Legislature(1999 - 2000)

01/27/2000 01:35 PM Senate TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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          SENATE TRANSPORTATION COMMITTEE                                                                                       
                   January 27, 2000                                                                                             
                      1:35 p.m.                                                                                                 
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Senator Jerry Ward, Chairman                                                                                                    
Senator Drue Pearce, Vice Chair                                                                                                 
Senator Mike Miller                                                                                                             
Senator Rick Halford                                                                                                            
Senator Georgianna Lincoln                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
None                                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
SENATE BILL NO. 189                                                                                                             
"An Act relating to the international airports in Anchorage and                                                                 
Fairbanks and establishing the Alaska International Airport                                                                     
Authority; and providing for an effective date."                                                                                
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 208                                                                                                             
"An Act establishing the Alaska Marine and Rail Transportation                                                                  
Authority; relating to ferries and ferry terminals; relating to the                                                             
Alaska Railroad Corporation; and providing for an effective date."                                                              
                                                                                                                                
     HEARD AND HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 203                                                                                                             
"An Act relating to metropolitan planning organizations and to                                                                  
designation of a metropolitan planning organization for the                                                                     
Anchorage metropolitan area; and providing for an effective date."                                                              
                                                                                                                                
     MOVED SB 203 FROM COMMITTEE WITH INDIVIDUAL RECOMMENDATIONS                                                                
                                                                                                                                
PREVIOUS SENATE ACTION                                                                                                          
                                                                                                                                
SB 189 - No previous action.                                                                                                    
                                                                                                                                
SB 208 - No previous action.                                                                                                    
                                                                                                                                
SB 203 - No previous action.                                                                                                    
                                                                                                                                
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
Mr. Ben Grenn                                                                                                                   
Staff to Senator Tim Kelly                                                                                                      
State Capitol Building                                                                                                          
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:      Read sponsor statement for SB 189                                                                      
                                                                                                                                
Ms. Sherri McConnell                                                                                                            
Louisiana Port Authority                                                                                                        
POSITION STATEMENT:      Testified on SB 189 and SB 208                                                                         
                                                                                                                                
Mr. Phil Prejean                                                                                                                
Louisiana Port Authority                                                                                                        
POSITION STATEMENT:      Testified on SB 189 and SB 208                                                                         
                                                                                                                                
Mr. Doyle Ruff, Manager                                                                                                         
Fairbanks International Airport                                                                                                 
Department of Transportation and Public Facilities                                                                              
6450 Airport Way                                                                                                                
Fairbanks, Alaska 99709                                                                                                         
POSITION STATEMENT:      Testified on SB 189                                                                                    
                                                                                                                                
Mr. James Dodson                                                                                                                
Fairbanks Chamber of Commerce                                                                                                   
P.O. Box 73568                                                                                                                  
Fairbanks, Alaska 99709                                                                                                         
POSITION STATEMENT:      Testified on SB 189                                                                                    
                                                                                                                                
Ms. Angela Moss                                                                                                                 
Staff to Senator Ward                                                                                                           
State Capitol Building                                                                                                          
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:      Read sponsor statement for SB 208                                                                      
                                                                                                                                
Mr. Bill Sheffield                                                                                                              
President and CEO                                                                                                               
Alaska Railroad Corporation                                                                                                     
P.O. Box 107500                                                                                                                 
Anchorage, Alaska 99510                                                                                                         
POSITION STATEMENT:      Testified on SB 208                                                                                    
                                                                                                                                
Ms. Wendy Lindskoog                                                                                                             
Public Relations Director                                                                                                       
Alaska Railroad Corporation                                                                                                     
Anchorage, Alaska 99510                                                                                                         
POSITION STATEMENT:      Read testimony for SB 208                                                                              
                                                                                                                                
Captain Norm Edwards                                                                                                            
Alaska Marine Highway                                                                                                           
3132 Channel Drive                                                                                                              
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:      Testified on SB 208                                                                                    
                                                                                                                                
Mr. Jeff Ottesen                                                                                                                
Department of Transportation                                                                                                    
3132 Channel Drive                                                                                                              
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:      Testified on SB 203                                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                                
TAPE 00-1 , SIDE A                                                                                                              
                                                                                                                                
CHAIRMAN WARD called the Senate Transportation Committee meeting to                                                             
order at 1:35 p.m. and brought up SB 189 as the first order of                                                                  
business.                                                                                                                       
                                                                                                                                
                                                                                                                                
SB 189-INTERNATIONAL AIRPORT AUTHORITY                                                                                          
                                                                                                                                
MR. BEN GRENN, legislative aide for Senator Kelly, read the                                                                     
following sponsor statement:                                                                                                    
                                                                                                                                
     The public process surrounding the implementation of an Alaska                                                             
     Airport Authority combining Alaska's two international                                                                     
     airports promises to be comprehensive.  The process will allow                                                             
     the public and affected organizations to review the proposed                                                               
     legislation and begin a thorough discussion of its merits.                                                                 
                                                                                                                                
     Forming an airport authority encourages the development of                                                                 
     trade on a statewide level and allows the Anchorage                                                                        
     International Airport and Fairbanks International Airport to                                                               
     benefit from the economies offered by a single administrative                                                              
     body.  The proposed board structure will give this authority                                                               
     the long term management stability it needs to more                                                                        
     effectively and rapidly respond to fast-changing world market                                                              
     conditions.                                                                                                                
                                                                                                                                
     Only Alaska and Hawaii have regional international airports                                                                
     that are state operated. The other 48 states international                                                                 
     airports are run by authority systems.                                                                                     
                                                                                                                                
     Concern may arise over some elements of this legislation.  The                                                             
     term authority can be misleading and even inaccurate in                                                                    
     implying a voracious and autonomous self-sustaining public                                                                 
     body.  Some authorities do in fact meet that criteria.                                                                     
     However, in SB 189 the Governor of Alaska will appoint the                                                                 
     members of the board of directors and the legislature will                                                                 
     review and appropriate the budget.  All things done by the                                                                 
     authority are public and the acquisition of land by eminent                                                                
     domain may take place only with prior approval of the                                                                      
     governor.                                                                                                                  
                                                                                                                                
     Responsibility to repay existing airport bonds is assumed by                                                               
     the authority, and the authority also assumes repayment of new                                                             
     bond issues.  Existing state employees transferred to the                                                                  
     authority become authority employees, and transfer with their                                                              
     collective bargaining agreements for the duration of that                                                                  
     contract.  These employees continue to participate in their                                                                
     existing retirement benefit programs.  The authority may                                                                   
     choose to engage in collective bargaining with its employees.                                                              
                                                                                                                                
     Senate Bill 189 provides for the continuation of litigation,                                                               
     hearings, investigations and other proceedings that were begun                                                             
     under a law that was amended or repealed by this Act,                                                                      
     notwithstanding the amendment or repeal of that law.                                                                       
     Likewise, regulations adopted under pre-existing law remain in                                                             
     effect for the term adopted or until repealed.                                                                             
                                                                                                                                
     This legislation requires the authority to annually prepare a                                                              
     concise report for the governor, legislature, mayors of the                                                                
     Municipality of Anchorage, the Fairbanks North Star Borough                                                                
     and the City of Fairbanks describing the operations, income                                                                
     and expenditures of the authority for the prior fiscal year.                                                               
                                                                                                                                
MS. SHERRY MCCONNELL, Chair of the Port Association of Louisiana,                                                               
stated Louisiana has 26 port authorities that are political                                                                     
subdivisions of the state.  The authorities are statutorily                                                                     
established and governed by a local body of commissioners.                                                                      
                                                                                                                                
Number 472                                                                                                                      
                                                                                                                                
SENATOR PEARCE asked if the enabling statute allows parishes to                                                                 
have more than one port authority, or whether authorities can cross                                                             
parish lines.                                                                                                                   
                                                                                                                                
MS. MCCONNELL answered she did not know of a prohibition for                                                                    
crossing parish lines.  She deferred to Mr. Prejean to elaborate on                                                             
the issue.                                                                                                                      
                                                                                                                                
SENATOR PEARCE asked if authorities have powers by statute of                                                                   
eminent domain.                                                                                                                 
                                                                                                                                
MR. PREJEAN answered parishes can have more than one port                                                                       
authority, and authorities do have the right of eminent domain but                                                              
it is not absolute--there has to be a court process.  None of the                                                               
ports share jurisdiction.                                                                                                       
                                                                                                                                
CHAIRMAN WARD confirmed that Louisiana has appointed and elected                                                                
port commissioners, and he asked for clarification of the umbrella                                                              
organization.                                                                                                                   
                                                                                                                                
MR. PREJEAN responded the umbrella organization is a trade                                                                      
organization which meets monthly and works with the legislature on                                                              
port issues.                                                                                                                    
                                                                                                                                
Number 737                                                                                                                      
                                                                                                                                
SENATOR PEARCE asked if authorities have jurisdiction over                                                                      
airports.                                                                                                                       
                                                                                                                                
MR. PREJEAN responded they are traditional port authorities.                                                                    
                                                                                                                                
SENATOR PEARCE asked if the New Orleans International Airport is                                                                
operated by the city or by an authority.                                                                                        
                                                                                                                                
MR. PREJEAN answered the airport is operated by a commission                                                                    
appointed by the city.                                                                                                          
                                                                                                                                
Number 870                                                                                                                      
                                                                                                                                
CHAIRMAN WARD asked if Louisiana authorities have powers of                                                                     
taxation on land.                                                                                                               
                                                                                                                                
MR. PREJEAN responded yes, most of the capital projects are                                                                     
supported by the state through a transportation trust fund.                                                                     
                                                                                                                                
CHAIRMAN WARD asked when the ports became port authorities were                                                                 
lands transferred to the authorities.                                                                                           
                                                                                                                                
MR. PREJEAN answered land was not transferred to start ports.  Land                                                             
donations came from private land owners or from land purchases.                                                                 
Airports in Louisiana are a portion of the Louisiana Trust Fund and                                                             
they receive monies to match federal funds for construction.                                                                    
                                                                                                                                
MS. MCCONNELL clarified that most ports started with a port                                                                     
authority whose mission was to start ports.                                                                                     
                                                                                                                                
MR. PREJEAN agreed.                                                                                                             
                                                                                                                                
SENATOR PEARCE asked Mr. Grenn if this bill is similar to one she                                                               
introduced in 1996.                                                                                                             
                                                                                                                                
MR. GRENN responded yes.                                                                                                        
                                                                                                                                
MR. DOYLE RUFF, Manager of the Fairbanks International Airport,                                                                 
presented the Department of Transportation and Public Facilities'                                                               
(DOTPF) position on SB 189.  The department disagrees with                                                                      
language in the bill saying the viability and competitive  position                                                             
of the Anchorage and Fairbanks International Airports would be best                                                             
protected under the operation of an independent authority.                                                                      
Alaska's international airports are being operated in an efficient,                                                             
responsive and business-like manner and they are being operated                                                                 
with the best interest of all Alaskans and visitors in mind.                                                                    
                                                                                                                                
DOTPF believes there is no point in fixing something that is not                                                                
broken, and it believes the department should be recognized for                                                                 
some of its successes.                                                                                                          
                                                                                                                                
The international airport system has continued to grow, and cargo                                                               
has grown in excess of 6% per year in the last 5 years--Anchorage                                                               
is ranked the number one "all cargo airport" in the country and                                                                 
Fairbanks is ranked number thirty six.  Over $100 million of                                                                    
private investments have been committed and there have been over                                                                
$350 million in infrastructure improvements.                                                                                    
                                                                                                                                
DOTPF is concerned that creating an authority would create another                                                              
level of bureaucracy and confusion.  Fairbanks or Anchorage board                                                               
members could veto a decision proposed by the board causing a block                                                             
vote.  The bill also does not assure airport independence, and it                                                               
may eliminate airport managers and staff.                                                                                       
                                                                                                                                
The department feels this bill defeats the purpose of                                                                           
transportation planning, and the goals of the bill can best be                                                                  
accomplished within the existing system.                                                                                        
                                                                                                                                
Number 1409                                                                                                                     
                                                                                                                                
SENATOR LINCOLN commented the sponsor statement says only Alaska                                                                
and Hawaii have state operated international airports, other                                                                    
international airports are run by authority systems.  She asked for                                                             
Mr. Ruff's response.                                                                                                            
                                                                                                                                
MR. RUFF responded only three states have airports under DOT--                                                                  
Alaska, Hawaii and Maryland.  With regard to airports that are                                                                  
under authorities, Anchorage is one of the top one hundred airports                                                             
based on total passengers--ranked 58.  The top one hundred airports                                                             
are broken down into hubs--large, medium and small.  Anchorage is                                                               
a medium hub, Fairbanks is a small hub.  Of the large hubs, 12 out                                                              
of 28 are operated by authorities.  There are 19 out of 44 medium                                                               
hubs operated by authorities, and 11 out of 28 small hubs operated                                                              
by authorities.                                                                                                                 
                                                                                                                                
SENATOR LINCOLN stated that the fiscal note attached to the bill                                                                
for 2001 is $401,000, she asked Mr. Ruff what the cost differential                                                             
will be.                                                                                                                        
                                                                                                                                
MR. RUFF responded he would defer to other staff at DOTPF, but he                                                               
feels the legislation would create a need for additional staff and                                                              
expenses.                                                                                                                       
                                                                                                                                
SENATOR LINCOLN responded additional staff is not mentioned in the                                                              
analysis of the fiscal note, and she asked if there is support from                                                             
the Anchorage and Fairbanks assemblies.                                                                                         
                                                                                                                                
MR. RUFF answered that Mr. James Dodson should answer Senator                                                                   
Lincoln's question.                                                                                                             
                                                                                                                                
SENATOR PEARCE asked how much of the overhead costs are charged                                                                 
back to airports by DOTPF to pay for the Commissioner and his                                                                   
staff.                                                                                                                          
                                                                                                                                
MR. RUFF responded the requirements within the legislation demand,                                                              
in his opinion, a constant staff for meeting the reporting                                                                      
requirements.                                                                                                                   
                                                                                                                                
Number 1770                                                                                                                     
                                                                                                                                
MR. JAMES DODSON, representing the Mayor and Chamber of Commerce of                                                             
Fairbanks, stated Fairbanks opposed this legislation in 1996 and is                                                             
still concerned about this issue.  The city will voice its position                                                             
at a later time.                                                                                                                
                                                                                                                                
CHAIRMAN WARD set SB 189 aside until the sponsor and DOTPF have                                                                 
more time to address the concerns brought to committee's attention.                                                             
                                                                                                                                
              SB 208-RAILROAD AND FERRY AUTHORITY                                                                               
                                                                                                                                
MS. ANGELA MOSS, staff to Senator Ward, read the following sponsor                                                              
statement for SB 208.                                                                                                           
                                                                                                                                
     "An Act establishing the Alaska Marine and Rail Transportation                                                             
     Authority; relating to ferries and ferry terminals; relating                                                               
     to the Alaska Railroad Corporation; and providing for an                                                                   
     effective date."                                                                                                           
                                                                                                                                
     The intent of this Act is to establish a state-owned authority                                                             
     that would be directly responsible for the operation and                                                                   
     management of both the Alaska Railroad Corporation and the                                                                 
     Alaska Marine Highway.                                                                                                     
                                                                                                                                
     In 1985 the State of Alaska purchased the Alaska Railroad from                                                             
     the federal government for $20 million dollars. This                                                                       
     transaction came with a significant amount of excess land that                                                             
     assists in the operational costs of the railroad.  The Alaska                                                              
     Railroad currently has a surplus land base. The Alaska                                                                     
     Railroad is not currently under the executive budget act.  The                                                             
     Alaska marine highway was created under the authority of the                                                               
     federal government in 1963 and was not given a land base.  For                                                             
     the past several years, the Alaska marine highway has relied                                                               
     on the general fund for costs because of a lack of capital                                                                 
     equity base in order to make it self sufficient.                                                                           
                                                                                                                                
     Creating an authority would allow the excess land to generate                                                              
     revenue and provide a stable funding base for the Alaska                                                                   
     Marine and Rail Transportation Authority.  The idea is to                                                                  
     reduce the requirements to fund the Alaska marine highway                                                                  
     through the general fund.  The overall transportation plan in                                                              
     Alaska would benefit from the re-organization and provide for                                                              
     a system to utilize both services and cut the cost of doing                                                                
     so.  Currently the Alaska marine highway and the Alaska                                                                    
     Railroad share the use of facilities in many locations.                                                                    
                                                                                                                                
     The authority will be a public corporation of the state and a                                                              
     division of DOTPF.  The authority will operate the Alaska                                                                  
     marine highway system and the state-owned Alaska Railroad as                                                               
     separate divisions of the authority.                                                                                       
                                                                                                                                
     The authority will make all of its financial records available                                                             
     to the legislature and an appointee of the governor.  The                                                                  
     authority shall submit an annual budget for the Alaska marine                                                              
     highway system and the Alaska Railroad Corporation to the                                                                  
     legislature through the governor.                                                                                          
                                                                                                                                
     The primary duties of the authority will be to assist                                                                      
     residents, businesses and communities of the state to obtain                                                               
     the highest quality of the marine, rail passenger and freight                                                              
     service.  The authority will be responsible to encourage and                                                               
     integrate with other public and private carriers in and                                                                    
     outside the state to provide the highest quality of service                                                                
     within the state.  The authority is required to employ Alaskan                                                             
     residents to the highest legal level possible.                                                                             
                                                                                                                                
     The authority will operate under the name "Alaska Marine and                                                               
     Rail Transportation Authority."  The authority shall prepare                                                               
     a comprehensive long-range plan for the development and                                                                    
     improvement of the Alaska marine highway system and the Alaska                                                             
     Railroad.                                                                                                                  
                                                                                                                                
     The authority may acquire by purchase, gift, or exchange of                                                                
     land in fee simple or easements that it considers necessary                                                                
     and reasonable for either temporary or permanent public use.                                                               
     The authority may transfer land, other than rail land under AS                                                             
     44.90.240, that is not considered necessary for use by the                                                                 
     marine highway system.  The authority will have the power to                                                               
     receive additional land grants from the state.  The proceeds                                                               
     of disposal by the Department of Natural Resources (DNR) shall                                                             
     be credited to the funds from which the purchase of the land                                                               
     was originally made.                                                                                                       
                                                                                                                                
     It is my hope as sponsor of SB 208 that it becomes legislation                                                             
     in order to ensure a long term transportation network that                                                                 
     serves all Alaskans.                                                                                                       
                                                                                                                                
Number 2049                                                                                                                     
                                                                                                                                
FORMER GOVERNOR BILL SHEFFIELD, President and CEO of the Alaska                                                                 
Railroad Corporation (ARRC), had a prepared statement for Wendy                                                                 
Lindskoog to read to the committee.                                                                                             
                                                                                                                                
MS. WENDY LINDSKOOG, Director of External Affairs for the Alaska                                                                
Railroad Corporation, read the following statement:                                                                             
                                                                                                                                
     Thank you Chairman Ward and Senate Transportation Committee                                                                
     members for giving us the opportunity to testify on SB 208.                                                                
                                                                                                                                
     We have had only one week to consider this bill and believe                                                                
     this issue requires a more in-depth review on our part before                                                              
     we can better convey our concerns about the bill's fiscal                                                                  
     impact on the railroad.                                                                                                    
                                                                                                                                
     Having said that, we do have some initial reactions.                                                                       
                                                                                                                                
     The marine highway system and the Alaska Railroad Corporation                                                              
     both provide a valuable transportation service.  We both move                                                              
     people and goods throughout many parts of Alaska not accessed                                                              
     by the state's highway system.  For these reasons, the idea to                                                             
     combine the marine highway system and the Alaska Railroad                                                                  
     Corporation has merit.  The reality, however, comes with                                                                   
     obstacles.                                                                                                                 
                                                                                                                                
     The legislature has worked over the years to streamline                                                                    
     government.  At first glance, SB 208 appears to accomplish the                                                             
     goal.  At a closer look, however, this bill creates an                                                                     
     additional layer of management staff that could impact the                                                                 
     efficiency and decision making process of both transportation                                                              
     organizations.                                                                                                             
                                                                                                                                
     Combining both transportation entities will also produce an                                                                
     administrative burden in terms of managing four different                                                                  
     types of employee benefit systems.                                                                                         
                                                                                                                                
     There are two classes of Alaska Railroad Corporation employee                                                              
     including federal employees and corporation employees.  Each                                                               
     group has different retirement benefits, but neither are part                                                              
     of the state's personnel benefit system.                                                                                   
                                                                                                                                
     Under the new authority, the marine highway system would also                                                              
     have two classes of employee.  These include employees who are                                                             
     part of the state personnel benefit system and those who would                                                             
     be under the "new authority" benefit system.                                                                               
                                                                                                                                
     In addition to adding administrative layers, SB 208 diverts                                                                
     the railroad's net earnings from its real estate and uses them                                                             
     to help subsidize the marine highway system.                                                                               
                                                                                                                                
     This results in taking money away from the railroad's regular                                                              
     maintenance and capital program and stripping the Alaska                                                                   
     Railroad Corporation of its ability to remain a true self-                                                                 
sustaining entity.                                                                                                              
                                                                                                                                
     After many years of federal neglect, the Alaska Railroad                                                                   
     Corporation has been investing heavily in deferred                                                                         
     maintenance.  We are replacing approximately 100,00 ties per                                                               
     year, new ballast, and are working on several projects,                                                                    
     including our track straightening project between Anchorage                                                                
     and Wasilla.                                                                                                               
                                                                                                                                
     The track realignment will make the railroad safer by removing                                                             
     congestion on our tracks, straightening out curves, reducing                                                               
     equipment wear and tear and increasing train handling                                                                      
     consistency.                                                                                                               
                                                                                                                                
     In terms of industry standards, railroads the size of the                                                                  
     Alaska Railroad should be reinvesting $15 to $20 million                                                                   
     annually into the rail line.  This level of funding ensures                                                                
     proper maintenance and operations.  That is what we do.  Every                                                             
     bit of money we make is put directly back into our road bed,                                                               
     equipment, bridges, roads, etc.                                                                                            
                                                                                                                                
     We have recently had two derailments.  While those were not                                                                
     related to worn out track, we cannot afford to diminish our                                                                
     ongoing efforts to maintain and continue to improve the                                                                    
     railroad's infrastructure.  Safety is too important.                                                                       
                                                                                                                                
     In addition to providing safe transportation, part of our                                                                  
     mission is to promote economic development.  We are on the                                                                 
     verge of an exciting growth phase at the Alaska Railroad.                                                                  
     This is made possible through the federal grants we receive.                                                               
     In order to qualify for these grants, the railroad must match                                                              
     them with an investment of its own funds.  For example, the                                                                
     $10 million grant for crossties, rail, and ballast, which we                                                               
     have received for the past 4 years, requires an annual                                                                     
     investment by the railroad of $6 to $8 million.                                                                            
                                                                                                                                
     These grants provide us the opportunity to accomplish many                                                                 
     important safety and economic development projects including:                                                              
                                                                                                                                
          Seward passenger dock - re: hub for cruise ship landings.                                                             
                                                                                                                                
          New freight dock - new contracts for freight through                                                                  
          Seward.                                                                                                               
                                                                                                                                
          Whittier underpass for safe pedestrian traffic under our                                                              
          rail and from the boat harbor to the City of Whittier.                                                                
                                                                                                                                
          Anchorage airport rail station - this allows the railroad                                                             
          to be competitive in time and dollars to new cruise ship                                                              
          passengers to and from Anchorage, to Seward and Whittier                                                              
          as well as downtown Anchorage.  This provides good                                                                    
          revenue to help with "maintenance of way" for the good of                                                             
          the railroad.  If we should lose the coal contract or                                                                 
          continue to receive less for transporting coal, this                                                                  
          passenger service will help pick up that $2.5 million a                                                               
          year to maintain the Anchorage to Seward mainline track.                                                              
                                                                                                                                
          Klatt road to Eagle River - double track - straighten                                                                 
          curves to Wasilla.  Improve safety, efficiency and                                                                    
          profit.                                                                                                               
                                                                                                                                
          $10 million a year for road bed improvements, new and                                                                 
          larger sidings where trains meet, electric switches, rail                                                             
          grinding, new rail, ties, ballast, etc.                                                                               
                                                                                                                                
          New Denali depot - move passengers - passenger trains                                                                 
          longer.                                                                                                               
                                                                                                                                
          New intermodal facility in Fairbanks - move from downtown                                                             
          - blocking streets.  More efficient operation.                                                                        
                                                                                                                                
          Proposed new track alignment to North Pole refinery which                                                             
          will eliminate 30 crossings and enhance safety.                                                                       
                                                                                                                                
     And the list goes on and on.                                                                                               
                                                                                                                                
     This is safety and common sense along with meeting our                                                                     
     customer needs.                                                                                                            
                                                                                                                                
     Producing the matching funds for these grants will be next to                                                              
     impossible if proceeds from our real estate, which represent                                                               
     35 to 50 percent of our net income, are shifted to the                                                                     
     authority under this legislation.                                                                                          
                                                                                                                                
     The Alaska Railroad does not require, and has never asked for,                                                             
     operational or capital funding from the state.  We are self-                                                               
sustaining.  This will not remain the case if our earnings are                                                                  
shared with the state's marine highway system.  Under this                                                                      
scenario, the Alaska Railroad Corporation will be put in a position                                                             
within a year or two of seeking state subsidies to operate its                                                                  
services and maintain its track.  The net effect will be more                                                                   
demand on the state's general fund, not less.                                                                                   
                                                                                                                                
     Finally, SB 208 places the new authority under the executive                                                               
     budget act.  As you are aware, the Alaska Railroad Corporation                                                             
     needs the flexibility to operate its business to react to                                                                  
     market demands.  We believe that this action would hinder that                                                             
     ability to react to market demands for new or additional                                                                   
     business or catastrophic events.  The authority would not have                                                             
     the prerogative to obligate funds to make things happen in a                                                               
     timely fashion.                                                                                                            
                                                                                                                                
     In closing Mr. Chairman, you have requested detailed financial                                                             
     information from the railroad as it relates to the proposed                                                                
     changes in SB 208.  Discerning the financial implications and                                                              
     obtaining good information will take some time.                                                                            
                                                                                                                                
     This bill is complex, it represents a huge policy decision                                                                 
     requiring a lot of dialog.  We hope we can continue a dialogue                                                             
     with this committee as we gain a better understanding of                                                                   
     changes called for in SB 208.                                                                                              
                                                                                                                                
     Mr. Chairman, the big picture is that what we are doing, in                                                                
     addition to running a railroad 24 hours a day, is building a                                                               
     railroad--a state asset, to be a better railroad--and larger                                                               
     asset, fostering economic development for the entire state and                                                             
     all Alaskans.                                                                                                              
                                                                                                                                
     And to let you know, our goal is to foster and improve a                                                                   
     better working relationship with the legislature to ensure                                                                 
     that we are both working towards mutually beneficial goals.                                                                
     In fact, we welcome and invite you to tour our facilities and                                                              
     meet our employees.                                                                                                        
                                                                                                                                
     Thank you again for this opportunity to testify.                                                                           
                                                                                                                                
CHAIRMAN WARD agreed with Ms. Lindskoog that this issue will take                                                               
time for consideration.                                                                                                         
                                                                                                                                
Number 2337                                                                                                                     
                                                                                                                                
SENATOR MILLER stated that he and the Chairman were in the                                                                      
legislature when the railroad was purchased.  He worked on the                                                                  
legislation because the federal government made the railroad                                                                    
available for purchase and Alaska wanted it.  It was also felt that                                                             
at some point the railroad would become a private corporation.                                                                  
                                                                                                                                
CHAIRMAN WARD commented that this legislation would remove the                                                                  
possibility of future privatization.                                                                                            
                                                                                                                                
Tape 00-1, Side B                                                                                                               
                                                                                                                                
CHAIRMAN WARD stated he felt the marine highway system had not been                                                             
given a proper land base, and the railroad had more land than it                                                                
needed.  He feels an authority combined with additional state                                                                   
acreage would stop the need for general funds going into the marine                                                             
highway system.  He has not ruled out the possibility of a sale of                                                              
the railroad, but he wants to make sure the marine highway system                                                               
and railroad continue to exist in Alaska.  He noted he has some of                                                              
the same concerns that Ms. Lindskoog expressed and he does not have                                                             
all of the answers but he chose to model the legislation after                                                                  
Louisiana's authority system because it has been successful.                                                                    
                                                                                                                                
SENATOR LINCOLN asked for Governor Sheffield's comments regarding                                                               
the makeup of the Board of ARRC and for any additional comments.                                                                
                                                                                                                                
GOVERNOR SHEFFIELD responded the railroad board is appointed by the                                                             
governor and confirmed by the legislature.  There is one union                                                                  
member, one commissioner from DOTPF and one from DCED, one outside                                                              
member with railroad experience and two members from the public.                                                                
                                                                                                                                
Number 2215                                                                                                                     
                                                                                                                                
CAPTAIN NORM EDWARDS, Operations Manager for the Alaska Marine                                                                  
Highway (AMHS), read the following statement:                                                                                   
                                                                                                                                
     I would like to start by saying that we have had less than one                                                             
     week to review this piece of legislation.  We were not given                                                               
     a copy of the legislation prior to it's introduction and were                                                              
     not asked to work with the sponsor on it's development.  We                                                                
     have not had time to fully consider this unusual proposal.                                                                 
                                                                                                                                
     That being said, our initial impression is that this proposal                                                              
     is an attempt to blend two agencies that have different                                                                    
     missions, have different customers and serve different regions                                                             
     of the state.  We fail to see that this bill would benefit                                                                 
     either organization and if one of the sponsors goals is to                                                                 
     adequately fund the AMHS, there is a simpler and less                                                                      
     disruptive way.                                                                                                            
                                                                                                                                
     Frankly, we are perplexed as to the objectives of this                                                                     
     legislation.  We are in the process of implementing the                                                                    
     Southeast Transportation Plan, developed with considerable                                                                 
     community input and support.  We are also currently working on                                                             
     the Southwest and Prince William Sound Transportation Plans.                                                               
     Under these plans, we will effectively redesign and manage the                                                             
     marine highway system, providing better and more efficient                                                                 
     service for the communities of coastal Alaska.  Therefore, as                                                              
     the old saying goes:  "If it isn't broken, don't fix it."                                                                  
                                                                                                                                
     Before we comment in detail on the bill, we will need more                                                                 
     time to analyze it.  In short, however, we believe that the                                                                
     AMHS is right where it belongs, an integral part of the                                                                    
     Southeast Region of DOTPF.                                                                                                 
                                                                                                                                
     Again, thank you for the chance to testify today.                                                                          
                                                                                                                                
CHAIRMAN WARD asked Captain Edwards what the easy way to run the                                                                
ferry system would be without using general fund monies.                                                                        
                                                                                                                                
CAPTAIN EDWARDS responded that has not been fully determined at                                                                 
this time.                                                                                                                      
                                                                                                                                
CHAIRMAN WARD responded that SB 208 may not be the answer, but                                                                  
having a land base is one option and it will eliminate the need to                                                              
come to the legislature for funding every year.  He welcomed                                                                    
Captain Edwards to his new position at the Alaska Marine Highway                                                                
System.                                                                                                                         
                                                                                                                                
There being no further testimony on SB 208, CHAIRMAN WARD announced                                                             
he will set SB 208 aside so that the committee can get additional                                                               
information.  The committee then took up SB 203.                                                                                
                                                                                                                                
           SB 203-METROPOLITAN PLANNING ORGANIZATIONS                                                                           
                                                                                                                                
SENATOR DONLEY explained that SB 203 is an Anchorage Caucus                                                                     
priority.  SB 203 is similar to legislation passed the Senate last                                                              
year but it contains a few changes.                                                                                             
                                                                                                                                
Under federal law, communities with a population of over 50,000                                                                 
must have a municipal planning organization (MPO).  Anchorage is                                                                
the only community in Alaska to have a MPO, which is named the                                                                  
Anchorage Metropolitan Area Transportation Study (AMATS).  AMATS                                                                
was created by the Governor and the Mayor of Anchorage.  Several                                                                
years later, federal law was amended and requires that MPO's be                                                                 
created by state statute.                                                                                                       
                                                                                                                                
SB 203 attempts to rectify this problem.  It lays the ground work                                                               
for additional federal requirements and sets up the membership                                                                  
requirements for AMATS.  Currently, AMATS has two members appointed                                                             
by the governor and three members chosen by the municipality.  This                                                             
legislation would add two members of the legislature in non-voting                                                              
positions--one Senate and one House member from that municipality.                                                              
                                                                                                                                
It is important to have legislative representation on the MPO                                                                   
because the legislature has to include MPO projects in the budget.                                                              
In the past, there has been no coordination between AMATS and the                                                               
legislature and problems have arisen.  This legislation also sets                                                               
up a time line for submitting the MPO priority list to the                                                                      
legislature--January 15.                                                                                                        
                                                                                                                                
SENATOR LINCOLN asked if the Municipality of Anchorage has endorsed                                                             
this legislation.                                                                                                               
                                                                                                                                
SENATOR DONLEY responded no.                                                                                                    
                                                                                                                                
SENATOR LINCOLN asked if an endorsement had been requested.                                                                     
                                                                                                                                
SENATOR DONLEY responded there had been a mixed response from the                                                               
assembly last year concerning an endorsement.  The original version                                                             
of the bill had voting legislative members, and the assembly has                                                                
not yet taken a position on legislation with non-voting legislative                                                             
members.                                                                                                                        
                                                                                                                                
SENATOR LINCOLN asked if the governor's appointments are required                                                               
to be from the municipality.                                                                                                    
                                                                                                                                
Number 1667                                                                                                                     
                                                                                                                                
SENATOR DONLEY responded the Governor would appoint the                                                                         
Commissioners of DOTPF and DEC or their designees.                                                                              
                                                                                                                                
MR. JEFF OTTESEN, DOTPF, commented that the department is neutral                                                               
on this legislation.  DOTPF believes the early deadline for                                                                     
submitting  DOTPF's list of projects is excellent, and the bill                                                                 
seems to be flexible in adapting for future boundary changes.                                                                   
                                                                                                                                
SENATOR PEARCE moved SB 203 out of committee with individual                                                                    
recommendations.  There being no objection, the motion carried.                                                                 
                                                                                                                                
With no further business to come before the committee, CHAIRMAN                                                                 
WARD adjourned the meeting.                                                                                                     
                                                                                                                                
                                                                                                                                

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