Legislature(2013 - 2014)HOUSE FINANCE 519
02/04/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HJR10 || HB122 || HB123 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HJR 10 | TELECONFERENCED | |
| *+ | HB 122 | TELECONFERENCED | |
| + | HB 123 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 4, 2014
8:33 a.m.
8:33:13 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 8:33 a.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Lindsey Holmes
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Peggy Wilson; Becky Rooney, Staff,
Representative Peggy Wilson; Jeff Ottesen, Director,
Division of Program Development, Department of
Transportation and Public Facilities; John MacKinnon,
Executive Director, AGC of Alaska; Barbara Huff Tuckness,
Teamsters; Tom Brice, Alaska District Council of Laborers.
PRESENT VIA TELECONFERENCE
Sarah Lefebvre, Fairbanks, Chair Fairbanks Chamber of
Commerce; Karl Gohlke, Fairbanks, Frontier Supply Company;
Tony Johansen, Fairbanks, Great Northwest; Christine Klein,
Anchorage, Calista Corporation; David Levy, Anchorage,
Alaska Mobility Coalition.
SUMMARY
HB 122 TRANSPORT. INFRASTRUCTURE FUND APPROP.
HB 122 was HEARD and HELD in committee for
further consideration.
HB 123 DEDICATED TRANSPORT FUND/PUB TRANSPORT
HB 123 was HEARD and HELD in committee for
further consideration.
HJR 10 CONST. AM: TRANSPORTATION FUND
HJR was HEARD and HELD in committee for further
consideration.
HOUSE JOINT RESOLUTION NO. 10
Proposing amendments to the Constitution of the State
of Alaska creating a transportation infrastructure
fund.
HOUSE BILL NO. 122
"An Act making a special appropriation to the
transportation infrastructure fund; and providing for
an effective date."
HOUSE BILL NO. 123
"An Act relating to the transportation infrastructure
fund, to local public transportation, to the municipal
harbor facility grant fund, to motor fuel taxes, to
the motor vehicle registration fee, to driver's
license fees, to identification card fees, to the
studded tire tax, to the vehicle rental tax, and to
other fees and taxes related to motor vehicles;
creating the Alaska Transportation Panel; and
providing for an effective date."
Co-Chair Austerman called the meeting to order. He noted
that the three transportation bills would be heard together
by the committee. The public would provide testimony.
8:35:11 AM
REPRESENTATIVE PEGGY WILSON, sponsor, represented district
33. She planned to present the full package of bills. She
introduced the PowerPoint presentation: "Transportation
Infrastructure Fund (copy on file)."
Representative Peggy Wilson began with slide 2: "Alaska's
Transportation Challenges."
Transportation Infrastructure Fund
For the record, Representative Peggy Wilson, District
33; thank you Mister Chairman for hearing these 3
important bills. These bills are tied very close
together. With the committee's indulgence, I would
like the latitude to present the entire package before
we drill down into the specifics of each bill.
Before we get started I'd like to say I know that we
are in deficit spending and are projected to be for
the next few years. I know it will be difficult for
this committee to appropriate $2B as in HB 122. This
endowment can happen after the constitution is
amended. I hope that you can listen to the concept
without the concern of where the $2B will come from.
We need to get the constitutional change before the
voters in this November. That is my goal for this
year.
Now I'd like to talk with you about an issue that is
very important to me and you as Alaskan's. It is
TRANSPORTATION. When I say transportation, I mean,
surface roads, ferries and harbors, airports, transit
systems, trails, the movement of people, goods and
services.
• I'm going to start out by getting us all on the
same page. We all have heard stories about the
condition of our transportation system and I'd like
to explain the issue as I know it.
• Then I'm going to propose a solution to our
transportation infrastructure challenges, the three
bills you have before you.
• Finally I will sum up with the outcomes we
expect, if this solution is implemented.
Representative Peggy Wilson continued with slide 2:
"Alaska's Transportation Challenges."
Alaska's Transportation Challenges
Alaska's transportation system is aging.
40-50 year old highways
• Our major roads are 40-50 years old. There hasn't
been a major road built for the past 30 years.
Population Growth = congestion
• With population growth we get congestion,
especially since growth is primarily centered in one
area. The population of Alaska has tripled since 1960.
• And we are putting more and more people on roads
that were designed for the 1970's.
Aging AMHS Ferry Vessels
• Our ferries are old and well maintained but the
older ferries cost a lot to operate and they are
coming to the end of their projected life expectancy.
Airport upgrades and major maintenance
• Alaska has over 250 state owned airports. They
are very expensive to maintain. Barges can only
travel up the rivers during the few warm months to
bring the necessary gravel for our runways in the
rural areas of the state.
Deteriorating harbors in disrepair
• We have a number of state owned harbors. The
state is in the process of transferring ownership of
many of the harbors to the appropriate municipalities.
But they don't always have the money to improve and
maintain this infrastructure as it ages.
Limited access to natural resources
• Alaska is and has always been a natural resource
state. Our natural resources are not generally on
the road grid or close to railroads. We need to
have access to those natural resources to diversify
the stream of revenue to our state.
Alaska's Transportation Challenges
$20 billion backlogged projects &deferred maintenance
• There is a large backlog of projects.
• All of this totals $20 billion dollars plus 700
Million dollars more in deferred maintenance.
Representative Peggy Wilson continued with slide 3:
"Alaska's Transportation Challenges."
Alaska's Transportation Challenges Declining
Transportation funds
Our funding, federal and state, is not keeping up with
the demand -
Federal funding not keeping up with the demand
Rural highway traffic up 23%
• US Rural highway traffic is up 23% and continues
to grow
Vehicle miles traveled up 35%
• And vehicle miles traveled is up 35% and
increasing
$65 billion/year lost to traffic congestion
• There is an estimated 65 Billion dollar loss due
to traffic congestion every year. That loss is passed
on to us as consumers
(According to the National conference of Legislators)
Fuel tax revenues can't keep up with inflation
• The federal fuel taxes have not kept up with
inflation. Nationally our fuel taxes can't
keep up with the demand and they can't keep up
with demand in Alaska either. With technology
improvements cars are going farther on a gallon of
gas.
• Alaska hasn't had an increase in Motor fuel taxes
since 1961, 53 years. We have the lowest motor fuel
tax in the nation at 8 cents a gallon.
The next closest state is (Wyoming) at 14 cents per
gallon.
State GF consumed by growing healthcare, corrections
and education costs - little left for transportation
• Our state funds have to be stretched further and
further to cover rising costs in all service areas
8:40:11 AM
Representative Peggy Wilson discussed slide 4: "Federal
Funding Challenges."
Federal funding Challenges
Map-21 reduces flexibility for use of funds
Emphasis on main highways and safety
• The new federal Transportation funding program,
MAP-21 focuses on National Highways and safety. Great
goals, but Alaska only has 4 national highways.
• We also, used to have greater flexibility with
respect to safety dollars as well. We are now limited
to roads with notable crash histories. That will help
our safety corridors, the 4 national Highways that
have horrendous crash statistics but there are more
needs out there than just those.
National Highway System funds now driven by
performance
• The national highway system funds are now driven
by performance. Since the penalties for non-
performance are painful (state match could double or
triple). Even on mainline highways we may be required
to focus less on congestion and modernization and more
on just keeping up. This means lots of maintenance
projects that don't provide new lanes or new access.
Community road funding is by population
• I will talk about the funding by population on
the next slide.
Federal funding Challenges
• I heard on a webinar by the council of State
Governments (CSG) on Friday that states can expect to
see a slowdown in payments from the Federal Highway
trust fund as early as this summer and by FY15 the
fund will be at 0.
8:41:45 AM
Representative Peggy Wilson discussed slide 5: "Funds
Before and After MAP - 21."
Map 21 Funding complications
• Here is a simple graphic of some of the issues
that are making it difficult for DOT to fund our
Alaska Highways and community roads.
• On the left hand side is the pre-Map 21
allocations. The light blue represents the national
Highway Systems percentage of funds (48%) and the dark
blue is the Community and Alaska Highway Systems
percentage (52%).
• With Map-21 the allotments are quite different.
Now the National Highway System receives 72% of the
federal funds and all the other roads in Alaska
receive 28%.
• To further complicate matters 14% of the 28%
allocated for the non-national highway roads is
divided up depending on population.
• 4.4% (lime green portion) goes to cities that
have more than 200,000 in population. Only Anchorage
qualifies
• 5.4% (Kelly green potion) is directed to cities
with a population less than 200,000 and more than
5,000. (Sitka, Ketchikan, Juneau, Fairbanks, Wasilla,
Kodiak and Kenai)
• 4.2% (Dark blue portion) is for all other roads
in the state.
• The bright yellow 14% portion is flexible but
unfortunately it is consumed by increased mandatory
requirements for data collection, bridge inspections,
GIS, and other necessities leaving little for project
purposes.
8:43:44 AM
Representative Peggy Wilson discussed slide 6:
"Transportation Infrastructure needs a Boost."
Transportation Infrastructure Needs a Boost (slide 6)
In Alaska, we have always had a serious problem with
financing transportation infrastructure.
Challenges with Federal Funding.
• There is a new Transportation Funding Program in
the works but it is anyone's guess at this time what
that will mean
• There will be no more money in the Federal
Highway trust fund by 2015.
Aging Infrastructure
• We need to bring our aging infrastructure into
the 21st century
Open new access to resources
• In order for Alaska to have access to our natural
resource we need to greatly increase the development
of our transportation system
Plans for the future
• We need to depend less on the federal government
and start taking responsibility for Alaska's
roads, harbors, airports, and railroads.
• We need to plan for the future.
Right now, that's not happening.
These problems aren't new just compounding. The House
Transportation committee started investigating the
funding issues 5 years ago.
Representative Peggy Wilson discussed slide 7: "House
Transportation Comm. Actions."
House Transportation Comm. Actions
What have we done to find answers to all these issues?
3 years of Committee hearings
For three years the House Transportation committee
listened to DOT, grassroots organizations, and
transportation organizations identifying the
challenges of transportation in our geographically
diverse state.
Viewed, first hand, rural and urban problems
• The committee flew to remote villages to view
their airports, the basic transportation in and
out their communities. We took the Dalton Highway to
see what our truckers use every day to get goods to
the area where our major source of revenue is located.
We rode the urban highways to see the challenges they
face with regards to safety, congestion and deferred
maintenance. We rode the trains and we experienced
the ferries underway.
Examined funding options
• After witnessing the problems first hand, we
started our quest for a solution.
• We heard from AML and the Matsu Borough who
teamed together to contract an independent study on
the fiscal challenges of statewide transportation.
• We heard from national experts from the National
Conference of State Legislatures, on what other states
are doing to address transportation infrastructure
budget gaps. (NATIONAL EXPERTS)
• We heard from state experts. Larry Persily, who
put together a report on the funding options available
to address the fiscal shortfalls that our
Alaska Long Range Transportation plan has outlined.
(STATE EXPERTS)
Rejected options which committed future GF
• In our deliberations we rejected the options to
fix the problem by bonding, which commits future funds
to pay off debt. Our children and our grandchildren
should not have to shoulder our debt.
House Transportation Committee Actions
• The solution I'm going to propose is the
culmination of all those hours of committee hearings,
travel, and research.
Persily Options we decided not to use:
Revenue bonds General Obligation Bonds Using some
portion of the permanent fund selling off oil
royalties Key Bank ON State Infrastructure banks Build
America Bonds (from Stimulus funding) raising the Gas
tax.
8:46:36 AM
Representative Peggy Wilson discussed slide 8: "ATIF
Solution."
ATIF Solution
Our Proposal has three parts:
1. Re-instate dedicated Alaska Transportation
Infrastructure Fund
• Part 1 Re-establish dedicated transportation
taxes and fees as part of a transportation fund
that was in existence at statehood. The Alaska
Constitution contained two dedicated funds related to
transportation:
Our constitution grandfathered 2 transportation funds
• The first one was known as the "Highway Fund".
All monies collected from taxes on vehicle motor fuel
were deposited into the Fund and had to be spent on
highway related purposes.
• The second fund was called the "Water and Harbor
Facilities Fund". Monies from taxes on motor fuel
used in boats and watercraft were placed into the Fund
and had to be spent on water and harbor facilities.
Requires a vote of the people
• ATIF or the Alaska Transportation Infrastructure
Fund will combine these 2 funds into one.
Reinstatement of the transportation fund requires
a vote of the people to change the constitution,
ensuring all fees and taxes paid for transportation
activities will be spent only on transportation.
2. Maintain existing funding
• The second part of the proposal is we must
continue to fund transportation as we have in the
past. This is the key to making real progress
improving our transportation infrastructure. This is
one way we can slowly chink away at our $20 B backlog
of projects.
3. More 100% state funded projects
The third part of the solution is to do more 100%
state funded projects
• We need to take advantage of both the cost and
time savings of state funded PROJECTS WITHOUT FEDERAL
"STRINGS", while providing for our growing
transportation needs. This fund will move projects
from concept to completion much faster. With
state funded projects we will see the impact of our
state dollars in our communities quicker
ATIF Solution
• For example, state funds were used in the
construction of the Elmore Road Extension in Anchorage
which was completed in less than 3 years as compared
to 7-10 years if federal processes had been followed.
• ATIF is not intended to diminish our partnership
with the federal government.
• The intention is to provide a dedicated revenue
stream that will allow more projects to be
completed faster and cheaper in addition to our
ongoing federal/state projects.
• The 3 pieces of legislation that make up ATIF
are:
• The first piece, House Joint Resolution 10, will
put the change to the constitution on the ballot so
the people can decide to re-establish the
Transportation Fund.
• The second piece, House Bill 123, will define the
laws to manage the fund and
• The third piece, House Bill 122, will put $2
billion into the fund for startup.
8:49:36 AM
Representative Peggy Wilson discussed slide 9: "Funding
ATIF."
Funding ATIF
So you ask yourself, "How can we fund ATIF?"
$2B endowment from legislature and
• We will need two billion dollars to seed the
ATIF. I know that is a sizeable chunk of money but
if we don't get this much it will be difficult to make
much progress clearing off our backlog.
•
• We want to leverage every federal dollar we can
while capitalizing on State funded projects. I have
heard anecdotally that a federal dollar is worth 75
cents as compared to a state dollar, I can't stress
enough how important all three elements of the
solution are.
• I understand that this is probably not the year
to ask for 2 B dollars; even in a year with abundant
revenue it will be difficult. This endowment could be
a lesser sum with the idea of adding to the endowment
when our savings accounts are flusher. We really need
to put the constitutional change before the people. I
know we can fully fund ATIF later.
Annual revenue
• Annually the revenue from the list that you see
on this slide will go into the fund: this is
approximately $80 Million per year
• One thing to note any special use fees have been
preserved. Things like vanity license plate fees, and
airport lease revenues.
Motor fuel tax $40M
Tire tax $1.4M
Vehicle rental tax $ 8.5M
Vehicle registrations and driver's license fees
8:50:52 AM
Representative Peggy Wilson continued with slide 10: "ATIF
Appropriation."
ATIF Appropriation
• Okay, now we have a fund, "how shall we manage
it? And how much will be available each year to
improve our transportation infrastructure?"
DOR will manage the fund
• The department of revenue will manage ATIF
consistent with a 6% rate of return over time. They
manage many funds and they have experience and a good
track record. All of the profits will be reinvested
into the fund each year.
Figuring the appropriation amount
• Each year there will be funds available for
appropriation. It will be the sum of 6 percent of
the market value averaged over the previous 5 years
plus half of the taxes and fees collected from the
previous year.
• Also coming out of the fund will be the expenses
for the Department of Motor Vehicles, the expenses to
administer and manage the fund, and also costs for the
advisory council. The fund will be self-sufficient
and will not require General Funds for administration.
Follows regular budgetary process
• The appropriations will follow the regular
budgetary process and will be approved by both the
governor and the legislature.
8:52:03 AM
Representative Peggy Wilson continued with slide 11: "2-
Panel - 2-Step Process."
2 Panel 2 Step Process
• We have a fund, and it is being funded annually
by revenues added to the large dedicated fund.
• Who will decide which projects get funded first?
• This will be handled by a 2 panel 2 step
processes. First we will have to decide if projects
are better suited for development using the proven
State Transportation Integrated Plan or STIP process
or the New ATIF process; effectively deciding if it
will be a federalized project or a 100% state funded
project.
7 Member Alaska Transportation Panel (ATP)
• The Alaska Transportation Panel will be comprised
of 7 members, 4 public one from each of the areas you
can see on the slide, the DOT commissioner, a STIP
board member and a member from the Alaska
Infrastructure Commission which I will describe in the
next slide. They will serve staggered 4 year terms.
DOT will develop a set of guidelines to be used as an
aid to decide if a project should be federalized or be
funded through ATIF. Our intent is to take the
politics out of the decision making process.
• We have a fund, and it is being funded annually
by revenues added to the large dedicated fund.
Who will decide which projects get funded first?
8:53:25 AM
Representative Peggy Wilson continued with slide 12: "2-
Panel - 2-Step Process."
2-Panel 2-Step Process
• When a project has been selected for development
using ATIF funds it must then be reviewed by the
Alaska Infrastructure Commission. You can see the
makeup on the slide. This commission will take the
ATIF selections and numerically rank using a set of
criteria written by the DOT. This ranking will
create a prioritized list. The list will need to be
completed by the advisory commission by October 15th
each year and submitted to both the Governor and the
legislature. This ensures that the governor will have
time to incorporate the ranked projects into his /her
capital budget.
8:54:12 AM
Representative Peggy Wilson discussed slide 13: "ATIP
Projects."
ATIF Projects
Limited to capital transportation and major
maintenance projects
• ATIF projects are limited to capital
transportation and major maintenance projects in the
modes of transportation you see on this slide.
• The constitutional amendment states that the
appropriations from the fund must be used on
"transportation and related facilities that are
designated by law." In the enabling statutes, HB 123,
we have constrained the fund to only be used on
capital projects and major maintenance. This will give
future legislatures the ability to use money's from
this fund for operations in times of huge fiscal
shortfalls. All the legislature would have to do is
make a statute change to allow the fund to be used for
operations.
• Anyone can submit a project for consideration;
the State, a borough, an unorganized borough, a
municipality, community or village.
• We envision there will be submission forms and
they will need to be filled out to make sure the
commission has enough information to rank the
projects.
• Every project will be considered.
Federalized projects not more than 20%
• The funds available to federalized projects,
which are projects that are constrained to use
the federal processes, can be no more than 20% of the
available funds. This is to incentivize more state
funded projects.
8:55:43 AM
Representative Peggy Wilson discussed slide 14: "ATIP
Projections."
ATIF Projections
• Here is a graph of what we can expect from the
Alaska Transportation Infrastructure Fund done by DOR.
The Blue bars are the balance in the fund over
time and the Red line is the amount of money
that could be appropriated each year for use on
projects. You can see that the payout starts
at about $83 Million dollars the 1st year and then is
$131M the second year and rises at a rate of about
3.5M in the early years. Remember, with this solution,
these 103 million dollars is in addition to the
operational and capital budgets we already have.
• If we put in 2 billion dollars now it will grow
to 5 billion dollars in 20 years. That 5 billion
includes 50% of the revenue that has been deposited
over the 20 years as well.
8:56:44 AM
Representative Peggy Wilson discussed slide 15: "ATIF…"
ATIF …
• What can Alaskans expect from ATIF?
• The fund will help Alaska plan for its future.
We will be able to work down the 20 billion dollar
backlog. It will help us get rid of the deferred
maintenance list
Decrease dependence on federal funding
• ATIF will decrease Alaska's dependence on federal
dollars. We still want to leverage every federal
dollar we can but ATIF will allow us to do more
state funded projects as well.
Increase number of new jobs
• ATIF will provide more direct jobs and there will
be an indirect employment boost as well.
Increase road safety
• Our major roads are not safe due to congestion
and deterioration. ATIF will help to improve safety
on our roads, bridges, airports and harbors.
Increase Alaska's economy
• There are numerous studies that show
Transportation investment creates a competitive
environment, attracting additional economic investment
that includes: Increased output; productivity; income;
property values; employment and an increase in real
wages; It reduces the costs of production and
noncommercial travel time. This results in an improved
quality of life.
Increase access to Alaska's resources
• Our state's economy is highly dependent on our
resource extraction and these industries are
transportation intensive. Alaska has a majority of
the nation's coastline but has significant challenges
developing and maintaining the state's docks and
harbors for access, to our fishing resource. We
have world class mineral deposits but few
transportation corridors for access to those
resources. We have major untapped oil and gas
resources with no access to the remote locations.
ATIF will improve access to our resources, which will
the cost of production.
ATIF …
Ensure stable annual transportation budget
• Alaska needs a state-funded transportation system
that is sufficiently and predictably funded.
This reliable flow of funds allows for the development
and implementation of a sound transportation plan that
doesn't fluctuate with funding, politics or the
economy.
8:59:02 AM
Representative Peggy Wilson discussed slide 16: "ATIF
Summary."
ATIF Summary
• To summarize:
Alaska Transportation issues:
• I think I've defined our looming transportation
challenges that stem from 2 major issues, declining
funds both federal and state, and an aging
transportation infrastructure. I think we need to
act now and implement the Alaska Transportation
Infrastructure Fund.
• ATIF is about the broader social good and
economic progress of the state of Alaska.
• About meeting ever-growing transportation needs
for Alaskans. The sheer volume of freight moving
in Alaska underscores the importance of the
transportation system to Alaska's economy.
Implement the Alaska Transportation Infrastructure
Fund
• Alaska needs to take action now;
Put the constitutional amendment on the ballot in
November 2012
• We need this constitutional amendment on the
ballot in 2014. I think Alaskans want a better
transportation system. Let the people decide.
• Mr. Chair, thank you for this opportunity to tell
the committee about our plan to help Alaska move
forward. You have seen the 30,000 foot level
presentation.
• I know committee time is short so I will stop
here and attempt to answer any questions you may have.
9:00:49 AM
Co-Chair Austerman stated that he would accept questions
from committee members.
Representative Thompson agreed that roads, airports and
harbors were the arteries of Alaska's economy. He asked
about the decision to have two separate panels. He thought
the two panels might be cumbersome.
Representative Peggy Wilson responded that the commission
began as a 25-member panel. She listened to comments from
committee members in each community. The goal was for
panels that were non-political with representation from all
Alaskan geographical areas. A decision was made for one
commission to work on project assignments, with seven
people voting. The goal was to view the state as a whole
unit.
9:03:30 AM
Representative Thompson asked if the two panels must meet
in person, which would be expensive for airfare and hotel
rooms.
Representative Peggy Wilson replied that the panels would
meet twice a year.
Representative Thompson understood that Map - 21 was not
well accepted in the more remote areas of the state
including Sitka, Petersburg and Fairbanks. He asked about
Map - 21 and the federal transportation fund. He asked for
a specific dollar amount received by the state.
Co-Chair Austerman suggested that the question be held for
Department of Transportation and Public Facilities.
Representative Peggy Wilson noted that the fund could be
used as best determined for the state.
9:04:53 AM
Representative Holmes reviewed the travel costs detailed in
the fiscal notes. She wanted to know about the reasons for
two separate boards.
Representative Peggy Wilson replied that the board required
experts from the Department of Transportation and Public
Facilities.
Representative Holmes discussed the fund. She asked about
the discrepancy between 5 and 6 percent of the average
market value. She understood that the percent of market
value calculation was refined over time. The more
conservative estimates were in the 4 to 5 percent range.
She pointed out that the Department of Revenue stated that
principal might be eroded at 6 percent.
BECKY ROONEY, STAFF, REPRESENTATIVE PEGGY WILSON, referred
to the constitutional amendment, which stated "up to 6
percent of market value that could be utilized." She
thought that the purpose of the range was to provide future
options. In the enabling statutes, the rate was set at 5
percent.
Representative Holmes asked about the two ways to spring
money from the fund. She noted that 50 percent could be
utilized each year with an additional 5 or 6 percent of the
average over the last 5 years. She asked how the
calculations occurred. She wondered if the incoming fees
were calculated into the 5-year average.
Ms. Rooney replied that the fees utilized were from the
previous year. The fees became part of the fund. The
interest from the fees was sitting in the fund.
Representative Holmes asked if 50 percent was taken out
each year in addition to the 5 percent. She thought the
practice might erode principal.
9:09:05 AM
Co-Chair Austerman acknowledged Representative Holmes'
point. He stated that future presentations would include
information about the funding source.
Representative Costello realized the great effort put forth
by Representative Peggy Wilson. She noted the gravity of
the decision. She believed that the state framers saw a
need for such legislation with the importance of
transportation in the Alaskan economy. She was challenged
with the idea that such a proposal would remove the budget
crafting process from the legislature. She asked about
testimony regarding an appointed board making the decisions
rather than elected state representatives.
Representative Peggy Wilson responded that two legislators
would serve on the board as advisors. She envisioned the
legislators as the transportation chairmen. She explained
that the decisions would be reviewed by both the governor
and the legislature. She acknowledged fears that the
legislature would no longer have a say in the important
decision making process.
Representative Costello highlighted the work that
Representative Peggy Wilson had put into the bill. She
asked how the representative would address the competing
needs faced by the state.
9:12:27 AM
Representative Peggy Wilson replied that another interest,
such as education would require $20 billion to seed a fund
with similar intent. Children need safe roads to get to
school. She supposed that some Alaskans would leave the
state if the transportation situation did not improve and
schools suffered without many students.
9:13:55 AM
Representative Gara believed that transportation funding
was crucial. He acknowledged that Alaskans would vacate the
state if transportation needs were not met. He pointed out
that the state had approximately $17 billion in savings.
The governor proposed a draw on the savings including a $3
billion draw for Public Employees' Retirement System (PERS)
and Teachers' Retirement System (TRS). He wondered how long
savings would last.
9:15:12 AM
Representative Peggy Wilson stated that too much
deliberation about transportation and infrastructure would
delay necessary changes. She explained that infrastructure
helped to solve many different problems in the state. She
was most concerned about the constitutional amendment and
its inclusion on the ballot. She stated that waiting
another two years would allow for further delay.
9:17:02 AM
Representative Gara noted that the proposed fund would
place $80-$120 million into the transportation projects
annually. He asked how much money was allocated to roads,
vessels, railroads, trails and transportation projects last
year in the capital budget. He suspected that the
legislature was funding transportation at a higher rate
than the one estimated by the sponsor. He asked about slide
9. He understood the logic of placing all funds into
transportation. He argued for using the fund for Troopers
or energy projects.
9:18:56 AM
Ms. Rooney replied that public comment revealed that when
fees were designed for activities of the users, the public
was more inclined to participate and contribute to the
fees. She saw the opportunity for increases in gas tax,
which had not been raised in 53 years, if Alaskans
understood that the tax would pay for the roads.
Representative Gara wondered if the sponsor proposed a tax
increase.
Representative Peggy Wilson replied that the decision to
raise taxes might be made in the future. She stated that
further infrastructure development meant more jobs and a
greater economy.
9:20:26 AM
Representative Munoz congratulated Representative Peggy
Wilson on her efforts with the transportation committee.
She asked why the existing department processes were not
indicated in the proposed legislation. She wondered why the
effort could not continue within the established agency
framework. She expressed concern about creating another
layer of bureaucracy.
Representative Peggy Wilson replied that changes must be
made to eliminate the political aspect of the decision
making process. She wished to review the projects in a
different way.
9:22:23 AM
Representative Guttenberg offered congratulations on the
sponsor's hard work. He stated that the new commission was
subject to legislative appropriations. He asked if the
commission would supersede all the other organizations that
were actively planning for their communities.
Representative Peggy Wilson replied that each group would
continue to do what was best for their specific areas. The
commission would review the submissions and determine the
best projects to promote economic development in the state.
She stressed that the appointees should have some
experience in certain areas. The combination would lead to
the optimal statewide view. The goal of the legislation was
to remove the geographic look and decide the best action
for the state as a whole.
9:24:32 AM
Representative Guttenberg expressed confusion about how the
process would clear the playing field for projects. He
stated that the legislators would make the final decisions.
Representative Peggy Wilson replied that removal of the
legislative review would nix the bill's passage through the
finance committee.
9:25:55 AM
Co-Chair Stoltze stated that he helped facilitate the
passage of a similar initiative twice in the past. He
stated that he had witnessed three separate efforts to
change dedicated funds during his time on the legislature.
He recalled one effort in 1976, which required an exemption
from the prohibition to create the Permanent Fund. Another
effort from 1989-1990 by former governor Cooper addressed
that education endowment, which passed the House but not
the Senate. He wondered about removing the prohibition all
together to enable the legislative process to work.
Representative Peggy Wilson stated that she attempted to
access all different angles during her decision making
process. She stated that Alaska was behind $20 billion with
infrastructure projects and $700 million in deferred
maintenance.
Co-Chair Stoltze asked if amending the dedication
prohibition had been explored as a potential solution.
Representative Peggy Wilson had not determined a solution
for every department or state region. She felt that the
legislation would make a difference in every department in
the long run. She believed that developing the state's
infrastructure would promote economic development in
Alaska. She suggested that it was more economic for
businesses to visit the state for a profit.
9:29:04 AM
Co-Chair Stoltze hoped to vet the issues. He lacked
certainty about his position.
9:29:39 AM
JEFF OTTESEN, DIRECTOR, DIVISION OF PROGRAM DEVELOPMENT,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES offered
to answer questions about Map-21.
Representative Thompson asked about the federal
transportation infrastructure spending.
Mr. Ottesen replied that MAP-21, which was passed in 2012,
authorized the federal program for 2013 and 2014 with
funding comparable to that received in prior years. The
amount of money received remained unchanged, but the
distribution was altered. The funding was shifted from a
local class of roads to the larger highways in the national
highway system. He mentioned a tripling of funding for
safety projects. The state therefore had less money for
local-class roads and highways that were not on the
national system. He stated that the Alaska Highway System
received substandard funding for maintenance. He pointed
out that 60 percent of the bridges were reliant upon the
smaller slice of funding.
Mr. Ottesen continued that the Highway Trust Fund
approached zero dollars. He stated that Secretary Fox from
the United States Department of Transportation announced
that the Highway Trust Fund would reach zero dollars before
the end of 2014. He pointed out that the fund had outgo
that was greater than income, meaning delays in
reimbursements to the states. When states bill the United
States Department of Transportation, delays will ensue
unless a solution was found. He stated that the highway
required $40 billion to operate nationally and was
receiving approximately $30 billion in proceeds from the
various categories of taxes.
Mr. Ottesen asked the question, "Why is the highway trust
fund not remaining solvent." One explanation was that less
people were driving nationally and the use of liquid
petroleum fuels, the primary source of taxes, was
shrinking. Some people bypassed taxes by driving cars that
operate without liquid petroleum fuel. He added that the
highway authorization would expire at the end of 2014. He
opined that there was no easy solution to funding.
9:34:14 AM
Representative Thompson asked about Alaska's total
allocation from the Federal Highway Fund.
Mr. Ottesen replied that Congress used a two-step process.
Initially an amount of money was authorized at
approximately $500 million. Each year a smaller amount was
appropriated against the initial appropriation. He stated
that Congress appropriated approximately 92 or 93 percent
of the authorized number.
Representative Thompson asked about the smaller
appropriation.
Mr. Ottesen replied $450 million.
9:35:12 AM
Representative Gara asked about the backlog of state
transportation projects. He stated that at $100 million per
year, it would take 200 years to address the $20 billion
backlog. He asked about spending for ferries, trails and
roads.
Mr. Ottesen replied that appropriations over the past 10-12
years were quite varied; $600 -$100 million in general
funds. He stated that the 2012 amount was approximately
$700 million, but the contribution was much smaller since
then.
Co-Chair Austerman asked for further details for the
committee regarding Representative Gara's question.
Mr. Otteson agreed.
Representative Gara thought that the deliberative process
of prioritizing funds was reflected. Some years the state
had funding to address transportation projects, while other
priorities arose on different occasions. He thought it fair
to allow the legislature to continue determining the
largest priorities every year regarding the creation of
jobs and economy.
9:37:45 AM
Mr. Ottesen agreed with the legislative prerogative. He
recalled that the 2012 capital budget was nearly $300
million greater than the amount requested.
Representative Gara noted that the $20 billion backlog
would continue to grow. He did not see how the legislation
could address the enormous backlog.
Mr. Ottesen replied that the Roads to Resources projects
were being transferred to Alaska Industrial Development and
Export Authority (AIDEA) who was seeking a form of
resource-backed tolls to help build the roads, which would
remove the projects from the state budget. He noted efforts
to address transportation needs without accessing the
general fund.
9:39:10 AM
Representative Wilson understood that federal funding might
not be available, as the state did not have the required
match.
Mr. Ottesen stated that he had worked for the Department of
Transportation and Public Facilities for 25 years, and in
that time had not seen a "federal dollar left on the table
for lack of match." He acknowledged that the state was
nearing the end of match reserves. He did not predict that
2014 would yield an insufficient match to cover the
required state match.
Representative Wilson asked about local funding programs.
She asked if the bill might limit the choices made by the
local programs. She asked if the local organization would
continue to exist.
Mr. Ottesen replied that the two organizations known as the
Fairbanks Metropolitan Area Transportation System (FMATS)
and the Anchorage Metropolitan Area Transportation
Solutions (AMATS) were established under federal law and
received a portion of federal funds known as the sub-
allocation. He explained that the state did not have the
ability to alter the requirement. If federal funds were
acquired, the local boards would make the decisions. The
ATIF would make decisions about its own program, but not
about the money sub-allocated to FMATS and AMATS.
9:40:58 AM
Co-Chair Stoltze had difficulty with the similarity to past
dedicated fund exemptions. He included the Permanent fund
and the debate about its appropriate and actual use. He
noted only one major use of the Permanent Fund, which was a
statutory use of earnings for distribution to the people of
Alaska. He stated that the education endowment included a
provision preventing the legislative appropriation until
2013. He stated that the issue was placed before the voters
in 1990. He observed the serious nature of a dedicated
fund. He wondered if similar restrictions on the proposed
legislation might be considered. He noted that a
constitutional amendment was an enduring legacy change in
the law of the land. He referred to himself as a history
nerd.
9:44:57 AM
Mr. Ottesen commented about Map-21. He acknowledged the
difficult situation with the federal highway program and
congressional reauthorizations, but he remained hopeful
that the program would continue past October 2014.
Co-Chair Austerman stated that the three bills would come
back to the committee. He suspected that the committee
would have further questions for the Department of
Transportation and Public Facilities.
9:46:10 AM
SARAH LEFEBVRE, FAIRBANKS, CHAIR FAIRBANKS CHAMBER OF
COMMERCE (via teleconference) testified about the
advantages of the proposed fund. She stated that Federal
Transportation Funding was unstable. She advocated for the
state's independence from the federal process. She noted
Representative Don Young visited Fairbanks and expressed
frustration with Alaska for the lack of such a fund. She
hoped to prevent future problems with the fund's
establishment. She noted that the funding mechanism was
common in other states. She communicated strong support by
local government in the Interior for a state funded
program. She touched on the project of a road to Tanana.
She opined that a state fund would benefit similar
opportunities.
9:50:53 AM
KARL GOHLKE, FAIRBANKS, FRONTIER SUPPLY CO. (via
teleconference) stated support for the legislation. He was
a member of the Fairbanks Chamber of Commerce
Transportation Committee, the Alaska Miners Association,
the Association of General Contractors and the Alliance.
He noted that the various organizations spent committee
time discussing the infrastructure of projects and how
roads, bridges, airports and ports were important to major
projects such as the TransCanada project. He commended the
legislature for the passage of SB 21. He advocated for
consistency as a tool for planning for Alaska's future. The
initiative would help to get the Roads to Resources built
thereby improving the economy of Alaska. He believed that
the initiative would take care of the FMATS and the AMATS.
9:55:55 AM
TONY JOHANSEN, FAIRBANKS, GREAT NORTHWEST (via
teleconference), stated that Alaska had a great need for
infrastructure and maintenance. He testified in support of
the legislation. He listed necessary improvements such as
deferred maintenance and improvement of system capacity to
meet the growing population and expanding infrastructure.
He recalled similar budget issues in the 1980s. He believed
that the state funded education, health and social services
and troopers while slashing Alaska's capital budgets. He
encouraged the continued development of the state's
infrastructure. The Alaska Transportation Infrastructure
Fund would provide the mechanism to expand and improve the
state's transportation infrastructure. Without the
necessary infrastructure, Alaska would have no need for
schools, troopers or social services.
9:58:40 AM
CHRISTINE KLEIN, ANCHORAGE, CALISTA CORPORATION (via
teleconference), testified in support of the legislation
packet. She emphasized that the initiative would help in
both rural and urban Alaska. She pointed out that 79
percent of funding for transportation projects in Alaska
originated from the federal government. She stated that
contributions for airports were approximately 93 percent
federal in origin. She noted pressure for state fund
revenue toward some of the projects. Some programs were
policy-driven with a focus on mass transit; those projects
were often prioritized over important projects in Alaska.
She expressed support from her region, which consisted of
56 small villages with primary airport access. She noted
the difficulty of getting onto the STIP list, as the
backlog was so enormous. She pointed out that the economy
depended on basic core infrastructure. She noted that the
infrastructure was necessary for a more diversified and
stable economy.
10:04:45 AM
DAVID LEVY, ANCHORAGE, ALASKA MOBILITY COALITION (via
teleconference), testified in support of the legislation
packet. He stated that he worked with Representative Peggy
Wilson on the issue for a number of years. The need for
transportation infrastructure was significant throughout
the state. The bill would help Alaskans break the
connection with the federal government and take greater
responsibility with the transportation infrastructure.
10:06:25 AM
JOHN MACKINNON, EXECUTIVE DIRECTOR, AGC OF ALASKA,
testified in support of the legislation. He stated that he
worked for the Associated General Contractors of Alaska, a
construction trade association with approximately 650
construction-related business members. He stated that he
had served as deputy commissioner of the Department of
Transportation and Public Facilities for five years, where
he learned about transportation needs and issues in Alaska.
He pointed out that the model proposed in the initiative
was utilized by 44 other states in the union. The appointed
members would understand the transportation needs in the
region and in the state with and prioritize the projects
based on facts rather than politics or other
considerations. He noted the fund's stream of user fees
that work to replenish the fund. He stated that user fees
had ample support among tax payers. Alaskans love
transportation projects. He recalled only one bond issue
for transportation projects that did not pass. Because of
the size and limited transportation options in Alaska
Representative Guttenberg appreciated the testifier's
perspective. He expressed confusion about how the
legislation would clear the way to new transportation
projects. He thought that the limited nature of the funding
compromised its appeal. He asked how the legislation
simplified the issue of transportation in the state.
10:12:07 AM
Mr. MacKinnon replied that direct appropriations largely
funded the entire project. Once the appropriation was made
the project waited for design, permitting and construction,
which could take up to five years. The federal program
provided a known amount over the period of the bill's
reauthorization. The use was inefficient. The programmatic
spending was more efficient than lump-sum appropriations.
Programmatic spending allowed for a more efficient process,
as opposed to lump-sum appropriations. He expected the
federal subcategories would continue to exist under federal
law. The proposed legislation would establish a list of
projects in priority.
10:14:49 AM
Representative Guttenberg noted that the process of
legislative overview remained unchanged. The legislature
would continue to make the appropriation.
Mr. MacKinnon contrasted Representative Guttenberg's
statement with the methods of federal funding. He mentioned
a single lump-sum appropriation for the federal highway
program, including a series of allocations. While working
with the Department of Transportation and Public
Facilities, he saw many projects funded that were not the
best use of the money.
10:16:51 AM
Representative Costello asked if the testifier felt that
the process was working now. She asked for an example of
inefficiency in the current process.
Mr. MacKinnon recalled multiple efforts for transportation
enhancements with great spending requirements. He opined
that lost efficiencies were noticed when safety issues were
not prioritized above scenic waysides.
10:19:06 AM
Representative Costello noted her participation in the
governor's recreation and trails advisory board. She stated
that the points system used was less valuable than an open
discussion process. She asked if Mr. MacKinnon was open to
changes in the legislation to allow the transportation
committee to be the end arbitrator of the winning projects.
Mr. MacKinnon was open to a number of changes. He liked the
bill package because it provided a steady and predictable
stream of funding. The steady funding stream would allow
the legislature to participate in the decisions.
10:21:10 AM
BARBARA HUFF TUCKNESS, TEAMSTERS, testified in support of
the legislation. She noted that she had Teamster members in
all areas of the state transportation system. She believed
in Representative Peggy Wilson's efforts to create a stable
funding source for state transportation projects. She
requested serious consideration and movement of the bill
package.
10:23:08 AM
TOM BRICE, ALASKA DISTRICT COUNCIL OF LABORERS, testified
in support of the legislation on behalf of the 6000 public
and private construction and road maintenance members of
unions across the state.
Co-Chair Stoltze appreciated the process and he hoped to
pass the bill out of committee.
Representative Gara recalled rumors that the Department of
Transportation and Public Facilities spent money to self-
perpetuate the agency. He noted the component of the bill
package that included a different proposal for educating
the legislature about the analyzed transportation
priorities in Alaska. He had concerns about burning through
state savings. He expressed interest in the information
regarding frugal and efficient spending.
Co-Chair Austerman CLOSED public testimony.
HB 122 was HEARD and HELD in committee for further
consideration.
HB 123 was HEARD and HELD in committee for further
consideration.
HJR 10 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:27:00 AM
The meeting was adjourned at 10:27 a.m.