Legislature(2005 - 2006)SENATE FINANCE 532

04/25/2006 09:00 AM Senate FINANCE


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09:08:17 AM Start
09:09:06 AM SB231
10:03:40 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 231 BUDGET: CAPITAL & OTHER APPROPRIATIONS TELECONFERENCED
Heard & Held
+ Agency Testimony: TELECONFERENCED
Corrections
Education
Labor
Commerce
Environmental Conservation
Natural Resources
Transportation & Public Facilities
+ Bills Previously Heard/Scheduled TELECONFERENCED
                            MINUTES                                                                                           
                    SENATE FINANCE COMMITTEE                                                                                  
                         April 25, 2006                                                                                       
                           9:08 a.m.                                                                                          
                                                                                                                                
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair  Lyda  Green  convened   the  meeting  at  approximately                                                               
9:08:17 AM.                                                                                                                   
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice-Chair                                                                                                   
Senator Bert Stedman                                                                                                            
Senator Fred Dyson                                                                                                              
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
Also Attending: GREG O'CLARAY,  Commissioner, Department of Labor                                                             
and Workforce Development; BILL  NOY, Commissioner, Department of                                                               
Commerce, Community  and Economic  Development; NICO  BUS, Acting                                                               
Director,  Division of  Support Services,  Department of  Natural                                                               
Resources;  PAM VARNEY,  Executive Director,  Legislative Affairs                                                               
Agency, MIKE  BARTON, Commissioner, Department  of Transportation                                                               
and Public Facilities                                                                                                           
                                                                                                                                
Attending  via  Teleconference:   There  were  no  teleconference                                                             
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 231-BUDGET: CAPITAL & OTHER APPROPRIATIONS                                                                                   
                                                                                                                                
The Committee introduced a new  committee substitute and heard FY                                                               
2007 capital  budget testimony from  the Department of  Labor and                                                               
Workforce Development, the Department  of Commerce, Community and                                                               
Economic Development,  the Department  of Natural  Resources, the                                                               
Legislative Affairs  Agency and the Department  of Transportation                                                               
and Public Facilities. The bill was held in Committee.                                                                          
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 231                                                                                                        
     "An   Act    making   appropriations,    including   capital                                                               
     appropriations and appropriations to capitalize funds; and                                                                 
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This was  the third hearing for  this bill in the  Senate Finance                                                               
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Green  communicated that the purpose  of today's hearing                                                               
would  be   to  allow  departments  to   address  their  concerns                                                               
regarding the proposed FY 2007 (FY 07) capital budget.                                                                          
                                                                                                                                
Department of Labor and Workforce Development                                                                                 
                                                                                                                                
9:09:06 AM                                                                                                                    
                                                                                                                                
GREG O'CLARAY,  Commissioner, Department  of Labor  and Workforce                                                               
Development  stated  that  the three  Department  capital  budget                                                               
projects included  in Finance  committee substitute,  Version 24-                                                               
GS2034\F, are located on page 14  line 24 through page 15 line 4.                                                               
Continuing, however, he pointed  out that three "equally critical                                                               
projects" pertaining to the main  campus of the Alaska Vocational                                                               
Technical Education Center (AVTEC)  in Seward were "missing" from                                                               
the bill.  The projects had  been included in the  capital budget                                                               
bill proposed by Governor Frank Murkowski.                                                                                      
                                                                                                                                
Commissioner  O'Claray  identified  AVTEC  as  a  State  operated                                                               
vocational  training center.  The department  refers to  AVTEC as                                                               
Alaska's  "diamond  in  the  rough  with  respect  to  vocational                                                               
training". AVTEC's  "small dedicated staff"  trains approximately                                                               
1,500 Alaskans  each year  to be  welders, able  seamen, facility                                                               
maintenance  workers, diesel  and heavy  equipment operators,  or                                                               
licensed practical  nurses. The  Seward campus also  "operates an                                                               
allied    health   training    program    out   of    Anchorage".                                                               
"Unfortunately",   the  Seward   AVTEC  campus   is  experiencing                                                               
significant maintenance  and replacement issues,  particularly in                                                               
regard to  twelve facilities that  range from  25 to 55  years of                                                               
age.                                                                                                                            
                                                                                                                                
Commissioner  O'Claray   clarified  that  the   $2,500,000  AVTEC                                                               
facilities allocation depicted on page  14 line 26 of Version "F"                                                               
would address  deferred maintenance  needs of  several buildings,                                                               
but would  not address the  entirety of  the needs detailed  on a                                                               
list   [copy  not   provided]  previously   distributed  by   the                                                               
Department.                                                                                                                     
                                                                                                                                
Commissioner O'Claray  noted that  expanding the bill  to include                                                               
the three AVTEC projects "would  enable AVTEC to complete one new                                                               
distance training  facility, completely retrofit  AVTEC's 30-plus                                                               
year old  dormitory, replace  a dilapidated  maintenance building                                                               
and  begin the  design  of a  new  applied technology  facility."                                                               
These  projects  are  critical   "in  maintaining  and  improving                                                               
vocational training" for the citizens of the State.                                                                             
                                                                                                                                
Commissioner  O'Claray detailed  the three  projects. A  $423,000                                                               
general  fund  match  would  be requested  to  complete  the  new                                                               
distance  training  facility,  also  referred  to  as  the  video                                                               
conferencing project.  "The United States Department  of Commerce                                                               
Economic Development Administration awarded  a two million dollar                                                               
grant  to  AVTEC for  the  construction  of a  technology  center                                                               
building for  statewide distance training in  Seward." While this                                                               
award required  a match  of $623,000,  AVTEC has  "identified in-                                                               
kind  matches of  $200,000 from  private  corporations". A  State                                                               
allocation of $423,000 would allow  construction to begin in July                                                               
2006, with a completion date of January 2007.                                                                                   
                                                                                                                                
Commissioner O'Claray  recognized AVTEC as the  State leader "for                                                               
delivering vocational education  through distance delivery". More                                                               
than 240  Alaskans in  both urban and  rural areas  would benefit                                                               
from distance learning  in FY 2006. Absent  the distance delivery                                                               
ability,  transportation and  other expenses  would prohibit  the                                                               
training  of  these  individuals.   Students  who  complete  such                                                               
training  would qualify  for  higher paying  jobs  and have  more                                                               
career  opportunities. The  number of  students enrolled  in this                                                               
program could double with the completion of the facility.                                                                       
                                                                                                                                
9:13:26 AM                                                                                                                    
                                                                                                                                
Commissioner  O'Claray   identified  the  second   AVTEC  project                                                               
missing  from the  committee substitute  as a  $2,500,000 general                                                               
fund  request   to  renovate  the  Seward   campus'  100  student                                                               
dormitory. He  displayed photos  [copies not  provided] depicting                                                               
the state  of the dormitory,  which was constructed in  the 1970s                                                               
with  "cheap building  materials".  The dormitory  rooms are  not                                                               
quiet or conducive  to studying but are instead  noisy and drafty                                                               
with exposed  pipes. The building  is in  need of such  things as                                                               
safety   and  security   upgrades,  insulation   and  ventilation                                                               
improvements,  roof and  window  repairs,  and energy  efficiency                                                               
upgrades.                                                                                                                       
                                                                                                                                
Commissioner O'Claray stated a  "through and comprehensive review                                                               
of  AVTEC  facilities" was  conducted  in  2001, and  independent                                                               
engineers  concluded  that  three   AVTEC  facilities  should  be                                                               
replaced  due  to foundation  and  structural  issues. Thus,  the                                                               
Governor's  bill  had also  included  a  $2,000,000 general  fund                                                               
request   to  replace   AVTEC's  uninsulated   metal  maintenance                                                               
building,   which  was   the   first   facility  identified   for                                                               
replacement. A  picture of  the facility  was displayed.  The new                                                               
"basic"  maintenance facility  would be  energy efficient,  would                                                               
provide more  usable space, would  meet current  maintenance shop                                                               
safety standards,  and would  reduce AVTEC's  liability exposure.                                                               
Any funds  remaining after the  completion of that  project would                                                               
be  applied  to  design  and site  preparation  for  the  Applied                                                               
Technology Shop, the second facility identified for replacement.                                                                
                                                                                                                                
Commissioner O'Claray  informed the  Committee that  "a technical                                                               
correction"  would  also  be required  to  address  the  $166,700                                                               
general  fund "cost  of negotiated  salary and  benefit increases                                                               
negotiated with  AVTEC's teachers", which was  "effective July 1,                                                               
2005, subject to this appropriation".                                                                                           
                                                                                                                                
9:17:10 AM                                                                                                                    
                                                                                                                                
Co-Chair  Green interrupted  in order  to allow  for a  motion to                                                               
adopt the committee substitute.                                                                                                 
                                                                                                                                
Co-Chair Wilken  moved to adopt committee  substitute Version 24-                                                               
GS2034\F as the working document.                                                                                               
                                                                                                                                
Co-Chair Green objected for explanation.                                                                                        
                                                                                                                                
9:17:42 AM                                                                                                                    
                                                                                                                                
Commissioner O'Claray informed the  Committee that the Department                                                               
of  Commerce,  Community  and  Economic  Development  (DCED)  had                                                               
included  in its  FY 07  capital  budget a  three million  dollar                                                               
general  fund  request  "to  begin  construction  of  a  pipeline                                                               
training  facility located  in Fairbanks".  The schematic  of the                                                               
proposed $6,200,000  facility was displayed [copy  not provided].                                                               
In 2005, the  federal Department of Labor authorized  up to three                                                               
million dollars toward this facility  as part of program to train                                                               
workers for  the construction  of the  gas pipeline  project. The                                                               
federal  funds "would  not be  released to  the State"  until the                                                               
Governor notified the Secretary of  Energy that the project would                                                               
commence in two years time. It  is "critical to our success" that                                                               
workers  be   trained  and  available   when  the   gas  pipeline                                                               
construction begins.                                                                                                            
                                                                                                                                
Commissioner O'Claray noted that, during  the past two years, 170                                                               
Alaskans,  including women  and  rural  residents, have  received                                                               
such  training  at a  leased  facility.  All have  received  high                                                               
paying North  Slope jobs. The  Department of Labor  and Workforce                                                               
Development has  committed $100,000  toward the  facility design.                                                               
The  three million  dollar  DCED request  would  allow the  first                                                               
phase of the two-phase project  to get underway. This phase would                                                               
include  the  construction  of  a  20,000  square  foot  training                                                               
facility  in  Fairbanks.  The  second  phase  would  include  the                                                               
construction  of   a  30  student  coed   dormitory.  Maintenance                                                               
expenses of the  completed facility would be  funded by "industry                                                               
donations,  fees  assessed   of  trade  apprenticeship  programs,                                                               
employers, users fees, and training contracts".                                                                                 
                                                                                                                                
9:21:01 AM                                                                                                                    
                                                                                                                                
Commissioner  O'Claray  announced   that  the  training  facility                                                               
"would  create approximately  200 full  time jobs  and up  to 400                                                               
jobs"  when operating  at peak  pipeline  training. The  facility                                                               
would  also  train approximately  1,100  new  workers to  replace                                                               
"retiring journeymen in  the various trades" on  the North Slope.                                                               
This  facility would  assist the  Department's  goal "to  capture                                                               
more of those jobs" for residents of Alaska.                                                                                    
                                                                                                                                
9:21:45 AM                                                                                                                    
                                                                                                                                
Co-Chair  Green  asked  whether the  employees  of  the  training                                                               
center would be State, contract, or independent employees.                                                                      
                                                                                                                                
9:22:02 AM                                                                                                                    
                                                                                                                                
Commissioner  O'Claray  responded  contract employees  funded  by                                                               
training grants and joint  industry and contractor apprenticeship                                                               
programs would staff  the facility. State funds  would be limited                                                               
to supporting the training programs.                                                                                            
                                                                                                                                
9:22:25 AM                                                                                                                    
                                                                                                                                
Department of Commerce, Community and Economic Development                                                                    
                                                                                                                                
9:22:55 AM                                                                                                                    
                                                                                                                                
BILL NOLL, Commissioner, Department of Commerce, Community and                                                                  
Economic  Development thanked  the  Committee  for including  the                                                               
entirety of  the Department's  FY 07  capital budget  requests in                                                               
the committee substitute. The majority  of capital funds provided                                                               
to the Department  are from sources other than  the general fund.                                                               
The  few  projects  being  funded by  the  general  fund  include                                                               
$70,000 for  community block grants and  approximately $1,200,000                                                               
for energy programs. The energy  program general fund money would                                                               
be  leveraged to  receive an  additional $13  million in  federal                                                               
funds.                                                                                                                          
                                                                                                                                
Commissioner Noll  noted the Kodiak Launch  Complex funding would                                                               
consist  entirely  of  federal funds.  Other  projects  would  be                                                               
receipt supported.                                                                                                              
                                                                                                                                
Commissioner  Noll  stated that  he  and  other Department  staff                                                               
would  be available  to  answer any  questions  that might  arise                                                               
during the budgeting process.                                                                                                   
                                                                                                                                
Commissioner  Noll   pointed  out   that  numerous   other  State                                                               
department capital projects are  funded through the Department of                                                               
Labor  and  Workforce  Development  budget. He  could  provide  a                                                               
complete list  of those projects,  however, he could  not comment                                                               
on behalf  of the  affected department. Many  of the  projects on                                                               
the list are  extremely important to the local  community and are                                                               
very  worthy.  The  Office  of   Management  and  Budget  or  the                                                               
project's  sponsoring  department  should address  projects  that                                                               
were either partially funded or zeroed out.                                                                                     
                                                                                                                                
Department of Natural Resources                                                                                               
                                                                                                                                
9:25:41 AM                                                                                                                    
                                                                                                                                
NICO  BUS,   Acting  Director,  Division  of   Support  Services,                                                               
Department  of  Natural  Resources   directed  attention  to  the                                                               
Department's  $150,000   Interior  Alaska  Timber   general  fund                                                               
appropriation specified  on page 17  line 25 of Version  "F". The                                                               
Department's  original  $500,000  request   was  pared  down  and                                                               
included at $250,000 in the  Governor's capital budget bill. That                                                               
would be the  minimum amount necessary to complete  a public land                                                               
timber   inventory  study   to  support   hardwood  milling   and                                                               
manufacturing  facilities  in  the Interior  which  must  provide                                                               
proof  of  adequate  material  supplies  when  seeking  financial                                                               
institution funding.  The most recent  study was  conducted prior                                                               
to the early 1990s. Recent  forest fires and land acquisitions in                                                               
the area force the need for  a more recent inventory study. Thus,                                                               
the  Department   would  urge  the  Committee   to  increase  the                                                               
allocation to $250,000.                                                                                                         
                                                                                                                                
9:28:01 AM                                                                                                                    
                                                                                                                                
Mr.  Bus also  requested  the Committee  to  include $625,300  to                                                               
address the  Juneau Subport Building asbestos  abatement project.                                                               
The  Governor's Office  requested the  inclusion of  this project                                                               
via an  amendment submitted on April  20, 2006. As a  result of a                                                               
1994  State  settlement  with  the  Alaska  Mental  Health  Trust                                                               
Authority, the land  on which the Subport and  the National Guard                                                               
Armory  sit  were  transferred from  the  Department  of  Natural                                                               
Resources to the Trust. The  State's Subport lease with the Trust                                                               
would expire  in June 2006.  The leases required an  asbestos and                                                               
lead  survey  to be  conducted.  The  report was  completed  this                                                               
winter,  and  the  "remedy" would  cost  approximately  $523,000.                                                               
Associated management expense would  cost an additional $100,000.                                                               
The  Department's goal  would be  to begin  the abatement  effort                                                               
once the facility is vacated in  June. This would allow the Trust                                                               
to coordinate  with the City  and Borough of  Juneau's long-range                                                               
waterfront plan rather than delaying that effort for a year.                                                                    
                                                                                                                                
In response to  a question from Co-Chair Green,  Mr. Bus verified                                                               
the amount required for the abatement to be $625,300.                                                                           
                                                                                                                                
AT EASE 9:29:49 AM / 9:29:59 AM                                                                                             
                                                                                                                                
Co-Chair Green acknowledged the  receipt of the abatement project                                                               
amendment. It had  been received after the  Version "F" committee                                                               
substitute had been developed.                                                                                                  
                                                                                                                                
Mr. Bus apologized  for the late submittal of  the request. There                                                               
had  been  some  confusion  as   to  which  department  would  be                                                               
responsible for the effort.                                                                                                     
                                                                                                                                
Senator Hoffman  asked regarding  the $200,000  appropriation for                                                               
snowmachine trails, as specified on page 19 line 6.                                                                             
                                                                                                                                
9:30:33 AM                                                                                                                    
                                                                                                                                
Mr.  Bus   identified  the  snowmachine   trail  program   as  an                                                               
application-based grant  program. Applications are reviewed  by a                                                               
statewide board  and scored on  such things as  the contributions                                                               
from  the organization  and its  volunteer work.  The awards  are                                                               
funded from snowmachine registration fees.                                                                                      
                                                                                                                                
Co-Chair Green affirmed this to be an established program.                                                                      
                                                                                                                                
Senator Olson  asked whether the  program would fund  such things                                                               
as the marking of trails.                                                                                                       
                                                                                                                                
Mr. Bus  affirmed it  would. Other  projects could  include trail                                                               
expansions and safety improvements.                                                                                             
                                                                                                                                
9:31:39 AM                                                                                                                    
                                                                                                                                
Legislative Affairs Agency                                                                                                    
                                                                                                                                
Co-Chair Green  described her staff  as being "enlightened"  by a                                                               
recent tour  of the  Capitol Building  projects requested  by the                                                               
Legislative Affairs Agency (LAA).                                                                                               
                                                                                                                                
PAM  VARNEY,  Executive  Director,  Legislative  Affairs  Agency,                                                               
noted   that  LAA   capital   improvement   requests  have   been                                                               
infrequent. However,  in January,  both elevators in  the Capitol                                                               
experienced  mechanical  failures.  An  elevator  consultant  was                                                               
hired and  a request for  bids has been  let for the  repair work                                                               
estimated to cost $600,000. The  work would entail such things as                                                               
new motors,  AC drives,  and new lifting  equipment. Work  on the                                                               
elevators,  which were  installed in  1960, has  been limited  to                                                               
upgrading  the fire  service controls  and the  interiors of  the                                                               
cabs.                                                                                                                           
                                                                                                                                
9:33:18 AM                                                                                                                    
                                                                                                                                
Ms.  Varni noted  LAA's second  request would  be to  re-roof the                                                               
Capitol  Complex, which  includes  the Capitol  Building and  the                                                               
Terry Miller Building. Ten years  has passed since any major work                                                               
has been done to the Capitol's  roof. Only a portion of the Terry                                                               
Miller  Building's  roof  was  upgraded  when  the  building  was                                                               
remodeled in 1999.                                                                                                              
                                                                                                                                
Co-Chair Green informed  the Committee that the  elevator and re-                                                               
roofing projects  are specified on  page 46, lines 28  through 33                                                               
of the Version "F" committee substitute.                                                                                        
                                                                                                                                
9:33:46 AM                                                                                                                    
                                                                                                                                
Ms. Varni displayed a binder  [copy not provided] depicting water                                                               
catch buckets  in the attic  space of the Capitol.  Numerous roof                                                               
leaks  are located  above Co-Chair  Green,  Co-Chair Wilken,  and                                                               
Representative Mike  Chenault's offices on  the top floor  of the                                                               
building. Similar  roof leaks are  occurring in the  Terry Miller                                                               
Building.                                                                                                                       
                                                                                                                                
Ms.  Varni identified  LAA's  third request  as  upgrades to  the                                                               
Capitol's exterior  walls. Significant exterior  maintenance work                                                               
last occurred  in 1993. Such  things as resealing  mortar joints,                                                               
cleaning and  sealing exterior walls,  recaulking, and  repair of                                                               
broken and deteriorated sandstone would be addressed.                                                                           
                                                                                                                                
Co-Chair Green  affirmed the roof  leak damage. She  likened some                                                               
of the maintenance  needs of the Capitol Complex to  those of the                                                               
Department of  Labor and Workforce Development's  AVTEC facility,                                                               
which was previously discussed.                                                                                                 
                                                                                                                                
Department of Transportation and Public Facilities                                                                            
                                                                                                                                
9:35:55 AM                                                                                                                    
                                                                                                                                
MIKE  BARTON,  Commissioner,  Department  of  Transportation  and                                                               
Public  Facilities expressed  appreciation for  the "investments"                                                               
the  Committee has  made to  the  State's transportation  system.                                                               
However,  support of  "a few  more"  projects is  sought for  the                                                               
transportation  system  which  contributes  to  economic  growth,                                                               
assists in lowering the cost  of goods, improves quality of life,                                                               
and reduces operating costs of the  State as well as the costs to                                                               
the traveler.                                                                                                                   
                                                                                                                                
Commissioner  Barton noted  that  the photo  [copy not  provided]                                                               
depicting  a  [unspecified]  building  in  the  Matanuska-Susitna                                                               
Valley  (Mat-Su) is  an example  of some  of the  capital project                                                               
needs on the Department's priority list.                                                                                        
                                                                                                                                
9:37:28 AM                                                                                                                    
                                                                                                                                
Commissioner Barton  referred the  Committee to  the Department's                                                               
Juneau Access  project depicted  on page 45,  line 15  of Version                                                               
"F". The  Governor included $45  million for this project  in his                                                               
capital  budget; however,  the Version  "F" committee  substitute                                                               
appropriation only specified $25  million. He urged the Committee                                                               
to  restore the  funding level  to  $45 million,  as $25  million                                                               
would restrict  the project to  a point "halfway  across Berners'                                                               
Bay". This would not be "a logical completion point".                                                                           
                                                                                                                                
Commissioner  Barton explained  that  the  Juneau Access  Project                                                               
would  provide  Alaskans road  access  to  the capital  city  and                                                               
improve  the  State's  connectivity  with  the  continental  road                                                               
system.  Currently  one must  use  Alaska  Marine Highway  System                                                               
(AMHS) ferries  to travel  to Juneau;  however, the  System "does                                                               
not  have the  capacity  to meet"  future  demand projections  of                                                               
approximately  500 vehicles  per day.  The Juneau  Access Project                                                               
would reduce the State's current  transportation expenses on this                                                               
route by  two-thirds. Traveler costs  would be  one-fifth current                                                               
costs and travel on the route would be more convenient.                                                                         
                                                                                                                                
9:38:44 AM                                                                                                                    
                                                                                                                                
Co-Chair Green  asked for further  details about the  $45 million                                                               
request; specifically the benefits it  would generate in terms of                                                               
federal funds.                                                                                                                  
                                                                                                                                
Commissioner  Barton clarified  that  the $45  million would  not                                                               
generate  any  federal  match  funds.  However,  $15  million  in                                                               
federal  money was  earmarked  for this  project  in the  federal                                                               
Highway  Reauthorization  bill.  The  State match  for  that  $15                                                               
million is  "contained" in this  request. The completion  of this                                                               
road would result in cost  savings, as it would "eliminate 26,000                                                               
hours  a  year from  ferry  service".  The  first phase  of  this                                                               
project would allow ferry service  to commence from Slate Cove to                                                               
Haines and Skagway. The right  of way would transit federal land.                                                               
This  project, which  is  "ready  to go",  would  be the  State's                                                               
"first major highway system expansion" in 30 years.                                                                             
                                                                                                                                
9:40:05 AM                                                                                                                    
                                                                                                                                
Senator Stedman understood  that, in addition to  the request for                                                               
$45  million in  general funds,  federal SHAKWAK  money might  be                                                               
available. Thus,  he inquired  to the reason  for such  a "heavy"                                                               
demand for general funds.                                                                                                       
                                                                                                                                
9:40:35 AM                                                                                                                    
                                                                                                                                
Commissioner Barton  responded that approximately $27  million in                                                               
SHAKWAK  funds would  be available  in a  few years.  The State's                                                               
original  effort was  to  have  this project  included  as a  $60                                                               
million  earmark in  the  federal  Highway Reauthorization  bill;                                                               
however that effort  failed. The recourse was  to request general                                                               
funds.                                                                                                                          
                                                                                                                                
Senator Stedman asked whether that  was the "normal" procedure to                                                               
follow when building roads.                                                                                                     
                                                                                                                                
9:41:18 AM                                                                                                                    
                                                                                                                                
Commissioner  Barton replied  that  the State  would endeavor  to                                                               
build a road "however we can  build them"; this could include the                                                               
use of State funds, federal funds, private funds, or donations.                                                                 
                                                                                                                                
Senator  Stedman,  noting  that  the  $20  million  federal  fund                                                               
earmark for  the Gravina Island  Bridge project in  Ketchikan had                                                               
been  removed, asked  whether  a general  fund  request for  that                                                               
project would be addressed in this discussion.                                                                                  
                                                                                                                                
Commissioner  Barton  stated he  had  not  "intended to"  address                                                               
bridge  projects since  "they're  on the  federal  side" and  the                                                               
committee substitute had not made  any changes in that regard. He                                                               
was unsure "where the $20 million went".                                                                                        
                                                                                                                                
Senator  Hoffman  noted  that,  even  though  the  Juneau  Access                                                               
project was  not located in  his district, his  constituents have                                                               
lobbied  against using  these  funds to  support  the road.  They                                                               
argue the  "funds would be  better spent on improving"  the AMHS.                                                               
Thus,  he  asked the  support  of  the  road project  verses  the                                                               
support for improved ferry service to Juneau.                                                                                   
                                                                                                                                
9:42:40 AM                                                                                                                    
                                                                                                                                
Commissioner Barton  responded, "There is  a mix of  opinions out                                                               
there on this  project". Some support it and some  oppose it. The                                                               
road link  up Lynn  Canal would  be "a  better investment  of the                                                               
State's  money". The  long-term  goal  of the  AMHS  would be  to                                                               
develop  short roads  connecting to  shuttle ferries.  This would                                                               
improve  service and  "significantly  reduce"  AMHS general  fund                                                               
demands, as  less of the  larger mainline vessels and  crew hours                                                               
would be required.                                                                                                              
                                                                                                                                
9:43:30 AM                                                                                                                    
                                                                                                                                
Senator Hoffman  understood therefore that by  supporting the $45                                                               
million road, "we're also supporting  the shuttle system" for the                                                               
AMHS.                                                                                                                           
                                                                                                                                
Commissioner  Barton  identified the  road  as  being "the  first                                                               
phase" toward the goal of implementing a shuttle system.                                                                        
                                                                                                                                
9:43:56 AM                                                                                                                    
                                                                                                                                
Senator  Stedman asked  the extent  of the  work the  $25 million                                                               
would support. Continuing, he asked  the total amount required to                                                               
conclude the project.                                                                                                           
                                                                                                                                
9:44:20 AM                                                                                                                    
                                                                                                                                
Commissioner Barton  specified $45 million as  the minimum amount                                                               
required to award  the contract for phase one,  which would "push                                                               
the road north" of the Kensington Mine site.                                                                                    
                                                                                                                                
9:44:38 AM                                                                                                                    
                                                                                                                                
Senator Stedman  understood therefore that a  $25 million general                                                               
fund appropriation  would result in  delaying the project  a year                                                               
while the Department sought the additional $20 million.                                                                         
                                                                                                                                
Commissioner  Barton affirmed  $45 million  would be  required to                                                               
complete  the first  phase of  the  project. At  that point,  the                                                               
expectation is  that federal funds would  become available. Those                                                               
funds would be  used to complete the road to  the Katzehin River.                                                               
The forthcoming federal funds would require a State match.                                                                      
                                                                                                                                
Senator  Stedman  asked  whether the  federal  match  requirement                                                               
would  be a  90  percent  federal and  10  percent State  (90/10)                                                               
match.                                                                                                                          
                                                                                                                                
Commissioner  Barton clarified  that  some of  the federal  money                                                               
would be  matchless; some would  require either a 90/10  or 80/20                                                               
match. Bridge funding is a 80/20 match obligation.                                                                              
                                                                                                                                
9:45:35 AM                                                                                                                    
                                                                                                                                
Senator Stedman noted  that with the exception  of some financing                                                               
issues,  the   Gravina  Island  Bridge   project  "is   ready  to                                                               
construct". To  that point, he  asked the level of  general funds                                                               
that  would be  required to  provide  for the  approaches to  the                                                               
bridge,  as the  approaches must  be  provided for  prior to  any                                                               
actual bridge construction begins.                                                                                              
                                                                                                                                
9:46:36 AM                                                                                                                    
                                                                                                                                
Commissioner Barton responded the information would be provided.                                                                
                                                                                                                                
Senator Stedman concluded  his remarks by speaking  in support of                                                               
building the Gravina Island Bridge.                                                                                             
                                                                                                                                
Commissioner Barton  stated that the  next area of  concern would                                                               
be  the  funding request  for  the  second  phase of  the  Alaska                                                               
Railroad  extension study.  The first  phase, which  is underway,                                                               
involved a feasibility study regarding  extending the Railroad to                                                               
connect  with  the  continental  rail  system.  Phase  two  would                                                               
involve pre-construction  activities and an  Environmental Impact                                                               
Study (EIS).  While the Governor  included $50 million  for phase                                                               
two in  his capital budget, it  was not included in  Version "F".                                                               
Due  to the  fact that  this project  is a  joint effort  between                                                               
Alaska  and  Canada, the  State  has  requested both  Canada  and                                                               
United  States   Congress  to  match  the   State's  $50  million                                                               
appropriation.  The feasibility  study,  which  was addressed  in                                                               
phase one of the project, would  be completed in July. Were it to                                                               
conclude  that the  project  was not  feasible,  the $50  million                                                               
would  not be  utilized. However,  at  this point,  the money  is                                                               
being requested to continue the project's "momentum".                                                                           
                                                                                                                                
Commissioner Barton credited the  effort behind the joint project                                                               
to Governor Frank  Murkowski and Premier Dennis  Fentie of Yukon,                                                               
Canada, who signed a memorandum furthering the endeavor.                                                                        
                                                                                                                                
9:48:40 AM                                                                                                                    
                                                                                                                                
Commissioner  Barton  stated the  plan  would  be to  extend  the                                                               
railroad to either  Fort Nelson or Dease Lake in  the Yukon. This                                                               
extension would  benefit the  proposed gas  pipeline construction                                                               
and  would  "bolster  Alaska's  case  for  the  gas  liquids  and                                                               
petrochemical  facilities" in  the  State. It  could also  lessen                                                               
pressure on west coast ports  "in terms of containerized freight"                                                               
to the State.                                                                                                                   
                                                                                                                                
In  response to  a  question from  Senator Stedman,  Commissioner                                                               
Barton  affirmed the  committee  substitute did  not include  the                                                               
funding.                                                                                                                        
                                                                                                                                
9:49:48 AM                                                                                                                    
                                                                                                                                
Commissioner Barton spoke to the  Parks Highway project specified                                                               
on page  45, line  29 of  the bill.  This six-year  program would                                                               
eliminate  weight restrictions  on the  Parks Highway.  While the                                                               
Governor  had allocated  $10,500,000, only  half that  amount was                                                               
included in Version "F".                                                                                                        
                                                                                                                                
Co-Chair  Green voiced  the  understanding  that the  $10,500,000                                                               
amount would be allocated over a two-year period.                                                                               
                                                                                                                                
9:50:26 AM                                                                                                                    
                                                                                                                                
Commissioner Barton  stated no, $10,500,000 must  be allocated in                                                               
this budget to maintain the six-year project timeline.                                                                          
                                                                                                                                
Co-Chair Green  understood therefore  that the full  amount would                                                               
be required to keep the project on schedule.                                                                                    
                                                                                                                                
Commissioner Barton affirmed.                                                                                                   
                                                                                                                                
Co-Chair  Green  disclosed that  during  the  development of  the                                                               
capital budget,  partial funding  of several  multi-year projects                                                               
had been deemed acceptable.                                                                                                     
                                                                                                                                
Commissioner  Barton did  not support  that funding  approach for                                                               
Department projects.                                                                                                            
                                                                                                                                
9:51:05 AM                                                                                                                    
                                                                                                                                
Commissioner  Barton noted  that truckers  who transit  the Parks                                                               
Highway   are  very   enthusiastic   about   this  project.   The                                                               
improvements would provide many  benefits including reduced costs                                                               
of goods.                                                                                                                       
                                                                                                                                
9:51:24 AM                                                                                                                    
                                                                                                                                
Commissioner  Barton brought  to  the  Committee's attention  the                                                               
omission  of  funding  for  Stampede Road  in  Version  "F".  The                                                               
Governor  included nine  million dollars  in his  budget proposal                                                               
for  this project.  The  Committee  approved funds  in  FY 06  to                                                               
extend  the  road  five  miles;  this  funding  would  allow  the                                                               
Department to  extend it another  14 miles. This  extension would                                                               
enhance access  to State land on  the north side of  Denali State                                                               
Park, would provide additional  tourism opportunities, and "could                                                               
be  the  precursor to  a  road  up  the  Upper Kuskokwim  and  to                                                               
McGrath".                                                                                                                       
                                                                                                                                
9:52:26 AM                                                                                                                    
                                                                                                                                
Commissioner  Barton also  noted that  a Juneau  channel-dredging                                                               
project  was omitted  from the  Senate budget.  The Governor  had                                                               
included seven  million dollars in  his bill. This  project would                                                               
benefit the area's commercial fishing fleet.                                                                                    
                                                                                                                                
9:52:37 AM                                                                                                                    
                                                                                                                                
Senator Hoffman referred to the  Commissioner's remarks about the                                                               
Stampede  Road  extension;  specifically   as  to  who  might  be                                                               
requesting road  access to  the Kuskokwim area  of the  State. He                                                               
was unaware of any discussion in that regard.                                                                                   
                                                                                                                                
Commissioner  Barton   clarified  his   remarks  to   be  forward                                                               
thinking. A road project in that  area might be considered in the                                                               
future.                                                                                                                         
                                                                                                                                
Senator Hoffman  communicated that, at  this time, he knew  of no                                                               
local support for road access to the Kuskokwim area.                                                                            
                                                                                                                                
9:53:32 AM                                                                                                                    
                                                                                                                                
Commissioner  Barton continued  his  remarks  about the  dredging                                                               
project proposed  for the Gastineau  Channel in  Juneau. Dredging                                                               
is  also  being considered  for  Dry  Straits near  Wrangell  and                                                               
Petersburg.  The   endeavor  would   shorten  transit   time  for                                                               
commercial  fishing  vessels  and reduce  fuel  consumption.  The                                                               
routes would also  be safer to travel. Dredging  of the Gastineau                                                               
Channel most recently occurred in the late 1960s.                                                                               
                                                                                                                                
Senator Stedman noted that, due  to a geological occurrence known                                                               
as  tectonic  plate  uplifting, the  area  of  Gastineau  Channel                                                               
slated for dredging  is dryer than the area  being considered for                                                               
dredging  in Dry  Straits. As  a result,  the Gastineau  dredging                                                               
project would be  more expensive and "more  challenging now" than                                                               
the  dredging  that  occurred  in  the  1960s.  An  [unspecified]                                                               
Internet site he recently visited  provided plate prediction lift                                                               
information in  addition to tide schedules  for Southeast Alaska.                                                               
Uplifting is more  prevalent in the northern  region of Southeast                                                               
Alaska than in the southern region.                                                                                             
                                                                                                                                
Senator  Stedman noted  that none  of  his constituents  familiar                                                               
with  the  Dry Strait  area  have  communicated support  for  the                                                               
dredging  project. Those  he has  talked with  disagree with  the                                                               
position that the project would  shorten transit time, as shorter                                                               
alternative routes  exist. In addition,  the cost of  keeping the                                                               
Stikine  River silt  flow at  bay would  be immense.  His remarks                                                               
were based on local knowledge  of the area rather than scientific                                                               
studies.                                                                                                                        
                                                                                                                                
Commissioner  Barton agreed  that the  Stikine River  is a  large                                                               
influence on the area. The project "would be challenging".                                                                      
                                                                                                                                
9:55:53 AM                                                                                                                    
                                                                                                                                
Commissioner  Barton  remarked  that  the  Senate  bill  did  not                                                               
include any  funding for Bradfield  Canal projects.  The Governor                                                               
included two million dollars in his  budget to support an EIS for                                                               
a project that would construct a  road up the Bradford Canal. The                                                               
project  would   also  include  construction  of   an  electrical                                                               
intertie  grid  system  following  that  road.  This  grid  would                                                               
connect with the Canadian electrical  grid system. The goal would                                                               
be to provide power southward into west coast states.                                                                           
                                                                                                                                
Commissioner  Barton  informed  the   Committee  that  a  private                                                               
developer  was  considering  constructing  a  hydropower  dam  in                                                               
Thomas  Bay,  north  of  Petersburg. This  would  allow  for  the                                                               
exportation of hydropower. "There is  a great deal of interest in                                                               
the Lower 48  for this power." Canadian  officials are supportive                                                               
of  the  endeavor, which  would  require  Canada to  upgrade  its                                                               
electrical  grid  system. He  urged  the  Committee to  fund  the                                                               
project,  which  "would be  the  catalyst"  for furthering  other                                                               
electric intertie projects being considered in Southeast Alaska.                                                                
                                                                                                                                
9:58:06 AM                                                                                                                    
                                                                                                                                
Senator  Stedman  noted that  Bradfield  Canal  is located  in  a                                                               
valley south of  the Stikine River drainage.  The construction of                                                               
a road there would provide  road access to Southeast Alaska. With                                                               
the  exception  of road  access  at  Haines  and Skagway  at  the                                                               
northern  end of  Lynn  Canal,  no other  road  access exists  to                                                               
Southeast  Alaska. Therefore,  in addition  to providing  a power                                                               
grid  route, the  Bradford  Canal Road  would  allow freight  and                                                               
people to move into Southeast Alaska.                                                                                           
                                                                                                                                
Senator Stedman  informed the Committee  that the  intertie would                                                               
transit  power from  the yet  to  be developed  Thomas Bay  Hydro                                                               
Authority. The Tyee  Lake Dam, which is  currently only utilizing                                                               
30  percent of  its  power capacity,  and a  future  dam at  West                                                               
Baranof, would  eventually be included  in the  intertie project.                                                               
More power  loads would be  required to further the  intertie, as                                                               
"you  can't build  a dam  until you  can sell  virtually all  the                                                               
power". Therefore, the sale of  power to the North American power                                                               
grid would be required. This  would further the effort to provide                                                               
hydropower to Southeast Alaska.                                                                                                 
                                                                                                                                
Therefore, "in the  spirit of compromise" he  urged the Committee                                                               
to reduce the  Juneau Access project funding  from $25,000,000 to                                                               
$23,000,000 and provide that $2,000,000  balance to the Bradfield                                                               
EIS study.  This action  "would drive both  projects at  the same                                                               
time".  Since  $25,000,000 "can't  build  a  road", reducing  the                                                               
amount to $23,000,000 would not do any further harm.                                                                            
                                                                                                                                
10:01:02 AM                                                                                                                   
                                                                                                                                
Commissioner  Barton advised  the Committee  of the  Department's                                                               
concern  regarding the  $4,000,000 Alaska  Marine Highway  System                                                               
Vessel  and Terminal  Overhaul and  Rehabilitation allocation  as                                                               
specified on  page 23, line  28. The Governor included  a request                                                               
of  $6,000,000  in  his  budget  bill.  While  this  project  has                                                               
historically received  $5,000,000, the  recent addition  of three                                                               
new vessels  prompted the increase.  This money is used  to ready                                                               
ferries for the  coast guard certification, which  allows them to                                                               
carry passengers.                                                                                                               
                                                                                                                                
10:01:48 AM                                                                                                                   
                                                                                                                                
Commissioner Barton  identified the  omission of funding  for the                                                               
McCarthy Road  rehabilitation project  as the  Department's final                                                               
request. The Governor's bill included  a request of $2,000,000 to                                                               
address  the  most  problematic  needs  of the  road.  "It  is  a                                                               
terrible mess." This road is an  access route to the Wrangell St.                                                               
Elias area  and "distributes  the visitor  load to  Denali" State                                                               
Park. Improvements  to it would  enhance the  visitor experience.                                                               
It would  also reduce Department  maintenance expenses.  He urged                                                               
the Committee to restore this funding.                                                                                          
                                                                                                                                
Commissioner Barton concluded his remarks.                                                                                      
                                                                                                                                
Co-Chair Green stated this would  conclude the department capital                                                               
budget  presentations scheduled  for  today's hearing.  Testimony                                                               
from  the  University  of  Alaska, the  Department  of  Law,  the                                                               
Department  of  Public Safety,  the  Department  of Revenue,  the                                                               
Department  of  Administration,  the  Alaska  Court  System,  the                                                               
Department of Fish and Game,  the Department of Health and Social                                                               
Services  and the  Department of  Military  and Veterans  Affairs                                                               
would be heard during the April 26, 2006 Committee hearing.                                                                     
                                                                                                                                
[NOTE:  No action  was taken  on  the motion  to adopt  committee                                                               
substitute, Version "F".]                                                                                                       
                                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Lyda Green adjourned the meeting at 10:03:40 AM.                                                                     
                                                                                                                                
                                                                                                                                

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