Legislature(2009 - 2010)CAPITOL 120

02/17/2010 01:00 PM House JUDICIARY


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01:07:37 PM Start
01:08:05 PM Select Committee on Legislative Ethics
01:49:35 PM Board of Governors of the Alaska Bar
01:57:09 PM Public Defender
02:18:31 PM Violent Crimes Compensation Board
02:25:02 PM HJR42
03:04:04 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearings: TELECONFERENCED
Select Committee on Legislative Ethics;
Violent Crimes Compensation Board;
Quinlan Steiner, Public Defender; Board
of Governors of the Alaska Bar
+ HJR 42 CONST. AM: TRANSPORTATION FUND TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
            HJR 42 - CONST. AM: TRANSPORTATION FUND                                                                         
                                                                                                                                
2:25:02 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS announced that the  final order of business would be                                                               
HOUSE  JOINT  RESOLUTION  NO. 42,  Proposing  amendments  to  the                                                               
Constitution  of the  State of  Alaska creating  a transportation                                                               
infrastructure fund.                                                                                                            
                                                                                                                                
2:25:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  moved  to adopt  the  proposed  committee                                                               
substitute (CS)  for HJR 42, Version  26-LS1411/S, Kane, 2/17/10,                                                               
as  the work  draft.   There being  no objection,  Version S  was                                                               
before the committee.                                                                                                           
                                                                                                                                
2:26:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PEGGY  WILSON, Alaska State  Legislature, speaking                                                               
as  chair   of  the  House  Transportation   Standing  Committee,                                                               
sponsor, explained that passage of  HJR 42 would place before the                                                               
voters a proposed change to Article  IX, Section 7, of the Alaska                                                               
State Constitution  in order  to allow for  a dedicated  fund for                                                               
capital transportation projects.  She  noted that for fiscal year                                                               
2010 (FY 10), 87 percent  of Alaska's transportation budget comes                                                               
from  the  federal  government,  and  that  the  current  federal                                                               
reauthorization bill has expired and  is only being extended on a                                                               
month-to-month  basis  until  new   federal  legislation  can  be                                                               
passed.   She relayed  that she's heard,  however, that  that new                                                               
federal reauthorization bill  is going to be  very unfavorable to                                                               
those with small  populations - like Alaska -  because it's going                                                               
to emphasize mass transit and green transportation.                                                                             
                                                                                                                                
REPRESENTATIVE  P.  WILSON  remarked that  with  federal  funding                                                               
diminishing,   Alaska  is   going  to   have  to   shoulder  more                                                               
responsibility for  its transportation infrastructure.   Although                                                               
passage  of  HJR  42's  proposed   change  to  the  Alaska  State                                                               
Constitution  might impact  the  Department  of Transportation  &                                                               
Public  Facilities (DOT&PF),  the proposed  change is  more about                                                               
meeting   all   of   Alaska's   growing   transportation   needs.                                                               
Transportation  investment  creates  a  competitive  environment,                                                               
attracting additional  economic development.  She  noted that the                                                               
House  Transportation  Standing   Committee  has  researched  the                                                               
issues surrounding Alaska's  transportation needs and challenges,                                                               
and has  received input from  interested parties from  across the                                                               
state  as well  as information  from the  National Conference  of                                                               
State Legislatures  (NCSL) regarding what other  states are doing                                                               
to  address  their  transportation  infrastructure  budget  gaps.                                                               
Furthermore,  a  House  Finance   Committee  member's  staff  has                                                               
compiled a list  of the many different  funding options available                                                               
to address  the fiscal shortfalls  resulting from  Alaska's long-                                                               
range transportation plan.                                                                                                      
                                                                                                                                
2:28:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON  explained that HJR 42  is a culmination                                                               
of all  that research and  input, and, if its  proposed dedicated                                                               
fund is added to the Alaska  State Constitution by the voters, it                                                               
would  allow Alaska  more opportunity  to take  advantage of  the                                                               
cost-  and  time-savings  of  State-funded  projects  while  also                                                               
addressing  the  state's  growing   transportation  needs.    The                                                               
proposed  dedicated  fund  would  allow  Alaska's  transportation                                                               
projects  to be  completed much  faster because,  as State-funded                                                               
projects, they  wouldn't have to  follow lengthy,  expensive, and                                                               
time-consuming federal procedures;  such projects would, however,                                                               
still have to comply with  federal construction standards.  House                                                               
Joint  Resolution  42's  proposed constitutional  change  is  not                                                               
intended  to diminish  the State's  partnership with  the federal                                                               
government;  instead,  it  is intended  to  provide  a  dedicated                                                               
revenue stream  that will allow  more transportation  projects to                                                               
be completed faster and at less cost.                                                                                           
                                                                                                                                
REPRESENTATIVE  P. WILSON  said  that  the resolution's  proposed                                                               
transportation  infrastructure  fund  would  grow  as  investment                                                               
returns compound.   The  goal is  to seed  the endowment  with $1                                                               
billion, and it is anticipated that  it will then grow by another                                                               
$65 million  the first year  as the result of  investment returns                                                               
and  motor fuel  tax and  registration  fees, and  by another  $5                                                               
million  to $6  million each  year  thereafter.   She noted  that                                                               
members'  packets  contain  graphs  created  by  the  Legislative                                                               
Finance  Division  illustrating  the  proposed  dedicated  fund's                                                               
balance   and   the  amounts   that   would   be  available   for                                                               
appropriations from it each year - from FY 11 through FY 30.                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON offered  her understanding that  in one                                                               
of  his speeches,  former Governor  Hickel indicated  support for                                                               
the  Alaska State  Constitution being  changed to  provide for  a                                                               
dedicated transportation  fund.   She remarked that  Alaska needs                                                               
to take  action now; that the  future of the economic  and social                                                               
wellbeing  of  Alaska's citizens  is  critically  dependant on  a                                                               
reliable  transportation  system;  and  that  HJR  42's  proposed                                                               
change  to   the  Alaska  State  Constitution,   allowing  for  a                                                               
dedicated transportation  fund, is needed to  create and maintain                                                               
a reliable transportation system for  Alaska.  She then explained                                                               
that under Version S,  the proposed transportation infrastructure                                                               
fund would  begin receiving revenue  from the motor fuel  tax and                                                               
registration fees after of July 1,  2011 - the beginning of FY 12                                                               
-  and appropriations  from that  fund would  be limited  to only                                                               
those capital projects for  transportation and related facilities                                                               
that are  designated by law -  in other words, those  approved by                                                               
the legislature.                                                                                                                
                                                                                                                                
2:34:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG,  in  response to  comments,  mentioned                                                               
that  although  he  won't  hold the  resolution  up,  he  doesn't                                                               
support it for constitutional reasons,  and pointed out that it's                                                               
difficult  to  address  the  resolution's  constitutional  issues                                                               
separate  from  its  fiscal issues  because  the  prohibition  on                                                               
dedicated funds outlined in Article  IX, Section 7, of the Alaska                                                               
State  Constitution  is  based  on the  fiscal  policy  that  the                                                               
framers imbedded in the Alaska  State Constitution.  His feeling,                                                               
he relayed,  is summarized  in a handout  he's provided  from the                                                               
publication,  Alaska's Constitution;  A  Citizen's  Guide, as  it                                                             
pertained to Article IX, Section 7.                                                                                             
                                                                                                                                
REPRESENTATIVE  HERRON asked  whether  HJR 42  would prevent  the                                                               
governor from suspending Alaska's motor fuel tax.                                                                               
                                                                                                                                
REPRESENTATIVE P.  WILSON offered her  belief that it  would not;                                                               
instead, the proposed dedicated  transportation fund would simply                                                               
grow more slowly when it wasn't receiving revenue from that tax.                                                                
                                                                                                                                
REPRESENTATIVE  HOLMES said  she doesn't  see any  constitutional                                                               
problems  with   HJR  42,  expressed   favor  with   Version  S's                                                               
stipulation that appropriations from  the proposed dedicated fund                                                               
could  only  be  for  capital  projects  for  transportation  and                                                               
related  facilities that  are designated  by law,  but questioned                                                               
whether the  legislature could appropriate  monies from  the fund                                                               
for  transportation  infrastructure maintenance  and  operational                                                               
costs.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  P.  WILSON indicated  that  the  language of  the                                                               
proposed  constitutional change  might be  broad enough  to allow                                                               
for  that, though  not  for  the normal  operating  costs of  the                                                               
DOT&PF.   In  response to  another question,  she indicated  that                                                               
several organizations  have expressed favor  with HJR 42  and its                                                               
proposed  dedicated  transportation   infrastructure  fund.    In                                                               
response   to   other   questions,   she   explained   that   any                                                               
appropriations from the proposed  dedicated fund would be limited                                                               
to State-funded transportation projects.                                                                                        
                                                                                                                                
2:43:31 PM                                                                                                                    
                                                                                                                                
BECKY ROONEY,  Staff, Representative  Peggy Wilson,  Alaska State                                                               
Legislature, in response to questions  and comments, explained on                                                               
behalf  of   the  sponsor,  the  House   Transportation  Standing                                                               
Committee,  which is  chaired by  Representative P.  Wilson, that                                                               
HJR 42 doesn't  address any of the other  suggestions outlined in                                                               
the handout  titled "Alaska  Transportation Finance  Study; Final                                                               
Report", and would not be instituting any new taxes.                                                                            
                                                                                                                                
REPRESENTATIVE   P.    WILSON   again   relayed    that   several                                                               
organizations have expressed  favor with HJR 42  and its proposed                                                               
dedicated transportation  infrastructure fund, and  surmised that                                                               
it's because they know that  Alaska's economic development cannot                                                               
happen without an adequate transportation infrastructure.                                                                       
                                                                                                                                
REPRESENTATIVE  HERRON questioned  whether  anyone has  expressed                                                               
opposition to HJR 42.                                                                                                           
                                                                                                                                
REPRESENTATIVE  P.  WILSON  said  no.   In  response  to  another                                                               
question, she acknowledged  that because the language  on page 2,                                                               
lines 3-5,  says, "Each year,  the legislature may  appropriate a                                                               
percentage  of   the  average  market   value  of  the   fund  as                                                               
established by  law for capital  projects for  transportation and                                                               
related  facilities  that  are  designated  by  law",  that  that                                                               
percentage, once  it's established in  statute, could be  as high                                                               
as 50  percent.   However, she pointed  out, language  in another                                                               
piece of  legislation pertaining to this  proposed constitutional                                                               
dedicated fund  currently stipulates that  it would be  6 percent                                                               
of a five-year average.                                                                                                         
                                                                                                                                
REPRESENTATIVE  GRUENBERG surmised,  then,  that the  legislature                                                               
could pass  legislation in  the future allowing  it to  empty out                                                               
this proposed dedicated fund if it felt it needed to.                                                                           
                                                                                                                                
REPRESENTATIVE   P.   WILSON   acknowledged  that   that   is   a                                                               
possibility.                                                                                                                    
                                                                                                                                
REPRESENTATIVE   GRUENBERG   -   with    regard   to   the   term                                                               
"transportation infrastructure  fund" - questioned  whether under                                                               
the proposed  constitutional change, some  of the monies  in that                                                               
fund  could be  appropriated to  "a specialized  type of  revenue                                                               
sharing that's used only for municipal roads."                                                                                  
                                                                                                                                
REPRESENTATIVE  P.  WILSON  acknowledged  that that,  too,  is  a                                                               
possibility.                                                                                                                    
                                                                                                                                
2:50:06 PM                                                                                                                    
                                                                                                                                
FRANK  RICHARDS,   Deputy  Commissioner  of  Highways   &  Public                                                               
Facilities,   Office   of   the   Commissioner,   Department   of                                                               
Transportation  & Public  Facilities (DOT&PF),  in response  to a                                                               
question, indicated that the DOT&PF has no position on HJR 42.                                                                  
                                                                                                                                
REPRESENTATIVE  GRUENBERG questioned  whether  HJR 42's  proposed                                                               
change to the  Alaska State Constitution really  does provide for                                                               
a true dedicated fund.                                                                                                          
                                                                                                                                
2:53:15 PM                                                                                                                    
                                                                                                                                
BRIAN  KANE,  Attorney,  Legislative Legal  Counsel,  Legislative                                                               
Legal and  Research Services,  Legislative Affairs  Agency (LAA),                                                               
speaking  as  the drafter,  offered  that  it  does in  that  the                                                               
proposed constitutional  change provides  that all of  the monies                                                               
from  the fees  listed therein  and  the State's  motor fuel  tax                                                               
would  go into  the proposed  transportation infrastructure  fund                                                               
and could then only be spent on a limited number of projects.                                                                   
                                                                                                                                
REPRESENTATIVE  P. WILSON  added  that the  funds  that could  be                                                               
appropriated under HJR 42 in any given year would be limited.                                                                   
                                                                                                                                
2:55:13 PM                                                                                                                    
                                                                                                                                
KATHIE  WASSERMAN, Executive  Director,  Alaska Municipal  League                                                               
(AML),  noted  that  the aforementioned  handout  titled  "Alaska                                                               
Transportation Finance Study; Final  Report" was prepared for the                                                               
AML and illustrates  that among other things, the  State needs to                                                               
identify some way to fill the  financial gap that will be left as                                                               
a result  of the  anticipated decrease in  federal funding.   She                                                               
indicated  that  the  AML  would  be happy  to  support  HJR  42,                                                               
surmising that  other interested organizations would  be as well.                                                               
In conclusion,  she relayed that  the AML  is in full  support of                                                               
HJR 42.                                                                                                                         
                                                                                                                                
REPRESENTATIVE GATTO  surmised that the monies  from the proposed                                                               
dedicated fund could be appropriated for Alaska's railroads.                                                                    
                                                                                                                                
REPRESENTATIVE  GRUENBERG, referring  to the  sponsor's statement                                                               
that the  goal is  to seed  the proposed  dedicated fund  with $1                                                               
billion and add Alaska's motor  fuel tax and registration fees to                                                               
it, questioned  whether taking  that much in  GF funding  off the                                                               
table initially is supported by  the AML, given that taking those                                                               
funds off the table could  affect such things as revenue sharing,                                                               
education funding, and  other things for which  funding is needed                                                               
now.                                                                                                                            
                                                                                                                                
MS. WASSERMAN  relayed that the AML  is aware that there  will be                                                               
some tradeoffs with  HJR 42's approach, but is still  in favor of                                                               
it.                                                                                                                             
                                                                                                                                
REPRESENTATIVE  GRUENBERG  asked  Ms. Wasserman  what  she  would                                                               
propose in order  to address any [initial]  budget shortfall that                                                               
results from so seeding the proposed dedicated fund.                                                                            
                                                                                                                                
MS.  WASSERMAN  relayed  that  she   is  unable  to  answer  that                                                               
question.                                                                                                                       
                                                                                                                                
2:59:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG opined  that before HJR 42  is passed by                                                               
the  legislature, it  will be  essential for  the legislature  to                                                               
know  how local  governments intend  to  make up  for any  budget                                                               
shortfall  that could  result  from  the proposed  constitutional                                                               
change.   He  said he  could  envision that  ratification of  the                                                               
proposed  constitutional change  by  the voters  could result  in                                                               
there being  less money  for the capital  budget, less  money for                                                               
municipal revenue sharing, and less  money for education funding,                                                               
particularly because $1 billion is  a lot of money.  Furthermore,                                                               
he   predicted,   the  proposed   constitutional   transportation                                                               
infrastructure fund  could be  just the  first of  many dedicated                                                               
funds to be proposed.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GATTO said,  "You  might consider  that we  could                                                               
bond for infrastructure, and use  the dedicated fuel tax funds to                                                               
pay the bonds?"                                                                                                                 
                                                                                                                                
MS. WASSERMAN  acknowledged that the legislature  could take such                                                               
an approach.                                                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG offered his belief that there are                                                                      
various other ways of paying for the state's transportation                                                                     
needs besides adopting HJR 42.                                                                                                  
                                                                                                                                
CHAIR RAMRAS, after ascertaining that no one else wished to                                                                     
testify, closed public testimony on HJR 42.  In response to                                                                     
comments, he relayed that HJR 42 [Version S] would be held over.                                                                

Document Name Date/Time Subjects
01 HJR42 Sponsor Stmt.pdf HJUD 2/17/2010 1:00:00 PM
02 HJR42 Bill v.E.pdf HJUD 2/17/2010 1:00:00 PM
03 HJR42-OOG-DOE-2-9-10.pdf HJUD 2/17/2010 1:00:00 PM
04 HJR42 Support - fund values with taxes.pdf HJUD 2/17/2010 1:00:00 PM
05 HJR42 Support - Graph.pdf HJUD 2/17/2010 1:00:00 PM
06 HJR42 Exec Summary AK Trans Finance Study.pdf HJUD 2/17/2010 1:00:00 PM
07 HJR42 CS v. S.pdf HJUD 2/17/2010 1:00:00 PM