Legislature(1995 - 1996)

04/02/1996 01:43 PM Senate TRA

Audio Topic
* first hearing in first committee of referral
+ 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              
 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            
 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           
 CHAIRMAN RIEGER announced that nine people remain to testify.                 
 Therefore, he requested that testimony be limited to about four               
 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               
 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                  
 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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