Legislature(2007 - 2008)
08/02/2008 02:16 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| HB4005 | |
| HB4001 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 4001
An Act making supplemental appropriations, capital
appropriations, reappropriations, and other
appropriations; making appropriations to capitalize a
fund; and providing for an effective date.
Co-Chair Chenault spoke to the bill. He asked if there were
questions about the bill.
7:43:52 PM
Co-Chair Meyer reminded department heads that some of the
changes made will have a fiscal impact, and all fiscal notes
would be appreciated.
7:44:14 PM
Representative Hawker commented that he would like to see
per capita information in the fiscal notes. Supplemental
budgets should not be used for capital appropriations. Why
would it ever be appropriate to supplement budgets for a
capital appropriation?
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
discussion about the reimbursement and identify significant
investments to get the gas line construction organized.
7:46:51 PM
Representative Hawker inquired about any constitutional or
statutory prohibition or authority preventing the use of a
supplemental appropriations bill for a capital
appropriation. Ms. Rehfeld was not aware of any
constitutional prohibition.
7:47:36 PM
Representative Gara requested discussion on the AGIA
appropriation.
7:49:13 PM
FRANK RICHARDS, DEPUTY COMMISSIONER OF HIGHWAYS & PUBLIC
FACILITIES, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, clarified the question ready to go to bid.
Mr. Richards stated that there are three projects:
· Reconstruction of the Dalton Highway from milepost
175 to milepost 209.
· Reconstruction of the Dalton Highway from milepost 9
to milepost 11.
· Culvert replacement on the Dalton Highway from
milepost 260 to milepost 321.
These projects are bid ready, but because of complications
with the STIP funds, they were developed using the Federal
Highway Fund Design Efforts. The construction funds have not
yet been available to complete the three projects. If the
appropriation from the legislature was made available, the
projects would be advertised this fall and winter, allowing
construction to begin in the spring of 2009. The benefit of
starting the projects with an appropriation now is that the
money will be available to begin construction, whereas if it
is postponed until the next session the construction will
not begin until late spring 2009 or possibly as late as
August if there are protests in the bidding process.
7:51:50 PM
Co-Chair Chenault replied that if federal funds were applied
for and then replaced with state funds, the available
federal funds could be used for other projects in the state.
Would it cost less to use state funds because federal funds
usually come with strings attached? There have been bicycle
paths constructed on the Dalton that wouldn't have been
built without those federal requirements. He asked whether
state funding could be used without the extra expense
associated with federal requirements.
7:53:17 PM
Mr. Richards responded that the projects are already
designed and that it is standard to remain consistent with
the design. The goal with the projects is to affect
alignment, and replace culverts on over 60 miles of highway.
Bike paths are not part of the plan, as this is a rural
highway.
Co-Chair Chenault noted that the Dalton Highway is in poor
shape. He asked whether the state had investigated the
possibility of mining gravel on federal land along the
Dalton Highway instead of hauling it in from other areas of
the state.
Mr. Richards answered that the Department of Transportation
(DOT) is looking for hard aggregate for the Dalton Highway
in many areas, but a shortage of gravel is one of the
challenges they are facing. A portion of the appropriation
is to define those material sites, open them up, and then
have them ready for the construction activities, both in
current and future projects associated with the gas
pipeline.
7:56:32 PM
Representative Hawker noted that the bike paths on the
Dalton Highway were placed on the old roadbed at very little
incremental cost when the road was upgraded.
Co-Chair Chenault said he had driven more miles on those
bike paths than anyone else in the room.
7:58:22 PM
Representative Gara wanted to avoid building roads
specifically for hauling the pipeline materials that may
need to be rebuilt in order to haul materials for the
pipeline. Because of the speed at which roads in Alaska
deteriorate, it might not make sense to construct roads over
the next couple of years for that purpose.
Mr. Richards explained that most of these roads are being
designed to come on line at the time the pipeline
construction should begin. The projects such as the Dalton
Highway upgrade need to happen soon because of the current
deterioration of that highway. Grade and alignment features
that are appropriate for hauling pipeline materials will be
incorporated now. It would be a great challenge to the
contracting community to do hundreds of miles of major
upgrades right before the line goes in. The goal is to
expand these projects out through the six years available
until the construction of the gas pipeline.
8:02:19 PM
Representative Gara asked what specific projects are being
funded in this bill.
Mr. Richards repeated the specific Dalton highway sections.
The construction would begin next year if the money was
appropriated.
Representative Gara reiterated that he didn't think those
sections would still be in good shape during the pipeline
construction.
Mr. Richards responded that the challenge of modern design
in the Arctic is the creation of roads that can withstand
heavy traffic and permafrost issues.
8:04:46 PM
Representative Thomas asked what had been done on the
Canadian section of the Alaska Highway. Would it be
necessary to rebuild and realign that section of the road?
Mr. Richards confirmed that he has been in discussions with
the Canadians regarding this issue. To upgrade the road, the
administration is in contact with those in the Yukon
Territory. He will visit Canada next week and will have more
information following the visit.
Representative Thomas asked about the nature of the upgrades
that are required. How many layers of asphalt will be
necessary?
Mr. Richards answered that there will be injections of
asphalt into the existing roadbed and the strength would be
greatly increased.
8:07:29 PM
Co-Chair Chenault noted that there are Canadian mining
companies that want to use the highway to Haines to
transport their materials. He wondered whether the mining
companies would be willing to contribute to the upgrades.
Mr. Richards said that the companies are looking to upgrade
the road or build a railroad to Haines where there are
better docking facilities.
Representative Kelly requested clarification on this
appropriation bill and what the immanent priorities were.
Co-Chair Chenault answered that the appropriation bill is a
wish list. He wanted to find out what needs are out there.
The remaining issues can be revisited in the next regular
session.
8:10:33 PM
Representative Gara asked Commissioner Galvin what amount of
money was appropriate for this special session to
communicate the intent of the legislature for support of the
TransCanada project.
PAT GALVIN, COMMISSIONER, DEPARTMENT OF REVENUE, responded
that it would be most appropriate for the legislature to
allocate the entire $500 million to fully fund the
transportation fund. It is imperative to allocate enough
money to get the project through the primary season and
avoid any bottlenecks that would slow the project down.
There would be a risk of delaying the project with an
insufficient amount of money.
8:14:22 PM
Representative Gara asked what the 500 million and the 164
million dollar amounts represented.
Commissioner Galvin explained that the $164 million was the
suggested amount for reappropriation from the $300 million
set aside in the AHFC fund along with the interest that has
been generated by those funds, which is approximately $36
million. The remainder will come out of the general fund.
Representative Gara noted that he has heard discussion that
appropriating small amounts would give the legislature a
chance to monitor how DOT is handling the money. But the
legislature doesn't really have the opportunity to review
receipts, so that approach may not make sense. He asked
whether there is any reason to disburse the funds in small
amounts.
Commissioner Galvin responded that the opportunity is
already built into the Alaska Gasoline Inducement Act (AGIA)
statute. Any money appropriated into the reimbursement fund
can be taken out again by the legislature. He does not see
any additional reporting issues that would be raised by
fully funding the reimbursement.
Co-Chair Chenault noted that no one in the building was
talking about slowing the project down with smaller
appropriations.
TONY PALMER, VICE PRESIDENT, ALASKA BUSINESS DEVELOPMENT,
TRANSCANADA, introduced himself.
Representative Gara asked about reimbursement of qualified
costs up to 50 percent of their expenditures through the
Open Season.
Mr. Palmer confirmed that once the license was issued, the
state would be obligated, subject to TransCanada meeting, to
all of the conditions and 50 percent of expenditures. They
had that expectation.
Representative Gara asked what the company would require to
get through the Open Season, noting the legislature's
funding cycle.
Mr. Palmer answered $54 million worth of expenditures
through June 2009 and $84 million total through July 2010.
Representative Gara asked how much was necessary.
Mr. Palmer responded half of the 84 million dollars.
Representative Gara asked how much was required if the
legislature was to fully fund the commitment.
Mr. Palmer said that it would be one half of the $84 million
or $42 million. Representative Gara asked for TransCanada's
request of the legislature at this point. Mr. Palmer
responded that he preferred that the legislature fully fund
the request.
8:22:50 PM
Commissioner Galvin answered that there was little risk to
the legislature in appropriating the entire amount into the
fund, because DOT would be providing detailed reports. The
money would not be taken out of the control of the
legislature if placed in the reimbursement fund.
8:24:06 PM
Representative Crawford asked what the earnings would be on
the money sitting in the reimbursement fund.
Commissioner Galvin answered that the money would be handled
like the money in the general Fund, though accounted for
separately. It would be the Commissioner's discretion to try
to maximize the return by investing more aggressively than
the General Fund.
Co-Chair Chenault asked whether the General Fund invests for
short term return while the AGIA reimbursement fund would be
a long-term investment.
Commissioner Galvin responded that with the money in the
General Fund, it is available to the legislature at any
point. If it were to move into the AGIA fund with the
purpose of reimbursing TransCanada, then the money could be
invested for a slightly longer term, recognizing that a
schedule must be followed. Understanding that the
legislature could reappropriate funds would probably prevent
this type of investment.
8:28:14 PM
Representative Thomas asked what would happen if the 500
million dollars were appropriated and the investments
incurred losses.
Galvin responded that the funds would not be placed in
investment vehicles that were subject to losses due to the
nature of the requirements.
8:29:47 PM
TOM IRWIN, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,
introduced staff, Marty Rutherford, Deputy Commissioner,
Department of Natural Resources and offered a highlight of
what they are doing. He reviewed what the accomplishments of
the legislature over the past year by funding the AGIA
program. They have learned a tremendous amount. The issuance
of a license is a major step forward. There will be
questions that inevitably come up in the four categories. He
wants the state to be prepared when the questions do arise.
He is looking at 6.2 million over the next five years. They
plan to use a contractor to help with the process, and they
will be working with a multitude of companies. The funds
will be used to determine the correct paths to follow. He
described other needs for the money. They will be looking
for more efficient methods as they go.
8:35:12 PM
CLARK BISHOP, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, stated that the department of
education and the department of labor have a good
relationship that has been fostered for two years.
8:37:47 PM
LARRY LEDOUX COMMISSIONER, DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT, appreciated the opportunity to help young
people engage in the construction of a pipeline. He would
like to see an Alaska workforce ready when the pipeline is
ready for construction.
8:38:36 PM
Commissioner Bishop stated that each funding request
coincides with the strategy outlined in their training plan.
Business, Industry, and Education have all worked together
to develop the training plan. Each funding request was
identified in the strategies by timeline. Each request has
been vetted by the best in the state.
Representative Gara wanted as much job training as possible
for Alaskans to limit the amount of imported labor. He
thought this was the best way to limit dislocation. If the
training happens too early, the students may not work for
the pipeline, but instead take their training to other job
opportunities. If there is inadequate training, then labor
will need to be imported.
Commissioner Bishop made clear that one guiding principle of
the presented document was the industry recommendations that
the focus is on current workforce shortages. He did not
think that overtraining would be a problem. Representative
Gara asked if there was a way to ensure that people trained
would be available to work on the pipeline. Commissioner
Bishop discussed the variable occupations mentioned in the
training document, stating that many are transferable from
one industry to the next.
8:44:06 PM
Vice-Chair Stoltze asked for comments from Department of
Education and Early Development regarding the advertising of
technical training versus other methods of higher education.
Commissioner Ledoux observed that there will be plans
introduced soon. Technical education helps build vision in
young people. The real challenge will be to provide
experiences to young people throughout Alaska. Vocational
programs throughout the state have been reduced
substantially. The competitive nature of this program can
create innovative partnerships.
HB 4001 was HELD in Committee for further consideration.
8:49:38 PM
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