Legislature(2001 - 2002)

03/27/2001 06:05 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     CS FOR SENATE BILL NO. 59(CRA)                                                                                             
     "An Act relating to awards of federal funds to municipalities                                                              
     for road projects; and providing for an effective date."                                                                   
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
SENATOR JOHN  TORGERSON noted that  the subject of this legislation                                                             
has  been considered  for  several  years.  He explained  this  bill                                                            
directs the  Department of Transportation  and Public Facilities  to                                                            
make $20 million  in federal funds available to municipalities  that                                                            
have "road powers"  to address municipal road needs.  He pointed out                                                            
that the Senate Community  and Regional Affairs committee substitute                                                            
places  a $3  million limit  as  the maximum  amount  that could  be                                                            
allocated  to any single  municipality in a  fiscal year. He  stated                                                            
that this  is intended  to prevent  allocation of  all the funds  to                                                            
only one community.  He noted that the municipalities  would provide                                                            
matching  funds, thus explaining  the negative  $1.5 million  fiscal                                                            
note  reflecting  the  amount  of state  funds  required  under  the                                                            
existing procedure.  He added that this legislation  also stipulates                                                            
a  priority  for  any  state-owned  roads  being  considered  for  a                                                            
transfer to local ownership.                                                                                                    
Senator Hoffman relayed  that he was informed of the existing option                                                            
for municipalities  to receive this funding through  a Memorandum of                                                            
Agreement (MOA) through  the Department of Transportation and Public                                                            
Facilities.  He asked why this legislation  is therefore  necessary.                                                            
Senator Torgerson  replied that it  is true that some projects  were                                                            
undertaken under the MOA  program, but that they are done on a case-                                                            
by-case basis,  and not  an annual appropriation.  He stressed  that                                                            
the intent of this legislation  is to make funds available each year                                                            
to allow municipalities to plan projects.                                                                                       
Senator   Hoffman   also   understood   that   the   Department   of                                                            
Transportation and Public  Facilities presently spends approximately                                                            
$40 million on locally owned roads.                                                                                             
Senator Torgerson  responded, "I would  be real surprised  at that."                                                            
[Note: teleconference sound quality is poor.]                                                                                   
TOM BRIGHMAN,  Director, Division of Statewide Planning,  Department                                                            
of  Transportation  and Public  Facilities,  testified  off net  via                                                            
teleconference  from  Anchorage  that the  differences  between  the                                                            
department  and the  legislature are  not philosophical  but  rather                                                            
practical.   He shared that the department  funds local projects  in                                                            
two different ways. He  stated that the department has made a number                                                            
of agreements  with municipal  governments  over time, to allow  the                                                            
local governments to manage  their own projects using federal funds.                                                            
He  pointed  out that  the  department  also  manages  and  executes                                                            
federal  funded projects  that improve  local roads  in addition  to                                                            
state-owned roads. He affirmed  Senator Hoffman's statement that the                                                            
department  expends $40  million to  $50 million  annually on  these                                                            
kinds of projects.                                                                                                              
Mr.  Brigham asserted  that  the federal  funds utilized  for  these                                                            
projects are not grants.  He pointed out that although the state may                                                            
allocate  funds  to municipalities,  the  federal  government  still                                                            
holds the  department responsible  for the  project, and  therefore,                                                            
the department is still involved.                                                                                               
Mr. Brigham  next stressed that the  department does not  "get money                                                            
from the federal  government that we then put in the  bank and spend                                                            
on  other projects."  He  clarified  that the  state,  or the  local                                                            
government  must first provide the  required matching funds,  less a                                                            
machinery  reimbursement,   for  a specific   project  according  to                                                            
federal regulations.                                                                                                            
Mr. Brigham  noted there are a number  of aspects to projects,  such                                                            
as environmental and right-of-way  issues that are "fairly complex,"                                                            
which  local  governments  and many  consulting  engineers  are  not                                                            
equipped  to address.  He stated that  oversight  or errors made  in                                                            
these matters  have the effect of adding to the overhead  costs of a                                                            
Senator  Hoffman  asked  the witness  if  local  municipalities  are                                                            
required  to provide the  matching funds up  front before a  project                                                            
could begin, why the department opposes this legislation.                                                                       
Mr. Brigham  responded that if the  process worked perfectly,  there                                                            
would  be no objection.  However,  he stressed  that  there are  few                                                            
local governments  equipped to address all the federal  requirements                                                            
and  the department  is  still  forced  to be  involved  in  project                                                            
management. He reiterated the increased overhead expenses.                                                                      
Senator Leman  requested an explanation of language  on page 1, line                                                            
9 of  the committee  substitute, "The  maximum amount  awarded  to a                                                            
single  municipality  may  not exceed  $3,000,000."  and  asked  the                                                            
reason for this provision.                                                                                                      
Senator   Torgerson  relayed   that   the  concern   was  that   one                                                            
municipality  could have  a project  with a high  cost, which  could                                                            
prevent other municipalities from participation in the program.                                                                 
Senator Leman  asked why the maximum level is set  so low and wanted                                                            
to know if the amount could be higher for larger municipalities.                                                                
Senator  Torgerson answered  that the  intent is  for more than  one                                                            
municipality to  be able to partake in using the funds.  He surmised                                                            
that a larger municipality  with a larger project could phase in the                                                            
Amendment  #1:  This  conceptual  amendment  increases  the  maximum                                                            
amount  awarded to  a single  municipality  from $3  million to  $10                                                            
Co-Chair Donley  moved for adoption  and stressed that he  could not                                                            
support this legislation  with such a low cap. He remarked he wanted                                                            
the  allocations   to  reflect  per  capita  and  "volume   of  use"                                                            
considerations "more accurately."                                                                                               
Senator Torgerson countered  that one project should not receive all                                                            
the funds.  He suggested  that the large  project in question  might                                                            
not be  in Anchorage  but perhaps  the Ketchikan  bridge project  at                                                            
$120 million.  He stated  that the  intention is  to distribute  the                                                            
funds across the state.                                                                                                         
Senator Green  objected to the amendment saying she  agreed with the                                                            
sponsor. She then  asked if the legislation places  any restrictions                                                            
on the type of road projects,  such as new roads, maintenance or re-                                                            
construction on an existing road.                                                                                               
Senator Torgerson  responded that maintenance would  not qualify. He                                                            
stated that  any project that qualifies  for federal funding,  which                                                            
he described  as  projects that  increase  the life  of an  existing                                                            
road, would be allowable under this program.                                                                                    
Senator  Green pointed  out  that  some roads  are heavily  used  by                                                            
drivers  who do not  reside in the  municipality  where the  road is                                                            
located. She also spoke  to the major effort for smaller communities                                                            
to undertake some projects.                                                                                                     
A roll call was taken on the motion.                                                                                            
IN FAVOR: Senator Leman and Co-Chair Donley                                                                                     
OPPOSED: Senator  Wilken, Senator Austerman, Senator  Green, Senator                                                            
Hoffman, Senator Olson and Co-Chair Kelly                                                                                       
ABSENT: Senator Ward                                                                                                            
The motion FAILED (2-6-1)                                                                                                       
The amendment FAILED to be adopted.                                                                                             
Senator  Green offered  a motion to  move from  Committee, CS  SB 59                                                            
(CRA), with  accompanying  Department of  Transportation and  Public                                                            
Facilities zero fiscal note.                                                                                                    
Co-Chair Donley  objected stating that he wanted additional  time to                                                            
work  with  the  sponsor   on  addressing  his  concerns   with  the                                                            
Senator Green  WITHDREW her motion to move the bill  from Committee.                                                            
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              

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