Legislature(2009 - 2010)CAPITOL 17
02/11/2010 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| Presentation by Advisory Committee for Aviation | |
| Update on Aviation by Christine Klein, Deputy Commissioner of Dot&pf Aviation | |
| HB329 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 329 | TELECONFERENCED | |
HB 329-DEDICATED TRANSPORT FUND/PUB TRANSPORT
2:01:09 PM
CHAIR P. WILSON announced that the final order of business would
be HOUSE BILL NO. 329, "An Act relating to the transportation
infrastructure fund, to local public transportation, to motor
fuel taxes, and to the motor vehicle registration fee; and
providing for an effective date."
2:03:09 PM
CHAIR P. WILSON explained that HB 329 is up for a second
hearing. She provided some answers to questions raised. She
stated that meetings are subject to the Open Meetings Act, and
Brian Kane suggested submitting the report to the council, the
governor, and the legislature. She further stated all of
DOT&PF's meetings are subject to the Open Meetings Act. Another
question was how many states have dedicated funds, and how other
states are addressing transportation funding. She offered that
she has made a formal request to National Conference of State
Legislatures (NCSL), but also provided members with handout,
containing research from Illinois that indicates at least 15
states have dedicated funds for transit.
2:04:25 PM
CHAIR P. WILSON advised members that she is working to define
the terms "rural" and "urban". She recalled that a variety of
definitions currently exist for the terms in various programs.
REPRESENTATIVE GRUENBERG recalled a debate in the 1980s. He
recalled that a former representative included a bridge as being
listed as urban.
2:07:25 PM
TOM GEORGE, Alaska Representative, Aircraft Owners & Pilots
Association (AOPA), stated that the AOPA represents the private
pilots rather than the commercial pilots. Nationally, the AOPA
has 415,000 members, of which 4,300 private pilots belong to the
AOPA in Alaska. While he is a member of the Governor's Aviation
Advisory Board, he is only speaking today on behalf of the AOPA.
He offered to strongly support the concept of state funding for
transportation infrastructure, particularly due to reductions in
federal funding. His organization is just starting to study the
bill so he offered to make initial comments. He recalled other
states have dedicated transportation funds, and some are
multimodal, such as in Maryland, which have been successful. He
suggested flexibility in the percentages of funding for each
mode, that in some instances it might not be prudent to limit
roads to only 60 percent. He acknowledged frustrations with the
current DOT&PF process to prioritize and allocate federal funds,
and would like to explore a less contentious way to allocate
funds. He expressed interest in working with the committee and
commended it for its leadership. In closing, he thanked Ms.
Klein for her service, and stressed the importance of keeping
the aviation presence in the DOT&PF.
2:10:07 PM
REPRESENTATIVE GRUENBERG expressed his concern that HB 329 is
contingent on passage of a constitutional amendment. He
referred to page 9, lines 14-16, of Section 14. He offered his
belief that the language could remain as is, but if the
constitutional amendment does not pass, the committee's work
would be fruitless, or the committee could develop an alternate
plan to proceed in the event that the constitutional amendment
does not pass. He inquired as to whether the sponsor would like
to consider placing an alternate plan in this bill or create a
second bill. He stated that he introduced a bill that is
available, HB 330, and has no pride of authorship. He
recommended that an alternate plan be developed.
2:12:13 PM
REPRESENTATIVE T. WILSON offered her belief that the discussion
of a dedicated transportation fund is worthwhile, whether it
passes or not. The public needs to know that funding
transportation projects is important.
CHAIR P. WILSON expressed concern that to present two approaches
to establish a dedicated transportation fund might confuse the
public on the ballot proposition. She agreed that the
discussion is important.
REPRESENTATIVE PETERSEN recommended not mentioning the term
"permanent fund" when referring to the dedicated transportation
fund and to use the term "dedicated" or "long-term"
transportation fund so as not to confuse the public.
REPRESENTATIVE MUNOZ related that the bill contains a
contingency that states the bill has no effect if the
constitutional amendment to establish a dedicated transportation
fund is not approved by the voters.
2:15:14 PM
REPRESENTATIVE GRUENBERG stated that Section 14 indicates that
except for Section 10 of the bill the rest of the bill would not
take effect unless the constitutional amendment passes. He
suggested that a constitutional amendment must pass the
legislature with a two-thirds vote of each body and a majority
of voters must vote to pass the constitutional amendment this
year during the November election. Thus, the constitutional
amendment must pass these two hurdles. In terms of timing, he
thought it would be helpful for the committee to develop an
alternate plan. Otherwise, it would take time for the next
legislature to pass another bill to create a transportation
fund.
2:17:58 PM
CHAIR P. WILSON recalled the legislature established an
education fund and responded that the process is a simple one.
REPRESENTATIVE GRUENBERG recalled that the education fund has
become somewhat of a "slush fund". He suggested that if the
legislature developed a transportation fund statutorily, that it
would be important to encourage the funds be used to address
transportation needs.
2:18:57 PM
REPRESENTATIVE GRUENBERG, in response to Chair Wilson, suggested
the committee may need legal advice and might want a legal
opinion to identify the constitutional limitations for the
committee if it decided to create a transportation fund in
statute.
2:19:56 PM
CHAIR P. WILSON, in response to Representative Johansen, related
that she previously mentioned the education fund.
REPRESENTATIVE GRUENBERG recalled a fund exists that is not a
constitutional dedicated fund but is a separate account in the
general fund to be used for education. He characterized it as a
sub-account in the general fund, but nothing requires it to be
used for education. No penalty exists and the funds do not
lapse. He suggested a value to exploring the legal limits.
2:21:19 PM
REPRESENTATIVE JOHANSEN said he was disturbed by the term "slush
fund," which has negative implications, but he understood the
mechanics. He referred to page 1, lines 7-8, to the legislative
intent. He asked for ramifications if the legislature did not
appropriate the $1 billion.
CHAIR P. WILSON explained another bill, an appropriation bill,
would provide the vehicle for the funding.
2:22:29 PM
REPRESENTATIVE JOHANSEN referred to Section 3, on page 2, lines
1l-12. He inquired as to whether the Municipal Harbor Facility
Grant Fund would be capitalized as specified using the Fisheries
Business Tax.
2:23:10 PM
REBECCA ROONEY, Staff, stated the intent was not to leave small
funds that had potential funding from the collection of the
motor fuel tax unfunded. The intent is to move the Municipal
Harbor Facility Grant Fund to another section. She referred to
page 3, lines 25-26, which read, "(4) eight percent of the
appropriations from the fund may be used for projects related to
harbor facilities and state-owned marine facilities and for
deposit into the Municipal Harbor Facility Grant Fund (AS
29.60.800)." She stated the Fisheries Business Tax was left
alone.
2:24:33 PM
REPRESENTATIVE JOHANSEN related that the Fisheries Business Tax
specifically is a tax on commercial activities fishermen. He
expressed concern that the commercial fishermen may be singled
out as a possible source of funding.
MS. ROONEY stated that the Fisheries Business Tax language is
not new language in the statute, but is probably referenced in
this section since commercial fishermen use the harbor
facilities.
REPRESENTATIVE JOHANSEN referred to page 2, line 7, and
suggested he might offer an amendment to remove the language.
It would then read, "There is established the Municipal Harbor
Facility Grant Fund consisting of money appropriated to the
fund." He offered to discuss this further with the sponsor.
2:25:56 PM
REPRESENTATIVE GRUENBERG related his understanding that
currently, funds from the watercraft fuel tax can be deposited
to the Municipal Harbor Facility Grant Fund. Under HB 329, the
funding would be deposited to the dedicated transportation fund,
and then be disbursed to the Municipal Harbor Facility Grant
Fund. He cautioned that the possible amendment would prohibit
money from the Fisheries Business Tax from being deposited into
the Municipal Harbor Facility Grant Fund. He suggested that may
be a step back.
CHAIR P. WILSON recalled the Municipal Harbor Facility Grant
Fund was established by Senator Bill Thomas several years ago.
2:27:16 PM
BRIAN KANE, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency,
explained that basically Section 3, the Watercraft Fuel Tax
Account will not be in existence if this bill passes. Thus, in
Section 3, the money that would be separately accounted for is
the Fisheries Business Tax. This is accounted for separately so
to identify the balance that could be appropriated to the
Municipal Harbor Facility Grant Fund.
2:28:21 PM
CHAIR P. WILSON recalled that the Watercraft Fuel Tax would be
deposited to the dedicated transportation fund due to the Alaska
Marine Highway System.
2:28:51 PM
REPRESENTATIVE JOHANSEN asked if this bill is enacted and the
constitutional amendment passes, if anything precludes the
legislature from appropriating money to the dedicated
transportation fund.
MR. KANE responded that if HB 329 passes, that provisions in the
resolution provide an option for fees and taxes to be deposited
into the fund, as well as an option for additional funds to be
appropriated to the dedicated transportation fund.
2:29:40 PM
REPRESENTATIVE MUNOZ understood that in Section 3 of HB 329, the
Municipal Harbor Facility Grant Fund would remain in place while
the Watercraft Fuel Tax Account would be removed.
MR. KANE answered yes. In further response to Representative
Munoz, he responded that the option to have the Municipal Harbor
Facility Grant Fund receive funds from the Fisheries Business
Tax is not mandatory. The funds will be separately accounted
for with an option for the legislature to appropriate funds to
the Municipal Harbor Facility Grant Fund.
MR. KANE, in response to Chair Wilson, related that the
Fisheries Business Tax Fund will be deposited to the general
fund, except for monies directed to dedicated transportation
fund. In further response to Chair Wilson, he explained that
under the bill the only change is that less money will be
separately accounted for since the Watercraft Fuel Tax Account
(WFTA) will be deleted and the funds that normally would be
deposited to the WFTA will be directed to the dedicated
transportation fund. He was unsure if the WFTA is referenced in
other statutes. He offered to research the matter.
CHAIR P. WILSON indicated that it was not her intention to
divert funds from commercial fishermen, but wanted to insure
that the harbors can be maintained for the Alaska Marine Highway
System, barges, or other businesses.
2:32:30 PM
REPRESENTATIVE JOHANSEN referred to page 4, line 29, and asked
for the timing on the capital projects. He recalled that the
capital projects are submitted in late summer or fall and this
subsection would require the advisory council to provide a
report on December 31 of each year.
2:33:04 PM
JEFF OTTESEN, Director, Division of Program Development,
Department of Transportation & Public Facilities (DOT&PF),
answered that was correct, that the Capital Improvement Budget
(CIB) process begins in late summer to identify projects to
request general fund authority or federal funds, federal
aviation or highways. The CIB process includes preparing the
project lists, working with the Office of Management and Budget
(OMB). The general fund projects are scrutinized and cut. The
revised list is submitted to the Governor and is included in the
Governor's Budget request to the legislature. This list would
be developed by the decision-making body, the Transportation
Infrastructure Fund Advisory Council (TIFAC), which uses a
different source of funding. He was unsure whether any conflict
exists, but the timeframe differs from the CIB process. In
response to Chair Wilson, he agreed it would be better if the
timeframes were the same. He offered to provide the date that
the DOT&PF submits requests to OMB.
2:36:12 PM
REPRESENTATIVE JOHANSEN referred to page 4, lines 11-28, and
asked about the process to select the composition of the TIFAC.
He recalled that usually the presiding officers of the
legislature make appointments. He also asked whether the
specific cite listed in subsection (c) is correct for travel and
per diem expenses for legislative members.
2:37:23 PM
CHAIR P. WILSON agreed that usually the appointments are made by
the presiding officers of the legislature, that it could be
changed, as she is open to what makes sense to the committee.
2:38:16 PM
REPRESENTATIVE MUNOZ expressed concern that including
legislators as members of the TIFAC as a part of the decision-
making process for projects is risky, since they represent their
districts and may lose sight of the statewide perspective. She
suggested substituting the director of the AMHS, Aviation, or
their designees since they would represent the modes.
2:39:05 PM
CHAIR P. WILSON expressed her neutrality in the matter, stating
that that impartiality would probably depend on the person.
REPRESENTATIVE MUNOZ expressed a preference for the regional
representation, but thought that including a director from each
of the major transportation sectors would be preferable to
including elected officials.
2:40:21 PM
REPRESENTATIVE JOHANSEN pointed out that the proposed TIFAC
would only function as an advisory board, but that the decision
making process would remain with the department and the
legislature.
2:41:00 PM
REPRESENTATIVE GRUENBERG recalled that the committee should
consider the current tax on cruise ship passengers, which should
be reviewed. He recalled that a recent U.S. Court of Appeals
decision questioned the constitutionality on whether a ferry
system could charge a small fee to its commuters. He further
recalled that the court considered and judged the
appropriateness of the ferry expenditures. He suggested this
may be a good way to enshrine this in state law. He offered his
belief that the funds could be not be used for dredging since
dredging was not specifically required for the ferries to
operate.
2:45:01 PM
REPRESENTATIVE GRUENBERG recalled another court case in
Louisiana in which the U.S. Court of Appeals upheld that taxes
collected from ships using the Mississippi River that could be
used to provide fire-fighting services for ships. He suggested
using a similar concept on the Alaska Marine Highway System
(AMHS) could also benefit fishing industry.
2:46:06 PM
CHAIR P. WILSON, in response to Representative Gruenberg,
related her understanding the suggestion is to put similar
concepts in statute to prevent a lawsuit.
REPRESENTATIVE GRUENBERG agreed, stating that setting provisions
in statute on specific uses of taxes collected could inoculate
the state, and allow revenues to benefit coastal communities.
CHAIR P. WILSON offered to check into this with the attorney
general.
2:47:10 PM
REPRESENTATIVE JOHANSEN expressed concern over any hearings on
the constitutionality of the "head tax" since the state is
currently in litigation on the taxes collected on cruise ship
passengers.
REPRESENTATIVE GRUENBERG agreed it would need to be
confidential.
REPRESENTATIVE JOHANSEN maintained that he would not take part
in any discussion of the legality or constitutionality of the
cruise ship "head tax."
2:47:54 PM
REPRESENTATIVE T. WILSON asked how the allocation was arrived at
for each mode.
CHAIR P. WILSON responded that the allocation approximated the
current expenditure. She stated she is open to suggestions.
The allocation process should provide flexibility.
2:48:43 PM
REPRESENTATIVE T. WILSON suggested using a matrix similar to one
currently used by the DOT&PF for its other projects. In some
years the state might spend more on airports, and she wanted to
insure that the state maintains its flexibility. She referred
to page 3, lines 9-10, to subsection (b), and asked if capital
projects for transportation also included deferred maintenance
costs.
MS. ROONEY recalled discussions with the DOT&PF, that the major
deferred maintenance is provided from the CIB, but the CIB
funding would not be used for snow plowing or day-to-day
maintenance.
2:50:55 PM
REPRESENTATIVE T. WILSON asked whether a dollar amount defines
the difference between a maintenance and capital project.
MR. OTTESEN answered technically no. However, a maintenance
project is typically performed to keep the asset or facility
operational. Capital projects are generally large scale
maintenance projects, such as the systematic repairs to
guardrail on a large stretch of highway.
2:52:13 PM
MR. OTTESEN, in response to Chair Wilson, clarified that
deferred maintenance is just maintenance that has not been
performed over time. He characterized the difference between
maintenance and deferred maintenance as gray area, even for our
federal partners to determine.
CHAIR P. WILSON offered that she would not envision the proposed
dedicated transportation fund being used for routine
maintenance.
REPRESENTATIVE T. WILSON pointed out that it is important not to
put off maintenance projects, since what is maintenance today
could become a capital project later on.
2:53:27 PM
MR. OTTESEN clarified that routinely the CIB contains projects
that might be considered maintenance by the federal government,
but is funded in the CIB using general fund dollars.
REPRESENTATIVE T. WILSON asked what types of projects could be
funded in the proposed dedicated transportation fund.
MR. OTTESEN offered one example as the Dalton Highway. The
DOT&PF may initially resurface the Dalton Highway and it later
need more gravel for resurfacing. The federal partners would
allow federal funding for the initial project, but does not
allow the state to stockpile gravel for resurfacing. The state
typically would use general funds for stockpiling gravel, but
this provides a perfect example of how the proposed dedicated
transportation fund could be used.
2:55:08 PM
REPRESENTATIVE GRUENBERG expressed concern regarding the
Anchorage transit funding. He referred to page 3, to lines 27-
29, to paragraph (5), which allocates five percent of
appropriations from the proposed dedicated transportation fund
for projects related to local community transportation and
transit. He assumed that paragraph refers to public transit
projects.
MR. OTTESEN said he believed it refers to public transit
projects.
REPRESENTATIVE GRUENBERG suggested a larger percentage for
transit, and asked Chair Wilson to flag the item for
consideration.
CHAIR P. WILSON related that the AMATS will receive funding for
transit. She stated she would flag the item but will work for
an equitable allocation, noting a matrix may provide a better
methodology.
REPRESENTATIVE P. WILSON, in response to Representative
Gruenberg, responded that a matrix would be a scoring method for
projects.
2:56:54 PM
REPRESENTATIVE PETERSEN referred to page 4, lines 29-31, to
language previously discussed. He inquired as to whether the
report would be submitted early enough to allow the Governor to
include projects in the CIB.
CHAIR P. WILSON answered that she did not envision the
Governor's participation. She explained that the Governor
considers general fund projects. The proposed dedicated
transportation fund would be a separate matter, she stated.
2:58:11 PM
REPRESENTATIVE JOHANSEN suggested that the process should track
or be synchronized to achieve a smooth process. Since millions
of dollars are involved, the TIFAC could also inform the
governor of the proposed dedicated transportation fund
priorities instead of keeping the two project lists completely
separate.
CHAIR P. WILSON answered she has noted the request.
2:58:57 PM
REPRESENTATIVE MUNOZ referred to the revenue sources. She
related that 60 percent of the aviation proceeds are refunded to
municipalities. She asked for the total aviation revenues
collected.
JERRY BURNETT, Deputy Commissioner, Department of Revenue (DOR),
stated that the tax on 60 percent of the fuel sold at municipal
airports is shared back to municipalities. Currently,
approximately $125,000 is the total amount shared back, although
he was unsure of the total sales. The majority of the $125,000
is shared back to the Juneau International Airport (JNU).
MR. BURNETT, in response to Representative Munoz, agreed that
the structure would not change under the proposed bill. In
further response to Representative Munoz, Mr. Burnett answered
that the Juneau International Airport is not a state-owned
airport and that the airport receives its funding from planning
fees and direct federal grants.
REPRESENTATIVE MUNOZ understood that the state participates in a
share of the projects for municipal airports. She recalled it
might be 3 to 5 percent
MS. KLEIN answered that the municipal airports do not
participate through the state but can apply directly to the FAA.
Additionally, their sponsor, typically the municipality or the
DOT&PF, would also apply for the AIP grants on their behalf.
REPRESENTATIVE MUNOZ inquired as to whether the 96 percent could
be shared.
3:02:01 PM
MS. KLEIN clarified that the share depends on the type of
project. Terminal projects are treated differently than runway
projects. The sponsor would still need to provide matching
funds, she stated. For example, the Juneau International
Airport would need to provide its own matching funds whereas the
state airport would not.
REPRESENTATIVE MUNOZ asked whether municipalities have any
opportunities to receive state support.
MS. KLEIN answered that the state will participate in some
terminal projects to provide the matching funds since other
funds for certificated airports do not exist and municipal
airports do not have sufficient passengers to raise the
revenues. In some rare instances the state will participate by
providing matching funds for municipal airport terminal
projects.
3:03:22 PM
REPRESENTATIVE GRUENBERG referred to page 3, lines 1-4. He
understood that the funding for the proposed dedicated
transportation fund will be removed by appropriation. He
pointed out that the Governor would participate in the process
since he/she would need to sign the bill. He asked whether the
appropriations will be segregated and would be a separate
appropriation from the general fund. He asked if that was the
sponsor's intent.
CHAIR P. WILSON agreed that was her intent. She referred to
page 4, lines 1-4, which requires the DOR to determine the
market value of the fund and invest the fund. She asked Mr.
Burnett whether the DOR performs this function with other funds.
MR. BURNETT answered yes, and listed some examples, including
the Children's Trust Fund and the Public School Trust Fund. He
offered that the DOR manages about 100 funds with various payout
rules.
3:05:10 PM
CHAIR P. WILSON related that the fiscal note has not yet been
prepared.
MR. BURNETT responded that the fiscal note was prepared today.
He explained that the DOR would attempt to achieve a real rate
of return of 5 percent, which would require a mix of equities
and fixed income securities, perhaps a ratio of 55 to 45. The
DOR would charge contractual fees against that since external
management would manage the equities. He estimated the fees
based on $1 billion in appropriations would equal $424 thousand
per year, and based on today's market conditions would expect to
produce a spendable income of $50 million the first year. He
also estimated, based on the permanent fund and constitutional
budget reserve, that a similar asset like the dedicated
transportation fund over 20 years would probably incur losses in
15 to 20 percent of the time, but the probability that the
earnings would be double the anticipated projections would be
about the same percentage.. He related that he has not had an
opportunity to assess the exact probabilities for the dedicated
transportation fund.
3:07:29 PM
[HB 329 was held over.]
3:08:25 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 329 Sponsor Stmt.pdf |
HTRA 2/9/2010 1:00:00 PM HTRA 2/11/2010 1:00:00 PM |
HB 329 |
| HB 329 AK Trans Finance Study.pdf |
HTRA 2/9/2010 1:00:00 PM HTRA 2/11/2010 1:00:00 PM |
HB 329 |
| Aviation advisory board Legislative Update 2010.pdf |
HTRA 2/11/2010 1:00:00 PM |
|
| legal opinion on open meetings.pdf |
HTRA 2/11/2010 1:00:00 PM |
|
| Illinois research on trans funds.pdf |
HTRA 2/11/2010 1:00:00 PM |