HOUSE BILL NO. 395 "An Act relating to the Alaska marine highway system fund and the Alaska marine highway system vessel replacement fund; establishing the Alaska marine highway system fund and the Alaska marine highway system vessel replacement fund outside the general fund; authorizing the commissioner of transportation and public facilities to expend money from the Alaska marine highway system fund and the Alaska marine highway system vessel replacement fund; and providing for an effective date." 2:18:37 PM Co-Chair Merrick asked if members had questions. 2:18:55 PM Co-Chair Merrick OPENED public testimony. DAVID IGNELL, SELF, JUNEAU, spoke in opposition of HB 395 because it seemed to give the commissioner of the Department of Transportation and Public Facilities (DOT) authority to spend a significant amount of money. He noted that the bill was introduced less than a week ago and questioned why public testimony had been scheduled so quickly. He expressed that it seemed like someone was trying to "pull a fast one" with the bill. It reminded him of the events that led up to the defunding of the Alaska Marine Highways System (AMHS). He thought that the bill would be detrimental to rural communities. He requested that public hearing of the bill be postponed until the people of Alaska were more aware of it, and for the public to be given a "reasonable opportunity to be heard" through public testimony. Co-Chair Merrick indicated that the committee was not trying to rush the bill hearing process. She relayed that the hearing had been noticed in the previous week and that this was the first hearing of the bill. Mr. Ignell stated that he had spent only a few minutes looking at the bill. He shared his understanding of the bill hearing process in that once public testimony was closed for a bill, the public had no more opportunities for input. He thought the amount of time given for public testimony was insufficient. Co-Chair Merrick asked the testifier to keep his comments focused on the bill. She explained that the committee procedurally held public testimony and then would decide whether to draft amendments based on the testimony. She invited the next testifier to begin. 2:25:55 PM PAT ALEXANDER, SELF, SITKA (via teleconference), agreed with Mr. Ignell that the legislation had been brought forth too quickly. She thought the monies were being moved to another account to avoid the sweep provision. She was interested in protecting the funds so that they would only be spent to support AMHS and not diverted to any other purpose. She asked for clarification on the legislation. Co-Chair Merrick indicated committee hearings could be revisited online. Representative Rasmussen asked if the testifier objected to creating a separate account that was outside of the general fund to disallow the fund from being sweepable. The reason the legislation was brought forward was because there had been previous accounts that fell under the general fund that were subject to the sweep and it did not achieve the three-quarter vote threshold. It was clear in the bill that the money was for a specific purpose. It also specified to what purpose the commissioner could use the funding. Ms. Alexander did not want the money to be swept into the general fund. She wanted to ensure that the money would be spent on AMHS. 2:30:16 PM Representative Rasmussen thought the bill accomplished what the testifier was hoping for it to accomplish. Co-Chair Merrick indicated that HB 395 dealt with the sweepability of AMHS, but HB 322 also dealt with that matter. They were two versions of the bill with slight differences. 2:31:15 PM Representative Josephson noted that there were differences in the bill. He wondered if Ms. Alexander's and Mr. Ignell's testimony came from a place of well-deserved confusion because the administration was not in favor of additional AMHS funding earlier in the term. He wondered whether the testifiers were suspicious of the administration because of its prior opposition to funding AMHS. Ms. Alexander was concerned that the money would be used for a purpose other than AMHS because of the state's dire fiscal position. Representative Josephson clarified that neither bill could guarantee that funds would be used for designated purposes. He explained that it was a presumptive designation. It came down to a question of control of the funds, and whether the legislature or the commissioner should be made responsible for those funds. 2:33:35 PM FRANK LEE, SELF, DOUGLAS (via teleconference), spoke in support of funding the AMHS for as long as possible. He indicated that the funds should be allocated for AMHS and should not be allocated for any other purpose. There had been historic problems maintaining the ferries due to lack of funds. He stated that AMHS was important to sustain Alaskan communities and was a lifeline for Southeast Alaska. 2:35:15 PM WANDA CULP, SELF, JUNEAU (via teleconference), commented that the State of Alaska was corporate-based due to Alaska Native Claims Settlement Act (ANCSA). She added that Southeast Alaska was still suffering from the governor's last withdrawal of the AMHS and that it was more expensive than ever to travel on the ferry. She noted that DOT used federal and state transportation funding and that it must not be abused. She suggested that [federal] Indian-based funding had most likely been absorbed by DOT. She stated that Native people deserved equal access to AMHS and the road system, otherwise it was akin to genocide. She wondered if the governor's action of taking from the AMHS was specifically to accommodate the corporate-rooted infrastructure in the northern areas of the state rather than accommodating the Tongass National Forrest. It seemed that the funding the governor took was used for business corporations. She spoke of the high cost of travel by air and wanted to keep the AMHS out of the governor's hands. She emphasized the importance of equality, and that the state needed to step back. 2:39:28 PM SHANNON ADAMSON, ALASKA REGIONAL REPRESENTATIVE, MASTERS MATES AND PILOTS, JUNEAU (via teleconference), spoke in support of AMHS. She spoke in support of HB 322 and in opposition to HB 395. She opined that AMHS needed stability and predictability, and HB 322 provided AMHS with the knowledge that future vessels would be available on a yearly basis. Although HB 395 provided some protection to the funds, it allowed the DOT commissioner to spend some of the funds without much oversight. She was concerned that the current management system would have control of the funds, which was troubling because management had problems making decisions that were in the best interest of the vessels and the communities. The bill failed to provide some protections of the fund from the political cycle which had always been a problem for AMHS. She concluded that HB 322 would be a huge step forward. 2:41:44 PM GERRY HOPE, TRANSPORTATION DIRECTOR, SITKA TRIBE OF ALASKA, SITKA (via teleconference), indicated that the Sitka Tribe of Alaska had submitted comments in writing and had been solicited by AMHS over the past few decades regarding the winter and summer ferry schedules. He noted the declining service of AMHS to Sitka. He thought the bill had a good intent except for the control of funding. The concept of money being set aside for the specific purpose of AMHS was appreciated. However, he thought the wheels came off the bill by putting too much authority into the hands of the commissioner. He liked the concept of the bill but noted the constitutional requirement for funds to not be designated for a specific purpose. 2:44:48 PM Vice-Chair Ortiz noted that there were two different bills before the committee, HB 395 and HB 322, but that both bills did essentially the same thing. The main difference was that the control of the funds was in the hands of the commissioner of DOT under HB 396. Under HB 322, the authority rested in the hands of the legislature. He asked whether Mr. Hope had a preference between the bills. Mr. Hope preferred the authority be in the hands of the legislature but acknowledged that things could change in the future. He stated that more heads were better than one. He questioned the role of the newly created AMHS board because it was unclear. 2:47:05 PM Co-Chair Merrick CLOSED public testimony. 2:47:14 PM Representative Thompson asked Co-Chair Foster about the new timeline since the Department of Revenue had released the spring revenue forecast. Co-Chair Merrick asked Representative Thompson to hold his question until the committee was done with HB 395. Representative Wool appreciated Co-Chair Merrick's decision to bring both bills forward at the same time. He thought the committee would be taking action on one bill at a time because the bills were very different. He thought there was no rush to move the bills forward without first having deep discussions. Co-Chair Merrick set an amendment deadline for March 16, 2022. 2:49:15 PM Co-Chair Foster indicated amendments on the budget would be due by March 18, 2022. The committee would begin taking up amendments on Monday, March 21, 2022 and planned to discuss amendments through Thursday, March 24, 2022. He hoped that the budget would be moved out no later than the following week. The committee would have hearings twice a day until amendments were completed. The budget would be moved to the House floor from March 28, 2022 to March 31, 2022. 2:51:17 PM Representative Thompson thanked Co-Chair Foster for laying out the timeframe. Co-Chair Merrick reviewed the agenda for the following meeting. Representative Rasmussen asked Co-Chair Foster when the committee substitute (CS) would be taken up. Co-Chair Foster thought that the spring revenue forecast was supposed to have been released earlier that morning, and the intention was to base a CS on that forecast. More money was coming into the state and there was more funding available for appropriation. There would be a rollout of the changes the following afternoon. HB 395 was HEARD and HELD in committee for further consideration. Co-Chair Merrick adjourned the meeting.