Legislature(2021 - 2022)ADAMS 519
02/14/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: 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 281 | TELECONFERENCED | |
| += | HB 282 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
February 14, 2022
1:32 p.m.
1:32:57 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:32 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Bryce Edgmon
Representative DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Rob Carpenter, Deputy Commissioner, Department of
Transportation and Public Facilities; Dom Pannone,
Administrative Services Director, Department of
Transportation and Public Facilities, Office of Management
and Budget, Office of the Governor; John Binder, Deputy
Commissioner, Department of Transportation and Public
Facilities.
PRESENT VIA TELECONFERENCE
Ryan Anderson, Commissioner, Department of Transportation
and Public Facilities; Wolfgang Junge, Director,
Deptartment of Transportation and Public Facilities,
Central Region; Matt McLaren, Business Development Manager,
Alaska Marine Highway System, Department of Transportation
and Public Facilities.
SUMMARY
HB 281 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 281 was HEARD and HELD in committee for
further consideration.
HB 282 APPROP: MENTAL HEALTH BUDGET
HB 282 was HEARD and HELD in committee for
further consideration.
PRESENTATION: DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES
Co-Chair Merrick reviewed the agenda for the meeting.
^PRESENTATION: DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES
1:33:33 PM
ROB CARPENTER, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, introduced himself.
He indicated Mr. Ryan Anderson was online to make some
opening remarks.
1:34:04 PM
RYAN ANDERSON, COMMISSIONER, DEPARTMENT OF TRANSPORTATION
AND PUBLIC FACILITIES (via teleconference), thanked the
committee for hearing the presentation which would cover
three focus areas of the Department of Transportation and
Public Facilities (DOT). He read a list of testifiers that
were online and in the room. He was excited about where the
department was headed and proud to share its progress.
Co-Chair Merrick relayed that the committee would be
hearing about the Statewide Transportation Improvement
Program (STIP) in the next meeting.
Mr. Carpenter turned the presentation over to Mr. Dom
Pannone.
1:36:18 PM
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, explained he
would be giving a high-level overview of the FY 23
governor's budget, the impacts of the federal COVID-19
relief fund, and an overview of the Alaska Marine Highway
System (AMHS) and its budget.
Mr. Pannone began with slide 3. He relayed that the FY 23
governor's budget included a reduction of $76.9 million
from FY 22 and a $60.4 million decrease in unrestricted
general funds (UGF). The state continued to use the federal
COVID-19 relief funds to displace UGF. The federal funds
came from the Coronavirus Aid, Relief, and Economic
Security Act (CARES), the Coronavirus Response and Relief
Supplemental Appropriations Act (CRRSAA) of 2021, and the
American Rescue Plan Act (ARP). There was a significant
service level increase for AMHS and funds from the
Infrastructure Investment and Jobs Act (IIJA) were used to
help fund AMHS.
Mr. Pannone turned to slide 4 which included a graph
tracking the budget's history by fund type. The graph
compared the final authorized budget amounts which included
any supplementals. He noted there was an overall reduction
in UGF for AMHS. There was a significant spike in FY 22
authority amounts due to forward funding for AMHS including
an additional six months of authority, and the transfer of
the public building fund and leasing components from the
Department of Administration (DOA) to DOT.
Mr. Pannone continued to slide 5 which compared the FY 22
management plan and the governor's proposed FY 23 budget.
He highlighted the one time forward funding for AMHS and
the $135 million in federal funding for AMHS. The combined
funding largely replaced the $61 million of UGF in the AMHS
budget which accounted for the 45 percent reduction in UGF.
1:40:35 PM
Representative LeBon asked whether the federal funding
amount for AMHS was known or if it was still to be
determined.
Mr. Pannone responded that there was $200 million annually
available in funding through IIJA. The program had not been
established yet and DOT was anticipating the details to be
released later in the year. The department believed that
Alaska would receive a large portion of the funding. The
department calculated the price to run a full schedule for
AMHS, which was represented on the slide.
Representative LeBon asked if the state would make up for
difference if the funding fell short.
Mr. Pannone had a future slide that would provide more
detail.
1:42:10 PM
Representative Josephson asked if the administration was
asking for an adjustment to FY 22 as funded.
Mr. Pannone responded that there was no request for
additional funding for FY 22. He had offered the slide
simply as a comparison.
Representative Johnson wanted more information on IIJA, the
new federal program that would supply a significant amount
of funding to Alaska. She wondered how the $135 million of
AMHS federal funding was calculated.
Mr. Pannone responded that part of the funds were intended
to provide rural ferry service. To be eligible, a state
needed to provide ferry service to two rural communities at
a population of 50,000 or less that were at least 50
sailing miles apart. Very few states qualified, and he
expected Alaska to receive a significant portion of the
funding.
Representative Johnson asked if a portion of the $135
million funding was sourced from the $200 million from
IIJA.
Mr. Pannone responded in the affirmative.
Representative Johnson asked if the funding was expected to
be recurring.
Mr. Pannone clarified that it was a five-year program.
Mr. Carpenter added that the program was a new highway act
for the nation. It was common for highway acts to
reinitiate at the end of a five-year period.
1:45:35 PM
Mr. Pannone continued to slide 6 which showed the results
delivery unit (RDU) funding level comparison. He
highlighted a few elements of the budget. There would be a
reduction of about $400,000 through the Office of
Information Technology (OIT). There was also a $20.3
million reduction of federal funding reversals and a
reduction of $11.5 million for duplicate authority for the
Division of Facilities Services (DFS). There was an
increase to AMHS services and there were no budgetary
layups.
Mr. Pannone moved to slide 7 which showed the composition
of the department's FY 23 budget. The left column showed
the department's funding sources and the right showed the
fund classifications.
Co-Chair Merrick asked if the slides could be adjusted to
reflect the current committee substitute. She did not think
the numbers on the slide were applicable.
Mr. Carpenter responded that he could adjust the slides.
However, he thought that the numbers would remain
conceptually the same.
1:48:42 PM
Mr. Pannone moved to slide 8 which offered some conceptual
perspective on contractual services and commodity budgets.
Almost $200 million was budgeted for contractual services
for DOT and almost $80 million was budgeted for
commodities. He wanted to highlight the exposure to market
forces within the budget, such as inflation and consumer
price index (CPI) increases.
Mr. Pannone moved to slide 9 which showed workforce trends
and highlighted a significant increase in overtime depicted
in blue. This was largely due to the significant number of
winter events in the state coupled with a high number of
vacancies. He clarified that the graphs represented
equipment personnel.
Mr. Pannone advanced to slide 10 which showed the vacant
positions department-wide. The vacancies had a cascading
effect into other operations within the state. The
highlighted line at the bottom showed the total vacancies
for 2022.
1:51:54 PM
Representative Johnson asked if there was data available
that compared Alaska's wages to nationwide wages. She
wanted to get a sense of where the state's workforce was
most vulnerable.
Mr. Carpenter replied that the chart illustrated the rising
concern that DOT had regarding the lack of a skilled
workforce. It was affecting not only state agencies, but
the private sector as well. There was a concern that the
state could not compete nationwide. He had conversations
with the Alaska Gasline Development Corporation (AGDC) that
indicated that it had too many contracts and not enough
employees to complete the work. It was an issue he was very
concerned about and wanted to make sure the state could
deliver a solution.
Representative Johnson thought the workforce issue was a
statewide concern. She suggested conducting an overview of
Alaska's workforce and how it was doing as compared to the
rest of the nation. She heard concerns about the state of
the workforce in all sectors and thought it was a large
issue.
Representative Rasmussen noted that there was a reduction
in vacant positions from January 2020 to July 2020. She
asked what had caused the reduction. She asked for a graph
of the vacancy trends over the last five years.
Mr. Pannone could not speak to the reason for the reduction
in vacancies. He would get that information to the
committee at a later date, in addition to the five-year
vacancy trends.
1:56:34 PM
Representative Edgmon hoped there would be a more detailed
presentation regarding Alaska's workforce. He asked Mr.
Carpenter what he thought was causing the state's increased
vacancies. He did not believe the vacancies would go away.
Mr. Carpenter thought that everyone across the nation had
similar questions as Representative Edgmon. There was
always natural attrition and difficulty in recruiting
within DOT. He thought the recruitment and training
programs were perhaps not as attractive as they used to be.
The department was concerned and was working to address the
issue. A successful change to attract employees and reduce
turnover was implementing a two weeks on two weeks off
schedule for workers on the Dalton Highway. He reassured
the committee that the department was doing everything it
could to address the problem.
Representative Rasmussen asked if state laws allowed for
17-year-olds to do heavy equipment and commercial driver's
license (CDL) training. She suggested that age restrictions
in statute might need to change.
Mr. Carpenter deferred to Mr. Wolfgang Junge.
2:01:19 PM
WOLFGANG JUNGE, DIRECTOR, DEPTARATMENT OF TRANSPORTATION
AND PUBLIC FACILITIES, CENTRAL REGION (via teleconference),
asked for the question to be repeated.
Representative Rasmussen restated her question.
Mr. Junge responded that he was not aware of any statutes
that precluded minors from testing or training for a CDL.
He would supply additional information to the committee.
Representative Carpenter appreciated the data from DOT. He
was surprised that the data was being shown without further
explanation and he thought the data showed there was a
management problem. He wanted more information on why the
vacancy problem was happening. He understood that there was
a problem but did not understand the details of the problem
or what the legislature should do to respond.
Mr. Carpenter indicated that the presentation was a high-
level overview. He thought Mr. Junge could offer more
details about the situation.
Mr. Junge relayed that many of the vacancies began in 2006
when the benefits changed for Tier III and Tier IV state
employees. After the state became a matching employer,
benefits became transferable after five years and therefore
employees were not incentivized to stay in their positions
for longer than five years.
2:05:06 PM
Representative LeBon asked if there was a regional impact
pattern that could be identified.
Mr. Carpenter indicated that it was more difficult to
recruit new employees in the rural areas of the state. He
relayed the department had implemented mission critical pay
in certain areas where it was extremely difficult to
recruit and retain employees.
Representative LeBon noted that the number of vacant
positions was listed at 390 on slide 10. He asked what
percentage of the total number of positions the figure
represented.
Mr. Pannone responded that there were roughly 2,800 total
full-time positions in DOT.
Co-Chair Merrick asked for a definition of mission critical
pay.
Mr. Carpenter responded that it was a type of incentive. He
deferred to Mr. Junge for additional detail.
Co-Chair Merrick asked Mr. Junge to respond.
Mr. Junge explained that was an incentive pay that was
devised in collaboration with unions for staffing in remote
areas. For example, it had been difficult to keep the
Bethel Airport staffed, so the department offered a
flexible schedule, free housing, and mission critical pay
in the form of a bonus as an incentive for prospective
employees.
Co-Chair Merrick asked if there was a formula for
determining mission critical pay.
Mr. Junge would get back to the committee with the formula.
Vice-Chair Ortiz asked if the 2,800 aforementioned
positions included the Alaska Marine Highway System (AMHS).
Mr. Pannone indicated that the department had budgeted for
3,393 positions total. He explained that 2,964 positions
were full-time and 794 positions were budgeted for AMHS.
Vice-Chair Ortiz asked for clarification that the 2,800 was
not inclusive of AMHS.
Mr. Pannone replied that the total number of budgeted
positions was 3,393 and included the 794 AMHS positions.
The AMHS positions were not included on slide 10. There
would be roughly 2,600 budgeted positions if the AMHS
positions were excluded.
Vice-Chair Ortiz asked how many vacancies there were within
AMHS.
Mr. Pannone responded that there was a slide later in the
presentation that would answer the question.
2:10:19 PM
Representative Thompson asked about future projections. He
wondered if incoming federal dollars from the Build Back
Better Act would create a larger problem in the future.
Mr. Carpenter reported that the department was concerned
with the competitiveness of the state with the private
sector.
Representative Rasmussen asked if there was room to
increase wages in order to reduce overtime. She thought
employees would be making similar overall wages already by
combining lower wages and overtime pay.
Mr. Carpenter did not know if the department had done such
an analysis but would get back to her.
Representative Rasmussen asked if the state had considered
putting the positions out to bid for contract work.
Mr. Carpenter responded that the department already
contracted in rural areas and implemented contracts in more
urban areas when it was deemed necessary.
Mr. Pannone answered that the department had looked at the
cost analysis of overtime hours. The department was in the
process of looking at the numbers again.
Representative Rasmussen thought it would be interesting to
look at the overall compensation package for an employee as
compared to a contractor. She thought that the state could
pay contractors more and still receive a cost savings. She
assumed that the state did not offer benefits to
contractors.
Mr. Pannone indicated the department could contract out
services when necessary. The state did not negotiate
benefits with contractors.
Mr. Junge responded that over 80 percent of the state's
rural airports were currently maintained by contractors.
Service contracts were direct fees and there were no
benefit packages available.
Representative Rasmussen wondered how much more expensive
it would be to hire a contractor than to hire a state
employee. She was trying to offer a creative solution.
Mr. Pannone replied that contracting was sometimes not
successful. He offered to provide some cost comparisons to
the committee.
Representative Josephson added that when the Department of
Environmental Conservation (DEC) had positions it could not
fill, it simply canceled the positions and no longer asked
for funding for the positions. He asked if the department
had considered doing something similar.
Mr. Carpenter responded that all vacant positions were
identified needs for the department. The heavy equipment
operator positions were in high demand and only represented
a portion of DOT's vacancies.
Representative Josephson asked if there were additional
vacancies.
Mr. Carpenter responded that he had not yet addressed
vacancies at AMHS.
Mr. Pannone clarified that the department column on slide
10 included all vacancies department-wide apart from AMHS.
2:18:22 PM
Mr. Pannone continued to slide 11 to explain the increase
in overtime through mission critical incentive pay. He
explained that he would provide the committee the formula
on how the pay amount was determined. The slide showed a
table of filled and vacant positions across various
districts in the state. Every district experienced a 15 to
30 percent vacancy rate, except Dalton which was only 3
percent. He reminded that DOT implemented a two-week on,
two-week off schedule in order to attract more potential
employees in Dalton. It drew talent pools into that
district and employee satisfaction had increased. He added
that the state utilized contracting when there was an
extreme weather event and an unexpected need for more
employees.
Mr. Pannone continued to slide 12 which addressed extreme
weather events. The department had asked for another $1
million in the FY 21 supplemental for a reappropriation for
emergency weather events. The department was again
requesting an additional $4.6 million in the FY 22
supplemental for a reappropriation of funds for emergency
weather and catastrophic events. The appropriation would
allow for the DOT to absorb the expenditure spikes related
to unprecedented events, which would allow the department
to deliver consistent levels of service without sacrificing
other amenities. The use of the funds would be restricted
for contained and defined events for costs above what was
budgeted. He indicated that capital appropriation also
encouraged fiscal constraint and conservation of funds.
2:21:31 PM
Representative Rasmussen asked why it was a capital
appropriation.
Mr. Pannone explained it was a capital appropriation
because it was a multi-year investment back into
infrastructure. It allowed the department to retain the
financial buffer because it would not expire at the end of
a fiscal year.
Representative Rasmussen asked for a more detailed
breakdown of what kinds of infrastructure would be paid for
with the requested $4.6 million.
Mr. Pannone moved to slide 13 to answer the question. The
slide showed an in-depth breakdown of how the $4.6 million
would be appropriated. He offered the example of the
Sterling Highway Landslide, which was an unforeseen weather
event. The department would evaluate costs whenever extreme
weather events took place.
Representative Rasmussen commented that the appropriations
seemed to be a mix between personnel and capital expenses.
She hoped for more transparent budgeting for the public.
Mr. Pannone responded that the personnel would be billing
time directly to the capital appropriations. He offered
reassurance that all events would be reportable.
2:24:42 PM
Representative Thompson explained that when he was the
mayor of Fairbanks, he hired employees for snow removal
through the unions rather than through the state. He
thought there seemed to be a hang-up on how the state
managed its employees. He questioned why the state had
employees throughout the entire summer when the employees
did not seem to be needed.
Mr. Carpenter reported that full-time and year-round work
was critical for maintaining and retaining employees. He
could not speak to the situation specifically but hoped
that the state was not employing people to do useless work.
Co-Chair Merrick thought that operators doing snow removal
in the winter would be running construction projects in the
summer.
Mr. Carpenter responded in the affirmative.
2:27:45 PM
Mr. Pannone moved to slide 14 to show the impacts of
federal funding in the operating budget. He noted there
were four pieces of federal legislation that impacted the
budget: CARES, CRRSAA, ARP, and IIJA. The DOT received the
funding from three federal partners: the Federal Highway
Administration (FHA), the Federal Transit Administration
(FTA), and the Federal Aviation Administration (FAA).
Co-Chair Merrick indicated Co-Chair Foster had joined the
meeting.
Mr. Pannone continued to slide 15 which illustrated the
federal funds the state had received and how the funds were
classified.
Mr. Pannone advanced to slide 16 which showed direct
federal COVID-19 relief funding and the associated funding
timelines. It also showed any remaining balances for the
funds, which would be available for appropriation in 2024.
Mr. Pannone indicated slide 17 showed a high-level account
of all funds that had been received from the state's three
federal partners. The chart showed the main uses for each
type of funding. There was about $18 million in federal
funding that was displacing UGF in the operating budget.
Mr. Pannone turned to slide 18 which showed the federal
funding comparison by fund source. He explained that the
IIJA funding increase was due to the rural ferry service
program, and relief funding for COVID remained roughly the
same. The CRRSAA funding was utilized mostly to forward-
fund AMHS.
Mr. Pannone advanced to the bar charts on the slide 19
which showed a federal funds comparison by results delivery
unit (RDU). Some AMHS funds under the design and
engineering category were swapped for federal dollars and
were now being swapped back because the federal dollars
were no longer available.
2:33:14 PM
Representative Edgmon asked what the department was doing
to prepare for the incoming federal funding.
Mr. Pannone responded that IIJA was intended for capital
and would impact the department's service improvement plan.
He explained that he would be detailing the plan in the
following day's committee meeting. He could provide
additional details in the following meeting.
Mr. Carpenter responded that the department was crafting
strategies and plans for the incoming funds. However, the
process was still in the early stages.
Representative Edgmon would hold his more detailed
questions for the following day. He thought many people
would have questions about the preparations for the federal
funds. He suggested that DOT would be the agency most
impacted by the funds.
Mr. Carpenter agreed that DOT was the most impacted. He
noted there were new programs proposed in the bill in
addition to changes to existing programs. The department's
goal was to have a presentation by the administration on
the overall approach to the IIJA.
2:36:56 PM
Mr. Carpenter moved to the topic of AMHS on slide 20. He
noted there were several recommendations that came out of
the AMHS working group. One suggestion was forward funding
the budget in order to make the ferry schedule more
reliable. Another significant event was that the Tustumena
Replacement Vessel was ready to go to construction.
Additionally, the Hubbard vessel would be out of
construction in October of 2022. Another highlight was that
the state was working towards returning service to Prince
Rupert. The department was working with the Canadian
government in order to expand sailing destinations. The DOT
was also recruiting for a marine highway planner who would
be specifically dedicated to AMHS. He shared that the
Marine Highway Operations Board (MHOB) recently met for the
first time with the intent to have a more business minded
focus and address strategic planning for AMHS. The
department brought in an expert on organizational business
change who worked as a liaison to MHOB and AMHS.
Representative Edgmon asked who the new chair of MHOB was.
He also wondered if the Marine Transportation Advisory
Board (MTAB) was now in a defunct status.
Mr. Carpenter relayed that Shirley Marquardt was the new
chair of MHOB and MTAB had been repealed.
2:42:37 PM
Mr. Carpenter moved to the pie chart on slide 21 which
showed the operating expenses in FY 21 for AMHS. He noted
that staff wages made up for 75 percent of the costs.
Mr. Carpenter continued to slide 22 to show the actual
revenue collections and the sources of the revenue
collections. The amount generated in 2021 was significantly
smaller than normal due to the pandemic. He noted that 82
percent of sales were generated through tickets.
Co-Chair Merrick asked whether stateroom sales were mostly
occupied during "normal" years.
Mr. Carpenter responded that it depended on the route. The
staterooms were almost always full on long-haul routes.
Mr. Carpenter continued to the FY 23 proposed budget on
slide 23. The department was aiming to have all ships
running at all times. There were no cost-saving layups in
the budget and all ships would be running a schedule at all
times apart from annual required overhaul periods.
2:45:30 PM
Vice-Chair Ortiz asked Mr. Carpenter to return to the
previous slide. He asked if there was a breakdown as to
passenger ticket sales and naval ticket sales.
Mr. Carpenter thought a representative from AMHS might know
the answer.
MATT MCLAREN, BUSINESS DEVELOPMENT MANAGER, ALASKA MARINE
HIGHWAY SYSTEM, DEPARTMENT OF TRANSPORTATION and PUBLIC
FACILITIES (via teleconference), would provide the
breakdown to the committee.
Vice-Chair Ortiz wondered if DOT was moving forward with
dynamic pricing in relation to the operating revenues.
Mr. Carpenter responded that the department still had
dynamic pricing in place. He was aware that it was not a
popular structure and MHOB would be looking at
alternatives.
Vice-Chair Ortiz returned to slide 23. He wondered how
realistic of a goal was it to run all of the ships at all
times.
Mr. Carpenter agreed that planned schedules were not always
followed. He thought Vice-Chair Ortiz was correct in that
it might not be realistic.
2:48:36 PM
Representative Rasmussen had not seen anything in the
presentation that addressed the costs of the Malaspina
vessel. She wondered if there was a cost breakdown for the
Malaspina.
Mr. Carpenter thought there was a monthly fee of about
$30,000 to maintain the Malaspina.
Mr. McLaren indicated the cost ranged from $30,000 to
$35,000 depending on the time of year.
Representative Rasmussen asked if the department had
considered selling the Malaspina.
Mr. Carpenter responded that the department was evaluating
the issue. He hoped something would be completed soon.
Representative Rasmussen would like a more realistic
timeline. Constituents regularly reached out to her about
the vessels and she wanted to have more concrete
information to offer.
Mr. Carpenter added that there were some things the
department simply could not talk about.
Representative Rasmussen asked if the state had looked at
contracting with private companies. She suggested that the
state could utilize pull tabs or something similar.
Mr. Carpenter believed the collective bargaining unit
prohibited contracting out bar services. The department was
currently in negotiations with all three involved unions.
Representative Rasmussen asked if pull tabs had been
discussed.
Mr. Carpenter responded that he was not familiar with the
subject but thought "floating casinos would be great."
Representative Thompson noted that the ferries ceased bar
service and closed the gift shops about six years ago. He
wondered why vendors were not brought in to provide the
services. He had heard that the bartenders and gift shop
operators on the ferries were being paid $100,000 per year.
He was told that nothing could be changed because it was a
union contract. One year after the bars and gift shops were
closed, the bartenders and the gift shop operators were
still being paid because their union contracts prevented
them from being fired. He had been trying to renegotiate
the contracts for years. He did not understand why the bars
on the ferries could not make money. He thought it would be
especially profitable for a vendor to offer bar service
during tourist season.
2:54:07 PM
Representative LeBon relayed that he had the same questions
as Representatives Thompson and Rasmussen. He understood
the barrier of collective bargaining agreements, but
thought the situation was frustrating. He thought the bars
and gift shops on the vessels were a substantial
enhancement to the sailing experience.
Representative Thompson noted that AMHS still had inventory
of whiskies, wines, and gift shop merchandise in a
warehouse.
Representative Josephson referred to slide 23 and asked
whether the sort of funding for AMHS through the federal
government was unprecedented.
Mr. Carpenter responded in the affirmative.
Representative Josephson asked if IIJA expressly allowed
operating monies to be used for ferries.
Mr. Carpenter replied that the department believed the
money was intended for the operation of rural ferries. He
thought the money could be used for capital as well, but he
was still waiting for more guidance.
Representative Josephson understood that the funds outlined
on slide 23 were available for FY 23 and were not waiting
for additional guidance.
Mr. Carpenter responded that there had been a bit of a
delay. It was expected that a notice of funding opportunity
would be released in April of 2022. The department was
expecting to receive a grant around October of 2022 and to
receive actual cash in December of 2022. He clarified that
IIJA was effective in FY 22 that there was $200 million
allocated for FY 22 and for FY 23.
Representative Josephson suggested that the struggle to
fund AHMS was over until FY 26 or FY 27 in which time the
state would return to having an unstable funding source.
Mr. Carpenter was hopeful that the program would be
permanent. He reiterated that DOT had not seen much
competition for rural ferry system funds and expected that
Alaska would receive the funding for the next five years
and beyond. It was also expected that AMHS would be able to
save money and use it in the future.
2:59:04 PM
Mr. Carpenter moved to slide 24 which compared the FY 23
budget proposal to the authorized budgets of the last few
years. The chart illustrated where the governor's budget
fell within the planned weeks of service. He relayed that
roughly 362 weeks of service and 6,300 port calls were
proposed. The goal was to return service to the level it
was at in 2019. The slide also had a funding source
breakdown at the bottom.
Representative Rasmussen asked if there a slide that showed
the actual weeks of service.
Mr. Carpenter thought there was a slide later in the
presentation. He advanced to slide 27 to show the revenues
collected in conjunction with actual weeks of service. He
highlighted that the collected revenues in FY 20 and FY 21
were lower than projected due to the pandemic. There were
203 weeks of service in FY 20 and 200 weeks in FY 21.
Representative Rasmussen asked how significantly vessel
mechanical issues impacted the actuals. She thought a graph
that went further back in time than the one on slide 27
would be helpful.
Mr. Carpenter would get back to her with an answer.
3:03:52 PM
Mr. Pannone advanced to slide 25 which showed the forward
funded budget scenario. He pointed to the rows at the
bottom of the slide and explained that row four showed the
time frame for the proposed budget. Row three showed the
appropriations for the current year's budget. The requested
funding of $142 million would be implemented on January 1,
2023. Rows one and two showed where in time the operating
schedules for AMHS were and when the schedules would be
released.
Representative Edgmon asked how the AMHS replacement fund
would fit into the picture.
Mr. Pannone responded that the unobligated balances within
the replacement fund were swept. The fund was largely
intended for capital and did not necessarily have an impact
on the operating budget. However, the $22 million match
funding for the Tustumena replacement vessel remained in
the operating budget.
Representative Edgmon asked whether the state would see
measured amounts in the capital budget.
Mr. Pannone responded that the unappropriated amount that
was swept was no longer available. There was no proposal
for the legislature to reappropriate the funds back into
the vessel replacement fund.
Representative Edgmon asked if it would be possible to
capitalize the fund at a much higher rate.
Mr. Pannone responded that the AMHS fund balance would grow
and the revenues collected would not be expended to operate
the system.
Representative Edgmon wondered if there would be an
opportunity to create an essential air service using the
IIJA funds. He assumed he was not asking the question to
the right people.
Mr. Carpenter agreed that he was not the right person for
the question. He thought the intent of the $200 million
fund was to provide an essential service to rural
communities. The structure of the program was up to the
legislature and the administration.
Representative Edgmon understood that an essential air
service would not be precluded.
Mr. Carpenter responded that it would not be precluded to
his knowledge.
3:09:50 PM
Representative Josephson thought that federal monies were
not sweepable according to the United States Supreme Court.
Vice-Chair Ortiz asked if it was expected that Alaska would
receive more than the $135 million that was budgeted.
Mr. Carpenter was hopeful that Alaska would receive more
because the competition for the funding was limited. There
were not many other states that met the qualifications.
Co-Chair Merrick asked if Maine was one of the other
states.
Mr. Carpenter thought that Maine qualified initially, but
he was not sure if it did anymore.
Vice-Chair Ortiz asked how much consideration was given to
the issue of the aging fleet if the state received only the
budgeted $135 million. He wondered if it would be wise to
reduce the number of weeks of service to save more money
for capital expenditures. He wondered if the fleet issues
would be considered.
Mr. Carpenter replied that the money was announced not long
ago. The aging fleet was the number one priority for MHOB.
He was more than willing to work with the legislature on
how to use the funding.
3:14:17 PM
Mr. Carpenter advanced to slide 26 which showed a graph of
the generated revenue and other fund sources of AMHS back
to 1992. The pink bar represented generated revenue and the
blue bar represented other funding sources. The gold line
showed the fare box recovery rate, which indicated what
portion of the revenues was covered by the system. He
highlighted that in the last two years, the state had
funded the budget with federal money. Revenues were still
being collected but were not being expended. He surmised
that revenues had historically been a higher portion of the
budget than in more recent years.
Representative Edgmon noted that he had chaired the DOT
budget subcommittee a few years ago, and at that time 45
percent of the AMHS budget was funded through UGF. He
acknowledged that there had been efforts to reduce the
percentage over the years. He suggested that the structure
of AMHS had always been an issue.
Mr. Carpenter understood Representative Edmon's point.
Representative Edgmon thought Mr. Carpenter might have been
the source of the referenced data.
Mr. Carpenter skipped to slide 28 which showed the state's
historical overhaul appropriations. He explained that every
ship went into overhaul every year for maintenance.
3:19:27 PM
Representative Rasmussen understood that the graph on slide
28 showed the state only had one vessel that was taken out
of service in FY 19 and there were four taken out of
service in FY 21.
Mr. Carpenter responded that the four vessels that were
taken out of service in FY 21 were either sold or in the
process of being sold.
Representative Rasmussen asked how the state would meet the
projected number of weeks of service with fewer vessels.
Mr. Carpenter deferred to Mr. Pannone.
Mr. Pannone thought the ships that had been sold had been
out of service already and he did not think there would be
an impact.
Mr. McLaren responded that the Hubbard and Tazlina vessels
were back in service which was helpful. He relayed that
AMHS would only be down one ship from FY 19 because
multiple vessels had been sold or had been out of service
for a while.
3:22:14 PM
Mr. Carpenter turned to slide 29 to discuss the staffing
trends within AMHS. He relayed that there was a large
discrepancy between the amount of employees who were hired
and the amount of employees who left. There were 255
vacancies for entry-level stewards alone.
Representative Rasmussen wondered about the certification
requirements for entry-level employees. She wondered if
there were more requirements than there used to be.
Mr. Carpenter did not believe the state had implemented any
additional requirements.
Mr. McLaren relayed that there were certain federal
requirements to which AMHS needed to adhere. However, none
of the requirements were new. The state made sure that new
staff was trained before working on the ships. Due to an
increased number of employees leaving, there had been a
loss in employee experience and there were many shoreside
vacancies as well which impacted the training process.
Representative Rasmussen asked whether the state was
working with the unions on scheduling. It was her
understanding that there had been an issue between the
state and the unions regarding scheduling. It had been
suggested that the unions take over the scheduling process.
Mr. Carpenter responded that Representative Rasmussen was
speaking to union dispatch. He could not speak to the topic
in detail but knew that there was some collaboration going
on with the unions.
3:26:35 PM
Co-Chair Foster indicated the meeting would be ending soon.
Representative Johnson asked where the vacant positions
were being advertised.
Mr. Carpenter responding that recruitment efforts had been
aggressive. The department was working with the Department
of Labor and Workforce Development and there were
advertisements running in the local news and across all
social media platforms.
Mr. Carpenter moved to the AMHS staffing targets on slide
30. The main fleet required 24 positions to be filled in
order to run successfully. If the Tazlina and Columbia
vessels were added to the schedule, 166 positions needed to
be filled. The real challenge was that all positions needed
to be filled by March 1, 2022 in order for the vessels to
be operational.
Representative Rasmussen asked if there was information on
what would happen if the staffing needs were not met.
Mr. Carpenter would follow-up with the information.
Representative LeBon returned to the subject of airport
maintenance. He asked how common it was for airports to be
under private contract. He wondered if it was possible to
see one of the contracts. He questioned whether union labor
was utilized to uphold the contracts.
3:30:57 PM
JOHN BINDER, DEPUTY COMMISSIONER, DEPTARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, responded that
private contracts were an important tool for the
department. The decision to contract labor instead of
utilizing DOT staff was dependent on the type of airport
that needed employees. Hub airports had a much higher
certification requirement and were usually staffed by DOT
employees because it was easier to ensure that they were
properly trained. Certification requirements were much
lower at non-hub airports and employees were often
contracted out in these locations. The state provided the
equipment and storage for the facility but did not offer
retirement or benefits to contract employees. He was happy
to provide a copy of the contracts.
Representative LeBon asked if any of the contractors had
union employees.
Mr. Binder responded that very few were unionized. He
indicated that many employees were individuals who had a
business license and had maintained the airports for years.
Representative LeBon commented that it would be interesting
to see a detailed breakdown of the airports with contract
agreements.
Mr. Binder indicated he would be happy to provide the
requested information.
3:33:43 PM
Representative Thompson recalled an incident where a driver
plowed the road leading to the airport but was not
permitted to plow the airport runway.
Mr. Binder would need more details on the where and when
the incident occurred to comment.
Representative Carpenter asked if the projected costs for
the Malaspina was the finalized "all-in" cost or if there
would be other expenses like insurance or risk-management.
Mr. Carpenter responded that he thought the cost would be
all-in but was unsure about the risk-management part.
Mr. McLaren responded that the cost did not include risk
management. He noted that risk-management costs had
decreased in recent years. He could provide the breakdown
of costs to the committee.
Representative Carpenter thought the information would be
helpful. He also asked how many collective bargaining
contracts were currently active.
Mr. Carpenter asked if Representative Carpenter was
specifically talking about AMHS.
Representative Carpenter responded in the affirmative.
Mr. Carpenter was not certain but would provide the
information to the committee.
Representative Carpenter wondered when the negotiations
began on the collective bargaining contracts.
Mr. Carpenter responded that it was recent, but he would
get back to the committee with further detail.
Representative Josephson noted that in 2019, the Silvertip
Maintenance Station was closed. He asked if motor fuel tax
receipts were trending up or down.
Mr. Pannone thought the question should be answered by the
Department of Revenue. He offered reassurance that DOT was
making sure the revenues would be enough to fund the
budget.
3:38:22 PM
Representative Josephson asked what sort of flexibility the
department had to fund maintenance stations through other
funding sources.
Mr. Pannone replied that federal highways dollars provided
the funding for the maintenance stations. The type of funds
that could be used for maintenance stations were not
limited. Motor fuel tax was also not limited to any
specific use and could be freely appropriated by the
legislature.
Vice-Chair Ortiz reviewed the agenda for the following day.
ADJOURNMENT
3:39:32 PM
The meeting was adjourned at 3:39 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DOT Overview 2022.02.14 - HFIN - DOT&PF.pdf |
HFIN 2/14/2022 1:30:00 PM |