Legislature(1993 - 1994)
03/30/1993 03:36 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 COMMITTEE
March 30, 1993
3:36 p.m.
MEMBERS PRESENT
Senator Bert Sharp, Chairman
Senator Randy Phillips, Vice Chairman
Senator Tim Kelly
Senator Georgianna Lincoln
Senator Jay Kerttula
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 148
"An Act relating to the Alaska Railroad Corporation; and
providing for an effective date."
SB 157 (PROHIBITED HIGHWAY ADVERTISING) WAS SCHEDULED, BUT
NOT HEARD THIS DATE.
PREVIOUS SENATE COMMITTEE ACTION
SB 148 - See Transportation minutes dated 3/11/93, 3/23/93.
SB 157 - See Transportation minutes dated 3/23/93.
WITNESS REGISTER
John Kelsey
Valdez, AK
POSITION STATEMENT: Has concerns with SB 148
Phyliss Johnson, General Counsel
Alaska Railroad Corporation
P.O. Box 107500
Anchorage, AK 99510-7500
POSITION STATEMENT: Outlined concerns with SB 148
George Utermohle, Legal Counsel
Division of Legal Services
Legislative Affairs Agency
130 Seward St.
Juneau, AK 99801
POSITION STATEMENT: Offered information on SB 148
Senator Steve Frank, Co-chair
Senate Finance Committee
State Capitol
Juneau, AK 99801
POSITION STATEMENT: Offered information on SB 148
Dave Skidmore, Staff to Senator Frank
State Capitol
Juneau, AK
POSITION STATEMENT: Offered information on SB 148
Leon Van Wyhe
Alaska Resource Conservation Center
Box 10087
Fairbanks, AK 99710
POSITION STATEMENT: Opposed to SB 148
Jack Burton, President
Alaska Federation of Government Employees
Moose Pass, AK
POSITION STATEMENT: Opposed to SB 148
Wayne Carpenter, Executive Director
Seward Chamber of Commerce
P.O. Box 749
Seward, AK 99664
POSITION STATEMENT: Opposed to SB 148
Frank Chapados, Member of the Board of Directors
Alaska Railroad Corporation
Box 74825
Fairbanks, AK 99707
POSITION STATEMENT: Opposed to SB 148
Cathy Shultz
Fairbanks Hotel & Motel Association
Box 2107
Fairbanks, AK 99707
POSITION STATEMENT: Supports SB 148
Pat Pourchot, Executive Director
Alaska Commonwealth North
935 W. 3rd
Anchorage, AK 99501
POSITION STATEMENT: Opposed to SB 148
Hank Warren
P.O. Box 770848
Eagle River, AK 99577
POSITION STATEMENT: Opposed to SB 148
Bonnie Bailey
Chugiak-Eagle River Chamber of Commerce
P.O. Box 770353
Eagle River, AK 99577
POSITION STATEMENT: Read resolution opposing SB 148
Joe Fields
Box 71047
Fairbanks, AK 99707
POSITION STATEMENT: Opposed to SB 148
ACTION NARRATIVE
TAPE 93-17, SIDE A
Number 001
CHAIRMAN SHARP called the Senate Transportation Committee to
order at 3:55 p.m. He opened the public hearing on SB 148
(ALASKA RAILROAD CORPORATION) stating that there were
several witnesses waiting to testify over the teleconference
network.
JOHN KELSEY, a Valdez businessman testifying from Valdez,
said that in 1982 he was appointed to Alaska Railroad
Transfer Advisory Commission. Many of the provisions of SB
148 were discussed in great detail by that commission, and
it was generally the consensus of the membership that by
placing too many restrictions upon the Alaska Railroad
Corporation would affect the economic well-being of that
entity.
Mr. Kelsey said the advisory commission was directed by
legislation to attempt to find another railroad corporation
to purchase the Alaska Railroad, but they were unable to
find a buyer. In informal conversations with potential
bidders, concerns were evidenced about the possibility of
the state placing restrictions, by virtue of sale
provisions, that would adversely affect the operation.
Mr. Kelsey believes that many of the provisions of SB 148
might very well have the effect of inhibiting profit to the
Alaska Railroad Corporation. He recommended caution in
placing restrictions upon the Alaska Railroad as it is
presently structured.
Number 075
CHAIRMAN SHARP asked if committee members had any comments
on a proposed committee substitute that had been drafted as
the result of a Saturday work session on the legislation.
SENATOR KELLY stated that he did not think the committee
substitute, as drafted, came out like was agreed to at that
work session. He noted there had been a consensus that the
current board should be held harmless, and he wasn't sure
that the committee substitute addressed that adequately.
Number 121
PHYLLIS JOHNSON, General Counsel, Alaska Railroad
Corporation, expressed the railroad's appreciation for the
opportunity to participate in the work session on SB 148 and
to identify several areas of concern. Some of their
concerns have been addressed in the committee substitute,
however, there are several areas where it doesn't track or
completely reflect their understanding of the concerns that
were discussed and the consensus reached in that work
session.
Ms. Johnson outlined the following significant concerns that
the railroad corporation has with the committee substitute:
use of language regarding railroad and railroad related
transportation services; debt limit language; municipal
taxation issue; Open Meetings Act consideration and
teleconferencing; and composition of the board.
Ms. Johnson pointed out that other state entities such as
the Alaska Housing Finance Corporation, the University of
Alaska and the Alaska Power Authority do not require their
executive directors to file conflict of interest statements,
and they question why the railroad is being treated a little
differently.
Number 252
There was extensive discussion between the committee members
and George Utermohle, Legislative Legal Counsel on the $10
million debt limitation language and just what the consensus
of the committee was on that language.
The discussion centered around inserting the following
exception language to paragraph (3) on page 8, line 2:
"debt incurred for the acquisition and maintenance of
railroad rolling stock, locomotives, construction and
maintenance equipment, track structure, and other railroad
related physical plant."
CHAIRMAN SHARP asked if the language was added to paragraph
(3), would it exclude from the limitation all activities
involved in the railroad operation. GEORGE UTERMOHLE
answered that if it were added, it would essentially
withdraw avocation for that provision to capital
acquisitions of the railroad. It would not seemingly apply
to operation expenses of the railroad and nonrailroad or
nontransportation activities or expenditures.
Number 412
SENATOR FRANK, Co-chair of the Senate Finance Committee,
said it was his understanding that during the work session
it was agreed to have a $10 million cap with an exception
for rolling stock, engines, etc., but not an exception for
any other emergencies. However, he added that the $10
million figure might be too high, but he would be
comfortable with that amount.
Number 425
CHAIRMAN SHARP requested that Mr. Utermohle include the
exception language in the next draft of the committee
substitute.
Number 432
Discussion then turned to the teleconferencing of board
meetings. SENATOR KELLY said at the work session committee
members were concerned that the railroad wouldn't allow a
commissioner in Juneau, during a legislative session, to
teleconference. The railroad said they were going to
address that at their meeting, but committee members felt it
important that the issue be particularly addressed during
session. SENATOR KERTTULA agreed with Senator Kelly's
comments, saying he thought that at least during the
legislative session it makes sense to teleconference.
It was agreed that on page 4, line 31, to delete "and by the
public" and to insert after the word "teleconference" the
phrase "during legislative sessions."
Number 515
The committee next discussed the makeup of the board, and
the fact that the committee substitute does not grandfather
in the current seven members. The consensus at the work
session was to let current members remain on the board as
long as they like, but also to have management represented
on the board because labor is represented on the board.
Overall consensus was that in the future to not have the 10
years of railroad experience member be the CEO, that those
two be separate.
Number 540
GEORGE UTERMOHLE said in addressing the concern about
whether the CEO of the corporation is either the executive
of another railroad or has 10 years of railroad experience,
the committee substitute gets at that by saying the CEO may
not be either of those persons, and neither of those persons
may be the CEO. However, it does not grandfather in the
existing members of the board. Should the current CEO be
one of those two members of the board, he is not
grandfathered in under this bill. He said the only persons
that need to be grandfathered in at this point are the three
people involved: the CEO and the one or two appointees who
satisfy the conditions of having 10 years of railroad
experience and/or currently an executive of a railroad.
PHYLISS JOHNSON added that his portion of the legislation is
very confusing. She said the concern was to grandfather in
the existing board members, but there are other seats that
are involved as well.
SENATOR KELLY suggested saying that all members of the board
have to file conflict of interest forms, and the CEO can't
be the chair or vice chair of the board.
CHAIRMAN SHARP requested that Mr. Utermohle rework that
section of the bill.
TAPE 93-17, SIDE B
Number 001
There was brief discussion on the taxation section on page
2, lines 3 through 7, and concerns expressed about putting
any undo restrictions on the railroad's ability to lease
their land. The railroad has requested that section be
deleted from the bill, however, the committee members agreed
to leave that section in and request that the Senate Finance
Committee look at the issue and make that decision.
Number 075
SENATORS PHILLIPS and LINCOLN expressed their concern
regarding the railroad getting into other types of business,
but both agreed that they were more comfortable with the
provision in the purpose section of the bill which provides
that the corporation shall obtain approval from the
legislature before obtaining an equity position in
nontransportation activities.
Discussion then turned to the language which appears several
times in the committee substitute relating to railroad and
railroad related transportation services, which would
include leasing.
PHYLISS JOHNSON spoke to the language on page 8, beginning
on line 9, "use assets of the corporation to obtain an
equity position in a nontransportation activity", etc.,
which she said is a whole new area of definition of an
activity the railroad cannot engage in without legislative
approval. She said by inserting that language, the
intention was to take out the other language in the bill
where the purpose was limited to railroad and railroad
related, etc.
DAVID SKIDMORE, staff to Senator Frank, clarified that the
new language on page 8 referred to by Ms. Johnson, plus the
accompanying definition on page 10 of "nontransportation
activities" would remove the necessity of keeping in
language in other portions of the bill that refer to the
purpose of providing railroad and railroad related
transportation services.
The committee agreed to instruct the drafter to delete the
new language relating to railroad and railroad related
transportation services which is contained in Section 5 on
page 4, in Section 10 on page 5, and in Section 13 beginning
on page 8.
Number 275
LEON VAN WYHE, representing the Alaska Resource Conservation
Center, testifying from Fairbanks, spoke to a joint venture
the center is involved in, which is the development of a
regional landfill at Mile 388 on the Alaska Railroad
mainline near Clear, Alaska. The facility will be able to
service a vast majority of Alaskan citizens via the railroad
system, the state highway system and the Tanana-Yukon river
system. He said the way SB 148 is written, it will
effectively stop all progress on the project.
Number 342
SENATOR KELLY commented he thinks that with the way the bill
is drafted the project can go forward. However, he
suggested that the drafter to take a close look at it, and,
if it is necessary, the bill be changed to make certain that
this type of joint venture is encouraged. CHAIRMAN SHARP
said the committee would get more information on the project
and make sure that it is adequately addressed.
Number 380
JACK BURTON, President of the Alaska Federation of
Government Employees, testifying from Moose Pass, said he
represents approximately 250 employees of the Alaska
Railroad. He said the employees of the railroad are very
upset with SB 148 and have a vested interest in its outcome.
These employees have no desire to be dug back into another
government\political mess. They have just spent years under
direct government management and it was choking the life out
of the Alaska Railroad.
Number 475
WAYNE CARPENTER, Executive Director of the Seward Chamber of
Commerce, testifying from Anchorage, spoke to the importance
of the Alaska Railroad to Seward. He said for the railroad
to operate effectively in the marketplace, it needs a degree
of autonomy. The impact of SB 148 will very effectively
hamstring that opportunity and could have very far-reaching
effects.
Mr. Carpenter said the Seward Chamber of Commerce feels that
the Alaska Railroad Corporation already imposes substantial
legislative control on the railroad's actions. He urged
defeat of SB 148.
Number 535
SENATOR PHILLIPS pointed out that many of Mr. Carpenter's
concerns have been addressed in the new committee
substitute. SENATOR KERTTULA added for the record that he
thinks the bill is still onerous.
Number 555
FRANK CHAPADOS, a member of the Board of Directors of the
Alaska Railroad, testifying from Fairbanks, said the
purchase of the Alaska Railroad by the state in 1985 and
operation of the line through an independent public
corporation has proven to be one of the most successful
public policy actions in recent time.
Mr. Chapados urged great caution and careful consideration
before passing sweeping adjustments as those currently
proposed in SB 148. He said the provisions restricting
railroad debt over $1 million, coupled with the railroad and
railroad related transportation services limitations could
make it quite difficult for the railroad to respond to
transportation market opportunities. In addition, the added
taxation exposure for real property of the railroad will
lead to increased costs.
Number 638
CATHY SHULTZ, representing the Fairbanks Hotel and Motel
Association, voiced support for SB 148, saying citizens of
Alaska should expect that a corporation owned by the state
should reasonably have to report to the legislative body
when its activities go beyond its usual scope of business.
She encouraged the committee to retain the language in the
bill which requires that the railroad corporation come
before the legislature before entering into an equity
position in future ventures.
TAPE 93-18, SIDE A
Number 010
PAT POURCHOT, Executive Director of Commonwealth North,
testifying from Anchorage, stated their board's strong
concern with many of the provisions contained in SB 148 and
the proposed committee substitute.
Mr. Pourchot outlined some areas of concern such as the
limitation on debt, which has been opposed by Commonwealth
North, and the railroad related transportation services
language, which they agree should be deleted from the work
draft.
Concluding his comments, Mr. Pourchot said Commonwealth
North feels that the best way to ensure that the railroad
operates with the independent conditions of the 1984 Act is
to allow the board and managers to run the railroad with a
positive bottom line. The Alaskan people are fortunate to
have the railroad operating as a viable, profit-making
entity. The public must ensure that Alaska's elected
officials insulate the Corporation's operations from
political meddling, he said.
Number 087
HANK WARREN, a resident of Eagle River testifying from
Anchorage, said in the early eighties he was co-chairman of
the Anchorage-Eagle River Chamber of Commerce committee
which met to make recommendations to the state regarding the
purchase of the railroad. The main recommendations made by
that committee were that (1) the state should purchase the
railroad; (2) the railroad should be organized as an
independent corporation under the control of the board of
directors; (3) the railroad should operate as a business and
be competitive in the marketplace; (4) the railroad should
be entirely free of any political or special interest
pressure; and (5) the railroad should operate so that its
bottom line would make it attractive for purchase by private
interests.
Mr. Warren said it is his opinion that in operating under
the provision of the 1984 Act and its board of directors,
the Alaska Railroad has done extremely well and has provided
jobs for hundreds of Alaskans. He said it is strange that
we have an entity that is doing what we intended for it to
do, and now the legislature wants to tinker with its rules
and make significant changes. He urged defeat of the
legislation.
Number 177
BONNIE BAILEY, representing Bruce Marion, President of the
Chugiak-Eagle River Chamber of Commerce and testifying from
Anchorage, read into the record a resolution passed by the
Chamber of Commerce in opposition to HB 202 and SB 148.
Number 206
JOE FIELDS, testifying from Fairbanks, voiced concern that
the legislation might limit the ability of the Alaska
Railroad to interrelate with private industry, and he urged
that great care and caution be exercised so as not to cause
unnecessary harm to a successful element of Alaska's
infrastructure.
Number 234
CHAIRMAN SHARP closed the public hearing on SB 148 and
stated that a new committee substitute making the proposed
changes would be before the committee at its next meeting on
Thursday, April 2.
There being no further business to come before the
committee, the meeting was adjourned at 5:25 p.m.
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