Legislature(2021 - 2022)SENATE FINANCE 532
05/17/2021 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB41 | |
| HB117 | |
| SB50 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 41 | TELECONFERENCED | |
| += | HB 117 | TELECONFERENCED | |
| += | SB 50 | TELECONFERENCED | |
SENATE BILL NO. 50
"An Act making appropriations, including capital
appropriations, reappropriations, and other
appropriations; making supplemental appropriations;
making appropriations to capitalize funds; and
providing for an effective date."
9:36:41 AM
Co-Chair Bishop stated that the committee's intent was to
hear the bill for the purpose of discussion. He related
that the bill version before the committee largely
reflected what had been previously introduced by the
governor. He said that all fund other than UGF had been
removed for clarity.
CHRISTOPHER CLARK, STAFF, SENATOR CLICK BISHOP, spoke to a
proposed CS to SB 50. He relayed that all documents
pertaining to the document were posted on BASIS under the
legislation. He referenced an overview agency summary
document labeled "A2" 2021 Legislature Capital Budget
Agency Summary Governor Structure (copy on file). He
noted that the column, 22GovAmdT showed all amendments
received form the governor to date. He said that the CS
represented the governor's request from December 2020
through the amendment deadline of February 16, 2021. He
shared that the column took out those funds that were non-
UGF under the governor's proposal, but the committee
considered UGF, namely bond receipts from AHFC and PCE,
which were now being funded with UGF. He pointed to the
total on the spreadsheet of $169.4 million, which did not
include $7 million from HB 71, which would bring the total
$176.6 million and had been reflected in presentations form
Legislative Finance Division.
9:40:24 AM
Co-Chair Stedman understood that document A2 was still
under discussion.
Mr. Clark affirmed that he was still referencing document
A2.
Co-Chair Stedman asked for further clarity as to which
columns were being discussed.
Mr. Clark directed attention to the column 22GovAmdT and
pointed to the Funding Summary line, which showed $128.2
million in UGF and represented what the governor had
submitted in his budget and budget amendments since
December 2020. He stated that column 2, which showed UGF of
$169.4 million, which was part of a total of $176.6 million
in capital projects. He noted that the federal receipts
were $1.7 billion, up from $1.2 billion, which would be
discussed later. He said that the numbers reflected what
had been done with transportation projects in the bill.
9:42:25 AM
Mr. Clark directed attention to Section 1 of the proposed
CS. He asked members to go to the bottom of page 7 of the
bill. He spoke to the appropriations for the Department of
Transportation and Public Facilities. He shared that in
previous years, appropriations for airport improvements and
surface transportation had been lump sums. He explained
that the current bill reflected what had been done before
2017, when appropriations had been broken down into
allocations. He stated that the reasoning for breaking down
the numbers were to provide detail for each project. He
said that there was a difference between what was done
before 2017 and what the billed showed in that how the size
of the allocations to accommodate for things such as
unexpected cost due to work orders or other unexpected
project delays.
Mr. Clark directed attention to page 24, lines 23 and 24,
which showed allocations for "Contingency" ($100 million)
and "Project Acceleration ($150 million). He shared that
the funds were intended to accommodate additional authority
within each project or to allow projects to be accelerated
should the originally allocated project be put on hold. He
said that the agency had proposed creation of the
contingency and acceleration funds.
9:45:35 AM
Co-Chair Bishop added that individual lawmakers would have
the ability to identify individual projects, per
legislative district, in the bill.
9:46:02 AM
Co-Chair Stedman observed that the proposed funds comprised
25 percent of the overall appropriation. He wondered
whether the funds were only available for listed projects,
or if there was flexibility when spending the funds.
9:46:51 AM
ROB CARPENTER, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES (via teleconference),
explained that the two allocations would provide federal
receipt authority to aid with cost overruns and
reallocating funding to other STIP projects in place of
delayed projects.
9:48:06 AM
Senator Wielechowski was curious if any such language had
been included in previous capital budgets. He was concerned
that if contractors knew that there was $100 million set
aside for cost overruns, that there would be less incentive
to stay on budget.
Mr. Carpenter stated that in prior years there had been
allocations in the bill that had caused the department to
over-program the appropriation to create room for slippage
and cost overruns. He said that the intent of the
allocations listed was to plan for the issues in advance.
He appreciated Senator Wielechowskis concern but felt that
in the competitive environment for projects would result in
the best bids possible.
9:49:43 AM
Co-Chair Stedman recalled that over previous years, there
had been many federal projects in the STIP that had
resulted in anticipation and excitement in communities,
only to be shelved and never completed. He referenced a
road in his district that had been in the STIP for 20
years. He thought the STIP was over-programed. He
referenced the importance of not misleading communities. He
stressed the importance of more transparency in the STIP
process and held that the concept of the two funds was to
provide more transparency in STIP projects.
9:51:33 AM
Co-Chair Bishop referenced Senator Wielechowski's question
and thought the line items offered a truer accounting of
STIP projects and where money was ultimately allocated.
9:52:15 AM
Mr. Carpenter agreed.
9:52:22 AM
Senator Wielechowski queried the sort of provisions in
RFP's the prevented contractors from bidding low and then
seeking more funding through change orders.
9:52:49 AM
BEN WHITE, PROGRAM DEVELOPMENT DIRECTOR, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES (via teleconference),
explained that the department followed the standard
contracting process for the state and followed the Federal
Highways Administration contracting and procurement
processes. He said that there were provisions in place that
addressed the issue. He agreed to provide the information.
9:53:40 AM
Senator Wielechowski asked how often bids went over
projected cost.
Mr. White replied that much of the costs were dependent on
the cost of materials. He mentioned the volatility in the
price of steel, and the mobilization and demobilization of
equipment. He discussed cost variables in different regions
of the state and different activity costs such as marine
pile driving.
9:54:45 AM
Co-Chair Stedman asked whether there would be management
fees for the proposed $250,000,000.
Mr. Carpenter did not think there would be fees involved;
the money was federal receipt authority that could be
reallocated to a project under the Contingency and Project
Acceleration provisions.
9:56:18 AM
Co-Chair Stedman understood that the Indirect Cost
Allocation Program (ICAP) charge wound not be applied until
the money was allocated to a project. He asked how long the
funds could be carried forward before there was a potential
risk of loss to the state.
Mr. Carpenter stated that the funds would be part of the
capital budget appropriation. He thought there was a five-
year window in which to charge or move funds according to
the allocations, at which time the funds would lapse for
the life of the project. He said that the intent was to get
the projects started within the next federal fiscal year,
starting the state fiscal year YF 22, which was two federal
fiscal years. The funds could be used over many years just
as the capital allocations for other projects would be
used.
9:58:22 AM
Co-Chair Stedman commented on the technical nature of the
new line items. He asked what DOT could do to help the
committee track the individual years and amounts of the
proposed funds and how the funds were spent. He asked
whether the department would be reporting to the
legislature on an annual basis or other.
Mr. Carpenter appreciated the question. He suggested that
intent language could be added that indicated the
department should report to the legislature each time the
Contingency money was used and when a project was moved
forward under Project Acceleration. He reminded that the
agency reported quarterly on obligations and could report
every time there was use of the allocations.
10:00:00 AM
Co-Chair Bishop understood that there was no double-
dipping on the indirect rate through the Contingency or
Project Acceleration allocations to a project for
management fees for a project.
Mr. Carpenter answered in the affirmative.
10:00:31 AM
Senator von Imhof asked what would happen to the funds if
there were no cost overruns or contingency needs.
Mr. Carpenter explained that the funds were not actual cash
but was expenditure authority that allowed the department
to use federal revenue in a different manner.
Senator von Imhof referenced page 16 of the bill, which
listed three large projects. She assumed if one of those
projects did not move forward, the contingency money would
be triggered.
Mr. Carpenter answered in the affirmative. He added that
there was a limit of what could be moved forward and what
could incur cost overruns. The department had calculated
cost overrun trends for the past and slippage. He agreed to
provide the details.
10:02:31 AM
Mr. White stated the department had considered how to move
projects forward. He said that if a larger project slipped
out, the department needed the ability to move projects
forward and fill the federal gap. The department wanted to
ensure that it obligated each federal dollar.
10:03:20 AM
Senator von Imhof asked whether the committee could see
what projects were in the queue. She referenced the STIP
report and what potential projects would be chosen to fill
any gap.
10:03:54 AM
Senator Wielechowski asked whether the contingency funds
could be used for construction contracts as well as
consultancy contracts.
Mr. Carpenter answered in the affirmative.
Senator Wielechowski wanted to better understand how the
funds might be used. He requested more detail, in writing,
about the potential ways the funds could be used.
Mr. Carpenter stated that the department would provide
backup to the project appropriation that would give further
details.
Senator Wielechowski wondered whether he could see some
detail before moving forward on voting on the proposed CS.
Mr. Carpenter stated that he could provide the information.
10:05:49 AM
Co-Chair Stedman asked for clarification as to whether the
Contingency and Project Acceleration funds would be used
only for projects from the STIP.
Mr. Carpenter replied affirmatively that the funds would be
used for STIP projects only.
Co-Chair Stedman clarified that the money could not be used
for a project outside of the STIP.
Mr. Carpenter agreed.
Co-Chair Stedman thought there needed to be a tracking
mechanism to provide more clarity on DOT project spending.
10:07:35 AM
Co-Chair Bishop believed that the proposed CS would provide
greater clarity than what had been available in the past.
10:07:44 AM
Senator Wielechowski asked whether the Contingency and
Project Acceleration funds were required to go through an
RFP or procurement process before issuance.
Mr. Carpenter reiterated that the funds were federal
receipt authority that the department could reallocate to
projects. He stated that RFP and bidding process would
follow standard Federal Highway rules.
Co-Chair Bishop considered that all the overruns would need
to be vetted before meeting Federal Highway requirements.
Mr. Carpenter affirmed that the department was bound by the
strict rules of the FHA on how DOT funds were spent.
Co-Chair Bishop asserted that DOT would have to demonstrate
that all rules had been followed before the money could be
used for cost overruns.
Mr. Carpenter answered in the affirmative.
10:09:15 AM
Senator Wielechowski recalled that Mr. Carpenter had agreed
that the funds could be used for consultants. He asked
whether an RFP process would need to be followed to procure
a consultant.
Mr. Carpenter stated that any consultants that would be
hired would be strictly tied to the projects guided in the
STIP. He assured the committee that department would not
randomly hire consultants using contingency funds. All
expenditures would be guided by the STIP, the public
planning process, and federal rules.
10:10:35 AM
Co-Chair Stedman reminded that all the federal funds would
be accompanied by state matching funds. He asked Mr.
Carpenter to explain how the match process would work. He
pondered where the $250 million would go if the line items
did not pass muster.
Mr. Carpenter discussed the match process, which included a
separate appropriation for federal components. There was a
roughly ten percent match on the federal highway, which
would require a state match.
Co-Chair Stedman reiterated his question about the
distribution of the $250 million without the Contingency
and Project Acceleration funds.
Mr. Carpenter said that in recent years the appropriation
would have been leaner because it would have been a lump
sum. He reminded that the projects were controlled by the
STIP. In the past the bill would have to be overprogrammed
by nearly double to account for expected overruns. He said
that the intent with the new line items was to keep the
bill lean, while allowing for flexibility in terms of cost
overrun and slippage.
10:14:23 AM
Senator Olson considered the $250,000,000 proposed for the
two funds and wondered why the state didn't use the funds
for deferred maintenance and capital projects that were on
the list.
Mr. Carpenter reminded that the funding was not actual
cash, but rather expenditure authority for DOT to be able
to charge to the allocations with legal authority. He
stressed that the DOT was still capped at approximately
$600 million from the Federal Highway Administration.
Senator Olson thought the proposal could be a slanted way
to make expenditures.
Mr. Carpenter noted that the department would not be hiring
consultants outside the procurement process. He reiterated
that every expenditure had to be itemized in the STIP and
the procurement process was followed to the letter of the
law.
10:16:59 AM
Senator Olson assumed that the funds would only be used for
roads, since the STIP was referenced, rather than ferries
or airports.
Mr. Carpenter noted that there were two appropriations
one for surface and another for airports.
10:17:49 AM
Senator Wielechowski was trying to understand how the
federal government would allow the additional receipt
authority. He understood that DOT received authorization
for projects and wondered how the process would work.
Mr. Carpenter deferred to Dom Pannone.
10:18:56 AM
DOM PANNONE, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF TRANSPORTATION AND PUBLIC FACILITIES (via
teleconference), explained that if DOT had a federal
project for $10 million and an allocation in the Capital
Budget for $10 million which experienced a cost overrun,
the department would tap into the Contingency allocation.
He said that this would keep the department from reducing
allocations to other projects and to continue with the
project without having to seek legislative approval.
10:20:17 AM
Co-Chair Stedman wanted to take a high-level view of the
proposed Contingency fund and Project Acceleration fund. He
said that the bill contained $750 million in projects, with
$250 million in the new funds. He asked how much the
federal government would send to the state. He asked for
more refinement on the total expected federal dollars.
Mr. Carpenter deferred to Mr. White.
Mr. White stated that for each DOT project, there was a
project agreement with the FHA based on the planning
estimate. The department would be working closely with the
FHA and would make additional funding requests to the FHA.
The project could not be advanced with the additional
funding until the cost increase was approved by the FHA. He
shared that currently, if a project had a cost increase,
they had to find a way to deduct from another project or
allocation, which made for constant funding management.
10:22:55 AM
Co-Chair Stedman took note of the $750 million for federal
receipt authority. He asked how much the federal government
would be sending to the state.
Mr. White cited that for the current fiscal year, $586
million had been allocated in federal limitation, which did
not include other funding sources that became available
during the year. He said that the base allocation for 2021
was $586 million.
Co-Chair Stedman pondered that the department had received
$600 million, the bill listed $750 million in receipt
authority, which provided and additional $150 million. He
furthered that the Contingency and Project Acceleration
added and additional $250 million. He concluded that in all
culminated in the department receiving the $600 million in
federal authority.
Mr. White answered in the affirmative.
10:24:57 AM
Senator Wielechowski asked whether the department was
expecting 33 percent cost overruns on STIP projects.
Mr. White stated that the intent was to make use of more
federal funding as it became available. He said that the
last two years the department had obligated more federal
funding than what had been originally allocated because of
earmarks or other available federal funding than had not
been part of the base allocation from the FHA.
Senator Wielechowski thought the Contingency fund was for
cost overruns and not allocation of possible additional
federal funding.
Mr. White stated that the Contingency was for cost
overruns, and the Project Acceleration fund was for
additional federal funding.
10:26:51 AM
Co-Chair Bishop pondered that in if the federal government
had money that had not been spent by other states the
department would be in place to benefit from those
additional dollars.
Mr. White agreed. He said that during the August
redistribution at the end of the federal fiscal year, FHA
would make any unallocated funds available, which would be
the Project Acceleration funding the department would seek
out.
Co-Chair Bishop asked whether Alaska was one of the better
states in the country at being prepared to have projects
ready for additionally available funding.
Mr. White affirmed that the state had done a good job at
being prepared for any additional funding.
10:28:49 AM
Mr. Clark directed attention to page 24, line 26, which was
an allocation for the Denali Commission for $15 million. He
said that the administration believed that the allocation
would help to build roads in rural Alaska.
10:29:19 AM
Mr. Clark pointed out that Section 2, which set out the
funding by agency for the appropriations made in Section 1.
He furthered that Section 3 set out the statewide funding
for the appropriations made in Section 1. He addressed
Section 4 starting on page 30, which was the language
section of the bill. He pointed out to the committee that
the first item related to a revised program for legislative
RPLs. He noted that the language was the same as the Senate
version of the operating budget bill that had been
previously released. The language put some constraint on
the governor's ability to use RPLs for funding government
and to retain the legislative power of appropriation.
Mr. Clark highlighted a few items in the language section.
He spoke to legislative reappropriations the first of which
was on Page 32, under the Department of Health and Social
Services. He said that the bulk of the reappropriations
could be found on Page 39, line8, staring with House
Districts 12 and 28, these were reappropriations requested
by individual legislators. He noted that then end of the
bill contained lapse dates for projects and effective dates
for the sections of the bill.
10:32:21 AM
AT EASE
10:35:02 AM
RECONVENED
Co-Chair Stedman MOVED to ADOPT proposed committee
substitute for SB 50, Work Draft 32-GS1507\N (Dunmire,
5/16/21). There being NO OBJECTION, it was so ordered.
SB 50 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 50 06 - Supp ProjectDetailByAgency.pdf |
SFIN 5/17/2021 9:00:00 AM |
SB 50 |
| SB 50 05 - SCS1 ProjectDetailByHD.pdf |
SFIN 5/17/2021 9:00:00 AM |
SB 50 |
| SB 50 03 - SCS1 Cap AgencySummary UGF.pdf |
SFIN 5/17/2021 9:00:00 AM |
SB 50 |
| SB 50 02 - SCS1 Cap AgencySummary All Funds.pdf |
SFIN 5/17/2021 9:00:00 AM |
SB 50 |
| SB 50 04 - SCS1 ProjectDetailByAgency.pdf |
SFIN 5/17/2021 9:00:00 AM |
SB 50 |
| SB 50 01- SB 50 Version N, 16 May 2021.pdf |
SFIN 5/17/2021 9:00:00 AM |
SB 50 |
| HB 41 Explanation of Changes ver I to G 5.13.2021.pdf |
SFIN 5/17/2021 9:00:00 AM SFIN 1/31/2022 1:00:00 PM |
HB 41 |
| HB 41 Work Draft ver. G 5.13.2021.pdf |
SFIN 5/17/2021 9:00:00 AM SFIN 1/31/2022 1:00:00 PM |
HB 41 |