Legislature(2009 - 2010)SENATE FINANCE 532

03/02/2009 09:00 AM FINANCE

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Heard & Held
Heard & Held
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SENATE BILL NO. 124                                                                                                           
     "An   Act  relating   to  the   authorization  for   the                                                                   
     Department  of Transportation  and Public Facilities  to                                                                   
     participate  in the American  Recovery and  Reinvestment                                                                   
     Act of 2009; and providing for an effective date."                                                                         
9:08:37 AM                                                                                                                    
MICHAEL BARNHILL,  ASSISTANT ATTORNEY GENERAL,  DEPARTMENT OF                                                                   
LAW (LAW),  informed the committee  that SB 124  ensures that                                                                   
the  Department   of  Transportation  and   Pubic  Facilities                                                                   
(DOT/PF)  has  the  authority   needed  under  state  law  to                                                                   
participate  in the  American Recovery  and Reinvestment  Act                                                                   
(ARRA)  of 2009,  otherwise known  as  the economic  stimulus                                                                   
bill. The  bill has  three sections  of intent language.  The                                                                   
purpose of  intent language sections  A and B is  to identify                                                                   
the sections  of the economic  stimulus bill in  which DOT/PF                                                                   
will  participate.  Each  of the  sub-agencies  of  the  U.S.                                                                   
Department of  Transportation (USDOT)  to which DOT/PF  would                                                                   
apply for  funding are identified.  He noted that  Section C,                                                                   
Title XII,  gives the  Federal Aviation Administration  (FAA)                                                                   
discretion regarding funding.                                                                                                   
9:11:48 AM                                                                                                                    
Co-Chair  Stedman  asked  about the  timeline  regarding  the                                                                   
certification.  Mr. Barnhill answered  that action had  to be                                                                   
taken  as  soon  as  possible.   He  anticipated  making  the                                                                   
governor's certification  as early as mid-March.  Funds would                                                                   
be ready to flow on 3/4/09.                                                                                                     
FRANK  RICHARDS,  DEPUTY COMMISSIONER,  HIGHWAYS  AND  PUBLIC                                                                   
FACILITIES,   DEPARTMENT   OF   TRANSPORTATION   AND   PUBLIC                                                                   
FACILITIES,    reported    that     the    Federal    Highway                                                                   
Administration (FHWA)  has said the  funds are ready  as soon                                                                   
as the certification is provided.                                                                                               
Co-Chair Hoffman  stated that many legislators  want to apply                                                                   
for all  available funds. He quoted  from Section C,  page 2,                                                                   
line  14: "to  seek to  maximize the  funding available."  He                                                                   
noted the legislation mentions  the intent of the legislature                                                                   
and queried  who the administration  had talked  to regarding                                                                   
Mr. Barnhill  acknowledged that they  had spoken with  no one                                                                   
in  the legislature;  the language  had been  phrased in  the                                                                   
usual  manner of  intent  language. He  believed  it was  the                                                                   
intent  of  the  administration   to  maximize  applying  and                                                                   
receiving  funding  under  Title  VI  and Title  XII  of  the                                                                   
economic stimulus bill. The only  notice made is that the FAA                                                                   
has discretion, which the state has no control over.                                                                            
Co-Chair Hoffman stated that his intent was open dialogue.                                                                      
Co-Chair  Stedman returned  to  the question  of when  action                                                                   
needs  to  be taken.  Some  thought  action should  be  taken                                                                   
immediately.  He emphasized  the need  to know firm  deadline                                                                   
dates.  Mr. Barnhill  answered that  there are  a variety  of                                                                   
deadlines  in  the stimulus  bill  for certification  by  the                                                                   
governor. The governor  has 45 days until April  3 to certify                                                                   
with respect to  use of the funds. Another  deadline is March                                                                   
19.  He  stated   the  administration  would   do  everything                                                                   
possible  to  meet   the  deadlines.  He  did   not  know  of                                                                   
legislative   deadlines  except   the  backstop   legislative                                                                   
certification;   there  was  question   whether  the   45-day                                                                   
deadline applied  to that.  He thought  an opinion  was being                                                                   
sought  regarding the  deadline  from the  federal Office  of                                                                   
Management and Budget (OMB).                                                                                                    
9:16:09 AM                                                                                                                    
Co-Chair Stedman asked for definitions  of Title VI and Title                                                                   
XII. Mr. Barnhill replied that  Title VI is Homeland Security                                                                   
and Title XII is USDOT.                                                                                                         
Co-Chair  Stedman  stated  that legislators  were  under  the                                                                   
impression that  they could take action after  the governor's                                                                   
deadline   date;  other   information   indicated  that   the                                                                   
legislature  and governor  had the same  deadline dates.  Mr.                                                                   
Barnhill  reiterated than  an opinion  was being sought  from                                                                   
the federal  OMB. He stated  that there is frenetic  activity                                                                   
across the country with respect to details about deadlines.                                                                     
Co-Chair Stedman asked if he would  get back to the committee                                                                   
when the  deadlines were  clarified. Mr. Barnhill  reiterated                                                                   
that the governor  has deadlines but he knew  of no deadlines                                                                   
for the legislature.                                                                                                            
Senator  Huggins   stated  that   he  was  offended   by  Mr.                                                                   
Barnhill's tone and use of the  language "frenetic activity."                                                                   
Mr. Barnhill apologized. He clarified  that there was a great                                                                   
deal of  activity around the  country, including  many emails                                                                   
with  misleading,  false, and  changing  deadlines  regarding                                                                   
Senator  Huggins was surprised  with the  statement that  Mr.                                                                   
Barnhill  had not  spoken to  anyone in  the legislature.  He                                                                   
emphasized that both the administration  and legislature work                                                                   
for Alaskans.  He was surprised  that the department  had not                                                                   
spoken to  the legislature. He  wanted to cooperate  and move                                                                   
thoroughly and thoughtfully to make the process go well.                                                                        
Senator Huggins queried the deadline  for the approval of the                                                                   
9:19:50 AM                                                                                                                    
Mr. Barnhill  stated for  the record  that he simply  drafted                                                                   
the  legislation  and  has  no authority  to  speak  for  the                                                                   
administration  or to negotiate.  Senator Huggins  understood                                                                   
and  hoped to  develop a  positive relationship  in order  to                                                                   
move forward.                                                                                                                   
Mr.  Richards  answered  that   regarding  the  timeline  the                                                                   
stimulus  bill  requires  DOT/PF  to  obligate  at  least  50                                                                   
percent of the transportation  funds awarded to Alaska within                                                                   
120 days  of enactment,  or by  June 15,  2009. The  projects                                                                   
have  to be  developed  and  authorized  by FHWA  to  solicit                                                                   
project  bids  in   order  to  get  Alaskans   to  work.  The                                                                   
department has  been communicating  with the legislature  and                                                                   
intends  to  continue  dialogue  so  that  the  bill  can  be                                                                   
understood  fully.  Almost  two weeks  after  enactment,  the                                                                   
department is still learning the  nuances of the legislation.                                                                   
Personnel   are  working   many  extra   hours  to   maximize                                                                   
transportation funding for Alaska.                                                                                              
Senator  Huggins   asked  for   more  information   regarding                                                                   
deadlines. Mr. Richards  replied that at least  50 percent of                                                                   
the money must be obligated by  June 15, 2009, and all of the                                                                   
funds must be obligated by February 17, 2010.                                                                                   
Senator  Huggins clarified  that the purpose  of the  current                                                                   
phase is to  maximize funding. He asked to  be walked through                                                                   
the  process  of  legislative  involvement  during  the  next                                                                   
9:22:35 AM                                                                                                                    
Mr.  Richards  explained  that the  department  is  currently                                                                   
aware of funding formulas through  FAA, FHWA, and the Federal                                                                   
Transit Administration  (FTA).  Criteria are being  developed                                                                   
by  the   Office  of  the   Secretary  of  USDOT   for  other                                                                   
discretionary programs  within the bill. The  department does                                                                   
not  know yet  what funds  will  be available  for states  to                                                                   
compete  for.  The  department   will  communicate  with  the                                                                   
legislature  about  the  additional programs  when  it  knows                                                                   
Co-Chair  Hoffman stated  that  he was  under the  impression                                                                   
that the  legislature  could apply  for funds  if it did  not                                                                   
agree with the governor's application.  He wondered if SB 124                                                                   
addressed  the   issue  of   the  legislature  applying   for                                                                   
different appropriations. He asked  if other departments such                                                                   
as the  Department of Health  and Social Services  would also                                                                   
look to the legislature to apply for funds.                                                                                     
Mr. Barnhill understood  that the intent of the  bill was for                                                                   
the administration  to apply for  all funds available  to the                                                                   
state  under  Title  VI (Homeland  Security)  and  Title  XII                                                                   
(Transportation) of the economic stimulus bill.                                                                                 
Co-Chair Hoffman  pointed out that  SB 124 states  the intent                                                                   
of  the legislature  to  have the  department  apply for  the                                                                   
funds.  He reiterated  his  understanding  that the  governor                                                                   
applies and  then the legislature  makes a determination  and                                                                   
decides  whether   it  wants  to  apply.  He   asked  if  the                                                                   
legislature  would  still have  the  authority  to apply  for                                                                   
projects if SB 124 were passed.                                                                                                 
Mr.  Barnhill  assumed  Co-Chair  Hoffman  was  referring  to                                                                   
Section 1607  of ARRA, the "backstop authorization  section."                                                                   
The section requires the governor  to certify by April 3 that                                                                   
she  will  apply  for  and  use  funds  available  under  the                                                                   
economic  stimulus bill.  If the governor  does not  certify,                                                                   
the backstop legislation gives  the legislature the authority                                                                   
to certify that  it will apply for and use the  funds. He did                                                                   
not  think the  backstop authorization  was triggered  unless                                                                   
the  governor  did  not  apply for  funds.  Senate  Bill  124                                                                   
assumes the governor will apply for everything available.                                                                       
9:26:43 AM                                                                                                                    
Senator Huggins asked  if there were other ways  to apply for                                                                   
funds.  Mr. Barnhill  replied  that there  are  a variety  of                                                                   
other agencies drafting  bills to get the authority  to apply                                                                   
for other funding  sources in ARRA. The objective  is to have                                                                   
a collection  of bills  that will  cover the entire  stimulus                                                                   
bill.  He  noted the  complexity  of  the stimulus  bill.  He                                                                   
admitted one  option was  to have a  single, broad  bill with                                                                   
more agencies  and more funding,  but he thought it  might be                                                                   
easier to take smaller steps at the beginning.                                                                                  
Co-Chair  Stedman noted  the lack of  backup information  and                                                                   
asked   that   more  be   included   in  the   bill   packet.                                                                   
Specifically,  he wanted  the  governor's  timeline with  her                                                                   
planned actions clearly laid out.                                                                                               
Senator  Huggins asked  if other  states  had been  consulted                                                                   
regarding  techniques   used.  Mr.  Barnhill   answered  that                                                                   
several weeks previously LAW had  conducted a national search                                                                   
for   a  pattern   of   response   with  respect   to   state                                                                   
implementation.  At that  time, there  did not  seem to  be a                                                                   
pattern. Senator  Huggins encouraged conversation  with other                                                                   
9:31:18 AM                                                                                                                    
Mr.  Barnhill   offered  to   provide  information   garnered                                                                   
regarding  the  various task  forces  being put  together  by                                                                   
other  states. He  referred  to  a document  with  a list  of                                                                   
approximately 26 states.                                                                                                        
Senator Thomas  confirmed that  other bills were  forthcoming                                                                   
that would correspond  to other titles [similar  to Titles VI                                                                   
and  XII]  such  as military  and  education.  He  asked  for                                                                   
clarification  regarding  what  he  thought  was  a  critical                                                                   
deadline,  the  thirty  days  from  enactment.  Mr.  Barnhill                                                                   
replied  that the  thirty-day  deadline  referred to  Section                                                                   
1511 certification  that must be made by the  governor or the                                                                   
head   executive   of   DOT/PF.    The   provision   requires                                                                   
certification   of  maintenance   of  effort  regarding   the                                                                   
expenditure  of funds. He  stated that  he could provide  the                                                                   
committee  with  copies  of a  memo  listing  the  governor's                                                                   
Senator  Thomas asked  if  the certification  also  indicated                                                                   
that the state would follow up  on the projects. Mr. Barnhill                                                                   
offered to provide a listing of all of the deadlines.                                                                           
Senator Olson  understood that SB 124 gave  the authorization                                                                   
for DOT/PF  to apply for  the funding,  but not to  spend the                                                                   
money.  Mr. Barnhill  replied that  a partner  bill, SB  123,                                                                   
would provide for appropriations of the funds.                                                                                  
9:34:01 AM                                                                                                                    
Co-Chair Stedman  asked if there  were a representative  from                                                                   
the administration  present to speak to the  legislation. Mr.                                                                   
Richards  replied that  Karen  Rehfeld, Director  of OMB  had                                                                   
been slated  to speak to  the bill, but  her flight  had been                                                                   
Co-Chair  Stedman  stated  that  the committee  had  made  an                                                                   
effort  to  schedule  the  bill   as  soon  as  possible.  He                                                                   
reiterated concerns about the  lack of backup information. He                                                                   
stated that no action would be  taken without more backup and                                                                   
without  hearing  testimony  from   the  administration.  Mr.                                                                   
Richards answered that he understood.                                                                                           
Co-Chair Hoffman  asked if  the bill  were required  in order                                                                   
for  the state  to receive  the funds.  Mr. Barnhill  replied                                                                   
that the bill was  an exercise of due caution  to ensure that                                                                   
DOT/PF has explicit authorization to participate.                                                                               
Co-Chair Stedman  wanted to work before the  next meeting for                                                                   
clarification  regarding  what  the administration  needs  in                                                                   
terms of legislative authorization.                                                                                             
Mr. Richards added that regarding  the maintenance of effort,                                                                   
the  bill requires  the governor  to certify  that the  state                                                                   
will  maintain  planned Alaska  transportation  funding.  The                                                                   
department interprets  this to  mean its current  year budget                                                                   
amount since  next year's  budget has  not been enacted.  The                                                                   
administration  will  certify   that  it  will  not  supplant                                                                   
previous project funds with stimulus funds.                                                                                     
9:38:10 AM                                                                                                                    
Senator  Thomas asked  if the department  would not  supplant                                                                   
FY09 budget but would supplant  the FY10 budget. Mr. Richards                                                                   
answered  with an  example: if  project X had  $2 million  in                                                                   
general  fund dollars  appropriated by  the legislature,  the                                                                   
department  would not  extract the $2  million general  funds                                                                   
and use $2 million in stimulus funds instead.                                                                                   
Senator  Thomas thought  that  the money  could  be used  for                                                                   
shovel-ready projects, but that  the department would forward                                                                   
the state's allocated money to another project.                                                                                 
Co-Chair Stedman said that the  SB 123 discussion would cover                                                                   
the  relationship  between  the  maintenance  of  effort  and                                                                   
general funds.                                                                                                                  
SB  124  was   HEARD  and  HELD  in  Committee   for  further                                                                   

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