ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 9, 2017
1:39 p.m.
MEMBERS PRESENT
Senator Mia Costello, Chair
Senator Shelley Hughes, Vice Chair
Senator Kevin Meyer
Senator Gary Stevens
Senator Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 14
"An Act relating to transportation network companies and
transportation network company drivers."
- MOVED CSSB 14(L&C) OUT OF COMMITTEE
PRESENTATION: ADMINISTRATIVE ORDER 281
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 14
SHORT TITLE: TRANSPORTATION NETWORK COMPANIES
SPONSOR(s): SENATOR(s) COSTELLO
01/09/17 (S) PREFILE RELEASED 1/9/17
01/18/17 (S) READ THE FIRST TIME - REFERRALS
01/18/17 (S) L&C, FIN
02/02/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/02/17 (S) Heard & Held
02/02/17 (S) MINUTE(L&C)
02/09/17 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
NANCY ALLRED, Senior Counsel
Uber
San Francisco, California
POSITION STATEMENT: Answered questions related to SB 14.
WESTON EILER, Staff
Senate Labor & Commerce Committee
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Explained the changes between version U and
version A of SB 14.
BRIAN GEBHARDT, Uber
Portland, Oregon
POSITION STATEMENT: Answered questions related to SB 14.
MEGAN WALLACE, Legislative Council
Division of Legal and Research Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions related to SB 14.
SHELDON FISHER, Commissioner
Department of Administration (DOA)
Juneau, Alaska
POSITION STATEMENT: Introduced Administrative Order 281.
DANNY ACOSTA, Partner
Boston Consulting Group (BCG)
Boston, Massachusetts
POSITION STATEMENT: Presented information on "State of Alaska:
Economic Context and Agency Review" related to Administrative
Order 281.
NICOLE BENNETT, Principal
Boston Consulting Group (BCG)
Boston, Massachusetts
POSITION STATEMENT: Presented information on Alaska Housing
Finance Corporation (AHFC), Alaska Industrial Development and
Export Authority (AIDEA, and Alaska Energy Authority (AEA)
findings related to the lower cost of housing, energy, and large
enterprise economic development.
ACTION NARRATIVE
1:39:59 PM
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing
Committee meeting to order at 1:39 p.m. Present at the call to
order were Senators Hughes, Meyer, Stevens, Gardner, and Chair
Costello.
SB 14-TRANSPORTATION NETWORK COMPANIES
1:40:14 PM
CHAIR COSTELLO announced the consideration of SB 14 and noted it
is the second hearing. She stated the intent is to conclude
public testimony, adopt a committee substitute (CS), and look to
the will of the committee. She asked if anyone wanted to
testify.
1:41:15 PM
NANCY ALLRED, Senior Counsel, Uber, San Francisco, California,
offered to answer questions related to SB 14.
1:41:38 PM
CHAIR COSTELLO closed public testimony.
1:41:50 PM
SENATOR HUGHES moved to adopt the CS for SB 14, labeled 30-
LS0250\U, as the working document.
CHAIR COSTELLO objected for discussion.
1:42:23 PM
WESTON EILER, Staff, Senate Labor & Commerce Committee, Alaska
State Legislature, explained the changes in version U for SB 14
on behalf of the sponsor. He said the committee substitute makes
several changes after consultation with stakeholders, insurance
companies, the Department of Law, Uber, Lift, and a variety of
others. Many of the changes are technical and based on model
language from the National Council of Insurance Legislators.
He described the following changes:
Page 1, line 13, changing "offered" to "afforded," and adding
the language "notwithstanding any requirement under AS 28.20."
is added.
Page 2, the first sentence on lines 9-10 is deleted, and
language is added in the new subsection (b)(2)(A) and (B) on
lines 17-22 of version U. It reads: "may be construed to require
an insurer to use specific policy language or to refer to this
section in order to exclude any and all coverage for any loss or
injury that occurs while a driver (A) is logged onto the digital
network of a transportation network company; or (B) provides a
prearranged ride."
Page 3, line 10, adds the language "Insurers potentially
providing coverage" and deletes "to one another a clear
description" and adds "upon request of any insurer involved in
the claim, the applicable coverages".
Page 5, line 1, is a change made at the request of the
Department of Law. It moves the regulation of rideshare
companies under the Department of Commerce because they are
technology companies, not transportation companies.
Page 8, lines 12-17, provides certificate of insurance.
Page 9, line 8, [Sec 28.23.100. Transportation network company
driver requirements] adds the language "or a third party,".
1:47:11 PM
SENATOR STEVENS asked Mr. Eiler if he was referring to version
U, adding that he was having trouble following the changes.
MR. EILER answered yes. He continued to say the final changes
are in Sections 6 and 7 on page 11. Section 6 amends AS 2910.200
by adding a new paragraph (66). It reads, "AS 29.35.148
(regulation of transportation network companies or drivers).
Section 7 adds a new Sec. 29.35.148. Regulation of
transportation network companies or drivers.
CHAIR COSTELLO asked Mr. Eiler to go over the memo that provides
follow up answers to questions members posed during a previous
hearing.
1:49:55 PM
MR. EILER read the following questions and answers:
Senator Stevens:
What is the cause and effect of rideshare companies
entering a municipal transportation market?
A: four-month pilot study in Portland, Oregon showed
that despite an initial decline of 16% in taxi
traffic, combined for-hire Transportation business
grew 40% after the introduction of rideshare services.
Senator Gardner:
What constitutes an Independent Contractor?
A: Alaska law does not define "Independent Contractor"
in statute. AS 23.20.230(a) provides a list of job-
types/occupations that are exempt from the State's
Workers' Compensation program.
Can Uber drivers decline passengers? What are Uber's
policies for confirming insurance coverage?
A: Yes - Please see attached letter from Uber
regarding their verification procedures and driver
protection policies.
Senator Hughes:
Can drivers display proof of insurance electronically?
A; Yes - AS 28.22.019(a) allows for Alaskans to
display proof of insurance on a mobile electronic
device.
1:53:09 PM
CHAIR COSTELLO noted Senator Gardner had questions for the Uber
representative.
SENATOR GARDNER asked if Uber could provide a sample contract
and an employee handbook. She also asked how large or small
Uber's role is in purchasing cars for drivers.
1:55:16 PM
BRIAN GEBHARDT, Uber, responded that Uber does not have a
handbook, but it does have Uber Community Guidelines that lay
out expectations for both the rider and the driver. He noted
there is also information available on the internet.
To the second question, he explained that Uber does not provide
vehicles for its drivers. In some places there is a separate
operating entity called Exchange Leasing for driver partners. He
did not anticipate having an exchange program in Alaska.
SENATOR GARDNER asked for a sample contract that clarifies
whether the drivers are employees or independent contractors.
1:57:37 PM
SENATOR GARDNER referred to a letter the committee received from
Daniel McHugh, Senior Vice President of Alaska USA Federal
Credit Union. She read:
Comp and Collision coverage works hand in hand to help
repair and replace one's car in the event of physical
damage. Personal auto insurance carriers exclude
carriers for Comp and Collision when the automobile is
being used for ride sharing purposes. (TNC driver)
Ridesharing Comp and Collision insurance is available
to some, not all, carriers in the Lower 48, only if
the TNC driver elects to pay the additional
endorsement or rider.
She asked if that issue is addressed in version U.
MR. EILER said he was sure it was. He said they met with Alaska
USA and forwarded their language for inclusion in version U.
1:59:25 PM
MEGAN WALLACE, Legislative Council, Division of Legal and
Research Services, Legislative Affairs Agency, pointed to
language on page 2, subsection (b), line 9, "Nothing in this
section .... (3) precludes an insurer from providing coverage
for the personal vehicle of a transportation network company
driver if the insurer chooses to provide coverage by contract or
endorsement."
She said this allows insurance companies to exclude or endorse
coverage.
2:01:18 PM
SENATOR GARDNER asked if the language about Uber confirming that
drivers have appropriate coverage includes the optional contract
or endorsement.
MS. WALLACE replied the insurance provision in Section 2 opens
it up for private insurers to either exclude or provide
endorsements, but in Section 5, pages 4 and 5, specifically line
line 22, sets the coverage requirement for drivers and
transportation network companies. The protection for the riders
mandates that the driver or the company provide coverage. On
page 6, subsection (d), it says if the driver does not have
coverage the transportation network company's Insurance must
provide it.
2:04:09 PM
SENATOR STEVENS asked when the driver is plugged in to the
digital network.
MR. EILER deferred to Uber to answer.
2:04:53 PM
MR. GEBHARDT explained that drivers are considered logged in to
the app when they have opened the application and declared
themselves available. From an insurance perspective, that is
when Period I starts.
2:05:45 PM
At ease
2:06:12 PM
CHAIR COSTELLO reconvened the committee. She noted Mr. Gebhardt
would address Senator Stevens' question about when the insurance
kicks in.
MR. GEBHARDT clarified that Period I starts when drivers log in
to the platform and make themselves available to provide rides.
Once the request has been accepted by the driver and he or she
is enroute to pick up the driver, Period II begins. Period III
begins when the ride starts, after the passenger enters the
vehicle. After the trip concludes, it is back to Period I. He
referred to a handout for further details.
MS. ALLRED added that the drivers have a separate app and when
they choose to go online, insurance coverage begins.
CHAIR COSTELLO requested that Ms. Allred state the insurance
that is provided to drivers in each period.
MS. ALLRED explained that Period I provides primary automobile
insurance of about $50,000 for one person for bodily injury,
$100,000 for all people, and $25,000 for property damage. For
Periods II and III, there is primary automobile liability
coverage of $1 million. The National Conference of Insurance
Legislation (NCOIL) has adopted this as model legislation.
2:08:55 PM
SENATOR MEYER referred to page 7, line 19, "In the event of a
loss involving a personal vehicle used in connection with a
transportation network company and if the personal vehicle is
subject to a lien, the insurance carrier for the transportation
network company shall pay a claim covered under collision
physical damage coverage or comprehensive physical damage
coverage directly to the business repairing the personal vehicle
or jointly to the owner of the personal vehicle and the primary
lienholder on the covered personal vehicle." He questioned
whether the payment should just go to the lien holder who owns
the vehicle.
CHAIR COSTELLO clarified that it says, "of the personal vehicle
and the primary lien holder."
SENATOR MEYER said he understood that the insurance company
would pay both the owner of the vehicle and the lien holder.
CHAIR COSTELLO asked for clarification.
MS. WALLACE responded that the provision requires that the check
or money to pay for the collision repair is either sent directly
to the repair shop or in a check to the lien holder and the
owner jointly to be issued to whoever repairs the vehicle. She
recalled that was part of the model language.
2:11:27 PM
At ease
2:12:30 PM
CHAIR COSTELLO brought the meeting back to order.
SENATOR MEYER noted if the check is made out jointly it should
be ok.
He referred to Section 7, line 19, that says "transportation
network drivers is reserved to the state" and line 20 which says
that "a municipality may not enact or enforce an ordinance
regulating transportation network companies or transportation
network drivers." He said he understands the need for a
consistent, statewide law. He asked if Anchorage has weighed in,
considering the taxicab industry has been in place for so long.
SENATOR GARDNER said she tried to obtain that information, but
was unsuccessful.
2:14:03 PM
SENATOR GARDNER looked at the sectional summary for version U,
specifically AS 28.23.010, "Provides that a transportation
network company or driver is not a common carrier and may not
provide taxicab or for-hire services." She said that area gets
to the core of the bill because common carriers are regulated,
whereas transportation network companies are not. She summarized
that the bill removes TNCs as common carriers and removes
Workers Compensation from TNCs
MR. EILER responded that currently there is no definition for
independent contractors in statute. He noted that there are
additional distinctions between the two transportation modes.
2:15:59 PM
SENATOR HUGHES pointed out in the legislative intent language,
the wording "ensure the safety, reliability, and cost-
effectiveness of rides" on page 1, line 7. She suggested that
the legislature cannot guarantee the safety, reliability, and
cost-effectiveness of rides, but instead, could help encourage
and promote them. She emphasized that it does not guarantee
them.
2:17:00 PM
SENATOR STEVENS commented that insurance is complicated. He
asked if taxis can carry less insurance when they are not
carrying passengers. He also asked what level of insurance
drivers are on when they've ended a trip and what the process is
for changing the level of insurance.
2:18:16 PM
MR. EILER explained that the process is done through a computing
platform. When the driver is signed in he/she is on the
insurance. His understanding is that after a trip is completed,
the driver is back under Period I indicating they are available
or they can switch off line.
SENATOR STEVENS asked if the driver could end the ride and go
off the app and then sign in again if he/she was flagged down.
MR. EILER clarified that Uber drivers cannot be flagged down.
All transactions are done through the app.
SENATOR STEVENS commented on the advantage of being able to
switch levels of insurance coverage. He asked the Uber
representative to address his question.
2:20:34 PM
MR. GEBHARDT clarified that in Period I drivers are logged in
and once they completed the ride and Period III ends, they are
back to Period I coverage.
2:21:22 PM
SENATOR HUGHES commented that taxicabs are identifiable and Uber
cars are not. She wondered if a person could ever flag an Uber
car down.
MR. GEBHARDT said there should not be any markings on Uber
vehicles. The rider and driver partner by app.
2:22:31 PM
SENATOR HUGHES moved to report the CS for SB 14, labeled 30-
LS0250\U, from committee with individual recommendations and
attached zero fiscal notes.
SENATOR GARDNER objected. She said she hasn't had time to read
and understand the committee substitute. She said she likes the
idea of Uber and many Alaskans want it, but she is reluctant to
step into the dispute between taxicabs and Uber and choose
between two business models. She removed her objection, and
added that it doesn't mean that she would support the bill on
the Senate floor.
2:24:03 PM
CHAIR COSTELLO stated that without further objection, CSSB
14(L&C) is reported from the Senate Labor & Commerce Standing
Committee.
2:24:22 PM
At ease
^PRESENTATION: ADMINISTRATIVE ORDER 281
PRESENTATION: ADMINISTRATIVE ORDER 281
2:26:42 PM
CHAIR COSTELLO announced that the next order of business would
be a presentation from the Boston Consulting Group (BCG) on
Administrative Order 281.
2:27:17 PM
SHELDON FISHER, Commissioner, Department of Administration
(DOA), introduced Administrative Order 281. He explained that
the Governor requested that the Department of Administration
look at the Alaska Housing Finance Corporation (AHFC), the
Alaska Energy Authority (AEA), and the Alaska Industrial
Development and Export Authority (AIDEA) to see if there were
opportunities to be more efficient. In addition, Administrative
Order 281 requested strategies to improve economic development
if the state.
2:28:23 PM
DANNY ACOSTA, Partner, Boston Consulting Group (BCG), presented
information on "State of Alaska: Economic Context and Agency
Review" related to Administrative Order 281. He said that one of
the project mandates was to address the economic ecosystem in
Alaska and to suggest potential opportunities. He shared the
project overview: the economic development landscape, AHFC
summary findings, AEA summary findings, AIDEA summary findings,
and the next steps.
He said that there were particular questions for each agency.
For AHFC it was understanding its role in Alaska's market
compared to the other entities. For AEA, the questions related
to its operations, impacts, and importance in supporting rural
communities. For AIDEA, the focus was on development finance and
the role it plays nationally and internationally, from small
investments to larger projects. All throughout, BCG was seeking
efficiency opportunities.
2:31:38 PM
MR. ACOSTA turned to the current financial state in Alaska. He
said Alaska scores poorly on national ranking of business
attractiveness and is mid-range in regulatory friendliness. BCG
considered Alaska's unique circumstances, both in the context of
strengths and challenges. Alaska has considerable resources to
leverage, but also faces some unique challenges, such as
resource dependency, impacts from oil, unique regional needs,
and low population density.
2:32:56 PM
MR. ACOSTA described how Alaska faces a unique set of
institutional challenges and opportunities for enterprise
economic development. He described challenges such as a sense of
de-centralized planning and lack of a common state vision. There
are gaps in capabilities and capacity and political cycles limit
sustained efforts, and there is a focus on regulation versus
commercialization.
2:34:08 PM
MR. ACOSTA addressed the tremendous opportunities Alaska has for
enterprise economic development: a very connected network,
leadership, openness to private sector involvement, Native
corporation empowerment, local knowledge, and a growing network
of support for entrepreneurs.
He showed a diagram of Alaska's current economic development
efforts spread across many entities, and noted a need for
greater coordination.
2:35:45 PM
MR. ACOSTA related that BCG looked at other states' core
capabilities and recommended that in order to further support
enterprise economic development success, Alaska should build
additional capabilities.
He turned to lessons from other states, noting there is a range
of models between public approaches and private approaches for
building an "ecosystem" of entities. He described the pros and
cons of public, public-private, and private models.
2:38:11 PM
He reviewed various other states' economic development
approaches, which could provide key lessons for Alaska in order
to optimize the institutional environment. He provided examples
from Montana, Indiana, Oregon, Utah, and Texas.
2:39:56 PM
MR. ACOSTA reported that BCG also looked at examples overseas
and nation-level models, given Alaska's ownership of key assets
and unique resource rich nature.
He compared competitor states to Alaska, pointing out that they
actively leverage a broader toolkit of economic development
incentives. He said all models are different and target specific
sectors.
2:42:18 PM
MR. ACOSTA maintained that despite a commanding position and
some natural advantages, Anchorage's (ANC) airport transit cargo
market share is declining. Despite a tremendous amount of flight
activity, BCG noted a need to create an aviation cluster. He
showed graphs of market share by number of flights and pounds of
cargo.
MR. ACOSTA said BCG built a business case for an aviation
maintenance business that highlighted the advantages the airport
has for maintenance and repair operators. They rigorously tested
the business case for aviation maintenance as a path to reverse
the decline. The biggest concern was lack of trained labor.
He related that BCG built a business case, tested its viability
with operators, and came up with key learnings and success
factors. He noted the quote at the bottom right corner of slide
18, "Beyond incentives, I want to see a broader state aviation
strategy. I'm not coming for five years, I'm coming for 25 years
and I need other players to come along."
He concluded that a comprehensive approach for ANC is required
to turn the tide on a challenged cargo business.
2:46:40 PM
MR. ACOSTA provided a table of how Alaska lags competitor states
in job creation, training, and capital investment. He pointed
out that many competitor states have maintenance, repair and
operations (MRO) or aviation specific incentives.
He summarized the presentation.
2:47:48 PM
NICOLE BENNETT, Principal, Boston Consulting Group (BCG),
presented information on Alaska Housing Finance Corporation
(AHFC), Alaska Industrial Development and Export Authority
(AIDEA, and Alaska Energy Authority (AEA) findings related to
the lower cost of housing, energy, and large enterprise economic
development. She said that, collectively, the agencies provide
many benefits to Alaska, however, BCG found that there are
opportunities for them to increase efficiency and improve
Alaska's economic development.
MS. BENNETT first addressed AHFC. She related that BCG was asked
by AHFC to focus on several questions. The first question was,
"Is their role that they play today appropriate?" BCG's finding
was that AHFC's roles within mortgage financing and public
housing are quite significant and on par with other states. She
shared that AHFC's activities are largely in line with other
state housing authorities, with a few exceptions.
She reported that BCG took a closer look at AHFC's role in
mortgage financing in today's economy and whether it is
competitive with banks. BCG found that AHFC has very low
delinquency rates and complements the role of banks; it does not
compete with banks.
2:51:01 PM
MS. BENNETT reported that Alaska's mortgage finance market is
estimated at $20 billion with AHFC commanding 14 percent of the
market share. She pointed out that 14 percent is a little on the
high side due to the role it played in the 1980s and the high
number of rural loans. She explained that AHFC does not compete
with banks because AHFC does not originate loans and uses
private provider servicing.
2:53:35 PM
MS. BENNETT showed a table of the seven groups AHFC serves, five
of which may qualify for government-sponsored entity (GSE)
loans, but find more value in AHFC products. She described each
category of which rural loans was the largest and the category
served only by AHFC. AHFC can offer a lower rate than many GSE
loans and without AHFC, some of the customers would have to pay
a higher rate.
2:55:03 PM
MS. BENNETT turned to how AHFC's choice of "high touch"
servicing may contribute to lower foreclosure rates and a
balanced risk portfolio. AHFC has very low foreclosure rates
compared to Alaska and U.S. averages. She drew attention to the
number of people who would not be able to get a loan if not for
AHFC.
She stated that BCG found that AHFC's role in mortgage financing
should be maintained to ensure the continuation of associated
benefits; providing access to home ownership, providing a
consistent flow of funds to Alaska, subsidizing other social
programs, contributing to the economy, helping to keep Alaskans
in Alaska, and creating jobs.
MS. BENNETT pointed out that at the end of each section of her
presentation is a comprehensive list of BCG's core
recommendations.
2:58:14 PM
MS. BENNETT drew attention to BCG's recommendations for the
Alaska Energy Authority (AEA). She shared four guiding
principles to build recommendations for AEA: carry forward AEA's
contributions to rural Alaska, minimize spending and establish a
sustainable funding model, broaden the financial toolkit used by
AEA, and double-down on areas of core expertise.
She reviewed the four areas of AEA activities: rural energy
support, alternative energy technologies, Power Cost
Equalization (PCE) payments, and two Alaska Railbelt assets.
3:00:29 PM
MS. BENNETT stated that energy technology funding through the
Renewal Energy Fund (REF) has been fragmented, creating a "long
tail" of supported technologies. She detailed the core
investments for REF-supported projects. She said BCG recommends
that AEA prioritize the areas of REF funding.
She listed the area AEA should focus on - prioritize critical
technologies as a push to shift the energy mix to the most
effective ones. She showed critical, important, and moderate
technology categories. The five key areas are building
efficiency, hydro, biomass, wind, and heat recovery. BCG
suggested to transition to loans, not state grants, for the
moderately important technologies, and to stop funding
technologies of moderate importance. BCG also suggested AEA
focus on the sustainability of projects already installed and
future projects.
3:03:06 PM
MS BENNETT discussed three rural energy support programs. Rural
Power System Upgrade (RPSU) and Bulk Fuel Upgrade (BFU) focus on
diesel fuel, make up the largest of the support programs, and
depend on grant funding. She described problems, implications,
and potential solutions for these programs recommended by BCG,
when looking for sustainability within rural support.
3:07:02 PM
MS. BENNETT said the potential exists to optimize the value of
Power Cost Equalization (PCE), a critical subsidy program that
can be leveraged for sustainable energy use. She addressed BCG's
findings and takeaways.
She stressed the importance of AEA's engaging four key sets of
stakeholders relevant to rural systems: policymakers and
funders, contractors, communities, and utilities.
3:08:35 PM
MS. BENNETT reported on the potential for strategic and
financial benefits from consolidation of AEA and AHFC. BCT
suggests AIDEA maintain its independence, however, she said all
three agencies could be co-located and share some service
integration for savings purposes.
She shared detailed reasons why AEA and AHFC should combine
because both have expertise in rural Alaska and it could lead to
more comprehensive community development.
3:11:08 PM
MS. BENNETT turned to AIDEA findings. She said Alaska has a
unique need for enterprise project and infrastructure financing,
given its core industrial focus and need for infrastructure to
access critical assets. Today, AIDEA plays an important role in
two aspects; small commercial finance in the form of the Loan
Participation Program, and investment in small and mid-sized
enabling infrastructure through Development Finance. However,
there is opportunity in the marketplace for a state player to
take a larger role:
Invest in larger enterprise infrastructure projects,
targeting key sectors to diversify the overall economy,
such as in commercial finance, project finance, and
especially in the large enterprise projects.
Proactively source and select projects targeting specific
economic sectors that can foster high potential industries
and diversify the economy.
Increase the use of a range of investment vehicles, equity
as well as debt, to improve returns.
She concluded that it is important that AIDEA continue its
process of making management improvements by tracking and
reporting financial and macroeconomic impacts, enhancing project
assessment and selection rigor/criteria process, fostering a
more risk tolerant culture through governance, and increasing
financing and operating budget flexibility.
3:16:39 PM
CHAIR COSTELLO thanked the BCG presenters. She pointed out that
the document is in draft form and asked when the final would be
released.
COMMISSIONER FISHER replied it would be released in a few days.
3:17:53 PM
SENATOR GARDNER asked if this change might threaten funding for
AHFC.
MR. ACOSTA said BCG is not recommending significant changes to
the integration of agencies and is not anticipating any changes
in federal funding.
SENATOR GARDNER asked if BCG worked closely with the Board of
Directors for all the agencies.
COMMISSIONER FISHER indicated that they did.
SENATOR GARDNER asked about having access to the analysis of the
agency reviews.
3:19:32 PM
COMMISSIONER FISHER replied the intention is to only provide the
summary report and answer questions, not distribute the data.
SENATOR GARDNER inquired about a list of stakeholders BCG worked
with during the review.
3:20:12 PM
MS. BENNETT clarified that they did not do a comprehensive
stakeholder engagement nor include all rural governments or
tribal entities. They did visit with several rural communities
and spoke to representatives from rural areas.
3:20:45 PM
SENATOR STEVENS said he is under the impression that there is
outside representation on the boards.
COMMISSIONER FISHER offered his understanding that all the board
members were Alaskans.
3:21:23 PM
MR. ACOSTA pointed out that specific recommendations for the
AIDEA board are to lengthen the terms of board members, stagger
terms, and designate spots based on specialty. When pursuing the
right talent, there may be some need to look beyond Alaska.
3:22:26 PM
CHAIR COSTELLO expressed interest in looking at maximizing how
AIDEA can help grow Alaska's economy. She opined that things
tend to go wrong when the legislature tries to tell AIDEA what
to do or how to invest. She asked how to expand AIDEA powers in
order to move into larger projects.
MS. BENNETT referred to a list of which statutes would need to
change to make that happen. She explained AIDEA is functioning
as an infrastructure fund and it should function more like a
business with rigorous criteria to avoid political influence.
She explained that, currently, the legislature must approve
anything over $25 million that AIDEA does in the area of
commercial or development finance. A statutory change could
provide more independence to AIDEA. The board changes would also
provide more independence.
3:25:20 PM
SENATOR GARDNER asked if the final report will include board
responses and descriptions of the involvement and roles of key
stakeholders, as well as a description of the communities
visited.
3:26:03 PM
COMMISSIONER FISHER said he views BCG's recommendations as a
starting place and DOT will continue to work with the boards and
agencies. One of the core initiatives will be to look at
integrating the three agencies and determine the benefits and
savings of doing so. He maintained that it is premature to share
agency responses and to include board responses. The involvement
of communities is not included in the document, which is more a
summary of recommendations. He offered to provide that
information. He concluded that the report is less about the
process and more about the findings. There was not deep
stakeholder engagement on the part of communities.
3:27:58 PM
SENATOR GARDNER expressed interest in seeing who was contacted
and their roles because it affects confidence in the findings.
CHAIR COSTELLO questioned how important it is for the state to
have an economic strategy. She used Texas's use of marketing and
industry clusters as examples of strategies.
3:29:29 PM
MR. ACOSTA responded said that BCG consistently heard a desire
for clarity of vision and priorities. He said having an economic
strategy is a very important tool. There are various ways to get
there as long as there is a public/private collaboration.
3:30:44 PM
MS. BENNETT agreed and added that it is critically important
that the state have an economic development strategy. It should
come from a statewide comprehensive level, not a community or
regional level. It should be a big picture. Enterprising
economic development consists of sector strategies.
SENATOR GARDNER requested clarity about the core initiative to
integrate.
COMMISSIONER FISHER clarified that he meant "co-locate", not
integrate.
SENATOR GARDNER suggested communication via broadband is very
important.
CHAIR COSTELLO agreed that broadband is critical infrastructure.
She thanked the presenters.
3:33:36 PM
There being no further business to come before the committee,
Chair Costello adjourned the Senate Labor & Commerce Standing
Committee at 3:33 p.m.