Legislature(2003 - 2004)

04/30/2004 09:12 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     CS FOR SENATE BILL NO. 371(TRA)                                                                                            
     "An Act relating to  the powers and duties of the Department of                                                            
     Transportation and  Public Facilities; relating to a long-range                                                            
     program   for  highway   construction   and  maintenance;   and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  this  bill sponsored  by  the Senate  State                                                            
Affairs  Committee,  "relates  to  the  powers  and  duties  of  the                                                            
Department of  Transportation and Public Facilities.  It affirms the                                                            
validity  of the current  Department's planning  process."  He noted                                                            
the provisions of the legislation would be retroactive to 1977.                                                                 
                                                                                                                                
AT EASE                                                                                                                         
                                                                                                                                
JEFF OTTESON, Director,  Division of Program Development, Department                                                            
of Transportation and Public  Facilities, testified this legislation                                                            
is "vitally important  to both the Department and  to the State." It                                                            
has been  discovered  through a  lawsuit, that  the Department  must                                                            
undertake  a consideration  of  costs and  benefits at  the time  of                                                            
project  selection   for  the  capital   budget  in  the   Statewide                                                            
Transportation  Improvement Program  (STIP). This has not  been done                                                            
for  a  significant  number  of  projects   and  all  such  projects                                                            
currently underway are at risk.                                                                                                 
                                                                                                                                
Mr. Otteson furthered that  undertaking cost and benefit analyses at                                                            
the time  a project  is  under consideration  for  inclusion in  the                                                            
capital  budget  would  not always  be  useful.  This would  not  be                                                            
meaningful  information to  decision makers  for several classes  of                                                            
projects,  or would incur  such costs as to  be overwhelming  to the                                                            
project.                                                                                                                        
                                                                                                                                
Mr. Otteson outlined Section  1 reflects language recommended by the                                                            
Department  of Law  as  necessary  to instruct  the  court that  the                                                            
current  project  involved   in litigation   should  be  allowed  to                                                            
proceed. Section  4 has been the most widely discussed  substance of                                                            
the bill and pertains to  the consideration of cost and benefits for                                                            
new transportation projects  and facilities. The language in statute                                                            
was  codified  from  administrative  code  in  1977  and  has  never                                                            
undergone  the legislative  process.  Section 6  stipulates the  new                                                            
provisions  would  be retroactive  to  1977.  This would  allow  any                                                            
project  underway to  be covered  by the  amended  statute, some  of                                                            
which actually are 30 years  old, including the Cooper River Project                                                            
on the Sterling Highway.                                                                                                        
                                                                                                                                
Mr.  Otteson stressed  the  importance of  this legislation  to  the                                                            
Illiamna/Nondalton  project, which has been underway  since 1975 and                                                            
is  nearly  complete.  The  key  portion   of  the  project  is  the                                                            
construction   of  a  bridge   across  the   Newhalen  River.   This                                                            
legislation  is important  to address other  projects that  could be                                                            
similarly  litigated.  Environmental  organizations  have  indicated                                                            
using the existing  statute to halt  other projects. He warned  that                                                            
this would be easily accomplished  for these groups were the statute                                                            
not changed.                                                                                                                    
                                                                                                                                
Mr. Otteson  compared the stoppage  of the project at the  Pogo Mine                                                            
to the potential  existing for projects  with the existing  statute.                                                            
The Pogo Mine  project obtained all permits and was  underway, until                                                            
the project  was halted due to complications  in federal  law. State                                                            
statute  could   not  address  the   Pogo  Mine  issues,   but  this                                                            
legislation could prevent such occurrences for State projects.                                                                  
                                                                                                                                
SENATOR GARY STEVENS informed  that Governor Walter Hickel signed an                                                            
executive  order  in 1977  establishing  the  Alaska Transportation                                                             
Council and stipulated  that no project could be undertaken  without                                                            
review  and approval  by the Council.  However,  the Governor  never                                                            
appointed  members to  this Council  and adherence  to the  approval                                                            
requirement was  overlooked. The existing statute  should be amended                                                            
to avoid  future lawsuits  and to  prevent further  delays with  the                                                            
Illiamna/Nondalton project.                                                                                                     
                                                                                                                                
JEFF PARKER, Attorney,  testified via teleconference  from Anchorage                                                            
and  indicated  he  is  the  attorney   to  the  plaintiffs  of  the                                                            
Illiamna/Nondalton  litigation, Bob Gilliam [spelling  not verified]                                                            
and Trout  Unlimited.  Mr. Parker  recommended the  bill be held  in                                                            
Committee. The requirement  of cost benefit analyses relate directly                                                            
to fiscal issues. If the  ability to undertake cost benefit analyses                                                            
for  new transportation  modes  and  facilities is  undermined,  the                                                            
legislature  would  "put fiscal  resources  of this  State at  risk"                                                            
because projects  would be constructed  that are not cost  effective                                                            
and would therefore not  be maintained. The cost benefit requirement                                                            
does   not   apply  to   improvements   or   repairs   to   existing                                                            
transportation projects  and facilities. Cost benefit analyses allow                                                            
the  legislature  to  make  reasonable   decisions  about  the  most                                                            
effective  use  of   fiscal  resources.  Absent  this  requirement,                                                             
projects  become   "political  horse   trading"  because   no  other                                                            
objective criterion  is imposed in statute to facilitate  decisions.                                                            
Existing  statute  does  not prohibit  the  undertaking  of  certain                                                            
projects that do not have a favorable cost benefit ratio.                                                                       
                                                                                                                                
Mr. Parker informed that  the litigation over the Illiamna/Nondalton                                                            
project arose  because it  was one of two  projects included  in the                                                            
Southwest  Regional  Transportation  Plan  in which  the  Department                                                            
decided  "on the record"  to not  conduct a  cost benefit  analysis.                                                            
Although Mr. Otteson  warns that all transportation  projects are at                                                            
risk without the adoption  of this legislation, Mr. Parker countered                                                            
that cost  benefit analyses  were conducted  for all other  projects                                                            
and are therefore not subject  to the provisions of current statute.                                                            
                                                                                                                                
Co-Chair   Wilken   asked    Mr.   Otteson   the   threat   to   the                                                            
Illinois/Barnett   Street  Connector   bridge  project  located   in                                                            
Fairbanks if this legislation were not adopted.                                                                                 
                                                                                                                                
Mr. Otteson  surmised it would be,  along with many of the  projects                                                            
included  in  the  bond package  approved   by voters  in  the  last                                                            
statewide general election.  He listed the North Pole interchange, C                                                            
Street  extension,  Donlin Creek  Mine  project, as  examples.  Cost                                                            
benefit  analyses could  be conducted  for each  of these  projects,                                                            
although only  at significant expense.  A cost benefit analysis  was                                                            
recently completed  for a Naknek River  bridge project at  a cost of                                                            
$185,000  and six months  of time. An analysis  is underway  for the                                                            
Illiamna/Nondalton project  with a projected cost of $55,000 for the                                                            
consultants  alone. In both  instances, the  analysis confirmed  the                                                            
Department's assessment that the projects are legitimate.                                                                       
                                                                                                                                
Mr.  Parker  countered  that this  legislation  "creates  a  greater                                                            
likelihood  of projects getting  into the ten  year time track".  He                                                            
defined  the "ten-year  time track"  as a provision  of federal  law                                                            
that stipulates that if  federal funds are expended on a project for                                                            
planning,  design or  other  activities, and  the  project does  not                                                            
reach  construction  within  ten years,  the  State  is potentially                                                             
liable to refund the federal  funds. The STIP includes approximately                                                            
60 projects within  the ten-year time track and involve  hundreds of                                                            
millions of dollars of federal funding.                                                                                         
                                                                                                                                
Mr. Parker  contended  that the  more options  to facilitate  making                                                            
better-informed  decisions  that  are eliminated,  the  greater  the                                                            
likelihood  that "mere politics"  would move  a project forward.  As                                                            
"more  reasoned"   decision-making   is  implemented  later,   these                                                            
projects are  "put on the back burner".  This is the situation  that                                                            
occurred  with  the  Illiamna/Nondalton   project.  He  stated  that                                                            
project is  not near completion, as  attested to by Mr. Otteson  and                                                            
he  spoke of  the high  cost  and political  motivation  behind  the                                                            
project.                                                                                                                        
                                                                                                                                
Co-Chair Green  offered a motion to  report the bill from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
There was  no objection  and CS  SB 371 (TRA)  MOVED from  Committee                                                            
with zero fiscal  note #1 from the Department of Transportation  and                                                            
Public Facilities.                                                                                                              
                                                                                                                                

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