Legislature(2009 - 2010)SENATE FINANCE 532
03/02/2009 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB124 | |
| SB123 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 123 | TELECONFERENCED | |
| *+ | SB 124 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 123
"An Act making supplemental appropriations and capital
appropriations; amending appropriations; and providing
for an effective date."
9:39:49 AM
Co-Chair Stedman announced that public testimony would be
taken at a later date.
FRANK RICHARDS, DEPUTY COMMISSIONER, HIGHWAYS AND PUBLIC
FACILITIES, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, gave an overview of the legislation. He framed
what the America Recovery and Re-investment Act (ARRA) is
providing to Alaska for transportation. He emphasized the
intent to create jobs and invest in assets so that citizens
would benefit. The stimulus funds through the formula
programs include approximately $175 million for highways
projects, $42 million for transit projects, and $85 million
for aviation projects. The department has been working
diligently with federal funding partners to maximize the
potential use of the funds for Alaskans.
Mr. Richards explained that funding for highways and
transit projects will be provided through regular formula
programs, while aviation funding will go directly to the
FAA for discretionary allocation. Expectations were high
regarding easy access to and use of the transportation
funds. However, the funds will flow through the regular
federal formula programs, which means following mandatory
rules and regulations.
Mr. Richards listed requirements that apply to funding for
roads and bridges:
• To access the funds, the funds must have been
developed under Title XXIII rules.
• Funds will flow through state DOTs.
• At least 50% of the funds must be obligated within 120
days (June 15, 2009 deadline). This leaves 104 days
from the time of enactment to make sure the funds are
obligated, or the funds will be lost to another state
(use it or lose it provision).
• Remaining 50% must be obligated by one year (February
17, 2010).
• The funds specifically for the highway and transit
program come with an allocation defined by the bill.
Of those funds:
o 3% goes to transportation enhancement projects,
such as sidewalks, waysides, bike paths, etc.67%
to be used on state highways and roads.
o 19% must go to communities of less than 5,000.
o 11% must go to communities with populations of
greater than 200,000.
o The remaining 67% will go to state roads,
highways, and bridges.
• All projects must be in a current State Transportation
Improvement Plan (STIP); Amendment #18 is out for
public comment.
Mr. Richards stressed that the provisions will be
challenging to accomplish within the short timeframe. The
guidelines must be followed or Alaska will lose funds.
Essentially, Congress has mandated that funds be spent on
projects that have previously been developed following the
federal rules.
9:44:39 AM
Mr. Richards stated that SB 123 contains projects the
department felt would meet the required rules. The bill
represents about $330 million in highway projects. He
stressed that the projects have already been before the
legislature and received authority to proceed.
Mr. Richards listed the criteria developed by the
department to put together a priority list of projects. The
criteria correspond to ARRA emphasis areas, projects that:
• Address safety issues
• Are located in economically distressed areas, where
the unemployment rate is 1 percentage point higher
than the national average
• Provide gasline logistic benefits
• Leverage other funds
• Could be under construction by 2009
Mr. Richards referred to a letter sent the previous week
identifying the projects. The letter also provided a
spreadsheet listing the priorities for the recommended
projects as well as contingency projects following the same
criteria.
Mr. Richards pointed out that SB 123 contains several
appropriations with individual project allocations. The
governor's priorities are included in the highway and
bridge stimulus projects list. There is also a contingent
list with eligible projects.
Mr. Richards reported that one unfortunate consequence of
the stimulus bill was the use of a 1991 formula for
allocation of "local funding." Alaska has been exempt from
the formula since 1991. Under the formula, funds are
allocated to communities of greater than 200,000 and less
than 5,000. Remaining funding could be spent in other
communities with populations between 5,000 and 200,000,
such as Fairbanks, Ketchikan, Juneau, Palmer, Wasilla, and
Sitka, if the funding level met 110 percent of the 1991
allocation to those communities.
9:47:01 AM
Mr. Richards stressed that Alaska is the only state without
the ability to allocate projects under the category of
funding to the mid-sized communities.
Mr. Richards pointed out that not all the funding would
flow through the state. Under transit, $42 million has been
designated for Alaska; $32.5 million will go to the
Anchorage Metropolitan Planning Organization (AMPO) and the
Fairbanks Metropolitan Planning Organization (FMPO).
Alaskans will probably receive $85 million for aviation,
but FAA will determine where the money is spent. Portions
of the aviation funds will be given to local sponsors,
meaning non-state-owned airports, such as in Juneau
Municipal Airport and Merrill Field Airport in Anchorage.
Mr. Richards reminded listeners that the department still
has STIP Amendment 18 out for comment and he urged
committee and community members to participate. The
department has been learning that communities have projects
that some believe are eligible for the stimulus funds. He
emphasized the importance of dialogue between the
communities and the department to determine if projects
will meet the requirements of Title XXIII. He warned that
the department does not have authority to provide funding
if the projects are not currently on the federal STIP.
Co-Chair Stedman queried the communication process between
the communities and DOT/PF. Mr. Richards reported that
DOT/PF had recently been approached by communities with
projects. Department staff would work with the communities
to determine if procedure was followed regarding right-of-
way certification and environmental and design documents.
The process takes time. Communities should have
communications with FHWA regarding project eligibility. The
stimulus funds flow through DOT/PF, so projects must be
part of the STIP.
9:50:36 AM
Co-Chair Stedman underlined the need for communities to be
proactive and get in contact with DOT/PF. Mr. Richards
agreed; otherwise, the department has no way of knowing
about potential projects. Co-Chair Stedman asked how the
department would assist communities. Mr. Richards answered
that the department has developed a matrix tree to provide
to communities for determining the eligibility of a
project.
Co-Chair Stedman asked for a brief synopsis of amounts for
projects, not including funds that could be obtained from
other states. Mr. Richards summarized that the amount for
highways and bridges is $175,461,000.
Co-Chair Stedman emphasized the difference between federal
receipt authority and cash in hand to move a project
forward. The priority is to move projects forward.
Mr. Richards added that there will be approximately $9.1
million for transit projects.
9:54:12 AM
Co-Chair Stedman stated that he was interested in a broad
overview of projects because of an administration news
release regarding additional funds.
Mr. Richards added that there would be approximately $75
million worth of aviation projects.
Co-Chair Hoffman asked for a delineation of funds for
transportation. Mr. Richards answered that a spreadsheet
was attached to the February 20, 2009 letter ("Alaska
Transit, Highway and Bridge Stimulus List, Based on ARRA
2009," Copy on File). The spreadsheet identifies projects
that were stimulus (recommended), with transit,
transportation, local, and state dollars identified. Each
of the projects is then funded under one of the categories
that is shown as 2009 stimulus funds needed. The specific
transportation enhancement projects are on the bottom of
page 1:
• Valdez Areawide Bike and Ped Trail Pavement
Refurbishment
• Denali Highway Wayside Project
Mr. Richards referred to page 2, the transit projects
totaling approximately $9 million.
9:57:17 AM
Co-Chair Stedman asked how long the five priority items on
page 1 of the document had been on the STIP. Mr. Richards
replied that the project descriptions in the bill would
indicate when each project first showed up on the STIP. He
said he could get the information.
Co-Chair Stedman asked what the timeframe would be if the
STIP were modified to deal with community projects. Mr.
Richards replied that FHWA procedures require an entire
STIP amendment for a new project funded with federal money.
The amendment process includes a public comment period;
from initiation of the STIP amendment to sign-off by FHWA
and FTA is approximately 90 days, with very aggressive
scheduling. The department believes it will be able to
accomplish Amendment 18, which includes the funding cycle
for the projects that have been identified in SB 123. New
projects brought forward that meet the requirements for use
of the stimulus funds would require a new STIP amendment.
10:00:29 AM
Co-Chair Hoffman spoke to the 67 percent funds category
that can be used in any area of the state and noted that
appropriations are concentrated in area. He asked why there
was not more equity in the location of projects. Mr.
Richards answered that the department wanted equitable
distribution across the state. The news that local funds
could not be used for communities with populations between
5,000 and 200,000 upset plans for equitable distribution.
The department had to act quickly to meet the new
guidelines provided by Congress. He felt the project list
in SB 123 meets the intent of Congress of providing for
safety, jobs in economically distressed areas, and
equitable distribution.
10:03:12 AM
Co-Chair Stedman queried the process used to develop
prioritization, as the fund amounts are lower than numbers
mentioned in the administration's news release. He pointed
out that federal receipt authority was a good way to get
allocations but not to accomplish anything. He wanted cash
in hand for projects around the state instead of federal
receipt authority that may not materialize.
Senator Thomas wondered if the prioritization criteria
considered how close a project had to be to an area to be
considered a stimulus for that area.
10:06:10 AM
Mr. Richards stated that the department was willing to talk
about prioritization factors used for individual projects.
He added that the presentation letter included a list of
projects previously identified as eligible when the
timeline to obligate was thought to be 18 months. When
Congress condensed the timeline to 12 months, some of the
projects dropped off the list; the dropped projects can be
found on page four of the spreadsheet.
10:08:08 AM
Co-Chair Hoffman stated concerns that the administration
limited flexibility by making early decisions regarding
where the stimulus funds would be spent. Early decisions
meant that the projects had to be funded out of the 67
percent discretionary funds. He emphasized that other
conditions needed to be considered when making decisions,
such as high unemployment and equity of distribution of
projects. He did not feel those considerations were
utilized when decisions were made about the discretionary
funds. The early decisions tied the hands of the department
as well as the legislature. He questioned if the bill
treated all Alaskans fairly.
10:11:04 AM
Mr. Richards replied that 60 percent of the funds will flow
to areas in economic distress.
Co-Chair Hoffman wanted to see a list of the projects that
fit the criteria. Mr. Richards replied that the list is on
the spreadsheet under the prioritization factor "serves
economic distress" column.
Mr. Richards addressed the question regarding whether the
projects on the governor's recommended list provides for
equitable distribution across the state. He stated that the
question is multi-faceted. Because Alaska has the ability
under the regular federal funding formula to use the funds
on all roads within the state, the state has experienced a
major reduction in its ability to use national highway
system funds. National highways include the Parks and
Dalton Highways, roadways that serve the vast majority of
the state and not any particular community. Ten years ago,
the state was able to do approximately 12 projects per
year. Now, the normal program is underfunded at about $75
million per year, covering only two or three projects per
year. The top priorities in the governor's recommended bill
are the national highway system assets that have not been
sufficiently funded to address needed safety and other
related issues. The department felt that the projects put
forward and recommended by the governor were some of the
most needed.
Mr. Richards stressed that if the projects are selected by
the legislature to fund, other STIP projects will advance
and be funded, greatly benefiting the state and addressing
the needs of smaller communities.
10:14:29 AM
Co-Chair Stedman observed that the administration seemed to
have a high degree of assurance that the contingency
projects will move ahead and be funded. He asked if the
administration was saying that the legislature should not
be concerned which group is the first group and which is
contingent, because both would be funded. Mr. Richards
answered that based on the current level of federal highway
program funding in 2009 and the likely level in 2010, the
administration feels that both recommended and contingent
projects will be addressed in the near term because of the
economic stimulus funds.
Co-Chair Stedman asked why the administration is concerned
about re-arranging the list if all the projects that will
get done in the end. Mr. Richards replied that his goal is
to present projects that would meet the eligibility
requirements of the stimulus bill. Previously, the
department was asked to provide prioritization of projects.
Co-Chair Hoffman reiterated concerns that there would not
be a stimulus package next year and that the administration
would not utilize the same criteria on future projects as
the stimulus bill utilizes. He questioned whether the
administration could ensure that future funding would
address the concerns of economically distressed areas. Mr.
Richards replied that Congress placed emphasis on the
creation of jobs. Most of the recommended projects are
those that can be under construction in 2009. The focus has
been to provide for jobs in 2009 and some in 2010. The
regular STIP funds projects were already in line.
10:18:07 AM
Co-Chair Hoffman referred to prior testimony by the
department that projects in other areas of the state would
be addressed "next year.He stated that by then the
criteria could be different; there is no guarantee that
projects in economically distressed areas would be funded.
He asked if the administration would use similar criteria
[to that used in the stimulus package] for the 2011 budget.
Mr. Richards addressed the question regarding the use of
funds in next year's STIP. Major projects will be taken out
of the lineup because of economic stimulus funds, enabling
funding of the vast majority of remaining projects.
Concurrent with STIP amendment 18, the 2010 to 2013 STIP is
out for public comment. The public and the legislature are
being asked to look at existing criteria used to rank
upcoming projects. He invited the legislature to identify
different criteria. The STIP ranking for the 2010-2013
programs will occur soon after the legislative session ends
in April.
Co-Chair Hoffman wanted the stimulus package to stimulate
jobs throughout the state. He stated concerns about equity
of the projects throughout the state, particularly areas
with the highest unemployment rates. He questioned what the
committee could do to change that. He referred to the
community of Emmonak.
10:22:28 AM
Mr. Richards stated that Emmonak was part of the governor's
recommended list. Co-Chair Hoffman pointed to other
communities in Western Alaska that were not on the list.
Senator Huggins referred to $130 million that DOT/PF
requested during the summer 2008 special session. The co-
chairs told the department to come back with the requests
during the regular session. He asked if the same projects
are now in the stimulus package. Mr. Richards answered that
they were.
Senator Huggins asked if the administration looked at the
capital budget with an eye towards using state funds to
stimulate the state economy, since there is flexibility
with the capital budget. Mr. Richards believed that the
amendments put forward for the capital budget would address
the issue for transportation.
Senator Huggins asked for examples that meet the criteria.
He asked whether highway safety corridors projects meet
criteria to get pushed forward. Mr. Richards answered in
the affirmative. He referred to the Parks Highway, which
has high traffic incidents and fatalities. Interim steps
have been taken to address the issue. The challenge with
projects like the Parks Highway from Wasilla to Big Lake is
cost. A project that costs $125 million could consume
nearly 75 percent of the stimulus funds. The project also
did not meet the initial cut.
10:26:36 AM
Senator Olson opined that there was an uneven distribution
of the stimulus money, with $175 million going to highways
and bridges and only $75 to aviation. He thought more money
should go towards aviation projects in a region where
aviation is so essential. Mr. Richards agreed. He stated
that the compromise bill had a smaller amount for aviation
than originally hoped for. He urged continuing
communication with FAA regarding aviation needs in Western
and Southwestern Alaska.
Senator Olson asked for clarification of what aviation
funds would be used for.
10:29:12 AM
Senator Huggins asked about railroad funding. Mr. Richards
replied that the railroad is eligible to receive funds
under transit funding. Of the $42 million that the state
will receive, more than $32 million will go to Anchorage
and Fairbanks. Fairbanks will receive $760,000 for transit.
The remainder to Anchorage will be distributed by formula,
which favors the Alaska railroad because of its passenger
load. The railroad will receive approximately 80 percent of
Anchorage's funds. Railroads also have the opportunity to
apply for discretionary funds that USDOT is writing the
criteria for, related to projects of national significance.
Once the criteria are developed, there may be other
projects that would qualify.
Senator Ellis asked where the Port of Anchorage ranks on
the priority list. Mr. Richards responded that currently
the Port of Anchorage is available for the discretionary
money that will come in the future. There is no Port of
Anchorage money within SB 123.
Senator Ellis queried the rejection of the Port of
Anchorage project. Mr. Richards answered that SB 123
identified highway, bridge, and transit projects that have
been in the pipeline through DOT/PF. These are projects
that have already received legislative authority and that
have used federal dollars for design and permits.
10:32:58 AM
Co-Chair Stedman requested information regarding non-state
airports.
CHRISTINE KLEIN, DEPUTY COMMISSIONER OF AVIATION,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,
provided an overview of funds provided by the stimulus
package for aviation. Alaska will receive 7.7 percent, or
$85 million, of the $1.1 billion allocated to all states.
Allocations are based on the number of airports. The funds
will be distributed under the discretionary program
according to FAA criteria, which focus on projects that
contribute most to safety, security, aviation capacity, and
efficiency of the state's airport system. The criteria also
consider airport activity levels, whether for small,
medium, and non-hub airports, or for commercial service.
The largest airports in Alaska are medium hub. Also
considered is the priority level of work, based on work
already underway. Routine and preventative maintenance
projects are discounted. Airports with compliance actions
are ineligible.
Ms. Klein stated that there is approximately $10 million
for municipal airports, such as Merrill Field in Anchorage
and the Kenai, Palmer, Wasilla, and Juneau airports;
basically the airports that submit grant applications first
will get the funding. The money has to be obligated within
120 days and the projects have to be completed within two
years.
10:36:45 AM
Co-Chair Stedman referred to the Port of Anchorage and
railroad integration and the expansion of facilities. He
hoped there would be a gasline in the next ten or fifteen
years, but regardless of what happens with the gasline, the
Port of Anchorage will be shipping in most of Alaska's
goods. He emphasized the importance of projects that would
benefit the state for some time to come.
Senator Olson asked about the eligibility of deferred
maintenance projects. Ms. Klein answered that maintenance
and operation projects are not eligible under the
discretionary formula; under federal law, those activities
are the obligation of the state.
Senator Thomas pointed to the $45.6 million in SB 123,
approximately half of the total funds. He asked if more
money was coming for aviation projects. Ms. Klein replied
that there were $104 million in projects that could
potentially be ready. The amount in SB 123 is the
legislative authority needed in order to finish the
projects. The projects have been approved by the
legislature already for permitting, design, and planning.
10:39:40 AM
Senator Thomas asked how much was coming to the state. Ms.
Klein answered $88 million. Senator Thomas asked if the
balance was coming soon.
Ms. Klein listed the projects that would be recommended to
move ahead:
• Akiachak Airport Relocation
• Allakaket Airport Improvements
• Fairbanks International Airport Security Access
Control Improvements
• Fairbanks International Airport Taxiway and Apron
Improvements
• Fort Yukon Airport Improvements
• Hoonah Airport Improvements
• Kodiak Chemical Storage Building
• Kotzebue Apron Expansion
• Ouzinkie Airport Relocation
• Cordova Apron Improvements
• Anchorage International Airport North Terminal Gate
Reconstruction
• Lake Louise Runway Rehabilitation
Ms. Klein said the project total on the list is
approximately $104 million. Around $75 is available; if the
legislature approves the projects, $45.6 million in
legislative authorization would still be needed to bring
the projects to completion.
Co-Chair Stedman clarified that the white page in the
aviation section of SB 123 is the list before the
amendments; the yellow page has a different total.
Ms. Klein explained that FAA is still developing criteria;
on Friday [February 27], FAA asked the administration to
put forward the Huslia and Lake Louise projects, which had
previously been lower on the list.
10:42:25 AM
Senator Olson asked the difference between a rehabilitation
project and deferred maintenance. Ms. Klein answered that
it usually depends on how much work has to be done and the
cost. A project that will take a significant amount of time
and material becomes a reconstruction project, which is
what happened to the Lake Louise project. Co-Chair Hoffman
asked if she meant a rehabilitation project. Ms. Klein
answered in the affirmative.
Co-Chair Hoffman asked if she meant King Salmon and
Cordova. Ms. Klein replied that the King Salmon Apron and
Taxiway Resurfacing project was added. The two amendments
had been added because FAA wanted the projects to move
forward.
Co-Chair Stedman noted several appropriations with
allocations. He reminded the public that the legislature
appropriates funds and the department has flexibility with
appropriations. He asked why the legislature should give
broad appropriation and a lot of allocations versus smaller
numbers of appropriations and have DOT/PF go to the
legislature to move projects around.
Mr. Richards explained that the appropriations in SB 123
were designated by airport stimulus projects, transit
stimulus projects, and highway and bridge stimulus
projects. The structure is similar to annual capital budget
appropriations for the highway program. Funds within a
program can be used within the projects. Individual
appropriations by project would present challenges. For
example, if a certain amount were appropriated and the
department went out to bid and the bid came in high, DPT/PF
would not have the ability to go forward with the project
until coming back to the legislature in the next
legislative cycle to ask for additional monies. The
stringent timeline of the stimulus legislation requires the
flexibility to use the funds for cost increases.
10:47:07 AM
Co-Chair Stedman pointed out there were 21 projects costing
approximately $139 million and queried whether the finance
committee should give the department flexibility with the
whole amount or break the number into compartments. Mr.
Richards responded that there would not be complete
flexibility, as the projects have been through the public
and legislative process. The department was now asking for
the authority to use the federal dollars from the stimulus
package for the projects in SB 123. The legislature would
determine the allocation within the appropriation.
Co-Chair Stedman added that there were 18 non-contingent
projects costing $148 million. The legislature would work
the details out through time. Mr. Richards stressed that
the important deadline is the 120-day obligation limit by
June 15. He stated that he was available as much as
necessary to work with the committee regarding project
needs. He emphasized the need to work within the parameters
placed by Congress, and the dynamic nature of the process.
Much is still being learned.
10:50:38 AM
Co-Chair Stedman drew attention to page 8, lines 8, 14, and
20, which address appropriation issues from 2001, 2002, and
2003.
NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, explained that the stimulus bill requires
tracking of activity. Therefore, a funding source has been
established to identify any funds received and expended
from the federal economic stimulus bill. Legislative
authorization has already been provided for several of the
recommended projects. Section 4 in SB 123 changes previous
appropriations from the regular federal authorization or
source codes to the new federal economic stimulus fund
source codes.
Co-Chair Stedman added that a different process may be used
to clean up. Ms. Slagle agreed that there were other ways
to deal with old appropriations; one option was reflected
in the bill. Items could also be repealed and re-
appropriated, or the full amount of the project costs could
be provided with the new source codes.
Co-Chair Stedman said the committee would work with OMB and
DOT/PF to make the process more transparent. He stated an
interest in housekeeping, which might be an interim
project.
Co-Chair Hoffman noted looking forward to continued
collaboration with the department on the stimulus package.
SB 123 was HEARD and HELD in Committee for further
consideration.
10:55:27 AM
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2009-02-24 Co-Chairs Letter.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 123 |
| DOT Aviation Revised 2-24.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 123 |
| DOT Hwy and Bridge Revised 2-24.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 123 |
| DOT response 2 20 09.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 123 |
| Economic Stim Fund Source Change DOT 2-20-09.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 123 |
| Stimulus project lists 2 22 09.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 123 |
| SB 124 Hearing Request.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 124 |
| US DOT Letter.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 123 |
| OMB response 3-2-09.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 124 |
| DOTPF Project Ready for Stimulus.pdf |
SFIN 3/2/2009 9:00:00 AM |
SB 123 |