Legislature(2011 - 2012)CAPITOL 17

02/15/2011 01:00 PM House TRANSPORTATION


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SJR 6 MILITARY OPERATIONS AREAS EXPANSION TELECONFERENCED
Moved Out of Committee
*+ HJR 4 CONST. AM: TRANSPORTATION FUND TELECONFERENCED
Heard & Held
*+ HB 30 DEDICATED TRANSPORT FUND/PUB TRANSPORT TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
          HB 30-DEDICATED TRANSPORT FUND/PUB TRANSPORT                                                                      
                                                                                                                                
1:48:04 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON  announced that the next order  of business would                                                               
be  HOUSE BILL  NO. 30,  "An Act  relating to  the transportation                                                               
infrastructure  fund,  to  local public  transportation,  to  the                                                               
municipal harbor  facility grant  fund, to  motor fuel  taxes, to                                                               
the motor vehicle registration fee,  to driver's license fees, to                                                               
identification card  fees, to  the studded tire  tax, and  to the                                                               
vehicle rental tax; and providing for an effective date."                                                                       
                                                                                                                                
1:48:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRUITT  moved  to   adopt  a  proposed  committee                                                               
substitute (CS)  for HB 30,  labeled 27-LS0193\D,  Kane, 2/15/11,                                                               
as the working document. There  being no objection, Version D was                                                               
before the committee.                                                                                                           
                                                                                                                                
1:49:54 PM                                                                                                                    
                                                                                                                                
REBECCA ROONEY, Staff, Representative  Peggy Wilson, Alaska State                                                               
Legislature, on behalf of one of  the joint prime sponsor's of HB
30, explained  that the proposed committee  substitute (CS) would                                                               
remove  all  references  to  airport   and  space  leases.    She                                                               
explained that  several dates  still will  need to  be corrected,                                                               
but those dates  will be addressed in subsequent  versions of the                                                               
bill.   She offered to  provide a section-by-section  analysis of                                                               
the  bill.   Section  1 would  provide  fees from  identification                                                               
cards would  be deposited into the  proposed transportation fund.                                                               
The bill would  add a new section to identify  fees that would be                                                               
deposited  to the  proposed Alaska  Transportation Infrastructure                                                               
Fund (ATIF),  including certain motor vehicle  registration fees,                                                               
and motor fuel taxes.   Special registration fees, including fees                                                               
for  license plates  would be  deposited into  the general  fund.                                                               
She  noted that  three  percent  of the  funds  destined for  the                                                               
proposed ATIF  would also be  deposited into the general  fund to                                                               
administer  the Alaska  Mandatory Insurance  Act, which  provides                                                               
the same requirement as current statute.                                                                                        
                                                                                                                                
1:51:12 PM                                                                                                                    
                                                                                                                                
MS.  ROONEY stated  that proposed  Section 3  would provide  that                                                               
vehicle registration  fees for  licenses and  permits, commercial                                                               
fees  and  tests, and  all  other  fees including  revocation  of                                                               
license  fees   shall  be  deposited  into   the  proposed  ATIF.                                                               
Proposed Section 4 would make  a conforming amendment by removing                                                               
a reference to the watercraft fuel  tax, which is deleted in this                                                               
bill.  It  also removes the references to  the Fisheries Business                                                               
Tax  in relation  to  the Municipal  Harbor  Facility Grant  Fund                                                               
(MHFGF).   She  explained since  the marine  fuel tax  revenue is                                                               
used  for the  dedicated  fund, this  language  is being  deleted                                                               
since  a mechanism  will remain  to address  the MHFGF.  Proposed                                                               
Section 5  of HB 30 would  amend the list of  program receipts so                                                               
that  only  special  registration  fees  will  be  accounted  for                                                               
separately and deposited into the general fund.                                                                                 
                                                                                                                                
1:52:22 PM                                                                                                                    
                                                                                                                                
MS. ROONEY stated  that proposed Section 6  describes the sources                                                               
of appropriations  to the fund.   Revenue from motor  fuel taxes,                                                               
vehicle registration,  driver's license fees, studded  tire taxes                                                               
and  other  revenue  designated   by  the  legislature  would  be                                                               
deposited to the  proposed ATIF, as well as future  funds such as                                                               
toll road fees.   The DOR would manage the  fund as an endowment.                                                               
This  proposed section  would require  the DOR's  commissioner to                                                               
manage the  account to yield  a six  percent real rate  of return                                                               
over time.  It provides  that appropriations to the proposed ATIF                                                               
do not  lapse.   She pointed  out that the  first five  years the                                                               
return  rate is  set at  five percent.   The  DOR is  required to                                                               
report  to  the  legislature  on  the  condition  and  investment                                                               
performance of  the fund.   She  related that  50 percent  of the                                                               
revenue will be  deposited into the ATIF to improve  the fund and                                                               
allow  the fund  to grow  at a  modest rate.   The  appropriation                                                               
would  be available  for capital  projects and  major maintenance                                                               
for  transportation  and  related facilities.    The  legislature                                                               
would also  have flexibility  to change the  statute, and  not be                                                               
required to  ask for voter  approval to change  the constitution,                                                               
for catastrophic  events in  which the  legislature needs  to use                                                               
the   proposed  ATIF   for  operations.     She   explained  that                                                               
appropriations cannot  be used for federal  matching funds unless                                                               
the total matching funds do not  exceed 20 percent for that year.                                                               
She commented that this provision  was added to avoid supplanting                                                               
the funds already used for federal matching funds.                                                                              
                                                                                                                                
1:54:58 PM                                                                                                                    
                                                                                                                                
MS. ROONEY explained  that proposed Section 6  also would outline                                                               
the  maximum  percentage  of  the   proposed  ATIF  that  can  be                                                               
appropriated to  certain categories of projects,  including up to                                                               
80   percent   could   be   directed   to   roads   and   surface                                                               
transportation, 25  percent could  be used  for aviation,  and 25                                                               
percent  could  be used  for  the  Alaska Marine  Highway  System                                                               
(AMHS).  She  elaborated that the total adds up  to more than 100                                                               
percent,  but would  also provide  built-in  flexibility for  the                                                               
legislature  to  fluctuate  the   amount  appropriated  for  each                                                               
category.                                                                                                                       
                                                                                                                                
1:55:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PRUITT  asked  for  an  explanation  on  how  the                                                               
percentages were derived.                                                                                                       
                                                                                                                                
MS. ROONEY  explained the  original percentages  added up  to 100                                                               
percent,  which   were  taken   from  the  DOT&PF's   long  range                                                               
transportation  plan.   Those percentages  were  "bumped up"  and                                                               
represent a "ball park" figure.                                                                                                 
                                                                                                                                
1:56:35 PM                                                                                                                    
                                                                                                                                
MS. ROONEY continued.   She explained that  proposed AS 37.40.870                                                               
establishes June 30 of each year as  the date the DOR will use to                                                               
determine  the  market value  of  fund.   The  commissioner  will                                                               
report to the legislature 10 days  after the start of the regular                                                               
legislative session.   This  section would  also create  the ATIF                                                               
Advisory Council  to make recommendations to  the legislature for                                                               
projects  to  fund.    She explained  that  the  ATIF's  Advisory                                                               
Council  was  expanded to  24  members  to allow  stakeholders  a                                                               
voice.   She detailed the  ATIF's advisory council members.   The                                                               
advisory council  will use  criteria developed  by the  DOT&PF to                                                               
make  recommendations to  the governor  and  the legislature  not                                                               
later than October 15 of each  year on which capital projects for                                                               
transportation and  related facilities should be  funded from the                                                               
fund, she  said.  Proposed  Section 6 also  provides definitions,                                                               
including "fund" to  mean the ATIF's fund as it  would be set out                                                               
in the state's constitution.                                                                                                    
                                                                                                                                
1:59:32 PM                                                                                                                    
                                                                                                                                
MS.  ROONEY  stated  that  proposed   Section  7  outlines  which                                                               
proceeds  from  taxes on  aviation  fuel  will be  deposited  and                                                               
aviation  taxes to  be  returned to  municipalities  that own  or                                                               
operate an airport.                                                                                                             
                                                                                                                                
MS.  ROONEY  explained  that  proposed  Section  8  requires  all                                                               
revenue from  the motor fuel  tax to  be deposited into  ATIP and                                                               
all refunds to be paid from the ATIP.                                                                                           
                                                                                                                                
MS. ROONEY  related that  proposed Section  9 makes  a conforming                                                               
amendment  due  to  the  repeal of  AS  43.40.010(j)  since  this                                                               
subsection is repealed in proposed Section 12 of HB 30.                                                                         
                                                                                                                                
2:00:14 PM                                                                                                                    
                                                                                                                                
MS.  ROONEY  stated  that  proposed   Section  10  allows  refund                                                               
warrants  to  be made  from  the  proposed  ATIF instead  of  the                                                               
highway fuel  tax account.   Proposed Section 11 provides  for 50                                                               
percent  of  vehicle  rental  taxes  to  be  deposited  into  the                                                               
proposed ATIF.   This tax was designed not only  to help maintain                                                               
roads  but  for tourism.    This  would  leave the  remaining  50                                                               
percent in the general fund for tourism purposes.                                                                               
                                                                                                                                
MS.  ROONEY  explained  that proposed  Section  12  provides  the                                                               
mechanism for studded  tire taxes to be deposited  into the ATIF.                                                               
Proposed Section 13 would amend  the list of responsibilities for                                                               
DOT&PF by  adding the  requirement for  promotion and  support of                                                               
local  public transportation,  and  to develop  criteria for  the                                                               
ATIF's advisory council.  Proposed Section  14 HB 30 also makes a                                                               
conforming  amendment to  remove AS  43.40.010 from  the list  of                                                               
notices of state agency requests  for proposals (RFPs).  Proposed                                                               
Section  15  would  repeal  the no  longer  needed  general  fund                                                               
reference  for  the  watercraft fuel  tax  account,  the  special                                                               
highway  fuel  tax  account,  and   the  non-public  highway  use                                                               
account.                                                                                                                        
                                                                                                                                
2:01:24 PM                                                                                                                    
                                                                                                                                
MS.  ROONEY  explained that  proposed  Section  16 describes  the                                                               
transition during the first five  years, referring to her earlier                                                               
comment  on the  use  of the  5 percent  instead  of six  percent                                                               
return.   Proposed  Section 17  would  stagger the  terms of  the                                                               
proposed  ATIF  advisory  council.   Proposed  Section  19  would                                                               
provide  a  contingency requirement  that  the  amendment to  the                                                               
state's constitution must  be passed by voters before  HB 30 will                                                               
become  effective.     Proposed  Section  20   would  provide  an                                                               
immediate  effective date  for  the  DOT&PF's responsibility  for                                                               
promotion  and  indicates  that   the  support  of  local  public                                                               
transportation will apply  even if the initiative  does not pass.                                                               
In  response   to  Representative  Munoz,  she   reiterated  that                                                               
DOT&PF's  responsibility  to  promote and  support  local  public                                                               
transportation will apply even if the initiative does not pass.                                                                 
                                                                                                                                
MS. ROONEY stated proposed Section  21 would direct that the fuel                                                               
taxes  and vehicle  registration revenue  will be  deposited into                                                               
ATIP once  the election  is certified.   She elaborated  the bill                                                               
drafter  brought  this  to  the  sponsor's  attention  since  the                                                               
constitutional amendment  will take  effect once the  election is                                                               
certified that the language in HB 30 must also conform.                                                                         
                                                                                                                                
2:03:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE  referred to  proposed Section  7 of  HB 30.                                                               
He stated  that 60 percent  of the  proceeds of the  revenue from                                                               
taxes  on  aviation fuel  would  be  returned to  the  respective                                                               
municipality   that   owns  the   airport.      He  related   his                                                               
understanding  that currently  proceeds  are  deposited into  the                                                               
general fund.   He asked if  this bill would guarantee  a minimum                                                               
level of funding for those municipalities who own airports.                                                                     
                                                                                                                                
MS. ROONEY  answered that the  provision to return 60  percent of                                                               
the proceeds of  the revenue from taxes on aviation  fuel is also                                                               
in current statute.                                                                                                             
                                                                                                                                
2:04:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ asked  whether  HB 30  limits the  proposed                                                               
ATIF for state-funded projects only.                                                                                            
                                                                                                                                
MS. ROONEY responded  the specific language states  that not more                                                               
than 20  percent of the proposed  ATIF could be used  for federal                                                               
matching funds, which implies the  projects would be state-funded                                                               
projects.                                                                                                                       
                                                                                                                                
2:04:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ said  she was under the  impression that one                                                               
of the benefits of the fund  was to fund state-funded projects as                                                               
a means to reduce red tape.                                                                                                     
                                                                                                                                
CHAIR  P.  WILSON explained  that  this  language would  help  to                                                               
address  uncertainty since  it  is not  possible  to predict  the                                                               
future.   At times,  the state  would appropriate  matching funds                                                               
and receive  quite a bit  more in  federal funds.   She clarified                                                               
that she  did not want to  prohibit this practice so  she limited                                                               
federal funds to 20 percent in the bill.                                                                                        
                                                                                                                                
MS. ROONEY  clarified that the amount  could also be zero  as the                                                               
language reads:   "...and the  amount of all  appropriations from                                                               
the fund  to match federal  money does  not exceed 20  percent of                                                               
the total amount available for appropriation from the fund."                                                                    
                                                                                                                                
CHAIR  P.   WILSON  added  that  the   proposed  ATIF's  advisory                                                               
committee  would  work   to  stretch  funds  so   unless  it  was                                                               
absolutely necessary the committee would not otherwise do so.                                                                   
                                                                                                                                
2:06:30 PM                                                                                                                    
                                                                                                                                
PAT  KEMP, Deputy  Commissioner, Department  of Transportation  &                                                               
Public Facilities  (DOT&PF), referred to  page 4 of  the original                                                               
version of  HB 30,  which read, "An  appropriation from  the fund                                                               
may not  be made to  a project for  which federal money  has been                                                               
allocated..."   He suggested  this language may  be a  little too                                                               
restrictive.   He apologized  to the committee  for not  having a                                                               
copy of the committee substitute before him.                                                                                    
                                                                                                                                
2:08:24 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON said that the  issue may have been brought up and                                                               
addressed.                                                                                                                      
                                                                                                                                
MR. KEMP said he thought his comment may be moot.                                                                               
                                                                                                                                
2:08:56 PM                                                                                                                    
                                                                                                                                
WHITNEY  BREWSTER, Director,  Division of  Motor Vehicles  (DMV),                                                               
Department of Administration  (DOA), stated that the  DMV has not                                                               
taken a  position on the  bill.  She  explained that the  DMV has                                                               
submitted  a  fiscal  note  which  identifies  a  concern.    She                                                               
explained  that if  the ATIF  was  currently in  effect, the  DMV                                                               
would have deposited all of  its $45 million in registration fees                                                               
into the fund.  She highlighted  that these funds would have been                                                               
deposited in FY 10 to the ATIF if it were in place.                                                                             
                                                                                                                                
CHAIR P.  WILSON asked if the  $45 million is everything  the DMV                                                               
collects.                                                                                                                       
                                                                                                                                
MS.  BREWSTER answered  no.    She explained  that  the DMV  also                                                               
collects fees for  titles and specialty license plates.   The DMV                                                               
would still  use those funds  to operate.  She  further explained                                                               
that  the DMV  is funded  via program  receipts, meaning  that it                                                               
operates from the  revenue it collects.  The  remaining fees that                                                               
would  be  available  to  the  DMV  under  HB  30  would  not  be                                                               
sufficient enough to  cover its operating or  capital budget, she                                                               
said.                                                                                                                           
                                                                                                                                
2:11:09 PM                                                                                                                    
                                                                                                                                
MS. BREWSTER  explained that  the DMV's  revenue is  deposited to                                                               
the general  fund but  the DMV's current  FY 12  operating budget                                                               
request  is   for  approximately  $15,473,700,  or   about  $15.5                                                               
million.  The way the  process is structured via program receipts                                                               
is that the DMV operates from  revenue it generates.  She offered                                                               
that for the DMV to continue  to operate the structure would need                                                               
to be  changed to allow  the DMV to  be entirely funded  from the                                                               
general  fund.   In  further  response to  Chair  P. Wilson,  Ms.                                                               
Brewster  explained that  the  DMV  spends a  lot  less than  the                                                               
revenue  it  generates.   The  DMV  generated  approximately  $54                                                               
million in FY 10 without  the motor vehicle registration tax that                                                               
is  directed to  local  government.   The  DMV  uses the  regular                                                               
appropriation process to obtain its funding, she said.                                                                          
                                                                                                                                
2:12:45 PM                                                                                                                    
                                                                                                                                
MS. BREWSTER,  in response to  Chair Wilson, agreed  that instead                                                               
of being  funded from  its receipts, which  would be  directed to                                                               
the ATIF under  HB 30, the DMV would need  to supplant those fees                                                               
with  something  else.    She referred  to  the  roughly,  $6.467                                                               
million reflected in  the fiscal note.  Since  the budget request                                                               
is approximately $15.5 million, the  DMV would need an additional                                                               
$6.5 million in  order to operate.  In further  response to Chair                                                               
P. Wilson, Ms. Brewster answered that  the DMV would be funded by                                                               
the general fund if  it is the will of the  legislature for it to                                                               
do so.                                                                                                                          
                                                                                                                                
CHAIR P. WILSON asked if that is the current process.                                                                           
                                                                                                                                
MS.  BREWSTER answered  the DMV  would use  a slightly  different                                                               
process since  the DMV  is funded from  program receipts  and not                                                               
directly from the general fund.                                                                                                 
                                                                                                                                
2:14:30 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON  referred to the accompanying  resolution, HJR 4,                                                               
which allows  the legislature  to fund "...up  to six  percent of                                                               
the  average market  value of  the  fund over  the previous  five                                                               
fiscal years  for transportation and related  facilities that are                                                               
designated by law,  for costs related to  motor vehicle licensing                                                               
and registration  that are designated  by law, and for  the costs                                                               
to administer the  fund as designated by law."  She asked whether                                                               
that would be sufficient for the DMV operations.                                                                                
                                                                                                                                
MS. BREWSTER  answered that language might  be sufficient funding                                                               
for the DMV.  In further  response to Chair P. Wilson, she agreed                                                               
to  review  the   specific  language  and  report   back  to  the                                                               
committee.                                                                                                                      
                                                                                                                                
2:15:32 PM                                                                                                                    
                                                                                                                                
MR. KEMP referred to page 3, lines  24-26, to Version D of HB 30.                                                               
He  expressed   concern  with  the   language  which   read:  "An                                                               
appropriation from  the fund  may not  be made  to a  project for                                                               
which federal  money has  been allocated..."   He  explained that                                                               
this language  may be  too restrictive  and reviewed  the federal                                                               
funding process  for roads.   He  further explained  that federal                                                               
projects  are  funded through  a  series  of notices  to  proceed                                                               
(NTP).   He  related that  in  a typical  project the  department                                                               
obtains NTP approval through  the environmental process, followed                                                               
by NTP approval  through the design phase, then  NTP approval for                                                               
the  right-of-way  acquisition,  and   finally  NTP  approval  to                                                               
construct the  project.  The project  is considered "federalized"                                                               
the minute  the DOT&PF begins  design work,  he said.   Thus, the                                                               
DOT&PF would  not be able to  use the proposed ATIF  funds, based                                                               
on  the  current  language  in  the  bill,  due  to  the  federal                                                               
allocation process, he said.                                                                                                    
                                                                                                                                
2:18:31 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON referred to  environmental impact statement (EIS)                                                               
and asked  whether the DOT&PF  would generally use  federal funds                                                               
for the EIS.                                                                                                                    
                                                                                                                                
MR. KEMP answered yes and  explained that the DOT&PF uses federal                                                               
funds  for  highways, but  not  for  aviation  and harbors.    In                                                               
further response to  Chair P. Wilson, Mr. Kemp  answered that the                                                               
DOT&PF currently  has over 50  projects waiting  for construction                                                               
funding.                                                                                                                        
                                                                                                                                
CHAIR P.  WILSON offered to review  the language.  She  asked for                                                               
further  clarification that  the DOT&PF  cannot use  the proposed                                                               
ATIF on projects in which federal funds were allocated.                                                                         
                                                                                                                                
MR. KEMP  agreed that  the DOT&PF cannot  use the  proposed ATIF,                                                               
under  the  current restrictive  language  in  HB 30  since  some                                                               
federal allocations have already been made.                                                                                     
                                                                                                                                
CHAIR  P.  WILSON  asked whether  the  federal  government  would                                                               
prohibit the state from using state funds on the projects.                                                                      
                                                                                                                                
MR. KEMP  answered that the  state could finish the  project with                                                               
state funds.                                                                                                                    
                                                                                                                                
2:20:17 PM                                                                                                                    
                                                                                                                                
MR.  KEMP offered  some examples  to  illustrate his  point.   He                                                               
related an instance in which  an important project is included in                                                               
the Surface Transportation Improvement  Project (STIP).  When the                                                               
STIP is fiscally constrained the  project could slip a few years,                                                               
which might  happen if  the project experiences  an overrun  or a                                                               
claim is  made.  If that  happened another project from  the STIP                                                               
would be substituted,  but under HB 30 the DOT&PF  could not fund                                                               
the substitute  project for construction  due to  the restrictive                                                               
language in  the bill.  In  further response to Chair  P. Wilson,                                                               
Mr.  Kemp suggested  if projects  were reevaluated  under another                                                               
project evaluation board  process that a project may  fall in one                                                               
fiscal year.   A subsequent project  could come in with  a higher                                                               
priority, such as  the Knik-Goose Bay Road,  which would displace                                                               
the earlier  project to the  outer years.  Under  the restriction                                                               
in HB  30, the  DOT&PF would  not be able  to fund  the displaced                                                               
project until  federal FY 14,  he said.   The proposed  ATIP fund                                                               
could  not  be used  to  fund  the  displaced project  since  the                                                               
project had already been "federalized"  by the federal allocation                                                               
process.    He  reiterated  that   the  DOT&PF  would  like  more                                                               
flexibility to access the proposed ATIF for its projects.                                                                       
                                                                                                                                
CHAIR  P.  WILSON  recalled  the  DOT&PF's  funding  process  for                                                               
highway  projects.    She  related   her  understanding  that  by                                                               
starting the  project with federal  funds meant the  DOT&PF would                                                               
have to continue with federal funds.                                                                                            
                                                                                                                                
MR.  KEMP referred  to the  restrictive language.   He  read: "An                                                               
appropriation from  the fund  may not  be made  to a  project for                                                               
which federal  money has been  allocated..."  He  reiterated that                                                               
the federal money  would already have been  allocated through the                                                               
design phase.   He offered a  scenario in which the  design phase                                                               
for  a project  had been  completed, the  right-of-way properties                                                               
had been purchased, and a  project was awaiting construction.  In                                                               
that scenario,  federal funds  would have  been allocated  to the                                                               
project.   With the  current restrictive language  in HB  30, the                                                               
DOT&PF would not  be able to use the proposed  ATIF funds for the                                                               
construction phase of this project.                                                                                             
                                                                                                                                
2:23:28 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON referred to  additional language on page 3, lines                                                               
26, of  Version D of  HB 30 that added  an exception.   She read,                                                               
"...unless  the  appropriation  is  for matching  money  for  the                                                               
project and  the amount  of all appropriations  from the  fund to                                                               
match  federal money  does not  exceed 20  percent of  the amount                                                               
available for appropriation from the fund."                                                                                     
                                                                                                                                
MR. KEMP  responded that the  exception she read pertains  and is                                                               
limited to matching  funds.  He related the DOT&PF  already has a                                                               
matching "pot" for federal matching funds.                                                                                      
                                                                                                                                
CHAIR P. WILSON offered to work on the language.                                                                                
                                                                                                                                
2:23:53 PM                                                                                                                    
                                                                                                                                
MR. KEMP  provided another scenario  in which  early right-of-way                                                               
acquisition is  deemed necessary  for a  complex project  that is                                                               
underway and a house  came up for sale.  The  DOT&PF would not be                                                               
able to purchase  the house under the federal  process unless the                                                               
DOT&PF  had  already  received  a NTP  to  appraise  and  acquire                                                               
property.   This would be  a good use  for the proposed  ATIF, he                                                               
stated.                                                                                                                         
                                                                                                                                
REPRESENTATIVE MUNOZ asked whether  the DOT&PF could purchase the                                                               
house  using the  proposed ATIF  even if  federal funds  had been                                                               
spent on the project.                                                                                                           
                                                                                                                                
MR. KEMP  answered yes.   The federal  process is done  through a                                                               
series  of  notices  to  proceed  (NTP)  and  the  DOT&PF  cannot                                                               
purchase  right-of-way until  the final  design is  complete, and                                                               
the final  design cannot  proceed until the  EIS is  complete, he                                                               
said.                                                                                                                           
                                                                                                                                
2:25:34 PM                                                                                                                    
                                                                                                                                
REBECCA ROONEY related her understanding  that one of the designs                                                               
of  the  proposed ATIF  is  to  allow  for state  only  developed                                                               
projects.   She recalled that  once a project is  federalized the                                                               
DOT&PF must follow the federal rules.                                                                                           
                                                                                                                                
MR. KEMP  agreed.   He stressed  that the  examples he  gave were                                                               
ones in which the DOT&PF  would have already followed the federal                                                               
process.   Once  the design,  EIS, ROW  processes are  completed,                                                               
these  projects are  ready for  construction and  essentially are                                                               
"sitting on  the shelf"  awaiting funding.   The  Federal Highway                                                               
Administration (FHWA)  doesn't have an issue  with states funding                                                               
the construction  phase of  their projects  with state  funds for                                                               
projects developed under the federal process.                                                                                   
                                                                                                                                
MS. ROONEY confirmed the sponsor's  goal for the proposed ATIF is                                                               
to provide  a means to  provide transportation  infrastructure to                                                               
Alaskans without constraints imposed by the federal process.                                                                    
                                                                                                                                
2:27:10 PM                                                                                                                    
                                                                                                                                
MS. ROONEY  pointed out the previous  draft of HB 30  limited the                                                               
fund to  capital projects  and deferred  maintenance.   The ideal                                                               
situation would  be for  the federal  funding stream  to continue                                                               
and  for the  proposed ATIF  to  provide additional  funds.   She                                                               
predicted  if  that  were  to happen  the  state  could  actually                                                               
achieve    overall    improvement     in    its    transportation                                                               
infrastructure.                                                                                                                 
                                                                                                                                
MR. KEMP offered his belief that  will happen with this bill, but                                                               
he  suggested  the   language  is  a  little   restrictive.    He                                                               
highlighted  that  some features  within  a  project may  not  be                                                               
eligible for  federal funding, including  an instance in  which a                                                               
highway contains  a driveway  structure which  consists of  a pad                                                               
built on pilings and beams.   The federal funds could not be used                                                               
and the  state would need to  fund replacement.  So  the proposed                                                               
ATIF  would be  a good  source of  funds to  do so.   He  related                                                               
another scenario in  Valdez, in which a park road  was paved with                                                               
federal  funds.   However,  the pullouts  were  not eligible  for                                                               
federal funds  so the  state funded  the pullouts,  he said.   He                                                               
asked the committee  to consider building in  more flexibility to                                                               
allow the  DOT&PF to better  use its Capital  Improvement Program                                                               
(CIP).                                                                                                                          
                                                                                                                                
2:28:51 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON related her  understanding that Version D  of HB
30 would  not allow more  than "80 percent of  the appropriations                                                               
from  the fund  may be  used for  projects related  to roads  and                                                               
surface transportation"  in proposed AS  37.14.860.  She  read an                                                               
excerpt  from   proposed  AS  37.14.860  (b):     "...unless  the                                                               
appropriation  is for  matching  money for  the  project and  the                                                               
amount  of all  appropriations  from the  fund  to match  federal                                                               
money  does not  exceed 20  percent of  the amount  available for                                                               
appropriation  from  the fund."    She  asked whether  "matching"                                                               
should be changed.                                                                                                              
                                                                                                                                
MR. KEMP offered one approach would  be to set aside a percentage                                                               
of the  proposed ATIF  fund to perform  these types  of projects.                                                               
He anticipated  that during the  first few years of  the proposed                                                               
ATIF, a large  number of federal projects would  be available for                                                               
construction.   This bill could  provide a means to  access state                                                               
funds on projects  developed under the federal  process, he said.                                                               
He then acknowledged that the  proposed ATIF Advisory Board would                                                               
first need to develop the project list.                                                                                         
                                                                                                                                
CHAIR P. WILSON,  in response to Mr. Kemp,  related the committee                                                               
could consider the DOT&PF's request for more flexibility.                                                                       
                                                                                                                                
2:31:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  asked whether any federal  allocation was                                                               
used in the Elmore Road Extension in Anchorage.                                                                                 
                                                                                                                                
MR. KEMP  said he thought so.  He elaborated by saying  that most                                                               
of  the recent  state-funded projects  have been  developed using                                                               
federal funds.                                                                                                                  
                                                                                                                                
REPRESENTATIVE JOHNSON  asked whether the DOT&PF  could have used                                                               
the proposed ATIF on the project.                                                                                               
                                                                                                                                
MR. KEMP  agreed it  could have given  his interpretation  of the                                                               
language  in  proposed  AS  37.14.860  (b),  which  read,  "...An                                                               
appropriation from  the fund  may not  be made  to a  project for                                                               
which  federal money  has been  allocated..."   Not only  has the                                                               
money been  allocated to a  certain project but it's  been spent,                                                               
he said.                                                                                                                        
                                                                                                                                
REPRESENTATIVE   JOHNSON  related   his   understanding  of   the                                                               
argument, but he  also indicated he also did not  want to provide                                                               
too  much flexibility.    He expressed  interest  in finding  the                                                               
balance.                                                                                                                        
                                                                                                                                
2:32:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PRUITT  asked whether federal funds  could be used                                                               
up to a certain stage of a project.                                                                                             
                                                                                                                                
MR.  KEMP  responded   that  each  project  would   be  a  little                                                               
different.   He stated that the  DOT&PF would work to  figure out                                                               
how to accommodate the majority of projects.                                                                                    
                                                                                                                                
CHAIR P. WILSON acknowledged that  staging would move the project                                                               
further along.                                                                                                                  
                                                                                                                                
2:33:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ related her  understanding from the examples                                                               
given that  if federal funds were  spent on a project  the DOT&PF                                                               
might  find an  opportunity to  expedite a  project by  using the                                                               
ATIP.  She agreed it could  be helpful to reduce the barriers and                                                               
provide flexibility  since the goal  is to finish projects.   She                                                               
offered her belief that HB 30 could help accomplish the goal.                                                                   
                                                                                                                                
2:34:13 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON related a  scenario in which federal  funds were                                                               
used on  a project.  She  asked whether the DOT&PF  must continue                                                               
to follow the more cumbersome  federal process.  She related that                                                               
the state  doesn't want to  sacrifice any quality but  would like                                                               
to avoid  any unnecessary steps,  just as  the DOT&PF did  in the                                                               
Dowling Extension  project.   She asked  whether the  state could                                                               
expedite  projects  that  were  initially  started  with  federal                                                               
funds.  She  emphasized her goal, which is  to construct projects                                                               
faster for less cost with the same quality.                                                                                     
                                                                                                                                
MR. KEMP answered absolutely.  He  related if a project was built                                                               
using the proposed  ATIF that it would be  considerably faster to                                                               
get a  project finished.   He said  if the project  was partially                                                               
funded with  federal funding,  that it would  depend on  stage of                                                               
the  process as  to  whether  the proposed  ATIF  could be  used.                                                               
Theoretically, if  state funds became  available during  the time                                                               
the DOT&PF had  an NTP authorization through  the design process,                                                               
the  state   could  start   commence  the   right-of-way  process                                                               
immediately,   instead  of   waiting  for   the  design   process                                                               
completion date.   It  could potentially shave  months or  a year                                                               
from a typical project, he said.                                                                                                
                                                                                                                                
2:36:11 PM                                                                                                                    
                                                                                                                                
CHAIR P.  WILSON asked for  a list of  the various stages  of the                                                               
projects that would be ATIP  eligible and indicate at which point                                                               
the federal requirement would need to be followed.                                                                              
                                                                                                                                
MR. KEMP agreed to do so.                                                                                                       
                                                                                                                                
2:36:42 PM                                                                                                                    
                                                                                                                                
JERRY BURNETT, Deputy Commissioner,  Department of Revenue (DOR),                                                               
explained  the  Department of  Revenue  (DOR's  staff prepared  a                                                               
spread  sheet  that shows  a  straight  line six  percent  return                                                               
payout which would be deposited into  the proposed ATIF.  The DOR                                                               
referred to  the fiscal note.   He said he thought  a six percent                                                               
payout seemed a  bit aggressive and could result  in a volatility                                                               
that potentially  might lose  money in  the fund  for one  out of                                                               
four or five years depending on  the timing.  He suggested equity                                                               
or some  other types of  investment have a more  volatile payment                                                               
stream than fixed income.   Instead, he recommended the committee                                                               
consider a payout  in the 4.5 to 5 percent  range to preserve the                                                               
value of  the fund and  not risk "a  serious blowup" in  an early                                                               
year.  He pointed out that  the DOR has experienced this over the                                                               
past  several years.   Otherwise,  the model  works well  and the                                                               
percent of  market value payout  is the proper method  payout, he                                                               
stated.  He also  said it is just matter of  growing the fund and                                                               
the  lower payout  in  first few  years would  help,  but he  was                                                               
unsure of the  crossover point.  He thought  the expected returns                                                               
may  do better  at a  slightly lower  payout.   He suggested  the                                                               
committee  may  wish  to  consider that  aspect  and  offered  to                                                               
provide  a model  using the  lower rates  if the  committee would                                                               
like him to do so.                                                                                                              
                                                                                                                                
2:39:12 PM                                                                                                                    
                                                                                                                                
MR.  BURNETT, in  response to  Chair Wilson,  responded that  the                                                               
latest capital market assumptions indicate  a real rate of return                                                               
at  five percent  as pretty  aggressive.   He  said in  reviewing                                                               
equities  from  2000-2010,  that  "it wasn't  pretty"  since  the                                                               
return  was not  a  good  return.   He  suggested that  somewhere                                                               
between 4.5 to  5 percent rate is recommended.   He recalled that                                                               
the retirement  board changed actuarial  from 8.25 to  8 percent.                                                               
He also  suggested that  the committee may  wish to  consider the                                                               
rate periodically.                                                                                                              
                                                                                                                                
2:40:48 PM                                                                                                                    
                                                                                                                                
MR. BURNETT explained  the fiscal note is based  on allocation of                                                               
expenditures between funds  and in particular, to this  fund.  He                                                               
stated  that the  DOR  manages  about $38  billion  in the  DOR's                                                               
Treasury Division, including retirement  funds, the general fund,                                                               
and trust funds.   The DOR must allocate cost.   Depending on the                                                               
source of  the funds,  it may not  represent an  incremental cost                                                               
but  may  be  a  new  allocation  to this  fund,  he  said.    He                                                               
anticipated that some  cost would likely be  incremental since it                                                               
would require some outside management.                                                                                          
                                                                                                                                
2:41:34 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON  recalled hearing that the  state may consolidate                                                               
its funds under the same department.                                                                                            
                                                                                                                                
MR. BURNETT  stated that  the Alaska Permanent  Fund has  its own                                                               
board as does the retirement fund,  but the rest of the funds are                                                               
managed   under   the   fiduciary  responsibly   of   the   DOR's                                                               
commissioner.    He  remarked that  the  DOR  manages  everything                                                               
except for the  permanent fund.  In response to  Chair Wilson, he                                                               
agreed to provide  a spreadsheet using a percent  of market value                                                               
using 4.5 percent, 4.75 percent and 5 percent rates.                                                                            
                                                                                                                                
CHAIR  P. WILSON  recalled Sitka  has  a permanent  fund using  a                                                               
percent of market value at 6 percent.                                                                                           
                                                                                                                                
MR. BURNETT remarked  that if the proposed ATIF  had been started                                                               
in 2008  it would look "pretty  bad."  If the  fund was initiated                                                               
in April  2009 it  would look  "really good."   He was  unsure of                                                               
what the condition would look like today.                                                                                       
                                                                                                                                
[HB 30 was held over.]                                                                                                          

Document Name Date/Time Subjects
ATIF Fact Sheet 2011.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
HB 30 -ATIF Sponsor Stmt ver B.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
HB 30 ver B.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
HB 30 Persily Report.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
HB 30 statutes.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
HB 30 support documents.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
HB 30 Support Miners 1-2011.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
HJR4 -Constitutional Change Sponsor Stmt.pdf HTRA 2/15/2011 1:00:00 PM
HJR 4
HJR $
HJR004-OOG-DOE-2-11-11.pdf HTRA 2/15/2011 1:00:00 PM
HJR 4
HJR 4 Ver B.pdf HTRA 2/15/2011 1:00:00 PM
HJR 4
CS HJR 4 Ver I.pdf HTRA 2/15/2011 1:00:00 PM
HJR 4
HB 30 support Harbormasters.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
CS SJR6 Ver I.pdf HTRA 2/15/2011 1:00:00 PM
SJR 6
SJR 6 - sponsor statement.pdf HTRA 2/15/2011 1:00:00 PM
SJR 6
SJR 6 Alaska Aviation Support.pdf HTRA 2/15/2011 1:00:00 PM
SJR 6
HB030-DOA-DMV-02-11-11.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
HB030-DOT-CO-2-11-11.pdf HTRA 2/15/2011 1:00:00 PM
HB 30
HB30 appropriations spreadsheet (2).pdf HTRA 2/15/2011 1:00:00 PM
HB 30
SJR 6 letters of support.pdf HTRA 2/15/2011 1:00:00 PM