Legislature(2005 - 2006)SENATE FINANCE 532
03/21/2006 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB261 | |
| SB271 | |
| SB308 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 261 | TELECONFERENCED | |
| + | SB 271 | TELECONFERENCED | |
| + | SB 308 | TELECONFERENCED | |
| + | TELECONFERENCED |
MINUTES
SENATE FINANCE COMMITTEE
March 21, 2006
9:06 a.m.
CALL TO ORDER
Co-Chair Lyda Green convened the meeting at approximately
9:06:44 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Bert Stedman
Senator Donny Olson
Also Attending: JOHN MACKINNON, Deputy Commissioner of Highways
and Public Facilities, Department of Transportation and Public
Facilities; CINDY CASHEN, Administrator, Highway Safety Office,
Department of Transportation and Public Facilities; LIEUTENANT
JAMES HELGOE, Alaska State Troopers, Department of Public
Safety; KURT SMITH, State Traffic Engineer, Department of
Transportation and Public Facilities; PATRICK GAMBLE, President
and Chief Executive Officer, Alaska Railroad Corporation,
Department of Commerce, Community and Economic Development
Attending via Teleconference: There were no teleconference
participants.
SUMMARY INFORMATION
SB 261-REGULATION OF HWYS; TRAFFIC OFFENSES
The Committee heard from the Department of Transportation and
Public Facilities. One amendment was adopted, and the bill
reported from Committee.
SB 271-AUTHORIZE HWY PROGRAM PARTICIPATION
The Committee heard from the Department of Transportation and
Public Facilities and the Alaska State Troopers, Department of
Public Safety. The bill was held in Committee.
SB 308-ALASKA RAILROAD REVENUE BONDS
The Committee heard from the Alaska Railroad Corporation and
reported the bill from Committee.
9:07:11 AM
CS FOR SENATE BILL NO. 261(TRA)
"An Act relating to the designation of traffic safety
corridors; relating to the bail or fine for an offense
committed in a traffic safety corridor and to separately
accounting for such fines; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
JOHN MACKINNON, Deputy Commissioner of Highways and Public
Facilities, Department of Transportation and Public Facilities
informed the Committee that this legislation would allow the
Department to establish "Traffic Safety Corridors" (TSC) and
double the traffic fines within those Corridors. This
legislation is the result of repeated tragic accidents occurring
on certain roadways, including the Seward Highway. Typically
when a road is experiencing a large number of accidents,
"structural improvements" such as changing its "geometry",
widening the road, and adding passing lanes are made. The
Department is furthering the TSC designation because it would
produce "more immediate results".
Mr. MacKinnon stated that the six states that have established
TSCs in areas experiencing "a higher than average rate of fatal
and very serious accidents" have deemed the endeavor a success.
Mr. MacKinnon informed the Committee that, when it was
considering establishing TSCs, the Department analyzed certain
road segments, primarily "in the Central region of the State".
Contrary to the Department's assumption that the Seward Highway
would be ranked the most dangerous, the accident rate on other
road segments, specifically those in the Matanuska Susitna (Mat-
Su) Valley "were every bit if not more dangerous as the Seward
Highway".
Mr. MacKinnon remarked that "more immediate results" are
experienced by addressing drivers' behavior, as opposed to
making road improvements. Research indicates that "high risk
drivers, drivers that are not driving safely, respond to only
one message. That message is increased enforcement." This
legislation would couple increased enforcement with double
traffic fines.
Mr. MacKinnon continued that the passage of a TSC law would
allow the Commissioner of the Department of Transportation and
Public Facilities, upon "consultation" with the Commissioner of
the Department of Public Safety, "to designate corridors of
roads as Traffic Safety Corridors."
9:10:21 AM
Mr. MacKinnon reiterated the fact that the TSC designation would
be accompanied by increased law enforcement efforts, which would
be supported by the Department of Transportation and Public
Facilities using federal highway aid Safety Sanction Funds
(SSF)". The State must utilize SSF to address road safety issues
such as "road improvements on the geometry side of things",
education programs such as the State's "Click It or Ticket" seat
belt message, or increased Driving Under the Influence (DUI)
enforcement.
Mr. MacKinnon specified that this bill would allow the increased
revenue resulting from the double traffic fines collected in the
TSC "to be returned to the Department". Those funds would then
be funneled to the Department of Public Safety to provide for
the expense of the increased enforcement on the TSCs.
9:11:39 AM
Mr. MacKinnon informed the Committee that the Department of
Transportation and Public Facilities worked with the Department
of Public Safety "in crafting" this legislation.
Mr. MacKinnon referred the Committee to four maps [copies on
file] "that illustrate the point that we are trying to make".
The maps depict a 13-mile segment on the Parks Highway from
Lucus Road to the Alaska Railroad-Houston Crossing; a 9.94 mile
segment on the Palmer/Wasilla Highway from Glenn Highway to
Parks Highway; a 17.25 mile segment on the Knik/Goose Bay Road
from Parks Highway to Point McKenzie Road; and a 26.94 mile
segment on the Seward Highway from Potter Marsh to Girdwood.
Mr. MacKinnon explained that each map depicts the location of
each fatal accident that occurred on that specific highway
segment during the years 1977 to 2005. Each fatality is
portrayed in either a blue or yellow box. A blue box indicates
that alcohol and drugs were the driver behavior issue involved
in the fatality; a yellow box indicates that such things as
inattention, unsafe speed, and improper lane changes were
involved. The increased enforcement proposed in this bill would
have a tremendous "affect on controlling driver behavior".
9:13:08 AM
Senator Stedman asked whether the increased traffic penalties
proposed in this bill would include points against a person's
driver's license or additional penalties for drug and/or alcohol
use offenses.
Mr. MacKinnon responded that the bill would be limited to
increased fine penalties. Points against a driver for the
offense would not be doubled in the TSCs.
Co-Chair Green declared that the penalty would address excess
speed.
Mr. MacKinnon affirmed. This legislation would "hit them in the
pocketbook".
Co-Chair Green clarified that the penalty would not affect the
point scenario.
Senator Stedman, while agreeing that doubling fines "would get
people's attention," opined that increasing the point penalty
would further the effort to modify drivers' behavior. Thus, he
asked whether a discussion on the point issue had occurred.
Co-Chair Green pointed out that the point issue had not been
addressed when separate legislation increasing penalties in
construction zones had been discussed.
9:15:24 AM
CINDY CASHEN, Administrator, Highway Safety Office, Department
of Transportation and Public Facilities viewed Senator Stedman's
increased point query as "a good" question. Noting that Duane
Bannock, Director, Division of Motor Vehicles, Department of
Administration, could more appropriately respond to the
question, she remarked, "that when there's excessive speeding",
a separate charge referred to as "racing" could be applied.
Points would accompany that charge. Continuing, she noted that,
"the majority of high risk drivers tend to already have lost
their license. That's not effective in making them change their
behavior. What's effective with them is hitting them in the
pocketbook."
9:16:19 AM
Co-Chair Wilken suggested that the word "may" in Section 1, page
one line 13 of the bill be changed to "shall", as that would
ensure that the Commissioner of the Department of Transportation
and Public Facilities would consult with the Commissioner of the
Department of Public Safety and other pertinent people when
making the TSC determination.
Mr. MacKinnon stated that TSCs would "primarily be rural,"
outside of urban areas. Urban area traffic accidents tend to
occur due to intersection issues rather than "long stretches of
road". It should be mandatory that the Commissioner of
Department of Transportation and Public Facilities consult with
the Department of Public Safety. However, "there might not be a
local entity to consult with. We will consult with any local
entity there is, State, local, or federal."
In response to a question from Co-Chair Wilken, Mr. MacKinnon
voiced no objection to changing the word "may" to "shall".
Amendment #1: This amendment replaces the word "may" with
"shall" in Section 1, page 1 line 13 of the bill.
Co-Chair Wilken moved to adopt Amendment #1.
Co-Chair Green objected for discussion.
Co-Chair Green asked whether the majority of TSCs would be
located on State and federal highways.
Mr. MacKinnon affirmed they would.
Senator Bunde inquired as to whether changing the language from
"may consult with other local, state, and federal agencies…" to
"shall consult with other local, state, and federal agencies…""
would require the State to consult with numerous entities prior
to moving forward or whether the consultation would be limited
to entities responsible with activities within that local area.
Co-Chair Green observed that the Department utilized statistical
information to identify the primary "trouble spots" rather than
consulting "with downtown Wasilla, Mat-Su, or the City and
Borough of Anchorage" officials. Continuing, she asked whether
the Department consulted with local entities when considering
changing the speed limit on State highways.
Mr. MacKinnon responded the Department, while it "is not
required" to consult with local entities when changing speed
limits on State highways, does so "as a matter of courtesy".
Co-Chair Wilken opined the term "'consult' is a pretty loose
word." The Department should endeavor to provide local entities
with at least, "a minimal level of consultation. … It doesn't
speak to being approved or passed by any sort of assembly or
anything, it'll just let them know;" particularly in regards to
any impending "traffic restrictions".
Mr. MacKinnon understood the intent to be for the Department to
"consult with other local, State, and federal agencies with
responsibility for traffic safety in that area". This would
include the local police department.
Co-Chair Wilken pointed out that the sentence in question
"speaks to 'a traffic safety corridor'".
LIEUTENANT JAMES HELGOE, Alaska State Troopers, informed the
Committee that the Department of Public Safety "does share
information with all local and municipal law enforcement
agencies for statistical gathering for grant statistics that
come through Highway Safety."
9:20:56 AM
Lieutenant Helgoe shared that the Department of Public Safety
has "good working relationships with the Wasilla Police
Department, the Palmer Police Department, and all police
departments in the State." The Department would continue to
share statistical information.
Co-Chair Green withdrew her objection to the amendment.
There being no further objection, Amendment #1 was ADOPTED.
Co-Chair Wilken asked for an explanation of the Alaska Traffic
Manual handout titled "Draft" [copy on file] the Department of
Transportation and Public Facilities had distributed.
Mr. MacKinnon explained that the Highway Traffic Manual dictates
to the Department "when and where signs should be used and how
they should be placed." The regulations proposed in the Draft
would be specific to traffic safety corridors. Including this
language in the Traffic Manual would allow adjustments to be
make quickly "were it found that, "for some reason the target we
picked was not correct. Were the language included in State
Statute, the process of changing it would be more "cumbersome".
If we put it into regulation, it is a much more time consuming
process to change it." "The Traffic Manual's what governs where
we put signs, how we put'em, why we put'em as well as the kinds
of signs" that are placed.
9:22:33 AM
Co-Chair Wilken understood therefore that the language reflected
in the "Draft" document "would be inserted into the Traffic
Manual", were this bill adopted.
Mr. MacKinnon affirmed. Continuing, he noted that in order to
establish a TSC, certain "thresholds must be reached";
specifically the Department must have "a three year record
looking back … and show that the fatal plus major injury
accident rate per mile exceeds 110 percent of the Statewide
average". After three years, a TSC designation could be
disestablished were the statistics to reflect "a significant
improvement" in the accident rate.
9:23:30 AM
Mr. MacKinnon stated that the establishment of a TSC would be
accompanied by publicity and public information. This would also
occur were a TSC dis-established, as that would substantiate the
program's success.
Senator Bunde agreed with the concept of the program. The
"unfortunate" aspect of the situation is that people must die
before the program could be established. Continuing, he asked
whether a local group or government could identity a particular
road as dangerous "and appeal to the Department" to have it
designated as a TSC prior to fatalities occurring.
Mr. MacKinnon responded that "there is always the potential" to
do that; however, he questioned whether the anticipation that a
particular road segment might be dangerous without statistics
would suffice. Continuing, he cautioned that establishing "too
many" TSCs could reduce their "effectiveness". He agreed "it is
a sad thing" that lives must be lost in order to establish a
safety corridor.
9:25:23 AM
Senator Stedman asked regarding "the interaction" that might
occur between the Department and a small community desiring "to
take a pro-active approach" to reduce speed limits on one of its
roads in order to curtail fatalities. He understood that the
Department "has been fairly responsive" to these types of
requests.
Mr. MacKinnon affirmed that the Department is responsive to such
situations when "enough people" are concerned about a particular
road. While the Department also receives requests to increase
the speed limit on certain roads, "there's a lot more resistance
to increasing speed limits."
Mr. MacKinnon pointed out that on certain road segments, simply
reducing the speed limit would "not necessarily result in a
decrease in accidents because it's the speeders that are causing
the problems and not the people obeying the speed limit." The
Department would not post a speed limit exceeding "the
geometries" of the road. The goal of establishing TSCs "is to
direct this effort toward driver behavior."
Co-Chair Green noted that language in Section 1, page 1 lines 9
through 12 might address Senator Bunde and Senator Stedman's
concerns about whether people could request certain roads to be
designated as TSCs. This information reads as follows.
In establishing the criteria, the commissioner may consider
accident data and reports, the types and volume of
vehicular traffic, engineering and traffic studies and
other relevant factors.
Co-Chair Green believed that this language would provide a
manner through which citizen concerns could be addressed.
Mr. MacKinnon agreed that the language would allow "non-
technical reasons" to be considered in the establishment of a
TSC. Again, the Department's concern would be that establishing
too many TSCs would be counterproductive. The Department has
proposed in the Draft regulations that "no more than ten" TSCs
be established Statewide. Establishing too many would reduce
their effectiveness. "There would also be the question of
whether the Alaska State Troopers or the local PDs (police
departments) would be able to adequately increase enforcement."
Co-Chair Green remarked that that would be a "major"
consideration.
Senator Olson stated that increasing the level of fines in a TSC
could be characterized as "counterintuitive", as the people
guilty of the offenses might be dead.
Mr. MacKinnon responded that the "sad part" is that "quite often
the fatalities" are innocent victims rather than the person who
was driving offensively.
Senator Olson asked regarding the collection rate on such fines.
Mr. MacKinnon responded that he would endeavor to provide this
information.
Senator Olson remarked that such information would assist in
determining the effectiveness of the program.
9:29:47 AM
Senator Stedman pointed out that the $5,000 fiscal impact
depicted on the Department of Transportation and Public
Facilities fiscal note #1 should be $5,000 per corridor.
Consideration might be given to increasing the fiscal note in
order to more accurately reflect the expense of seven to ten
corridors. The cost for seven corridors would be $35,000.
Mr. MacKinnon affirmed the fiscal impact would be $5,000 per
corridor. A "significant amount of signage" would be erected in
each corridor to alert drivers they were in a TSC with double
traffic fines. Signs would be placed to designate the beginning
and end of a TSC as well as throughout its length.
9:31:17 AM
Co-Chair Wilken thought the aforementioned maps were
interesting. To that point, he suggested that the map legend
should identity the significance of the blue and yellow boxes.
Mr. MacKinnon qualified that each box depicted on the map
indicates a fatality. Blue boxes indicate that alcohol or drug
abuse was a factor in the fatality. Yellow boxes indicate other
factors as being involved.
Mr. MacKinnon agreed that this information should be specified.
Continuing he noted that the Department of Public Safety was
interested in getting copies of the maps to distribute to their
staff, as the information would assist the Alaska State Troopers
in determining where they should focus their enforcement
efforts. The red dots on the map indicate where major accidents
and fatalities have occurred after a significant highway
improvement. The white dots indicate where accidents and
fatalities occurred before major highway improvements.
9:33:15 AM
Co-Chair Green asked whether the double fine signage at
construction sites has made a "notable difference" in driver's
speed.
9:33:41 AM
KURT SMITH, State Highway Traffic Engineer, Department of
Transportation and Public Facilities informed the Committee that
no data is available in this regard as such data "is hard to
collect in construction zones". The overall feeling of people
working at construction projects is that the signs "are
generally effective".
Co-Chair Green remarked that the signs catch her attention when
she is driving in a construction zone.
9:34:53 AM
Senator Bunde moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, CS SB 261(FIN) was REPORTED from
Committee with previous $5,000 fiscal note #1 dated January 30,
2006 from the Department of Transportation and Public
Facilities; previous zero fiscal note #2 dated January 27, 2006
from the Department of Public Safety; and new zero fiscal note
dated March 17, 2006 from the Alaska Court System.
9:35:39 AM
SENATE BILL NO. 271
"An Act authorizing the commissioner of transportation and
public facilities to participate in certain federal highway
programs and relating to that authorization; relating to
powers of the attorney general to waive immunity from suit
in federal court related to those programs; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
JOHN MACKINNON, Deputy Commissioner of Highways & Public
Facilities, Department of Transportation and Public Facilities
explained that a National Environmental Policy Act (NEPA)
delegation six-year pilot program was included in the federal
highway Safe, Accountable, Flexible, Efficient Transportation
Equity Act: A Legacy for Users (SAFETEA-LU), when it was
reauthorized by Congress in the summer of 2005. He read a
segment of a handout titled "NEPA Delegation Pilot Fact Sheet"
[copy on file] as follows.
SAFETEA-LU includes a NEPA delegation pilot program for
five states - Alaska, California, Oklahoma, Ohio, and
Texas. Under the program, the five states are eligible to
apply for delegation of the Secretary of Transportation's
(Secretary) NEPA responsibilities for one or more highway
projects within the state. The state may also apply for
delegation of some or all of the Secretary's review and
consultation responsibilities under other Federal
environmental laws. The scope of delegation will be
determined through application to the Secretary and
execution of a Memorandum of Understanding (MOU).
Time Frame:
· Duration of the pilot program is six years from
enactment of SAFETEA-LU. Unless extended by statute,
the pilot terminates on August 10, 2011.
· The Secretary is required to promulgate regulations to
establish delegation application requirements.
Rulemaking is required to be complete within 270 days
of the Act. Rulemaking is behind schedule.
· The State may not submit its application until
* Rulemaking is complete and
* The State must advertise the application and solicit
public comment.
· After its application is accepted, the State and
Secretary will enter into an MOU.
Once the MOU is executed, delegation may proceed.
Mr. MacKinnon pointed out that this program would transfer "the
decision making process on what level of environmental
documentation is required out of the hands of the federal
Highway Administration and puts in the hands of the State
Department of Transportation". The State would have "more
control of the process and the rate at which these environmental
reviews proceed". This program would not reduce environmental
protections or environmental reviews, as the State must continue
to follow federal Environmental Protection Act guidelines. The
benefit would be that the State could control "the pace at
which" the process proceeds.
Mr. MacKinnon qualified that the program would be limited to
highway projects administered by the Federal Highway
Administration (FHWA). Furthermore, the program would be limited
"to environmental decision making" and would exclude engineering
issues. Airport aviation projects and other federal projects
occurring in the State would be unaffected.
Senator Bunde ascertained therefore that, even though the State
might have more control, it could strengthen but not reduce
restrictions, as it must "abide by federal standards".
Mr. MacKinnon affirmed that the State would be required to abide
by federal regulations and could not establish its own
environmental policy.
Senator Bunde questioned, therefore, the benefit the program
would provide to the State. To that point, were the State to
participate in this program and a lawsuit regarding its actions
presented "as there often is", the State would be required to
defend its action.
Mr. MacKinnon affirmed.
Senator Bunde suggested therefore that the fiscal notes
accompanying the bill must "be adjusted" to address that issue.
In conclusion, he asked what "advantages" the State's
participation in this program would provide, since the State
would be required to follow the same rules.
Co-Chair Green understood one benefit to be that the State would
be "in more of a position" to improve project timeframes rather
than being dependent on federal decision timeframes.
Mr. MacKinnon affirmed. The State has no control over the timing
of the federal decision making process. "It would not be unusual
for work to sit on a desk for a significant period of time."
"There is a greater chance" that documents "sitting on one of
our desks" could be processed faster.
Mr. MacKinnon mentioned that the bill would also pertain to "the
level of documentation required. The majority of the
environmental documentation" consists of "categorical
exclusions" (Cat-Ex's), which are the simplest form of
documentation. The NEPA process is required for projects such as
road repavings or the construction of an overpass. Under this
program, the State would assume responsibility for Cat-Ex
documentation. When the federal government is involved, "they
make the decision on what level of documentation is required".
At times, the federal government required projects that had
historically been subject to Cat-Ex documentation to be subject
to an environmental assessment or the more extensive
environmental impact statement. Were the State to assume "the
NEPA delegation, those decisions would be made at the State
level and not at the federal level".
Mr. MacKinnon affirmed that with the assumption of this
responsibility, the State would be required to defend its
decisions in Court. Language that "waived the State's immunity
from suit in federal court" is specified in Section 1 page 1
lines 9 and 10 of the bill. Since "NEPA is procedural law", a
basis for a Court case "would be that the Department for one
reason or another did not follow the correct procedure." The
Court's decision could require the Department to go back and
redo something, "following the procedure correctly".
Historically in such FHWA cases, the judgments as well as the
defense costs have been small. Nevertheless, some of the federal
cases have been lengthy and expensive.
Mr. MacKinnon stated that, were the State to assume the
responsibilities of the program, the expectation would be that
the cost of defending such a case would be considered "an
eligible" individual project cost, rather than a general fund
expense.
9:43:25 AM
Senator Bunde voiced concern as to whether what the State would
"be gaining is worth the price."
Co-Chair Wilken deemed "this is just a little tiny piece" of the
answer to peoples' question as to "why government grows".
Referring to the Analysis section of the Department of
Transportation and Public Facilities fiscal note #1, he voiced
disbelief that the work required by the State for assuming the
responsibilities of this program "would require 160 hours a
week". This would be something he would be unable to explain to
constituents. Were this program enacted, he predicted that in
five years, "we're going to sit here and just think the world's
coming to an end because this program's going to go away".
Continuing, he asked whether the State would be able to conduct
the program using $647,000 in Capital Improvement Project (CIP)
receipts and only hire two people.
9:44:54 AM
Mr. MacKinnon responded that the Department based its staffing
determinations on the number of people currently administering
the federal program and on the Department's own internal review
of the program. "It's not a simple thing to assume."
Co-Chair Wilken announced that the question needed to be asked
even though the response provided no relief.
Senator Bunde understood therefore that the project would
require four or five new positions.
Senator Stedman, observing that the expenses associated with the
project and the new staffing positions would be approximately
$650,000 per year, remarked that "we're certainly not paying
these people by the road mile built," as the State has
historically conducted a tremendous amount of planning, but has
built few new roads. He voiced concern regarding the sovereignty
of the State as well as the hiring of people "without any
parameters on production". He was disinterested in compiling
office hours without accompanying road construction. Therefore,
even though "the intent is good", he was hesitant to expand
planning activities. The cost of planning per road mile built
"is alarming".
Mr. MacKinnon advised that the goal of the Department was not to
assume NEPA responsibilities "and proceed at the same pace. The
status quo isn't good enough for us." The Department, like the
Legislature and the public, is also frustrated with the time
that is required to develop a project. NEPA is one of the
factors affecting the time it takes to develop a project. The
money the Department has spent on developing certain
Environmental Impact Studies (EIS) or Environmental Impact
Assessments (EIA) would "astound" the Committee. In addition to
the time spent on developing a project, $8,000,000 to
$15,000,000 is typically spent on developing a major project's
EIS. One factor that increases the amount of time and money
spent on an EIS is the amount of time spent "dealing with the
various resource agencies when they say we need this
information, we need that information, and we need this
information in order to do a complete environmental assessment".
The State is not currently in a position to say, "we don't think
you need that information. The information that's there on this
particular issue is adequate, it's more than adequate".
Currently "the federal government makes those decisions because
they have the NEPA assumption".
Mr. MacKinnon stressed that the State is willing to assume the
risk of making those decisions. "We're a lot less adverse to
risk than the federal government is in these issues. The
likelihood of a serious mistake in carrying out one of these
documents because you didn't gather sufficient information is,
the judge would say, well you need to go back and count the
caribou there one more time. We're willing to take that risk …
The benefits far outweigh the potential costs in that."
9:49:35 AM
Senator Dyson asked what would be included in the Contractual
Services $154,700 expense depicted on the Department of
Transportation and Public Facilities fiscal note #1.
Mr. MacKinnon understood the expense would provide for a NEPA
"expert" attorney in the Department of Law. A Reimbursable
Services Agreement (RSA) between the Department of
Transportation and Public Facilities and the Department of Law
would address that expense.
Senator Dyson concluded therefore that adding this position to
the Department of Law would be preferred to contracting out for
that service.
Mr. MacKinnon affirmed. He noted that a legal sufficiency review
must be conducted on each NEPA document before it is finalized.
Senator Dyson asked whether this would be a new position in the
Department of Law or whether the Department of Transportation
and Public Facilities would be contracting for an existing
employee's services.
Mr. MacKinnon responded that while there is a person in the
Department of Law who is "very well versed in NEPA", that person
oversees a number of attorneys. The person being referenced in
the fiscal note would be required to have "a fairly specific
education and orientation towards NEPA".
Senator Stedman requested that the issue of cost of planning per
road mile built be set aside; else wise, upon review, the costs
"would be alarming". Continuing, he was curious of the reason
that Alaska was one of a select group of states chosen for this
pilot program; specifically whether Alaska was chosen because it
"has a harder time than other states in getting its projects
through the NEPA process.
Co-Chair Green remarked that Alaska Congressman Don Young
included the State in this project. She attested to the time and
effort that the State conducts in regards to the NEPA process.
9:52:13 AM
Co-Chair Green stated that, in her opinion, the majority of the
"projects that are very important to us are very small potatoes
in Washington DC as far as their importance on the NEPA interest
level", particularly in comparison to larger projects being
conducted in other states.
Mr. MacKinnon characterized Co-Chair Green's comments as
"accurate". He noted that half of the other four states
designated for this program "have ranking members" on the
federal Transportation Committee. They want their states to be
included in the five and a half year pilot program. This is an
opportunity that the Department would not want "to lose".
Senator Stedman asked the Department to provide the Legislature
a report comparing the program expenditures to the road miles
constructed at the conclusion of the pilot program, were it
enacted.
Mr. MacKinnon trusted that the Department would be able to
provide "a metric that will hopefully show an improvement over
the status quo".
Senator Bunde shared that he had "serious reservations" about
what Co-Chair Wilken coined as "growing government: four more
fulltime State employees and the risk of lawsuits." The net gain
is questionable. He would vote no on the bill.
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
Senator Bunde objected.
Senator Stedman preferred the bill to be held in Committee for
further consideration.
Co-Chair Wilken moved and asked unanimous consent to withdraw
the motion.
Without objection, the motion to report the bill from Committee
was WITHDRAWN.
Co-Chair Green ordered the bill HELD in Committee.
9:55:28 AM
SENATE BILL NO. 308
"An Act authorizing the Alaska Railroad Corporation to
issue revenue bonds to finance rail transportation projects
that qualify for federal financial participation; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
PAT GAMBLE, President and Chief Executive Officer, Alaska
Railroad Corporation (ARRC), Department of Commerce, Community
and Economic Development noted that a handout titled "Alaska
Railroad Corporation Legislative Request for Bonding Approval"
and "a series of maps" depicting the ARRC's "work plan" for
proposed tract improvements during the years 2006 through 2015
[copies on file] have been provided.
Mr. Gamble reviewed the handout as follows.
Page 2
Request Legislative Approval
ARRC desires to issue one or more series of capital grant
receipts revenue bonds or notes, in aggregate not to exceed
$165 million.
Mr. Gamble remarked that this bill would seek Legislative
approval allowing AARC to issue a series of capital grant
receipt (CGR) revenue bonds not to exceed $165 million. The
"sourcing [of] these bonds" would be as prescribed by Alaska
State Railroad Transfer Statutes.
Page 3
What?
Rehabilitate Mainline Substandard or
Potentially Unsafe Track
· Single most important purpose for the use of federal
funds
· Top capital investment effort and #1 priority since
1996 … $220 million already invested.
Mr. Gamble informed that in 1996, ARRC began an effort to
"rehabilitate" or rebuild its main rail tracks. This continuing
effort has been primarily funded by annual federal
appropriations, provided through efforts by Alaska Congressman
Ted Stevens who recognized that no regular deferred maintenance
had been conducted on the Alaska Railroad's (Railroad) main line
since it was rebuilt in the 1950s following World War 11.
Mr. Gamble stated that the deferred maintenance effort was
further compounded by the fact that train mainline derailment
occurrences were increasing and incurring additional expenses.
That risk of derailments exacerbated the need for deferred
maintenance since the Railroad's passenger count and hazardous
cargo loads were increasing. Actual track improvements began in
1998.
Mr. Gamble noted that the revenues generated from this bonding
would be used to rapidly accelerate and complete the deferred
maintenance plan on upgrading the mainline track. ARRC has
continued to request Federal funding through Congressman Stevens
since it ranked the mainline track upgrade a priority in 1996.
That federal money has been and would continue to be limited to
funding work on the mainline rather than being utilized to
support facilities and equipment. The money generated by the
revenue bonds requested in this bill would also be limited, with
a few "minor exceptions", to the mainline rehabilitation work.
9:59:09 AM
Mr. Gamble conveyed that the "Derailments, 1996-2005" graph
depicted on page 4 was included to provide an example of what
has happened on the mainline since the improvements began. The
blue line on the graph indicates a downward trend in the number
of derailments with reportable damage. The "Train Accident Rate"
graph depicted on page 5 compares the Alaska Railroad accident
trend to national railroad statistics. These graphs "provide
strong evidence" that the deferred maintenance efforts are
"having the desired payoff". This fact is what prompted the
notion amongst Railroad staff that "accelerating" the work on
the main line would provide "a safer railroad faster … The State
and our customers would expect that from us." This prompted this
initiative.
Page 6
Project Information
· 100% CWR from Anchorage to Fairbanks (355 miles)
· 85,000 concrete ties on curves less than 6 degrees (32
miles)
· Wooden ties all upgraded to 35-year cycle
· All ballast reset
· Complimented by ARRC Bridge Program … $30 million
· Complimented by ARRC Collision Avoidance Program … $13
million
Mr. Gamble reviewed the benefits the Railroad would receive from
this endeavor. While it was once thought that Continuous Welded
Rail (CWR) would not work in the cold climates and extreme
temperatures changes experienced in the State, such as the high
ninety-degree summer time temperatures and the sixty-below-zero
ambient temperatures experienced in Fairbanks. Railroad experts
from other parts of the country "proved" that to be wrong. Thus
ARRC is "vigorously" conducting a CWR program. CWR is important
because it welds segments of track together thereby eliminating
joints, which are often the cause of derailments. "The exchange
of energy" between the rail joints and the train wheels "is hard
on the metals of both and quite often is the single most
prominent source of failures on track and damage to wheels. In
addition to improved safety, CWR tracks are quieter as the noise
generated by the wheels hitting joints is eliminated.
Mr. Gamble noted that while concrete ties provide no substantial
benefit over wooden ties on straight stretches of rail,
utilizing them on curves increases the stability of the rail and
better absorbs the energy transfer between the track and train
wheels. In addition, concrete ties are easier to place at "the
right degree" to meet the angle calculated for a specific curve.
85,000 concrete ties would be utilized between Anchorage and
Fairbanks on curves exceeding six degrees. This would further
improve rail safety, as curves are susceptible to track failure.
Mr. Gamble also noted that the project would specify a 35-year
tie upgrade cycle. Depending on how much water is absorbed by
the tie and other circumstances, a tie typically does not
undergo "serious breakdowns" until about 40 years of use. A 35-
year cycle would provide a "safety margin" and would align with
what "good railroads" in the contiguous United States are doing.
Mr. Gamble noted that in conjunction with tie and rail
replacement, rock ballast under the railways, including river
rock, would be replaced "with solid granite which interlocks
very tightly and provides a solid bed". 169 bridges would be
upgraded in conjunction with track improvements.
Mr. Gamble pointed out that while the majority of his remarks
have addressed "mitigating the physical risks of track failure,
collision avoidance is a technology" that is also being
addressed by ARRC. This effort would address "human mistakes and
errors in judgment". Thus, the Railroad is "simultaneously
reducing physical risk as well as human error risks to the
degree affordable and possible with the current technology." The
effort would be to provide "one of the safest railroads in the
United States within the next seven or eight years".
Page 7
Why?
· Consistent with #1 priority
· Faster "take" of safety benefits and risk reduction of
non-human factors
· Continued mitigation effort
- More than 600 passenger trains per year
- 800 million gal. Refined product/hazardous
materials (30,000 carloads)
- 60% = hazardous cargo proportion
· Builds clarity and budget discipline into capital
program
- Debt service schedule drives yearly capital
apportionment
Mr. Gamble reiterated that this endeavor would fulfill the
number one priority of ARRC. The fact that this effort could
reduce "by as much as ten years" the work that the current
program would otherwise allow would be "worth the premium that
we would pay through the bonding". The Railroad moves
approximately 600 passenger trains a year and 800,000,000
gallons of hazardous material on its mainline. The amount of
hazardous material moved by the Railroad is one of the "highest
proportions of hazardous material cargo" run on any railroad in
the country. Any effort to increase the Railroad safety is "an
obligation" owed to the State.
10:05:31 AM
Mr. Gamble communicated that one of the "advantages" this
legislation would provide "internally" would be that "locking
these dollars in on an annual basis through bonding" would
assist ARRC in determining the level of capital funding that
would be available for other programs.
Page 8
Why Now
· SAFETEA-LU makes it possible
· Formula Funds increased 6-fold
· No undue risk to railroad or state
· Consistent with corporate priority
· Materials costs escalating annually
· Growing passenger train demand required nothing less
· Desire to get pre-pipeline work done ASAP
· No impact to previous capital plan
Mr. Gamble stated that after a five-year effort to secure
Federal Transit Administration (FTA) Formula Funds on an annual
basis, ARRC is now entitled to receive a predictable level of
funds from year to year. The level is based on a formula relying
on such things as "passenger miles and the number of total miles
on the railroad". The formula is also subject to an approximate
two percent growth rate each year. The FTA funding has provided
ARRC a "new tool in the tool kit"; this funding source could be
used "to pay off the debt service".
Mr. Gamble stated that two other positive events occurred three
years prior: the ARRC match required for federal funds was
reduced from 20 percent to nine percent and the federal Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A
Legacy for Users (SAFETEA-LU) "formula for attributable miles to
the Alaska Railroad has increased from ten percent attributable
miles to 60 percent attributable miles". This meant that the FTA
formula dollars increased from approximately five million
dollars a year to approximately $30,000,000 a year. Therefore,
were the ARRC able to provide its "low" nine percent match, ARRC
could depend on receiving total funds ranging between
$30,000,000 to $36,000,000 into the future. These events
provided ARRC the opportunity to consider a bonding proposal
similar to the one presented in this bill.
Mr. Gamble declared that this proposal is consistent with ARRC's
priorities. It would also provide ARRC the ability to improve
materials management; particularly as ARRC could make bulk steel
purchases and store the steel in order to avoid continuing price
increases. Furthermore, the increasing passenger train traffic
would benefit from safer tracks.
Mr. Gamble also noted that this proposal would allow pre-
pipeline work to be conducted in anticipation of the
construction of the State gas pipeline. Railroad tracks and
bridges must be ready to handle the load capacities that would
be required.
10:08:20 AM
Mr. Gamble stated that these improvements would provide the
Railroad the "ability to flow" the demands of the pipeline into
"our current customer load without cutting other customers off."
Mr. Gamble reiterated that the bond proposal would not impact
the Railroad's capital program.
Page 9
Proposed Financing
· $165 million authorization requested
· Currently planning three bond sales over next six
years
- Maximum annual debt service: $19.1 million or 49%
of available FTA/match for year
· ARRC Board approval required for each project and bond
sale
Mr. Gamble reviewed the proposed financing plans.
Mr. Gamble noted that the "Debt Service as a Percent of Formula
Funds/Match" graph on page 10 depicts the program's debt service
percentages from the year 2007 through 2024. The maximum level
of 49 percent would be anticipated in the year 2014, with the
debt dramatically decreasing toward zero from the year 2017 to
2024.
Mr. Gamble reminded the Committee that this debt service is
"just one element" of the Railroad's debt. Some other smaller
Railroad "borrowings" would also be retiring at that time. The
Railroad's "debt position" would remain "very healthy during
this whole process".
Mr. Gamble concluded his presentation. He could provide
additional financial details or review the remaining information
in the handout if so desired by the Committee. The remaining
information in the handout would provide "additional detail
about some of the methodology and considerations that have gone
into this proposal".
10:10:43 AM
Senator Dyson, being "visually oriented", appreciated the charts
and maps provided. Continuing, he asked the location of Wish
Bone Hill, as that is the prospective site of a new coal plant.
Mr. Gamble replied that Wish Bone Hill is located in the
vicinity of Palmer, which is not on the Railroad's mainline.
Senator Dyson observed that each of the maps from the year 2007
to 2015, depict two views of the Railroad's mainline. The view
on the left of the page depicts the projects occurring that
specific year and the view on the right depicts "the cumulative
status of the track" to date.
Mr. Gamble affirmed. He apologized for not fully explaining the
maps earlier.
Senator Dyson, referencing the map for the year 2015, asked for
clarification as to whether the track at Hurricane, milepost
281.4, was CWT on wooden ties.
Mr. Gamble stated that was correct.
Senator Dyson understood that concrete ties usage would be
limited to the areas highlighted in yellow with orange borders,
as specified in the map's legend.
Mr. Gamble acknowledged that due to the small map scale, it is
difficult to show much detail about individual projects.
Concrete ties would be utilized at any point of the track
containing a curve over six degrees. For example, he pointed out
that, as highlighted by the yellow and orange coloring on the
map, concrete ties would be used on a curve near Broad Pass.
Senator Dyson ascertained therefore, that concrete ties would
also be used between Potter, milepost 100.6, and Bird, milepost
81.7.
Mr. Gamble affirmed. There is a lot "of curvature" in that area.
Senator Dyson ascertained that the narrow red line depicted on
the map would indicate areas with regular un-welded line on wood
ties.
Mr. Gamble affirmed. For example, the line near Eielson Air
Force Base near Fairbanks, milepost G24, is reflected as a
narrow red line because that line "carries far far less tonnage
than the main line". That segment was constructed after the main
line and would not require upgrading. He reiterated that the
view on the right side of the map reflects the cumulative
project status and the view on the left side is that year's work
plan.
Senator Dyson deemed the maps "very helpful".
Senator Olson, noting that 80,000 joints would be upgraded,
questioned the total number of joints on the track.
10:14:57 AM
Mr. Gamble stated that this information would be provided. A
simple calculation involving the length of the track would be
required.
Senator Olson understood that rails were made with joints to
accommodate expansion and contraction. Further information as to
how CWR would accommodate these occurrences is desired.
Mr. Gamble likened this to the question about "which came first
… the chicken or the egg?" for there is disagreement as to
whether train track joints were the result of rail length
capabilities or temperature related characteristics. The rail
length used today has been constant since the 1860s.
Mr. Gamble explained that specifically trained personnel must
conduct the CWR forced weld under exact circumstances. Expansion
and contraction can be accommodated with a CWR; however extreme
"vigilance" of the track for signs of wiggling or buckling must
occur. The experience is that the CWR "could handle" the State's
temperature conditions. A few instances have occurred during
times of "extremely hot weather for several days" in which rails
have experienced "heat soak" and have expanded and attempted to
wiggle. However, the rail ties have securely held the rails in
place. Such experiences are minor in comparison to the
maintenance cost savings that the CWR provide. In summary, he
concluded that "there is a science" to the CWRs and the process
must be done correctly.
Senator Dyson inquired to the number of track miles on the
Railroad.
Mr. Gamble advised that the Railroad's mainline is approximately
500 miles long.
Senator Dyson asked the length of a traditional rail segment.
Mr. Gamble noted that the CWR rail could be welded into a
continuous segment of "up to half a mile". That piece could be
loaded onto a work train and "fed" onto the track from the
train. A regular piece of rail is 80-feet in length.
10:18:58 AM
Senator Bunde asked for confirmation that these bonds would be
used to maintain existing track rather than to expand the line.
Mr. Gamble affirmed.
Co-Chair Green noted that Members' packets contain a letter,
dated March 14, 2006 from Tom Boutin, Deputy Commissioner,
Department of Revenue to Bill O'Leary, Vice President Finance
and Chief Financial Officer, Alaska Railroad Corporation [copy
on file] that addresses the debt liability that would be assumed
by the ARRC with the issuance of these bonds.
Senator Bunde stated that his concern was in regards "to an on-
going systemic problem", as, since "the Railroad is an
instrument of the State when Railroad earnings are used to pay
this, or if there should be a problem, it's really State money
its just not general fund money."
Based on two rails, a total mainline length of 500 miles, and
rail lengths of 80 feet, Senator Dyson calculated there to be
66,000 joints on the mainline of the Railroad.
Senator Stedman moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, SB 308 was REPORTED from Committee
with previous zero fiscal note #1 from the Department of
Commerce, Community and Economic Development.
ADJOURNMENT
Co-Chair Lyda Green adjourned the meeting at 10:20:40 AM.
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