Legislature(2025 - 2026)ADAMS 519
02/25/2025 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB53 || HB54 || HB55 | |
| Overview: Fy 26 Department Budget by the Department of Transportation and Public Facilities | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 53 | TELECONFERENCED | |
| += | HB 54 | TELECONFERENCED | |
| += | HB 55 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 53
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making supplemental appropriations;
making reappropriations; making appropriations under
art. IX, sec. 17(c), Constitution of the State of
Alaska, from the constitutional budget reserve fund;
and providing for an effective date."
HOUSE BILL NO. 54
"An Act making appropriations, including capital
appropriations and other appropriations; making
reappropriations; making appropriations to capitalize
funds; and providing for an effective date."
HOUSE BILL NO. 55
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:35:23 PM
^OVERVIEW: FY 26 DEPARTMENT BUDGET BY THE DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES
1:35:28 PM
RYAN ANDERSON, COMMISSIONER, DEPARTMENT OF TRANSPORTATION
AND PUBLIC FACILITIES, provided a PowerPoint presentation
titled "House Finance Committee: Department of
Transportation and Public Facilities and Alaska Marine
Highway System Overview," dated February 25, 2025 (copy on
file). He began on slide 2 with the department's mission to
keep Alaska moving.
Core Values
Integrity - Excellence - Respect - Safety
DOT&PF oversees a network of highways that link
together cities and communities throughout the state,
thereby contributing to the development of commerce
and industry in the state, and that aids in the
extraction and development of its resources, and
improves the economic and general welfare of the
people of the state (AS 19.05.125)
Commissioner Anderson moved to an organizational chart on
slide 3 titled "Through Land, Air, Sea: It Takes a Team."
He reviewed the various divisions and offices under four
columns including strategic assets; planning, design,
construction, maintenance and operations; cross-functional
support; and boards. He mentioned the project delivery
division and a project management office. He mentioned
consistency in project management. He highlighted the
measurement standards and commercial vehicle compliance,
which involved staffing way stations. He discussed how
cross-functional support affected the whole department. He
mentioned the newer division of data modernization and
innovation. He highlighted the importance of resourcing
people quickly for communication when disasters struck. He
mentioned civil rights reviews handled by the core team in
the Civil Rights Office.
1:40:54 PM
Representative Stapp asked about weights and measures. He
recalled that weights and measures was calibrating and
certifying items used by the state. He wondered if the
state was completing the work or if there was another
entity to fact check the work.
Commissioner Anderson replied that there was a measurement
team setting the standards for the state. There was a lab
in Anchorage. He used the example of measuring a true
gallon of fuel and providing a certification.
Representative Stapp mentioned truck scales in the state,
which were certified by state inspectors. He recalled that
last time he had checked, the state workers were
calibrating the scales for the state's own trucks.
Commissioner Anderson replied affirmatively. There was not
any authority above DOT to certify what it did.
Representative Hannan asked if there were any vacancies in
the measurement standards and weigh stations for commercial
vehicle compliance.
Commissioner Anderson replied that he did not have the
information on hand and could follow up. He relayed that it
was not an area where they saw many vacancies.
Representative Hannan was concerned that a weigh station
was not operational, and wondered if it was a result of
staffing, budget, or other reasons. She addressed vacancies
and thought there were staff with multiple hats. She asked
about employees who filled more than one position.
Commissioner Anderson affirmed that the Northern Region
director position was vacant, and the department had
actively solicited for the position. He noted that the
position would be advertised soon. He noted that Deputy
Commissioner Katherine Keith was performing the role
currently as a temporary measure. There was a dedicated
director in the South Coast region. Sean Holland was the
director in the Central Region.
Representative Galvin looked at the statewide personnel and
distribution of 3,445 permanent full-time positions on
slide 3. She noted that the next page reflected 2,950
total. She assumed that there were a number of positions
that were not full-time or not permanent.
1:46:26 PM
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES, relayed that the
statistics on page 4 were pulled from actual positions,
while the data on slide 3 were positions counted whether
they were filled or not.
Representative Galvin thought it meant there were
approximately 500 positions not currently filled. She asked
where the Statewide Transportation Improvement Program
(STIP) manager was under the organizational chart.
Commissioner Anderson responded that the department was
taking a team approach to manage the STIP and it fell on
the commissioner to move it forward. He noted that the
regions were where the project managers and engineers
resided; and were feeding the STIP with current estimates
and project schedules. He noted that the STIP was a four
year program, which was really focused on project delivery.
He referenced the project delivery office under the heading
of "Planning, Design, Construction, Maintenance and
Operations" on slide 3; where a lot of the STIP happened.
He described the fed-aid team, which considered funding and
fund types to match with projects. The data modernization
side provided good sorting tools. The department had built
a system where all of the individuals contributed and moved
the STIP forward to the commissioner.
1:49:18 PM
Representative Galvin understood that the STIP work was a
team approach. She asked how to answer her constituents
regarding $1.6 billion ready for a request-for-proposals
(RFP) when she observed there was around $170 million for
access to real projects. She asked how to understand how
the team approach transferred into real projects that were
ready to put people to work.
Commissioner Anderson answered that the STIP was the
funding plan, and the project delivery teams in the regions
engaged in putting together the engineered plans, producing
environmental documents, acquiring the right of way, and
getting utility agreements before going to Director
Pannone's area where the project would be authorized the
funded by the federal government. He relayed that the
department felt good about the STIP. The STIP Amendment 2
had been reviewed by the Federal Highway Administration
(FHWA) informally, and the document was the four-year
funding plan for about $1.6 billion. Now the department had
to deliver, and the process would go to DOT's engineers and
pre-construction/construction groups to get the projects on
the street.
Commissioner Anderson shared that he had met with the
Association of General Contractors for a roughly 4.5-hour
discussion the previous day. The department had brought
pre-construction engineers from the region to discuss the
projects and the tentative advertising schedule. There was
a good plan in place and now DOT had to deliver the plan.
Representative Galvin asked what the legislature could do
to help the department get the (STIP) plan in motion. She
emphasized that the legislature was there to support DOT
and relied on the department providing the information. She
mentioned the safety pieces that came with building roads
appropriately.
1:52:47 PM
Representative Stapp addressed the topic of getting the
work out. He asked for a timeline for the projects and
getting back to the same status as when the commissioner
was director of the Northern region.
Commissioner Anderson replied that the department had heard
from the contracting community that the next few months
were critical to get projects on the street. He shared that
the department was looking at projects that could be
accelerated. It was taking some aggressive steps including
a $50 million project on the Kenai Peninsula. The
department had been working with a utility that was
uncomfortable with the Build America/Buy America (BA/0BA)
rules for compliance. He specified that DOT would have its
contractor include the work to relocate power lines and
other items. He discussed looking at general engineering
consultants to augment staff when needed. He used the
example of a DOT team that included a professional with the
right-of-way expertise needed to proceed. He emphasized
that the department was doing as much work as it could get
and was projecting more contract awards than the previous
year. He cited that DOT was projecting contract awards in
the amount of around $900 million.
Representative Stapp asked how much in contract awards
would be given out in the next three to four months. He
asked if the commissioner could project a reliable and
achievable goal.
Commissioner Anderson answered DOT was currently at about
$180 million to $200 million in awards, with another $120
million in pending awards that had been advertised, for a
total of up to $300 million. He mentioned several large
Construction Manager/General Contractor (CMGCs) [an
alternative project delivery method in which the contractor
is hired before the project moved to the construction
phase] and used the example of the Chena floodplain bridges
between $80 million to $100 million that would be awarded
the next month. He mentioned a Parks Highway CMGC that
would also be awarded the following month. The CMGC
projects were not included in the advertise lists. He
mentioned the tentative advertise list and estimated that
there would be between $150 million and $200 million in
projects going out the next month.
1:57:55 PM
Representative Stapp wanted to hear that in the next three
months DOT was going to get another $100 million in work
out the door. He asked if the department could make that
commitment.
Commissioner Anderson agreed.
Mr. Pannone addressed the FY 26 operating budget on slide
4. He directed attention to the pie chart that reflected
DOT's operating budget. The department budgeted for about
$210 million of contractual services, $99 million for
commodities, $7.8 million for travel, and $2.1 million for
capital outlays. The biggest expense was $488.1 million in
personal services for staff. The right-hand side of the
slide showed the activities of the department's employees.
He mentioned scientists, drone pilots, law enforcement at
airports, and heavy mechanics as part of DOT's diverse
workforce.
1:59:51 PM
Mr. Pannone addressed slide 5 showing the department budget
fund sources. There was $184 million in Unrestricted
General Fund (UGF) receipts, mostly budgeted in highways
and maintenance operations and the Alaska Marine Highway
System (AMHS). There was $6.2 million in General Fund (GF)
program receipts; about $3.5 million of which was for
measurement standards and commercial vehicle compliance for
overweight and oversize permit receipts. The rest was
largely for repairs for which the department recovered in
damages. The AMHS Fund received $22.8 million in operating
receipts from ridership. He mentioned Vehicle Rental Tax
receipts and Motor Fuel Tax receipts at $6.6 million and
$37.1 million, respectively.
Mr. Pannone highlighted federal receipts at $81.8 million,
which was largely the Rural Ferry Operations Grant. There
were federal receipts for rural aviation as well. He
pointed out interagency receipts of $60.8 million, which
were largely fees that DOT collected from the Division of
Facilities Services that maintained other agencies'
buildings. He highlighted the Highways Equipment Working
Capital Fund and the International Airports Revenue Fund.
He highlighted capital improvement project receipts for
$207 million, which was funded from DOT's $1.8 billion
capital program. He noted that the Public Building Fund
held 12 state office buildings, and DOT charged tenants for
maintenance and operations to bank the funds for future
improvements.
Mr. Pannone continued to discuss DOT operating funds on
slide 5. He mentioned Whittier Tunnel toll receipts at $1.8
million from toll fees in and out of Whittier. He
highlighted unified carrier registration receipts, which
were federal grants Alaska received for commercial vehicle
compliance. The aviation fuel tax amounted to $4.9 million
and supported the state's rural airports maintenance and
operations activities. The rural airport $281,000 in
receipts were receipts received from leasing space at rural
airports.
2:02:51 PM
Representative Tomaszewski asked about the Whittier Tunnel.
He mentioned federal funding from the previous year and
asked if Mr. Pannone could provide an update.
Mr. Pannone answered that about three to four years back,
the FHWA had done an audit on all toll facilities. The
federal audit concluded that DOT had received federal
reimbursement for about $15 million of ineligible
expenditures for the Whittier Tunnel. The department had
contested the findings and asserted that the expenses were
eligible. He continued that FHWA had indicated that the
participation rate at which the state was reimbursed was
not eligible. The department worked with its legal team to
identify a way to make the expenses eligible. He identified
that during the interim, DOT had avoided the $15 million
payback, but had switched to GF for Whittier Tunnel
operations. In the current year, DOT was switching back to
federal funds after resolving eligibility and participation
rates.
Representative Tomaszewski asked if the eligibility was
back and DOT would be able to receive the federal funds.
Mr. Pannone answered affirmatively and relayed that DOT had
renegotiated and determined the cost was eligible for
federal reimbursement.
Representative Johnson asked if the funding was expended
and then reimbursed. She asked if it was still needed in
the budget.
Mr. Pannone answered that all of the federal programs were
a reimbursement basis, but department requested federal
receipts in the budget. He specified that DOT billed for
reimbursement every two weeks.
2:05:13 PM
Mr. Pannone addressed a breakout of the FY 26 budget on
slide 6. The slide had two tables and two pie charts and
showed the major components of the DOT results delivery
units. The top half of the slide showed all funding. He
cited $127 million for international airports, which were
self-funded. The bottom half of the slide depicted just UGF
and Designated General Funds (DGF). Highways and aviation
was at $136.1 million of UGF (Motor Fuels Tax) and DGF. The
AMHS also received $60 million in UGF and $22 million of
its own DGF. The department had focused on leveraging
federal funds for preventative maintenance funds over the
previous several years and kept the focus on leveraging
federal funds for DOT operations whenever possible.
Mr. Pannone turned to FY 26 budget highlights on slide 7.
He highlighted that the top of the slide showed a graph of
the National Highway Construction Cost Index, which DOT
tracked closely. The index directly impacted the cost of
capital project delivery costs, and was reflective of the
increases that FWHA saw on all highway construction
projects. There was an increase of 67 percent from the
fourth quarter of 2020. It was also tracked because the
components of the index mirrored most of the components in
DOTs maintenance and operations. The bottom of the slide
showed FY 26 budget requests including increments to the
base budget. He mentioned an increment of $25,000 for a
federally mandated highway safety office with increases of
staff and indirect cost. The second was a Dalton Highway
materials stockpile for $4.5 million. If there was a
capital project, the costs could be reimbursed by federal
dollars.
Representative Bynum asked about the cost index shown on
the slide, which seemed to be a good indicator of the
market. He asked Mr. Pannone how he correlated the
information to what DOT was doing in Alaska. He thought the
regions in the state had different constraints and needs.
He used the example of road construction in his district in
Southeast and wondered how the general trend information
from the index would be extrapolated and used.
Mr. Pannone answered that the index was a baseline and
reference point to check increases in engineers' estimates
and bids. He mentioned bids coming in at double or over 20
percent higher. He noted that they were observing there was
a nationwide trend.
Representative Johnson asked about the Whittier Tunnel and
thought there was a fund change from UGF to federal
receipts for FY 26.
Mr. Pannone agreed.
Representative Johnson thought there would be an
accompanying budget reduction for DOT.
Mr. Pannone answered there would be a reduction in UGF and
an increase in federal receipts.
Representative Stapp knew the Northern region was
struggling to find personnel to maintain the Dalton
Highway. He asked about maintenance camp contracting and
asked if it was the beginning of a process of outsourcing
work for the entirety of the highway, or if the arrangement
was temporary while the recruiting issue was solved. He
asked if the legislature should look at making decisions to
ensure the highway remained open for all of the industry
that required it.
2:10:52 PM
Commissioner Anderson answered that the Dalton Highway had
been a focus point. He mentioned challenges with materials
and the materials stockpile referenced by Mr. Pannone. He
acknowledged that staffing was a challenge, particularly
with the Livengood Camp. He noted that the Elliot Highway
to Minto had been closed for five days due to understaffing
the previous winter. He discussed maintenance camp
contracting and noted that there had been success with
contracting for winter operations. He mentioned proposals
for Anchorage and Fairbanks and noted that all of the
maintenance and operations crews had started to have term
agreements for contractors so that when big storms hit it
was possible to scale up resources quickly.
Commissioner Anderson continued that if the increment was
approved, there would be a feasibility study. Teams were
considering what made the most sense - whether to contract
a whole camp or scale up as a one-time measure. He noted
that the request was a one-time increment.
Representative Stapp mentioned the Tanana Road and the
Iditarod. He had heard from constituents in Manly and Minto
who were upset the road would not be open until March 17
instead of March 15. He asked what to tell his
constituents.
Commissioner Anderson would follow up.
Co-Chair Josephson asked if the road in question was to
watch the Iditarod.
Co-Chair Foster had been told that because the Iditarod was
moving to Fairbanks, the road that was typically open on
March 15 would open two to four days later, and individuals
were upset.
Representative Hannan asked about the increased use of non-
commercial drivers (independent travelers) on the Dalton
Highway. She wondered about the cost it was contributing to
maintenance of the highway.
Commissioner Anderson answered that DOT maintained traffic
volume data to learn the percentage of trucks and smaller
vehicles that were on the road. He offered to provide the
information if the committee was interested, but DOT had
focused on truck usage of the road.
Representative Hannan suggested that DOT not expend staff
time on the topic if it was not a problem.
Mr. Pannone continued to discuss budget highlights on slide
7. He mentioned Dalton Highway safety training and a one-
time increment for $250,000. He cited $1 million in UGF for
roadside hardware repairs. The last one-time increment was
$500,000 in UGF for right of way clearing of vacant
homeless encampments.
2:16:03 PM
Mr. Pannone turned to slide 8 related to rural aviation
budget highlights. He noted that most of DOT's budget
request was mostly using its own rural airport receipts. He
highlighted a request of $160,000 for Airport Stormwater
Pollution Prevention Plans Tracker. This would centralize
the collection of 14 required reports per year. He
highlighted a $72,000 UGF request for employee lodging for
two staff year-round for Akutan Airport. He highlighted the
third budget item, a database for the Alaska Aviation
System Plan, which would track any letters of correction
DOT needed to address with federal partners. The fourth
item was software for aviation staff to collect conditions
and needs at the airport that got incorporated into DOT's
capital improvement program.
Representative Galvin asked if it was common to have
employee housing and if the Akutan Airport housing was a
normal UGF request.
Commissioner Anderson answered that it was getting harder
to find people to work in certain remote areas, and DOT was
bringing workers into work two weeks on and two weeks off
while rotating employees such as requested in Akutan. He
mentioned Kotzebue as another area with a similar
challenge. He did not think it had not been a request in
the past.
Representative Hannan noted that the presentation listed
"PFAS transition" under key issues ahead and asked about
PFAS (Per- and Polyfluoroalkyl Substances) cleanup. She
knew much of the contamination was at rural airports and
noted that the budget burden of cleanup had fallen largely
on DOT. She asked if the cleanup money was located in the
rural aviation component or somewhere else in the budget.
Commissioner Anderson noted that DOT had a plan to replace
all foams with fluorine-free foams so there would not be an
issue of PFAS going forward. He noted that DOT had been
working hard to make sure the communities had good water.
He mentioned a DOT program and noted that the department
had secured funding from the Department of Environmental
Conservation (DEC) and others. He mentioned funding the
building of water systems and cisterns in communities like
Gustavus. He noted that DOT was still providing water to
people in several communities. The department had a team
that was doing ongoing work in water infrastructure funded
through grants and other sources, and trying to get to a
permanent fix.
2:20:19 PM
Mr. Pannone continued reviewing slide 8 pertaining to rural
aviation. He mentioned a request for Kotzebue Airport
employee housing and travel. He cited a request for
$374,000 for combined rural airport maintenance contract
increases and cited an increase in the contracts over the
previous five years. There were well over 100 airports
maintained by a local contractor, and the average contract
was $35,000. He highlighted a request for rural airport
receipts to support after-hour call outs. He noted that the
Southcoast region had seen an increase in the call outs.
The last item was a one-time item of $160,000 in rural
airport receipts to remove abandoned buildings on lease
lots. He explained that DOT was federally mandated to
collect market rate for the spaces leased to other entities
and the vacant buildings needed to be cleaned up or
removed.
Representative Tomaszewski asked if there was an issue with
rural airport runway lighting.
Commissioner Anderson responded that airport lighting
systems was one of the key issues on an upcoming slide. He
explained that there were several lighting systems due to
be upgraded, many were installed 20 to 30 years previously
and needed to be installed with more modern systems. There
were several problematic systems that had been identified.
The department had put out a contract to get design
consultants on board for upgrade of 20 to 25 systems. The
department was shifting focus in aviation and the capital
program to work on the lighting systems.
Representative Tomaszewski asked if DOT was standardizing
systems.
Commissioner Anderson agreed and noted that DOT was
purchasing several additional emergency lighting sets to
stage in hub locations that could be deployed quickly when
there were problems. The sets were in the FY 24 budget.
Co-Chair Josephson asked what the department did with PFAS
contaminants and how it was being funded when it had not
been funded before.
Commissioner Anderson answered that typically the hazardous
materials had to be shipped out of state. When DOT was
working on a project and excavating, it would use the
railroad or trucks to transport the materials. He used the
example of a Cordova project with a fair amount of PFAS
contamination in the soil. The cost estimates for removal
had come in very high and the project was on hold. He
mentioned that typically airport improvement program
scenarios were not eligible. He noted that DOT was part of
a lawsuit to rectify the situation for increased
eligibility. He noted that when the cost issue was a
factor, DOT would have to submit the request in a future
budget.
Co-Chair Josephson pondered that the cost must be in the
millions of dollars. He wondered if DOT was absorbing the
cost with present operating budget appropriations.
Commissioner Anderson relayed that DOT did a lot of
avoidance in the situations. He explained that typically in
a PFAS issue, avoiding excavation was key. He mentioned
case studies at Fairbanks International Airport.
Representative Josephson wanted to hear more about
avoidance off-record. He pondered like it sounded like the
problem was not resolved, unless there were a guaranteed
water source and no threat to public.
Commissioner Anderson explained that when he said
"avoidance" he was looking for engineered solutions that
minimized excavation, because DOT was typically required to
dispose of the materials if excavated.
2:26:55 PM
Mr. Pannone turned to slide 9 and reviewed international
airport budget highlights. The system included Ted Stevens
International Airport and Fairbanks International Airport.
He clarified that the department did not have any specific
requests but had a couple of changes to the adjusted base
of the budget. There was a $3.1 million increase for salary
adjustments due to negotiated collective bargaining
agreements. He mentioned a significant item happening at
the airport, a transfer of $4.1 million towards
centralizing airport operations. The department had moved
about 28 staff to a consolidated model to have a focus on a
more system-wide approach.
Commissioner Anderson stated there had been great growth
and opportunity in the state's international airports. One
of the focuses had been how to manage the system. He
mentioned huge growth in Anchorage cargo and the challenges
of keeping up with the growth. Fairbanks had some capacity.
He described bringing the two systems under one director.
He relayed that there were a lot of innovative things
happening. The airlines had been supportive, and DOT had
done the work in coordination with the Aviation Advisory
Board.
Commissioner Anderson discussed the positions on the flow
chart on the slide. He mentioned opportunities to market
the airports as a system. He mentioned that IT had been a
big focus, particularly with concerns about cybersecurity.
He mentioned having good Wi-Fi at airports. Human resources
had been a big focus of the airlines. He mentioned that
Anchorage International Airport had a huge capital program
including taxiways, security, and gate replacements. He
mentioned keeping the infrastructure on the cutting edge
and supportive of the growth. He mentioned the new Alaska
International Airport System (AIAS) director.
2:30:00 PM
Representative Johnson thought the state might have saved
a little money on snowplowing in the current year, and
wondered what DOT would do with extra snowplowing money.
Commissioner Anderson answered that the individuals were
still working and did not get sent home. He mentioned
filling potholes from rain events. He mentioned that DOT
did quarterly budget projections and the central region was
doing well on its budget. He did not anticipate any
additional budget requests. He mentioned that there was an
ice storm up north a month and a half previously and noted
that winter weather was ongoing. He pondered how to budget
for years when one year was so extreme and the current year
was the other direction. He continued to like the concept
of using contractors to scale up.
2:31:32 PM
Representative Tomaszewski mentioned changing snow
conditions and moving the Iditarod to Fairbanks. He
mentioned problems with airport parking in Fairbanks and
asked if there were plans for future increased parking.
Commissioner Anderson relayed that there was some work on a
parking garage concept a year or two previously. He
mentioned hearing from the public about the matter. He
offered to get back to the committee with more information.
Commissioner Anderson continued to review highlights on
slide 9 pertaining to the international airport system. He
noted that DOT was working on solar power for Anchorage and
Fairbanks and mentioned diversifying energy so as to not be
such a drain on the community. He hoped to install solar
over the following summer. He cited that DOT had a
sustainable aviation fuel initiative for the two airports.
He mentioned use of 900,000 gallons of aviation fuels
annually for carriers at the two airports. Air carriers had
expressed interest in sustainable aviation fuels as a way
to cut down carbon usage. He mentioned fish waste and woody
biomass. He noted that the deputy commissioner was taking a
lead role and contractors were on board doing technical
feasibility analysis. There was a lot of technical work to
be done.
Representative Galvin saw that the presentation would
address AMHS ridership on a later slide. She asked if there
was anything to report on passenger numbers and if there
was expected growth in Anchorage and Fairbanks considering
what was happening in logistics.
Commissioner Anderson looked forward to bringing the
committee the numbers. There were some new routes, and the
passenger service had been strong. He thought there had
been five to seven percent cargo growth.
2:35:38 PM
Mr. Pannone reviewed budget highlights for the Division of
Facilities Services on slide 10. The division's FY 26
operating budget was $104 million, with $21.2 million UGF
and largely 82 million of interagency receipts. Project and
maintenance and operations were the two major parts to the
division. The division served multiple state agencies,
maintaining 827 public facilities spanning 50 communities.
The division was currently working on "Digital Twins," a
large initiative taking inventories using 360-degree
cameras to capture virtual models of buildings and capture
assets such as heating systems. The division had 180
projects underway.
Commissioner Anderson addressed key issues on slide 10. He
highlighted legacy systems, and noted DOT was going to
computerized maintenance management systems. He mentioned
assessments and tools that were economic to use to build
inventories. He mentioned great deferred maintenance lists
based on real time data. He mentioned that many of the
buildings taken care of by DOT had many occupants and
listed a focus on customer service and training. He
mentioned deferred maintenance and working on the backlog.
Representative Bynum stated that a lot of the spending for
departments was related to facilities and capital
infrastructure. He observed the number of facilities and
asked for the department's long-term capital replacement
plan aside from mentioning deferred maintenance.
Commissioner Anderson mentioned plans for replacement
facilities in three locations including Northway and
Haines. He offered to provide a complete list at a later
time. He understood Representative Bynum's concern with the
capital plan. He acknowledged that there was work to do on
the facilities side, and part of what DOT wanted to focus
on was inventorying what DOT had and what was utilized. He
did not believe they had any better information at present.
Representative Bynum asked what resources the department
needed to make a report on long-term capital needs.
Commissioner Anderson answered that rapidly changing
technology was contributing greatly to the issue. The
department was limited on human resources, but technology
tools could allow a person to do much more.
2:40:01 PM
Mr. Pannone responded that the division of facilities group
was looking at potentially contracting out condition
surveys in over 50 communities. The first step would be to
evaluate the conditions, which would help better prioritize
projects and have a long term capital plan. The division
director was also looking at different funding models and
how to manage the different types of buildings managed by
DOT.
Co-Chair Josephson remarked that the state had no
sophisticated deferred maintenance plan. He mentioned the
Capital Investment Fund, which was Amerada Hess-related
dollars that spun off $25,000 per year. He thought Utah was
a leader in the area. He asked what other states did with a
deferred maintenance strategy. He clarified it was not a
criticism and thought the state would do more if it had
greater funding.
Commissioner Anderson mentioned the Public Building Fund.
He thought expanding the fund had been discussed. He was
not familiar with Utah but would look into it.
Representative Hannan would like to see a list of what it
would cost to replace all of the buildings that needed
replacement. She mentioned collapse of the Palmer Library.
She mentioned the Fairbanks Pioneer Home, which was on the
deferred maintenance list. The home was more expensive to
maintain than replace, but she did not see a capital
request for replacement. She pointed out the lack of a
realistic picture of what needed repair. She emphasized
that the state needed a big-ticket goal before there were
elders in buildings collapsing. She wanted a realistic
discussion of what needed to be done. She knew the Design
Council was around with a plan that indicated 3 to 4
percent of the budget should be invested annually in
maintenance. She stressed the need for regular maintenance
and deferred maintenance.
2:44:43 PM
Commissioner Anderson was not aware of any buildings with
impending collapse. He understood Representative Hannan's
request for a list.
Mr. Pannone added that there was a list provided annually
and there was $83 million in deferred facilities costs
identified. He furthered that the governor's office and the
Office of Management and budget (OMB) also requested an
annual batch of deferred maintenance funds. The division
worked with the facilities council on prioritizing needs
with the limited revenue available.
Co-Chair Schrage thought there seemed to be blinders on
that the state did not address long standing deferred
maintenance. He thought the department had indicated it
needed technology to identify deferred maintenance, yet
there was already a large mass of buildings needing work.
He thought there were long-standing systematic problems in
the state. He asked if the current plan was adequate.
Commissioner Anderson relayed that DOT's focus was on
prioritizing because of working in a fiscal environment
with limited funds. He described boiler failures and
repurposing resources. He agreed that the planning was a
great step in understanding facilities. He reiterated that
it was a fiscally limited environment and there was a heavy
focus on prioritization.
2:48:00 PM
Mr. Pannone addressed FY 26 budget highlights for the state
equipment fleet on slide 11, with an annual operating
budget of $39.9 million collected through fees that DOT
charged other agencies. He cited that DOT was the largest
customer of the fleet at approximately 80 percent, which it
paid from the maintenance and operations budget. The funds
paid for heavy and light equipment mechanics, fuel, and
other associated costs. The department annually requested
an additional $39 million of highway equipment working
capital funds for replacements. There were currently 7,596
assets managed for state agencies, with 889 assets managed
for universities, housing, and energy sectors. There were
51 equipment maintenance shops and 3,400 active fuel cards.
Representative Bynum asked about the $39 million for the
fleet replacement in the capital budget for FY 26. He asked
if the request was part of a replacement plan.
Mr. Pannone directed attention to two numbers. The $39.9
million in operating costs on the top left was for
operating costs that paid for mechanics, and repairs and
maintenance for the entire fleet. The $39 million was a
capital request and was part of a plan. The statewide
equipment fleet had an inventory of all assets and
prioritized replacement on an annual basis. There was a
plan for the useful life of every asset.
Co-Chair Josephson asked if the two $39 million amounts on
the slide were different from one another.
Mr. Pannone agreed.
Representative Hannan asked if the $39 million for fleet
replacement was to replace the same exact item.
Mr. Pannone agreed. He relayed that as part of the rate,
users paid into the highway equipment working capital fund.
Then DOT paid out of the fund for an asset at the end of
its life and usually replaced with like assets.
Representative Bynum asked about end of life for equipment
and asked if items were cycled or at the true end of life.
He thought some of the equipment was probably sold off. He
asked if the state was running equipment to failure before
replacement.
Mr. Pannone responded there were several classes of
vehicles in the fleet. When each vehicle was purchased,
there was a predicted useful life of the item before
failure. The department calculated a salvage cost
reflecting how much the item could be sold at public
auction at the end of its useful life. The department was
replacing the assets before failure on a predetermined
schedule.
2:52:32 PM
Mr. Pannone addressed slide 12 pertaining to the Alaska
Marine Highway System (AMHS). For FY 26, DOT proposed a
flat budget for AMHS. Upcoming slides would address budget
structure. The department anticipated 9 ferries running to
35 ports of call and over 3,500 miles of routes.
Commissioner Anderson relayed that one challenge faced by
AMHS was the maritime workforce. He noted that DOT was
working with FTA and FHWA, both of which had different sets
of rules. He felt DOT had resolved some of the BA/BA. He
mentioned the M/V vessel Matanuska, which was the hotel
ship at present because it did not meet standards for
sailing. The department would undergo a process over the
following months to decide what to do with the vessel. He
continued that DOT had done a lot of work including looking
at hull structure. He discussed issues that needed
resolution. The department was working through the AMHS
Operations Board to determine the future of the vessel. The
long-range plan for AMHS was scheduled to come out the
following Friday and would have opportunities to comment.
Capital investment in vessels and terminals had been a big
push, with over $400 million in vessels and $170 million in
terminal facilities. A lot of work had been done with
modernization and customer service. He noted there was
Starlink Wi-Fi on the M/V Columbia. There were plans to do
the same on all vessels. He mentioned trooper ride-alongs
and working in partnership with the Department of Public
Safety.
2:55:50 PM
Commissioner Anderson turned to AMHS vessels on slide 13.
The slide showed all the different vessels and what was
currently being done or planned. He highlighted the M/V
Lituya, M/V Hubbard and M/V Aurora, with no major projects
planned. The M/V Columbia was the mainline vessel running
the Bellingham/Skagway/Haines route. The M/V Kennicott was
at Everett shipyard with a major emissions and exhaust
project for $25 million. The M/V LeConte was up for
extended overhaul over the winter. He thought the work
could extend into June. To accommodate additional
passengers, the crew was looking into the M/V Tazlina to
make up for the LeConte overhaul. The M/V Tustumena had a
replacement vessel project. The funding had been secured,
and the ship was in final design process. The bidding would
be out of bid in September or October. There was a design
for a new mainliner, and there was a grant for a no/low
emissions ferry that had gone out to bid for the design.
2:58:16 PM
Commissioner Anderson turned to slide 14 and discussed AMHS
terminals. There were 12 projects listed to upgrade
terminal facilities so that all AMHS vessels could fit all
docks. The next two to three years would see a lot of
construction.
Representative Bynum did not see Prince Rupert on the list.
He understood the state had some issues with Prince Rupert
and relayed he had heard many questions on the topic. He
pondered the reasons and asked what DOT was doing
differently to get back to that port or a Southern
connection. He asked what resources the department needed
to get back to the port. He wanted to treat it like an
emergency to understand what could get done.
Commissioner Anderson relayed that DOT had been to Prince
Rupert a year and a half previously trying to understand
what needed to be done. He mentioned that the state only
had one vessel that was capable of going to the port
because of Safety of Life at Sea (SOLAS) certification
verification. The M/V Kennicott was the only vessel that
had SOLAS certification. He mentioned that the
infrastructure in Prince Rupert needed to be upgraded. He
mentioned federal funds and BA/BA requirements being
applied on Canadian soil. There had been a waiver
submitted, which approved would be step forward.
3:01:25 PM
Representative Bynum thought Commissioner Anderson had
indicated that the primary challenge was the waiver.
Commissioner Anderson mentioned that funding was also an
issue.
Representative Bynum thought DOT just had to make the issue
a priority. He wanted to know if the waiver was the largest
hurdle. He wanted to solve the problem and looked forward
to further discussions.
Representative Allard had a candid conversation with one of
the senior captains in her district. She had discussed the
cross-gulf ferry from Whittier to Juneau and previously
heard that there were not enough employees. The captain had
indicated that employees were not the issue, but rather
ferries that were breaking down. She wondered about having
the transportation reinstated.
Commissioner Anderson answered that the only vessel that
could do a cross-gulf trip was the M/V Kennecott, which was
currently getting the emissions repaired. He continued that
having a new mainliner constructed would give the ability
to make the run. The AMHS was currently very constrained
with vessels.
3:04:44 PM
Representative Allard asked what the department needed to
fix the problem.
Commissioner Anderson mentioned the long-range plan coming
out Friday and making sure it would address service levels,
including the cross-gulf from Whittier to Juneau. He
thought it would take time to get back to where people
wanted it to be, and it would take more vessels.
Representative Hannan referenced Representative Bynum's
question about Prince Rupert and thought the problem was
two-fold. She thought the problem was not only the waiver
but the SOLAS certification. She emphasized that the state
did not have any vessels that were adequately prepared to
cross the gulf, and it needed to. She emphasized the
Yakutat had no ferry service for three years. The mammogram
equipment could not reach the community. She emphasized
they could not wait for another mainliner to be built.
3:07:16 PM
Mr. Pannone addressed DOT's proposed change to the FY 26
budget structure on slide 15. He noted that AMHS was on the
calendar year, which meant that its budget started six
months after all of the other state budgets. He described
the multi-year waterfall model shown on the slide. He
highlighted the significant administrative burden of budget
close outs on the calendar year as well as the fiscal year.
He discussed flexible carry-forward or roll-forward of
funding surplus or shortfall. He suggested the change would
lead to better management of funds.
Mr. Pannone addressed the history of federal funding for
the Rural Ferry Program on slide 16. It showed the budget
composition since 2023. He described that AMHS had been
leveraging the Rural Ferry Program that was authorized in
the Infrastructure Investment and Jobs Act (IIJA) for an
operating grant on an annual basis. The current year's
budget was structured with an anticipated $76 million award
that DOT would apply for when the notice of funding
opportunity came out.
Co-Chair Josephson asked when the state would hit the cliff
wall where the funding was gone.
Mr. Pannone answered that the authorization was for $200
million for five years. Currently there was $410 million
remaining in the program to be awarded. The $76 million DOT
was hoping for would come out of the remaining amount. The
department would continue to submit for grant awards after
the $410 million was gone. They were hoping the program
would be reauthorized, which was not un-typical of programs
in infrastructure.
3:10:33 PM
Mr. Pannone advanced to slide 17 titled "Trends: Budget,
Expenditures, Revenue." The graphs on the slide went back
approximately 10 years. He pointed out a dip in AMHS
revenue in 2020 going from $50.8 million to $28.5 million.
The revenue had not recovered since the Covid-19 period. He
commented that AMHS had been growing into the current
budget. In 2023 there was $133 million in expenses in a
$144 budget. in 2024 there was $150 million of expenses in
a $158 million budget. He explained that DOT was continuing
to anticipate closing the gap and growing into the budget
AMHS had.
Mr. Pannone discussed ridership history on slide 18. The
graph showed the number of vessels operating, the number of
vehicles carried, and the number of passengers on the
system. The red line depicted expenditures. He observed an
increase in vessels around 2004 that indicated the fast
ferries. Around 2014 and 2015, there were less vessels
running which denoted selling the fast ferries and the M/V
Malaspina. He pointed out a significant dip during the
Covid-19 pandemic. He highlighted a recovery path with
ridership, and hoped the long-range plan provided a long-
term vision for the system.
Representative Bynum mentioned the dip during Covid-19,
which he thought had some impact on ridership. He thought
routine schedules and having vessels in the water was what
generated revenue and ridership. He asked to discuss the
impact of the lack of frequent schedules and vessels
running and causing an impact on revenue and ridership.
Mr. Pannone answered that one of the drivers behind the
calendar-year budgeting was to have longer visibility on
the budget to get schedules out quicker. He mentioned a
positive correlation between ridership and getting
schedules out quicker. He described the main limiting
factor as a lack of staffing on ships. He relayed that the
forward funding was trying to achieve predictability.
Representative Bynum asked the department to provide a
report to the committee that specifically addressed
staffing issues and what the department was doing to solve
the issue. Additionally, he asked for information on
minimum staffing levels required by the U.S. Coast Guard
and regulatory agencies to operate vessels, compared to
obligations under contracts and AMHS standards.
Mr. Pannone responded affirmatively.
3:14:44 PM
Representative Allard asked about a constitutional
obligation for a ferry system.
Co-Chair Josephson replied in the negative. He thought the
AMHS dated back to right after statehood.
Commissioner Anderson was not aware of a constitutional
mandate.
Mr. Pannone addressed the AMHS Fund on slide 19. The slide
outlined the two funds that were outlined in statute. The
AMHS Fund included the deposit of all receipts generated
from the system. The department was required to report on
the fund on a fiscal year basis, which provided fund
balances and revenues. The table on the slide ultimately
showed that with revenues remaining, there was a potential
for a shortfall in the fund in FY 26. Part of the long-
range plan would be to address revenue, and the fund would
need an increase of $4 million annually to keep the fund
positive.
Mr. Pannone addressed the AMHS Vessel Replacement Fund. The
funds were for replacing vessels. There was currently $19.6
million unappropriated and not designed for any of the
vessels that were discussed during the meeting.
Representative Bynum discussed revenue generated by AMHS.
He emphasized that the AMHS was Southeast Alaska's highway.
He asked what kind of revenue was generated from highways
in the rest of Alaska to pay for the systems as opposed to
what AMHS was doing with ridership fares and fees on its
vessels.
Mr. Pannone answered that DOT collected an 8 cent per
gallon Motor Fuels Tax, which was largely the basis for
user funding. Additionally, DOT received federal funds from
the FHWA from the federal highway account. The AMHS
generated roughly $36 million per year from ridership.
Representative Bynum asked if DOT had an analysis that had
a per-user comparison. He pondered the cost of riding the
ferry as compared to the 8-cent motor fuel tax.
Mr. Pannone replied that the department could provide the
number of miles traveled in its annual traffic volume
report. He thought it would be possible to make
correlations with average daily traffic on highways and
provide some high-level numbers on the number of diesel and
gas consumed on state roads. He was not aware of a specific
analysis but offered to do some research.
Representative Bynum asked for the information to be
correlated to the cost spent for both programs.
Mr. Pannone agreed.
3:19:32 PM
Commissioner Anderson addressed AMHS crewing and lodging on
slide 20. He pointed out the AMHS crewing options as of
February 7th, which included job classes. He pointed out
categories of "currently employed," as well as "minimum
needed" and the current status based on the criteria. He
pointed out that overall AMHS was in the red with needs for
filling positions. He mentioned that typically the higher-
licensed positions saw the biggest stresses. He mentioned
better luck with recruitment for entry-level positions. He
emphasized the amount of training needed for people to move
up through the ranks. He mentioned AMHS wages and the
comparison with Washington State Ferries. He noted that the
state did have a nice benefit package, and DOT was working
on getting the same information from Washington in order to
do an analysis with the complete information.
Commissioner Anderson turned to the STIP Amendment 2 on
slide 21. He encouraged members to submit comments. He
relayed that the plan was a culmination of the original
STIP and working with the federal government on issues.
Representative Jimmie understood and appreciated the AMHS
since her district had the same appreciation for aviation.
She stated there was no highway in her district, but the
area utilized the Kuskokwim River ice in the winter. She
asked if the adjusted base had ever included consistent
for the Kuskokwim River ice, and if the department had
requested funds to maintain it.
Commissioner Anderson answered that the department had been
pushing forward its ice road program across the state,
including the Kuskokwim River. He thought the previous year
DOT was funding the Kuskokwim. He relayed that one could
see the funding in the STIP as a federally funded program,
and DOT was working to have it exist with a regular program
in the STIP. The program had not been added to the
operating budget.
Representative Jimmie asked why the funding was not added
into the operating budget.
Commissioner Anderson stated that DOT was looking at
leveraging federal funds when possible. There had been new
eligibility through the Infrastructure Investment and Jobs
Act (IIJA) that allowed for ice roads to be funded through
federal dollars. There had not been an ice roads program
previously, and currently DOT was proposing a $3.5 million
ice roads program for the state, which was unprecedented.
Co-Chair Josephson asked if Representative Jimmie should be
confident that the IIJA funding would flow. He referenced a
previous amendment proposed for Kuskokwim River ice
maintenance.
Commissioner Anderson answered that DOT was currently
funding the Kuskokwim River. The department was working to
solidify the federal program, which would be the most
sustainable way to do it for the future.
3:25:46 PM
Representative Hannan asked about the STIP amendment
program on slide 21. She had constituent groups meeting
with her that day and had heard about things being added to
the STIP and a governor's amendment. She asked about
taking public comment and whether the STIP amendment was a
fixed list. She asked about the status of the list.
Commissioner Anderson answered that the QR code on the
slide would get to the STIP Amendment 2. The STIP Amendment
2 was DOT's proposed four-year plan of what would be funded
for projects. He stressed that there was an opportunity for
members to comment and provide feedback. He noted would be
a change record to see what had occurred.
Representative Hannan asked if people needed to send public
comments in support of items on a list.
Commissioner Anderson confirmed that the STIP Amendment 2
was a draft document, and it would not be finalized until
approval by FHWA and the Federal Transit Administration
(FTA).
Co-Chair Josephson asked for verification that the STIP
could include road projects that were not in existence yet.
He used the example of investment in the West Susitna
Access Road. He asked if the project was in a STIP.
Commissioner Anderson answered that the project was in the
current STIP.
Co-Chair Josephson asked if the project required a state
capital budget match before it could be realized.
Commissioner Anderson relayed that the majority of the
projects in the STIP required a match.
Representative Tomaszewski thanked the department. He
complimented the department. He commented that there was a
lot to do in DOT. He mentioned that the department had been
very helpful and responsive in the northern region.
Co-Chair Josephson thanked the department for its
presentation.
HB 53 was HEARD and HELD in committee for further
consideration.
HB 54 was HEARD and HELD in committee for further
consideration.
HB 55 was HEARD and HELD in committee for further
consideration.
Co-Chair Josephson reviewed the schedule for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 20250225 HFIN DOTPF Overview AMHS Overview.pdf |
HFIN 2/25/2025 1:30:00 PM |
HB 53 |