Legislature(2001 - 2002)
03/27/2001 06:05 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 Committee. 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 project. 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 project. Amendment #1: This conceptual amendment increases the maximum amount awarded to a single municipality from $3 million to $10 million. 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 legislation. Senator Green WITHDREW her motion to move the bill from Committee. Co-Chair Kelly ordered the bill HELD in Committee.