Legislature(2023 - 2024)BUTROVICH 205
02/15/2024 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| SB105 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 105 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
February 15, 2024
1:46 p.m.
MEMBERS PRESENT
Senator James Kaufman, Chair
Senator David Wilson, Vice Chair
Senator Löki Tobin
Senator Jesse Kiehl
Senator Robert Myers
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 105
"An Act authorizing the Alaska Railroad Corporation to issue
revenue bonds to finance the replacement of the Alaska Railroad
Corporation's passenger dock and related terminal facility in
Seward, Alaska; and providing for an effective date."
- MOVED CSSB 105(TRA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 105
SHORT TITLE: RAILROAD CORP. FINANCING
SPONSOR(s): TRANSPORTATION
03/15/23 (S) READ THE FIRST TIME - REFERRALS
03/15/23 (S) TRA, FIN
03/21/23 (S) TRA AT 1:30 PM BUTROVICH 205
03/21/23 (S) <Bill Hearing Canceled>
02/13/24 (S) TRA AT 1:30 PM BUTROVICH 205
02/13/24 (S) Heard & Held
02/13/24 (S) MINUTE(TRA)
02/15/24 (S) TRA AT 1:30 PM BUTROVICH 205
WITNESS REGISTER
BILL O'LEARY, President and CEO
Alaska Railroad
Anchorage, Alaska
POSITION STATEMENT: Gave invited testimony on SB 105.
ACTION NARRATIVE
1:46:53 PM
CHAIR JAMES KAUFMAN called the Senate Transportation Standing
Committee meeting to order at 1:46 p.m. Present at the call to
order were Senators Wilson, Myers, and Chair Kaufman. Senators
Tobin and Kiehl arrived thereafter.
SB 105-RAILROAD CORP. FINANCING
1:47:36 PM
CHAIR KAUFMAN announced the consideration of SENATE BILL NO. 105
"An Act authorizing the Alaska Railroad Corporation to issue
revenue bonds to finance the replacement of the Alaska Railroad
Corporation's passenger dock and related terminal facility in
Seward, Alaska; and providing for an effective date."
This is the committee's second hearing of SB 105. A committee
substitute was adopted at the first hearing and one amendment
was received for discussion today.
1:48:02 PM
CHAIR KAUFMAN advised that his intern Ms. Wallace-Moyer as well
as Alaska Railroad Corporation (ARRC) President and CEO Bill
O'Leary were available to answer questions.
1:48:15 PM
CHAIR KAUFMAN solicited a motion.
1:48:29 PM
SENATOR MYERS moved to adopt Amendment 1, workorder 33-
LS0606\B.1, to SB 105.
[Original punctuation provided.]
33-LS0606\B.1
Marx/Walsh
2/14/24
AMENDMENT 1
OFFERED IN THE SENATE BY SENATOR MYERS
TO: CSSB 105(TRA), Draft Version "B"
Page 1, line 1, following "Act":
Insert "relating to the review of the Alaska
Railroad Corporation's assets; relating to the Alaska
Railroad Corporation's annual reporting requirements;"
Page 1, following line 4:
Insert new bill sections to read:
"* Section 1. AS 42.40.260(a) is amended to read:
(a) Within 90 days following the end
of the fiscal year of the Alaska Railroad,
the board shall present to the governor a
report describing the operations and
financial condition of the corporation
during the preceding fiscal year. The report
may include suggestions for legislation
relating to the structure, powers, or duties
of the corporation or to the operation or
facilities of the corporation. Subject to
AS 42.40.220, the report shall itemize the
cost of providing each category of service
offered by the railroad and the income
generated by each category. The board shall
submit the report to the senate secretary
and chief clerk of the house of
representatives and notify the legislature
that the report is available.
* Sec. 2. AS 42.40.260 is amended by adding a new
subsection to read:
(d) The annual report must include a
complete accounting, audited by an
independent outside auditor, of the assets
of the corporation and the results of the
review and determination made under
AS 42.40.545.
* Sec. 3. AS 42.40 is amended by adding a new
section to article 6 to read:
Sec. 42.40.545. Annual Review of Assets. (a) The
corporation shall annually review the
corporation's assets to determine whether assets
of the corporation exceed an amount required to
fulfill the purposes of the corporation as
described in this chapter. In making its review,
the board shall determine whether, and to what
extent, assets in excess of the amount required
to fulfill the purposes of the corporation during
the next fiscal year are available without
(1) breaching an agreement entered into by
the corporation;
(2) materially impairing the operations or
financial integrity of the corporation; or
(3) materially affecting the ability of the
corporation to fulfill the purposes of the
corporation as described in this chapter.
(b) The corporation shall specifically identify
in the corporation's assets the amounts that the
board believes are necessary to meet the
requirements of (a)(3) of this section."
Page 1, line 5:
Delete "Section 1"
Insert "Sec. 4"
Renumber the following bill section accordingly.
1:48:34 PM
CHAIR KAUFMAN objected for purposes of discussion.
1:48:37 PM
SENATOR MYERS explained that Amendment 1 does not relate to the
bonding authority of SB 105 but is related to the Alaska
Railroad Corporation (ARRC). It seeks to separate the parts of
the railroad that are directly related to and necessary for
railroad operations, transporting passengers, freight, etc.,
from parts that are profit-seeking in other ways. He said ARRC's
real estate holdings and the management of that real estate have
caused consternation in several districts. He listed Flying
Crown subdivision in Anchorage, the Nenana waterfront, and North
Pole as examples. Amendment 1 would subject ARRC to a third-
party independent audit annually. The audit would be presented
to the Chief Secretary of the Senate and the Chief Clerk of the
House. The audit would show what part of ARRC, is necessary to
operate the railroad and what part is not. He said this
amendment would not change ARRC operations, but it would begin
to provide information to the legislature.
1:50:34 PM
SENATOR WILSON concurred and further proposed separating ARRC
into land bank and operations sides. He questioned, however,
whether ARRC could be defined as the cars and trains for the
purpose of moving goods and people along its rails or if it is
in the business of generating profits as a land trust. He
suggested it may not be possible to separate those parts as one
doesn't work without the other. He said SB 105 is a heavy lift
as it is. He suggested Amendment 1 may make it more difficult to
pass SB 105.
1:51:32 PM
Senator Tobin joined the meeting.
1:51:51 PM
SENATOR MYERS agreed that more action is needed. He said
information is needed to guide action and audits could provide
the necessary information. He acknowledged adding Amendment 1
may affect passage of SB 105. He urged consideration of the
amendment as a first step toward necessary changes to ARRC's
operations and interactions with the public.
1:53:18 PM
SENATOR TOBIN asked for a description of ARRC's current practice
for reporting to the public.
1:54:05 PM
BILL O'LEARY, President and CEO, Alaska Railroad, Anchorage,
Alaska, said ARRC does not support Amendment 1. ARRC is unclear
about what problem or shortcoming Amendment 1 seeks to address.
He opined that the proposed audit would unnecessarily complicate
the outstanding economic development opportunity for the state
represented by SB 105.
MR O'LEARY asserted that the Alaska railroad is one of the more
reviewed and audited entities under state purview. It is subject
to:
• annual financial audit by the international accounting firm
• annual single audit related to some of the federal monies
ARRC receives for passenger services
• national transit database review performed by that
accounting firm
• triennial review conducted by the federal government
through the Federal Transit Administration on many of
ARRC's operations
• statutorily mandated annual performance audit on a
different topic each year to ensure operation efficiency
and effectiveness
• Department of Transportation and Public Facilities (DOTPF)
audits overhead rates
• unfettered access to review by Legislative Audit
• producing myriad reports to the executive and legislative
branches of state government
MR O'LEARY suggested the additional audit would be expensive and
resource-intensive for undefined benefit. He opined that it
would be difficult to determine the appropriate entity to
perform the proposed audit. He offered an example of inventories
for locomotive parts. He explained ARRC does things differently
than lower 48 railroads; being isolated, ARRC manages
significantly more inventory. He asserted that the audit, as
drafted to report on assets and financials simultaneously, would
be infeasible.
MR. O'LEARY said ARRC loves to talk about themselves and, other
than proprietary information, they welcome discussions about
assets, holdings and plans. They make themselves available for
transportation committee meetings and other meetings.
MR O'LEARY concluded that the model for ARRC is ingenious, put
together by a legislature that considered what was necessary for
the railroad to be, by statute, self-sustaining, and not come to
the state every year, or any year, for operating subsidies. He
said the railroad's lands are a key piece of that. He said there
are rail operations and there are land holdings, and they work
together to make ARRC self-sustaining. He cautioned that changes
to the model should be considered with great care.
2:01:11 PM
SENATOR MYERS expressed confusion. He said Amendment 1 asks for
an external audit and the assertion is that ARRC already does an
external audit and that an external audit would be infeasible.
The assertion is that ARRC loves to talk about itself and its
operations but declines to share what it owns and how that
contributes to operations.
2:01:52 PM
MR. O'LEARY explained that ARRC does have an annual standard
financial audit, examining whether ARRC is presenting
information clearly and accurately. ARRC's understanding is that
the proposed audit would look at substantially more than that:
examining assets to determine what is in excess of what is
necessary to meet the railroads mission.
2:02:36 PM
SENATOR KIEHL joined the meeting.
2:02:40 PM
MR. O'LEARY asserted it is ARRC's job to look at their holdings
every day as part of running the business. They would not hold
on to assets that aren't contributing to the business. He
explained that requiring an audit by statute like the one
proposed would be tremendously expensive and tremendously
resource extensive for limited benefit. He stated it is the
intention of ARRC to be open with the legislature and others,
subject to proprietary concerns, about what they're doing, what
their plans are, where they've been and where they want to go.
2:03:46 PM
At ease
2:04:26 PM
CHAIR KAUFMAN reconvened the meeting.
CHAIR KAUFMAN opined that, while Amendment 1 may have merit, it
is beyond the scope of SB 105.
2:04:33 PM
CHAIR KAUFMAN maintained his objection and asked for a roll call
vote.
2:05:05 PM
A roll call vote was taken. Senators Kiehl and Myers voted in
favor of Amendment 1 and Senators Tobin, Wilson, and Kaufman
voted against it. The vote was 2:3.
2:05:40 PM
CHAIR KAUFMAN announced Amendment 1 failed on a vote of 2 yeas
and 3 nays.
2:05:48 PM
CHAIR KAUFMAN called for discussion of SB 105. He asked about
the scope of the dock design and the focus on cruise ship
function. He asked about other wharf or dock operations in the
future, and about the function of other facilities, especially
about freight in the Seward area.
2:06:27 PM
MR. O'LEARY answered that ARRC has three docks in Seward:
• the old coal dock, renamed the "energy dock"
• the passenger dock, which is the subject of SB 105 and this
discussion
• the freight dock
He said the passenger dock is used in the winter for freight
activities. He explained the majority of freight activities
occur at the freight dock, which is the subject of another
capital project. He said there is a $25 million plan to expand
the freight dock to make it more functional for the increased
business they have been experiencing and expect in the future.
2:07:56 PM
At ease.
2:08:10 PM
CHAIR KAUFMAN reconvened the meeting and solicited a motion.
2:08:14 PM
SENATOR WILSON moved to report committee substitute (CS) for SB
105, work order 33-LS0606\B, from committee with individual
recommendations and attached fiscal note(s).
2:08:37 PM
CHAIR KAUFMAN found no objection and CSSB 105(TRA) was reported
from the Senate Transportation Standing Committee.
2:08:39 PM
At ease
2:10:37 PM
CHAIR KAUFMAN reconvened the meeting.
2:10:44 PM
There being no further business to come before the committee,
Chair Kaufman adjourned the Senate Transportation Standing
Committee meeting at 2:10 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CSSB 105 Amendment 1.pdf |
STRA 2/15/2024 1:30:00 PM |
SB 105 |