Legislature(2001 - 2002)

04/02/2002 04:14 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 second  hearing for  this bill in  the Senate  Finance                                                            
MARY JACKSON,  Staff to Senator John Torgerson, the  bill's sponsor,                                                            
informed the Committee  that this bill would establish a new program                                                            
that would direct approximately  $20 million in non-National Highway                                                            
System   (NHS)    federal   transportation    funds   annually    to                                                            
municipalities  rather than  to State agencies.  She continued  that                                                            
the proposal  specifies an  annual limit of  $3 million be  allotted                                                            
per municipality;  that the recipient municipality  must possess the                                                            
power and authority  to use the funds  to construct roads;  and that                                                            
the municipality  must  provide matching  funds as  detailed in  the                                                            
bill's fiscal  note. She explained that the focus  of the bill is to                                                            
provide   municipalities   with  the   ability   to  expedite   road                                                            
construction projects within  their boundaries, and furthermore, she                                                            
stressed,  the  State  would  save  approximately  $1.5  million  in                                                            
general  funds because  the  municipality,  rather  than the  State,                                                            
would provide the required matching funds.                                                                                      
TIM  ROGERS,  Legislative   Program  Coordinator,  Municipality   of                                                            
Anchorage,  testified  via teleconference  from  Anchorage to  voice                                                            
support  for  this  legislation  as  it would  enable  the  City  to                                                            
undertake  ownership of  seven identified  road  projects. He  noted                                                            
that  only  one of  these  projects  is under  the  current  program                                                            
threshold of  $350,000 and that the  average project ranges  between                                                            
$4 million and  $5 million with a total cost for all  seven projects                                                            
being $30 million. He urged  the Committee to consider elevating the                                                            
threshold   level  to  allow   Anchorage   the  ability  to   assume                                                            
responsibility for these road projects.                                                                                         
JEFF  OTTESEN,  Statewide  Planning  Chief,  Division  of  Statewide                                                            
Planning,  Department   of  Transportation  and  Public   Facilities                                                            
asserted that current practice  allows funding to be appropriated to                                                            
local governments  through the Statewide Transportation  Improvement                                                            
Program (STIP)  that annually provides approximately  $75 million to                                                            
local road projects.                                                                                                            
Mr.  Ottesen continued  that  while  the alternate  funding  process                                                            
proposed in this bill would  allow local governments to execute road                                                            
projects and  administer funds on  a local level, he contended  that                                                            
the  technicalities  of  the  federal  aid  process   are  extremely                                                            
complex. He declared that  Department "staff have spent their entire                                                            
careers  learning  how to  work  within those  rules,  they  undergo                                                            
constant training and re-training  to stay abreast of the changes in                                                            
those rules.  It is not a trivial  body of knowledge they  that have                                                            
to work within and to assume  that local officials, already immersed                                                            
in  their   day-to-day  routines   and  responsibilities   of  local                                                            
government,  can automatically  just step in  and learn all  this is                                                            
our worry."  He showed the  Committee a large  manual that  contains                                                            
overviews of the federal  program, and he stated that a multitude of                                                            
similar manuals would be required reading.                                                                                      
Mr.  Ottesen stressed  that  this  federal  aid is  a reimbursement                                                             
program  rather than  a grant program  as incorrectly  perceived  by                                                            
many people.  He expressed  that  communities would  be required  to                                                            
"float the  cash" for a  project in adherence  to federal rules  and                                                            
regulations,  and then request reimbursement  for the expenditures.                                                             
He  asserted  that,  if the  project  were  determined  to  be  non-                                                            
compliant  with the  federal  regulations,  the money  would not  be                                                            
forthcoming.  He reiterated  the  difficulties  associated with  the                                                            
Mr. Ottesen  informed the Committee  that, in addition to  receiving                                                            
regular  STIP  funding,   some  communities,  including   Anchorage,                                                            
receive  additional  STIP  funding  that  is  available  to  support                                                            
administrative expenses.                                                                                                        
Mr. Ottesen stressed that,  were this legislation enacted, the local                                                            
community projects  would continually require State  involvement. He                                                            
stressed that  in a situation where a local project  fails to comply                                                            
with federal  rules  and "gets  into financial  trouble," the  State                                                            
would  be  required  "to  bail  them  out"   because  the  State  is                                                            
"obligated  under   the  relationship  with  the  Federal   Highways                                                            
Administration (FHA) to take that responsibility."                                                                              
Mr. Ottesen  furthered  that because  the Department  is  ultimately                                                            
responsible  for this  funding, the  "management  of these  projects                                                            
would require  a high level of oversight by DOT staff."  He detailed                                                            
the multitude  of procedures and documentation  mandated  by the FHA                                                            
that  the communities  would  be required  to  perform  in order  to                                                            
receive the  federal aid. He stated,  "that the technical  realities                                                            
of the legislation are sobering."                                                                                               
Mr.  Ottesen pointed  out  that,  although  it is  separate  federal                                                            
legislation,  the  Transportation  Equity Act  for  the 21   Century                                                            
(TEA-21), identified  many transportation  projects for communities                                                             
in the  State;  however because  of the  complexity  of the  federal                                                            
guidelines,  the risks that would  be assumed, and the multitude  of                                                            
procedural  requirements,   only  one  has  been  pursued  by  local                                                            
governments.  He commented  that the  federal  requirements of  this                                                            
legislation would be similar.                                                                                                   
Co-Chair Kelly  asked the Municipality  of Anchorage representative                                                             
to respond to  the Department's position that the  technicalities of                                                            
this endeavor are too much for a local government to undertake.                                                                 
Mr. Rogers informed the  Committee that the program proposed by this                                                            
legislation  is optional  rather than mandatory,  and he  reiterated                                                            
that this legislation would  provide communities with the ability to                                                            
further  their  priority  road  projects.   He  countered  that  the                                                            
Municipality of Anchorage  does not perceive the federal regulations                                                            
and requirements to be  an issue, and he attested that Anchorage and                                                            
other  municipalities  in  the State  are  capable of  handling  the                                                            
projects independently from the State.                                                                                          
Amendment #2:  This amendment raises  the maximum amount  of federal                                                            
highway funds  awarded to a single  municipality from $3  million to                                                            
$7 million per year.                                                                                                            
Co-Chair Donley moved for adoption of Amendment #2.                                                                             
Senator  Austerman  objected. He  voiced  concern that  raising  the                                                            
award  level  might  be beneficial  to  large  communities  such  as                                                            
Anchorage  that have big  projects; however,  because the funds  are                                                            
limited,  raising   the  level  would  reduce  the  funding   amount                                                            
available for other communities' projects.                                                                                      
Senator Green  voiced that, to address Senator Austerman's  concern,                                                            
the  Committee  should  consider  increasing  the  total  amount  of                                                            
available funding.                                                                                                              
Ms.  Jackson verified  that  federal  funds  could be  available  to                                                            
provide for an elevated level.                                                                                                  
Senator Green  asserted that increasing the total  amount of funding                                                            
awarded would  be beneficial  because there  are multiple levels  of                                                            
funding needs in the State.                                                                                                     
Senator  Green moved  to amendment  the  amendment  to increase  the                                                            
total  amount awarded  in  a fiscal  year from  $20  million to  $40                                                            
million, and increases  the maximum amount of federal  highway funds                                                            
awarded to a single municipality to $6 million per year.                                                                        
Co-Chair Kelly objected then removed his objection.                                                                             
Senator  Hoffman asked the  sponsor's representative  to comment  on                                                            
what  he  (Senator  Hoffman)   characterized  as  "double-dipping;"                                                             
whereby  some  municipalities,  such  as Anchorage  with  its  AMATS                                                            
Anchorage Metropolitan  Area Transportation  Study (AMATS)  program,                                                            
receive transportation funding from multiple sources.                                                                           
Ms.  Jackson  responded  that she  "heard  that  and noted  it,  and                                                            
frankly I was  a little surprised to hear it because  the Department                                                            
would  have the  authority  to  establish  the regulations  for  the                                                            
program" to ensure against such double-dipping.                                                                                 
Senator  Hoffman asked  whether  this "would  be the  intent of  the                                                            
Ms. Jackson replied, "Certainly."                                                                                               
A roll call was taken on the motion to amend the amendment.                                                                     
IN FAVOR: Senator Ward, Senator Green                                                                                           
OPPOSED:  Senator   Wilken,  Senator  Austerman,  Senator   Hoffman,                                                            
Senator Leman, Senator Olson, Co-Chair Donley, Co-Chair Kelly                                                                   
The motion FAILED (7-2)                                                                                                         
The amendment FAILED to be amended.                                                                                             
Co-Chair Kelly announced  that Amendment #2 is before the Committee.                                                            
Co-Chair Donley avowed  that the AMATS program that was incorporated                                                            
under the Municipal Planning  Organizations (MPOs) program initiated                                                            
by TEA-21  "has been  a curse"  to Anchorage  and other nation-wide                                                             
metropolitan  areas  nationwide  that  have  populations   exceeding                                                            
200,000, because  completion of the  various components required  by                                                            
the study, particularly  the major investment study,  is tedious. He                                                            
stated  that  because  of  AMATS,  the  federal   STIP  program  has                                                            
"intentionally  discriminated" against Anchorage for  many years and                                                            
has resulted  in less  funding being  provided to  the City  because                                                            
roads could not be constructed without a completed study.                                                                       
Co-Chair  Donley  stated  that  because  most  of  the  projects  in                                                            
Anchorage exceed  $7 million, this  amendment would allow  Anchorage                                                            
to participate  in receiving  some of the  funding proposed  in this                                                            
legislation.  He  contended  that with  42  percent of  the  State's                                                            
population,  Anchorage  would be  entitled  to $8.4  million if  the                                                            
distribution  of funds  were determined  on a per  capita basis.  He                                                            
asserted  that  the Municipality   of Anchorage  expends  "more  per                                                            
capita for road maintenance  than any other community in the State."                                                            
He argued that  to limit the allotment  per community to  $3 million                                                            
would be "really  unfair to the people of the Anchorage  community,"                                                            
as it makes it difficult for the community to access the money.                                                                 
Senator Wilken  reminded the Committee that in previous  hearings, a                                                            
$10 million  maximum per community  was discussed, and he  asked the                                                            
witness how the sponsor views that level of funding.                                                                            
Ms. Jackson  advised  that Senator  Torgerson would  not support  an                                                            
amendment that  would substantially increase the funding  level. She                                                            
contended  that  numerous  communities   in  the  State  might  have                                                            
projects in  the $7 million range;  however, she stressed,  the goal                                                            
is to distribute  the money around the State. She  stated that, "the                                                            
practical application  would be to break a project  into components"                                                            
to fit within the specified levels of the bill.                                                                                 
A roll call was taken on the motion.                                                                                            
IN FAVOR:  Senator Leman,  Senator Ward,  Co-Chair Donley,  Co-Chair                                                            
OPPOSED: Senator  Wilken, Senator Austerman, Senator  Green, Senator                                                            
Hoffman, Senator Olson                                                                                                          
The motion FAILED (4-5)                                                                                                         
Amendment #2 FAILED to be adopted.                                                                                              
Amendment #3:  This amendment changes  the bill's effective  date to                                                            
July 1, 2002.                                                                                                                   
Senator Leman moved for adoption of Amendment #3.                                                                               
Without objection, Amendment #3 was ADOPTED.                                                                                    
Senator  Ward made  a motion  to report  "committee  substitute  for                                                            
Senate   Bill  Number   59   out  of   committee   with   individual                                                            
recommendations, as amended, and accompanying notes."                                                                           
Co-Chair Donley  objected. He stated  that this bill "perpetuates  a                                                            
decade  of unfair,  unreasonable  discrimination  against  the  road                                                            
needs of  the Anchorage  Bowl, and  that the rest  of the State  has                                                            
benefited by  the shortchanging of  the Anchorage community  through                                                            
the STIP and  the unreasonable redistribution  of that money  to the                                                            
rest of the  State, with promise after  promise that eventually  the                                                            
money would  be coming to  our community to  deal with the  problems                                                            
that we have with  just basic traffic." He continued  that the State                                                            
receives  most of its revenue  from motor  fuel taxes and  licensing                                                            
fees from  Anchorage's  residents, who  comprise  42 percent of  the                                                            
State's population,  and he contended  that Anchorage residents  are                                                            
entitled  to some  funding. He  stated  that the  criteria for  this                                                            
distribution  is biased against any  urban area and has resulted  in                                                            
"severe discrimination" against the Anchorage community.                                                                        
Senator Hoffman  also objected.  He stated  that although this  bill                                                            
might be well-intentioned,  the problems that communities would have                                                            
in  adhering   to  the  federal  regulations   and  guidelines,   as                                                            
identified   by  the  Department   of  Transportation   and   Public                                                            
Facilities,  would prevent  the majority of  small rural areas  from                                                            
accessing  this  funding because  they  do  not have  the  necessary                                                            
expertise or capability to participate in this program.                                                                         
A roll call was taken on the motion.                                                                                            
IN FAVOR: Senator  Green, Senator Austerman, Senator  Olson, Senator                                                            
Wilken, Senator Ward, Senator Leman, Co-Chair Kelly                                                                             
OPPOSED: Co-Chair Donley, Senator Hoffman                                                                                       
The motion PASSED (7-2)                                                                                                         
CS SB 59(FIN)  was REPORTED from Committee with a  new Department of                                                            
Transportation  and Public Facilities zero fiscal  note, dated April                                                            
23, 2002.                                                                                                                       
At EASE 6:02 PM / 6:05 PM                                                                                                       

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