03/08/2011 01:00 PM Senate TRANSPORTATION
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| SB37 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 37 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
March 8, 2011
1:04 p.m.
MEMBERS PRESENT
Senator Albert Kookesh, Chair
Senator Joe Thomas, Vice Chair
Senator Dennis Egan
Senator Linda Menard
Senator Charlie Huggins
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 37
"An Act relating to the transportation infrastructure fund, to
local public transportation, to motor fuel taxes, and to the
motor vehicle registration fee; and providing for an effective
date."
- MOVED SB 37 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 37
SHORT TITLE: TRANSPORTATION INFRASTRUCTURE FUND
SPONSOR(s): SENATOR(s) THOMAS
01/19/11 (S) PREFILE RELEASED 1/14/11
01/19/11 (S) READ THE FIRST TIME - REFERRALS
01/19/11 (S) TRA, FIN
02/24/11 (S) TRA AT 1:00 PM BUTROVICH 205
02/24/11 (S) Bills Previously Heard/Scheduled
03/01/11 (S) TRA AT 1:00 PM BUTROVICH 205
03/01/11 (S) Bills Previously Heard/Scheduled
03/08/11 (S) TRA AT 1:00 PM BUTROVICH 205
WITNESS REGISTER
GRIER HOPKINS, Staff to Senator Thomas
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Introduced SB 37 on behalf of the sponsor.
JOHN MACKINNON, Executive Director
Associated General Contractors of Alaska
Anchorage, AK
POSITION STATEMENT: Testified in support of SB 37.
JERRY BURNETT, Deputy Commissioner of Treasury
Department of Revenue (DOR)
Juneau, AK
POSITION STATEMENT: Stated a preference for a 5 percent pay out
methodology rather than six percent as it relates to SB 37.
BARBARA HUFF-TUCKNESS, Director
Governmental and Legislative Affairs
Teamsters Local 959
Anchorage, AK
POSITION STATEMENT: Testified in support of SB 37.
JOHN DUFFY, representing himself
Anchorage, AK
POSITION STATEMENT: Testified in support of SB 37.
WALT WREDE, Manager
City of Homer
Homer, AK
POSITION STATEMENT: Testified in strong support of SB 37.
RACHAEL PETRO, Executive Director
Alaska State Chamber of Commerce
Anchorage, AK
POSITION STATEMENT: Testified in support of SB 37.
WHITNEY BREWSTER, Director
Department of Motor Vehicles
Department of Administration
Anchorage, AK
POSITION STATEMENT: Testified that DMV has no position on SB 37
but she would point out that the division is funded by program
receipts.
DAVE TALERICO, Mayor
Denali Borough
Healy, AK
POSITION STATEMENT: Testified in support of SB 37.
JACK SHAY, Board Member
Alaska Municipal League
Ketchikan, AK
POSITION STATEMENT: Testified in support of SB 37.
TOM GEORGE
Alaska Regional Representative
Aircraft Owners and Pilots Association
Fairbanks, AK
POSITION STATEMENT: Testified in support of SB 37.
WILLARD DUNHAM, Mayor
City of Seward
Seward, AK
POSITION STATEMENT: Testified in support of SB 37.
ACTION NARRATIVE
1:04:45 PM
CHAIR ALBERT KOOKESH called the Senate Transportation Standing
Committee meeting to order at 1:04 p.m. Present at the call to
order were Senators Huggins, Menard, Egan, Thomas, and Kookesh.
SB 37-TRANSPORTATION INFRASTRUCTURE FUND
1:05:02 PM
CHAIR KOOKESH announced the consideration of SB 37 relating to a
transportation infrastructure fund.
1:05:15 PM
SENATOR JOE THOMAS, sponsor of SB 37 said this legislation seeks
to strengthen the Alaska transportation system. He spoke to the
following sponsor statement:
Senate Bill 37 proposes to establish the
transportation infrastructure fund within the general
fund. This fund would help to levelize the funding
streams for Alaska's transportation infrastructure and
begin to get our state off of its boom and bust
spending cycles. SB 37 allows our state,
municipalities, local contractors and construction
workers to more adequately plan for their future,
strengthening Alaska's economy in the process.
Six percent of the earnings from this fund would be
available for appropriation by the legislature each
year for capital projects and major maintenance. These
projects would undergo a prioritization process based
on the scoring of a fund council who then recommend
projects to the legislature for funding, similar to
the current State Transportation Improvement Plan
process. In addition to the capitalization money
revenue from the motor fuels tax and vehicle
registration fees will also be appropriated to the
fund. This funding stream would begin to chip away at
the many backlogged projects that would open up new
development and growth opportunities for our
communities and state.
As one of the few states in the nation with no state
funded transportation program, SB 37 would begin to
prepare Alaska for decreased federal funding, a
potentially detrimental reauthorization of the federal
transportation bill and show Congress that Alaskans
are willing to pay our own way. While SB 37 does not
create a dedicated fund, it would allow our state
greater flexibility in maintaining and expanding our
marine highways, airports and road system.
A state transportation fund is supported by numerous
groups including the Alaska State Chamber of Commerce,
the Associated General Contractors, the Alaska
Trucking Association and the Alaska Municipal League.
1:07:09 PM
GRIER HOPKINS, staff to Senator Thomas, said the purpose of SB
37 is to build new transportation infrastructure statewide and
address the nearly $1 billion backlog in deferred maintenance
and requested projects. He provided the following sectional
analysis:
Section 1 lays out the legislative intent, which is to
appropriate $1 billion into the transportation infrastructure
fund once it is established. This fund will reside within the
general fund. The earnings from this fund will provide a stream
of revenue for transportation projects statewide. He clarified
that SB 37 does not create a dedicated fund.
1:08:04 PM
Section 2 states that the vehicle registration fees that are
collected will be deposited into this new fund.
Section 3 describes how the fund will operate and the funding
mechanisms, which are the motor fuel tax, vehicle registration
fees, the original $1 billion appropriation, and any future
appropriations. The commissioner of the Department of Revenue
(DOR) will invest the fund to return a minimum of six percent on
a five-year average and report the return at the end of each
fiscal year. These transportation projects are loosely defined
and can include trails, boat launches, recreational facilities,
airports, roads, and marine ports. Up to ten percent of the
earnings could go toward federal matches. The advisory council
that's established consists of eight members as follows: the
chairs of the House and Senate transportation committees; the
commissioner of Department of Transportation and Public
Facilities or his/her designee; a public member from each of the
four judicial districts each of whom are appointed by the
governor for a staggered four-year term; and one public member
appointed by the governor.
Section 4 deals with reimbursements to municipally-owned
airports. Currently 60 percent of the proceeds from the taxes on
aviation can be refunded to the municipality.
Section 5 lays out the marine tax carve-out; these funds would
go into a special watercraft fuel tax account within the general
fund.
Section 6 lays out the partial exemption of the fuel tax when
it's used to operate an internal combustion engine that is not
operated on public ways.
Section 7 lays out the fuel reimbursements that will be paid out
of the fund.
Section 8 tells DOTPF to develop criterion that is similar to
the Statewide Transportation Improvement Program (STIP) process
for long-range planning.
Section 9 deals with the public disclosure that the lieutenant
governor will develop and supervise.
Section 10 repeals [AS 43.40.010(g) and 43.40.010(j).]
Sections 11-14 lay the groundwork for transitioning toward
having the fund.
1:12:34 PM
MR. HOPKINS cited the extensive list of companies, associations,
and individuals statewide that have voiced support for
transportation funds.
SENATOR MENARD asked if other states have passed similar
legislation and if the funds had proved successful.
MR. HOPKINS said the bill packets contain a research report from
the National Council of State Legislatures (NCSL) describing how
each state funds its transportation system. It points out that
Alaska is the only state that doesn't have an exclusive
dedication of fuel tax revenue for highway purposes. The Alaska
Constitution doesn't allow funds to be dedicated. While all
states are falling behind on transportation upkeep, Alaska is
potentially in a worse position now that SAFTEA-LU [Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A
Legacy for Users] is due for reauthorization. Currently there's
more support for urban centers as opposed to more rural areas.
This portends trouble for Alaska since it receives about 80
percent of its transportation funding from the federal
government.
1:16:10 PM
SENATOR MENARD asked the sponsor if the Knik Arm Crossing toll
bridge was part of the conversation for developing this fund.
She noted that Wilber Smith Associates estimated that by 2019
the toll bridge would generate about $40 million in Title 23
money.
SENATOR THOMAS replied he didn't recall having a conversation
that considered what might come from tolls.
SENATOR MENARD said she brought it up because she and Senator
Huggins are very involved in that project.
1:17:02 PM
CHAIR KOOKESH agreed that it might be a good idea to look at
that because the toll bridge money either goes into the general
fund or some fund for transportation. He then cautioned the
sponsor against opting for an advisory board because those don't
have teeth. The marine transportation advisory board (MTAB), for
example, doesn't have the authority to make decisions at the
board level to tell the Department of Transportation and Public
Facilities what direction it wants to go in terms of the marine
highway system.
SENATOR THOMAS acknowledged the suggestion.
JOHN MACKINNON, Executive Director, Associated General
Contractors (AGC) of Alaska, stated that a state-funded
transportation program is critical to address the transportation
needs of Alaska and this bill contains most of the essential
elements. First, it provides substantial, predictable and
regular state funding. The idea is to use motor fuel taxes and
vehicle registration fees. This will be more palatable to the
public because there's a connection to what they're used for.
Another essential element that's described in the bill is
programmatic development so the money can be allocated as it's
needed. This is very efficient. The final element that the bill
describes is prioritization of projects based on need and facts,
not politics. This will help avoid the kind of planning
processes that are not the most efficient use of the public's
money.
1:23:30 PM
SENATOR MENARD asked if he would give examples of projects that
weren't an efficient use of the public's money.
MR. MACKINNON said the 1998-2004 T-21 federal highway
authorization required spending a minimum of $40 million over
six years on transportation enhancements like bike paths and
trails. During that time the state spent $160 million on those
things. While all the projects were good, that additional $120
million could have been put to better use for the state if it
had gone toward things like safety improvements, congestion
relief, or new roads.
1:25:09 PM
JERRY BURNETT, Deputy Commissioner of Treasury, Department of
Revenue (DOR), stated that DOR will handle the money in whatever
manner the Legislature chooses, but the proposed six percent
real rate of return on the investments is a concern. Assuming
three percent inflation, DOR would need to invest for a nine
percent return. To achieve that in the current capital market it
would probably be necessary to rely on highly volatile exotic
investments. Trying to achieve a five percent payout methodology
would allow DOR to invest with far less risk to the state.
SENATOR THOMAS said he appreciates the comments and he would
look into it.
BARBARA HUFF-TUCKNESS, Director, Governmental and Legislative
Affairs, Teamsters Local 959, stated that local 959 represents
about 8,000 working and retired teamsters in every industry but
fishing and they support SB 37 and its concept. The state would
be very remiss if didn't proactively plan the future funding for
its transportation needs, she said. The reauthorization of
SAFTEA-LU has everyone rightfully concerned about the potential
loss of federal funds. SB 37 is a proactive approach to address
this issue at the state level.
1:28:57 PM
JOHN DUFFY, representing himself, said he's been involved in
transportation planning and project development and financing
for many years, primarily when he was working for the Mat-Su
Borough. The primary benefit of this long overdue bill is that
it will create a stable capital fund and replace the over
reliance on federal dollars. It will also provide stability to
long-term capital improvement planning. Placing all existing
transportation-related fees and taxes into this fund is an
excellent idea, he said. The proposal provides a good nexus
between facility costs and revenue sources and is in tune with
the results of many national surveys. These have found strong
support for transportation fees and taxes that are dedicated to
transportation purposes. As proposed, the regionally diverse
advisory council will provide recommendations of proposed
capital transportation projects using objective criteria as a
means of ranking. These investments should be made objectively
and with as much transparency as possible. SB 37 accomplishes
these goals.
In 2008 the Mat-Su Borough, the Alaska Municipal League, and
DOTPF completed a study of the transportation funding needs of
the state and recommended creating an Alaska transportation fund
similar to the one described in SB 37. He agrees that the funds
should be used for capital investments only but he believes that
the amount available on an annual basis is on the low side,
particularly when considering the large cost of transportation
improvements.
WALT WREDE, City Manager, City of Homer, said the city strongly
supports passage of SB 37 for the reasons that the sponsor
highlighted in his opening statement. He thanked Senator Thomas
for bringing the bill forward. It will provide tremendous
benefit to the City of Homer and other communities in Alaska.
1:33:50 PM
RACHAEL PETRO, President and CEO, Alaska State Chamber of
Commerce, said the Chamber represents hundreds of diverse
businesses and thousands of working Alaskans. Transportation
infrastructure has long been an important issue to members and
the Chamber has made the creation of an Alaska transportation
infrastructure fund one its top three legislative priorities
this year. Investing in transportation infrastructure is
critical for the long term growth of Alaska's economy. The
current infrastructure is dilapidated and lacks a consistent
funding mechanism to address the billions of dollars of
multimodal needs. New transportation infrastructure development
will provide access to resources, reduce barriers for
communities to participate in the economy, and it will allow
safe and more efficient transportation for all Alaskans. State
highway and airport infrastructure is largely funded by federal
dollars and those are under threat of significant reduction.
Additionally, there are no consistent federal programs for
harbors and ports, both of which are critical in Alaska.
1:36:15 PM
WHITNEY BREWSTER, Director, Division of Motor Vehicles,
Department of Administration, said the DMV doesn't have a
position on the bill, but she would point out that the DMV uses
program receipts to operate and deposits any excess into the
general fund. SB 37 would require most of the fees collected by
the DMV to be deposited into the transportation infrastructure
fund and it provides no funding mechanism for the DMV. If the
bill is implemented as currently written, the DMV would need
about $229,000 in general funds on an annual basis for operating
and future capital requests.
DAVE TALERICO, Mayor, Denali Borough, said SB 37 will be a
tremendous help to Alaska's economy in the future since much of
the economy is based on the transportation infrastructure.
Future improvements to airports, ports, harbors, and the highway
system will allow municipalities to enhance emergency response,
which is particularly important to Alaska residents.
1:39:11 PM
JACK SHAY, Board Member, Alaska Municipal League (AML), said the
AML represents about 98 percent of the population of the state.
Transportation is vital to this state and the AML has long
supported creating a transportation infrastructure fund. He
thanked the sponsor; the legislation is on the right track.
TOM GEORGE, Alaska Regional Representative, Aircraft Owners and
Pilots Association (AOPA), said AOPA has about 4,800 members in
Alaska who use aircraft for everything from recreation to
business transportation. AOPA supports the concept of a state
funded transportation program as described by SB 37. Capital
programs for the aviation system in Alaska are typically 95
percent federal dollars with the state paying only five percent.
The FAA reauthorization program - including airport funding, is
currently being debated in Washington D.C. and there are efforts
to reduce the overall funding in that program so state support
is clearly needed. Because federal funding can have strings
attached, it can be less expensive for DOTPF to provide a
facility than to follow all the federal process and standards.
MR. GEORGE cautioned the committee to not only create a state-
funded program but also to look carefully at the details on how
the program is defined because it needs to complement rather
than just supplement the federal funding sources. Furthermore,
this should not take pressure off the state to adequately fund
the maintenance and operation of existing transportation
facilities.
1:43:14 PM
WILLARD DUNHAM, Mayor, City of Seward, said he is speaking in
strong support of SB 37. The state has long been amiss in not
having a transportation fund and it will suffer badly if it
doesn't step up and show that it isn't always dependent on
others. Federal SAFTEA-LU dollars may end and the state needs to
have some backup plan before that happens. This bill is a way to
do that.
CHAIR KOOKESH closed public testimony and asked the will of the
committee.
1:46:11 PM
SENATOR THOMAS moved to report SB 37 from committee with
individual recommendations and attached fiscal note(s). There
being no objection, SB 37 moved from the Senate Transportation
Standing Committee.
1:46:31 PM
There being no further business to come before the committee,
Chair Kookesh adjourned the meeting at 1:46 p.m.
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