Legislature(2003 - 2004)
03/18/2003 01:32 PM Senate TRA
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ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
March 18, 2003
1:32 p.m.
MEMBERS PRESENT
Senator John Cowdery, Chair
Senator Thomas Wagoner, Vice Chair
Senator Gene Therriault
Senator Georgianna Lincoln
Senator Donny Olson
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
SENATE BILL NO. 31
"An Act relating to a railroad utility corridor for extension of
the Alaska Railroad to Canada and to extension of the Alaska
Railroad to connect with the North American railroad system."
SCHEDULED BUT NOT HEARD
SENATE BILL NO. 40
"An Act relating to construction of highways by the Department
of Transportation and Public Facilities."
MOVED SB 40 OUT OF COMMITTEE
SENATE BILL NO. 103
"An Act increasing certain motor vehicle registration fees; and
providing for an effective date."
HEARD AND HELD
PREVIOUS ACTION
SB 40 - See Transportation minutes dated 2/18/03.
SB 103 - See Transportation minutes dated 3/11/03.
WITNESS REGISTER
Mr. Mark O'Brien
Department of Transportation &
Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Answered questions about SB 40
Mr. Kevin Jardell
Assistant Commissioner
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Answered questions about SB 103
ACTION NARRATIVE
TAPE 03-9, SIDE A
CHAIR JOHN COWDERY called the Senate Transportation Standing
Committee meeting to order at 1:32 p.m. Senators Wagoner, Olson
and Chair Cowdery were present and Senators Therriault and
Lincoln arrived shortly thereafter. He informed members he would
not bring up SB 31 because he was still waiting for suggested
language for a committee substitute. SB 40 was the first order
of business.
SB 40-CONSTRUCTION OF HIGHWAYS BY DOTPF
MR. MARK O'BRIEN, Chief Contracts Officer for Department of
Transportation and Public Facilities (DOTPF), told members the
effect of SB 40 would be to prohibit DOTPF and agencies that it
transfers projects to from using their own employees when the
project costs exceeded $250,000, but by statute DOTPF may
exercise the use of a force account in two instances. One is for
community and boardwalk projects where an agency such as the
Bureau of Indian Affairs (BIA) has a project and DOTPF is
providing access to that project. DOTPF may transfer [funds] to
the BIA to accomplish that project. In many cases, a transfer is
in the interest of all agencies and is cost effective. SB 40
would also affect municipalities and cities because they would
be prohibited from asking for and receiving transfer of a
project if the cost exceeded $250,000.
MR. O'BRIEN said the second instance under which DOTPF could
exercise a force account is when they use their own maintenance
staff to accomplish capital projects. DOTPF has been addressing
close to $200 million in deferred maintenance by using federal
aid funds and state maintenance staff to perform those projects
during the summer. The types of maintenance projects that are
eligible include cracked ceilings, bridge repair, chip seal road
surfacing, and others. The program benefits DOTPF in a number of
ways. It provides the ability to transfer costs of the winter
maintenance program to a federal aid project, thereby preserving
general fund dollars for severe winter events. DOTPF can then
retain year-round skilled, knowledgeable employees. It also
allows DOTPF to fund a portion of its equipment costs and defray
some of the state costs of maintaining equipment by charging
those costs to the federal aid projects, which further stretches
the dollars for deferred maintenance.
MR. O'BRIEN said another key factor is the size of the program.
DOTPF's summer maintenance program represents less than three
percent of the federal aid program. More than half of that three
percent is contracted out to the private sector now. He said the
impetus for this legislation was the St. Mary's project.
CHAIR COWDERY remarked the St. Mary's project did stir things up
a bit but he knows that DOTPF did a 35 mile chip seal project on
the Old Seward Highway a few years ago and referred to it as a
maintenance project. He said other states use different
standards for maintenance and construction. He has no problem
with DOTPF doing maintenance work, but he believes construction
projects should go out to competitive bid. He said some states
consider any project that costs over $50,000 to be a
construction project rather than a maintenance project.
He pointed out that before the state came into its oil wealth,
the state got a non-construction rate from the unions during the
winter and hired equipment operators from the union halls to
plow the snow. He said those are some of the reasons he
introduced this legislation. He placed a $250,000 limit in the
bill because DOTPF said some projects cost less than $100,000.
He said he believes the competitive process is a good one and
that everyone should be entitled to the same Davis-Bacon wages
in both rural and urban Alaska.
1:40 p.m.
SENATOR OLSON said the St. Mary's project is in his district. He
clarified that project was completed ahead of schedule and under
budget. He pointed out that it looks like there will be a
request for a significant amount of money to complete the
Anchorage International Airport, which he finds appalling. He
then asked Mr. O'Brien if he had a breakdown of the source of
funds used for force account projects, specifically federal and
general fund money.
MR. O'BRIEN said almost all of the funds used for the force
account programs are federal aid funds. DOTPF receives very
little in terms of general funds.
SENATOR OLSON asked how many DOTPF employees would be affected
by the passage of SB 40.
MR. O'BRIEN said he hadn't done that calculation but one of two
things would happen. Without the ability to use the federal aid
to subsidize the general fund, DOTPF would either have to reduce
its summer employment or it would not be able to respond to
severe winter events with overtime hire. He said management
would have to decide which alternative to take and either
alternative would result in a different number of employees that
would be affected.
SENATOR OLSON asked what kind of effect this legislation would
have on future supplemental budgets.
MR. O'BRIEN said in order to respond to severe winter events,
DOTPF managers would have to make some tough choices. Either
additional funding would have to be provided to pay for overtime
work to address such an event or DOTPF would have to reduce
summer employment. He said a budget increase would be necessary
to maintain a consistent work force throughout the year and
respond to winter events.
SENATOR OLSON asked how much of DOTPF's capital budget would be
affected by this bill.
MR. O'BRIEN said since nearly all of the force account work is
done with federal funds, SB 40 would affect all projects that
cost over $250,000.
SENATOR OLSON said he was asking for a definitive number.
MR. O'BRIEN said he has not computed the numbers in that manner.
CHAIR COWDERY referred to Senator Olson's comment on the St.
Mary's project being completed under budget and said there is
nothing to compare that cost to because it was not put out to
competitive bid. He said he believes an audit is being done on
that project now and added that DOTPF has been very supportive
of the concept of day labor contracts, which would assure that
local people get the work.
SENATOR OLSON said the numbers that were forwarded to his office
show that DOTPF budgeted over $3 million for the St. Mary's
project while total expenditures were about $2.7 million.
CHAIR COWDERY said his point was that a private contractor might
have bid that project at $1.7 million. He said there is no way
to know what the private sector might have estimated the cost to
be.
SENATOR LINCOLN said her questions about Administrative Order
199 (AO 199) hadn't been answered and although she doesn't know
its status, she believes it plays into SB 40. She pointed out
that as a resident of Rampart she has seen what happens when an
outside contractor comes in and doesn't believe in the day labor
contract concept. She has seen outside contractors bring in all
of their own food, manpower, equipment, some housing and even
furniture. Her community pushed for the runway project and had
to be very vocal to get just two local people hired. She said
the letter from Mr. James of the Tununak IRA Council shows that
such jobs are the lifeblood of many small communities and SB 40
would have a devastating impact. She urged to look at what is in
the best interest of the entire state and repeated she is very
uncomfortable that her questions about AO 199 have gone
unanswered.
CHAIR COWDERY asked if the equipment was available in Rampart to
do the runway job.
SENATOR LINCOLN replied some equipment was available.
CHAIR COWDERY said he worked on a number of projects in rural
Alaska and needed to import a lot of things. He hired and rented
locally as much as possible. He said the day labor contract
concept is pretty much tailored to the local people.
SENATOR WAGONER commented that he understands the concerns of
rural communities but he also understands the position of the
contractors. A woman from Nome recently testified that her
company would bid on any size project in rural Alaska. He said
he sees the need for force accounting but believes it should be
limited. He asked how many projects Mr. O'Brien foresees using a
force account on during the next year that would cost in excess
of $250,000.
MR. O'BRIEN said using the year 2000 as a baseline for the
number of projects, two were below $250,000 and the rest were
more. He said, "... just looking back through the lists, a price
tag of $1 million would probably take care of 60 to 70 percent
of them - allow them to be done. A price tag of half that would
probably let 15 to 20 percent of them through."
SENATOR THERRIAULT asked whether any communities formed
construction companies to bid projects or were they are barred
from doing so. He pointed out those communities should be able
to underbid other contractors because they would not have to
mobilize anyone.
MR. O'BRIEN said, in order to do a construction project in
excess of $100,000 in Alaska, an entity must be bonded. In
addition, that entity must meet the requirements set for a
licensed and bonded contractor. A surety company looks at
expertise, past performance, equipment capability and capacity
before it agrees to bond an entity. He said he is not aware of
any consortiums or groups that have been created to respond to
state bids in rural Alaska.
SENATOR THERRIAULT commented those hurdles are not
insurmountable. He questioned whether those requirements should
be waived.
MR. O'BRIEN said there may a way to assist those entities. DOTPF
is restricted by statute to doing business with certain
entities. He said if that barrier is broken down, an entity
could bid a project on a competitive basis.
CHAIR COWDERY said the Native corporations have the ability to
bond small groups.
MR. O'BRIEN said if there is no licensed surety within the
state, there is an option under the bonding for individual
sureties to bond construction companies. It requires two
individual sureties to provide identical bonding at the full
amount.
CHAIR COWDERY asked if the purpose of bonding is to assure that
all employees get paid and to guarantee performance.
MR. O'BRIEN said that is correct.
SENATOR LINCOLN responded to Senator Therriault's question about
why a village could not compete for a bid and said what usually
happens with a force account project is that a particular
village does a particular project, but they aren't ongoing. She
said the Doyon Corporation did get involved in construction for
a very brief time, but none of the 38 village corporations in
the Interior have a construction company because it is cost
prohibitive for small villages.
SENATOR WAGONER said in his area just about all of the oil field
contract work has been taken over by Native corporations. He
said they hire both Native and non-Native employees. He said he
believes strongly in bidding out any project and using force
accounting when no bids are received.
SENATOR THERRIAULT moved SB 40 from committee with individual
recommendations with its zero fiscal note.
SENATOR LINCOLN objected because the only other committee of
referral was the Senate Finance Committee and this committee
didn't even know how many projects would be affected by this
legislation or what is happening with AO 199. She said there are
too many unanswered questions to pass this legislation from the
one and only committee that would scrutinize it.
SENATOR OLSON stated his objection as well saying this
legislation is less palatable than the version introduced last
year because the limit has been reduced from $1 million to
$250,000.
CHAIR COWDERY called for a roll call vote.
The motion to move SB 40 and its attached zero fiscal note from
committee carried with Senators Therriault, Wagoner and Cowdery
voting in favor and Senators Lincoln and Olson opposed.
SB 103-MOTOR VEHICLE REGISTRATION FEES
CHAIR COWDERY announced the committee would take up SB 103 and
asked an administration representative to come forward.
MR. KEVIN JARDELL, Assistant Commissioner of the Department of
Administration (DOA), reminded members that Duane Bannock
provided the committee with an overview of the bill at the last
hearing and that he was available to answer questions.
CHAIR COWDERY said he held this bill in committee for the
purpose of giving members and the public time to voice
objections. He heard none.
SENATOR LINCOLN asked if public testimony had been taken and
noted the bill was only introduced on March 6.
MR. JARDELL replied the bill was heard in committee last week
and was announced to the public at that time just as it was
today.
SENATOR LINCOLN asked what DOA did to publicize the legislation.
CHAIR COWDERY remarked the committee noticed the bill in the
same way it does every other bill. He said from the number of
inquiries he received, he believes people are aware of the bill.
SENATOR LINCOLN apologized for her absence at the previous
hearing and asked for an explanation of the need to increase
registration fees.
MR. JARDELL explained that user fees within DOA were reviewed to
determine when they were increased last, the value of the fee to
the state at that time, and whether the state is receiving that
value today. With regard to vehicle registration fees, DOA
determined the value had decreased significantly. Staff then
looked at other states to see how Alaska's fees compared and
determined that the increase provided in SB 103 would still keep
Alaska's registration fees below the national average. He
acknowledged that determination was made in-house and that it
was difficult to compare vehicle registration fees from state to
state because each state uses a different methodology. For
example, some states impose taxes in addition to the vehicle
registration fee; some calculate the value of the car in the
registration fee formula. SB 103 updates the fees to better
reflect the intent of the original legislation.
SENATOR LINCOLN asked for the average registration fee in the
nation.
MR. JARDELL said the national average is about $118. He said he
would provide her with the formula DOA used.
SENATOR LINCOLN asked if DOA staff determined an average fee for
each category of vehicle.
MR. JARDELL said they did not. They did a baseline calculation
to see if SB 103 would treat Alaska citizens in a disparate
manner from the other states. He said it would be too onerous to
make that comparison for every category.
SENATOR LINCOLN asked how DOA came up with a taxicab
registration fee of $160.
MR. JARDELL said in general, the fees were raised $10 per year
so the biannual registrations would increase $20. However, the
passenger vehicle registration fee increase is $30. That was a
streamlining decision. Years ago, passenger vehicles were
charged different rates than SUVs or trucks. It does not make
sense to do that today so passenger vans and pick-up trucks were
combined into one category. By increasing the passenger vehicle
fee $30, the fee would be the same for both categories. He
explained the extra $2 stems from the time when the Legislature
instituted biannual registrations and decided it didn't want to
simply double the annual fee so they doubled the fee and
subtracted $2. DOA decided to simplify and raise the fee an
additional $2 because it's easier to collect $100 than $98.
SENATOR LINCOLN asked if school buses would be exempt.
MR. JARDELL said school buses would be treated in the same way
they are today and it is his understanding that school buses for
a non-profit organization are exempt under the non-profit
category. School buses for other entities would pay registration
fees.
SENATOR LINCOLN asked if the fee is $300 for a school bus.
MR. JARDELL said he believes the fee amount is the same as the
amount charged for a commercial vehicle, which depends on the
weight of the vehicle. He offered to get back to Senator Lincoln
to verify that information. He said Section 1(4) applies to tour
buses only. That is one area in which DOA made a policy call on
the increase. In the past, tour buses used for out-of-state
tourists were in a special category with a fee lower than the
normal commercial rate. That rate was increased.
SENATOR OLSON asked Mr. Jardell if the bill distinguishes
between school buses owned by school districts versus those
owned by the private sector.
MR. JARDELL said he believes a distinction is made for non-
profit entities. He offered to get back to the committee with
more information on school buses. He repeated that SB 103 does
not change the current method of charging registration fee for
school buses; it only increases the fee.
SENATOR WAGONER noted some districts own their school buses
while others contract with private owners.
TAPE 03-09, SIDE B
MR. JARDELL said it is his understanding that a school district
that owns its buses pays a registration fee.
SENATOR WAGONER asked why the fee is the same for a passenger
vehicle and a motor home.
MR. JARDELL said that was a previous policy call that DOA did
not change. The idea behind it was that a motor home in Alaska
is not used for more than a couple of months per year. The same
logic applies to registration fee for motorcycles.
SENATOR WAGONER said he thinks motor home owners are getting a
free ride because many of the motor home owners use those
vehicles from April through October. He said there is a
tremendous amount of motor home traffic on the roads between
Anchorage and the Kenai Peninsula and Seward. He said he
believes that fee is very low for a person driving a $500,000
motor home.
CHAIR COWDERY said trailer and motor home registration in other
states is a lot more.
SENATOR WAGONER pointed out they also pay a special licensing
fee to the county.
CHAIR COWDERY asked if the boroughs in Alaska charge a separate
fee.
MR. JARDELL replied they do not.
SENATOR THERRIAULT asked if local governments have that option.
MR. JARDELL said he did not know.
CHAIR COWDERY thought they do have that option.
SENATOR OLSON said although the fees for motor homes and
motorcycles are tied to usage, it is his understanding that the
majority of the fees collected are used for road maintenance. He
said the wear and tear on a road caused by a motorcycle is far
different from that of a motor home. He said he would consider
the weight of a vehicle.
MR. JARDELL said the fee charged for a motor home is more than
the fee charged for a motorcycle because of road damage. He said
motorcycle fee isn't the same as passenger vehicle fee because
motorcycles are used for a limited time during the year.
SENATOR OLSON asked when fees were last increased.
MR. JARDELL offered to get back to Senator Olson with an answer
to that question. He said he believes the last overall increase
was in 1978 and the disparity between trucks and cars was
changed in 1986. The Legislature decided on the biannual
registration at that time.
SENATOR OLSON asked if the registration fees only apply to
vehicles used on state roads.
MR. JARDELL said they apply to vehicles used on state and
borough roads.
SENATOR OLSON asked if it applies to vehicles that are driven on
the beach.
MR. JARDELL said SB 103 does not change current practice.
SENATOR OLSON asked if there are three categories of school
buses: those owned by school districts; those owned by private
contractors; and private buses owned by private schools.
MR. JARDELL could not verify that.
SENATOR OLSON asked how the fees for those three categories
compare with each other.
MR. JARDELL replied that a non-profit agency would seek a
registration under its non-profit status. Other agencies or
school bus owners would seek registration for a general
commercial vehicle. He repeated that he would verify that
information for committee members.
SENATOR LINCOLN said she like the committee to hold this
legislation until it gets that information. She asked if most
road damage is done during the months from May to September, the
same time motor homes are used.
CHAIR COWDERY thought most damage is done during the winter
months when studded snow tires are used.
SENATOR LINCOLN said she was thinking about vehicle weight and
noted the Legislature separated fees for passenger vehicles and
trucks in 1986 because of a disparity. Now they would be charged
the same amount. She asked Mr. Jardell to provide her with the
formula DOA used to determine the comparison to the national
average and information about registration fees for school
buses.
MR. JARDELL said he would provide the information, but wanted
committee members to understand that SB 103 increases the fees
and not the methodology.
SENATOR LINCOLN said she still wants to know who would fall
under that non-profit status.
SENATOR THERRIAULT asked Mr. Jardell if he wrote down committee
members' questions.
MR. JARDELL said he would provide answers to the questions about
the local option, how school buses will be charged, and the
formula used to determine the national average.
SENATOR THERRIAULT asked Mr. Jardell to provide the answers
quickly because he would like to see them before the bill is
taken up in another committee.
MR. JARDELL said he would do so.
CHAIR COWDERY announced he would hold SB 103 until the next
Senate Transportation Committee hearing.
SENATOR WAGONER noted his intent to offer an amendment to SB 103
to increase the motor home registration fee to $150. He said he
also believes that motor homes for hire should be categorized
under Section 1(4) and that fee should be increased to $300. He
said about 25 to 30 percent of the motor homes on the road are
rentals.
SENATOR OLSON suggested decreasing the fee for passenger
vehicles rather than increasing the fee for motor homes.
There being no further business to come before the committee,
CHAIR COWDERY adjourned the meeting at 2:37 p.m.
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