03/27/2008 01:00 PM House TRANSPORTATION

HB 322-TRANSPORTATION FUND                                                                                                    
                                                                                                                                
2:31:39 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN  announced that the  next order of  business would                                                               
be  HOUSE  BILL   NO.  322,  "An  Act   establishing  the  Alaska                                                               
transportation fund and  relating to the fund;  and providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
REPRESENTATIVE FAIRCLOUGH  said that she supports  the governor's                                                               
$1 billion transportation  plan as there are $1  billion worth of                                                               
transportation needs in Alaska,  which include projects, deferred                                                               
maintenance, and  future needs  to address a  gas pipeline.   She                                                               
offered her  belief that  an endowment  approach with  an annuity                                                               
payout was worthy of discussion.   She referred to a spread sheet                                                               
titled "The  Transportation Fund with  a 10 year  Annuity Payout"                                                               
[included in members' packets] that  shows an annuity payout that                                                               
would  put  $1.2  billion  into  projects over  10  years.    She                                                               
remarked  that  the   flip  side  to  this   spread  sheet,  "The                                                               
Transportation Fund  with an endowment approach"  reflects that a                                                               
5 percent  annual payout  will erode the  buying power  and allow                                                               
less  opportunity   to  make  a   substantial  inroad   into  the                                                               
shortcomings of  deferred maintenance and projects.   She offered                                                               
her belief  that $50 million is  too small an amount  of money to                                                               
spend for  maintenance that has been  deferred for so long.   She                                                               
expressed  her belief  that  the annuity  approach  allows for  a                                                               
larger annual appropriation.                                                                                                    
                                                                                                                                
2:36:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FAIRCLOUGH  explained  that   the  model  can  be                                                               
adjusted  for stock  market fluctuations,  commodity prices,  and                                                               
inflation.   This allows  the state the  ability to  more quickly                                                               
respond to any needs.                                                                                                           
                                                                                                                                
REPRESENTATIVE NEUMAN  remarked that this is  a totally different                                                               
funding plan than  the administration's plan.  He asked  if it is                                                               
possible  to do  a  side-by-side comparison  of  the two  funding                                                               
plans.    He declared  that  he  wants  to  see a  Department  of                                                               
Transportation &  Public Facilities (DOT&PF) project  plan before                                                               
he will consider a fund.                                                                                                        
                                                                                                                                
2:39:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   FAIRCLOUGH   offered   to  do   a   side-by-side                                                               
comparison, and  she explained more  about the analysis  that her                                                               
plan provides.   She explained  that after ten years  the annuity                                                               
plan  will have  spent its  entirety, putting  $1.2 billion  into                                                               
transportation  projects; whereas,  the administration  plan will                                                               
still  have $945  million  in the  fund, but  it  will only  have                                                               
generated $507  million spent  for projects.   She  expressed her                                                               
desire  to  contain  the  discussion  to  an  annuity  versus  an                                                               
endowment approach,  which she likened  to the percent  of market                                                               
value  (POMV) and  the permanent  fund.   She explained  that the                                                               
POMV system  will secure a fund  and allow it to  endure, whereas                                                               
an annuity  will zero out  but will  put more money  more quickly                                                               
into transportation  projects.  She  offered her belief  that the                                                               
primary  concern  is  fiscal  planning  and  sustainability,  not                                                               
prioritization of projects.                                                                                                     
                                                                                                                                
CHAIR  JOHANSEN asked  that  DOT&PF be  prepared  to compare  and                                                               
contrast the  two proposals during the  next House Transportation                                                               
Standing Committee meeting on Tuesday, April 1, 2008.                                                                           
                                                                                                                                
REPRESENTATIVE  DOOGAN requested  DOT&PF prepare  a statement  of                                                               
the annual  appropriations for  transportation projects  from the                                                               
general fund for the last few  years to allow a comparison of the                                                               
appropriation funding style to the two other approaches.                                                                        
                                                                                                                                
2:43:33 PM                                                                                                                    
                                                                                                                                
FRANK  RICHARDS,   Deputy  Commissioner  of  Highways   &  Public                                                               
Facilities,   Office   of   the   Commissioner,   Department   of                                                               
Transportation   &   Public   Facilities   (DOT&PF),   asked   if                                                               
Representative  Doogan  would like  a  list  of all  the  capital                                                               
appropriations from all the fund sources.                                                                                       
                                                                                                                                
REPRESENTATIVE DOOGAN explained that he  wanted to know the state                                                               
funds appropriated from  the capital budget for each  of the last                                                               
five  years  to allow  a  comparison  with these  other  proposed                                                               
funding programs.                                                                                                               
                                                                                                                                
2:44:32 PM                                                                                                                    
                                                                                                                                
MR. RICHARDS  offered his  belief that a  comparison of  the fund                                                               
appropriations is in Mr. Ottesen's presentation.                                                                                
                                                                                                                                
REPRESENTATIVE DOOGAN asked if it is possible to receive a copy.                                                                
                                                                                                                                
MR. RICHARDS offered a copy to Representative Doogan.                                                                           
                                                                                                                                
[HB 322 was held over.]