Op-Ed on Alaska Railroad February 21, 1997 submitted the the Anchorage Daily News

The Alaska Railroad and Legislative Responsibilities

by Rep. Terry Martin

There is an old Ebonics question that asks, “Is you is or is you ain’t?” that seems to now demand an answer in the Alaska Railroad’s relationship to its owners, the people of Alaska. Is the railroad private, or public?

Here is the problem: When the Legislature established the Alaska Railroad Corporation (ARRC) in 1984, it set it up as a quasi-governmental, quasi-private business entity, with deliberately arms-length, distant oversight by the Legislature. This arrangement has proven to be disadvantageous to the public.

When it is convenient for ARRC to be a public corporation, such as to enjoy exemptions from property taxes, corporate income taxes, some fuel taxes, and license plates fees, then ARRC is a public corporation. But when it is convenient to wear its “private business” hat, such as when the legislative auditor wants to have a look at how ARRC is disposing of public assets, then it’s a private business with proprietary information to protect.

The ARRC can no longer have it both ways. Either it should be privatized, as was the intent of the public at the time it was purchased, or it should be brought under the Executive Budget Act (EBA) and treated just like other public corporations. These include the Permanent Fund Corporation, the Alaska Housing Finance Corporation, and others. Under the EBA, the Governor and the Legislature have the opportunity to review and approve the budgets and programs of the public corporations, along with all the rest of the programs of state government.

One top ARRC official recently decried that putting the railroad under the EBA “would be the beginning of the end of the railroad.” Well, we heard virtually the same argument from AHFC officials two years ago when they were brought under the same Act, but AHFC is as healthy today as ever.

If we are to continue the ARRC as a public corporation, we must be willing to accept the liabilities that come with it. My greatest concern is that deferred maintenance, or simply the continued use of dangerous, slow-speed trackage, will lead to a disaster from which the railroad will not be able to recover. Suppose a bridge collapses, or the railbed falls off the cliff into the Nenana River, taking a trainload of tourists or Mapco fuels with it. The $75 million insurance coverage ARRC maintains would likely not even come close to covering the claims. As reported in the newspaper recently, Burlington Northern railroad is on the hook for $250 million for the deaths of two drunks who died in a crossing collision. It isn’t a far stretch to envision railroad-generated lawsuits reaching for the deep pockets of the Permanent Fund.

Additionally, it seems obvious to many experts that the railroad needs an infusion of capital if it is to get caught up on deferred maintenance and expand to areas it does not currently serve. But you won’t see that needed capital coming its way as long as it continues as the hybrid it is.

On the other hand, I have unabashedly advocated the privatization of the railroad for many years. It is clear to me that the people of Alaska believed the state would only be a conduit to receive the railroad from the federal government and then transition it to private business after a given number of years. For example, the federal law required the state to operate the railroad for 10 years before any of the land could be transferred to a third party. And the state law required the railroad to attempt to offer the line for sale and then report back to the Legislature after five years on the results.

I have no particular buyer in mind, although I have discussed the concept of selling it with at least three different groups. Perhaps even a buy-out by the employees would work.

Last year, we in the Legislature placed a bill on Governor Knowles desk that would have started the wheels turning to sell the railroad. Bowing to whatever pressure came to bear on him, he chose to veto that bill; I was pleased he did so.

This year, we will try a constitutional approach, that is, to make the railroad abide by public corporation laws and therefore answerable to the public.