Legislature(2009 - 2010)HOUSE FINANCE 519

02/11/2010 01:30 PM FINANCE


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01:38:16 PM Start
01:38:29 PM HB300 || HB302
03:31:11 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 300 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
+= HB 302 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
+ Dept. of Transportation and Public TELECONFERENCED
Facilities
<Above Item Rescheduled from 02/04/10>
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 300                                                                                                            
                                                                                                                                
     "An  Act making  appropriations  for  the operating  and                                                                   
     loan program  expenses of state government,  for certain                                                                   
     programs, and  to capitalize funds;  making supplemental                                                                   
     appropriations;  making  appropriations  under art.  IX,                                                                   
     sec.  17(c), Constitution  of the  State of Alaska;  and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
HOUSE BILL NO. 302                                                                                                            
                                                                                                                                
     "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."                                                                                                        
                                                                                                                                
1:42:53 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker discussed housekeeping.                                                                                         
                                                                                                                                
1:43:02 PM                                                                                                                    
                                                                                                                                
DEPARTMENT OF TRANSPORTATION AND PUBLIC WORKS                                                                               
                                                                                                                                
LEO VON SCHEBEN,  COMMISSIONER, DEPARTMENT  OF TRANSPORTATION                                                                   
AND PUBLIC  FACILITIES, offered  the FY2011 Operating  Budget                                                                   
Overview  for  discussion  (copy  on  file).  He  shared  the                                                                   
department's  mission  statement  found  on Slide  2  of  the                                                                   
overview:                                                                                                                       
                                                                                                                                
Department Mission: Provide for the safe movement of people                                                                   
and goods and the delivery of State services.                                                                                   
                                                                                                                                
Department Core Services:                                                                                                       
                                                                                                                                
   · The department is statutorily responsible for the                                                                          
     planning,   design,   construction,   maintenance,   and                                                                   
     operations of transportation facilities and buildings.                                                                     
                                                                                                                                
   · Maintenance & Operations of State Transportation                                                                           
     Systems:  Highways,  Airports,   Alaska  Marine  Highway                                                                   
     System, Public  Facilities, Ports and Harbors  and State                                                                   
     Equipment Fleet.                                                                                                           
                                                                                                                                
   · Measurement Standards/Commercial Vehicle Enforcement                                                                       
                                                                                                                                
   · Transportation & Facilities Construction Program                                                                           
                                                                                                                                
   · Program and Administrative Support                                                                                         
                                                                                                                                
Commissioner  von Scheben stated  that the FY2011  governor's                                                                   
budget  was $236.2 million,  and was  distributed over  three                                                                   
priority  program areas;  Maintenance &  Operations of  State                                                                   
Transportation   Systems,  Measurement   Standards/Commercial                                                                   
Vehicle  Enforcement,  and the  Transportation  &  Facilities                                                                   
Construction Program. He discussed  Slides 3, 4, and 5, which                                                                   
illustrated  the  distribution  details of  the  department's                                                                   
total general fund request:                                                                                                     
                                                                                                                                
Maintenance &  Operation of State Transportation  Systems was                                                                 
important  to  the  safety  of  public  use  of  the  state's                                                                   
transportation  systems;  supported economic  development  in                                                                   
terms  of travel  industry,  general public,  and  commercial                                                                   
vehicle  transportation,  etc.  The total  FY2011  governor's                                                                   
request was $227,474.0.                                                                                                         
                                                                                                                                
Results of Current Capacity:                                                                                                  
                                                                                                                                
   · In 2008 Alaska experienced 1.29 traffic fatalities per                                                                     
     100 million VMT, a decrease  of 18.87 percent from 2007,                                                                   
     and compared to the national 2008 average of 1.27.                                                                         
                                                                                                                                
   · The work-related injury rate of department employees                                                                       
     decreased from  4.7 on 2008 to 3.2 in  2008, a reduction                                                                   
     of 31.9 percent.                                                                                                           
                                                                                                                                
   · The Fairbanks International Airport's occupational                                                                         
     injury and  illness incidence  rate increased  from 12.1                                                                   
     in 2007  to 15.3  in 2008, which  is above the  national                                                                   
     rate of 9.9.                                                                                                               
                                                                                                                                
   · The rate of public injuries and incidents decreased                                                                        
     from 1.7 in FY2007 to 1.2 percent in FY2008.                                                                               
                                                                                                                                
   · Customer satisfaction with the Marine Highway System                                                                       
     had stayed strong at 96.5  percent for the 5th year in a                                                                   
     row,  with a high  percentage of  respondents giving  an                                                                   
     excellent rating.                                                                                                          
                                                                                                                                
   · Customer satisfaction in transportation services in                                                                        
     2008 compared to 2005 has remained constant at 80                                                                          
     percent.                                                                                                                   
                                                                                                                                
   · Government sector customer satisfaction had remained                                                                       
     high at 94 percent for state equipment fleet and                                                                           
     increased from 83 percent to 84 percent for facilities                                                                     
     between FY2008 and FY2009.                                                                                                 
                                                                                                                                
   · Rural airport revenues collected in FY2009 exceeded the                                                                    
     target of 5 percent and increased by 6.3 percent over                                                                      
     the prior year.                                                                                                            
                                                                                                                                
 1:48:39 PM                                                                                                                   
                                                                                                                                
Commissioner von Scheben continued to Slide 4:                                                                                  
                                                                                                                                
Measurement Standards/Commercial  Vehicle Enforcement reduces                                                                 
the risk of  accidents or road damage from  unsafe commercial                                                                   
vehicles and/or  loads. The  total FY2011 governor's  request                                                                   
was for $1,946.7 million.                                                                                                       
                                                                                                                                
Results of Current Capacity:                                                                                                  
                                                                                                                                
   · 99.2 percent of the commercial motor vehicles that were                                                                    
     inspected in 2009 were weight compliant.                                                                                   
                                                                                                                                
   · Fatalities    resulting    from   accidents    involving                                                                   
     commercial motor vehicles decreased by 28.57 percent                                                                       
     from 7 in 2007 to 5 in 2008, which is less than the 5                                                                      
     year average of 7.2 fatalities.                                                                                            
                                                                                                                                
                                                                                                                                
Commissioner von Scheben continued to Slide 5:                                                                                  
                                                                                                                                
Transportation and  Facilities Construction  Program provides                                                                 
the planning  and management of construction  projects across                                                                   
the   department.    This   includes    major   repair    and                                                                   
rehabilitation of  all transportation modes, and  state owned                                                                   
facilities, operated  and maintained by the  State of Alaska.                                                                   
The total FY2011 governor's request was $6,761.8 million.                                                                       
                                                                                                                                
Results of Current Capacity:                                                                                                  
                                                                                                                                
The percentage  difference between  bid and final  contractor                                                                   
payments increased  to 12 percent in 2009. By  using the last                                                                   
three  fiscal  years  for source  date,  the  department  has                                                                   
established  a three year  average of  about 10 percent  that                                                                   
was still short of the 8 percent goal.                                                                                          
                                                                                                                                
Commissioner  von  Scheben  listed  the  top  accomplishments                                                                   
achieved by the department in 2009:                                                                                             
                                                                                                                                
Ted Stevens International Airport A & B Concourses:                                                                           
                                                                                                                                
   · Opened for business on November 2, 2009                                                                                    
                                                                                                                                
   · Passenger/Baggage screening centralized                                                                                    
                                                                                                                                
   · A & B Concourses 352,000 ft2 renovation                                                                                    
                                                                                                                                
Fairbanks Passenger Terminal:                                                                                                 
                                                                                                                                
   · Opened May 7, 2009                                                                                                         
                                                                                                                                
   · Authorized $96.2M                                                                                                          
                                                                                                                                
   · Cost $92.3M                                                                                                                
                                                                                                                                
                                                                                                                                
1:52:28 PM                                                                                                                    
                                                                                                                                
Commissioner  von Scheben  cited  Slide 8,  which listed  the                                                                   
Dowling Road Extension,  the Sitka Roundabout,  and the North                                                                   
Pole  Interchange  as  areas of  2009  highway  improvements.                                                                   
Slide 9 illustrated  the Alaska Marine Highway  System (AMHS)                                                                   
improvements:                                                                                                                   
                                                                                                                                
   · 92 percent on Time Departures                                                                                              
                                                                                                                                
   · 96 percent customer satisfaction level                                                                                     
                                                                                                                                
   · Schedule                                                                                                                   
   · Winter '09/Spring '10 released July 17th                                                                                   
   · Summer '10 schedule released October 1st                                                                                   
                                                                                                                                
   · Power Management/ Fuel Savings                                                                                             
                                                                                                                                
   · Alaska Class Ferry-STIP Funding Approved                                                                                   
                                                                                                                                
Commissioner von  Scheben continued to  Slide 9, which  was a                                                                   
photograph of the  crew of the M/V Taku, receiving  and award                                                                   
from  the  Coast  Guard.  The crew  had  rescued  two  people                                                                   
onboard a burning fishing vessel.                                                                                               
                                                                                                                                
Co-Chair   Hawker  pointed   out  that   he  AMHS  has   been                                                                   
responsible for saving  many lives, and that this  was a most                                                                   
recent  example  of  a  long  and  distinguished  history  of                                                                   
helping  vessels in  need of  aid.  Commissioner von  Scheben                                                                   
agreed.                                                                                                                         
                                                                                                                                
1:55:42 PM                                                                                                                    
                                                                                                                                
Commissioner  von  Scheben  continued   to  Slide  11,  which                                                                   
detailed achievements in the Highway Safety Corridors:                                                                        
                                                                                                                                
   · Education                                                                                                                  
         Include distracted and aggressive driving                                                                              
         http://www.youtube.com/user/asthwsads#p/u                                                                            
          http://www.youtube.com/watch?v=yjmAy2Q4BRY                                                                          
                                                                                                                                
   · Enforcement                                                                                                                
          Bureau of Highway Patrol's 2nd year                                                                                   
                                                                                                                                
   · Engineering                                                                                                                
          Knik Goose Bay & Vine Rd; Knik Goose Bay &                                                                            
          Fairview Loop Signals                                                                                                 
          Sterling Highway Rut Repair                                                                                           
                                                                                                                                
Commissioner von Scheben explained  that the department had 4                                                                   
years of funding  for the Highway Safety  Improvement Program                                                                   
which, via  the Department of  Public Safety,  placed highway                                                                   
patrol officers at the safety  corridors.  Palmer and Wasilla                                                                   
had  also  benefited   from  new  stop  lights   and  turnout                                                                   
facilities. He continued to Slide 12:                                                                                           
                                                                                                                                
Rumble Strips                                                                                                                 
                                                                                                                                
   · Installed on the Richardson Highway-2009                                                                                   
                                                                                                                                
   · Highway Safety Corridors-to be constructed in 2010                                                                         
                                                                                                                                
                                                                                                                                
Commissioner  von Scheben cited  Slide 13, which  illustrated                                                                   
safety projects elsewhere:                                                                                                      
                                                                                                                                
Pedestrian Countdown Signals                                                                                                  
                                                                                                                                
   · Reduce pedestrian crashes by 25 percent                                                                                    
                                                                                                                                
   · Started in Anchorage & Fairbanks in 2009                                                                                   
                                                                                                                                
   · 2010 complete Anchorage, Matsu and Kenai                                                                                   
                                                                                                                                
                                                                                                                                
Commissioner  von  Scheben  stated that  the  department  had                                                                   
found  that pedestrian  countdown signals  had a  significant                                                                   
effect in improving pedestrian  safety. He continued to Slide                                                                   
14:                                                                                                                             
                                                                                                                                
Emergency Response                                                                                                            
                                                                                                                                
   · Flooding                                                                                                                   
                                                                                                                                
   · Portage Road to Whittier Tunnel                                                                                            
                                                                                                                                
   · Highway Erosion                                                                                                            
                                                                                                                                
Commissioner  von Scheben  directed attention  to Slides  15,                                                                   
16, and  17, which contained  photographic images  of several                                                                   
of the aforementioned emergencies.                                                                                              
                                                                                                                                
1:59:55 PM                                                                                                                    
                                                                                                                                
Commissioner von Scheben continued  to Slide 18, which showed                                                                   
that  the  department  had worked  with  legislators  through                                                                   
committee    meetings,   House    Transportation    Committee                                                                   
education,  and  a  Dalton  Highway  trip.  Slides  19  &  20                                                                   
contained photographs  of the  various meetings  with members                                                                   
of the  legislature. Slide  21 continued  the list  of DOT&PF                                                                   
successes:                                                                                                                      
                                                                                                                                
   · Fatality rate dropped over 24 percent between 2006 and                                                                     
     2007                                                                                                                       
                                                                                                                                
   · ARRA and regular program                                                                                                   
                                                                                                                                
   · Department safety                                                                                                          
          -3.2 injuries/illness per hundred employees                                                                           
                                                                                                                                
   · Team Approach- DOT&PF and Consultants                                                                                      
                                                                                                                                
Commissioner  von  Scheben  explained  that a  year  ago  the                                                                   
department  had been  tasked  with the  job  of getting  $250                                                                   
million obligated for construction  programs within one year.                                                                   
As  of February  5, 2010,  every dollar  had been  obligated.                                                                   
Slide  22  contained  a chart  which  illustrated  the  "Team                                                                   
Approach-DOT&PF and  Consultants". He cited 2006  and 2007 as                                                                   
examples of particularly successful years.                                                                                      
                                                                                                                                
Representative Gara asked about  the Rumble Strip Project. He                                                                   
wondered  if the  lack of  rumble strips  along highways  was                                                                   
contributing to the instances of accidents.                                                                                     
                                                                                                                                
FRANK  RICHARDS, DEPUTY  COMMISSIONER OF  HIGHWAY AND  PUBLIC                                                                   
FACILITIES,   DEPARTMENT   OF   TRANSPORTATION   AND   PUBLIC                                                                   
FACILITIES, responded  that the  majority of accidents  along                                                                   
the  highway   safety  corridors  were  due   to  inattentive                                                                   
drivers. The department believed  that the replacement of the                                                                   
rumble strips  in the highway safety corridors  would prevent                                                                   
accidents.                                                                                                                      
                                                                                                                                
Representative Gara  thought that the strips  should be place                                                                   
along the  major portion  of the state  highway system  for a                                                                   
minimal  cost. He expressed  concern to  limiting the  rumble                                                                   
strips  to only the  highway safety  corridors. Mr.  Richards                                                                   
stated that the projects in the  presentation were limited to                                                                   
projects that would  be completed in the summer  of 2010, and                                                                   
that the  areas were chosen by  the rates of  fatalities. The                                                                   
use of fog line side rumble strips  were being considered for                                                                   
other areas of the highway. He  said he would get back to the                                                                   
committee with  the cost of the project.  Representative Gara                                                                   
said that the numbers would be appreciated.                                                                                     
                                                                                                                                
2:06:19 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  wondered where the  funds came from  for the                                                                   
Alaska Highway Safety  Office grants, and what  the money was                                                                   
being used for. Mr. Richards responded  that the funds were a                                                                   
combination  of  regular  STIP  program  funds,  and  federal                                                                   
dollars allotted  to address  specific highway safety  needs.                                                                   
The two combined federal fund  sources allowed the department                                                                   
to  address safety  needs  through grants  to  the Bureau  of                                                                   
Highway  Patrol  and the  Alaska  State Troopers.  Since  the                                                                   
inception of  the Bureau of  Highway Safety Patrol  the trend                                                                   
lines had shown less major injury accidents.                                                                                    
                                                                                                                                
Co-Chair  Hawker  stated that  in  the Department  of  Public                                                                   
Safety  (DPS)  budget there  was  an  earmark for  funding  5                                                                   
trooper positions,  the fund source  was the AHSO/CIP  funds.                                                                   
He wondered  how long  the funds  could be  relied upon.  Mr.                                                                   
Richards replied  that the department was in  the second year                                                                   
of  a  4 year  grant.  Co-Chair  Hawker  asked if  the  state                                                                   
received the  same, or an  increasing amount, each  year. Mr.                                                                   
Richards replied that  it was the same amount  each year. Co-                                                                   
Chair  Hawker  wondered  how  the  grant  could  fund  5  new                                                                   
troopers this year, when it was  spent on something else last                                                                   
year. Mr. Richards  thought that the funds had  been spent to                                                                   
recruit and train people for the trooper positions.                                                                             
                                                                                                                                
Co-Chair Hawker  pointed out  to the  committee that  DPS had                                                                   
listed the request  as a new increment to their  base in this                                                                   
year's budget.  He thought  that the point  would need  to be                                                                   
clarified as the committee when  further with the process. He                                                                   
asked  about  Slide 17,  which  pictured  the road  near  the                                                                   
Whittier Tunnel.  Mr. Richards  clarified that the  image was                                                                   
of  400 thousand  cubic  yards  of United  States  Government                                                                   
rock. Co-Chair Hawker asked who  owned the rock. Mr. Richards                                                                   
replied  that  he  rock came  from  the  adjacent  landowner,                                                                   
Chugiak National  Forest, and  fell onto  the state  asset in                                                                   
the  slide.  State  resources  were  used  to  clean  up  and                                                                   
stockpile the rock.  Co-Chair Hawker referred to  a 2 million                                                                   
dollar  supplemental request  to remove  the government  rock                                                                   
from the  state road. Mr. Richards  said the request  was for                                                                   
$2.3  million.  He  added  that  the  department  received  a                                                                   
portion of the  rock from the Forest Service, and  it was now                                                                   
a state asset.                                                                                                                  
                                                                                                                                
2:11:50 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker asked  if the  exchange value  for the  rock                                                                   
received was  equitable to the  work and effort  performed by                                                                   
the department  to remove  it. Mr. Richards  was not  sure of                                                                   
the quantity  of rock  received by the  state. He  thought it                                                                   
broke down  to approximately $5.30  per cubic  yard. Co-Chair                                                                   
Hawker asked  if recourse  could be  taken for federal  rocks                                                                   
falling on  state roads,  rather than  the state footing  the                                                                   
clean-up  bill.  Mr.  Richards  said that  there  may  be  an                                                                   
easement issue involved. Co-Chair  Hawker requested a follow-                                                                   
up on  the issue.  Mr. Richards  said that  there had  been a                                                                   
"lively"  conversation with  the adjacent  landowner to  seek                                                                   
some share in the cost of the clean-up, but to no avail.                                                                        
                                                                                                                                
Representative Fairclough  noted that the state  was spending                                                                   
equal amounts  of money on  highways and the  marine highway.                                                                   
She wondered  how many people  travel on the highway  vs. the                                                                   
marine highway.                                                                                                                 
                                                                                                                                
JIM  BEEDLE,   DEPUTY  COMMISSIONER  OF   MARINE  OPERATIONS,                                                                   
DEPARTMENT   OF   TRANSPORTATION   AND   PUBLIC   FACILITIES,                                                                   
responded  that   the  2008  annual  traffic   volume  report                                                                   
reflected  that  340,000 passengers,  and  109,000  vehicles,                                                                   
traveled on  the AMHS. He stated  that comparing the  two was                                                                   
difficult.                                                                                                                      
                                                                                                                                
LAURA  BAKER, DIRECTOR,  ADMINISTRATIVE SERVICES,  DEPARTMENT                                                                   
OF  TRANSPORTATION  AND  PUBLIC FACILITIES,  added  that  the                                                                   
statistics concerning  the modes  of transportation  could be                                                                   
provided at a later date.                                                                                                       
                                                                                                                                
2:17:26 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough said that  $140 million  was spent                                                                   
in  FY2009  in  the  AMHS  and  $153  million  was  spent  on                                                                   
highways. She understood that  services needed to be provided                                                                   
to coastal  communities, but  wanted to  know what  was being                                                                   
done to  maintain the  road system,  which she believed  used                                                                   
for 90  percent of  the travel in  Alaska. She thought  costs                                                                   
could be streamlined in the AMHS.                                                                                               
                                                                                                                                
2:19:13 PM                                                                                                                    
                                                                                                                                
Representative Fairclough  asked about the  department's $6.1                                                                   
million  travel  budget. Ms.  Baker  replied  that given  the                                                                   
transportation needs  across the state, and the  lack of duty                                                                   
stations  in every  location of  construction, a  significant                                                                   
amount  of  travel  was  necessary  in  order  for  staff  to                                                                   
relocate to various  projects. She said that  a more detailed                                                                   
breakdown of the  travel budget could be provided  at a later                                                                   
date.                                                                                                                           
                                                                                                                                
Representative  Fairclough   asked  about  the   auditing  of                                                                   
federal monies and grants.                                                                                                      
Co-Chair Hawker  interjected that  the state had  spent money                                                                   
in  anticipation  of receiving  grant  money,  and then  were                                                                   
unable to  realize the entire  amount the state had  spent in                                                                   
anticipation of receiving a full federal award.                                                                                 
                                                                                                                                
2:21:09 PM                                                                                                                    
                                                                                                                                
Representative  Fairclough  wondered  how often  the  federal                                                                   
receipts were audited.                                                                                                          
                                                                                                                                
Ms. Baker replied that it was  difficult for departments that                                                                   
were  receiving  federal receipts  to  "get  it down  to  the                                                                   
penny", as the state fiscal year  and the federal fiscal year                                                                   
closed  a  different times.  She  listed  ways in  which  the                                                                   
departments  were  taking action;  capable  accountants  were                                                                   
overseeing  the  operating  and   capital  dollars,  and  the                                                                   
legislative  audit group  came  in once  a  year to  evaluate                                                                   
federal compliance.  Federal dollars  that were coming  in to                                                                   
the  department were  coming in  on the  capital side,  which                                                                   
were  for longer  term  projects,  not the  annual  operating                                                                   
costs that  were built into  the base budget.  Obligation, in                                                                   
the  sense  of   federal  grants,  was  unique   because  the                                                                   
department had to list projects before money was granted.                                                                       
                                                                                                                                
2:24:11 PM                                                                                                                    
                                                                                                                                
Representative   Fairclough  asked   if  the   state  had   a                                                                   
reciprocal agreement  with the federal government  to provide                                                                   
free  transportation for  federal employees  or other  groups                                                                   
traveling  from  out-of-state.   Mr.  Beedle  explained  that                                                                   
certain employees  of the federal government  could apply for                                                                   
free passes. The passes were available  for under work status                                                                   
only and uniforms must be worn  at least twice a day. Most of                                                                   
the  passes  were  on  a  space   available  basis  and  were                                                                   
negotiated in union contracts.  Children were included; up to                                                                   
age 18.  Marketing passes existed  for people  writing travel                                                                   
logs  or books.  Shore  side  people could  receive  business                                                                   
passes.                                                                                                                         
                                                                                                                                
2:28:41 PM                                                                                                                    
                                                                                                                                
Representative   Fairclough  inquired   about  the   aviation                                                                   
component  of  the  budget,  specifically  that  the  volcano                                                                   
observatory,  which  had  requested  a  backfill  of  federal                                                                   
dollars because  the federal resources  were not going  to be                                                                   
available.  It  was  suggested  that the  state  should  take                                                                   
responsibility  for the observatory  funding, to  ensure safe                                                                   
international air  travel. She  wondered why the  airport was                                                                   
not   contributing  to   the   observatory  personnel   fees.                                                                   
Commissioner von Scheben was aware  of the situation, but did                                                                   
not believe  that the Anchorage  airport had been  approached                                                                   
for the funding.                                                                                                                
                                                                                                                                
Representative  Fairclough   asked  if  the   department  had                                                                   
considered  the expense  of  the observatory  when  examining                                                                   
airport expenses. She wondered  about the details involved in                                                                   
the  possible  absorption  of  the  costs.  Commissioner  von                                                                   
Scheben  said he would  get back  to the  committee with  the                                                                   
information.                                                                                                                    
                                                                                                                                
Representative  Fairclough  said  that general  fund  dollars                                                                   
were  being requested  for the  observatory and  if it  would                                                                   
directly affect  the airport it may  be a cost that  could be                                                                   
shared, or  transferred in  some way, to  those that  use the                                                                   
airport  that  depend on  safety  in that  particular  flight                                                                   
pattern.                                                                                                                        
                                                                                                                                
Commissioner von  Scheben recalled a discussion  on the issue                                                                   
on the  national level,  including talks  of a  congressional                                                                   
group that was trying to secure  funding for the observatory.                                                                   
He reiterated that  he would provide the committee  with more                                                                   
information at a later date.                                                                                                    
                                                                                                                                
Co-Chair  Hawker   reiterated  why  should   the  legislature                                                                   
appropriate  general fund  money to pay  for the  maintenance                                                                   
and  operation of  the Alaska  Volcano  Observatory, when  it                                                                   
exists  to provide  air traffic  safety internationally,  and                                                                   
was  traditionally federally  funded. Ms.  Baker assured  the                                                                   
committee  that   she  understood  the  question   and  would                                                                   
research the issue.                                                                                                             
                                                                                                                                
2:32:53 PM                                                                                                                    
                                                                                                                                
Representative  Gara reiterated  the request for  information                                                                   
on  the  cost  of  a  statewide  rumble  strip  program.  Mr.                                                                   
Richards replied that fog and  center line rumble strip plans                                                                   
were already  planned for  the major  routes of the  national                                                                   
highway system.                                                                                                                 
                                                                                                                                
2:35:03 PM                                                                                                                    
                                                                                                                                
Representative Joule stated that  the community of Ambler had                                                                   
naturally  occurring  asbestos  which made  finding  a  clean                                                                   
gravel source  challenging. The  closest clean gravel  source                                                                   
was 30 miles away  and roads would need to be  built in order                                                                   
to haul  gravel. He asked if  it would be more  beneficial to                                                                   
the  community  to pave  a  runway,  than  build a  road.  He                                                                   
stressed that the  ability of the community  to spend capital                                                                   
dollars  was hindered  by the  naturally occurring  asbestos.                                                                   
Mr.  Richards stated  that the  naturally occurring  asbestos                                                                   
was a problem  in other locations throughout  the state. Over                                                                   
the last  few years  the department  had been examining  dust                                                                   
palliatives to  determine what would have longevity  on roads                                                                   
and  runways.  The  department   felt  that  the  reoccurring                                                                   
application   of  the  dust   palliatives  would   more  cost                                                                   
effective in the long run.                                                                                                      
                                                                                                                                
2:40:52 PM                                                                                                                    
                                                                                                                                
Representative  Doogan  questioned  the  Capital  Improvement                                                                   
Project  Receipts for  $132.6,  which was  found  on the  pie                                                                   
chart  on  Slide   30.  Ms.  Baker  said  that   the  capital                                                                   
improvement  receipts  on the  chart reflected  the  personal                                                                   
services costs  of staff, within the operating  budget, which                                                                   
were  spending time  on  the details  of  a capital  project.                                                                   
Representative  Doogan  understood  that the  department  was                                                                   
shifting  money  from the  capital  budget to  the  operating                                                                   
budget  to cover  the costs.   Ms.  Baker said  that when  an                                                                   
estimate  for a  project is  projected it  included what  the                                                                   
internal  staff  time  would  be, as  well  as  the  external                                                                   
instruction   costs  like  equipment   and  supplies.   Under                                                                   
statutory  authority the  department had  to report  personal                                                                   
services operating position costs in the operating budget.                                                                      
                                                                                                                                
Ms. Baker  continued.  The Highway Working  Capital Fund  was                                                                   
the funding for the management  of the state equipment fleet.                                                                   
                                                                                                                                
2:45:30 PM                                                                                                                    
                                                                                                                                
Representative  Doogan thought  that the department's  travel                                                                   
budget  was  expensive  and  requested  more  information  on                                                                   
travel spending.                                                                                                                
                                                                                                                                
Representative  Austerman  understood  that $10  million  had                                                                   
been aside for the rebuild of  the road in Kodiak between the                                                                   
Coast  Guard  base and  downtown.  The  project had  cost  $7                                                                   
million.  He wondered  where the  other $3  million would  be                                                                   
spent. He suggested  the funds could be used  for maintenance                                                                   
at  the state  airport in  Kodiak.  Commissioner von  Scheben                                                                   
replies   that   leftover  funds   would   be   redistributed                                                                   
throughout  the   state.    Mr.   Richards  added   that  the                                                                   
competitive  nature of  the bids  for  stimulus projects  had                                                                   
resulted  in many  projects  coming  in below  the  engineers                                                                   
estimate. The department had come  to the legislature to have                                                                   
the funds used  for other projects that were  ready to begin.                                                                   
The  oversights placed  in  projects, by  state  legislation,                                                                   
required   both   Title   23    eligible   work,   and   LB&A                                                                   
authorization.                                                                                                                  
                                                                                                                                
Representative  Austerman asserted  that  stimulus money  was                                                                   
intended to  be used for  projects that created  jobs. Intent                                                                   
language  was  put into  the  legislation  in an  attempt  to                                                                   
create smaller projects that local  companies could bid on as                                                                   
well as the  larger companies in the state.  He lamented that                                                                   
the  stimulus money,  in the  case  of the  Kodiak road,  had                                                                   
created only five  jobs. He expressed frustration  that small                                                                   
construction  companies in  his  community did  not have  the                                                                   
bonding ability to contend for the larger projects.                                                                             
                                                                                                                                
2:50:03 PM                                                                                                                    
                                                                                                                                
Commissioner  von Scheben responded  that the department  was                                                                   
held  to regulations  when  obligating  the stimulus  dollars                                                                   
within  a  very  short  timeframe.   Sometimes  the  simplest                                                                   
projects, which  do not generate  a lot  of jobs, but  can be                                                                   
accomplished sooner, take priority.                                                                                             
                                                                                                                                
Representative  Austerman  disagreed  with  the  department's                                                                   
approach. He  felt that when  one major construction  company                                                                   
was moved from  community to community to do  the work, local                                                                   
people missed out on the opportunity for the jobs.                                                                              
                                                                                                                                
Representative  Fairclough   asked  if  there   had  been  an                                                                   
increase of  contractors from out-of-state bidding  on DOT/PF                                                                   
projects. She also  wondered how often the scales  that weigh                                                                   
baggage   at  the   airports  were   checked  for   accuracy.                                                                   
Commissioner von Scheben did not think the bidding by out-                                                                      
of-state  contractors  was  increasing.   He  listed  current                                                                   
outside   contractors   being  used.   He   noted  that   the                                                                   
contractors  were   hiring  locally  and  using   local  sub-                                                                   
contractors. He said that he could  get back to the committee                                                                   
with more information concerning  the weights and measures at                                                                   
airports.                                                                                                                       
                                                                                                                                
2:54:05 PM                                                                                                                    
                                                                                                                                
Mr. Richards  stated that  a significantly  larger number  of                                                                   
firms,  both Alaskan and  out-of-state,  bid on the  stimulus                                                                   
projects.  He  recalled  that   the  only  stimulus  projects                                                                   
awarded to outside  firms were the Akiachak  Airport project,                                                                   
and the  project at  Trump Road, which  went to a  Washington                                                                   
firm.                                                                                                                           
                                                                                                                                
Co-Chair  Hawker  probes  the   issue  of  state  competition                                                                   
against the private  sector. He questioned if  the department                                                                   
should  be divested of  the responsibility  of pile  drilling                                                                   
operations,  which  could  then  be awarded  to  the  private                                                                   
sector. Mr.  Richards replied the department  is occasionally                                                                   
required  to rent  the equipment  it needs  from the  private                                                                   
sector in order  to drill the post holes. The  department was                                                                   
in charge of  the routine replacement of the  rail itself. He                                                                   
asserted  that  the department  was  not  as efficient  as  a                                                                   
private  contractor,  who  was  set  up  with  the  necessary                                                                   
equipment to perform the guard  rail installation. He relayed                                                                   
that  the  department  put  out   contracts  for  repair  and                                                                   
replacement  of   guard  rails,   but  did  the   minor  work                                                                   
independently. He acknowledged  the issue was a long-standing                                                                   
one, but  added that  the work  done by  the department  with                                                                   
state account forces  and state equipment was  a "fraction of                                                                   
a decimal point of the entire capital budget."                                                                                  
                                                                                                                                
Co-Chair Hawker pointed out the  relative economic scale that                                                                   
should  be taken into  consideration when  comparing  a state                                                                   
department with a small business.                                                                                               
                                                                                                                                
Mr.  Richards agreed.  He  added  that it  was  shown in  the                                                                   
operating budget  that the CIP  receipts had allowed  for the                                                                   
retention  of   equipment  operators  and  mechanics,   on  a                                                                   
yearlong  basis,  which might  not  be possible  without  the                                                                   
general  funds   to  keep  them  employed.   Co-Chair  Hawker                                                                   
understood that  more state employees  was a good  thing. Mr.                                                                   
Richards responded  that the retention of  existing employees                                                                   
was a good thing.                                                                                                               
                                                                                                                                
Co-Chair    Hawker   queried    functional   allocation    of                                                                   
expenditures  across all  budgets.  He expressed  frustration                                                                   
with the  reining in  of the operating  costs of  the various                                                                   
agencies. He noted  the growth in the department's  budget in                                                                   
travel and  personnel costs.  He asked  what would  happen if                                                                   
the funds in those two areas were  cut by 10 percent, and how                                                                   
would the department implement the legislative cuts.                                                                            
                                                                                                                                
2:59:45 PM                                                                                                                    
                                                                                                                                
Commissioner von  Scheben replied that taking  10 percent off                                                                   
the top  would result  in less  travel, but that  performance                                                                   
would  go down  as well.  For example,  the commissioner  was                                                                   
based out of Anchorage, but traveled  to Juneau for business.                                                                   
He  added that  cuts  to the  budget  would  affect the  core                                                                   
competencies of the department.                                                                                                 
                                                                                                                                
Co-Chair Hawker  asked what  was done  in the private  sector                                                                   
when  there  was  not  enough   revenue  to  cover  expenses.                                                                   
Commissioner von Scheben responded  that people would need to                                                                   
be  laid off  and  that  would mean  giving  up  some of  the                                                                   
competencies of the group. Co-Chair  Hawker wondered what the                                                                   
key  people in  the department  would  cut in  order to  save                                                                   
money.  Commissioner  von Scheben  shared  that  he had  been                                                                   
through  the  budget  process  through  two  administrations.                                                                   
During  those  times  cuts  to  the  budget  were  constantly                                                                   
considered  and  budget  growth   was  never  an  option.  He                                                                   
stressed that over  the last 3 years the budget  had been cut                                                                   
so much  that the  next cuts  would be  to the core  services                                                                   
provided by the department.                                                                                                     
                                                                                                                                
Co-Chair Hawker noted that the  department was up $30 million                                                                   
in two  years. He  wondered how  there could  have been  cuts                                                                   
made, and a 7 and a half increase in the budget.                                                                                
                                                                                                                                
Commissioner von  Scheben opined that the budget  request was                                                                   
high due to increased wages from  union negotiations. He said                                                                   
that union  increases  were expensive.  He asserted that  for                                                                   
the last three  years he had been told by  the administration                                                                   
to make more cuts.                                                                                                              
                                                                                                                                
Co-Chair  Hawker said  that the legislature  had honored  the                                                                   
collective   bargaining   settlements    conducted   by   the                                                                   
administration.  He   felt  that  at  the  current   rate  of                                                                   
spending, the state would soon be in a deficit.                                                                                 
                                                                                                                                
3:05:17 PM                                                                                                                    
                                                                                                                                
Representative Austerman spoke  of recent mudslides in Kodiak                                                                   
due  to heavy  rains. It  was reflected  in the  supplemental                                                                   
budget  that $500,000  of general fund  dollars would  offset                                                                   
the cost  of the  clean-up. He  noted that  the incident  had                                                                   
been  declared  a federal  emergency  and wondered  how  many                                                                   
federal dollars  had had been  awarded to aide in  the clean-                                                                   
up. He  said that the district  filled cracks in  the highway                                                                   
every three  years, in  the meantime  the cracks filled  with                                                                   
water, which froze  and cracked the roads. He  hoped that the                                                                   
district was getting enough money  in the budget to deal with                                                                   
the problem.                                                                                                                    
                                                                                                                                
Mr. Richards replied  that the $500,000 received  was for the                                                                   
general funded needed  work. He did not have  the number that                                                                   
the federal  government had  agreed to  pay for the  mudslide                                                                   
emergency.  The Federal  Emergency  Management Agency  (FEMA,                                                                   
would pay for  any work above and beyond what  the department                                                                   
was  normally budgeted  for. He  added that  the amount  that                                                                   
would  be paid  out was  dependent  on the  where the  impact                                                                   
occurred, and the type of road involved.                                                                                        
                                                                                                                                
Representative  Austerman  asked   if  the  department  could                                                                   
provide documentation of the numbers  so that he could ensure                                                                   
his  district  would  be  paid pack  for  the  clean-up.  Mr.                                                                   
Richards replied  that the district would not  be expected to                                                                   
cover  the cost  of the  emergency with  operating funds.  He                                                                   
said  that the  cost accounting  figures  would be  collected                                                                   
internally and cover  of the costs would be  requested by the                                                                   
department in the supplemental.                                                                                                 
                                                                                                                                
Representative Austerman  argued that the  mudslide emergency                                                                   
cost  exceeded  $500,000. He  wanted  to  know how  much  the                                                                   
federal government was going to  contribute to the emergency.                                                                   
Mr. Richards said he would provide the numbers.                                                                                 
                                                                                                                                
Ms. Baker continued to Slide 23,  titled "DOT&PF Challenges":                                                                 
                                                                                                                                
   · Uncertainty and timing of adequate funding levels                                                                          
                                                                                                                                
   · Replacing our aging workforce as large number of                                                                           
     employee are approaching retirement age                                                                                    
                                                                                                                                
   · Cost of doing business continues to go up                                                                                  
                                                                                                                                
Ms. Baker said that the fuel trigger  was currently funded by                                                                   
a mechanism in  the operating budget and was  not included in                                                                   
the base funding from year-to-year.                                                                                             
                                                                                                                                
Co-Chair  Hawker stated  that  the fuel  trigger points  were                                                                   
being reassessed  and would be an important  component of Ms.                                                                   
Baker  stated   that  30-40   percent  of  the   department's                                                                   
workforce was primed for retirement.  Bids were rumored to be                                                                   
coming  in lower  in  the area  of contracts,  however,  core                                                                   
service  costs  continued to  rise.  Ms. Baker  continued  to                                                                   
Slide 24, which  was an update on the $12.7  million that was                                                                   
added on the senate side in 2009,  titled "FY10 Maintenance &                                                                 
Operations":                                                                                                                  
                                                                                                                                
   · Maintain 15,221 lane miles, 256 airports                                                                                   
                                                                                                                                
   · M&O is half of DOT&PF's GF budget                                                                                          
                                                                                                                                
   · $1.5M Facilities FY10 increment:                                                                                           
          -$172.6 to avoid supplemental                                                                                         
          -$1,309.7 for increased service                                                                                       
                                                                                                                                
   · $11.2M Highways & Aviation FY10 increment:                                                                                 
          -$2,550.1 to avoid supplemental                                                                                       
          -$8,689.1 for increased service                                                                                       
                                                                                                                                
                                                                                                                                
Ms.  Baker  stated that  $1.5  million  of the  dollars  went                                                                   
toward facilities, and $11.2,  toward aviation. Approximately                                                                   
$10  million  was  used  to  increase   service  capacity  on                                                                   
existing infrastructure,  and $2.7 million was  used to avoid                                                                   
ongoing supplemental needs. Slide  25 illustrated further how                                                                   
the funds were spent:                                                                                                           
                                                                                                                                
   · Central Region Highways & Aviation $4,264.4                                                                                
          -$1,617.6 Avoid Supplementals                                                                                         
          -$2,646.8 Higher Level of Service                                                                                     
                                                                                                                                
   · Northern Region Highways & Aviation $5,412.1                                                                               
          -$554.0 Avoid Supplementals                                                                                           
          -$4,858.1 Higher Level of Service                                                                                     
                                                                                                                                
   · Southeast Region Highways & Aviation $1,552.7                                                                              
          -$378.5 Avoid Supplementals                                                                                           
          -$1,184.2 Higher Level of Service                                                                                     
                                                                                                                                
Ms.  Baker  stated  that the  handout  only  represented  the                                                                   
highway and aviation portion,  the facilities detail could be                                                                   
provided upon request.  She continued to Slide  30, which was                                                                   
a pie  chart that  illustrated the  funding source  breakdown                                                                   
for the  department. She highlighted  that the  $54.2 million                                                                   
for  the Marine  Highway Fund  was  part of  the $64  million                                                                   
difference in the general fund  categories. The International                                                                   
Airport Revenue Fund was funding  the Anchorage and Fairbanks                                                                   
International Airport.  Slide 31 detailed the  $236.2 million                                                                   
of general funds.  Slide 32 was a bar graph  demonstration of                                                                   
the  FY10 capital  and operating  budget.  Ms. Baker  relayed                                                                   
that  the main  concern in  local district  areas related  to                                                                   
highway  and   aviation;  specifically  access,   safety  and                                                                   
transportation.  Fifty  percent   of  the  resources  in  the                                                                   
operation budget were to be used  in those areas. Thirty-Five                                                                   
percent of  the funding was  going toward the  marine highway                                                                   
system.  Other   funds  were  slated  for   administration  &                                                                   
support, measure standards & commercial  vehicle enforcement,                                                                   
design  and   construction,  and  facility   maintenance  and                                                                   
operations.                                                                                                                     
                                                                                                                                
3:13:43 PM                                                                                                                    
                                                                                                                                
Representative Austerman referred  to Slide 32. He understood                                                                   
that $850 million was expected  to be coming from the federal                                                                   
government. Ms. Baker replied in the affirmative.                                                                               
                                                                                                                                
Ms. Baker continued  to Slide 33, which was  a spreadsheet of                                                                   
the  budget request.  She detailed  the  increases and  broke                                                                   
down  the  budget.  She explained  that  of  the  traditional                                                                   
general  funds, $3.1  million  was for  the marine  highways,                                                                   
which had  3 bargaining  units up for  a 4 percent  increase,                                                                   
with a  $148 increase  to their  health insurance.  Ms. Baker                                                                   
said  that  in  looking  at  the   incremental  changes,  the                                                                   
department  had  $2.8  million in  traditional  general  fund                                                                   
request,  $2.2 of  which was  in highways  and aviation.  She                                                                   
asserted that the  budget for FY2011 was flat  in theory, and                                                                   
that the  majority of  the requests  were to meet  regulatory                                                                   
compliance   expectations.  Slides   34-41  related   to  the                                                                   
increases  that relate  to the  $2.8  million dollar  general                                                                   
fund incremental.                                                                                                               
                                                                                                                                
3:20:36 PM                                                                                                                    
                                                                                                                                
Ms. Baker referred to Slide 29,  and noted that discharge was                                                                   
an  issue.  Two  state positions  at  $188,000  would  handle                                                                   
permit compliance and oversee the program.                                                                                      
                                                                                                                                
Representative Fairclough  queried the issuance  of a private                                                                   
sector  contract for  street sweeping.  Mr. Richards  replied                                                                   
that there  had been one contract  for sweeping a  portion of                                                                   
the state's  road assets  in the  municipality of  Anchorage;                                                                   
the contract  had an end completion  date in August,  but was                                                                   
not performance  based.  He added that  the new  multi-sector                                                                   
permit that went  into effect February 1, 2010  required that                                                                   
all roads  in Anchorage  be swept twice  before June  1, with                                                                   
another  two sweepings  before  first snow  in  the fall.  He                                                                   
noted that the  higher sweeping sequence was  mandated by EPA                                                                   
and   that  the   existing  level   was  negotiated   through                                                                   
aggressive consultation.                                                                                                        
                                                                                                                                
Representative  Fairclough thought  the operating costs  were                                                                   
high. She questioned  whether the state should  invest in its                                                                   
own  equipment.  Mr.  Richards  replied that  the  funds  for                                                                   
street  sweeping  would  be contracted  out  to  the  private                                                                   
sector with  the specific performance milestones  required by                                                                   
the permit.                                                                                                                     
                                                                                                                                
Representative  Fairclough   asked  whether  the   two  state                                                                   
workers,  along with retirement  benefits  would go into  the                                                                   
operating  budget.  Mr.  Richards concurred.  The  two  state                                                                   
workers would  be responsible to meet state  requirements. In                                                                   
addition  to street  sweeping; mapping  of drainage  systems,                                                                   
placement  of   the  geographical  information   system,  and                                                                   
numerous permit stipulations would need to be met.                                                                              
                                                                                                                                
3:24:02 PM                                                                                                                    
                                                                                                                                
Representative Kelly wondered  what would happen if the state                                                                   
insisted on sweeping  all roads without involvement  from the                                                                   
federal   government.   Mr.   Richards   replied   that   the                                                                   
commissioner of the  department would be put in  jail and the                                                                   
state  would  face   fines  of  $25,000  per   day  for  non-                                                                   
compliance.                                                                                                                     
                                                                                                                                
Representative Kelly  thought that the state  should have the                                                                   
right  to sweep  its  own streets.  He  wondered whether  the                                                                   
federal requirements bothered the department.                                                                                   
                                                                                                                                
3:25:47 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker shared Representative Kelly's frustrations.                                                                     
                                                                                                                                
Representative  Doogan thought that  street sweeping  in past                                                                   
years had  been lacking. He  expressed appreciation  that the                                                                   
department would change the contract  so the streets would be                                                                   
safer. Commissioner  von Scheben acknowledged that  a mistake                                                                   
had been made  in the writing of past specifications  for the                                                                   
street sweeping.  The timeframe had not included  staging. He                                                                   
stated that the mistake had been corrected.                                                                                     
                                                                                                                                
Vice-Chair   Thomas   pointed   out   that   in   the   past,                                                                   
Representative  Doogan had wanted  snow removal equipment  in                                                                   
the budget. The item had been added, but was expensive.                                                                         
                                                                                                                                
Ms. Baker continued. She shared  that the department had some                                                                   
satellite  communications  contract  work to  buy  additional                                                                   
bandwidth for marine line vessels  for business purposes. The                                                                   
equipment had been installed with  federal dollars, and would                                                                   
allow all  vessels active contact  with the shore.  The final                                                                   
request was for  $500.0 thousand for the  Bellingham Terminal                                                                   
Facilities Lease Increase.                                                                                                      
                                                                                                                                
Co-Chair   Hawker   urged   a    frugal   approach   to   the                                                                   
implementation  of  telecommunication equipment  on  nautical                                                                   
vessels.                                                                                                                        
                                                                                                                                
Ms. Baker concluded the presentation. She stated that the                                                                       
department would compile and distribute responses as soon as                                                                    
possible.                                                                                                                       
                                                                                                                                
3:31:11 PM                                                                                                                    

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