
airport system works well now. Both airports have experienced
steady growth in the past five years. The Fairbanks airport has
exceptional management. He echoed the sentiments regarding not
fixing something that is not broken.
CHAIRMAN RIEGER asked Mr. Clarence Bolden to testify next. The
teleconference moderator informed the committee that Mr. Bolden had
to leave. Mr. Bolden left written testimony which the
teleconference moderator said would be faxed to the committee.
BARBARA YOUNG, testifying from Anchorage, explained that AIA
currently generates revenue for the state which is placed in the
general fund of the state in order to help other airports in the
state. How would this revenue source be replaced if the state no
longer has this income? Ms. Young expressed concern with the state
employees at the airport; SB 313 does not address how the state
will negotiate with the unions that represent these employees. Ms.
Young urged the committee not to pass SB 313 out of committee.
JIM SAMPSON, Mayor of the Fairbanks Northstar Borough, explained
that 12 or 15 months ago Mayor Mystrom of Anchorage invited him to
participate in discussions regarding AIA. Over that time, Mayor
Mystrom's task force had reviewed a number of alternatives and
ultimately recommended an airport authority. Mayor Mystrom
understood the importance of FIA to Fairbanks as is AIA to
Anchorage. Mayor Sampson said that he had not had the opportunity
to read SB 313 in its entirety; however Mayor Sampson did not share
Mayor Mystrom's frustration. He was satisfied with FIA, its
structural organization, and its management. Mayor Sampson noted
that Fairbanks has historically opposed efforts to combine FIA and
AIA. Mayor Sampson opposed the legislation. He said that
Fairbanks would help Anchorage in any way possible that did not
negatively effect Fairbanks. Mayor Sampson believed that this time
could be better spent addressing the airport leasing problems that
concern Fairbanks.
Number 183
MARTIN SPINDE, a State Airport Employee & Tenant, believed that
DOTPF was operating the airport effectively. DOTPF has established
a balance between economic development and providing for the
general aviation needs for Alaska. He was concerned that with the
establishment of an airport authority, a corporate entity would
sacrifice general aviation in the name of corporate business
development. Mr. Spinde said that there should be a balance
between a business and service style of management which DOTPF
recognizes. He expressed concern that Anchorage had uncovered
another revenue source and proceeded without much public input. He
did not believe that replacing DOTPF with a corporate authority
would remove political influence from the decision-making processes
at FIA and AIA. The airport authority would minimize the power of
the Alaska Legislature and Alaskan voters who have rejected the
idea of an airport authority in the past. Mr. Spinde urged the
committee not to pass SB 313 out of committee.
DON DAVIS, testifying from Fairbanks, opposed SB 313. Mr. Davis
believed that FIA and AIA are both doing well and the future looks
promising. SB 313 appears to form a heavy bureaucracy that places
more groups trying to get a piece of the pie. He indicated that
corruption could be a problem. Mr. Davis felt that having board
members appointed by the Governor would increase the political
influence in the airport. Mr. Davis noted that those wanting
change would be receiving something very different than they
wished.
CHAIRMAN RIEGER asked if anyone else in the audience wanted to
testify. Hearing no one, the meeting was adjourned at 3:10 p.m.
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