Legislature(2003 - 2004)

05/05/2003 09:02 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     SENATE BILL NO. 100                                                                                                        
     "An  Act making capital  appropriations  and reappropriations;                                                             
     capitalizing a fund;  making appropriations under art. IX, sec.                                                            
     17(c),   Constitution  of  the   State  of  Alaska,   from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This was  the twelfth hearing  for this bill  in the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Amendment #8:  This amendment is outlined in a memorandum  from Mike                                                            
Barton,  Commissioner,  Department   of Transportation   and  Public                                                            
Facilities  to Cheryl  Frasca, Director,  Office  of Management  and                                                            
Budget dated May 2, 2003, which reads as follows.                                                                               
                                                                                                                                
     The Department of Transportation and Public Facilities is                                                                  
     requesting amendments to the capital budget bills (HB 150 and                                                              
     SB 100) before the Legislature.                                                                                            
                                                                                                                                
     Rural Airport Projects                                                                                                     
     The  Department is requesting  the following  changes  to rural                                                            
     airport capital projects:                                                                                                  
                                                                                                                                
     Amend                                                                                                                      
     Chevak: Snow Removal Equipment Building                                                                                    
          Increase from $50,000 to $200,000 federal receipt                                                                     
     authority. The cost  to build this structure has increased over                                                            
     previous estimates.  This amount is needed in addition to an FY                                                            
     03  appropriation   to  bring  the  total  estimated   cost  to                                                            
     $750,000.                                                                                                                  
                                                                                                                                
     Add                                                                                                                        
     Scammon Bay: Airport Snow Removal Equipment Building                                                                       
          $100,000 federal receipts. Reflects revised Airport                                                                   
     Improvement  Program  request. This  project  will upgrade  the                                                            
     Scammon Bay Snow Removal Equipment Building.                                                                               
                                                                                                                                
     Statewide: Various Airport Snow Removal Equipment                                                                          
          $4,300,000 federal receipts. This was inadvertently                                                                   
     omitted  from the Department's  original  request. The  project                                                            
     provides federal authority  to purchase new or replacement snow                                                            
     removal equipment at several rural airports.                                                                               
                                                                                                                                
     Surface Transportation Projects                                                                                            
     The  Department's current  AMATS [Anchorage  Metropolitan  Area                                                            
     Transportation  Study] and Surface Transportation  requests are                                                            
     $68,734,000 and $416,092,600.                                                                                              
                                                                                                                                
     The  following  reductions   are  being  requested  to  various                                                            
     highway projects:                                                                                                          
                                                                                                                                
          ($39,906,000) - Over the past year there has been a                                                                   
     decrease in the amount  of federal fuel tax revenues collected,                                                            
     which  have caused  a corresponding  reduction  in the  highway                                                            
     construction  program.  A  reduction  in specific  projects  is                                                            
     being requested to  reflect delays due to the decreased federal                                                            
     funding.                                                                                                                   
          ($48,125,000) - This amendment requests project                                                                       
     reductions  where the Department  has determined that  adequate                                                            
     project  authority already exists  to continue work  through FY                                                            
     04.                                                                                                                        
          ($1,205,000) - Also being requested is a reduction in                                                                 
     TRAAK  [Trails and Recreation  Access  for Alaska] projects  to                                                            
     reflect a program allocation decrease.                                                                                     
                                                                                                                                
     The following additions are being requested:                                                                               
          $55,416,000 - New or increased federal project authority                                                              
     is  being requested  where  scope changes,  funding  breakdown,                                                            
     updated estimates or priorities have changed.                                                                              
          $21,700,000 - Project authority is needed for earmarks                                                                
     contained   within   the   recently   approved   congressional                                                             
     appropriation bill.                                                                                                        
                                                                                                                                
     Finally,  the amendment contains the elimination  of individual                                                            
     pavement and bridge  projects and combines them into regionwide                                                            
     allocations.  This  will  provide the  regions  flexibility  in                                                            
     determining  their  greater need,  pavement  or bridge  repair.                                                            
     Similar  adjustments  are  taking  place  for AMATS  and  FMATS                                                            
     [Fairbanks  Metropolitan Area  Transportation Study]  projects.                                                            
                                                                                                                                
     The  net  effect   of  these  amendments  is   a  reduction  of                                                            
     $12,220,000   to   the   AMATS   and  Surface   Transportation                                                             
     appropriation  requests.  A  spreadsheet  with the  changes  is                                                            
     attached [copy on file].                                                                                                   
                                                                                                                                
This amendment  was initially discussed  at the May 2, 2003  hearing                                                            
on this bill.                                                                                                                   
                                                                                                                                
Co-Chair Wilken  informed that the projects identified  in Amendment                                                            
#8 are  included in  the updated  Department  of Transportation  and                                                            
Public Facilities spreadsheet [copy on file], dated May 2, 2003.                                                                
                                                                                                                                
Senator  B. Stevens  stated  that lines  78  through 80  of the  new                                                            
spreadsheet   specify   that   the   total   pavement   and   bridge                                                            
refurbishment  expense  would  be $46  million.  He noted  that  the                                                            
components  comprising  this amount  are: lines  ten through  twelve                                                            
that total  $14 million;  lines 36 and 37  that total approximately                                                             
$10.5  million;  and  lines  48 and  49  that  total  $6.1  million.                                                            
However, he pointed out  that the $6.1 million total of lines 48 and                                                            
49 is included in each  of the two aforementioned totals. Therefore,                                                            
he  argued that  the total  of  these three  items  should be  $30.6                                                            
million rather  than the $46 million  reflected on the spreadsheet.                                                             
He puzzled as to how the total was calculated.                                                                                  
                                                                                                                                
JEFF  OTTESEN,  Acting Director,  Division  of  Statewide  Planning,                                                            
Department of  Transportation and Public Facilities  shared that one                                                            
of  the  major  difficulties  the  Department   has  experienced  in                                                            
preparing its capital budget  request is that the Department has had                                                            
"to guess  what the new  formula will be  in the reauthorization  of                                                            
the [federal]  transportation  bill," as he  explained, the  federal                                                            
formula  might  not  be finalized   until the  spring  of  2004.  He                                                            
expressed  that  this  lack  of  finality   has  resulted  in  "much                                                            
uncertainty"  in  the  budget.  He  reminded  that  numerous  FY  03                                                            
preventative  maintenance activities  were  eliminated because  of a                                                            
decrease in federal funds  "late in the year." Continuing, he voiced                                                            
the Department's desire  to provide the various regions of the State                                                            
with the flexibility  to use any excess  federal aid the  Department                                                            
might receive,  to "catch up" on preventive  maintenance  activities                                                            
and other necessary projects.                                                                                                   
                                                                                                                                
Senator B. Stevens noted  that the budget for the Central region has                                                            
increased  from $14  million to $20  million and  that the  Northern                                                            
region's budget  has increased from  $10 million to $20 million.  In                                                            
addition, he  reiterated that the  newly created Southeast  region's                                                            
$6 million  proposed budget,  as specified  on lines  48 and  49, is                                                            
incorporated  into the  total budget  three times.  He continued  to                                                            
voice confusion regarding how the budget was calculated.                                                                        
                                                                                                                                
Co-Chair Wilken  asked the Department to provide the  Committee with                                                            
a summary sheet to further define the total expense.                                                                            
                                                                                                                                
Mr. Ottesen clarified  that rather than attempting  "to be the exact                                                            
sum of  the old lines,"  the revised  lines in  the spreadsheet  are                                                            
intended to  include the old lines  "plus the extra authority"  that                                                            
might be forthcoming from the federal government.                                                                               
                                                                                                                                
Co-Chair Wilken  understood that the federal funding  in question is                                                            
specific  to the Anchorage  Metropolitan  Area Transportation  Study                                                            
(AMATS)  and the Fairbanks  Metropolitan  Area Transportation  Study                                                            
(FMATS).                                                                                                                        
                                                                                                                                
Mr. Ottesen clarified that  the federal funding would have a region-                                                            
wide effect.                                                                                                                    
                                                                                                                                
Co-chair  Wilken   asked  the  Department   to  provide   a  revised                                                            
spreadsheet to clarify the funding.                                                                                             
                                                                                                                                
Senator  B. Stevens  noted that,  were Amendment  #8 adopted,  FMATS                                                            
projects would be reduced  approximately $545,000 and AMATS projects                                                            
would be reduced  $12.3 million for an AMATS total  of $54.2 million                                                            
as compared to its original budget proposal of $66.5 million.                                                                   
                                                                                                                                
Senator B. Stevens additionally  asked for an explanation of the new                                                            
Metropolitan Planning Organization  (MPO) item on line 74 as well as                                                            
a clarification  as to whether Anchorage's  University and  Illinois                                                            
Avenues,  as identified  on  line  21 in  the new  spreadsheet,  are                                                            
considered part of the MPO road system or are classified as State-                                                              
owned roads.                                                                                                                    
                                                                                                                                
Mr.  Ottesen explained  that  University  and Illinois  Avenues  are                                                            
considered State-owned roads.                                                                                                   
                                                                                                                                
Senator B. Stevens opined,  therefore, that they are included in the                                                            
National Highway System (NHS).                                                                                                  
                                                                                                                                
Mr. Ottesen replied  no. He explained that although  these are State                                                            
roads, their  location within a MPO  mandates that their  funding be                                                            
included  in the  MPO  budget. He  noted  that roads  designated  as                                                            
National  Highway  System  routes would  be  the exception  to  this                                                            
determination.                                                                                                                  
                                                                                                                                
Senator  B.  Stevens  declared  that  his  AMATS  and  FMATS  budget                                                            
reduction   calculations    and   percentages   differ    from   the                                                            
Department's, and he remarked  that his primary concern is the $12.3                                                            
million  reduction  in  AMATS  funding.  He  communicated  that  the                                                            
proposed  FMATS  and AMATS  $12.7  million  total  budget  reduction                                                            
equates to 16.1 percent  of the total budget reduction. He asked the                                                            
Department to  identify similar levels of reductions  in other areas                                                            
in the  State, as he asserted  that rather  than AMATS carrying  the                                                            
brunt  of total budget  reduction,  the entirety  of the  components                                                            
should reflect  a 16-percent Community Transportation  Program (CTP)                                                            
reduction                                                                                                                       
                                                                                                                                
Co-Chair Wilken asked the  Department to provide a reconciliation of                                                            
the numbers.                                                                                                                    
                                                                                                                                
Mr. Ottesen affirmed that further information would be provided.                                                                
                                                                                                                                
Mr.  Ottesen   reviewed   the  Department's   funding  approach   by                                                            
explaining that  in November 2002, the Department  projected a total                                                            
funding  level of  $205 million  for CTP  and Trail  and  Recreation                                                            
Access in Alaska (TRAAK).  He communicated that these two categories                                                            
fund MPO  allocations.  Continuing,  he noted  that current  non-MPO                                                            
funding  is estimated  to total  "only" $94  million. Therefore,  he                                                            
explained  that the  revised  FY 04 spreadsheet  "is  an attempt  to                                                            
restart"  funding  allocations   to produce   "equality  across  the                                                            
board," between the MPOs and the non-MPOs in the State.                                                                         
                                                                                                                                
Mr.  Ottesen reminded  the  Committee  that  previous "transitional                                                             
funding" levels authorized  for Illinois Avenue and University Drive                                                            
upgrades were  at the 100 percent level; however,  due to a downturn                                                            
in available  funding, the transitional  funding specified  for them                                                            
in  FY 04  is at  the  50-percent  level.  He explained  that  these                                                            
transitional funds are  in addition to the regular funding mechanism                                                            
for these avenues, and  he noted that this type of extra funding has                                                            
occurred  frequently over  time. He  expressed  that other  projects                                                            
have received  additional  funding in  this manner,  and he  assured                                                            
that the extra  funding has been provided "judiciously  and for good                                                            
reason."                                                                                                                        
                                                                                                                                
Co-Chair  Wilken announced  that the  Department  would continue  to                                                            
work with Senator B. Stevens to address his concerns.                                                                           
                                                                                                                                
Senator  Hoffman noted  that the revised  FY 04  budget totals  $350                                                            
million  as opposed  to the original  budget  of approximately  $450                                                            
million.  He  asked  the  Department  to  identify  which  Statewide                                                            
Transportation   Improvement  Program  (STIP)  projects   have  been                                                            
eliminated due to the funding reduction.                                                                                        
                                                                                                                                
Mr. Ottesen explained that  the red line denoted on the budget chart                                                            
accompanying the revised  spreadsheet indicates the original federal                                                            
funding level  that was estimated for FY 03 through  FY 06 while the                                                            
yellow line  on the chart reflects  the current anticipated  federal                                                            
funding level  reduction of approximately  $75 million per  year. He                                                            
noted  that the  federal and  State match  funding  levels are  also                                                            
depicted.                                                                                                                       
                                                                                                                                
Senator Hoffman asked which projects would be affected.                                                                         
                                                                                                                                
Mr. Ottesen stated that the reduction would be all encompassing.                                                                
                                                                                                                                
Senator Hoffman  surmised therefore  that the project reductions  in                                                            
their entirety would equate  to approximately $75 to $80 million per                                                            
year.                                                                                                                           
                                                                                                                                
Mr. Ottesen  clarified that  the net affect  would be approximately                                                             
$160 million,  as the  downturn in  federal funds  would affect  the                                                            
current  year's  funding  in  addition  to  the FY  04  funding.  He                                                            
affirmed that  the issue is complex  because the total includes  the                                                            
new SHAKWAK funding  category that is limited in its  scope of usage                                                            
and is excluded from the regular federal funding formula.                                                                       
                                                                                                                                
In response to a question  from Senator Hoffman, Mr. Ottesen replied                                                            
that  the Department  was  unaware  of some  of  the federal  FY  03                                                            
funding reductions until  approximately four weeks prior. He assured                                                            
that the Department  is currently revising both the  FY 03 and FY 04                                                            
budgets  in an  attempt to  re-schedule  and/or delay  projects.  He                                                            
communicated that  this is the first time in fifteen  years that the                                                            
Department has faced a downturn in federal funding.                                                                             
                                                                                                                                
Senator Taylor  questioned the methodology  used to determine  which                                                            
projects were selected  for funding reductions; specifically whether                                                            
such things as  the elimination of $1.4 million in  federal receipts                                                            
designated  for the Saxman  ferry terminal  occurred because  of the                                                            
Department's  knowledge  that the delivery  of the  ferry was  being                                                            
delayed.                                                                                                                        
                                                                                                                                
JOHN   MACKINNON,  Deputy   Commissioner   of   Highways  &   Public                                                            
Facilities,  Department  of Transportation  and  Public Facilities,                                                             
stated  that the  Department's three  regional  directors and  staff                                                            
worked  to make "cuts  proportionately"  and to  reach agreement  on                                                            
which projects  could  be delayed  "with minimum  impact" or  with a                                                            
determination  that  a  project's  funding authority  would  not  be                                                            
included because  the project was behind its projected  timeline. He                                                            
clarified that  rather than jeopardizing a project,  its delay would                                                            
appropriately  reflect  the project's  current  situation. He  noted                                                            
that these projects  might be behind schedule due  to such things as                                                            
right-of-way conflicts,  utility delays, or construction  schedules.                                                            
                                                                                                                                
Senator  Taylor voiced  concern regarding  two big  projects in  his                                                            
district; specifically  the $6 million Gravina Island  access bridge                                                            
to  the  airport  project  and  the  $1.9  million   Tongass  Avenue                                                            
resurfacing project.                                                                                                            
                                                                                                                                
Mr. MacKinnon  referred  the Committee  to the  spreadsheet as  it's                                                            
comment section  specifies that sufficient money would  be available                                                            
in the proposed budget to continue those projects through FY 04.                                                                
                                                                                                                                
Senator  Taylor  requested   that  some  assurance  be  provided  to                                                            
substantiate that the projects  would be adequately addressed in the                                                            
FY 05 budget proposal.                                                                                                          
                                                                                                                                
Mr.  MacKinnon  assured  that these  projects  would  be  furthered,                                                            
provided that sufficient federal funding becomes available.                                                                     
                                                                                                                                
Senator  Taylor  asked  whether  this  assurance  is  based  on  the                                                            
historical level or the projected level of federal funding.                                                                     
                                                                                                                                
Mr. MacKinnon  clarified that it is  based on the anticipated  level                                                            
of federal  funding, which,  he characterized  "as a more  realistic                                                            
level" of what the funding would be.                                                                                            
                                                                                                                                
Senator  Taylor asked  regarding the  deletion of  the $6.5  million                                                            
Prince of Wales  Coffman Cove Road  from the FY 04 budget.  He asked                                                            
for assurance  that this project would move forward  even though the                                                            
accompanying  comment section specifies  that the its funding  would                                                            
not be required until FY 05.                                                                                                    
                                                                                                                                
Mr. MacKinnon  responded that the Coffman Cove project  is a federal                                                            
forest  service project  that has  been bid and  is currently  being                                                            
awarded. He assured that  the project would be included in the FY 05                                                            
budget, as its funding would not be required until August 2004.                                                                 
                                                                                                                                
Senator  Taylor  declared  therefore,  that  the  project  would  be                                                            
addressed in the FY 05 budget.                                                                                                  
                                                                                                                                
Mr. MacKinnon concurred.                                                                                                        
                                                                                                                                
Senator B. Stevens asked  whether the ferry system projects on lines                                                            
65 and 67 of the revised  budget were included in a recently adopted                                                            
amendment pertaining to SHAKWAK designated funds of $68 million.                                                                
                                                                                                                                
Senator Taylor  interjected that the  funding for these projects  is                                                            
separate from the $68 million SHAKWAK amendment.                                                                                
                                                                                                                                
Mr. MacKinnon concurred.                                                                                                        
                                                                                                                                
Co-Chair  Wilken  reiterated  that  the  Department   would  provide                                                            
information to  the Committee regarding questions  that arose during                                                            
this meeting.                                                                                                                   
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                

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