Legislature(2021 - 2022)ADAMS 519
03/10/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB283 | |
| Presentation: University of Alaska Deferred Maintenance | |
| Presentation: Municipal Harbor Matching Grants | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 283 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 283
"An Act making appropriations, including capital
appropriations, reappropriations, and other
appropriations; making supplemental appropriations;
and providing for an effective date."
1:33:47 PM
^PRESENTATION: UNIVERSITY OF ALASKA DEFERRED MAINTENANCE
1:33:58 PM
CHAD HUTCHISON, DIRECTOR, STATE RELATIONS, UNIVERSITY OF
ALASKA, provided a PowerPoint presentation titled
"University of Alaska for Alaska," dated March 10, 2022
(copy on file). He listed colleagues available online. He
noted that many of the requests listed in the presentation
were similar to requests made the previous year. He began
with an FY 23 capital budget summary on slide 2. The slide
included the Board of Regents' request of $50 million,
which was standard for the university. Included in the
governor's GO [general obligation] bond package proposal
(SB 166) was $18.7 million for Moore Hall and Bartlett Hall
located at the center of the University of Alaska Fairbanks
(UAF) campus. He detailed that the insides of the buildings
were corroded. He had seen a quote specifying that the
buildings were on the verge of an imminent sewer and water
systemic failure. Therefore, $18.7 million had been
included in the governor's GO bond package. He relayed that
the $18.7 million had increased from the previous year due
to supply issues. He would provide further detail later in
the presentation.
Mr. Hutchison moved to the second item on slide 2. He noted
that the student information technology (IT) systems
modernization and security upgrades were of particular
interest to University of Alaska President Pat Pitney. He
detailed that the system had last been upgraded in the late
1990s. He spoke to the need for mobility and an experience
that students had come to expect when it came to services
including enrollment, advising, and other. He elaborated
that the update would be systemwide. Currently, the funding
was coming from the federal Coronavirus capital projects
fund. There was an open question about whether the
university could qualify for the $20 million as proposed by
the governor. He explained that the use had to be tied to
the Coronavirus. The university was making its best case
and had submitted an application to the Office of
Management and Budget (OMB) and OMB had submitted the
application to the U.S. Treasury. He noted that the
Treasury took a bit of time to provide feedback. He added
that the increment and funding situation was something to
keep in mind, whether it came from capital or federal
funds. He relayed the university had not yet received a
definitive answer from the Treasury. He highlighted that
the item was President Pitney's top priority as it related
to the entire university system. The upgrade impacted all
of the university's students; it would help with enrollment
and would reduce the university's reliance on state general
fund dollars in the future.
Mr. Hutchison moved to the economic development increment
on slide 2. The increment pertained to critical minerals,
rare earth, drones, enhanced oil recovery, mariculture, and
the university's health program. He remarked that the
university was very pleased with the way the House Finance
Committee had talked about the projects. The goal was to
show good value for the state. The governor had asked the
university what it could do help Alaska. The increment
including economic development packages was the
university's response.
1:38:36 PM
Mr. Hutchison turned to the university's growing $1.4
billion deferred maintenance backlog on slide 3. He
remarked that the need was great. He used Moore Hall and
Bartlett Hall as an example of things the university was
doing to help the entire state beyond the academic side. He
detailed that in the summertime, the university housed
woodland firefighters who helped out with firefighting
activities in the Interior when hundreds of thousands of
acres were burning. The university had partnerships that
helped the entire state, and some went beyond the academic
mission.
Mr. Hutchison moved to the governor's proposed FY 23
capital budget on slide 4. The slide included the $18.7
million GO bond funds increment for the Bartlett Hall and
Moore Hall modernization and renewal and $20 million for
the student IT systems work. The slide also included $94.4
million in funding authority for the Seward Marine Center
research vessel (Sikuliaq) infrastructure. The project
included the extension of the dock, a warehouse, and high-
level scientific equipment to help with Sikuliaq capacity.
He highlighted the increment was only federal funding
authority. He clarified there were no dollars attached to
the increment, it was merely the university's ability to
receive the funds at some point in time. The university was
very encouraged by the conversations about the Sikuliaq,
but the money was still to come.
1:40:31 PM
Mr. Hutchison turned to slide 5 referenced a one-page
document ["University of Alaska FY 23 Priority Deferred
Maintenance (DM) and Renewal and Repurposing (R&R)" (copy
on file)] prioritizing all of the university's deferred
maintenance. He noted that slide 5 included the same
projects on the priority list. The top priority on the list
was the Moore Hall and Bartlett Hall systems renewal. He
noted there were experts online who could answer detailed
questions about the work.
Co-Chair Merrick noted the original cost was under $19
million and it had increased to almost $21 million. She
highlighted that the work would cost more as time went on.
Mr. Hutchison agreed and noted the cost was likely to
continue increasing if the work was not addressed.
1:42:07 PM
Mr. Hutchison turned to slide 6 showing the remainder of
the deferred maintenance projects (projects 6 through 14).
He reiterated there were experts online for any detailed
questions. He concluded his presentation.
1:42:52 PM
AT EASE
1:44:21 PM
RECONVENED
^PRESENTATION: MUNICIPAL HARBOR MATCHING GRANTS
1:44:28 PM
MARIE HEIDEMANN, PLANNING CHIEF, JUNEAU FIELD OFFICE,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,
provided a PowerPoint presentation titled "Alaska
Department of Transportation and Public Facilities Harbor
Grant Programs: Program Development and Statewide Planning"
(copy on file). She reviewed slide 2:
Background
• Legislation passed in 2006 (AS 29.60.800)
• 50% matching grant program
• Funded on an annual basis at the discretion of
the Alaska Legislature
• Projects locally inspired and managed
• Competitive Process Project Evaluation Board
evaluates and ranks projects
Purpose
• Provides financial assistance for construction
ready harbor improvement projects
• Furthers the sustainability of Alaska's public
harbor system
• Recapitalizes local government's harbor
infrastructure
Ms. Heidemann elaborated on the program's purpose. The
program was available for municipal or regional housing
authority owned harbor facilities to fund construction
ready harbor projects. She clarified the program was for
small boat harbors, not commercial docks or barge
facilities.
1:45:59 PM
Ms. Heidemann turned to slide 3 and continued to provide
information about the program:
Funds Availability
• Maximum of $5 million per municipality per year
• Minimum state match of $50,000
• Funding is subject to budget process with the
Alaska Legislature
Defined Categories Tier I and Tier II
• Tier I First priority, consists of major
maintenance and repair of a harbor facility
previously owned by the state and now is locally
owned
• Tier II Other facilities and those which have
received a Tier I grant
Competitive Process
• Documented safety issue(s)
• Ability to fund match AND future maintenance &
operations
• Serves the public interest
• Maintenance and operational need
• Public support (and local government resolution
of support)
Ms. Heidemann elaborated on slide 3. She explained that the
minimum project size was $100,000 with a 50/50 match. She
explained that when the program began it had been a way to
get local participation and divest some state
infrastructure.
1:47:01 PM
Ms. Heidemann moved to slide 4 showing a list of eligible
and ineligible items. The eligible items made up the basic
operation of a harbor including boat ramps, seaplane
floats, and anything integral to the harbor. The program
did not fund breakwaters, dredging, or large commercial
docks. She noted the statute specifically restricted any
preventative maintenance from eligibility.
Ms. Heidemann discussed the 50 percent local matching
sources on slide 5. The matching funds for the program were
non-state funds. She noted there were a few state programs
allowed as match, but primarily federal, private, and local
funding was used for the 50 percent match. She turned to
slide 6 and relayed that the Project Evaluation Board (PEB)
met for a half-day public meeting. She detailed that the
projects were ranked ahead of the legislative session
(there was a current list available). Board members
included the harbor program manager, four representatives
from each of the regions and statewide Department of
Transportation and Public Facilities, and the maintenance
and operations specialist with responsibility for state
harbors.
1:48:10 PM
Ms. Heidemann advanced to the Harbor Grant Program timeline
on slide 7. The call for projects for the current cycle for
FY 23 was the previous spring. The call for projects for
the next cycle would occur in April 2022. She relayed that
the PEB met in the fall and capital budget development took
place during winter and spring. Following the governor's
approval of the capital budget, the program moved forward
with project awards (the program moved down the list and
funded as many projects as it was able). She noted that
others were welcome to come back for the next cycle. She
informed the committee that the timeline was set so they
knew the award within the call for projects, enabling a
municipality that was unsuccessful to apply again the
following year.
Representative Josephson asked about program funding for
the current fiscal year. He wondered if the program funding
had been funded, underfunded, or vetoed.
Ms. Heidemann answered the program had been funded in the
amount of about $7 million, which had funded two projects.
She believed the projects had both been Tier I in Seward
and Cordova. She would follow up with the complete list of
the projects awarded.
Representative Josephson asked if his memory in recent
years of the legislature or governor not funding the
program was incorrect. He asked for verification the
program was funded in the current year.
Ms. Heidemann answered that the program had not been funded
in FY 21 but had been funded in FY 22.
Representative Josephson asked why.
Ms. Heidemann replied that she did not know.
Co-Chair Merrick noted it would likely be a question for
the Office of Management and Budget (OMB). She would ask
OMB to follow up on the question at a later time.
Representative Wool had been approached by someone who had
told him the program had been vetoed for several years. The
individual had been looking to get the funding into the
budget. He thought perhaps he was mistaking the program for
something else. The program brought to him by the
individual had included multiple ports and a school in
Fairbanks located on the Eielson Air Force Base. He asked
if it rang a bell.
Co-Chair Merrick replied that she was trying to locate
someone from OMB to address the questions.
1:51:30 PM
Ms. Heidemann discussed current ranked projects for FY 23
on slide 8. The list included two Tier I applications from
the City of Valdez and City of Yakutat. She detailed that
by statute the two projects rose to the top of the list as
the highest priority with the highest score. There were
five Tier II projects in Sand Point, Juneau, Homer, Sitka,
and Anchorage. The slide listed the ranking scores and the
total grant fund request for the seven applications was
just over $20 million. She turned to slide 9 and addressed
the recent program funding levels in a bar chart. The blue
bar reflected the municipal request, and the red bar
reflected the capital budget amount. She highlighted the
program had been unfunded in FY 21. The program request for
FY 23 was about $20 million. She noted the department did
not yet know what the capital budget amount would be for FY
23.
Representative Josephson thought it appeared the program
had not been funded in the current fiscal year.
Ms. Heidemann clarified the chart showed the 2022
legislative session for FY 23. She concluded the
presentation.
1:53:13 PM
Representative Edgmon referenced slide 4 related to program
eligibility. He asked if the economic contribution of a
harbor was factored into the scoring process.
Ms. Heidemann responded there was a standard for whether an
applicant had sufficient revenue and fee structure to
operate and maintain [the infrastructure]. There was not
specific standard related to economic development or
benefit. One of the scoring criteria was whether a project
served the best public interest. She added that the
importance of the applicant's harbor facility was standard
8.
Representative Edgmon spoke in defense of the Sand Point
community in his district where a fishing fleet occupied
the harbor. He believed the location was almost exclusively
commercial fishing boats.
1:55:18 PM
Representative LeBon observed that the City of Valdez small
boat harbor reconstruction was ranked number one under Tier
I on slide 8. He asked if the project was ranked number one
due to the nature of the project or because the project had
come up with twice the amount of matching funds required.
Ms. Heidemann replied the project was ranked number one due
to its criteria score. She answered, "Yes, because they're
Tier I," but the project was also competitive with Yakutat.
She did not believe the increased match provided the
project with extra points. The additional match was because
the [Valdez] project hit the ceiling of the $5 million
maximum; therefore, Valdez had to fund the rest of the
project.
Representative LeBon thought it made sense, but he thought
it also made sense to reward a community that put more into
a project.
Co-Chair Merrick noted that Representative Johnson and
Representative Carpenter had joined the meeting.
1:56:29 PM
AT EASE
1:59:27 PM
RECONVENED
Representative Wool referenced a list of harbor projects
that was similar to the presentation but different. He
noted the list was under Alaska Statute (AS) 29.60.700
instead of AS 29.60.800. The list he referenced included
the Mat-Su Borough deep water port, Aleutians East Borough
small boat harbor, Valdez, and Fairbanks Eielson Air Force
Base schools. He thought it was a bond package that had
been vetoed the past couple of years.
ALEXEI PAINTER, DIRECTOR, LEGISLATIVE FINANCE DIVISION (via
teleconference), replied that he was familiar with the
program.
Representative Wool considered the Municipal Harbor Grants
Program [in the presentation], which he reasoned was a fine
list of boat harbors; however, he noted the other projects
were being vetoed and the state's obligation was not being
paid. He expressed hesitancy at entering another
arrangement with additional projects.
Mr. Painter stated the difference in the structure of the
programs was the past bond program that had an outstanding
state obligation of about $2.4 million in FY 23. He
explained the projects were financed and there were annual
bond payments. He elaborated that funding the initial
capitalization for the projects under the municipal harbor
grants program would discharge the state's obligation. He
clarified that it would not create an ongoing obligation.
2:01:31 PM
Representative Wool restated his question for OMB. He
referenced harbor projects under AS 29.60.700 with a bond
match that had been vetoed in the past couple of years. He
wondered why.
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR (via teleconference), responded that
the governor had vetoed a number of projects the previous
year that were included in the general obligation (GO) bond
package proposed during the last session. He relayed that
some of the projects were included in the capital budget
passed by the legislature utilizing unrestricted general
funds (UGF) rather than receipts from GO bond issuances. He
explained that many of the projects moved from the bond
package to the regular capital budget were vetoed in
acknowledgement of the general fund resources available at
the time and the administration's desire to use bonding in
the capital budget to support some of the needs.
Representative Wool stated that the obligation had been
realized before the previous year and before the GO bond
had been put forth. He asked for verification that the
obligation had been paid in previous years under the
operating budget or with UGF.
Mr. Steininger responded that he may be confusing the
projects Representative Wool was talking about with
projects that were included in the GO bond package the
previous year. He asked if Representative Wool's question
was in reference to some of the municipal debt included in
the debt services section of operating budgets in prior
years that had not been included in operating budgets under
the current administration.
2:03:55 PM
Representative Wool stated the debt had been included [in
the budget] but vetoed by the administration. He believed
they were speaking about the same thing. He stated that
some of the items went back to 2007 and 2012.
Mr. Steininger replied that starting in the governor's
initial FY 20 budget, the administration stopped including
some of the debt service payments for non-state debt (that
previously had been included in the operating budget). He
noted the specific debt was often referred to as "moral
obligation debt." He explained that some of the items had
been removed in FY 20 and had been added back in subsequent
years on occasion and vetoed because they were not direct
state obligations for debt, but debt paid "as a matter of
convention" by the state in prior years.
Representative Josephson continued with the same subject.
He asked if the administration had chosen to veto the items
highlighted by Representative Wool for the same reason it
had decided to veto school bond debt in terms of moral
responsibility. Alternatively, he wondered whether the
administration reached the same conclusion for a veto but
for a different reason.
Mr. Steininger responded that by nature the reasons were
very similar. He explained that obligations that were not
necessarily tied to the state's credit rating were subject
to appropriation and had been viewed similarly in
consideration in the years they had been vetoed.
Representative Josephson referenced the list of current
Municipal Harbor Grants Program ranked projects on slide 8
of the presentation at a total of about $20 million. He
asked what portion of the $20 million was included in the
governor's budget.
Mr. Steininger answered that he did not believe any of the
harbors from the Municipal Harbor Grants Program list were
accounted for in the governor's budget. He thought one of
the projects may be on the GO bond package list. He would
have to follow up.
2:07:52 PM
Representative Josephson stated that the administration's
department (DOT) was presenting a list of highly ranked
projects that were not in the governor's capital budget. He
asked why the list had been presented. Additionally, he
noted the administration was vetoing municipally driven
programs where historically legislatures would provide
around 50 percent funding when they could afford to do so.
He asked if the administration had any interest in the
improvement of harbors and docks at the local level.
Mr. Steininger answered that the Municipal Harbor Grants
Program had been funded in prior year capital budgets when
revenue was available to fund projects on the list. He
stated that often the level of funding was based on the
highest ranked projects on the list. He explained it was
separate from the state in previous years choosing to take
on a portion of municipally issued debt that appeared as
moral obligation debt in the operating budget. He explained
that the Municipal Harbor Grant Program had ranking
criteria that went through DOT. He stated that the
administration was interested in funding ports and harbor
infrastructure projects, as reflected in its GO bond
package. He remarked it was an area of need throughout the
state; however, like most areas of need, the need exceeded
the available resources when the budget had been issued.
2:10:08 PM
Representative Josephson stated that since December the
state had come into a substantial amount of money. He asked
if it changed the administration's position. He considered
the $20 million request from DOT and pointed out the state
had the funds. He asked if the administration believed the
money should be appropriated.
Mr. Steininger answered that as the administration was
responding to quickly changing events in state revenue, it
was analyzing the highest and best use for the revenue. He
stated that until there was a solid spring forecast, he
could not speak to the administration's position on the
best use for the revenue. The administration had already
proposed mechanisms to fund some port and harbor projects
around the state through the GO bond package. He elaborated
that the administration had put out priorities using the
funding available on December 15. He remarked that the
change in revenue may alter some of the perspective on how
to best fund some of the projects, but currently the
administration believed the GO bond issuance was
advantageous for the state. How the surplus was used would
be thought through as the spring forecast was received on
March 15. He could not confirm that the program was the
best use of $20 million or just another good use in a long
list.
2:12:30 PM
Representative LeBon returned to Representative Wool's
comments about a Fairbanks North Star School District
school located on Eielson Air Force Base. He remarked there
was a mix of projects including several ports. He asked
about the source and year of the project list referenced by
Representative Wool.
Representative Wool answered he had been referencing AS
29.60.700. He informed the committee the Fairbanks bond was
issued in 2006. He believed Mr. Steininger had called it a
moral obligation like school bond debt. He believed the
idea was the state would pay half and the municipality
would pay half. He stated Fairbanks had been included on
the list somehow. He thought it had been vetoed the last
several years. He remarked on the new revenue forecast and
noted there was a $2 million obligation for FY 23.
HB 283 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the schedule for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 283 2022-03-10 Harbor Grant Program_V.2.0_Submitted to H-FIN.pdf |
HFIN 3/10/2022 1:30:00 PM |
HB 283 |
| HB 283 UA House Finance Deferred Maintenance 3 10 2022.pdf |
HFIN 3/10/2022 1:30:00 PM |
HB 283 |
| HB 283 AML Harbor Debt Reimbursement Joint Letter.pdf |
HFIN 3/10/2022 1:30:00 PM |
HB 283 |