Legislature(2013 - 2014)HOUSE FINANCE 519

02/04/2014 08:30 AM House FINANCE

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08:33:13 AM Start
08:35:11 AM HJR10 || HB122 || HB123
10:27:00 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
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Heard & Held
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 4, 2014                                                                                           
                         8:33 a.m.                                                                                              
8:33:13 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 8:33 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Representative   Peggy   Wilson;    Becky   Rooney,   Staff,                                                                    
Representative   Peggy  Wilson;   Jeff  Ottesen,   Director,                                                                    
Division    of    Program   Development,    Department    of                                                                    
Transportation  and   Public  Facilities;   John  MacKinnon,                                                                    
Executive Director,  AGC of  Alaska; Barbara  Huff Tuckness,                                                                    
Teamsters; Tom Brice, Alaska District Council of Laborers.                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
Sarah  Lefebvre,  Fairbanks,   Chair  Fairbanks  Chamber  of                                                                    
Commerce; Karl  Gohlke, Fairbanks, Frontier  Supply Company;                                                                    
Tony Johansen, Fairbanks,  Great Northwest; Christine Klein,                                                                    
Anchorage,  Calista  Corporation;   David  Levy,  Anchorage,                                                                    
Alaska Mobility Coalition.                                                                                                      
HB 122    TRANSPORT. INFRASTRUCTURE FUND APPROP.                                                                                
          HB 122 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HB 123    DEDICATED TRANSPORT FUND/PUB TRANSPORT                                                                                
          HB 123 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HJR 10    CONST. AM: TRANSPORTATION FUND                                                                                        
          HJR was HEARD and HELD in committee for further                                                                       
HOUSE JOINT RESOLUTION NO. 10                                                                                                 
     Proposing amendments  to the Constitution of  the State                                                                    
     of  Alaska  creating  a  transportation  infrastructure                                                                    
HOUSE BILL NO. 122                                                                                                            
     "An  Act   making  a   special  appropriation   to  the                                                                    
     transportation infrastructure  fund; and  providing for                                                                    
     an effective date."                                                                                                        
HOUSE BILL NO. 123                                                                                                            
     "An Act  relating to the  transportation infrastructure                                                                    
     fund, to local public  transportation, to the municipal                                                                    
     harbor  facility grant  fund, to  motor fuel  taxes, to                                                                    
     the  motor   vehicle  registration  fee,   to  driver's                                                                    
     license  fees,  to  identification card  fees,  to  the                                                                    
     studded tire  tax, to  the vehicle  rental tax,  and to                                                                    
     other  fees  and  taxes   related  to  motor  vehicles;                                                                    
     creating   the   Alaska   Transportation   Panel;   and                                                                    
     providing for an effective date."                                                                                          
Co-Chair Austerman called the meeting to order. He noted                                                                        
that the three transportation bills would be heard together                                                                     
by the committee. The public would provide testimony.                                                                           
8:35:11 AM                                                                                                                    
REPRESENTATIVE PEGGY  WILSON, sponsor,  represented district                                                                    
33. She  planned to present  the full package of  bills. She                                                                    
introduced  the   PowerPoint  presentation:  "Transportation                                                                    
Infrastructure Fund (copy on file)."                                                                                            
Representative Peggy Wilson began with slide 2: "Alaska's                                                                       
Transportation Challenges."                                                                                                     
     Transportation Infrastructure Fund                                                                                         
     For the  record, Representative Peggy  Wilson, District                                                                    
     33;  thank  you Mister  Chairman  for  hearing these  3                                                                    
     important  bills.   These  bills  are  tied very  close                                                                    
     together.  With  the  committee's indulgence,  I  would                                                                    
     like the latitude to present  the entire package before                                                                    
     we drill down into the specifics of each bill.                                                                             
     Before we  get started I'd like  to say I know  that we                                                                    
     are in  deficit spending  and are  projected to  be for                                                                    
     the next  few years.  I  know it will be  difficult for                                                                    
     this committee to  appropriate $2B as in HB  122.  This                                                                    
     endowment   can  happen   after  the   constitution  is                                                                    
     amended.   I hope  that you can  listen to  the concept                                                                    
     without the  concern of where  the $2B will  come from.                                                                    
     We  need to  get the  constitutional change  before the                                                                    
     voters  in this  November.  That is  my  goal for  this                                                                    
     Now I'd  like to talk with  you about an issue  that is                                                                    
     very important to me and you as Alaskan's.  It       is                                                                    
     TRANSPORTATION.  When  I  say transportation,  I  mean,                                                                    
     surface roads,  ferries and harbors,  airports, transit                                                                    
     systems,  trails, the  movement  of  people, goods  and                                                                    
     •    I'm going  to start out  by getting us all  on the                                                                    
     same  page.  We  all  have   heard  stories  about  the                                                                    
     condition of our transportation system  and   I'd  like                                                                    
     to explain the issue as I know it.                                                                                         
     •    Then  I'm  going  to propose  a  solution  to  our                                                                    
     transportation  infrastructure  challenges,  the  three                                                                    
     bills you have before you.                                                                                                 
     •    Finally  I  will  sum  up  with  the  outcomes  we                                                                    
     expect, if this solution is implemented.                                                                                   
Representative Peggy Wilson continued with slide 2:                                                                             
"Alaska's Transportation Challenges."                                                                                           
     Alaska's Transportation Challenges                                                                                         
     Alaska's transportation system is aging.                                                                                   
     40-50 year old highways                                                                                                    
     •    Our major roads are  40-50 years old. There hasn't                                                                    
     been a major road built for the past 30 years.                                                                             
     Population Growth = congestion                                                                                             
     •    With   population   growth  we   get   congestion,                                                                    
     especially since  growth is  primarily centered  in one                                                                    
     area. The population of Alaska  has tripled since 1960.                                                                    
     •    And we are  putting more and more  people on roads                                                                    
     that were designed for the 1970's.                                                                                         
     Aging AMHS Ferry Vessels                                                                                                   
     •    Our ferries  are old and  well maintained  but the                                                                    
     older ferries  cost  a  lot  to operate  and  they  are                                                                    
     coming to the end of their projected life expectancy.                                                                      
     Airport upgrades and major maintenance                                                                                     
     •    Alaska has over 250 state owned airports.    They                                                                     
     are very expensive to maintain.    Barges    can   only                                                                    
     travel  up the  rivers during  the few  warm months  to                                                                    
     bring  the  necessary gravel  for  our  runways in  the                                                                    
     rural areas of the state.                                                                                                  
     Deteriorating harbors in disrepair                                                                                         
     •    We have a number of state owned harbors.     The                                                                      
     state is  in the  process of transferring  ownership of                                                                    
     many of the harbors  to the appropriate municipalities.                                                                    
     But they  don't always  have the  money to  improve and                                                                    
     maintain this infrastructure as it ages.                                                                                   
     Limited access to natural resources                                                                                        
     •    Alaska is  and has always been  a natural resource                                                                    
     state.    Our  natural resources  are not  generally on                                                                    
     the road grid or close to railroads.    We    need   to                                                                    
     have  access to  those natural  resources to  diversify                                                                    
     the stream of revenue to our state.                                                                                        
     Alaska's Transportation Challenges                                                                                         
     $20 billion backlogged projects &deferred maintenance                                                                      
     •    There is a large backlog of projects.                                                                                 
     •    All of  this totals  $20 billion dollars  plus 700                                                                    
     Million dollars more in deferred maintenance.                                                                              
Representative Peggy Wilson continued with slide 3:                                                                             
"Alaska's Transportation Challenges."                                                                                           
     Alaska's     Transportation    Challenges     Declining                                                                    
     Transportation funds                                                                                                       
     Our funding, federal and state,  is not keeping up with                                                                    
     the demand -                                                                                                               
      Federal funding not keeping up with the demand                                                                            
          Rural highway traffic up 23%                                                                                          
     •    US Rural  highway traffic is up  23% and continues                                                                    
     to grow                                                                                                                    
         Vehicle miles traveled up 35%                                                                                          
     •    And  vehicle   miles  traveled   is  up   35%  and                                                                    
     $65 billion/year lost to traffic congestion                                                                                
     •    There is  an estimated 65 Billion  dollar loss due                                                                    
     to traffic congestion every year.  That loss  is passed                                                                    
     on to us as consumers                                                                                                      
     (According to the National conference of Legislators)                                                                      
     Fuel tax revenues can't keep up with inflation                                                                             
     •    The  federal  fuel taxes  have  not  kept up  with                                                                    
     inflation.          Nationally  our  fuel  taxes  can't                                                                    
     keep up  with the  demand and       they can't  keep up                                                                    
     with  demand   in  Alaska  either.     With  technology                                                                    
     improvements  cars are  going  farther on  a gallon  of                                                                    
     •    Alaska hasn't had an increase  in Motor fuel taxes                                                                    
     since 1961,   53 years.  We have the  lowest motor fuel                                                                    
     tax in the nation at 8 cents a gallon.                                                                                     
     The next  closest state  is (Wyoming)  at 14  cents per                                                                    
     State  GF consumed  by growing  healthcare, corrections                                                                    
     and education costs - little left for transportation                                                                       
     •    Our state  funds have to be  stretched further and                                                                    
    further to cover rising costs in all service areas                                                                          
8:40:11 AM                                                                                                                    
Representative Peggy Wilson discussed slide 4: "Federal                                                                         
Funding Challenges."                                                                                                            
     Federal funding Challenges                                                                                                 
     Map-21 reduces flexibility for use of funds                                                                                
     Emphasis on main highways and safety                                                                                       
     •    The  new federal  Transportation funding  program,                                                                    
     MAP-21 focuses on National Highways  and safety.  Great                                                                    
     goals, but Alaska only has 4 national highways.                                                                            
     •    We  also, used  to have  greater flexibility  with                                                                    
     respect to safety dollars as  well.  We are now limited                                                                    
     to roads  with notable crash histories.  That will help                                                                    
     our  safety corridors,  the  4  national Highways  that                                                                    
     have  horrendous crash  statistics but  there are  more                                                                    
     needs out there than just those.                                                                                           
     National   Highway   System   funds   now   driven   by                                                                    
     •    The national  highway system funds are  now driven                                                                    
     by  performance.     Since   the  penalties   for  non-                                                                    
     performance are  painful (state  match could  double or                                                                    
     triple). Even  on mainline highways we  may be required                                                                    
     to focus less on  congestion and modernization and more                                                                    
     on  just keeping  up. This  means  lots of  maintenance                                                                    
     projects that don't provide new lanes or new access.                                                                       
     Community road funding is by population                                                                                    
     •    I  will talk  about the  funding by  population on                                                                    
     the next slide.                                                                                                            
     Federal funding Challenges                                                                                                 
     •    I  heard on  a  webinar by  the  council of  State                                                                    
     Governments (CSG)  on Friday that states  can expect to                                                                    
     see  a slowdown  in payments  from the  Federal Highway                                                                    
     trust  fund as  early as  this summer  and by  FY15 the                                                                    
     fund will be at 0.                                                                                                         
8:41:45 AM                                                                                                                    
Representative Peggy Wilson discussed slide 5: "Funds                                                                           
Before and After MAP - 21."                                                                                                     
     Map 21 Funding complications                                                                                               
     •    Here is  a simple  graphic of  some of  the issues                                                                    
     that  are  making it  difficult  for  DOT to  fund  our                                                                    
     Alaska Highways and community roads.                                                                                       
     •    On  the   left  hand   side  is  the   pre-Map  21                                                                    
     allocations.   The light  blue represents  the national                                                                    
     Highway Systems percentage of funds  (48%) and the dark                                                                    
     blue  is  the  Community  and  Alaska  Highway  Systems                                                                    
     percentage (52%).                                                                                                          
     •    With  Map-21 the  allotments are  quite different.                                                                    
     Now  the National  Highway System  receives 72%  of the                                                                    
     federal  funds  and  all  the  other  roads  in  Alaska                                                                    
     receive 28%.                                                                                                               
     •    To  further  complicate  matters 14%  of  the  28%                                                                    
     allocated  for   the  non-national  highway   roads  is                                                                    
     divided up depending on population.                                                                                        
     •    4.4%  (lime green  portion)  goes  to cities  that                                                                    
     have more  than 200,000 in population.   Only Anchorage                                                                    
     •    5.4% (Kelly  green potion)  is directed  to cities                                                                    
     with  a  population less  than  200,000  and more  than                                                                    
     5,000. (Sitka,  Ketchikan, Juneau,  Fairbanks, Wasilla,                                                                    
     Kodiak and Kenai)                                                                                                          
     •    4.2% (Dark  blue portion) is  for all  other roads                                                                    
     in the state.                                                                                                              
     •    The  bright yellow  14%  portion  is flexible  but                                                                    
     unfortunately  it is  consumed  by increased  mandatory                                                                    
     requirements for  data collection,  bridge inspections,                                                                    
     GIS, and  other necessities leaving little  for project                                                                    
8:43:44 AM                                                                                                                    
Representative    Peggy    Wilson   discussed    slide    6:                                                                    
"Transportation Infrastructure needs a Boost."                                                                                  
     Transportation Infrastructure Needs a Boost (slide 6)                                                                      
     In Alaska,  we have always  had a serious  problem with                                                                    
     financing transportation infrastructure.                                                                                   
     Challenges with Federal Funding.                                                                                           
     •    There is  a new Transportation Funding  Program in                                                                    
     the works  but it is  anyone's guess at this  time what                                                                    
     that will mean                                                                                                             
     •    There  will  be  no  more  money  in  the  Federal                                                                    
     Highway trust fund by 2015.                                                                                                
     Aging Infrastructure                                                                                                       
     •    We  need to  bring our  aging infrastructure  into                                                                    
     the 21st century                                                                                                           
     Open new access to resources                                                                                               
     •    In order for Alaska to  have access to our natural                                                                    
     resource we  need to  greatly increase  the development                                                                    
     of our transportation system                                                                                               
     Plans for the future                                                                                                       
     •    We need  to depend less on  the federal government                                                                    
       and start taking responsibility for Alaska's                                                                             
          roads, harbors, airports, and railroads.                                                                              
     •    We need to plan for the future.                                                                                       
     Right now, that's not happening.                                                                                           
     These problems aren't new just  compounding.  The House                                                                    
     Transportation  committee   started  investigating  the                                                                    
     funding issues 5 years ago.                                                                                                
Representative Peggy Wilson discussed slide 7: "House                                                                           
Transportation Comm. Actions."                                                                                                  
     House Transportation Comm. Actions                                                                                         
     What have we done to find answers to all these issues?                                                                     
     3 years of Committee hearings                                                                                              
     For  three  years  the House  Transportation  committee                                                                    
     listened to    DOT,   grassroots   organizations,   and                                                                    
     transportation organizations       identifying      the                                                                    
     challenges  of  transportation  in  our  geographically                                                                    
     diverse state.                                                                                                             
     Viewed, first hand, rural and urban problems                                                                               
     •    The  committee flew  to  remote  villages to  view                                                                    
     their airports,     the  basic  transportation  in  and                                                                    
     out their communities.   We took the  Dalton Highway to                                                                    
     see what  our truckers  use every day  to get  goods to                                                                    
     the area where our major  source of revenue is located.                                                                    
     We rode the  urban highways to see  the challenges they                                                                    
     face with  regards to  safety, congestion  and deferred                                                                    
     maintenance.   We  rode the  trains and  we experienced                                                                    
     the ferries underway.                                                                                                      
     Examined funding options                                                                                                   
     •    After  witnessing  the  problems  first  hand,  we                                                                    
     started our quest for a solution.                                                                                          
     •    We  heard  from  AML  and the  Matsu  Borough  who                                                                    
     teamed  together to  contract an  independent study  on                                                                    
    the fiscal challenges of statewide transportation.                                                                          
     •    We heard  from national experts from  the National                                                                    
     Conference of State Legislatures,  on what other states                                                                    
     are  doing  to  address  transportation  infrastructure                                                                    
     budget gaps. (NATIONAL EXPERTS)                                                                                            
     •    We heard  from state  experts. Larry  Persily, who                                                                    
     put together a report  on the funding options available                                                                    
               to address the fiscal shortfalls  that    our                                                                    
     Alaska  Long Range  Transportation  plan has  outlined.                                                                    
     (STATE EXPERTS)                                                                                                            
     Rejected options which committed future GF                                                                                 
     •    In our  deliberations we  rejected the  options to                                                                    
     fix the problem by  bonding, which commits future funds                                                                    
     to  pay off  debt. Our  children and  our grandchildren                                                                    
     should not have to shoulder our debt.                                                                                      
     House Transportation Committee Actions                                                                                     
     •    The  solution   I'm  going   to  propose   is  the                                                                    
     culmination of  all those hours of  committee hearings,                                                                    
     travel, and research.                                                                                                      
     Persily Options we decided not to use:                                                                                     
     Revenue  bonds  General  Obligation  Bonds  Using  some                                                                    
     portion  of   the  permanent   fund  selling   off  oil                                                                    
     royalties Key Bank ON  State Infrastructure banks Build                                                                    
     America Bonds  (from Stimulus funding) raising  the Gas                                                                    
8:46:36 AM                                                                                                                    
Representative Peggy Wilson discussed slide 8: "ATIF                                                                            
     ATIF Solution                                                                                                              
     Our Proposal has three parts:                                                                                              
     1.   Re-instate    dedicated   Alaska    Transportation                                                                    
     Infrastructure Fund                                                                                                        
     •    Part   1  Re-establish   dedicated  transportation                                                                    
     taxes and fees        as part  of a transportation fund                                                                    
     that was in existence at statehood.     The      Alaska                                                                    
     Constitution contained  two dedicated funds  related to                                                                    
     Our constitution grandfathered 2 transportation funds                                                                      
     •    The  first one  was known  as the  "Highway Fund".                                                                    
     All monies  collected from taxes on  vehicle motor fuel                                                                    
     were deposited  into the  Fund and had  to be  spent on                                                                    
     highway related purposes.                                                                                                  
     •    The second  fund was called the  "Water and Harbor                                                                    
     Facilities  Fund".   Monies from  taxes  on motor  fuel                                                                    
     used in boats and watercraft  were placed into the Fund                                                                    
    and had to be spent on water and harbor facilities.                                                                         
     Requires a vote of the people                                                                                              
     •    ATIF or  the Alaska  Transportation Infrastructure                                                                    
     Fund   will   combine   these   2   funds   into   one.                                                                    
          Reinstatement of the transportation fund requires                                                                     
     a vote of the people to change the constitution,                                                                           
     ensuring  all fees  and taxes  paid for  transportation                                                                    
     activities     will be spent only on transportation.                                                                       
     2.   Maintain existing funding                                                                                             
     •    The  second  part  of  the  proposal  is  we  must                                                                    
     continue  to  fund transportation  as  we  have in  the                                                                    
     past.  This   is  the  key  to   making  real  progress                                                                    
     improving  our transportation  infrastructure. This  is                                                                    
     one way we  can slowly chink away at our  $20 B backlog                                                                    
     of projects.                                                                                                               
     3.   More 100% state funded projects                                                                                       
     The  third part  of the  solution  is to  do more  100%                                                                    
     state funded projects                                                                                                      
     •    We need  to take  advantage of  both the  cost and                                                                    
     time savings  of state funded PROJECTS  WITHOUT FEDERAL                                                                    
     "STRINGS",      while   providing   for   our   growing                                                                    
     transportation needs.     This fund  will move projects                                                                    
    from concept to completion much faster.        With                                                                         
     state funded  projects we  will see  the impact  of our                                                                    
     state dollars in our communities quicker                                                                                   
     ATIF Solution                                                                                                              
     •    For  example,   state  funds  were  used   in  the                                                                    
     construction of the Elmore  Road Extension in Anchorage                                                                    
     which was  completed in less  than 3 years  as compared                                                                    
     to 7-10 years if federal processes had been followed.                                                                      
     •    ATIF is  not intended to diminish  our partnership                                                                    
     with the federal government.                                                                                               
     •    The intention  is to  provide a  dedicated revenue                                                                    
     stream        that  will  allow  more  projects  to  be                                                                    
     completed faster and cheaper       in  addition to  our                                                                    
     ongoing federal/state projects.                                                                                            
     •    The  3 pieces  of  legislation that  make up  ATIF                                                                    
     •    The first  piece, House Joint Resolution  10, will                                                                    
     put the  change to  the constitution  on the  ballot so                                                                    
     the   people    can   decide   to    re-establish   the                                                                    
     Transportation Fund.                                                                                                       
     •    The second piece, House Bill  123, will define the                                                                    
     laws to manage the fund and                                                                                                
     •    The  third  piece, House  Bill  122,  will put  $2                                                                    
     billion into the fund for startup.                                                                                         
8:49:36 AM                                                                                                                    
Representative Peggy Wilson discussed slide 9: "Funding                                                                         
     Funding ATIF                                                                                                               
     So you ask yourself, "How can we fund ATIF?"                                                                               
     $2B endowment from legislature and                                                                                         
     •    We  will  need two  billion  dollars  to seed  the                                                                    
     ATIF.     I know that is a  sizeable chunk of money but                                                                    
     if we don't get this much  it will be difficult to make                                                                    
     much progress clearing off our backlog.                                                                                    
     •    We want  to leverage  every federal dollar  we can                                                                    
     while  capitalizing on  State funded  projects. I  have                                                                    
     heard  anecdotally that  a federal  dollar is  worth 75                                                                    
     cents as  compared to  a state  dollar, I  can't stress                                                                    
     enough  how   important  all  three  elements   of  the                                                                    
     solution are.                                                                                                              
     •    I understand  that this is  probably not  the year                                                                    
     to ask  for 2 B dollars;  even in a year  with abundant                                                                    
     revenue it will be difficult.   This endowment could be                                                                    
     a lesser sum  with the idea of adding  to the endowment                                                                    
     when our  savings accounts are flusher.  We really need                                                                    
     to put the constitutional change  before the people.  I                                                                    
     know we can fully fund ATIF later.                                                                                         
     Annual revenue                                                                                                             
     •    Annually the  revenue from the  list that  you see                                                                    
     on  this  slide   will  go  into  the   fund:  this  is                                                                    
     approximately $80 Million per year                                                                                         
     •    One thing to  note any special use  fees have been                                                                    
     preserved. Things  like vanity license plate  fees, and                                                                    
     airport lease revenues.                                                                                                    
     Motor fuel tax     $40M                                                                                                    
     Tire tax       $1.4M                                                                                                       
     Vehicle rental tax  $ 8.5M                                                                                                 
     Vehicle registrations and driver's license fees                                                                            
8:50:52 AM                                                                                                                    
Representative Peggy Wilson continued with slide 10: "ATIF                                                                      
     ATIF Appropriation                                                                                                         
     •    Okay, now  we have  a fund,  "how shall  we manage                                                                    
     it?  And  how  much  will  be available  each  year  to                                                                    
     improve our transportation infrastructure?"                                                                                
     DOR will manage the fund                                                                                                   
     •    The  department   of  revenue  will   manage  ATIF                                                                    
     consistent with a 6% rate of return over time.    They                                                                     
     manage many funds  and they have experience  and a good                                                                    
     track record.  All  of the  profits will  be reinvested                                                                    
     into the fund each year.                                                                                                   
     Figuring the appropriation amount                                                                                          
     •    Each  year  there  will  be  funds  available  for                                                                    
     appropriation.      It will be the sum of 6 percent of                                                                     
    the market value averaged over the previous 5 years                                                                         
     plus  half of  the taxes  and fees  collected from  the                                                                    
     previous year.                                                                                                             
     •    Also coming out  of the fund will  be the expenses                                                                    
     for the  Department of Motor Vehicles,  the expenses to                                                                    
     administer and manage the fund,  and also costs for the                                                                    
     advisory council.   The  fund  will be  self-sufficient                                                                    
     and will not require General Funds for administration.                                                                     
     Follows regular budgetary process                                                                                          
     •    The   appropriations  will   follow  the   regular                                                                    
     budgetary  process and  will be  approved  by both  the                                                                    
     governor and the legislature.                                                                                              
8:52:03 AM                                                                                                                    
Representative Peggy Wilson continued with slide 11: "2-                                                                        
Panel - 2-Step Process."                                                                                                        
     2 Panel 2 Step Process                                                                                                     
     •    We have  a fund, and  it is being  funded annually                                                                    
     by revenues added to the large dedicated fund.                                                                             
     •    Who will decide which projects get funded first?                                                                      
     •    This  will  be  handled  by   a  2  panel  2  step                                                                    
     processes.  First we  will have  to decide  if projects                                                                    
     are  better suited  for  development  using the  proven                                                                    
     State  Transportation Integrated  Plan or  STIP process                                                                    
     or  the New  ATIF process;  effectively deciding  if it                                                                    
     will be  a federalized project  or a 100%  state funded                                                                    
     7 Member Alaska Transportation Panel (ATP)                                                                                 
     •    The Alaska Transportation  Panel will be comprised                                                                    
     of 7 members,  4 public one from each of  the areas you                                                                    
     can  see on  the slide,  the DOT  commissioner, a  STIP                                                                    
     board   member   and   a   member   from   the   Alaska                                                                    
     Infrastructure Commission which I  will describe in the                                                                    
     next slide.   They will  serve staggered 4  year terms.                                                                    
     DOT will develop  a set of guidelines to be  used as an                                                                    
     aid to decide if a  project should be federalized or be                                                                    
     funded  through  ATIF.    Our intent  is  to  take  the                                                                    
     politics out of the decision making process.                                                                               
     •    We have  a fund, and  it is being  funded annually                                                                    
     by revenues added to the large dedicated fund.                                                                             
     Who will decide which projects get funded first?                                                                           
8:53:25 AM                                                                                                                    
Representative Peggy Wilson continued with slide 12: "2-                                                                        
Panel - 2-Step Process."                                                                                                        
     2-Panel 2-Step Process                                                                                                     
     •    When a  project has been selected  for development                                                                    
     using  ATIF  funds it  must  then  be reviewed  by  the                                                                    
     Alaska  Infrastructure  Commission.  You  can  see  the                                                                    
     makeup on  the slide.   This  commission will  take the                                                                    
     ATIF  selections and  numerically rank  using a  set of                                                                    
     criteria  written  by the  DOT.     This  ranking  will                                                                    
     create a  prioritized list.  The list  will need  to be                                                                    
     completed by  the advisory  commission by  October 15th                                                                    
     each year  and submitted to  both the Governor  and the                                                                    
     legislature. This  ensures that the governor  will have                                                                    
     time to  incorporate the ranked projects  into his /her                                                                    
     capital budget.                                                                                                            
8:54:12 AM                                                                                                                    
Representative Peggy Wilson discussed slide 13: "ATIP                                                                           
     ATIF Projects                                                                                                              
     Limited   to    capital   transportation    and   major                                                                    
     maintenance projects                                                                                                       
     •    ATIF    projects    are   limited    to    capital                                                                    
     transportation  and major  maintenance projects  in the                                                                    
     modes of transportation you see on this slide.                                                                             
     •    The  constitutional  amendment   states  that  the                                                                    
     appropriations   from  the   fund  must   be  used   on                                                                    
     "transportation   and  related   facilities  that   are                                                                    
     designated by  law." In the enabling  statutes, HB 123,                                                                    
     we  have  constrained  the  fund to  only  be  used  on                                                                    
     capital projects and major  maintenance. This will give                                                                    
     future  legislatures the  ability to  use money's  from                                                                    
     this  fund  for  operations  in times  of  huge  fiscal                                                                    
     shortfalls.  All the  legislature would  have to  do is                                                                    
     make a statute change to allow  the fund to be used for                                                                    
     •    Anyone  can submit  a  project for  consideration;                                                                    
          the State, a borough, an unorganized borough, a                                                                       
     municipality, community or village.                                                                                        
     •    We  envision there  will be  submission forms  and                                                                    
     they  will need  to  be  filled out  to  make sure  the                                                                    
     commission   has  enough   information   to  rank   the                                                                    
     •    Every project will be considered.                                                                                     
     Federalized projects not more than 20%                                                                                     
     •    The  funds  available   to  federalized  projects,                                                                    
          which are projects that are constrained to use                                                                        
     the federal processes,  can be no more than  20% of the                                                                    
     available funds.    This is  to incentivize  more state                                                                    
     funded projects.                                                                                                           
8:55:43 AM                                                                                                                    
Representative Peggy Wilson discussed slide 14: "ATIP                                                                           
     ATIF Projections                                                                                                           
     •    Here is  a graph  of what we  can expect  from the                                                                    
     Alaska Transportation Infrastructure  Fund done by DOR.                                                                    
          The Blue bars are the balance in the fund over                                                                        
     time           and the Red line is the amount of money                                                                     
     that  could  be  appropriated  each  year  for  use  on                                                                    
     projects.         You can see that the payout starts                                                                       
     at about $83  Million dollars the 1st year  and then is                                                                    
     $131M  the second  year and  rises at  a rate  of about                                                                    
     3.5M in the early  years. Remember, with this solution,                                                                    
     these  103  million  dollars  is  in  addition  to  the                                                                    
     operational and capital budgets we already have.                                                                           
     •    If we  put in 2  billion dollars now it  will grow                                                                    
     to  5 billion  dollars in  20  years.   That 5  billion                                                                    
     includes  50% of  the revenue  that has  been deposited                                                                    
     over the 20 years as well.                                                                                                 
8:56:44 AM                                                                                                                    
Representative Peggy Wilson discussed slide 15: "ATIF…"                                                                         
     ATIF …                                                                                                                     
     •    What can Alaskans expect from ATIF?                                                                                   
     •    The  fund will  help Alaska  plan for  its future.                                                                    
     We  will be  able to  work down  the 20  billion dollar                                                                    
     backlog.     It will  help us get  rid of  the deferred                                                                    
     maintenance list                                                                                                           
     Decrease dependence on federal funding                                                                                     
     •    ATIF will decrease  Alaska's dependence on federal                                                                    
     dollars.     We  still want  to leverage  every federal                                                                    
     dollar we can   but  ATIF  will  allow us  to  do  more                                                                    
     state funded projects as well.                                                                                             
     Increase number of new jobs                                                                                                
     •    ATIF will provide more direct  jobs and there will                                                                    
     be an indirect employment boost as well.                                                                                   
     Increase road safety                                                                                                       
     •    Our  major roads  are not  safe due  to congestion                                                                    
     and deterioration.  ATIF  will help  to improve  safety                                                                    
     on our roads, bridges, airports and harbors.                                                                               
     Increase Alaska's economy                                                                                                  
     •    There    are    numerous   studies    that    show                                                                    
     Transportation   investment   creates   a   competitive                                                                    
     environment, attracting  additional economic investment                                                                    
     that includes: Increased output;  productivity; income;                                                                    
     property  values; employment  and an  increase in  real                                                                    
     wages;         It reduces the costs of production and                                                                      
     noncommercial travel time. This  results in an improved                                                                    
     quality of life.                                                                                                           
     Increase access to Alaska's resources                                                                                      
     •    Our  state's economy  is highly  dependent on  our                                                                    
     resource   extraction   and    these   industries   are                                                                    
     transportation intensive.     Alaska has  a majority of                                                                    
     the nation's  coastline but has  significant challenges                                                                    
     developing  and  maintaining   the  state's  docks  and                                                                    
     harbors for access, to our fishing resource.      We                                                                       
     have   world    class   mineral   deposits    but   few                                                                    
     transportation   corridors   for    access   to   those                                                                    
     resources.      We have major untapped oil and gas                                                                         
     resources with no access to the remote locations.                                                                          
     ATIF will  improve access to our  resources, which will                                                                    
     the cost of production.                                                                                                    
     ATIF …                                                                                                                     
     Ensure stable annual transportation budget                                                                                 
     •    Alaska needs a  state-funded transportation system                                                                    
     that is sufficiently and predictably funded.                                                                               
     This reliable flow of funds  allows for the development                                                                    
     and implementation of a  sound transportation plan that                                                                    
     doesn't  fluctuate   with  funding,  politics   or  the                                                                    
8:59:02 AM                                                                                                                    
Representative Peggy Wilson discussed slide 16: "ATIF                                                                           
     ATIF Summary                                                                                                               
     •    To summarize:                                                                                                         
     Alaska Transportation issues:                                                                                              
     •    I  think I've  defined our  looming transportation                                                                    
     challenges  that stem  from 2  major issues,  declining                                                                    
     funds   both   federal   and  state,   and   an   aging                                                                    
     transportation  infrastructure.    I  think we  need to                                                                    
     act  now   and  implement  the   Alaska  Transportation                                                                    
     Infrastructure Fund.                                                                                                       
     •    ATIF  is   about  the  broader  social   good  and                                                                    
     economic progress of the state of Alaska.                                                                                  
     •    About  meeting  ever-growing transportation  needs                                                                    
     for Alaskans.     The  sheer volume  of freight  moving                                                                    
     in Alaska      underscores the importance of the                                                                           
     transportation system to Alaska's economy.                                                                                 
     Implement  the   Alaska  Transportation  Infrastructure                                                                    
     •    Alaska needs to take action now;                                                                                      
     Put  the  constitutional  amendment on  the  ballot  in                                                                    
     November 2012                                                                                                              
     •    We  need  this  constitutional  amendment  on  the                                                                    
     ballot in 2014.     I  think  Alaskans  want  a  better                                                                    
     transportation system.        Let the people decide.                                                                       
     •    Mr. Chair, thank you for  this opportunity to tell                                                                    
     the  committee  about  our plan  to  help  Alaska  move                                                                    
     forward.   You  have   seen  the   30,000  foot   level                                                                    
     •    I  know committee  time is  short so  I will  stop                                                                    
     here and attempt to answer any questions you may have.                                                                     
9:00:49 AM                                                                                                                    
Co-Chair Austerman stated that he would accept questions                                                                        
from committee members.                                                                                                         
Representative  Thompson  agreed  that roads,  airports  and                                                                    
harbors  were the  arteries of  Alaska's  economy. He  asked                                                                    
about the decision  to have two separate  panels. He thought                                                                    
the two panels might be cumbersome.                                                                                             
Representative  Peggy Wilson  responded that  the commission                                                                    
began as  a 25-member panel.  She listened to  comments from                                                                    
committee  members  in  each community.  The  goal  was  for                                                                    
panels that were non-political  with representation from all                                                                    
Alaskan  geographical areas.  A  decision was  made for  one                                                                    
commission  to  work  on  project  assignments,  with  seven                                                                    
people voting.  The goal was  to view  the state as  a whole                                                                    
9:03:30 AM                                                                                                                    
Representative Thompson  asked if  the two panels  must meet                                                                    
in person,  which would be  expensive for airfare  and hotel                                                                    
Representative Peggy  Wilson replied  that the  panels would                                                                    
meet twice a year.                                                                                                              
Representative  Thompson understood  that Map  - 21  was not                                                                    
well  accepted  in  the  more  remote  areas  of  the  state                                                                    
including Sitka,  Petersburg and  Fairbanks. He  asked about                                                                    
Map - 21  and the federal transportation fund.  He asked for                                                                    
a specific dollar amount received by the state.                                                                                 
Co-Chair Austerman  suggested that the question  be held for                                                                    
Department of Transportation and Public Facilities.                                                                             
Representative  Peggy Wilson  noted that  the fund  could be                                                                    
used as best determined for the state.                                                                                          
9:04:53 AM                                                                                                                    
Representative Holmes reviewed the  travel costs detailed in                                                                    
the fiscal notes.  She wanted to know about  the reasons for                                                                    
two separate boards.                                                                                                            
Representative Peggy Wilson replied  that the board required                                                                    
experts  from the  Department of  Transportation and  Public                                                                    
Representative Holmes  discussed the  fund. She  asked about                                                                    
the  discrepancy between  5  and 6  percent  of the  average                                                                    
market  value. She  understood that  the  percent of  market                                                                    
value   calculation  was   refined  over   time.  The   more                                                                    
conservative estimates  were in  the 4  to 5  percent range.                                                                    
She pointed out  that the Department of  Revenue stated that                                                                    
principal might be eroded at 6 percent.                                                                                         
BECKY ROONEY,  STAFF, REPRESENTATIVE PEGGY  WILSON, referred                                                                    
to  the  constitutional amendment,  which  stated  "up to  6                                                                    
percent  of  market  value  that  could  be  utilized."  She                                                                    
thought that the purpose of  the range was to provide future                                                                    
options. In  the enabling  statutes, the rate  was set  at 5                                                                    
Representative  Holmes asked  about the  two ways  to spring                                                                    
money  from the  fund. She  noted that  50 percent  could be                                                                    
utilized each year with an additional  5 or 6 percent of the                                                                    
average  over   the  last  5   years.  She  asked   how  the                                                                    
calculations  occurred. She  wondered if  the incoming  fees                                                                    
were calculated into the 5-year average.                                                                                        
Ms.  Rooney replied  that the  fees utilized  were from  the                                                                    
previous  year.  The  fees  became part  of  the  fund.  The                                                                    
interest from the fees was sitting in the fund.                                                                                 
Representative  Holmes asked  if  50 percent  was taken  out                                                                    
each  year in  addition to  the 5  percent. She  thought the                                                                    
practice might erode principal.                                                                                                 
9:09:05 AM                                                                                                                    
Co-Chair   Austerman  acknowledged   Representative  Holmes'                                                                    
point.  He stated  that future  presentations would  include                                                                    
information about the funding source.                                                                                           
Representative Costello realized the  great effort put forth                                                                    
by  Representative Peggy  Wilson. She  noted the  gravity of                                                                    
the  decision. She  believed that  the state  framers saw  a                                                                    
need   for  such   legislation   with   the  importance   of                                                                    
transportation in  the Alaskan  economy. She  was challenged                                                                    
with the idea  that such a proposal would  remove the budget                                                                    
crafting  process  from  the legislature.  She  asked  about                                                                    
testimony regarding an appointed  board making the decisions                                                                    
rather than elected state representatives.                                                                                      
Representative Peggy  Wilson responded that  two legislators                                                                    
would serve  on the  board as  advisors. She  envisioned the                                                                    
legislators  as the  transportation chairmen.  She explained                                                                    
that the  decisions would be  reviewed by both  the governor                                                                    
and  the  legislature.  She   acknowledged  fears  that  the                                                                    
legislature  would no  longer have  a say  in the  important                                                                    
decision making process.                                                                                                        
Representative   Costello   highlighted    the   work   that                                                                    
Representative  Peggy  Wilson had  put  into  the bill.  She                                                                    
asked  how the  representative would  address the  competing                                                                    
needs faced by the state.                                                                                                       
9:12:27 AM                                                                                                                    
Representative Peggy  Wilson replied that  another interest,                                                                    
such as education  would require $20 billion to  seed a fund                                                                    
with  similar intent.  Children need  safe roads  to get  to                                                                    
school.  She supposed  that some  Alaskans  would leave  the                                                                    
state if  the transportation  situation did not  improve and                                                                    
schools suffered without many students.                                                                                         
9:13:55 AM                                                                                                                    
Representative  Gara  believed that  transportation  funding                                                                    
was crucial. He acknowledged  that Alaskans would vacate the                                                                    
state if transportation  needs were not met.  He pointed out                                                                    
that  the state  had approximately  $17 billion  in savings.                                                                    
The governor proposed  a draw on the savings  including a $3                                                                    
billion draw for Public  Employees' Retirement System (PERS)                                                                    
and Teachers' Retirement System  (TRS). He wondered how long                                                                    
savings would last.                                                                                                             
9:15:12 AM                                                                                                                    
Representative   Peggy   Wilson   stated   that   too   much                                                                    
deliberation about  transportation and  infrastructure would                                                                    
delay necessary  changes. She explained  that infrastructure                                                                    
helped to  solve many different  problems in the  state. She                                                                    
was most  concerned about  the constitutional  amendment and                                                                    
its  inclusion  on  the  ballot.  She  stated  that  waiting                                                                    
another two years would allow for further delay.                                                                                
9:17:02 AM                                                                                                                    
Representative  Gara  noted  that the  proposed  fund  would                                                                    
place  $80-$120  million  into the  transportation  projects                                                                    
annually. He  asked how much  money was allocated  to roads,                                                                    
vessels, railroads, trails  and transportation projects last                                                                    
year  in   the  capital   budget.  He  suspected   that  the                                                                    
legislature  was funding  transportation  at  a higher  rate                                                                    
than the one estimated by  the sponsor. He asked about slide                                                                    
9.  He  understood  the  logic of  placing  all  funds  into                                                                    
transportation. He  argued for  using the fund  for Troopers                                                                    
or energy projects.                                                                                                             
9:18:56 AM                                                                                                                    
Ms. Rooney  replied that public  comment revealed  that when                                                                    
fees were designed  for activities of the  users, the public                                                                    
was  more  inclined to  participate  and  contribute to  the                                                                    
fees.  She saw  the opportunity  for increases  in gas  tax,                                                                    
which  had  not  been  raised   in  53  years,  if  Alaskans                                                                    
understood that the tax would pay for the roads.                                                                                
Representative Gara  wondered if the sponsor  proposed a tax                                                                    
Representative  Peggy Wilson  replied that  the decision  to                                                                    
raise taxes  might be  made in the  future. She  stated that                                                                    
further  infrastructure development  meant more  jobs and  a                                                                    
greater economy.                                                                                                                
9:20:26 AM                                                                                                                    
Representative  Munoz   congratulated  Representative  Peggy                                                                    
Wilson  on her  efforts with  the transportation  committee.                                                                    
She  asked why  the existing  department processes  were not                                                                    
indicated in the proposed legislation.  She wondered why the                                                                    
effort  could not  continue  within  the established  agency                                                                    
framework.  She  expressed  concern about  creating  another                                                                    
layer of bureaucracy.                                                                                                           
Representative  Peggy Wilson  replied that  changes must  be                                                                    
made  to  eliminate the  political  aspect  of the  decision                                                                    
making  process. She  wished  to review  the  projects in  a                                                                    
different way.                                                                                                                  
9:22:23 AM                                                                                                                    
Representative  Guttenberg  offered congratulations  on  the                                                                    
sponsor's hard work.  He stated that the  new commission was                                                                    
subject  to  legislative  appropriations. He  asked  if  the                                                                    
commission would supersede all  the other organizations that                                                                    
were actively planning for their communities.                                                                                   
Representative Peggy  Wilson replied  that each  group would                                                                    
continue to do  what was best for their  specific areas. The                                                                    
commission would  review the  submissions and  determine the                                                                    
best projects to promote economic  development in the state.                                                                    
She   stressed  that   the  appointees   should  have   some                                                                    
experience in  certain areas. The combination  would lead to                                                                    
the optimal statewide view. The  goal of the legislation was                                                                    
to remove  the geographic  look and  decide the  best action                                                                    
for the state as a whole.                                                                                                       
9:24:32 AM                                                                                                                    
Representative Guttenberg expressed  confusion about how the                                                                    
process  would  clear the  playing  field  for projects.  He                                                                    
stated that the legislators would make the final decisions.                                                                     
Representative  Peggy Wilson  replied  that  removal of  the                                                                    
legislative review would nix the  bill's passage through the                                                                    
finance committee.                                                                                                              
9:25:55 AM                                                                                                                    
Co-Chair  Stoltze  stated  that  he  helped  facilitate  the                                                                    
passage  of  a similar  initiative  twice  in the  past.  He                                                                    
stated  that  he had  witnessed  three  separate efforts  to                                                                    
change dedicated  funds during his time  on the legislature.                                                                    
He recalled one effort in  1976, which required an exemption                                                                    
from the  prohibition to create the  Permanent Fund. Another                                                                    
effort from  1989-1990 by  former governor  Cooper addressed                                                                    
that  education endowment,  which passed  the House  but not                                                                    
the Senate.  He wondered about removing  the prohibition all                                                                    
together to enable the legislative process to work.                                                                             
Representative  Peggy Wilson  stated that  she attempted  to                                                                    
access  all  different  angles during  her  decision  making                                                                    
process. She stated that Alaska  was behind $20 billion with                                                                    
infrastructure  projects   and  $700  million   in  deferred                                                                    
Co-Chair   Stoltze   asked   if  amending   the   dedication                                                                    
prohibition had been explored as a potential solution.                                                                          
Representative Peggy  Wilson had  not determined  a solution                                                                    
for  every department  or state  region. She  felt that  the                                                                    
legislation would  make a difference in  every department in                                                                    
the  long  run. She  believed  that  developing the  state's                                                                    
infrastructure   would  promote   economic  development   in                                                                    
Alaska.  She  suggested  that  it   was  more  economic  for                                                                    
businesses to visit the state for a profit.                                                                                     
9:29:04 AM                                                                                                                    
Co-Chair  Stoltze  hoped  to   vet  the  issues.  He  lacked                                                                    
certainty about his position.                                                                                                   
9:29:39 AM                                                                                                                    
JEFF  OTTESEN, DIRECTOR,  DIVISION  OF PROGRAM  DEVELOPMENT,                                                                    
DEPARTMENT OF  TRANSPORTATION AND PUBLIC  FACILITIES offered                                                                    
to answer questions about Map-21.                                                                                               
Representative    Thompson   asked    about   the    federal                                                                    
transportation infrastructure spending.                                                                                         
Mr. Ottesen replied  that MAP-21, which was  passed in 2012,                                                                    
authorized  the  federal  program  for 2013  and  2014  with                                                                    
funding  comparable to  that received  in  prior years.  The                                                                    
amount  of  money  received   remained  unchanged,  but  the                                                                    
distribution  was altered.  The funding  was shifted  from a                                                                    
local class of roads to  the larger highways in the national                                                                    
highway  system.  He mentioned  a  tripling  of funding  for                                                                    
safety  projects. The  state therefore  had  less money  for                                                                    
local-class  roads  and  highways   that  were  not  on  the                                                                    
national system.  He stated that  the Alaska  Highway System                                                                    
received  substandard funding  for  maintenance. He  pointed                                                                    
out that  60 percent  of the bridges  were reliant  upon the                                                                    
smaller slice of funding.                                                                                                       
Mr.   Ottesen  continued   that  the   Highway  Trust   Fund                                                                    
approached zero  dollars. He stated that  Secretary Fox from                                                                    
the  United States  Department  of Transportation  announced                                                                    
that the Highway Trust Fund  would reach zero dollars before                                                                    
the end  of 2014.  He pointed  out that  the fund  had outgo                                                                    
that   was   greater   than  income,   meaning   delays   in                                                                    
reimbursements to  the states.  When states bill  the United                                                                    
States  Department  of  Transportation,  delays  will  ensue                                                                    
unless  a solution  was found.  He stated  that the  highway                                                                    
required  $40   billion  to   operate  nationally   and  was                                                                    
receiving  approximately $30  billion in  proceeds from  the                                                                    
various categories of taxes.                                                                                                    
Mr. Ottesen  asked the question,  "Why is the  highway trust                                                                    
fund not  remaining solvent." One explanation  was that less                                                                    
people  were  driving  nationally  and  the  use  of  liquid                                                                    
petroleum   fuels,  the   primary  source   of  taxes,   was                                                                    
shrinking. Some  people bypassed taxes by  driving cars that                                                                    
operate  without liquid  petroleum fuel.  He added  that the                                                                    
highway authorization  would expire at  the end of  2014. He                                                                    
opined that there was no easy solution to funding.                                                                              
9:34:14 AM                                                                                                                    
Representative   Thompson   asked   about   Alaska's   total                                                                    
allocation from the Federal Highway Fund.                                                                                       
Mr. Ottesen  replied that Congress used  a two-step process.                                                                    
Initially   an   amount   of   money   was   authorized   at                                                                    
approximately $500  million. Each year a  smaller amount was                                                                    
appropriated  against the  initial appropriation.  He stated                                                                    
that Congress  appropriated approximately  92 or  93 percent                                                                    
of the authorized number.                                                                                                       
Representative    Thompson   asked    about   the    smaller                                                                    
Mr. Ottesen replied $450 million.                                                                                               
9:35:12 AM                                                                                                                    
Representative  Gara  asked  about   the  backlog  of  state                                                                    
transportation projects. He stated  that at $100 million per                                                                    
year, it  would take  200 years to  address the  $20 billion                                                                    
backlog.  He asked  about spending  for ferries,  trails and                                                                    
Mr. Ottesen replied that appropriations  over the past 10-12                                                                    
years  were  quite varied;  $600  -$100  million in  general                                                                    
funds.  He stated  that the  2012  amount was  approximately                                                                    
$700 million,  but the contribution  was much  smaller since                                                                    
Co-Chair  Austerman  asked  for   further  details  for  the                                                                    
committee regarding Representative Gara's question.                                                                             
Mr. Otteson agreed.                                                                                                             
Representative  Gara thought  that the  deliberative process                                                                    
of prioritizing  funds was reflected.  Some years  the state                                                                    
had funding to address  transportation projects, while other                                                                    
priorities arose on different  occasions. He thought it fair                                                                    
to  allow  the  legislature   to  continue  determining  the                                                                    
largest  priorities every  year  regarding  the creation  of                                                                    
jobs and economy.                                                                                                               
9:37:45 AM                                                                                                                    
Mr.  Ottesen agreed  with  the  legislative prerogative.  He                                                                    
recalled  that  the  2012 capital  budget  was  nearly  $300                                                                    
million greater than the amount requested.                                                                                      
Representative  Gara  noted  that the  $20  billion  backlog                                                                    
would continue to  grow. He did not see  how the legislation                                                                    
could address the enormous backlog.                                                                                             
Mr.  Ottesen replied  that the  Roads to  Resources projects                                                                    
were being transferred to  Alaska Industrial Development and                                                                    
Export  Authority   (AIDEA)  who  was  seeking   a  form  of                                                                    
resource-backed tolls  to help build the  roads, which would                                                                    
remove the projects from the  state budget. He noted efforts                                                                    
to  address  transportation   needs  without  accessing  the                                                                    
general fund.                                                                                                                   
9:39:10 AM                                                                                                                    
Representative Wilson understood  that federal funding might                                                                    
not be  available, as  the state did  not have  the required                                                                    
Mr. Ottesen stated that he  had worked for the Department of                                                                    
Transportation and  Public Facilities  for 25 years,  and in                                                                    
that time had  not seen a "federal dollar left  on the table                                                                    
for  lack of  match."  He acknowledged  that  the state  was                                                                    
nearing the end  of match reserves. He did  not predict that                                                                    
2014  would  yield  an  insufficient   match  to  cover  the                                                                    
required state match.                                                                                                           
Representative  Wilson asked  about local  funding programs.                                                                    
She asked  if the bill might  limit the choices made  by the                                                                    
local programs.  She asked if  the local  organization would                                                                    
continue to exist.                                                                                                              
Mr. Ottesen replied that the  two organizations known as the                                                                    
Fairbanks  Metropolitan Area  Transportation System  (FMATS)                                                                    
and   the   Anchorage   Metropolitan   Area   Transportation                                                                    
Solutions  (AMATS) were  established under  federal law  and                                                                    
received  a  portion of  federal  funds  known as  the  sub-                                                                    
allocation.   He explained that  the state did not  have the                                                                    
ability  to alter  the requirement.  If  federal funds  were                                                                    
acquired,  the local  boards would  make the  decisions. The                                                                    
ATIF would  make decisions  about its  own program,  but not                                                                    
about the money sub-allocated to FMATS and AMATS.                                                                               
9:40:58 AM                                                                                                                    
Co-Chair Stoltze had difficulty  with the similarity to past                                                                    
dedicated fund  exemptions. He  included the  Permanent fund                                                                    
and  the debate  about its  appropriate and  actual use.  He                                                                    
noted only one major use of  the Permanent Fund, which was a                                                                    
statutory use of earnings for  distribution to the people of                                                                    
Alaska. He  stated that the  education endowment  included a                                                                    
provision  preventing  the legislative  appropriation  until                                                                    
2013. He stated that the  issue was placed before the voters                                                                    
in  1990. He  observed  the serious  nature  of a  dedicated                                                                    
fund. He  wondered if similar  restrictions on  the proposed                                                                    
legislation   might  be   considered.   He   noted  that   a                                                                    
constitutional amendment  was an  enduring legacy  change in                                                                    
the law  of the land.  He referred  to himself as  a history                                                                    
9:44:57 AM                                                                                                                    
Mr.  Ottesen commented  about  Map-21.  He acknowledged  the                                                                    
difficult  situation with  the federal  highway program  and                                                                    
congressional  reauthorizations,  but  he  remained  hopeful                                                                    
that the program would continue past October 2014.                                                                              
Co-Chair Austerman  stated that  the three bills  would come                                                                    
back  to  the committee.  He  suspected  that the  committee                                                                    
would  have   further  questions   for  the   Department  of                                                                    
Transportation and Public Facilities.                                                                                           
9:46:10 AM                                                                                                                    
SARAH  LEFEBVRE,  FAIRBANKS,   CHAIR  FAIRBANKS  CHAMBER  OF                                                                    
COMMERCE   (via   teleconference)    testified   about   the                                                                    
advantages  of the  proposed fund.  She stated  that Federal                                                                    
Transportation Funding  was unstable. She advocated  for the                                                                    
state's  independence from  the federal  process. She  noted                                                                    
Representative  Don Young  visited  Fairbanks and  expressed                                                                    
frustration with  Alaska for  the lack of  such a  fund. She                                                                    
hoped   to  prevent   future   problems   with  the   fund's                                                                    
establishment.  She noted  that  the  funding mechanism  was                                                                    
common in  other states. She communicated  strong support by                                                                    
local  government  in  the  Interior   for  a  state  funded                                                                    
program. She  touched on  the project of  a road  to Tanana.                                                                    
She  opined   that  a  state  fund   would  benefit  similar                                                                    
9:50:53 AM                                                                                                                    
KARL   GOHLKE,   FAIRBANKS,   FRONTIER   SUPPLY   CO.   (via                                                                    
teleconference) stated  support for the legislation.  He was                                                                    
a   member   of   the    Fairbanks   Chamber   of   Commerce                                                                    
Transportation  Committee,  the Alaska  Miners  Association,                                                                    
the  Association of  General Contractors  and the  Alliance.                                                                    
He  noted that  the  various  organizations spent  committee                                                                    
time  discussing  the  infrastructure of  projects  and  how                                                                    
roads, bridges,  airports and ports were  important to major                                                                    
projects such  as the TransCanada project.  He commended the                                                                    
legislature  for the  passage  of SB  21.  He advocated  for                                                                    
consistency as a tool for  planning for Alaska's future. The                                                                    
initiative would  help to get  the Roads to  Resources built                                                                    
thereby improving  the economy  of Alaska. He  believed that                                                                    
the initiative would take care of the FMATS and the AMATS.                                                                      
9:55:55 AM                                                                                                                    
TONY    JOHANSEN,    FAIRBANKS,   GREAT    NORTHWEST    (via                                                                    
teleconference),  stated that  Alaska had  a great  need for                                                                    
infrastructure and  maintenance. He testified in  support of                                                                    
the legislation.  He listed  necessary improvements  such as                                                                    
deferred maintenance  and improvement of system  capacity to                                                                    
meet  the growing  population and  expanding infrastructure.                                                                    
He recalled similar budget issues  in the 1980s. He believed                                                                    
that the state funded  education, health and social services                                                                    
and  troopers while  slashing Alaska's  capital budgets.  He                                                                    
encouraged   the  continued   development  of   the  state's                                                                    
infrastructure.  The  Alaska  Transportation  Infrastructure                                                                    
Fund would provide  the mechanism to expand  and improve the                                                                    
state's    transportation   infrastructure.    Without   the                                                                    
necessary  infrastructure, Alaska  would  have  no need  for                                                                    
schools, troopers or social services.                                                                                           
9:58:40 AM                                                                                                                    
CHRISTINE   KLEIN,  ANCHORAGE,   CALISTA  CORPORATION   (via                                                                    
teleconference),  testified in  support  of the  legislation                                                                    
packet.  She emphasized  that the  initiative would  help in                                                                    
both  rural  and  urban  Alaska. She  pointed  out  that  79                                                                    
percent  of funding  for transportation  projects in  Alaska                                                                    
originated  from the  federal  government.  She stated  that                                                                    
contributions  for airports  were  approximately 93  percent                                                                    
federal  in  origin.  She  noted  pressure  for  state  fund                                                                    
revenue  toward some  of the  projects.  Some programs  were                                                                    
policy-driven with  a focus on mass  transit; those projects                                                                    
were often  prioritized over  important projects  in Alaska.                                                                    
She expressed  support from her  region, which  consisted of                                                                    
56  small villages  with primary  airport access.  She noted                                                                    
the  difficulty  of  getting  onto the  STIP  list,  as  the                                                                    
backlog was  so enormous. She  pointed out that  the economy                                                                    
depended on  basic core infrastructure.  She noted  that the                                                                    
infrastructure  was necessary  for  a  more diversified  and                                                                    
stable economy.                                                                                                                 
10:04:45 AM                                                                                                                   
DAVID  LEVY,  ANCHORAGE,   ALASKA  MOBILITY  COALITION  (via                                                                    
teleconference),  testified in  support  of the  legislation                                                                    
packet. He  stated that he worked  with Representative Peggy                                                                    
Wilson on  the issue  for a  number of  years. The  need for                                                                    
transportation  infrastructure  was  significant  throughout                                                                    
the  state.   The  bill  would   help  Alaskans   break  the                                                                    
connection  with the  federal  government  and take  greater                                                                    
responsibility with the transportation infrastructure.                                                                          
10:06:25 AM                                                                                                                   
JOHN   MACKINNON,  EXECUTIVE   DIRECTOR,   AGC  OF   ALASKA,                                                                    
testified in support  of the legislation. He  stated that he                                                                    
worked for  the Associated General Contractors  of Alaska, a                                                                    
construction  trade   association  with   approximately  650                                                                    
construction-related  business members.  He  stated that  he                                                                    
had  served  as deputy  commissioner  of  the Department  of                                                                    
Transportation and  Public Facilities for five  years, where                                                                    
he learned about transportation  needs and issues in Alaska.                                                                    
He pointed  out that  the model  proposed in  the initiative                                                                    
was utilized by 44 other  states in the union. The appointed                                                                    
members  would understand  the transportation  needs in  the                                                                    
region and  in the  state with  and prioritize  the projects                                                                    
based   on    facts   rather   than   politics    or   other                                                                    
considerations.  He noted  the  fund's stream  of user  fees                                                                    
that work  to replenish the  fund. He stated that  user fees                                                                    
had   ample  support   among  tax   payers.  Alaskans   love                                                                    
transportation  projects. He  recalled only  one bond  issue                                                                    
for transportation  projects that  did not pass.  Because of                                                                    
the size and limited transportation options in Alaska                                                                           
Representative   Guttenberg   appreciated  the   testifier's                                                                    
perspective.   He   expressed   confusion  about   how   the                                                                    
legislation  would  clear  the  way  to  new  transportation                                                                    
projects. He thought that the  limited nature of the funding                                                                    
compromised  its  appeal.  He   asked  how  the  legislation                                                                    
simplified the issue of transportation in the state.                                                                            
10:12:07 AM                                                                                                                   
Mr.  MacKinnon replied  that  direct appropriations  largely                                                                    
funded the  entire project. Once the  appropriation was made                                                                    
the project waited for  design, permitting and construction,                                                                    
which  could take  up  to five  years.  The federal  program                                                                    
provided  a  known amount  over  the  period of  the  bill's                                                                    
reauthorization. The  use was inefficient.  The programmatic                                                                    
spending  was more  efficient than  lump-sum appropriations.                                                                    
Programmatic spending allowed for  a more efficient process,                                                                    
as  opposed  to  lump-sum appropriations.  He  expected  the                                                                    
federal subcategories would continue  to exist under federal                                                                    
law.  The proposed  legislation  would establish  a list  of                                                                    
projects in priority.                                                                                                           
10:14:49 AM                                                                                                                   
Representative   Guttenberg  noted   that  the   process  of                                                                    
legislative  overview  remained unchanged.  The  legislature                                                                    
would continue to make the appropriation.                                                                                       
Mr.   MacKinnon   contrasted   Representative   Guttenberg's                                                                    
statement with the methods of  federal funding. He mentioned                                                                    
a  single lump-sum  appropriation  for  the federal  highway                                                                    
program, including  a series  of allocations.  While working                                                                    
with   the   Department   of   Transportation   and   Public                                                                    
Facilities, he  saw many projects  funded that were  not the                                                                    
best use of the money.                                                                                                          
10:16:51 AM                                                                                                                   
Representative  Costello asked  if the  testifier felt  that                                                                    
the process  was working  now. She asked  for an  example of                                                                    
inefficiency in the current process.                                                                                            
Mr. MacKinnon  recalled multiple efforts  for transportation                                                                    
enhancements  with great  spending  requirements. He  opined                                                                    
that lost efficiencies were noticed  when safety issues were                                                                    
not prioritized above scenic waysides.                                                                                          
10:19:06 AM                                                                                                                   
Representative  Costello  noted  her  participation  in  the                                                                    
governor's recreation and trails  advisory board. She stated                                                                    
that the points  system used was less valuable  than an open                                                                    
discussion process. She  asked if Mr. MacKinnon  was open to                                                                    
changes  in  the  legislation to  allow  the  transportation                                                                    
committee to be the end arbitrator of the winning projects.                                                                     
Mr. MacKinnon was open to a  number of changes. He liked the                                                                    
bill package  because it provided  a steady  and predictable                                                                    
stream  of funding.  The steady  funding stream  would allow                                                                    
the legislature to participate in the decisions.                                                                                
10:21:10 AM                                                                                                                   
BARBARA HUFF  TUCKNESS, TEAMSTERS,  testified in  support of                                                                    
the legislation. She noted that  she had Teamster members in                                                                    
all areas  of the state transportation  system. She believed                                                                    
in Representative Peggy Wilson's  efforts to create a stable                                                                    
funding  source  for   state  transportation  projects.  She                                                                    
requested  serious consideration  and movement  of the  bill                                                                    
10:23:08 AM                                                                                                                   
TOM BRICE,  ALASKA DISTRICT  COUNCIL OF  LABORERS, testified                                                                    
in support of  the legislation on behalf of  the 6000 public                                                                    
and  private construction  and road  maintenance members  of                                                                    
unions across the state.                                                                                                        
Co-Chair  Stoltze appreciated  the process  and he  hoped to                                                                    
pass the bill out of committee.                                                                                                 
Representative Gara  recalled rumors that the  Department of                                                                    
Transportation and  Public Facilities  spent money  to self-                                                                    
perpetuate the  agency. He noted  the component of  the bill                                                                    
package  that included  a different  proposal for  educating                                                                    
the   legislature   about    the   analyzed   transportation                                                                    
priorities in Alaska. He had  concerns about burning through                                                                    
state  savings. He  expressed  interest  in the  information                                                                    
regarding frugal and efficient spending.                                                                                        
Co-Chair Austerman CLOSED public testimony.                                                                                     
HB  122  was  HEARD  and   HELD  in  committee  for  further                                                                    
HB  123  was  HEARD  and   HELD  in  committee  for  further                                                                    
HJR 10 was HEARD and HELD in committee for further                                                                              
10:27:00 AM                                                                                                                   
The meeting was adjourned at 10:27 a.m.                                                                                         

Document Name Date/Time Subjects
ATIF Revenue Worksheet.pdf HFIN 2/4/2014 8:30:00 AM
HJR 10
HJR 10 ATIF payout spreadsheet.pdf HFIN 2/4/2014 8:30:00 AM
HJR 10 Exec Summary AK Trans Finance Study.pdf HFIN 2/4/2014 8:30:00 AM
HJR 10 Support Letters.PDF HFIN 2/4/2014 8:30:00 AM
HJR10 - Sponsor Stmt Ver U.pdf HFIN 2/4/2014 8:30:00 AM
NCSL-AASHTO Alaska profile.pdf HFIN 2/4/2014 8:30:00 AM
HJR 10
NCSL-AASHTO Study EXEC-SUM.pdf HFIN 2/4/2014 8:30:00 AM
HJR 10
HB 122 Sponsor Stmt.pdf HFIN 2/4/2014 8:30:00 AM
HB 122
HB 122 support AFLCIO.pdf HFIN 2/4/2014 8:30:00 AM
HB 122
HB 123 Support Letters.pdf HFIN 2/4/2014 8:30:00 AM
HB 123
HB 123 support AML.pdf HFIN 2/4/2014 8:30:00 AM
HB 123
HB 123 Persily Report.pdf HFIN 2/4/2014 8:30:00 AM
HB 123
HB 123 MatSu Reso 3-11.pdf HFIN 2/4/2014 8:30:00 AM
HB 123
HB 123 -ATIF Sponsor Stmt Ver C.pdf HFIN 2/4/2014 8:30:00 AM
HB 123
HB 123 -ATIF Sectional Ver C.pdf HFIN 2/4/2014 8:30:00 AM
HB 123
HB 123 AK Trans Finance Study.pdf HFIN 2/4/2014 8:30:00 AM
HB 123
HB 123 Harbor Facility Grants_SLA13_showing tiers and scores_01-14-13.pdf HFIN 2/4/2014 8:30:00 AM
HB 123 Copy of Wilson_ATIF_2-23-13.pdf HFIN 2/4/2014 8:30:00 AM
HJR 10 - HB 123 ATIF HFC presentation 2-4-14.pdf HFIN 2/4/2014 8:30:00 AM
HB 123
HJR 10
HJR 10 HB 123 Support Testimony.pdf HFIN 2/4/2014 8:30:00 AM
HB 123
HJR 10 NEW ATIF Worksheet 2-9-14.pdf HFIN 2/4/2014 8:30:00 AM
HJR 10