Legislature(2009 - 2010)HOUSE FINANCE 519

02/04/2009 01:30 PM FINANCE

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01:35:15 PM Start
01:38:42 PM HB81 || HB83
02:39:58 PM Commerce, Community and Economic Development
03:26:27 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Budget Overviews: TELECONFERENCED
Dept. of Transportation and Public
Commerce, Community and Economic
<Above Item Rescheduled from 02/03/09>
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 81                                                                                                             
     "An  Act making  appropriations  for  the operating  and                                                                   
     loan program  expenses of state government,  for certain                                                                   
     programs, and  to capitalize funds;  making supplemental                                                                   
     appropriations;  and  making appropriations  under  art.                                                                   
     IX,  sec. 17(c),  Constitution of  the State of  Alaska;                                                                   
     and providing for an effective date."                                                                                      
HOUSE BILL NO. 83                                                                                                             
     "An  Act making  appropriations  for  the operating  and                                                                   
     capital    expenses    of   the    state's    integrated                                                                   
     comprehensive mental  health program; and  providing for                                                                   
     an effective date."                                                                                                        
1:38:42 PM                                                                                                                    
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES                                                                            
LEO VON SCHEBEN,  COMMISSIONER, DEPARTMENT  OF TRANSPORTATION                                                                   
AND PUBLIC  FACILITIES (DOT/PF), introduced  department staff                                                                   
present  at  the  meeting  and   discussed  the  departmental                                                                   
structure of DOT (Copy on File).                                                                                                
1:40:18 PM                                                                                                                    
Commissioner  von Scheben listed  accomplishments within  the                                                                   
department  during  2008.  He   spoke  of  a  strategic  plan                                                                   
developed  by the  department and  highlighted five  business                                                                   
goals within the plan that the department hopes to achieve:                                                                     
   · Improve the safety of the transportation system                                                                            
   · Develop a transportation system that supports and                                                                          
     promotes economic development                                                                                              
   · Improve individual and collective performance                                                                              
   · Conduct business in an open and honest manner                                                                              
   · Promote career growth and safety for all staff                                                                             
Commissioner  von Scheben believed  that the newly  developed                                                                   
goals were realistic.                                                                                                           
1:42:18 PM                                                                                                                    
Commissioner  von  Scheben  was   excited  about  the  nearly                                                                   
completed Alaska  Marine Highway Systems (AMHS)  analysis. He                                                                   
stated  that   the  department  is  discussing   the  gasline                                                                   
infrastructure. He listed other  departments that DOT/PF will                                                                   
work  with   in  a  coordinated  effort   concerning  gasline                                                                   
infrastructure needs.                                                                                                           
1:44:14 PM                                                                                                                    
Co-Chair Stoltze  asked Commissioner  von Scheben  to outline                                                                   
the  distribution  of  safety  responsibilities  between  the                                                                   
department and  the railroad. He was particularly  interested                                                                   
in public safety at grade crossings.                                                                                            
FRANK  RICHARDS, DEPUTY  COMMISSIONER  OF  HIGHWAYS &  PUBLIC                                                                   
FACILITIES,   DEPARTMENT   OF   TRANSPORTATION   AND   PUBLIC                                                                   
FACILITIES,   answered   that   the   Alaska   Railroad   was                                                                   
established  before  DOT/PF  roadways.  Because of  this  the                                                                   
responsibility  falls  on DOT/PF  to  pay the  railroads  for                                                                   
repairs and upgrade of grade crossings.  For safety, separate                                                                   
crossings for  railway traffic and highway traffic  have been                                                                   
implemented where possible.                                                                                                     
1:46:13 PM                                                                                                                    
Co-Chair  Stoltze asked  whether  the department  would  have                                                                   
sole  responsibility  for  the  capital  infrastructure.  Mr.                                                                   
Richards replied that the department  is still in the process                                                                   
of negotiating  with the railroad  to determine  which entity                                                                   
shoulders the cost of different safety needs.                                                                                   
1:48:27 PM                                                                                                                    
Commissioner von  Scheben cited the Glenn Highway  and Bragaw                                                                   
Interchange as  major accomplishments  of the department.  He                                                                   
was excited about  the completion of internet  service at the                                                                   
Fairbanks   International   Airport   terminal.   He   listed                                                                   
accomplishments from FY08:                                                                                                      
   · Transferred  ownership  of  five docks  and  harbors  to                                                                   
   · Maintenance  and  Operations   crews  covered  1,563,794                                                                   
     linear feet of highways with surface crack seal                                                                            
     treatment or re-leveling depressed roadway surfaces by                                                                     
   · Paved 33 lane miles of gravel roads.                                                                                       
   · Reconstructed 31 lane miles of roads.                                                                                      
   · Performed 529 bridge inspections.                                                                                          
   · Completed  9,748 commercial  vehicle inspections  during                                                                   
   · Conducted airport pavement  condition inspections on one                                                                   
     third of all paved airports in the state.                                                                                  
   · Between 2006  and 2008, fatal  and major  injury crashes                                                                   
     dropped by 77 percent on the Seward Highway and 37                                                                         
     percent on the Parks Highway, Alaska's two designated                                                                      
     safety corridors.                                                                                                          
   · Provided surface  maintenance of either gravel  or paved                                                                   
     runways for 31 airports.                                                                                                   
   · Performed repairs on 34 bridges.                                                                                           
   · 17 percent  reduction in square footage  of structurally                                                                   
     deficient bridges (2007-2008).                                                                                             
   · Replaced over  41 failing  culverts, some over  six feet                                                                   
     in diameter.                                                                                                               
   · The Ted  Stevens Anchorage International  Airport, South                                                                   
     Terminal Seismic and Security Retrofit Project,                                                                            
     Concourse A was completed.                                                                                                 
   · In  2008  both  AMHS  passenger  and  vehicle  ridership                                                                   
     showed an increase in numbers from those of 2007.                                                                          
   · AMHS on-time departures were at 93 percent for 2008.                                                                       
1:51:23 PM                                                                                                                    
Representative   Salmon   wondered    about   accomplishments                                                                   
pertaining to the AMHS. Commissioner  von Scheben referred to                                                                   
the  systems analysis.  He  felt  that vessels  arriving  and                                                                   
departing  according  to  schedule should  be  considered  an                                                                   
accomplishment.  He added  that the ferry  schedule  had been                                                                   
approved  early  in  the year  to  ensure  that  out-of-state                                                                   
travelers could plan travel with  the ferry system during the                                                                   
summer  tourist  season. The  department  has  set aside  $60                                                                   
million  for  vessel  replacement.  He  relayed  that  he  is                                                                   
receiving less complaints  from the public than  in the past.                                                                   
He suggested  providing  a list of  AMHS accomplishments  for                                                                   
the committee at a later date.                                                                                                  
1:53:35 PM                                                                                                                    
Representative  Gara asked about  the possibility of  a river                                                                   
highway  system.  He  wondered   what  the  state  spends  in                                                                   
providing transportation on the Yukon and Kuskoquim rivers.                                                                     
1:54:09 PM                                                                                                                    
JIM BEEDLE, DEPUTY COMMISSIONER  OF MARINE OPERATIONS, MARINE                                                                   
HIGHWAY  SYSTEM,  DEPARTMENT  OF  TRANSPORTATION  AND  PUBLIC                                                                   
FACILITIES, answered  that AMHS  does not have  vessels built                                                                   
for  travel  on  rivers.  Representative   Gara  asked    the                                                                   
department to  consider river travel.  He felt that  the need                                                                   
for a freshwater system was strong.  Commissioner von Scheben                                                                   
responded  such an  endeavor would  be  of high  cost to  the                                                                   
1:55:25 PM                                                                                                                    
Commissioner  von  Scheben  continued with  the  FY09  status                                                                   
report. A 2008  management system upgrade on  the AMHS vessel                                                                   
MV  Aurora saved  the department  $120,000.  The same  system                                                                   
upgrade is  being done on the  MV Tustumena and  MV Matanuska                                                                   
and savings to the state should  be evident within two years.                                                                   
Co-Chair  Hawker stated  that  the FY08  allocation for  fuel                                                                   
from  the governor's  budget had  been based  on higher  fuel                                                                   
prices.  He wondered if  the drop  in the  price of  fuel had                                                                   
left the department with an excess fuel allotment.                                                                              
1:57:05 PM                                                                                                                    
NANCY SLAGLE, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                                                                   
DEPARTMENT   OF   TRANSPORTATION   AND   PUBLIC   FACILITIES,                                                                   
explained that the  department used the fuel  cost savings to                                                                   
cover increased  costs  for fuel and  utilities for  highways                                                                   
and aviation  facilities that had  not seen the same  drop in                                                                   
fuel cost because  of the timing of annual  procurements. The                                                                   
department had  already purchased most  of the fuel  prior to                                                                   
the  price  drop.  Rural  areas  are  experiencing  a  slower                                                                   
response  to   dropping  fuel   prices.  The  department   is                                                                   
continuing to review the AMHS fuel needs.                                                                                       
Co-Chair  Hawker asked  for an  accounting reconciliation  of                                                                   
fuel  costs for  FY09  and  comparisons and  projections  for                                                                   
FY10.  He felt  this  would give  the  committee  a basis  to                                                                   
examine what might  be needed in discussing  the continuation                                                                   
of  the  fuel  subsidy  program.   Commissioner  von  Scheben                                                                   
replied that the department would  provide the information as                                                                   
soon as possible.                                                                                                               
1:58:47 PM                                                                                                                    
Representative Crawford  asked if any thought  had been given                                                                   
to capital  requests for  the building  of more fuel  storage                                                                   
facilities. He suggested stockpiling  fuel in anticipation of                                                                   
rising fuel  costs. Commissioner  von Scheben wondered  where                                                                   
the storage facilities might be  built and if the stored fuel                                                                   
would  be  specifically  for  AMHS.  Representative  Crawford                                                                   
suggested  building  in  Ketchikan,   Wrangall,  Juneau,  and                                                                   
possibly Haines, and  clarified the fuel would be  for use by                                                                   
the AMHS.  Commissioner  von Scheben answered  that he  would                                                                   
take the idea into consideration.                                                                                               
2:00:25 PM                                                                                                                    
Representative Gara  thought that the cost of  importing fuel                                                                   
from Washington State was less  expensive per gallon and that                                                                   
the  price is  inflated  in Alaska.  He  felt  that a  larger                                                                   
storage  capacity  in  the state  was  comparable  to  having                                                                   
another refinery. He thought that  this was a possible way to                                                                   
look   at  lowering   fuel   costs  throughout   the   state.                                                                   
Representative  Foster  pointed   out  the  plan  could  work                                                                   
against the  state. Representative  Gara maintained  that the                                                                   
fuel storage plan  could save rural Alaskan's  $0.60 to $0.70                                                                   
per gallon.  Co-Chair Hawker  suggested discussing  the issue                                                                   
with  the Department  of  Commerce, Community,  and  Economic                                                                   
2:03:19 PM                                                                                                                    
Commissioner von  Scheben spoke of  the effect of  the hiring                                                                   
freeze on  the department.  The department  has a vacancy  of                                                                   
275  full-time positions  and  100 seasonal  positions.  This                                                                   
amounts to  10 percent  of its  workforce. Waivers  have been                                                                   
requested  for  the continuation  of  construction  programs,                                                                   
road   maintenance,  airport   maintenance,  continued   safe                                                                   
operations of AMHS, and international  airports.  He informed                                                                   
the committee that  the federal stimulus package  was a major                                                                   
topic of  discussion within the  department and  has prompted                                                                   
the  department   to  prepare   a  Statewide   Transportation                                                                   
Improvement Program (STIP) amendment.                                                                                           
2:04:26 PM                                                                                                                    
Commissioner  von Scheben specified  that the STIP  amendment                                                                   
would be ready by February 6, 2009.                                                                                             
Co-Chair Hawker asked Commissioner  von Scheben to talk about                                                                   
how the  federal stimulus plan  would affect the  department.                                                                   
Commissioner   von  Scheben  understood   that  the   federal                                                                   
stimulus  funding  the  department would  receive  would  not                                                                   
require a  state match. The  department would be  required to                                                                   
use  50  percent  of  the funding  within  90  to  180  days,                                                                   
depending on which version of the plan is passed.                                                                               
2:05:47 PM                                                                                                                    
Commissioner von  Scheben estimated that the  amount of money                                                                   
that his  department could receive  was between $300  to $500                                                                   
million. He informed that discussions  are ongoing concerning                                                                   
the use of stimulus funds.                                                                                                      
2:07:02 PM                                                                                                                    
Commissioner von  Scheben felt that more would  be known once                                                                   
President  Obama signed  a stimulus  bill.  The STIP  process                                                                   
takes 90  days. The department  began the STIP  process early                                                                   
in order to  be project-ready when the stimulus  funds become                                                                   
Co-Chair  Hawker  asked  how the  department  will  determine                                                                   
which projects will receive stimulus dollars.                                                                                   
FRANK  RICHARDS, DEPUTY  COMMISSIONER  OF  HIGHWAYS &  PUBLIC                                                                   
FACILITIES,   DEPARTMENT   OF   TRANSPORTATION   AND   PUBLIC                                                                   
FACILITIES, stated that the money  would be spent on projects                                                                   
that have been on the STIP and approved by the legislature.                                                                     
2:09:24 PM                                                                                                                    
Mr. Richards stressed that congress  is adamant that stimulus                                                                   
dollars will be  pulled and distributed to other  states with                                                                   
bid-ready projects  if the dollars are not spent  in the time                                                                   
allotted. He asserted  that a list of projects  had been made                                                                   
that could  use the money  provided they receive  legislative                                                                   
approval.  The  department  must   first  complete  the  STIP                                                                   
amendment to  highlight projects going into  the construction                                                                   
phase. The amendment should be  going out on February 6, 2009                                                                   
concurrent with  the department's request  for appropriation.                                                                   
The  hope  is  to  have the  projects  begin  as  quickly  as                                                                   
possible.  Another  emphasis   Congress  has  placed  on  the                                                                   
stimulus  money is  that  it be  used  in areas  of  economic                                                                   
distress;  this  equates  to   60  percent  of  the  proposed                                                                   
projects for  highways and transit.   All areas of  the state                                                                   
qualify as  economically distressed  except The North  Slope,                                                                   
Anchorage, Fairbanks, Juneau, Sitka, and Ketchikan.                                                                             
2:11:13 PM                                                                                                                    
Representative   Austerman   asked   for  a   definition   of                                                                   
transportation projects.                                                                                                        
Deputy  Richards  answered  that   there  are  three  initial                                                                   
formula funds  mentioned: the federal highway  administration                                                                   
funds, the federal transit administration  funds, and federal                                                                   
aviation  funds.  Under  the  federal  highway  program,  the                                                                   
department  uses  funds  for  enhancement  of  transportation                                                                   
projects  such   as  bikeways,  pedestrian   facilities,  and                                                                   
waysides. The House and Senate  bills currently being debated                                                                   
on  the federal  level  have  differing definitions  of  what                                                                   
constitutes a transportation project.                                                                                           
Vice-Chair Thomas asked if a requirement  for organized labor                                                                   
was in  the stimulus plan.  Deputy Richards answered  that he                                                                   
did  not  think  it  was  a  requirement.  Vice-Chair  Thomas                                                                   
expressed  concern that  contracts in  rural Alaska  would be                                                                   
given to  large companies  instead of  local contractors.  He                                                                   
felt that  the contracts should be  bid out on a  small scale                                                                   
for the stimulus package funds to help rural Alaskans.                                                                          
2:15:08 PM                                                                                                                    
Representative Fairclough  wondered if a dollar  number could                                                                   
be  given  for  differed  maintenance  for  the  department's                                                                   
facilities, highways, and airports.  Deputy Richards answered                                                                   
that   the   department's   dollar   numbers   for   differed                                                                   
maintenance are ever-increasing.                                                                                                
2:17:45 PM                                                                                                                    
Representative  Fairclough wondered  how  the department  was                                                                   
planning  on   addressing  the   issue  of  rising   deferred                                                                   
maintenance  numbers.  She felt  that some  stimulus  dollars                                                                   
could be used for deferred maintenance  projects, rather than                                                                   
funding  new projects.  She  spoke  of poor  road  conditions                                                                   
throughout the  state, particularly in rural  areas and along                                                                   
the Glenn Highway. She questioned  weather the department had                                                                   
plans  to  use stimulus  dollars  to  repair roads  in  those                                                                   
areas.  Deputy  Richards  replied   that  Glenn  Highway  rut                                                                   
repairs are on the list of projects.                                                                                            
2:19:51 PM                                                                                                                    
Mr. Richards added  that culverts on 62 miles of  road on the                                                                   
Dalton  Highway  will  be  replaced.  He  stressed  that  the                                                                   
department  has  every  intention   of  using  some  stimulus                                                                   
dollars  for deferred  maintenance in  the areas of  highways                                                                   
and aviation.                                                                                                                   
Representative Fairclough asked  if the Glenn Highway repairs                                                                   
were in  the STIP amendment  and, if  so, when would  they be                                                                   
completed.   Deputy  Richards   replied   that  the   project                                                                   
timelines are listed on the departments website.                                                                                
2:21:40 PM                                                                                                                    
Representative  Gara  asked  if  airport  upgrades  in  rural                                                                   
Alaska  go  through  the  STIP  amendment.  Commissioner  von                                                                   
Scheben  replied no.  Representative  Gara expressed  concern                                                                   
that stimulus dollars  would not be used for  rural community                                                                   
2:23:17 PM                                                                                                                    
Commissioner  von  Scheben  shared  that a  list  of  Airport                                                                   
Improvement Programs (AIP) is currently being compiled.                                                                         
Representative  Gara  felt  that  local  hire  needed  to  be                                                                   
enhanced throughout the state.  He wondered if the department                                                                   
would be diligent about local  hire. Commissioner von Scheben                                                                   
replied that  DOT/PF has a Disadvantaged  Business Enterprise                                                                   
(DBE)  program.  He  added  that  between  the  aviation  and                                                                   
highway  projects  there is  potential  for  local hire.  Mr.                                                                   
Richards added  that the  price of the  projects have  a wide                                                                   
range.  He   spoke  of  different   groups  that   DOT/PF  is                                                                   
collaborating with in order to put Alaskans to work.                                                                            
2:27:21 PM                                                                                                                    
Representative  Austerman   stated  he  was   concerned  with                                                                   
contract overload.  He thought  outside contractors  would be                                                                   
necessary.  Commissioner von  Scheben  communicated that  the                                                                   
increase in  workload would be  30 percent. He felt  that the                                                                   
Alaskan workforce would not be overburdened.                                                                                    
2:28:56 PM                                                                                                                    
Co-Chair Stoltze  relayed that the  Glenn Highway is  a state                                                                   
highway and  its Eagle River Bridge  is the most  used bridge                                                                   
in the  state. He asked that  the ownership of  the Birchwood                                                                   
Airport remain with the state.                                                                                                  
2:30:45 PM                                                                                                                    
Commissioner  von Scheben replied  that he  was not  aware of                                                                   
any  change of  ownership concerning  the Birchwood  Airport.                                                                   
Co-Chair  Stoltze  stated  for   the  record  that  Birchwood                                                                   
Airport is  the only rural  airport that  is not in  debt and                                                                   
that the municipality would like  to retain it as a source of                                                                   
2:32:31 PM                                                                                                                    
Representative   Fairclough  noted   that  Commissioner   von                                                                   
Scheben reached out to committee  members and invited them to                                                                   
view the  Dalton Highway  and see  the challenges  firsthand.                                                                   
She felt  the experience  had been  informative. She  thought                                                                   
that there  were consequences  to be  expected for  accepting                                                                   
stimulus money and cautioned the department to plan ahead.                                                                      
2:34:13 PM                                                                                                                    
Representative Foster reported  that Northwest Alaska has 152                                                                   
state employees; two in Saint  Mary's, two in Unalakleet, and                                                                   
148  in  Nome.  Half  of the  Nome  employees  were  born  in                                                                   
villages and have a knowledge of the needs in rural Alaska.                                                                     

Document Name Date/Time Subjects
COMMERCE 10 year plan.pdf HFIN 2/4/2009 1:30:00 PM
HB 81
DOT&PF Org Chart .pdf HFIN 2/4/2009 1:30:00 PM
HB 81
TRANSPORTATION 10 year plan 2009.02.04 HFC.pdf HFIN 2/4/2009 1:30:00 PM
HB 81
Historical Construction Expenditures.pdf HFIN 2/4/2009 1:30:00 PM
HB 81
M&O GF Auth.pdf HFIN 2/4/2009 1:30:00 PM
HB 81