Legislature(2017 - 2018)SENATE FINANCE 532
01/29/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Department of Transportation and Public Facilities Fy19 Operating Budget | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 144 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE BILL NO. 144
"An Act making appropriations for the operating and loan
program expenses of state government and for certain
programs; capitalizing funds; amending appropriations;
making supplemental appropriations; making appropriations
under art. IX, sec. 17(c), Constitution of the State of
Alaska, from the constitutional budget reserve fund; and
providing for an effective date."
^PRESENTATION: DEPARTMENT OF TRANSPORTATION and PUBLIC
FACILITIES FY19 OPERATING BUDGET
9:05:30 AM
MARK LUIKEN, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND
PUBLIC FACILITIES, discussed the presentation "Alaska
Department of Transportation and Public Facilities" (copy
on file). He spoke to slide 2, "Our DOT&PF People: Alaskans
Serving Alaska":
Meet some of the transportation professionals who Keep
Alaska Moving
Matt Tanaka Engineer/Architect III, Statewide Public
Facilities
?Lifetime Alaskan, grew up in Anchorage, raised
family there.
?32 years engineering experience, 21 years with
DOT&PF.
?Professional engineer, two bachelor's degrees,
and MS in civil engineering from Dartmouth.
?Specialized in the delivery of large and complex
public facilities projects.
?Enjoys the Alaskan outdoors as a skier, cyclist,
fly fisher.
?Contributes to DOT&PF's mission by building &
maintaining Alaska's infrastructure with
consistent success at meeting customer needs
while finishing on time and under budget. He
advances One DOT&PF through enthusiastic support
and with his expertise
Lauren Staft Project Manager, Statewide Public
Facilities
?While hiking the Appalachian Trail, decided to
pursue a career in the great outdoors and moved
to Alaska in 2000.
?Geological Engineering degree from University of
Alaska, Fairbanks.
?Has two young daughters and enjoys hiking and
camping.
?10 years of service across the state working
with DOT&PF Design & Construction and Statewide
Public Facilities.
?Responsible for managing construction,
renovation, and repair of facilities in the
Northern Region and is committed to thoughtful
project development to ensure facilities meet the
needs of the people who use them.
?In 2016, was named one of Construction's
"Deserving Dozen" for dedication, leadership, and
service.
Commissioner Luiken highlighted department employees that
were dedicated to providing service to the department and
the state.
Commissioner Luiken discussed slide 3, "Transportation &
Public Facilities - Keep Alaska Moving through service and
infrastructure":
The Department of Transportation & Public Facilities
is responsible for providing these core services:
?Preserve Alaska's Transportation Infrastructure
?Operate Alaska's Transportation Infrastructure
?Modernize Alaska's Transportation Infrastructure
?Provide Transportation Services
Sources:
Department Home: dot.alaska.gov
Strategic Plan:
dot.alaska.gov/comm/strategic_plan.shtml
Constitutional Authority:
dot.alaska.gov/comm/legislative/docs/Fact-Sheet.pdf
FY2019 Proposed Budget:
www.omb.alaska.gov/html/budget-report/fy2019-
budget/proposed.html
Commissioner Luiken listed the Alaska Marine Highway System
(AMHS) and the Alaska International Airport System as two
examples of infrastructure operated by the Department of
Transportation and Public Facilities (DOT). He explained
that results-based alignment was a service delivery
framework through which DOT measured the contribution of
the services delivered in support of its mission. He drew
attention to weblinks to source documents at the bottom of
slide 2.
AMANDA HOLLAND, ACTING DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, referenced slide 4,
"Department of Transportation and Public Facilities - Share
of Total Agency Operations," which showed a bar graph that
showed a ten-year lookback of DOT's Unrestricted General
Fund (UGF) and General Fund (GF) spending. She noted that
the subsequent four slides showed the budget slides
prepared by the Division of Legislative Finance (LFD). She
shared that the governor's proposed FY 19 budget, UGF
equaled $177.9 million, and DGF equaled $97.9 million. The
numbers were close to FY 09 budget levels.
Ms. Holland turned to slide 5, "Department of
Transportation and Public Facilities - Line Items," which
showed a bar graph depicting all funds by line item. She
pointed out that commodities and travel had decreased below
FY 09 level, while the services line had increased. She
explained that the increase was primarily due to personal
services being transferred to the services line to fund
shared services reimbursable services agreement. The
funding was for Shared Services of Alaska, the Office of
Internet Technology, and the Division of Facilities
Services.
9:09:07 AM
Ms. Holland reviewed slide 6, "Department of Transportation
and Public Facilities - Appropriations (GF Only)," which
showed a line graph. The graph showed GF only, which
included UGF and Designated General Fund (DGF) sources.
Highways, aviation, and facilities; and the AMHS made up 94
percent of the department GF operating budget. In the
governor's proposed FY 19 budget, all of the department's
GF appropriations were below FY 09 levels.
Co-Chair Hoffman asked why the Alaska Marine Highway System
(AMHS) reflected a smaller reduction than that of the
highway and aviation portion of the DOT budget.
Ms. Holland explained that during the timespan on the chart
on slide 6; there had been a greater decrease in GF for
highways, aviation and facilities as opposed to AMHS.
Co-Chair MacKinnon asked if the GF funding for the AMHS was
for personnel or for facilities.
Ms. Holland explained that the majority of the GF paid for
personal services, but also paid for contractual and
services lines.
Co-Chair MacKinnon asked if the AMHS fares paid for the
facilities where ferries docked. She discussed how DGF was
spent in other agencies.
9:12:21 AM
MATT MCLAREN, CONTROLLER, ALASKA MARINE HIGHWAY SYSTEM,
stated that most of the AMHS generated in revenue was used
for personal services for shore-side and vessel operations.
He stated that vessel operations and personal services were
split. About two-thirds vessel operation personal services
for crew was UGF, and the other third was through AMHS
generated revenues. He thought 90 percent of the shore-side
terminal staff, central office staff wages were paid with
AMHS generated revenues. The fuel for AMHS was split with
UGF and DGF. He referenced he previous two years' fuel
increase and stated that all fuel during the two years was
paid with UGF.
Co-Chair MacKinnon asked if there was a reason that DOT had
chosen the funding sources instead of applying all
passenger revenues to a single line item. She thought it
was difficult to follow the accounting, particularly when
there was significant federal funding in play.
Mr. McLaren understood that AMHS tried to pay as much as
possible with designated funds that were generated by the
system. He explained that there were not enough generated
funds to cover all personal services. There was enough
funding to cover shoreside costs, and the approximately $20
million in DGF was used to cover personal services. He
detailed that vessel crew wages ran over $80 million, and
the revenue generated by AMHS was not sufficient to cover
the amount.
Co-Chair MacKinnon explained that the legislature paid
closer attention to GF dollars and wondered if enough
attention was being paid to the costs generated by short-
side facilities of AMHS.
9:16:00 AM
Co-Chair Hoffman asked what percentage of the population of
Alaska was being served by AMHS.
Mr. McLaren shared that AMHS had annual traffic of
approximately 60 percent by Alaska residents, and 40
percent non-residents.
Co-Chair Hoffman clarified his question was regarding the
percentage of Alaskans that used the system.
Commissioner Luiken thought it was difficult to provide a
precise number, as the focus of the ferry was on coastal
Alaska. He stated that the system was used by Interior
Alaska residents as well.
Co-Chair Hoffman asked if the total was higher or lower
than 30 percent.
Mr. McLaren stated that the system served more than 30
percent of Alaskans. He referenced an economic study by the
McDowell Group, which had focused on the portion of
Alaskans served by the system. The study found that the
majority of tourist dollars went toward businesses in the
Interior, Anchorage, and Fairbanks.
Commissioner Luiken considered that the system served all
Alaskans, since it was available to all Alaskans, much like
road and airport systems.
Co-Chair Hoffman wondered how many people from Quinhagak
were served by the system.
Senator von Imhof thought it would be useful to have total
ridership data over time that included demographics. She
discussed her personal experience riding between Skagway
and Haines on a private ferry with Allen Marine. She
wondered if there was consideration and discussion of
further privatization of the shorter ferry route to
alleviate some of the operating burden of AMHS.
Commissioner Luiken relayed that there had been discussions
on the matter in the past, and private service had been
utilized when vessels were unable to fill part of AMHS's
marine route. He elaborated that the marine union contract
had a clause pertaining to contracting services, therefore
discussion was needed in the event of utilizing private
service. He stated that AMHS was continually negotiating
the concept with the marine unions, and it was necessary to
work through the union process.
Co-Chair Hoffman thought he had heard the same explanation
ten years previously.
9:20:01 AM
Vice-Chair Bishop referenced a report by Southeast
Conference (copy not on file). He wondered how much more
revenue AMHS might generate if it was forward-funded for a
year.
Commissioner Luiken clarified that the department was not
asking for forward-funding, but rather stable funding. He
read from AS 19.65.60, which referenced the creation of the
AMHS Fund. The statute mentioned funds that were consistent
from year to year to provide stable services to the public.
He considered the appropriations from the previous few
years, and thought it was inconsistent. He posited that the
system would be more confident in its business plan if had
stable reliable funding. Consistent and stable funding
would allow AMHS to publish a consistent and reliable
schedule, which would increase marketing and ridership.
Commissioner Luiken continued his remarks. He acknowledged
that there were many variables at work when trying to
estimate the revenue impact of AMHS. He conservatively
estimated that with a stable funding source, AMHS could see
an increase of 48 percent in ridership and vehicle traffic,
which would equate to $2 million to $3.5 million in
additional revenue. He referenced the previous year's
approximate 250,000 passengers. Over the previous 30 years,
the average passenger total was 300,000. Even returning to
the earlier average would signify a revenue increase of
$1.25 million. He was confident the system could bring in
additional revenue if given a stable budget.
Senator Stevens commented on the importance of AMHS. He
thought it was a lifeline for Southeast and Southwest
Alaska. He likened the marine highway to the other highways
in the state. He discussed the effects of reduced funding.
He agreed with the commissioner regarding the need for
stable funding.
9:24:35 AM
Co-Chair MacKinnon appreciated the commissioner's statement
about a potential increase in revenue, but she wondered at
the cost to the state. She referenced anecdotal information
about travelers waiting for the ferry in British Columbia.
She respected communities that received benefits from AMHS.
She wondered how much it would cost the state to increase
the revenue to AMHS.
Commissioner Luiken reiterated that the department was not
necessarily asking for additional funds, but rather stable
funds. Stable funds would allow for the system, as well as
businesses and travelers, to make plans.
Co-Chair Hoffman reminded that the state was at a cross
roads. He wondered what other state had entities that were
revenue-dependent upon one-time funds that were
evaporating. He thought it was necessary for every
department to examine its activities. He discussed the need
for additional cuts. He referenced the business community,
and thought it also wanted stable funding.
9:28:13 AM
Co-Chair MacKinnon stated she did not have an issue with
the value of the system. She agreed with Co-Chair Hoffman's
comments about the state's fiscal transition, and thought
it was necessary to right-size state services. She had
utilized the system the previous year and experienced great
service from the crew. She had observed freight from
private carriers waiting to be loaded on the ferry. She was
concerned about subsidizing freight movement for private
businesses. She referenced Senator von Imhof's remarks
pertaining to privatization. She thought there was
approximately $5 million generated in freight costs.
9:31:26 AM
Senator Micciche thought the value of AMHS was undeniable
and stated that the system was something he would always
support. He discussed recent cuts to DOT and thought that
there had been drops to ridership on the system over the
previous 20 years. He discussed fuel prices, and thought in
lower fuel price years, ridership on the ferry went down as
more people drove. He thought there was forward motion on
privatization that might make certain runs more efficient.
He thought that most coastal communities also had state
highways. He thought there were partnerships that could
bring the cost of AMHS down. He discussed the work of the
Southeast Conference.
9:34:29 AM
Senator von Imhof referenced the remarks of Chief Justice
Craig Stowers, who spoke about acknowledging the revenue
challenges in the state. The chief justice had spoken about
how his department had made changes to adjust to the new
fiscal climate. She hoped that Commissioner Luiken would
also discuss how DOT acknowledged the budget challenges
facing the state, and what specific things it had done to
address the challenge.
Senator Stevens thought there was an assumption that AMHS
impacted only coastal communities. He asserted that
Anchorage was affected by the marine highway. He discussed
the City of Cordova, which did not have a connecting road.
He informed that all building materials and grocery
materials came from Anchorage to Cordova and had a major
impact on the Anchorage economy. He thought it was
important to recognize that AMHS affected the whole state.
Vice-Chair Bishop discussed freight and asked the
commissioner to provide information on rates for AMHS. He
wanted to compare to barge freight rates.
9:37:46 AM
Commissioner Luiken discussed slide 8, "Transportation &
Public Facilities Results Based Alignment: Core Services":
PRESERVE ALASKA'S TRANSPORTATION INFRASTRUCTURE
Projects and activities that extend the life of
existing infrastructure
OPERATE ALASKA'S TRANSPORTATION INFRASTRUCTURE
Support safe and efficient movement on existing
infrastructure
MODERNIZE ALASKA'S TRANSPORTATION INFRASTRUCTURE
Improve infrastructure to meet current standards and
capacity
PROVIDE TRANSPORTATION SERVICES
Services that move people and goods on existing
infrastructure
Commissioner Luiken reiterated that results-based alignment
was the service delivery framework through which the
department measured the contribution of the services it
delivered to support its mission. The four core services
listed on the slide linked the work of the department to
its statutory and regulatory requirements.
Commissioner Luiken spoke to slide 9, "Budget Breakout by
Core Service - $586,592.5," which showed a pie chart of the
FY 18 management plan. The slide showed the breakdown of
core services of the department's FY 18 management plan
budget and included all fund sources. He stated that DOT
had performance data for nearly every direct service it
performed, and the data was used to make data-driven
decisions. He stated that he would be happy to provide the
committee with further details on what efficiencies had
been gained and how the department had absorbed the budget
cuts it experienced over the previous four years.
9:39:28 AM
Senator von Imhof referenced slide 7 and calculated that
Administration and Support had gone up 20 percent in the
previous 10 years, with an 8 percent increase since 2015.
Ms. Holland explained that there were a number of reasons
for the increase. The south coast regional group had
consolidated its administrative support, and the costs had
been consolidated in one area. She detailed the areas in
which funds had been transferred in for reduction of
vacancy factor, and positions to help process time and
equipment work.
Senator von Imhof asked if the funds were UGF. She thought
generally consolidations were associated with a decrease in
costs. She asked for greater detail.
Ms. Holland explained that the observable increase in
administration and support was not reflecting an overall
increase in the budget in the department. Some costs from
other budget components had been moved to the results-
delivery unit. The increase was a transfer of funds as the
department was organized to become more efficient.
Co-Chair Hoffman asked if there would be a levelling off of
the costs for administration and support in the future.
Ms. Holland answered in the affirmative. She shared that
DOT was in the midst of working towards shared services,
which had not been fully implemented.
9:42:57 AM
Co-Chair MacKinnon asked if the department could comment on
new technology that was deployed. She asked for details on
effectiveness and efficiency.
Commissioner Luiken stated that the department was
deploying a program called Agile Assets, which would
provide greater automation in the department's asset
management process. Additionally, the department had a new
program to help with procurement and construction
administration. None of the systems had been implemented
but would be in the following spring. He estimated that the
costs would decrease as more efficiencies were realized. He
offered to provide more detail at a later time.
Co-Chair MacKinnon relayed that it came to her attention
during a special session that there was something occurring
with federal reimbursement that was related to
implementation of Integrated Resource Information System
(IRIS). She wondered whether the issue had been worked out.
Ms. Holland stated that the department had been working
closely with Department of Administration (DOA) on a joint
workgroup to work through issues to use the new system more
effectively.
Co-Chair MacKinnon asked if the system had been certified
with the federal government.
Ms. Holland stated that the Federal Highway Administration
(FHWA) performed a performance review before the department
could use IRIS to perform federal transactions. The
department continued to meet with FHWA on a regular basis
to ensure the system was meeting the requirements.
9:46:07 AM
Co-Chair MacKinnon asked if the department was certified.
Ms. Holland stated the FHWA had approved the department's
use of IRIS and had not requested any corrective action.
Co-Chair MacKinnon discussed the aforementioned Southeast
Conference report and did not see expanded conversation in
reference to Senator Micciche's remarks about
privatization. She asked if the commissioner had any
comments about the report and the recommendations wherein.
Commissioner Luiken stated that he had confined his
presentation to an overview of the department's operating
budget. He was happy to engage the committee at a later
time on the specifics of the recommendations by the
Southeast Conference. He acknowledged that most of the
topics were recommendations rather than actionable items.
Co-Chair Hoffman asked if Commissioner Luiken envisioned
the administration introducing legislation pertaining to
privatization.
Commissioner Luiken thought the legislation was still in
question.
Commissioner Luiken discussed slide 10, "Department-wide
performance data," which showed a pie chart that gave an
example of the department's FY 18 budget information
combined with performance data. The left side showed the
budget breakdown for the direct service of snow and ice
management. There was a breakdown of fund category and a
pie chart denoting region. The right side of the slide
showed performance data related to the service. He pointed
out that the department had met its snow and ice management
target 98 percent of the time in FY 17. The target referred
to the priority road system and the time necessary to
return a road to good conditions after a winter weather
event. The department had performance data for nearly every
direct service of the department. He expressed willingness
to meet with members individually to share the details.
Commissioner Luiken referenced slide 11, "Accomplishments,"
which showed a line graph. He highlighted DOT's commitment
to excellence in an example of the State of Minnesota
adoption of the department's ice breaker design. The
department, along with the Department of Public Safety, was
the recipient of the Roadway Safety Foundation Award in
November 2017. He referenced a reduction of serious crashes
in the state's safety corridors.
9:50:40 AM
Commissioner Luiken turned to slide 12, "Safety & Health":
Safety
Safety moments at the start of each meeting
Raised awareness in work zones
?Decrease Workers' Compensation claims
Health
?Monthly health newsletter posted in various
facilities
?Regularly host Aetna/Wellness program functions at
facilities
?Walks during breaks and lunch
?Commissioner's Corner
Environment
?Goal: achieve independent state of DuPont Bradley
Curve
?Increase employee awareness of health and safety
Commissioner Luiken reminded that safety was at the
forefront of all the department's activities. Safety of the
travelling public was a top priority. Employee health was a
focus of the department. The department's budgeted
healthcare costs had decreased by approximately $2.5
million in the previous six years, and healthcare had
maintained steady as 8 and 8.5 percent of the operating
budget.
9:51:50 AM
Commissioner Luiken reviewed slide 13, "Challenges":
Transition facilities management and maintenance from
participating departments to the Division of
Facilities Services.
Keeping existing road and airport systems in
serviceable condition, enabling safe, efficient
travel, despite budget reductions, aging
infrastructure and the impacts of weather.
Provide uninterrupted ferry service and meet as many
customers' needs as possible.
Commissioner Luiken discussed details of transitioning
facilities management. He discussed challenges of keeping
existing road and airport systems in serviceable condition.
He mentioned increasing costs of equipment and materials,
and increased costs for maintenance of rural airports. He
discussed providing ferry service and stated that due to
the increasing age of the fleet, it was becoming more
difficult to provide on-time and on-budget delivery of
ships during yearly shipyard overhauls. Additionally,
compliance with new environmental regulations required
additional staff and resources.
Vice-Chair Bishop apologized to Co-Chair MacKinnon and
referenced an uncertain sailing schedule.
9:54:21 AM
Ms. Holland looked at slide 14, "FY2019 Governor's Proposed
Operating Budget: $584,816.5":
FY2019 Governor's Proposed
UGF $177,931.5 (30.43%)
DGF $97,972.1 (16.75%)
Other $306,846.7 (52.47%)
Federal $2,066.2 (.35%)
FY2018 Management Plan
$586,592.5
UGF $135,191.8 (23.05%)
DGF $142,201.3 (24.24%)
Other $307,133.2 (52.36%)
Federal $2,066.2 (.35%)
UGF
General Fund Receipts
$177,931.5
DGF
Marine Highway System Fund $51,470.9
Motor Fuel Tax Receipts $36,200.1
Vehicle Rental Tax Receipts $5,497.3
General Fund/Program Receipts $4,803.8
OTHER
Capital Improvement Project Receipts $161,668.8
International Airport Revenue Fund $90,272.6
Highway/Equipment Working Capital Fund $34,583.3
Rural Airport Receipts $8,481.9
Aviation Fuel Tax Revenue $4,622.1
Inter-agency Receipts $3,955.4
Whittier Tunnel Toll Receipts $1,929.4
Statutory Designated Program Receipts $535.1
Uniform Commercial Registration Receipts $513.5
Rural Airport Inter-agency Receipts $256.1
In-state Pipeline Fund Inter-agency Receipts $28.5
Ms. Holland informed that the two graphs on the slide
compared the FY 18 management plan breakdown to the FY 19
proposed breakdown. The largest change was in the
distribution of fund categories between UGF and DGF. In FY
18, the AMHS Fund was given a one-time increment of $40
million. The FY 19 governor's proposed budget reflected the
decrease in the fund (DGF), and the subsequent increase in
UGF necessary to allow the system to provide a level of
service that was comparable to FY 18 and in accordance with
its 2018 summer schedule.
Ms. Holland looked at slide 15, "FY2019 Governor's Proposed
Operating Budget Changes":
Increases
International Airport System increase for two 24/7
building maintenance positions, law enforcement
training funding and safety operational cost increases
(Intl Airport Revenue Fund Receipts) $457.0
Decreases
Supply resource reduction and accounting resource
reallocation (UGF) ($90.5)
Eliminate Harbor Program Development allocation (UGF)
($320.1)
Eliminate state funded minor structure inspections
(UGF) ($35.0)
Reduce overtime-winter and summer (UGF) ($175.0)
Delete unrealizable receipt authority-AK LNG ($1.3);
In-state Pipeline Funding ($672.9); Inter-agency
receipts ($155.7)($829.9)
Total
($1,450.5)
AMHS Service Changes
Service level increase of 8.2 weeks from 337.7 to
345.9 (UGF $4,364.5; DGF ($1,236.4))
$3,128.1
Salary Adjustments
Salary and health insurance increases (UGF $32.4; DGF
$59.4; Other $396.6) $488.4
One-Time Items
Reverse one-time funding from the Alaska Marine
Highway System Fund ($4,000.0)
Reverse Anchorage International Airport feasibility
study funding for maintenance repair & overhaul
facility ($400.0)
Fund Source Swaps
Replace Marine Highway System Funds with Unrestricted
General Funds to maintain marine highway system
service $40,000.0
Replace Unrestricted General Funds with Marine Highway
System Funds due to elimination of winter driver
discount program $300.0
Replace Capital Improvement Project Receipts with
Rural Airport Receipts to fund required Federal
Aviation Administration planning costs $1,030.0
Replace Unrestricted General Funds with Motor Fuel Tax
Receipts based on anticipated collections $647.8
Replace Unrestricted General Funds with Capital
Improvement Project Receipts to maintain environmental
positions $88.0
Total
$42,065.8
Organizational Changes
Establishment of the Division of Facilities Services
(shared services initiative)
Agency Transfers
Transfer PCNs from Department of Administration and
Education for Facilities Shared Services Initiative
(25 PFT; 3 PPT)
Transfer Information Technology (IT) Commodity staff
to the Department of Administration/Division of IT for
program alignment (10 PFT)
Position Count Changes
Delete Digital Mapping Project Manager (1 PFT)
Delete Harbor Program Support (1 PFT)
Co-Chair MacKinnon remarked that when the state was facing
a $2.5 billion revenue shortfall, the ferry system was
increasing ferry runs. She asked if DOT was increasing
services.
Ms. Holland stated that there was an overall decrease in
the FY 19 budget for AMHS, but the department was able to
have an increase in weeks of operating services because of
the mix of vessels that were being run. The combination of
running vessels changed the operating costs.
Co-Chair MacKinnon referenced a conversation with Co-Chair
Hoffman pertaining to clarity in the budget. She looked
forward to examining the numbers more closely, and thought
it appeared as though AMHS had increased services at an
increased cost.
9:58:13 AM
Senator von Imhof saw that the slide showed a proposed
replacement of UGF with Motor Fuel Tax receipts based on
anticipated collection. She thought the Motor Fuels Tax had
not passed through both bodies of the legislature.
Ms. Holland explained that the amount listed on the slide
was the projected increase in Motor Fuel Tax for the
existing tax amount.
Co-Chair Hoffman asked if the increase was because the
people in Alaska were using more fuel.
Ms. Holland did not have an explanation as to why there was
an increase.
Senator von Imhof mused about the increased carbon
footprint required to fund the ferries. She wanted to
discuss asset valuation. She thought that it was possible
for DOT to sell some older assets and thereby reduce
deferred maintenance expenditures. She wondered if there
had been an analysis of the idea.
Commissioner Luiken mentioned that there was an initiative
to consolidate facilities services for all departments, and
consideration of selling properties was part of the
process. He summarized that the department that was in the
process of doing a facilities inventory of owned and leased
facilities in order to make better decisions about the use
of the facilities.
Senator von Imhof hoped that the process would be finished
in the next few months and hoped there would be a grid
produced with line items per facility, as well as a
decision matrix.
10:01:26 AM
Senator Stevens asked for an explanation of the harbor
program development reductions.
Ms. Holland stated that DOT had approximately $320,000 UGF
in its harbor program development budget component. The
department proposed to eliminate the funds and move the
functions across the department to be absorbed in other
areas.
Senator Stevens asked about the purpose of the Harbor
Development Fund.
Ms. Holland stated that the Harbor Development Program was
designed to assist municipalities or communities get
ownership of its harbors. The cut would mean that there
would not be a large number of new harbor projects
happening over the next several years, and the department
would not be able to provide the same level of technical
support for improvement of harbors.
Senator Stevens was concerned about the impacts of the
budget decrease. He thought most Alaskan communities had
taken over ownership of harbors.
Commissioner Luiken did not have a specific answer but
agreed to provide more detail at a later time. He pointed
out that the department had two marine engineers that had
retired. In the engineer's absence, many communities had
hired private contractors or consultants to fill the void.
Co-Chair MacKinnon discussed ownership or lease of assets
and considered utilization of ferry terminals.
Commissioner Luiken believed there was one or two ferry
terminals in Southeast that were built at a time when there
was a different plan in place. The department was working
with FHWA to take the terminals off the books.
Co-Chair MacKinnon wondered why the state built a ferry
dock that was not being utilized.
Commissioner Luiken stated that terminals had been built at
a time when the department thought there would be a short-
route ferry system. The department had serviced the
terminals in the past and had discovered that there was no
longer demand at the location.
Co-Chair MacKinnon asked if there were staffing positions
that were allocated for the terminals.
Commissioner Luiken stated that the department was
responsible for maintaining the terminals in some working
condition, but that they were no longer staffed.
Co-Chair Hoffman wondered if the two terminals in question
could be considered for Senator von Imhof's proposed asset
reduction plan to reduce maintenance costs.
10:06:33 AM
Co-Chair MacKinnon recalled an issue from a subcommittee
discussion pertaining to reliance on federal dollars. She
guessed the commissioner was negotiating with the federal
government so as to not be required to pay back the federal
funds. She asked for a follow-up with the department
regarding the cost to keep the defunct terminals in working
order, as well as when the related discussions with the
federal government were concluded.
Ms. Holland continued discussion slide 15 and addressed the
depiction of organizational change. The largest change for
the department in the year was the establishment of the
Division of Facilities Services, which was a shared
services initiative. There were some positions being
transferred from DOA and Department of Education and Early
Development for the initiative. Conversely, there was a
transfer of DOT positions to DOA for the Office of
Information Technology shared services initiative.
Senator Micciche referenced a decrement from the previous
year listed on the slide and wondered why there was not a
number reflecting a decrease for the shared services
initiative.
Ms. Holland stated that the costs for personal services for
the ten IT positions were moved to the services line of the
budget and would remain with DOT. The department would pay
DOA through a reimbursable services agreement for the
services from the positions. For Facilities Services shared
services, the positions would be paid for by DOA and
Department of Education and Early Development through a
reimbursable services agreement. Budget funds were not
transferred, but the positions were.
Senator Micciche asked if the efficiency project would by
definition have a reduction in head-count.
Ms. Holland affirmed that the shared services model was to
be faster, better, and cheaper. She continued that DOT was
standing up the Division of Facilities Services. As the
division began to perform and provide shared services, the
department expected decreased budgets.
10:10:29 AM
Co-Chair Hoffman observed salary adjustments of a little
under $500 thousand, and asked about contract negotiations,
since labor was such large part of the department's budget.
Ms. Holland relayed that DOT was in the middle of
negotiating with the Labor Trades and Crafts Union. There
had been several meetings and were in the middle of the
negotiation process.
Co-Chair Hoffman asked how many employees were in the
union.
Ms. Holland specified that DOT had approximately 950 to
1000 employees in the Labor Trades and Craft Union.
Co-Chair Hoffman asked about the status of the
negotiations.
Ms. Holland stated that the groups had met twice and were
scheduled for a further meeting. The groups were going
through the main points of the contract. The administration
and the union both had points to offer; no definitions had
been made, and the contract was not ready to go to union
members for ratification.
Co-Chair Hoffman thought contracts were considered at the
end of the budget cycle. He assumed the current budget
process would not be informed of the contract negotiation.
Ms. Holland answered in the affirmative, and relayed that
contracts were typically three years in duration. New
contract negotiations were usually begun in the third year
of the contract. Contract negotiations sometimes occurred
before a budget was developed, but often occurred in the
winter when the budget for the next year had already been
developed.
Co-Chair Hoffman asked about the total dollar amount
currently requested for CY 19 salaries.
Ms. Holland offered to provide the number at a later time.
Co-Chair MacKinnon asked about details of a potential
supplemental request.
Commissioner Luiken thought there had already been a
supplemental request published with the governor's budget
in December. There was a request to supplement a shortfall
in AMHS for $23.7 million. He believed Co-Chair MacKinnon
and Co-Chair Hoffman had received a letter the previous
October informing of the request.
Co-Chair MacKinnon asked if $23.7 million was a limit for
the AMHS request.
Commissioner Luiken stated that the $23.7 million was the
amount to cover the FY 18 budget that was approved by the
legislature the previous summer.
Co-Chair MacKinnon asked if the amount was built into the
FY 19 budget.
Commissioner Luiken believed that the FY 19 budget request
had roughly the same budget request as FY 18 original
request.
Co-Chair MacKinnon asked if the FY 19 budget would cover
all costs so there would be no need for a supplemental
budget request for FY 19.
Commissioner Luiken stated that the department had
published a summer schedule, with the intention of sailing
the schedule based on the requested budget amount. If there
was a budget shortfall or the system did not generate the
anticipated revenue in the summer, the department would
adjust the winter schedule to stay within budget.
10:15:00 AM
Commissioner Luiken looked at slide 16, "Thank You":
Contact Information:
Marc Luiken
Commissioner
[email protected]
(907) 465-3900
Amanda Holland
Acting Deputy Commissioner
[email protected]
(907) 465-3900
Transportation is an economic driver
?Preserve, operate, and modernize existing
infrastructure
?Provide transportation services
?Federally funded capital improvement projects Impacts
daily quality of life
Impacts Daily Quality of Life.
?Safety
?Mobility
?Connectivity
Co-Chair Hoffman commented that the department did an
outstanding job in providing broad services throughout the
state.
Vice-Chair Bishop recalled that in 1968, a former Fairbanks
lawmaker introduced legislation to expand AMHS on the Yukon
River. The legislation had not progressed.
Senator Micciche thought that members could be perceived as
harsh. He considered that DOT employees were like
commercial fisherman and worked in the worst conditions. He
emphasized that the committee was appreciative of the work
of the department. He emphasized the need to continue
downward pressure on the budget.
Co-Chair MacKinnon asked Vice-Chair Bishop to consider a
lane-mile comparison to examine labor costs for AMHS. She
was appreciative of the efforts of the department. She
thought much of AMHS's costs were driven by contract
negotiations, and hoped the department was doing everything
it could to control some work rules that had been allowed
into contracts that marginally increased safety but created
huge costs. She remarked that the negotiating team was
bound to act for the benefit of those that used the system
as well as those that did not. She asked that the
negotiating team worked to reduce costs.
Co-Chair Hoffman discussed the agenda for the following
day.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012618 DOT FY19 Budget Overview.pdf |
SFIN 1/29/2018 9:00:00 AM |
SB 144 |