Number 500  SB 21 ALASKA MARINE HIGHWAY AUTHORITY  CHAIRMAN GREEN brought SB 21 before the committee as the final order of business. SENATOR ROBIN TAYLOR , prime sponsor of SB 21, read the following sponsor statement into the record: "SB 21 will establish the Alaska Marine Highway Authority to assume management of the Marine Highway System from the Department of Transportation & Public Facilities. "The Authority would be a public corporation of the state as an instrumentality of DOT/PF, but would have a legal existence independent and separate from the state. The new Authority would be comparable to the Alaska Housing Finance Corporation or the Alaska Industrial Development and Export Authority. However, it is different from the Alaska Railroad Board; it would not own its own assets, and would not be able to be self sufficient. "Establishment of such an authority boards would bring maritime experience and continuity to the management of the Alaska Marine Highway System. "Based on information gathered at public hearing over the interim, the Senate Task Force on the Alaska Marine Highway System concluded that the legislature should consider the creation of such an Authority. "Testimony received by the Task Force indicated that DOT management of the marine highway lacks focus and that AMHS administration under DOT lacks maritime experience. "Management under DOT has become insular and is unresponsive to input from vessel employees and the general public. Scheduling is chaotic and the fare structure has discouraged ridership. The reservations system has been an abject failure. "While concerns over funding levels are valid, the naturally bureaucratic mind-set of the Department has tightened what former director Jim Ayers termed a "death spiral". "Establishment of the Alaska Marine Highway Authority will not be a panacea, but will give the system a new perspective. It will also give it some history and background in maritime management, which it does not have now, as well as it will provide an opportunity for some major changes that will all to the benefit of the system itself, the legislature and the people of Alaska." Number 515 SENATOR TAYLOR directed attention to two proposed amendments to SB 21. He explained the first amendment would tighten up the designation of the maritime union representative by providing that the union representative would be a representative of the largest number of onboard employees in the authority. It also makes certain the commissioner of DOT would not end up being the chairman of the board. SENATOR MACKIE commented that IBU would be the representative of the largest number of onboard employees, and he questioned why the representation was being limited to one particular union. SENATOR TAYLOR replied that there is another union seat available, and it was just felt that at least one seat ought to represent the majority of the employees. He added he is trying to get as much balance to the board so that it will work effectively. Number 565 SENATOR TAYLOR , addressing the second amendment, explained the governor would be appointing the members to the board, with the exception of the commissioner of DOT, and it was felt that those six members should stand for confirmation before the Legislature. However, before confirmation can be required, the directors must have a quasi-judicial function about them. The amendment accomplishes that purpose by providing that the authority may adopt regulations. SENATOR MACKIE asked why these board members would have to be confirmed if he is trying to come up with something comparable to AIDEA and AHFC. SENATOR TAYLOR responded this is to address a concern that the makeup of the board could easily be stacked. TAPE 97-12, SIDE B Number 555 SENATOR WARD moved adoption of the following Amendment No. 1. Hearing no objection, CHAIRMAN GREEN stated the amendment was adopted. Amendment No. 1 Page 1, line 13: Delete "a maritime union" Insert "the maritime union representing the largest number of onboard employees of the authority" Page 3, lines 3 - 4: Delete "their number" Insert "the appointed directors" SENATOR WARD moved adoption of the following Amendment No. 2. Hearing no objection, CHAIRMAN GREEN stated the amendment was adopted. Amendment No. 2 Page 2, line 8: Delete "members" and insert "directors" Page 2, line 9: Following "affairs." insert "The appointed directors are subject to confirmation by a majority of the members of the legislature in joint session" Page 2, line 10: Delete "members" and insert "directors" Page 4, following line 13 insert new paragraph (10) to read: "(10)" adopt regulations under AS 44.62 (Administrative Procedure Act) governing (A) access to and use of services and facilities of the authority; (B) the authority of the officers and crew of vessels of the authority to maintain peace and order as necessary to protect the health, safety, and public welfare of the patrons and employees of the authority; (C) rates, tariffs, and other charges for transportation and other services provided by the authority;" Renumber the following paragraphs accordingly. Page 4, line 16: Delete all material. Renumber the following paragraph accordingly. Number 560 SENATOR DUNCAN asked how this authority, since it going to be autonomous, is going to work with the budget process. SENATOR TAYLOR said he believes it will work just as the current one works. The board, itself, or its executive director, will appear before committees of the Legislature, they will submit a proposed budget and that budget will be adjusted up or down as the Legislature sees fit. He said he doesn't see a dramatic change in the process, but he thinks its good to be concerned about whether or not that authority would continue to have the level of support from the executive branch. SENATOR DUNCAN said that was his concern, that the more autonomous we make it, what type of support does it lose from the executive branch for the operational side of the budget, as well as the commissioner of DOT is going to have pressure from the highway side to provide a majority of the federal highway funds to highways and not the Marine Highway System because it is no longer his responsibility. He asked Senator Taylor if he had any fear that all of a sudden the Marine Highway System will take a real back seat as far as funding necessary improvements, renovations, maintenance, etc. SENATOR TAYLOR answered he didn't think it could do much worse. He noted the state of Washington intentionally makes certain that they don't have any of the federal highway funds mixed in, and, as a consequence, they then can dictate that their boats will be repaired only in Puget Sound yards. He said he thinks it helps the commissioner to the extent that he now has a more autonomous group arguing with probably better credibility than what current staff is able to argue. Number 445 SENATOR MACKIE said he supports the concept of the board membership having representation of people that work on the ferries, because he thinks a lot of the information that's readily available from people that actually work on the ships is not being currently utilized to make it a better system. However, he questioned if conflict of interest problems could arise by a couple of members sitting on the board making decisions over working conditions, contracts, or other kinds of things that actually affect them. SENATOR TAYLOR replied that with seven members on this board, he doesn't believe it is going to be a problem. He added that he is trying to place members out of this fleet into direct control of this operation because he believes they want to keep the system going. SENATOR MACKIE noted there is less service now than there was six years ago, the public is paying more than they were years ago, the Legislature is appropriating less general funds, etc., and he asked what kind of money does he think is going to be saved in switching to this kind of management, and how are we going to be able to improve service. SENATOR TAYLOR replied he believes that though there will be an initial transition cost and start up cost, if a higher level of maritime experience were involved in management and if management would reduce itself in size to where it was comparable to other maritime operations, that there would be significant savings. Those savings could then be put into further service out in the fleet. Number 350 CHAIRMAN GREEN stated testimony would be taken from individuals waiting to testify over the teleconference network. ANDREA BARKLEY , an employee of the Alaska Marine Highway System testifying from Ketchikan, said she has just come from a meeting with Commissioner Perkins and Gary Haden, and the crews on the Marine Highway System were able to submit three more alternatives for possible fleet deployment. She said she believes Commissioner Perkins is interested in solving some of the problems, but she is not sure if, even through this administrative process, he would be able to do it himself. Ms. Barkley said the Executive Committee of the Inland Boatmen's Union has passed a resolution in support of SB 21. She also voiced her support for the two amendments adopted by the committee. Concluding, Ms. Barkley said she hopes the perception in the Legislature is not that the system is so broken that it must be thrown in the garbage can, because that is not the case. The crews on the Marine Highway System really love their jobs, and that's why they care so much and wish to see it survive and to prosper. She said they have an administrative problem and they need to be able to change the way that they are administrated. Number 298 DOUG WARD , Project Manager of Alaska Ship & Drydock, the current operators of the state-owned Ketchikan Shipyard, spoke in support of an amendment adopted in the Senate Transportation Committee, which added the interport differential, and which is designed to level the playing field for Alaska shipyards in competitive bids situations with out-of-state shipyards. The amendment only asks that the state consider all of the costs that go into transporting a vessel, and it brings fairness to the evaluation process in how the interport differential is used in evaluating a bid. It does not change how the state currently conducts its bidding practices. All it does is request a full accounting of the interport costs to make a more fair evaluation process. Number 250 SAM KITO , Special Assistant to Commissioner Perkins, Department of Transportation & Public Facilities, read a summary of a prepared statement that was read into the record by Commissioner Perkins in the Senate Transportation Committee. (See Senate Transportation minutes dated March 6, 1997) Mr. Kito, speaking to interport differential provision that was added in the Transportation Committee, said the department is concerned that the interport differential costs potentially could cost the Marine Highway System. A recent AIDEA report estimates that the cost to perform work on the vessels in Ketchikan was on the average 20 percent higher than outside the state. Using that 20 percent number the system believes it could face an additional $500,000 annually in costs for work at the Ketchikan shipyard. Also, this change will increase the cost that the Marine Highway System will not be able to receive reimbursement for under a federal project. Number 148 There being no further testimony on SB 21, CHAIRMAN GREEN stated it was her intention to hold the bill and schedule it for another hearing on Thursday, March 20. She then adjourned the meeting at 5:07 p.m.