Legislature(2007 - 2008)HOUSE FINANCE 519
07/31/2008 04:00 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB4001 | |
| HB4005 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB4001 | TELECONFERENCED | |
| += | HB4005 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 4001
An Act making supplemental appropriations, capital
appropriations, reappropriations, and other
appropriations; making appropriations to capitalize a
fund; and providing for an effective date.
4:14:38 PM
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
explained that HB4001 totals over $700 million and will
provide resources necessary for the Alaska Gas Inducement
Act (AGIA) license before the legislature. Included are
implementation costs, the reimbursement fund, job training
for Alaskans, instate gas use, and infrastructure for gas
pipeline construction. She relayed that the major component
of the bill was the $500 million request to capitalize the
AGIA reimbursement fund. The request was for reappropriation
of $300 million from the Alaska Housing Finance Corporation
(AHFC) plus $36 million of interest combined with $164
million of general funds, which would fully capitalize the
reimbursement fund at the $500 million.
Ms. Rehfeld added that another component of the bill
requests $15 million for gas pipeline implementation.
Components within that request include contractual expertise
that would be needed on an ongoing basis for the gas
pipeline implementation, and she stated that $42.7 million
was needed for workforce development through the Departments
of Labor, Education, and the University of Alaska. She
continued that there was approximately $130 million for the
Department of Transportation and Public Facilities (DOT/PF)
for infrastructure projects in the state and $25 million
proposed for the Alaska Natural Gas Development Authority
(ANGDA) instate gas use project.
4:17:20 PM
Ms. Rehfeld provided an analysis of section one which
includes appropriations for capital projects and grants from
the general fund or other funds as set out in section two or
this act by funding sources to the agencies named for the
purposes expressed. These appropriations are for the
Department of Education workforce scholarship program and
for recent high school or GED graduates preparing for
careers in AGIA related occupations. This would be operated
through the post secondary education commission. Also
included is an appropriation to the Department of Labor &
Workforce Development including $34.8 million dollars.
Components of this request include a pipeline administrator,
$26.5 million for a competitive grant program for a
technical training plan for the gas line, $2 million for a
pipeline training center, $1.5 million for the Alaska
vocational technical center in Seward, $2.5 million for GED
program and adult basic education, and a $750 thousand
request for skills upgrade and training, and a job awareness
program. $23.5 million for the Haines highway
reconstruction, realignment and Chilkat River bridge
replacement. $1 million would be for the University of
Alaska for equipment purchases. Finally, the reappropriation
request of the earnings within the AHFC where the $300
million has been residing, and a request of $164 million to
capitalize the AGIA reimbursement fund, complete section
one.
4:22:26 PM
Co-Chair Chenault asked if the $500 million for TransCanada
should be appropriated out of total general funds. Ms.
Rehfeld responded that the legislature could determine if
the funds from (AHFC) could be used. She claimed that it was
proposed because there had been discussion that the $300
million had been set aside for the purpose of creating a gas
pipeline. She stated that she was not opposed to a different
method of appropriation rather than taking the $300 million
from AHFC.
4:23:52 PM
Representative Gara requested more information on the
funding of $500 million dollars for AGIA and how the $300
million dollars got into the AHFC account. He asked if they
were dividend dollars. Ms. Rehfeld replied that the $300
million was appropriated to the AHFC account in FY 2006.
Representative Gara thought that the dividends should be
used for low income housing purposes unless the $300 million
were appropriated as savings. Co-Chair Chenault added that
the $300 million were appropriated to AHFC as a savings
account.
4:24:59 PM
Co-Chair Chenault clarified that the intent of the meeting
was to give an overview of the discussed components of the
projects. He stated that the bill will come back to
Committee for public testimony. Representative Gara wanted
the opportunity to ask questions of the department heads at
a future date.
4:26:23 PM
Representative Gara questioned the appropriation to (ANGDA)
for spur line permits. He understood that AGIA provides for
five points within the state. He expressed interest in the
spur line that provides instate gas rather than the
immediate spur line for the export of gas. He wanted to
know more about the spur line money.
4:27:31 PM
PAT GALVIN, COMMISSIONER, DEPARTMENT OF REVENUE, explained
that the spur line discussed in the ANGDA appropriation
would serve the Southcentral Anchorage area.
Representative Gara asked why the first permit being funded
was for the spur line. Commissioner Galvin recommended that
ANGDA discuss that. He discussed the need to bring gas into
populated parts of the state. The line would go through the
Fairbanks area and continue along the highway out of the
state. He noted the value of having a line connecting the
main line into the Anchorage area. The spur line would
connect Anchorage or the Cook Inlet to the rest of the
distribution system. As gas development takes place, supply
will dictate where the line runs. Ultimately, the gas
distribution system must connect Southcentral area to the
main line. He stated that ANGDA has identified the project
sequencing. The funding would put the state in a position
to take maximum advantage of the development of the
mainline.
4:30:30 PM
Representative Gara expressed concern about unnecessary
spending. He noted the other possibility of a bullet line
from the North Slope to Anchorage. Commissioner Galvin
responded that the need for the spur line exists regardless
of the options. The spur line is on the same route as the
bullet line. He stated that the work should be done now for
the ultimate connection of the line, and that each option
requires this particular segment.
4:33:01 PM
Representative Gara understood that a spur line from
Fairbanks to Anchorage was needed for either the spur or
bullet line. Commissioner Galvin acknowledged that the
affected segments are between Anchorage, Glennallen, Delta,
and Fairbanks.
Representative Gara did not want to spend money on a line
that would never be used. Commissioner Galvin clarified
that the state's interest has always been the Richardson
Highway route. He believed that it was in the state's best
interest to begin the work, so that the preliminary project
is finished when the discussed options become available.
Representative Gara felt it was premature to start spending
money on a line from Glennallen to Anchorage until the
decision was made. Commissioner Galvin emphasized getting
gas to Alaskans who don't currently have access.
4:35:27 PM
Co-Chair Chenault noted the projected total of $1.2 billion
dollars for repairs to gas pipeline associated roads. He
asked why the state of Alaska should use general funds to
pay for the road repairs, when the possibility exists that
they could be rolled into the tariff rates. Commissioner
Galvin stated that the Dalton Highway was an asset greater
than facilitating the construction of a gas line.
Development on the North Slope is intended for oil
exploration and an emerging gas exploration.
4:37:16 PM
Co-Chair Chenault asked if the state was not building a gas
line, highway work would be needed. He thought that the
expense should be tied into the tariffs of the pipeline
itself.
4:38:56 PM
Representative Thomas expressed concern about future capital
budgets. Ms. Rehfeld understood his concern. Representative
Thomas wanted his district to have local employment
opportunities in addition to those provided by the pipeline.
4:39:52 PM
Representative Crawford queried the prohibition of the use
of federal funds for regular road maintenance.
FRANK RICHARDS, DEPUTY COMMISSIONER OF HIGHWAYS & PUBLIC
FACILITIES, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, stated that the challenge with the Federal
Highway Funds is the Federal Highway Trust Fund is facing a
significant reduction in the amount of revenue flowing into
it due to the high cost of gasoline and the resulting
reduced amount of miles driven. The fund is seeing fewer
increases and a reduction of federal funds is anticipated.
The challenge is taking the funds received and achieving the
projects currently in the Statewide Transportation
Improvement Program (STIP), with the mentioned budget
constraints. He explained that the goal of using general
fund dollars was to enable a reliever on the STIP in future
years, allowing STIP dollars to be spent on other priority
projects.
Representative Crawford questioned if the department's goal
was to lock the state in if the funds were not available
from the federal government. Mr. Richards provided an
example of three Dalton projects using federal dollars. The
constraints of the STIP dollars, has resulted in fewer
projects and have delayed some projects.
4:44:03 PM
Representative Crawford asked about the time frame for the
construction projects. Mr. Richards stated that the three
projects would be bid in the fall and begin in the summer of
2009, depending on the contractor's time frame. The emphasis
of other allocations is to start the design work for the
next construction season, creating the infrastructure and
minimizing competition from other projects.
Representative Crawford thought that the area needed a large
amount of maintenance each year because of the weather, the
trucks, and the use of the Dalton Highway. Mr. Richards
agreed; however foundation issues create a challenge. The
goal is to upgrade the embankment anywhere there is melting
permafrost, which will take a number of construction
seasons.
4:46:59 PM
Representative Kelly asked if federal dollars would be lost
if the project was initiated now. Mr. Richardson replied
that he did not know if federal money would be missed for
this road or if those federal dollars would instead be spent
on competing projects.
Representative Kelly reiterated the query regarding the use
of federal dollars. He pointed out that the state does not
know what the next authorization of the federal highway bill
will be, but possibly the majority of federal funds will go
to large communities for mass transit to reduce the amount
of green house gas emissions. He wondered if rural
population states would receive less money.
Mr. Richards stated that the federal program comes with
federal requirements of timelines and processes on a program
of this size. The use of the general fund could shave
millions of dollars off of the program and will maximize the
use of federal dollars providing the state with more
flexibility.
Representative Kelly understood that future appropriations
are difficult to determine. His interest was in the
prevention of forgoing any match. He claimed understanding
that the placement of the dollars will provide positive
benefits and net gains.
4:52:40 PM
Representative Gara noted that if the state spends money on
roads, it would free up $129 million for other STIP
projects. He did not know if the state could afford a
capital budget with this allocation of road money. He
proposed that the legislature move the projects up the
federal list in order to qualify for the federal funding and
queried the timeline of that scenario. Mr. Richards
explained that the department has a STIP application process
that is scored. He stated that "the STIP gets played and
becomes a political hot potato." The proposed highways are
part of a national highway system. The amount currently
received is about $75 million per year. Any of the other
projects would be postponed. The amount of money is limited,
yet the need is large.
Representative Gara asked when the roads would be
constructed if federal money was used. Mr. Richards
referenced the PowerPoint presentation showing the
individual projects. Several projects programmed have not
made it onto the STIP because it is a three year planning
document. He offered to provide information as to where
future projects fit in.
Representative Gara thought that the projects did not need
to be built this year and that it would be many years before
pipe is transported on the roads. He wanted to see as many
roads as possible built with federal dollars. Mr. Richards
clarified that one of the challenges was the time constraint
of the preliminary environmental and design work. The goal
is a gas pipeline by 2018. There are six construction
seasons left for the necessary preliminary highway work, if
the pipeline construction begins in 2015. Postponing the
highway construction could increase the cost of the pipeline
construction.
Representative Gara expressed confusion about pushing the
project through by 2018, when some delay might enable the
use of federal dollars. Mr. Richards stated that the 2018
date is TransCanada's projection. The projects could go
forward with federal dollars if they were unlimited. He
spoke to the benefit of using the general fund.
5:00:07 PM
HB 4001 was HEARD and HELD in Committee for further
consideration.
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