Legislature(2001 - 2002)

02/20/2001 01:34 PM Senate TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Number 581                                                                                                                      
          SB 59-FEDERAL FUNDS TO MUNICIPALITIES FOR ROADS                                                                   
MS.  MARY  JACKSON,  staff  to  Senator  John  Torgerson,  said  the                                                            
Transportation  Equity  Act for  the 21st  Century  (TEA-21) is  the                                                            
federal  program  that  provides  transportation  funds  to  states.                                                            
Alaska receives  a great deal of this money and has  never given any                                                            
of it  as a  direct pass-through  to  municipalities.   SB 59  would                                                            
directly award  municipalities, with  $20 million being the  initial                                                            
MS. JACKSON  said SB  59 establishes  a new  Municipal Road  Project                                                            
Program   (MRPP).     The   bill  authorizes   the   Department   of                                                            
Transportation  and Public Facilities  (DOTPF) to develop  a project                                                            
application  for municipalities.   Municipalities would be  required                                                            
to come up with a match  for the federal funds.  DOTPF is to develop                                                            
priorities on  how the funds would be dispersed, with  the exception                                                            
that a  higher priority would  be assigned  if a municipality  comes                                                            
forward with an application  to take over the maintenance of a state                                                            
road, reducing maintenance costs for the state.                                                                                 
MS. JACKSON noted  that boroughs and municipalities  have many roads                                                            
under their jurisdiction,  and SB 59 proposes that  federal funds be                                                            
provided to  the municipalities.   Ms. Jackson commented  that DOTPF                                                            
is concerned  that municipalities  would not  be able to  administer                                                            
the program appropriately.                                                                                                      
CHAIRMAN COWDERY asked what the administration fees might be.                                                                   
Number 767                                                                                                                      
MS.   JACKSON   replied   DOTPF  would   take   a   percentage   for                                                            
administration costs but she does not know the amount.                                                                          
SENATOR  WILKEN asked  if money  from the federal  government  comes                                                            
tagged for certain communities.                                                                                                 
MS.  JACKSON   said  DOTPF  would   have  to  amend  the   Statewide                                                            
Transportation  Improvement Program  (STIP) and put into  it the $20                                                            
million that would  go to the local municipalities.   Municipalities                                                            
would know the  money is there and apply for it.   If municipalities                                                            
are able to  match the funds and comply  with the federal  reporting                                                            
requirements, they will receive the funds.                                                                                      
SENATOR WILKEN asked who will decide where the money goes.                                                                      
MS.   JACKSON   said   DOTPF   would   establish   a   process   for                                                            
prioritization.   If a municipality is willing to  take over a state                                                            
road and maintain it, that municipality would have top priority.                                                                
Number 949                                                                                                                      
SENATOR ELTON asked where the $20 million comes from.                                                                           
MS. JACKSON  replied that the money  comes from the TEA-21  program.                                                            
SENATOR ELTON  asked if the money comes from a component  of TEA-21,                                                            
such as  community transportation,  or  would it be  up to DOTPF  to                                                            
make that determination.                                                                                                        
MS. JACKSON said it would come from DOTPF.                                                                                      
SENATOR  ELTON asked who  would have  liability -  the state  or the                                                            
MS. JACKSON said the local  municipality would but this has not been                                                            
tested.    The  local  government  would  have  to  ascribe  to  the                                                            
regulations  DOTPF develops.  The  caveat is that if DOTPF  develops                                                            
regulations  saying it  would do  the paperwork  and certification,                                                             
then it would be responsible.                                                                                                   
SENATOR ELTON gave an example  of a Community Transportation Program                                                            
(CTP)  and  wondered  why  this  project,  in  the  STIP,  would  be                                                            
different from a TEA-21 project.                                                                                                
MS. JACKSON said a TEA-21  project gives funds to municipalities for                                                            
building roads.   CTP projects are  rated and DOTPF would  build the                                                            
SENATOR ELTON asked if  the priorities created in SB 59 would affect                                                            
the existing STIP.                                                                                                              
MS. JACKSON said she did  not think it would affect the STIP because                                                            
the STIP is not in statute.   The STIP is an internal mechanism that                                                            
DOTPF  uses  to rate  communities  depending  on  whether  or not  a                                                            
community would  take over maintenance  of a road.  SB 59  just puts                                                            
in a new program for municipalities.                                                                                            
Number 1140                                                                                                                     
SENATOR TAYLOR  said he  would like to  give municipalities  control                                                            
over the money they receive.                                                                                                    
Number 1240                                                                                                                     
MS. JACKSON  said  writing this  type of  priority  into statute  is                                                            
difficult - regulations will administer the program.                                                                            
SENATOR TAYLOR  asked if  it would be possible,  within the  federal                                                            
funding  mechanism,  to establish  an  entity  other than  DOTPF  to                                                            
prioritize projects.                                                                                                            
MS. JACKSON said her sense  is there is a lot of discretion with the                                                            
SENATOR  TAYLOR said  it is important  to him  that the communities                                                             
themselves build the projects.                                                                                                  
Number 1337                                                                                                                     
MR.  THOMAS  BRIGHAM,   Director  for  the  Division   of  Statewide                                                            
Planning, DOTPF,  said DOTPF's concern with SB 59  is of a practical                                                            
nature based  on its experience  with locally  administered  federal                                                            
MR. BRIGHAM  addressed earlier concerns  that DOTPF is only  funding                                                            
state or federal  projects.  According  to Mr. Brigham, this  is not                                                            
the case.   In 1999  the department  funded $49.5  million on  roads                                                            
owned by local  governments.  DOTPF  also funded $45 million  in the                                                            
year 2000  and about the  same amount for  2001.  DOTPF also  has an                                                            
Improve  and  Transfer  Program whereby  if  local  governments  are                                                            
willing to take  over a local road owned by the state,  that road is                                                            
then  owned and  operated by  the local  government.   This  program                                                            
averages $2.5 to $4.0 million per year.                                                                                         
MR. BRIGHAM  said DOTPF  is working  on regulations  for STIP.   The                                                            
final draft should be available in early March.                                                                                 
MR.  BRIGHAM noted  in the  past DOTPF  has  passed-through  federal                                                            
funds to boroughs  and cities giving  them the responsibility  to do                                                            
the project.    DOTPF does  not have  a philosophical  problem  with                                                            
local governments  doing their own projects, but DOTPF's  experience                                                            
is that  the strings attached  to the federal  funds cause  problems                                                            
for  local  governments.   A  Code  of  Federal  Regulations,  which                                                            
governs how highway projects  are to be done, comes with the federal                                                            
money - it is complicated  and hard to administer.  Because of this,                                                            
most local governments,  especially the small ones, will have a hard                                                            
time  administering  federal  projects.    Overhead  would  also  be                                                            
substantially  greater  because  there would  be overhead  for  both                                                            
local and  state government.   Even  the projects  earmarked  by the                                                            
federal government have to go through DOTPF.                                                                                    
Number 1776                                                                                                                     
CHAIRMAN  COWDERY  asked how  DOTPF  determines  the administrative                                                             
MR. BRIGHAM  replied that  direct, onsite  administration is  called                                                            
construction  engineering  and  is  capped  at  15 percent.    As  a                                                            
percentage  of the project,  big jobs  are less  and small jobs  are                                                            
Number 1810                                                                                                                     
SENATOR WARD  asked if DOTPF took  a percentage of the pass-through                                                             
money for the port project in Wasilla.                                                                                          
MR. BRIGHAM  said he did not know  but he assumed DOTPF had  because                                                            
one of its employees works full time on the project.                                                                            
SENATOR WARD asked if the  percentage is taken at the beginning of a                                                            
project and if it is always 15 percent.                                                                                         
MR. BRIGHAM said if it  is a local project, DOTPF does not charge 15                                                            
percent.   If it is  DOTPF's project,  15 percent  is the limit  for                                                            
construction engineering.                                                                                                       
MR. POSHARD said what is  possibly being referred to is the Indirect                                                            
Cost Allocation  Program (ICAP).   ICAP is  an arrangement  with the                                                            
Federal Highway  Administration (FHA).  There is a  two percent cost                                                            
on every  project that DOTPF  takes for ICAP,  rather than  charging                                                            
for  specific   projects.    The   two  percent  pays  for   DOTPF's                                                            
participation  and administration  of a project.  Even though  local                                                            
governments  do the actual  work, DOTPF does  all of the  paperwork,                                                            
reimbursements, and things of this nature.                                                                                      
MR. POSHARD  said he would provide  the committee with a  memorandum                                                            
from the FHA, which outlines the ICAP program.                                                                                  
Number 1953                                                                                                                     
SENATOR  ELTON said  that under  the program  envisioned  by SB  59,                                                            
several  things  happen:   1)  municipalities  will have  to  assume                                                            
liability  either for project  failure or  regulation violation;  2)                                                            
municipalities  will  have  to  pay  a  match;  3)  in  some  cases,                                                            
municipalities   would  have  to  take  over  maintenance;   and  4)                                                            
municipalities  would have  to deal  with the  Code of Regulations.                                                             
Given this, Senator Elton  asked if DOTPF anticipated municipalities                                                            
taking advantage of this type of program.                                                                                       
MR. BRIGHAM  said there might be a  rush in the beginning,  but then                                                            
it would be  a case of "once bitten,  twice shy."  Dealing  with the                                                            
Code of Federal  Regulations has not been a pleasant  experience for                                                            
local governments.   A state grant  is a much different process  and                                                            
much less  burdensome, which  local governments  can handle  without                                                            
much trouble.                                                                                                                   
MR.  POSHARD   added  that  it  is   difficult  to  determine   what                                                            
difficulties   municipalities   would   be  willing   to  take   on.                                                            
Municipalities  that already  have projects in  the CTP, in  this or                                                            
the  next fiscal  year,  would  likely  not take  advantage  of  the                                                            
program  because their  project is  already scheduled  for  funding.                                                            
Municipalities  that have projects further down the  list might want                                                            
to participate,  trying  to move  their  project up.   In  addition,                                                            
there are only  a handful of municipalities that have  the financial                                                            
ability to match federal funds.                                                                                                 
SENATOR  ELTON asked if  the $20  million would  be coming from  the                                                            
Community Transportation Program (CTP).                                                                                         
Number 2070                                                                                                                     
MR.  BRIGHAM replied  yes,  this type  of  project is  in  community                                                            
transportation  or  Trails  and  Recreational  Access  for  Alaskans                                                            
(TRAAK) program.                                                                                                                
SENATOR ELTON asked how large the CTP program is now.                                                                           
MR. BRIGHAM said it is about $120 million.                                                                                      
SENATOR ELTON  asked what  SB 59 does that  DOTPF does not  now have                                                            
the capability of doing, or is it just the magnitude of money.                                                                  
MR. POSHARD said  that now under the CTP program,  if a municipality                                                            
puts up a local match,  additional points are added for a project in                                                            
the scoring  and ranking  system,  allowing the  project to move  up                                                            
higher in  the funding  process.   SB 59 requires  a local match  to                                                            
SENATOR  ELTON  said  SB  59  creates  a program  that  only  a  few                                                            
municipalities  could take  advantage of, allowing  them to  move up                                                            
the STIP, causing other municipalities to drop down in the STIP.                                                                
MR. BRIGHAM said this is  accurate.  SB 59 also takes a piece of the                                                            
community transportation  program and says a certain amount of money                                                            
has  to go  to local  government  for administration   of their  own                                                            
SENATOR  ELTON said before  moving SB  59 he would  like to  know if                                                            
Juneau has the  ability to move up the STIP process  thereby forcing                                                            
other communities  down.   He sees this as  a real problem  - giving                                                            
large communities the ability to push smaller communities down.                                                                 
Number 2182                                                                                                                     
SENATOR WARD asked if DOTPF's  new regulations would accomplish what                                                            
the sponsor of SB 59 is trying to accomplish.                                                                                   
MR. BRIGHAM said  the new regulations would not accomplish  the same                                                            
thing.  The  regulations would take  the existing system  and put it                                                            
into regulation.   This is  something a number  of legislators  have                                                            
SENATOR  WARD   said  the  sponsor   is  also  concerned   with  how                                                            
municipalities  would  get on  the list  and stay  on without  being                                                            
passed over.                                                                                                                    
MR. BRIGHAM  said projects that score  with middle or low  scores do                                                            
not move up very  fast or they stay where they are.   Higher scoring                                                            
projects are built.   New projects that score well  go in line ahead                                                            
of other projects.                                                                                                              
SENATOR  WARD  asked if  there  had  ever been  a  discussion  about                                                            
creating a road commission that would be independent of DOTPF.                                                                  
MR. BRIGHAM said  a bill was introduced three or four  years ago but                                                            
it did  not move forward  because it created  more problems  than it                                                            
would have solved.                                                                                                              
Number 2289                                                                                                                     
MR. POSHARD said there  are states that use commissions to run their                                                            
programs  and this works  fine.   A commissioner,  director,  or CEO                                                            
runs other state programs and this also works well.                                                                             
Number 2340                                                                                                                     
SENATOR TAYLOR asked if DOTPF had a position on SB 59.                                                                          
MR. BRIGHAM said DOTPF is concerned about how it would function.                                                                
SENATOR TAYLOR asked who does the ranking in the STIP process.                                                                  
MR. BRIGHAM replied there  are three regional directors - Southeast,                                                            
Southcentral    and   Northern,   Mr.   Boyd   Brownfield,    Deputy                                                            
Commissioner,  DOTPF, Mr. Brigham,  Director, Division of  Statewide                                                            
Planning,  DOTPF  and Mr.  Michael Downing,  Director,  Division  of                                                            
Statewide Design and Engineering Services, DOTPF.                                                                               
SIDE B                                                                                                                          
SENATOR TAYLOR  asked what is done  with excess funds and  who makes                                                            
the decision where a project is placed on the STIP.                                                                             
Number 2288                                                                                                                     
MR. BRIGHAM  noted the gross amount  of money, over the course  of a                                                            
year  that   is  created  by  projects   coming  in  under   bid  is                                                            
"deobligated"  from one project to another.  The number  is exceeded                                                            
by the total amount  of projects that come in over-bid  and projects                                                            
whose  estimates  change in  the STIP.    Mr. Brigham  said  DOTPF's                                                            
"overages consistently exceed our underages."                                                                                   
MR. POSHARD  said  DOTPF has a  problem with  underestimations,  not                                                            
over-estimations.    When bids  come in  higher than  projects  were                                                            
estimated DOTPF has to  ask for additional legislative authority, or                                                            
the project  has  to be put  further down  the STIP.   DOTPF  cannot                                                            
spend money on  anything it does not have legislative  authority on.                                                            
Number 2090                                                                                                                     
SENATOR ELTON asked if DOTPF had a fiscal note for SB 59.                                                                       
MR. POSHARD  noted  that DOTPF  is in  the process  of developing  a                                                            
fiscal note.                                                                                                                    
SENATOR WILKEN  referred back to a  statement that Mr. Poshard  made                                                            
in reference to SB 79 concerning  cuts in DOTPF's maintenance budget                                                            
over the  last seven  years.   He referred  to a  chart that  showed                                                            
DOTPF's maintenance  budget had not been cut as much  as Mr. Poshard                                                            
had indicated.   He asked Mr. Poshard  to look at that and  get back                                                            
to the committee on the discrepancy.                                                                                            
SENATOR WARD said he does  not believe that "maintenance hasn't been                                                            
cut to the bone, it's not being done properly."                                                                                 
SENATOR  TAYLOR  asked what  the design  problem  was  on the  Third                                                            
Avenue bypass in Ketchikan.                                                                                                     
MR. BRIGHAN  said a portion  of the Third  Avenue route was  in very                                                            
steep  terrain.   This area  was intended  to be  bulwarked with  an                                                            
earth retaining  wall but it was determined  that this would  not be                                                            
successful,  from an engineering standpoint,  and that a  bridge was                                                            
Number 1877                                                                                                                     
SENATOR  WARD  said  it  was  amazing   that  a  designer  would  be                                                            
instructed  to design a structure  for an airport in Alaska  without                                                            
taking  into  consideration   that  there  might  be  an  earthquake                                                            
MR.  BRIGHAM   said  the   bypass  retaining   wall  design   was  a                                                            
professional  embarrassment  but in  the case  of  the airport,  the                                                            
contract  engineer  did take  into account  seismic  concerns.   The                                                            
issue  was simply  an  argument  between  the municipalities  as  to                                                            
whether the extent  to which those concerns were taken  into account                                                            
was adequate.                                                                                                                   
Number 1815                                                                                                                     
SENATOR WARD said  the municipality felt the state  was incompetent.                                                            
He asked Mr.  Brigham to speak with  the municipality on  this issue                                                            
and get back to the committee.                                                                                                  
CHAIRMAN  COWDERY said  it was  his understanding  the municipality                                                             
felt it was getting closer to a solution.                                                                                       
MR. POSHARD agreed.                                                                                                             
CHAIRMAN  COWDERY said  SB 59  would be  held in  committee until  a                                                            
fiscal note was furnished.                                                                                                      

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