Legislature(2023 - 2024)ADAMS 519
02/28/2024 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Overview: Fy 25 Budget Overview Department of Transportation and Public Facilities and Stip Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 268 | TELECONFERENCED | |
| *+ | HB 269 | TELECONFERENCED | |
| += | HB 270 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE BILL NO. 268
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making capital 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. 269
"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. 270
"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."
Co-Chair Johnson reviewed the meeting agenda.
^OVERVIEW: FY 25 BUDGET OVERVIEW DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES AND STIP UPDATE
1:50:21 PM
RYAN ANDERSON, COMMISSIONER, DEPARTMENT OF TRANSPORTATION
AND PUBLIC FACILITIES, introduced a PowerPoint presentation
titled "Alaska Department of Transportation and Public
Facilities: DOT&PF Overview and STIP Update for House
Finance," dated February 28, 2024 (copy on file). He
relayed that when it came to the Statewide Transportation
Improvement Program (STIP), the Department of
Transportation and Public Facilities (DOT) recognized the
seriousness of the situation. He relayed that staff had
been working on the topic around the clock to ensure DOT
was meeting the deadlines and was working with the Federal
Highway Administration (FWHA) to make sure the department
was on track to meet the deadline of the coming Friday. The
presentation would begin with an overview of the budget.
1:51:09 PM
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES, began on slide 2
with a high level overview of funds available to DOT. The
top portion of the slide showed all major program areas at
a total of $767 million. The bottom portion of the slide
reflected unrestricted general funds (UGF) and designated
general funds (DGF) showing the state's investment in
operating the highways infrastructure. The primary
difference was that the reduction of DOT's capital program
was not reflected (it was not UGF) and the international
airports were "other" funds. Slide 3 showed an FY 23 budget
lookback depicting how DOT managed through budgetary and
other challenges. The department used COVID-19 relief funds
through the past four years to address additional needs
including forward funding the Alaska Marine Highway System
(AMHS). The department had been able to substitute UGF and
leverage COVID funds for operational uses. Additionally,
DOT was keeping equipment in the state equipment fleet
longer, which reduced costs but increased the operational
costs and repairs and potentially downtime for older
equipment. The department had been utilizing emergency
weather and catastrophic event appropriations from the
capital budget; it had received $13.2 million since FY 21
and continued to use the funds to help absorb spikes in the
operational budget due to extreme weather events.
1:52:51 PM
Commissioner Anderson addressed the overall FY 25 budget
amount on slide 4. The department managed its funds between
14 maintenance districts. There were 621 equipment
operators (seasonal and permanent), 80 staffed maintenance
camps, and 235 airports. He noted that 26 of the airports
had Part 139 certification, meaning the airports were
Alaska Airlines compliant. He addressed critical job class
vacancies on the lower half of the slide. There was a 28.9
percent vacancy rate in equipment operators statewide. He
highlighted a vacancy rate of 75 percent in Southfork, 26
percent in the Dalton district, and 60 percent in Northway.
He relayed it was becoming increasingly difficult to find
equipment operators in rural areas as well as others. The
right portion of the slide showed annual supplemental
reappropriations. The funds enabled the department to keep
its baseline budget whole when events occurred that were
above and beyond what the department was budgeted for.
1:54:24 PM
Mr. Pannone turned to slide 5 and provided a high level
overview of UGF increments in the DOT base budget. The
highways and rural aviation component included $9.9 million
in UGF increments for rural airport lighting, commodities
increases, and changes in federal funding for the Anton
Anderson Memorial Tunnel in Whittier. He noted that the
commodities increases had already occurred and were not a
result of projected inflation increases. The budget
included a $1.3 million increase for utility and energy
costs at its facilities. He noted the department had seen a
15 percent increase in the past several years. The budget
included a couple of fund swaps. He explained that DOT was
swapping away from the final amount of federal COVID relief
funds to $9.8 million UGF in its rural airport system.
Additionally, the Sitka airport was switching from
international airport funds to UGF because it was no longer
an emergency divert airport for the international system.
1:55:30 PM
Mr. Pannone addressed the Whittier Tunnel funding swap of
$2.875 million UGF on slide 6. The fund swap was the result
of an audit from the FHWA office, which had evaluated all
toll facilities to ensure they were not over-receiving
federal funds. The audit presumed the Whittier Tunnel had
over-received federal funds in the amount of $15 million.
The department had negotiated out of the $15 million
payback by making the case that the tunnel was an
intermodal connector and a necessary road of the AMHS,
which entitled it to 100 percent federal funds. The
department would be renegotiating the tunnel operations
agreement and once the agreement was complete the funding
would revert back from UGF to federal.
Commissioner Anderson reviewed slide 7 showing core changes
in the operating budget. The slide included UGF receipts
based on some of the challenges the department was
experiencing, including rising commodities costs for
maintenance and operations in the amount of $4.5 million.
The department was establishing a new component for snow
removal to improve service to the public (contracting out
snow removal when necessary due to large snow events). The
department was looking at an agricultural roads maintenance
program. He elaborated that under the food security
priorities of the governor, the program would enable DOT to
address some gravel roads serving agricultural areas that
were in poor shape and had not seen work in a long time.
The department was also experiencing a reduction in the
federal funding share. Additionally, the department needed
a funding increase to cover the transfer of responsibility
agreements (TORA). He detailed that TORAs were agreements
with municipalities for things like lighting and
maintenance.
1:57:41 PM
Mr. Pannone addressed budget transactions relating to rural
aviation on slide 8. The first item was a request to add
rural airport leasing receipt authority for law enforcement
support in Adak. Adak had a Part 139 airport and the
emergency plan required law enforcement to be present for
TSA [Transportation Security Administration] screening. The
authority would enable DOT to collect money from the air
carrier to pay for the law enforcement officer's time. The
department had established an agreement with the Anchorage
International Police Force to have an officer fly from
Anchorage to Adak for the screenings. The second item was a
request for Sitka airport operations. He detailed that the
Sitka airport cost roughly $1 million per year to operate.
The airport had been receiving a subsidy from the
International Airport Revenue Fund. The signatory airlines
in the international airport system decided they did not
want to pay for the Sitka airport as an emergency divert
airport; therefore, the funding had been removed and was
switching to UGF. The last item was airport lighting
repairs. There were approximately 116 airports with lights,
75 percent of those systems were installed prior to 2012.
The systems had a projected useful life of 20 years. He
elaborated that there were many aging lights and inspection
and repairs could cost $25,000 per airport. The department
was required to check every system once every three years
at a minimum. The department was also hoping to purchase
additional standby systems (shown in a picture at the
bottom of slide 8).
1:59:22 PM
Commissioner Anderson discussed the budget for the state
equipment fleet on slide 9. The fleet included 51
maintenance shops across Alaska and 156 permanent full-time
positions. The fleet included heavy equipment and emergency
and passenger vehicles. He noted that the fleet served all
state agencies as well as outside organizations like the
University of Alaska. The fleet was funded from operating
rates paid into the Highway Equipment Working Capital Fund
(HEWCF). The vacancy rate for mechanics was 22 percent
statewide, 50 percent in Denali, Nome, and Ketchikan, 67
percent in Valdez and Bethel, and 100 percent in Tazlina.
He added that mechanics were co-located in DOT maintenance
camps with its highways and aviation officers.
2:00:30 PM
Mr. Pannone addressed the $102 million FY 25 budget for the
Division of Facilities Services (DFS) on slide 10. The
division maintained over 820 facilities across five
different departments with 144 employees and 150 capital
projects for 10 agencies. Prior to 2018 there were regional
facility components. Subsequent to that time, DOT
established a centralized structure and used an enterprise
model that billed other agencies and DOT for maintenance
services. The department determined it could directly fund
DFS by moving the real dollars to its budget, which would
result in better decision making and increased efficiency
instead of billing another part of DOT for utility bills or
services. The department was transferring approximately $20
million from the regional facilities components to DFS to
cut down on the duplicate effort of billing internally.
Mr. Pannone turned to slide 11 outlining the increases for
the Alaska International Airport System, which included the
Anchorage and Fairbanks international airports. The system
was fully funded by the International Airport Revenue Fund
and the signatory airlines DOT had an operating and lease
agreement with had agreed to fund the entire system and
enterprise. He listed International Airport System budget
items beginning with an airport police and fire officer
class study at a cost of $2.1 million. Items 2 and 3
reflected an increase related to DOT's requirement to audit
and report to the Department of Administration and the
signatory airlines on an annual basis. The department had
auditing services in the past, but there had not been
increases in several years. The fourth item was a TSA
required aviation workers screening program, which was a
new unfunded requirement. Items 5 and 6 were increases in
field training increases. He detailed that TSA and Part 139
required airport rescue and fire fighters to conduct annual
live fire training with a fire pit and mockup airplane.
Item 7 reflected increased parking for the Anchorage
International Airport. The contract had seen increases due
to increases in snow removal requirements as well as
general increases; there had not been an increase since
approximately 2014. Item 8 was an increase for operational
support software responsible for running flight information
screens and kiosks in terminals. The last item was an
increase for public safety radio and dispatch systems to
reflect an increase in repairs and maintenance
requirements.
2:04:15 PM
Mr. Pannone turned to slide 12 and discussed AMHS budget.
He noted that AMHS was on a calendar year budget and its
2025 budget request was $158 million. The 2025 budget was
largely a copy forward from the 2024 budget and relied on
$70 million in federal revenue. He pointed to a graph on
the slide and noted that in calendar year 2023, $130
million of the $144 million budget was expended. He
explained that AMHS was still growing into the budget
level. The department was facing challenges with crew and
some vessel availability and being able to expend the
entirety of its budget. Hiring was trending in the right
direction, but AMHS was still facing challenges with
licensed positions. The graph showed that revenue was
recovering; there was a slight decline in calendar year
2023 attributed primarily to the absence of a cross-gulf
run, which was usually a high revenue route. He noted that
instead, there had been an increase in Southeast routes.
Mr. Pannone addressed additional operating budget items on
slide 13. There was a transfer of Office of Information
Technology (OIT) staff to DOT at the direction of the
legislature. The department was adding $1 million back into
its budget to collect from elsewhere in the department for
the staff. The budget included an increase [of $778,100]
for marine highway vessel payroll. He elaborated that
roughly five employees had been transferred from DOA and
four from elsewhere in DOT to establish payroll for AMHS,
which was charged to AMHS. He addressed capital program
increases including $6 million for the new Data
Modernization and Innovation Office. The office would
provide a new level of metrics and information to help
support a number of efforts including the STIP. There was
an increase of $1.1 million for cross functional support to
help address a number of issues statewide and bring
consistency across the department in its interactions with
the public. The request included some recruitment and
outreach efforts.
Mr. Pannone addressed organizational efficiency budget
components at the bottom of slide 13. The department was
merging some areas where it was unnecessary to have two
different budget components [design, engineering, and
construction merged]. There was a facilities services
transfer of $19.6 million to directly fund DFS. He noted it
constituted a movement of funds within DOT's budget.
2:07:22 PM
Co-Chair Johnson understood there were some federal funds
that may or may not come through for AMHS. She asked when
the state would know whether more federal funding would be
coming for AMHS. She did not recall the amount.
Mr. Pannone responded that in the calendar year 2024
budget, DOT was short by roughly $26 million. The
department was mitigating the 2024 budget by using $13
million in carryforward from 2023. The revenue gap in 2024
was about $13 million. The department was not certain it
would spend enough to reach the gap in revenue; it was
still tens of millions more than AMHS spent the prior year.
There was $70 million in federal revenue in the 2025
budget. He relayed that the Federal Transit Administration
(FTA) would be issuing a notice of funding opportunity
within the next month and DOT would apply for the funds at
that time.
Representative Stapp referenced the Whittier Tunnel fund
source swap. He referred to the 80 percent toll
participation rate where DOT had been able to return to 100
percent federal funding. He considered a scenario where the
state spent the general fund dollars because of the
maintenance contract. He asked if DOT would be able to
supplant them with federal funds later on in the event the
funds were received.
Mr. Pannone answered that the department's plan was to
revise the operating agreement citing the federal law that
enabled DOT to receive 100 percent federal revenue for
operations of necessary roads for AMHS. The FHWA had given
a cursory nod of approval. Once the operating agreement was
revised, DOT hoped to negotiate the federal agreement for
100 percent of the operations for the tunnel and a
commensurate swap of funds.
2:10:23 PM
Representative Stapp restated his question. He asked if the
general fund money spent on the tunnel would be repaid with
the potential federal funding. Alternatively, he wondered
if the general fund money would not be repaid.
Mr. Pannone responded that at that point in time, the
department would revert away from any unspent UGF funding.
Representative Galvin referenced $422 million in COVID
relief funds shown on slide 3. She asked if there were any
of the funds remaining.
Mr. Pannone answered that the department did not project
any [COVID relief] funds remaining beyond FY 24.
Representative Galvin observed that vacancies appeared very
high in rural areas and 28.9 percent statewide [for
equipment operators]. She referenced the department's
discussion about working through the situation. She asked
if there were specific programs, internships, or training
available to alleviate the problem.
Commissioner Anderson answered there were various things
done in different maintenance district camps. Some areas
were okay, and some had increased vacancy rates at
different time periods. One of the strategies was using
mission critical incentive pay where the department had
done letters of agreement with the union and increased pay
by 30 percent. The mission critical pay had been used at
the Anchorage and Fairbanks International Airports the past
year and in areas such as Nome, Kotzebue, St. Mary's,
Unalakleet, Valdez, and Cordova. The department had
submitted a current proposal to the union to use the pay in
the Tok area in response to a large increase in vacancies
in the area; the proposal had not yet been signed by the
union. The department had also provided incentives with two
weeks on, two weeks off schedules for employees. He relayed
that the Local Trades and Crafts Union was in active
contract negotiations for a renewed contract in the current
year. He stated that DOT was hopeful that any issues that
were contract related would be resolved in the renewed
contract.
Representative Galvin stated her understanding there were
enough skilled workers needed by DOT and the department was
trying to incentivize them to work for the state through
providing critical emergency pay.
Commissioner Anderson answered that he could not say there
were enough skilled workers out there. The pay had helped
to stabilize things, but the department was not attracting
a lot of new employees.
2:14:26 PM
Representative Hannan referred to the AMHS budget and the
lack of revenue due to the absence of a cross gulf ferry.
She highlighted that the upcoming summer schedule did not
include a cross gulf ferry. She believed there was a ferry
run to Yakutat in March and she had not checked to see if
it included a cross gulf route. She asked if the
calculation of revenue was considered when putting together
the summer schedule. She knew a lack of staffing was not
allowing AMHS to run all of the vessels, but it had been
nearly a year without a cross gulf ferry, which was a
revenue generator.
Commissioner Anderson answered that the one cross gulf
vessel was the Kennecott. He stated that the past year, DOT
had to decide whether to run the Kennecott or the Columbia.
He elaborated that the Columbia had two decks and the
capacity to hold more vehicles and it had been fairly full
doing the Bellingham [Washington] run, not going across the
gulf the past year. The department had been running the
Kennecott some during the current winter when the Columbia
had gone in for overhauls. The department was keeping all
of the ships ready to go. He explained that DOT had the
funding to run the Kennecott, but it was a staffing
problem. The department had teams working on recruitment
and the director of the program had initiatives going to
get out to locations to attract employees. The focus was on
how to attract employees to get the Kennecott running,
which would open up the cross gulf route.
2:16:30 PM
Co-Chair Johnson noted that House floor session would
resume at 3:15 p.m.
Representative Ortiz referenced earlier discussion about
expected federal funds [for AMHS] of around $26 million
that may not come through. He believed Mr. Pannone stated
that DOT had $13 million in carryover funding to help make
it up and there was an expectation AMHS would not spend up
to $26 million anyway. He asked how it was accomplished. He
wondered if it meant not running boats, resulting in less
service.
Mr. Pannone responded there was $66 million in federal
revenue in the [AMHS] FY 24 budget. There was a $38 million
grant and $13 million in carryforward. He explained that
the funds resulted in $13 million more available than was
spent the previous year. He explained that if AMHS was able
to run an additional ship it could spend the money. He
elaborated that if spending exceeded the $13 million and
reached the territory with the revenue shortfall, the
department would look at other federal funds from FHWA or
some other potential solution.
Representative Ortiz asked if the other ship was the
mainliner that would likely not run due to a lack of crew.
Commissioner Anderson confirmed it was the Kennecott.
Representative Ortiz acknowledged that AMHS lacked the crew
for the Kennecott. However, he surmised the department was
saving money by providing less service to people relying on
transportation.
Commissioner Anderson agreed that AMHS was not running a
cross gulf route, which meant less service.
Co-Chair Johnson wanted to move forward with the Statewide
Transportation Improvement Program (STIP) portion of the
presentation.
Commissioner Anderson began the STIP portion of the
presentation on slide 14. He explained that that STIP was a
requirement for accepting federal funds. The STIP addressed
surface highway transport, AMHS, and the FHWA and FTA
funding. The STIP was a four-year planning document; the
current plan was 2024 to 2027. He elaborated that the STIP
was a fiscally constrained document that projected revenue
and how the state would invest the revenue. The STIP
decided federal funded projects and sometimes included
other projects with regional and statewide significance.
Sometimes the STIP included more than federally funded
projects.
2:21:14 PM
Commissioner Anderson turned to slide 15 titled "How does
the STIP Impact Projects on the Street?" He relayed that
project delivery continued at present. He explained that
DOT was granted an extension of the 2023 STIP, which ran
out on March 31, 2024. Once the extension ended, DOT's
authority to obligate projects and expend funds would
conclude. Projects continued to be obligated under the
extension and were currently close to $200 million in the
current year. There were carryover projects that had not
been impacted. He detailed that about $350 million in
construction projects were bid and awarded the previous
year that would continue in the current year. There was a
little over $100 million advertising for the coming summer
construction season. He explained that every time DOT
started a federally funded project or there was a different
phase in the federal highway world to acquire land, for
utility relocations, or construction, the phase had to be
listed in the STIP and DOT had to obligate to that phase.
As long as a phase was listed in the STIP and had
associated funding, a project or construction could move
forward. Without the STIP, DOT lacked the authority to move
a project forward.
2:23:16 PM
Commissioner Anderson turned to a timeline of the
department's work on the 2024 to 2027 STIP. The
department's planning staff began work on the STIP in
December 2021 with an electric platform product called e-
STIP or STIP Manager. The platform was cloud based and open
source, which the department believed would be a good step
forward to modernize and ensure the STIP was available to
the public and DOT staff. The e-STIP was a vendor-supplied
product and in May of 2023, DOT determined that the product
had faults. The department had gone through a series of
certification reviews and had discovered that the numbers
were not adding up. The department had been faced with
deciding whether to continue on and fix the problem or
pivot and get into something else.
Commissioner Anderson expounded that the new federal FY 24
would begin on October 1, 2023, and the STIP would need to
be established and approved. At that point, DOT pivoted to
a new platform called Airtable, which had increased
capability and proven accuracy. He elaborated that between
May 2023 and July 2023 the STIP had been converted from one
platform to another. The conversion allowed the department
to open the STIP for public comment on July 20, 2023,
through September 3, 2023. The department had received a
substantial number of comments from the public, local
governments, and legislators. He relayed that the 2020 to
2023 STIP had less than 30 comments, while the 2024 to 2027
STIP received over 1,200 comments. Subsequently, DOT asked
FHWA for a STIP extension to provide time to work through
the comments. The department developed a draft revised STIP
and began consultations with FHWA and submitted a first
draft in November 2023. There had been additional FHWA
consultations between November 2023 and January 2024. The
department had done a formal submittal on January 19 with
the idea that if anything came up before March, the
department would have another shot to address it. The FHWA
had provided a formal finding to DOT on February 12. The
final submittal deadline was the coming Friday, which
included all of the corrective actions [outlined by FHWA].
2:27:35 PM
Commissioner Anderson turned to slide 17 and discussed the
e-STIP problem. He explained that past STIPs were a series
of spreadsheets passed along from one group to another. The
department wanted a system that documented and had much
more functionality for searches. The slide showed the
overall work timeframe from December 2021 to May 2023.
Another reason for the e-STIP was that it was a modern tool
also used by the Metropolitan Planning Organization (MPO)
that was also required to do its own transportation
improvement plans (TIPs). In May 2023, the commissioner's
office began having more involvement due to the need to add
resources to the effort and to start pushing on the
timelines. The department had looked at how it had done
things over the past six months, and it had a 30-person
multidisciplinary team that included expertise in
technology and public and stakeholder engagement. There had
been a program management and administration group on the
fiscal side to ensure DOT was connecting the dots with
legislative authority and other financial components. The
project delivery component was critical and as the process
moved forward, the department brought in directors from
every region. He noted the importance of ensuring that the
cost estimates and schedules were lined out accurately for
project delivery. Additionally, the department worked to
ensure it was on track with the planning piece. He relayed
that the work on the STIP had been a big effort with
substantial resources and time going toward the process.
2:30:14 PM
Commissioner Anderson moved to slide 19 and discussed the
new open-source STIP platform the department was moving
forward with. The platform was used for the public notice
period and showed how to find information through tables
and dashboards. The public could select projects based on
region, investment area, legislative district, or type. The
platform also included tools for DOT staff to link to
project delivery, track cost increases, and legislative
authority.
Commissioner Anderson turned to slide 20 and discussed the
45-day public notice. The department used publications in
statewide newspapers and in a statewide STIP mailer.
Additionally, DOT held public meetings, presentations to
civic trade groups, direct emails to cities, boroughs,
tribes, nongovernmental organizations, direct contact with
underserved communities and municipal planning
organizations, and provided a joint House and Senate
Transportation Committee presentation.
2:31:47 PM
Commissioner Anderson advanced to slide 21 showing a
summary of consultations after the public notice period
(September 4 to January). The list included consultations
with MPOs and the FHWA. Additionally, the list included the
resolution of the 1,200 public comments.
Co-Chair Edgmon asked why the February correspondence was
not included on the list on slide 21.
Commissioner Anderson agreed that the February
correspondence should have been included on the list.
Co-Chair Edgmon was interested in a listing of the tier 1
projects that were rejected given the February 23
correspondence. He thought it may help get to the heart of
the matter of the issue. He thought the commissioner had
done a great job laying things out. He cited language from
the U.S. Department of Transportation in its February 23
correspondence that it believed progress was being made
based on engagement between federal agencies and DOT. He
was trying to gain an understanding of why there was so
much controversy around the issue.
Commissioner Anderson would answer the question as he
worked through the next several slides. He moved to slide
22 titled "Resolution of Public Comments." The department
received over 1,200 comments and the new platform enabled
DOT to easily view and separate the comments out. He
detailed that 36 percent of the comments were on the West
Susitna access project, with the majority of the comments
opposing the project. He noted there were also a fair
number of comments in support of the project. He
highlighted that all of the comments were available on
DOT's website. He elaborated that 11 percent of the
comments mentioned the Manh Cho mining operation and the
Richardson Steese Highway projects, and 6 percent of the
comments were on Sterling Highway/Anchor Point. Other
comments of note were on the Mat-Su area roads, Anchorage
area roads, Kenai area roads, Southeast area roads, AMHS
projects, Cascade Point, Juneau North Douglas Crossing,
Cooper Landing Bypass, and the Glenn Hwy Highland
Interchange. Public comments were also broken out as
follows:
Public Comments:
•909 Individual
•12 Legislative
•59 Local Government/Tribes
•67 Non-Governmental Organizations
•86% Alaska based comments
•14% Out of State comments
2:35:10 PM
Commissioner Anderson addressed fiscal constraint/project
delivery corrections on slide 23. He began with existing
challenges and explained that the old STIP was $3 billion
"over programmed," which was something that got carried
into the new STIP that the department had to tackle. The
FHWA indicated that fiscal constraint meant there was a
revenue forecast that dictated the STIP funding. In the
past, the state had been able to over-program by 30
percent. He explained that the change required the
department to look at existing project schedules and how
the costs had increased many of the costs had increased
over the past couple of years and start making decisions
on what made sense within the STIP time horizon.
Co-Chair Johnson asked for a definition of the term "over
program."
Commissioner Anderson answered that under the National
Highway Performance Program the state was apportioned
between $400 million and $500 million per year for projects
in the national highway system. In the past, the state had
been able to have a program indicating it may receive $600
million worth of projects, knowing there were problems that
arose with projects annually such as right of way
acquisition challenges. The state was now required to put
in the actual number for the projects and was not allowed
to over program any longer.
Commissioner Anderson continued to address slide 23. He
referenced the challenge of inflation costs and explained
that the state had a fair number of very large projects,
particularly on the national highway system such as the
Cooper Landing Bypass, which had experienced cost increases
over the past couple of years. There had also been large
projects on the Seward Highway with cost increases. He
detailed that projects that had previously been in the $50
million to $75 million range had grown to $100 million to
$150 million. The department wanted to care for the
contracting communities throughout the state and to avoid
starving out one area from another. The department was also
recognizing the needs of the individual districts and
regions across the state. Additionally, DOT had to adhere
to federal performance measures for pavement and bridge
condition, which it did very well on.
2:38:25 PM
Co-Chair Johnson asked Commissioner Anderson to expand on
the fiscal constraint over-programming.
Commissioner Anderson responded that there was $3 billion
more in projects over what could be included in the STIP.
For example, if the overall STIP was worth $4 billion, the
state had $7 billion in projects.
Co-Chair Edgmon returned to the February 23 correspondence
that included a reference to tier 1 projects that appeared
to have been rejected. He asked for additional details.
Commissioner Anderson turned to slide 24 to answer the
question. There were three tiers of corrective actions. The
first tier included corrective actions that were required
to be completed before the STIP could be approved. The
second tier items needed to be resolved within the first
STIP amendment or within six months, whichever came first.
The third tier included corrective actions that were
primarily project-by-project, which would have to be
resolved one at a time going forward working through the
projects. Within each of the tiers there were individual
actions required.
Commissioner Anderson began with the tier 1 findings
located under tier 1 conditions for STIP approval in the
findings letter. The first finding related to MPOs and
other TIPs. The finding indicated that the way the state
had been managing its projects, particularly the national
highway system projects, within the boundaries of an MPO
was not correct. The department had a series of discussions
with the FHWA prior to its submittal in January and its
understanding had been that if a project was not in an MPO
TIP it had to be removed from the STIP; therefore, DOT had
removed the projects. He stated that the corrective action
finding took it a step further and specified that even if a
project was in an MPO TIP, it should not be included in the
STIP. The department had some internal discussions about
the legality of the of that. He questioned if the state or
MPO had the planning authority when there was a national
highway system route running through a metropolitan area.
The department's stance was that it wanted consistency. For
example, the department wanted consistency in the corridor
running from Kenai to Dalton to Prudhoe Bay where there
were three MPOs along the one route. He stated that the
FHWA did not appear to agree with DOT on the matter. The
state had agreed to disagree and would go forward to
resolve what the federal agency was asking for within the
next six months.
2:42:39 PM
Co-Chair Edgmon asked if it was possible the state may push
back legally against the FHWA. He did not recall the STIP
process going back at least four or five cycles to be
controversial. He understood there was an amendment process
in the four-year period where there were opportunities to
resubmit. He thought the outright rejection and a pushback
almost appeared confrontational. He heard Commissioner
Anderson saying DOT was agreeing to disagree and that the
local planning process in Fairbanks and elsewhere was not
adhered to. He noted he was asking questions because he
chaired the capital budget portion of the budget. He did
not have a clear picture on why the situation was occurring
and what specific projects were at stake. He looked at
slide 22 and highlighted that nearly 50 percent of the 90
comments from individuals were on two resource development
projects, which he could understand. He heard a
presentation on the topic in the other body earlier in the
day and had learned that many of the comments were from
people located outside the Mat-Su borough and it could be
the same for the Manh Cho project in Representative Cronk's
district. He was not trying to say the comments were
locally driven, but he did not understand yet "why we are
where we are today."
Commissioner Anderson replied that the Department of Law
was available to speak on the MPOs. He relayed that since
the findings letter DOT had three or four good interactions
with FHWA to get clarifications and DOT believed it
understood what needed to happen to get the STIP approved.
He explained that following approval, there would still be
significant work to do in the next six months because there
were numerous tier 2 findings to resolve.
Co-Chair Johnson would like to hear from the Department of
Law.
2:45:20 PM
Co-Chair Edgmon stated that if it could potentially be a
new budget item for the committee to consider, he thought
it was only fair to get the details early on.
SEAN LYNCH, CHIEF ASSISTANT ATTORNEY GENERAL,
TRANSPORTATION SECTION, DEPARTMENT OF LAW, referenced Co-
Chair Edgmon's earlier comment that the STIP had not been
confrontational in the past and whether there was a
confrontational stance at present. He detailed that the
STIP had been submitted and DOT had received the corrective
action plan, which it had until Friday to resubmit. He was
personally confident in the document's status for the
resubmittal on Friday. He stated that tier 2 was not a
point of confrontation. He explained that historically the
STIP was prepared and submitted by DOT and comments had
been returned. From DOT's perspective, the rules were
different and unexpected this time around. He explained
there was no meeting of the minds on the expectations and
rules. The tier 2 portion was to create the policies and
procedures for doing business going forward with the state,
FTA, FHWA, and MPOs. He stated that related to the federal
statutes and regulations, it was a matter of getting
everyone on the same page.
2:48:24 PM
Co-Chair Edgmon stated his understanding of Mr. Lynch's
statements that it was not the nature of the project being
submitted by the state, but the rules and goal post had
changed on the federal end, and it was normal to have the
give and take process. He noted that Commissioner Anderson
had talked about that [the state and federal agencies] may
agree to disagree or there may be some additional steps
taken down the road and perhaps a legal challenge. He did
not hear any of that in the commentary by Mr. Lynch. He
wondered what was next because it appeared there would be
some disagreement at the end of the process.
Mr. Lynch replied that he understood Commissioner
Anderson's statement "we agree to disagree" in response to
projects that were in the wrong column in "table A." He
viewed there to be form issues and substance issues in the
process. He stated that the table A projects were a lack of
form and they should have been in the TIP, but had been
placed in the STIP. He elaborated that DOT had been given
30 days and its resolution had been to remove them all so
that no one could say they were in the wrong column. He
explained there were six months for the first amendment. He
expounded that all of the projects could go back in in the
first amendment. He relayed that the process had been a
resolution to get the document moving. He referenced the
statement about agreeing to disagree and remarked that
there was a combination of form and substance with the
federal process and the weaving of the TIP and STIP
documents. The resolution had been to pull the documents
temporarily and deal with them later.
Co-Chair Edgmon thought it would be very purposeful to have
the department back as it started delving into the capital
budget.
Co-Chair Johnson agreed. She looked at slide 24 and asked
about Mat-Su Valley planning. She asked about the impact
and issue.
Commissioner Anderson answered that the Mat-Su planning was
in a unique situation because it had just formed and did
not have a planning document or TIP. The department's
understanding was that the projects within the Mat-Su
metropolitan planning area could remain in the STIP because
they did not have a TIP or MTP [metropolitan transportation
plan].
Co-Chair Johnson would follow up on the topic.
2:52:26 PM
Representative Ortiz asked why the process was where it was
currently. It was his understanding that no other state had
failed its STIP despite changes in federal requirements. He
asked what was unique about Alaska that caused it to fail.
Commissioner Anderson answered that there was not one
generic STIP and STIPs were all different between states.
He believed there were some challenges for the state and
MPOs with the required corrective actions that needed to be
resolved. He stated that fiscal constraint was a new set of
interpretations for the state and DOT was working through
those. The STIP amendment and modifications/procedures was
another item that arose. He elaborated that it included
increased costs once a bid was awarded or a change
condition during a construction season. He explained that
for projects exceeding $10 million with a cost increase of
over 20 percent, DOT was required to submit a STIP
amendment, whereas in the past it had an exception to the
requirement which enabled projects to continue. The
exception had recognized Alaska's challenges with short
construction seasons. He relayed that the fifth tier 1
finding was related to the Fairbanks MPO and new
requirements due to the conformity freeze. He stated it was
compounding factors on numerous fronts that led to the
situation.
Co-Chair Johnson would give the department an opportunity
to summarize the last portion of the presentation after the
upcoming questions.
Representative Stapp referenced the department's
explanation that the e-STIP vendor product had faults that
prevented DOT from being able to proceed with the product.
He asked if the faults were due to the vendor's product
being inadequate. He asked about the liability of the
vendor. Alternatively, he wondered if the responsibility
resided with DOT because it had not figured out how to work
the product.
Commissioner Anderson stated it was his understanding that
DOT had to ask the vendor to come in to look at the system
to help the department understand what was going on. He
stated it had not been a data entry problem.
Representative Stapp asked if it was on the vendor, what
kind of liability the state had for purchasing a product
that did not work.
Commissioner Anderson answered DOT had not currently gone
down that path.
2:56:38 PM
AT EASE
2:57:13 PM
RECONVENED
Representative Stapp saw very little road miles on the map
of Alaska. He stressed that all of the transportation
thoroughfares went through some municipality. He
highlighted various highways. He stated his understanding
that the root of the argument was that an MPO could dictate
to the state a project that it could or could not do
through a transportation hub. He asked if it was the crux
of the issue.
Mr. Lynch replied that MPOs were a creature of federal law
and were required to have a minimum of 50,000 people. It
currently included Anchorage, Fairbanks, and Mat-Su. He
stated that Representative Stapp's question was one of the
puzzles in the interaction on the STIP. He referenced
regulation where he disagreed with the federal
interpretation and believed that in some cases the state
projects were the state's projects. He believed it was the
crux of the substance and the state would work through it.
Representative Stapp believed that Mr. Lynch was saying
that one person working for an MPO could dictate to the
state what it could put on its capital project STIP. He
emphasized it was a vital problem.
2:59:41 PM
Mr. Lynch responded that DOT viewed the national highway
system as an asset it had to manage. The department had to
manage all necessary flow of traffic and if there was a
bottleneck it widened roads. The department worked with
municipalities when there was an off ramp because when it
hit a surface street, the ramp would create more use in the
surface, which required cooperation and coordination by
federal law. He stressed that it was DOT's position that
the highway systems were the state's to manage and regulate
control over.
Co-Chair Johnson asked for a five minute wrap up of the
presentation.
Commissioner Anderson moved to slide 26 titled: Moving
Forward: Tier 2&3. Currently, the department was focused on
the TIP and STIP submittal through Friday. Once it was
submitted, the department would begin focusing on the six
month window that would include a look at tiers 2 and 3
items. The department already agreed with MPOs and FWHA
that the DOT policy would address the DOT/MPO coordination.
Additional action areas included consistency in TIP
management and funding and working through performance
targets together. The department recognized the STIP
situation was not ideal and it would have a DOT-dedicated
team focused on the MPOs. The department would pull people
from each individual MPO on the DOT side to tackle the
problem holistically throughout the state. The department
was tackling the State of Alaska/MPO Planning Authority
conflict. Lastly, as a tier 2 finding, Anchorage
Metropolitan Area Transportation Solutions (AMATS) had
certification review with six findings that had not yet
been addressed. The six findings showed up in DOT's
findings to ensure the state cared for those as well.
3:03:17 PM
Co-Chair Johnson stated that the committee wanted to see a
list of specific projects that may be jeopardized.
Commissioner Anderson agreed.
Commissioner Anderson concluded on slide 27 and
communicated that DOT had been researching how other states
did their STIPs. He contemplated that perhaps it had been a
problem for other states in the past because many were now
doing rolling STIPs. He explained it meant a state did not
wait four years to do a new STIP. For example, Texas did a
new STIP every two years and Washington did one every year.
Under Alaska's STIP process the new STIP would run from
2024 to 2027 and the state would begin the process for the
next STIP in 2026. At that time, the state would have two
years remaining on the STIP and it would not get into STIP
extension scenario. Once the new one was approved the state
would do another STIP in 2028 so the current situation
never occurred again.
Representative Josephson asked if there would be an
opportunity to follow up.
Co-Chair Johnson answered that there would be a follow up
when they got into the capital budget.
HB 268 was HEARD and HELD in committee for further
consideration.
HB 269 was HEARD and HELD in committee for further
consideration.
HB 270 was HEARD and HELD in committee for further
consideration.
Co-Chair Johnson thanked the presenters. She reviewed the
schedule for the following day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| H FIN DOT Overview and STIP Update 022824.pdf |
HFIN 2/28/2024 1:30:00 PM |
HB 268 |