Legislature(2007 - 2008)BUTROVICH 205

02/05/2008 01:00 PM Senate TRANSPORTATION


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 218 CHILD SAFETY SEATS & SEAT BELTS TELECONFERENCED
Moved SB 218 Out of Committee
+= SB 236 TRANSPORTATION FUND TELECONFERENCED
Moved SB 236 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                                                                                                                              
1:56:00 PM                                                                                                                    
CHAIR KOOKESH announced consideration of SB 236.                                                                                
                                                                                                                                
FRANK    RICHARDS,    Deputy    Commissioner,    Department    of                                                               
Transportation and  Public Facilities  (DOTPF), Juneau,  AK, said                                                               
he  would describe  Alaska's transportation  system  and how  the                                                               
state is constrained  in addressing its aging assets.  He said he                                                               
would describe what other states  are doing on their highways and                                                               
roads, and present Governor Palin's  approach to meeting Alaska's                                                               
transportation needs with an Alaska Transportation Fund.                                                                        
                                                                                                                                
MR.  RICAHRDS  said  the existing  infrastructure  across  Alaska                                                               
presents safety  concerns across  the board from  fatal accidents                                                               
to seasonal closures of airports.  This significantly impacts the                                                               
flow  of  goods  and  people.   There  is  congestion  in  larger                                                               
communities affecting  everything from commuters to  the movement                                                               
of   freight  and   school  busses.   The   state's  assets   are                                                               
deteriorating because of limited  funding. He displayed photos of                                                               
highway pavement to demonstrate  its poor condition. He estimated                                                               
the backlog  of pavement that has  reached the end of  its useful                                                               
life is approaching $300 million  on the national highway routes.                                                               
This is  2,100 miles  of highway that  include the  Glen Highway,                                                               
the Parks Highway, the Richardson  Highway, the Sterling Highway,                                                               
the  Alaska   Highway  and  the  Dalton   Highway.  The  pavement                                                               
deterioration on  these highways  alone is growing  at a  rate of                                                               
$80 million a  year. Other routes like the  Alaska Highway System                                                               
and the  Community Transportation  Program which  include locally                                                               
owned roads  present an  additional need.  He estimates  that for                                                               
every  dollar  of timely  pavement  lifecycle  investment, $4  of                                                               
extensive repair costs can be saved.  It will be difficult to put                                                               
into place with such a large backlog of nearly failed pavement.                                                                 
                                                                                                                                
MR. RICHARDS said  there are also needed  bridge repairs although                                                               
progress  is  being made.  Work  on  Washington Creek  Bridge  is                                                               
almost completed  as well  as on  several Parks  Highway bridges,                                                               
the Hicks Creek  Bridge, the Kenai River Bridge  in Soldatna, the                                                               
South Channel Bridge in Unalaska,  and the Tanana River Bridge on                                                               
the Alaska Highway.  Bridges in Hyder and  Gustavus are scheduled                                                               
projects this year if the  necessary environmental permits can be                                                               
obtained.  About   10  percent   of  the  bridges   need  seismic                                                               
retrofits. To date  DOTPF has spent almost $20  million doing the                                                               
work in  Phase 1. Phase 2  will be much more  expensive. Only one                                                               
or two projects can be done per year.                                                                                           
                                                                                                                                
He  said  transportation  assets   are  also  being  impacted  by                                                               
changing  climatic  conditions   including  heavy  precipitation,                                                               
greater frequency  of strong storms, warmer  summers and extended                                                               
seasons that increase the number of freeze/thaw cycles.                                                                         
                                                                                                                                
2:00:43 PM                                                                                                                    
CHAIR KOOKESH asked  him to address the bill with  respect to the                                                               
endowment                                                                                                                       
                                                                                                                                
MR.  RICHARDS said  the governor  has  proposed two  installments                                                               
into  an endowment  fund, $500  million in  fiscal 2008  and $500                                                               
million in fiscal  2009, to create a corpus of  about $1 billion.                                                               
That fund  would be  invested through  the Department  of Revenue                                                               
and   the  interest   earned   would  then   be   used  to   fund                                                               
transportation  needs  across the  state  and  address all  modal                                                               
issues,  from ports  and  harbors to  airports  and highways.  It                                                               
would  be a  fund  source the  legislature  would appropriate  to                                                               
cover  specific projects  that DOTPF  would nominate  through the                                                               
capital budget process.                                                                                                         
                                                                                                                                
CHAIR KOOKESH asked  if the committee was being asked  to adopt a                                                               
fiscal note. He said he was confused by all the zeros.                                                                          
                                                                                                                                
MR.RICHARDS referred the question  to the administration services                                                               
director, Nancy Slagle.                                                                                                         
                                                                                                                                
2:02:31 PM                                                                                                                    
NANCY SLAGLE,  Director, Administrative Services,  DOTPF, Juneau,                                                               
AK, said she  would expect an appropriation  specifically for the                                                               
$500 million to capitalize the  fund. This bill creates the fund.                                                               
The  zero  fiscal  note  is  basically  saying  that  DOTPF  will                                                               
administer  the  program  by   identifying  projects  within  the                                                               
organization.                                                                                                                   
                                                                                                                                
CHAIR KOOKESH asked  if that means this bill  would establish the                                                               
fund and then an appropriations bill will follow to fund it.                                                                    
                                                                                                                                
MS. SLAGLE said that is correct.                                                                                                
                                                                                                                                
SENATOR OLSON asked if this  will decrease the state's ability to                                                               
get federal funds for big projects.                                                                                             
                                                                                                                                
MS.  SLAGLE said  the bill  will not  impact the  ability to  get                                                               
funds from  the federal  government. Other  states are  trying to                                                               
deal with the  decrease in federal funds by  different means like                                                               
increasing fuel  taxes, bonding  and tolls.  This is  an approach                                                               
the governor thought was appropriate for Alaska.                                                                                
                                                                                                                                
SENATOR WILKEN asked to look again  at slide 17 again to see what                                                               
other states  have done.  He asked  if Alaska  is the  only state                                                               
that  doesn't have  a general  fund component  for transportation                                                               
and asked if this is correct.                                                                                                   
                                                                                                                                
MR. RICHARDS  said that is  correct. All  49 other states  have a                                                               
transportation fund.                                                                                                            
                                                                                                                                
SENATOR WILKEN asked Mr. Richards  to discuss slides 17-21 and 26                                                               
for some background.                                                                                                            
                                                                                                                                
MR.  RICHARDS said  that  Alaska has  been  fortunate to  receive                                                               
almost $6.44  of federal highway  funds for every dollar  that is                                                               
spent at the gas pump.  Re-authorization of the highway bill will                                                               
take  place in  2010.  The emphasis  in  a new  bill  will be  on                                                               
greenhouse  gas  reduction. As  a  recipient  state, Alaska  will                                                               
likely see a  significant reduction in what it  receives. The new                                                               
national  commission that  was charged  to look  at the  next re-                                                               
authorization  released  a  report  last  week  that  proposed  a                                                               
complete makeover of the whole federal transportation system.                                                                   
                                                                                                                                
2:07:01 PM                                                                                                                    
SENATOR  WILKEN  asked if  the  expectation  of funds  coming  to                                                               
Alaska from offshore will be less.                                                                                              
                                                                                                                                
MR. RICHARDS replied  that is correct. He indicated  on the chart                                                               
what other  states have been  receiving and how they  are funding                                                               
their transportation  needs. Other  states fund  approximately 70                                                               
to  80 percent  of their  transportation needs  using funds  they                                                               
collect through fees and other  structures like gas taxes, tolls,                                                               
and public/private  partnerships. They rely  on 20 to  30 percent                                                               
of  federal  funds.  In  Alaska,  state  ownership  is  about  40                                                               
percent.  The types  of funding  used  by other  states would  be                                                               
difficult to institute in Alaska  with its small population base.                                                               
The  strategic advantages  of having  a state-funded  program are                                                               
that  projects can  be completed  faster which  equates to  being                                                               
less  costly.  Federal  laws  don't  have  to  be  followed.  For                                                               
example, NEPA  (National Environmental Policy Act)  is avoided if                                                               
there are no  federal actions involved such  as wetlands permits.                                                               
Preventative maintenance could avoid  the NEPA process if federal                                                               
funds  are not  involved.  Another demanding  law  that would  be                                                               
avoided is  specific to DOTPF  funds and applies  to recreational                                                               
refuge and historic properties.                                                                                                 
                                                                                                                                
Slide 21 identifies a typical  project with a federal timeline of                                                               
seven years;  each phase of a  project in a federal  program must                                                               
be completed  before the  next phase can  begin. For  example, an                                                               
environmental phase which averages  three years must be conducted                                                               
before a  right-of-way phase can  begin. The benefit of  a state-                                                               
funded program is  that many of these processes  can be conducted                                                               
concurrently. For  example, DOTPF saved  three years time  on the                                                               
Dalton Highway and two years on the Elmore Road.                                                                                
                                                                                                                                
CHAIR KOOKESH asked if those were federally funded projects.                                                                    
                                                                                                                                
MR. RICHARDS said they were all state general funded projects.                                                                  
                                                                                                                                
MS.  SLAGLE added  that  there have  been  some federal  projects                                                               
along the Dalton Highway.                                                                                                       
                                                                                                                                
SENATOR WILKEN asked Mr. Richards to discuss slide 26.                                                                          
                                                                                                                                
MR. RICHARDS  said that  individual project  appropriations don't                                                               
allow  the DOTPF  to  develop a  programmatic  approach. In  lean                                                               
years appropriations  have been small.  This in turn  impacts the                                                               
construction,  design and  engineering communities  because there                                                               
isn't a  consistent approach to  keep the work flowing  and folks                                                               
employed. The $50 million generated  by the Alaska Transportation                                                               
Fund  would give  the  DOTPF  the ability  to  have a  systematic                                                               
approach. With individual appropriations  an estimate in year one                                                               
for a  project might, because of  inflation, run out of  money by                                                               
year  five. When  that happens  it's necessary  to return  to the                                                               
legislature to ask for additional funds.                                                                                        
                                                                                                                                
2:13:56 PM                                                                                                                    
MR. RICHARDS said  that with a programmatic approach  it would be                                                               
possible to  cover those increased  costs by shifting  funds from                                                               
one  project to  another. It  would be  more efficient  and would                                                               
result in  substantial savings. That  would be similar  to what's                                                               
done  with  federal highway  and  federal  aviation programs.  He                                                               
noted  that to  raise  an equivalent  $50  million would  require                                                               
raising the  existing gas  tax 150 percent,  from eight  cents to                                                               
twenty cents.                                                                                                                   
                                                                                                                                
CHAIR KOOKESH asked where the $50 million came from.                                                                            
                                                                                                                                
MR. RICHARDS said  that is the initial revenue  stream that would                                                               
be seen in the first year.                                                                                                      
                                                                                                                                
SENATOR COWDERY  asked what process  would be used  to prioritize                                                               
the projects.                                                                                                                   
                                                                                                                                
MR.  RICHARDS explained  that DOTPF  would develop  a listing  of                                                               
projects   similar   to   the  STIP   (statewide   transportation                                                               
improvement program).  In individual years the  projects would be                                                               
submitted to the legislature for appropriation.                                                                                 
                                                                                                                                
SENATOR  COWDERY  asked  about  funding  for  the  Alaska  Marine                                                               
Highway.                                                                                                                        
                                                                                                                                
MR.RICHARDS said that  is one of the transportation  modes in the                                                               
state and it would be eligible to receive money from this fund.                                                                 
                                                                                                                                
AVES  THOMPSON, Executive  Director, Alaska  Trucking Association                                                               
(ATA), Anchorage,  AK, said the organization  represents trucking                                                               
                                                                th                                                              
interests from  Barrow to  Ketchikan. It is  celebrating its  50                                                                
anniversary  in   2008.  It  represents  more   than  200  member                                                               
companies  throughout the  state.  Trucking  employs over  21,000                                                               
people  in  Alaska. It  pays  more  than  $928 million  in  wages                                                               
annually and makes a huge  contribution to the state economy. One                                                               
of the priorities of the ATA  is to expand the DOTPF general fund                                                               
capital projects  program. It's  clear that federal  funding will                                                               
not meet Alaska's transportation  infrastructure needs. Given the                                                               
enormous  tax  revenue increases,  Alaska  needs  to invest  some                                                               
money in the state's transportation system.                                                                                     
                                                                                                                                
MR. THOMPSON said the transportation  endowment fund can serve as                                                               
a primary funding  source to enable significant  expansion of the                                                               
state general  fund capital projects program.  The description on                                                               
page  1, lines  13-14, is  broad and  covers a  lot of  different                                                               
projects.  The  highway  trust  fund  has  been  depleted  partly                                                               
because of the  heavy demand coming from projects  not related to                                                               
highways highway  projects. The  federal highway trust  fund will                                                               
run out  of money  in 2009.  Although there  are modes  of travel                                                               
other than  highways in  Alaska, it  seems that  Alaska's highway                                                               
system  serves the  largest portion  of  the population.  Freight                                                               
movement  and tourist  and personal  travel are  on the  rise and                                                               
demands will  continue to grow  exponentially. The  largest share                                                               
of the  project dollars made  available through this  fund should                                                               
be directed to  the highway system. Non-highway  projects need to                                                               
be considered  on their own  merits after seeking  other sources.                                                               
In  Alaska there  are  two major  highway  systems, the  National                                                               
Highway System  and the  Alaska State  Highway system.  These are                                                               
systems   of  connecting   routes  that   link  communities   and                                                               
workplaces. They are the major  routes that carry a large portion                                                               
of all the freight delivered in Alaska. ATA supports SB 236.                                                                    
                                                                                                                                
2:22:16 PM                                                                                                                    
CINDY BETTINE, Member, MatSu Borough  Assembly, Wasilla, AK, said                                                               
she represents  District 5  which has two  of the  most dangerous                                                               
roads in  the state  according to DOTPF,  based on  accidents and                                                               
death. She supports  SB 236 and hopes the funding  will amount to                                                               
more than $6 million a year.  MatSu is one of the fastest growing                                                               
areas of the  state, she said, and taxpayers  contribute over $10                                                               
million a  year. Because  of the population  growth and  the over                                                               
use of state  roads, local roads are taking a  beating. What were                                                               
originally  developed as  residential subdivision  roads are  now                                                               
used  for short  cuts between  state  roads. One  of their  trunk                                                               
roads  has  had   priority  for  over  20  years   and  over  the                                                               
intervening years,  the cost has  escalated to over  $40 million.                                                               
Utilities have been moved. Rights-of-way have been purchased.                                                                   
                                                                                                                                
2:24:56 PM                                                                                                                    
MARIAN ROMANO,  Borough Manger, MatSu  Borough, Palmer,  AK, said                                                               
she supports  this bill  but said  it is not  enough to  meet the                                                               
present needs of  the state or even the MatSu  Borough. One third                                                               
of the state's  network is in the MatSu Borough.  The borough has                                                               
three  of the  most dangerous  roads in  the state,  according to                                                               
accident data from  DOTPF. There were five  fatalities in January                                                               
on  state  roads.  Their recent  long-range  transportation  plan                                                               
shows  that $1.5  billion  is needed  over the  next  20 year  to                                                               
prevent gridlock.  Asphalt has tripled  in price and the  cost of                                                               
right-of-way acquisition  in the  MatSu Borough has  doubled. The                                                               
borough  has already  spent $12  million on  the Seward  Meridian                                                               
Highway.  It has  identified the  right-of-way, but  there is  no                                                               
money to purchase  it. This puts home owners in  a position where                                                               
they can't sell their houses  and therefore, cannot afford to buy                                                               
another  house. This  is a  critical north/south  artery and  has                                                               
been  on the  list for  20  years. It  provides access  to a  new                                                               
hospital  and to  the college  which is  currently expanding  and                                                               
taking on four-year students. The  population of the Kinick/Goose                                                               
Bay Road  area is considered equal  to the fifth largest  city in                                                               
the state.  This is a main  access road to the  new state prison.                                                               
DOTPF doesn't have  this road on its list. The  borough is taxing                                                               
itself to  meet its own needs.  There is a local  contribution of                                                               
$6 million to  local roads and the community  provides gravel for                                                               
free  to DOTPF.  She  suggested the  committee consider  matching                                                               
programs to  recognize communities' willingness to  use their own                                                               
resources.                                                                                                                      
                                                                                                                                
2:29:25 PM                                                                                                                    
SENATOR  WILKEN  moved  SB 236  from  committee  with  individual                                                               
recommendations  and  attached  fiscal note(s).  There  being  no                                                               
objection, the motion carried.                                                                                                  

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