Legislature(2009 - 2010)CAPITOL 17
02/11/2010 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| Presentation by Advisory Committee for Aviation | |
| Update on Aviation by Christine Klein, Deputy Commissioner of Dot&pf Aviation | |
| HB329 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 329 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
February 11, 2010
1:03 p.m.
MEMBERS PRESENT
Representative Peggy Wilson, Chair
Representative Craig Johnson, Vice Chair
Representative Kyle Johansen
Representative Cathy Engstrom Munoz
Representative Tammie Wilson
Representative Max Gruenberg
Representative Pete Petersen
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION BY ADVISORY COMMITTEE FOR AVIATION
- HEARD
UPDATE ON AVIATION BY CHRISTINE KLEIN~ DEPUTY COMMISSIONER OF
DOT&PF AVIATION
- HEARD
HOUSE BILL NO. 329
"An Act relating to the transportation infrastructure fund, to
local public transportation, to motor fuel taxes, and to the
motor vehicle registration fee; and providing for an effective
date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 329
SHORT TITLE: DEDICATED TRANSPORT FUND/PUB TRANSPORT
SPONSOR(s): TRANSPORTATION
02/05/10 (H) READ THE FIRST TIME - REFERRALS
02/05/10 (H) TRA, FIN
02/09/10 (H) TRA AT 1:00 PM CAPITOL 17
02/09/10 (H) Heard & Held
02/09/10 (H) MINUTE(TRA)
02/11/10 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
LEE RYAN, Chair
Aviation Advisory Board
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of the Presentation by Aviation Advisory Board (AAB).
CHRISTINE KLEIN, Deputy Commissioner of Aviation
Office of the Commissioner
Department of Transportation & Public Facilities (DOT&PF)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of the Aviation Advisory Board (AAB).
MARY SIROKY, Legislative Liaison
Office of the Commissioner
Department of Transportation & Public Facilities (DOT&PF)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the discussion of
the Aviation Advisory Board overview.
TOM GEORGE, Alaska Representative
Aircraft Owners & Pilots Association (AOPA)
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 329.
REBECCA ROONEY, Staff
Representative Peggy Wilson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 329.
BRIAN KANE, Attorney
Legislative Legal Counsel, Legislative Legal and Research
Services, Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 329.
JEFF OTTESEN, Director
Division of Program Development
Department of Transportation & Public Facilities (DOT&PF)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 329.
JERRY BURNETT, Deputy Commissioner
Department of Revenue (DOR)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the discussion of
HB 329.
ACTION NARRATIVE
1:03:51 PM
CHAIR PEGGY WILSON called the House Transportation Standing
Committee meeting to order at 1:03 p.m.
Representatives Munoz, Petersen, T. Wilson, and P. Wilson were
present at the call to order. Representatives Johnson,
Gruenberg, and Johansen arrived as the meeting was in progress.
^Presentation by Advisory Committee for Aviation
Presentation by Advisory Committee for Aviation
1:04:33 PM
CHAIR P. WILSON announced that the first order of business would
be a presentation by Advisory Committee for Aviation.
1:05:32 PM
LEE RYAN, Chair, Aviation Advisory Board, explained his family
has a history of aviation in Alaska. He explained that his
grandfather started Ryan Air in the 40s, which became Unalukleet
Air Taxi in 1953. His great-grandfather was a mail carrier
between Unalukleet and Kaltag, driving a dog sled in the winter.
He has accrued over 7,000 hours of flying time in Alaska and has
used over 200 of the 252 state airports, he stated.
1:06:45 PM
MR. RYAN outlined his overview, including reviewing Alaska's
transportation system, airport funding, deferred maintenance,
and the Alaska Aviation System Plan [slide 1]. The Aviation
Advisory Board (AAB) works on aviation as a system and policy
issues, and assists the DOT&PF in hiring an Executive Director
for the Alaska International Airport System. He offered that a
year ago a team, including the AAB and DOT&PF commissioner, and
Deputy Commissioner of Aviation interviewed about six
candidates, but did not find a qualified candidate. Thus, the
current Deputy Commissioner, Christine Klein is serving in that
capacity of System Executive Director, as well as performing her
regular duties. He extended the AAB's appreciation for the
committee's September visit to Bethel area villages, which
provided a first-hand view of the infrastructure that rural
residents rely on for their basic needs [slide 2].
1:08:00 PM
MR. RYAN outlined some issues include airport safety, and
deferred maintenance, including airport resurfacing.
1:08:31 PM
CHAIR P. WILSON remarked that some of the mayors of those
communities have met with her this legislative session.
MR. RYAN related he is from Unalukleet. He related that the
community appreciates visitors and officials.
1:09:44 PM
REPRESENTATIVE PETERSEN asked for the number of paved or
unimproved runways.
CHRISTINE KLEIN, Deputy Commissioner of Aviation, Office of the
Commissioner, answered that 173 gravel runways are in Alaska of
the 258 state owned airports.
MR. RYAN added that paved runways are the major runways but most
of the others are gravel airstrips ranging from Barrow to
Dillingham.
1:10:39 PM
MR. RYAN mentioned that the AAB recognizes that Alaska is
supporting its transportation system through highways and roads,
the Alaska Marine Highway (AMHS), and aviation and airports
[slide 3]. He characterized Alaska's transportation system as a
three-legged stool, noting that all three legs are important.
The AAB also recognizes that to make decisions, that the state
is considering all modes that serve Alaska. He recalled a high
school trip to Fairbanks to participate on a team by first
flying to Fairbanks and then taking a bus. It made him realize
the importance of airlines in rural Alaska since aviation
provides their lifeline. All aspects of transportation are
important to the board, even though its emphasis is on aviation.
MR. RYAN provided an overview on airport funding. Most of the
airport construction costs are federally funded through the
Federal Aviation Administration (FAA) Airport Improvement
Program (AIP). The FAA provides approximately 95 percent of the
funding and the state funds the remaining 5 percent. In
exchange for the federal funding the DOT&PF must agree to
maintain its airports. Thus, maintenance is a sponsor function
[slide 4]. The emphasis of maintenance and operations is
recognizing the necessity of deferred maintenance [slide 5].
Snow removal is typically a big component, although this year
there has not been a lot of snow.
1:13:35 PM
REPRESENTATIVE MUNOZ asked for the percentage that applies to
municipal airports.
MS. KLEIN answered that AIP funds for municipal airports are
similar to funding for state-owned airports, and depending on
the airport size ranges from 93 to 95 percent federal to state
or municipal match.
CHAIR P. WILSON asked whether the Anchorage Metropolitan
Transportation Solutions (AMATS) would apply to only road or if
the AMATS is for airports, too.
MS. KLEIN responded that AMATS applies to other transportation
modes, but not to airports. In further response to Chair
Wilson, she replied that she did not have the amount for the
state matching funds for the last ten years, but she offered to
supply the information.
1:15:14 PM
MR. RYAN continued discussing deferred maintenance [slide 5].
He stated that the backlog of $90 to $95 million in airport
maintenance needs means that Alaska is losing ground. In 2008,
the backlog of $98.9 million existed and this year is
approximately $94 million. Some projects may deteriorate so
badly that it could affect the AIP process.
MS. KLEIN, in response to Chair Wilson, explained that the
airport ARRA funds were about $78.3 million, with most
designated for runway reconstruction or fairly large repair
efforts that would not necessarily be considered maintenance.
1:16:38 PM
MR. RYAN related the rate of deterioration increases
exponentially with infrastructure age. The longer maintenance
is delayed, the more it will cost to complete projects. He
offered that HB 325 addresses deferred maintenance, with
approximately $3.5 million directed to aviation. He remarked
that some federal funding is available for surface maintenance.
More efforts and resources are required by DOT&PF for deferred
maintenance, including brush and tree cutting, fencing, gates,
buildings, facilities, water drainage, lighting, navigational
aids, electrical equipment, wind cones, signage, and airport
markings [slides 6 - 7].
1:17:26 PM
MR. RYAN referred to photographs that depict operational damage
to a facility, a rural runway that needs brush maintenance. He
stated that one extremely beneficial program is the dust
palliatives project. He recalled growing up in rural Alaska and
having his nose swabbed to determine the level of asbestos
particles, which provided information to support paving the
runway. In areas in which it is not feasible to pave, the dust
palliatives is a positive way to reduce dust, and in areas such
as Ambler could keep down the natural asbestos. The life cycle
is about three years and it feels like landing on pavement, he
said. The state has worked with non-profits to minimize costs
to the state in some rural areas.
REPRESENTATIVE GRUENBERG recalled the legislature passed a law
to make it easier to use Native Corporation funding in projects.
1:20:10 PM
MARY SIROKY, Legislative Liaison, Office of the Commissioner,
Department of Transportation & Public Facilities (DOT&PF),
explained that last year the legislature passed legislature with
respect to potential liability issues associated with the Indian
Reservation Roads. In further response to Representative
Gruenberg, she said the bill was limited to Indian Reservation
Roads, but she was unsure if similar provisions apply to federal
government to aviation. She related that Indian Reservation
Roads are funds directly from the federal government to the
Native Corporations or the owners of the road.
CHAIR P. WILSON recalled that the DOT&PF is still working on
memorandums of understanding (MOUs) to implement the new law.
1:21:29 PM
REPRESENTATIVE PETERSEN asked what materials go into the dust
palliatives.
MR. RYAN offered that the dust palliatives are fully natural.
1:21:59 PM
REPRESENTATIVE PETERSEN asked for specific ingredients used.
MS. KLEIN related that some dust palliatives are oil based, and
some are tree sap compounds. She stated that the DOT&PF has
been testing to see which ones work best, but it varies for each
region of the state. She said she does not recall which ones
are being used on the runway listed on the slide, but the
outcome is a smooth surface.
MR. RYAN, in response to Chair Wilson, explained that the
material is sprayed on the runway. He explained the process,
including that the roller is very heavy to transport by air.
However, once villagers used the commercial roller several times
they were able to improvise by using a piece of the pipeline,
filling it with water, pulling a trailer with a 4-wheeler to
apply the dust palliative on the runway, and then rolling the
pipe across the runway. The end result is a product that looks
like pavement, he stated.
1:23:32 PM
MR. RYAN reviewed airport surfacing [slide 8]. In 2008, airport
resurfacing costs were approximately $70 million. He described
the photographs, including one that showed erosion at the
Kivalina air strip. Another photograph illustrates a rural
airport, which was very dangerous to land on, and was recently
replaced with AIP funds. The new runway extends the runway by
about 400 feet and adds safety areas. Many runways are
dangerous due to soft spots, he stated. He pointed out the Pt.
Hope runway photographs that show the runway before and after
painting. Although the runway is paved, it is difficult to tell
where the runway begins. Airport painting is very beneficial
for safety reasons.
1:25:49 PM
MR. RYAN highlighted the funding history using a graph [slide
9]. The red shows the federal AIP Surface Maintenance Funding,
the green the state Airport Life Safety and Deferred Maintenance
Funding, and the blue the state Airport Facilities Deferred
Maintenance and Critical Repairs Funding. He explained a
gradual increase in federal funding in the past few years, as
well as a spike in FY 09 of $11 million in general fund for
deferred maintenance at airports. Although state funding has
been unpredictable, the funding is used for matching AIP funds
and demonstrates the state's contribution. Once the state
agrees to receive funding, the airport must be maintained for 20
years. The AAB would like state funding to remain constant or
increase to be able to make its case at the federal level.
1:27:21 PM
CHAIR P. WILSON asked if the department receives any advance
warning on matching funds.
MS. KLEIN, in response to Chair Wilson, related that the AIP
program funding has been fairly steady, and the average funding
ranges between $250 to $275 million each year. The AIP program
funding has been gradually increasing, and the state match is
about 5 percent for the 93 to 95 percent federal funding. She
related that the projects change but the matching funds are
fairly consistent.
MR. RYAN stated he recently received the Obama administration
figures. He recalled the funding is similar to last year's
funding. He outlined the Aviation System Plan [slide 10]. The
federal government requires states update the Aviation System
Plan every five years. The DOT&PF has received funding and has
created a comprehensive plan to identify state issues. The
Aviation Advisory Board uses federal dollars to identify
projects such as deferred maintenance lists. The state has been
able to graph and chart deferred maintenance needs. He briefed
the committee on the four areas the AAB has been working on,
including the Social and Economic Impact Study. The economic
portion has been completed which identified that aviation brings
in $3.5 billion of the Gross State Product (GSP), or five
percent of Alaska's Gross State product and encompassing 47,000
jobs [slide 10]. He related that aviation provides an economic
driver for the state. The board is currently working on the
social study, in particular, with problems with federal funding
and to help point out that Alaska is different from other
states, including providing specific examples. He further
related that Lime Village is a tiny community of six people, but
has a 1,500 foot runway, that is too small to accommodate plane
to bring in fuel or plywood. The village does not have any
economic capabilities, and many rural airports are similar.
This paints the social picture and helps demonstrate the
importance of airports and federal dollars to sustain life.
1:31:09 PM
MR. RYAN identified the Board has created Aviation System Plan
work groups, including groups to address Maintenance and
Operations, and the U.S. Postal Hub Expansion.
MS. KLEIN, in response to Chair Wilson, stated that APEB stands
for the Airport Project Evaluation Board (APEB). This board
meets annually to prioritize airport projects and identify
project funding and timelines. She described this process as a
quantitative process.
MR. RYAN described another area that the AAB is working on is to
continually update the maintenance and operations (M&O) deferred
maintenance list.
1:32:13 PM
MS. KLEIN, in response to Representative T. Wilson, explained
that the M&O deferred maintenance list consists of 100 to 120
projects, with most maintenance projects generally performed in
house, and that the larger projects, the CIP projects, typically
use federal funds and include longer phases of engineering and
design work.
1:33:12 PM
MR. RYAN related another focal area for the AAB is Airport
Requirements and Development Standards. He explained that the
federal government requires ever increasing standards for runway
projects. The AAB will review the social impacts and use the
system plan to develop its projects. He reported that airport
performance measures are currently underway to identify economic
drivers in the communities in order to determine the specific
type of runway needed for the community. He characterized the
Aviation System Plan as a great asset, not only to the DOT&PF,
but also to the AAB.
1:34:16 PM
MR. RYAN highlighted a jet fuel production problem [slide 11].
In November, the air carriers using the Alaska International
Aviation System (AIAS) ran out of jet fuel supply due to
unexpected traffic increases during the holidays. This caused
cargo planes to temporarily divert while fuel was being
restocked. The DOT&PF and others responded and helped
facilitate and bring in additional jet fuel to Alaska. The
United Parcel Service (UPS) purchased $30 million in fuel, and
the DOT&PF worked with the Department of Natural Resources to
arrange for a barge to come in to the Tesoro plant and pipe the
fuel to the airport. This problem could become a long-term
problem, which is tied to in state fuel production, he stated.
MR. RYAN illustrated that the jet fuel production problem is an
example of how one mode can impact other modes of
transportation. He explained that the Alaska Railroad (ARR) has
been affected by Flint Hills Refinery producing one-third less
jet fuel and the ARR transports that fuel to the airport. Fuel
prices in some villages, like Kiana, typically cost from $8 -
$12 per gallon, but when the barges cannot make it to the
villages, the goods must be flown into the villages instead.
Thus, the transportation costs also dramatically increase. He
discussed the importance of aviation in Alaska [slide 12].
Aviation brings $3.5 billion into Alaska's Gross State Product
(GSP), and provides 47,000 jobs statewide, which is the fifth
largest industry in Alaska. He pointed out the significant
improvements to airports. He stated safety, sustainability, and
customer service were Ms. Klein's goals and she has done an
excellent job. The Aviation Advisory Board urges the state to
fill the void that will be left when Ms. Klein leaves her deputy
commissioner position on March 1.
1:38:27 PM
REPRESENTATIVE JOHANSEN agreed Ms. Klein has done a great job.
He asked for the value of the deputy position for the industry.
MR. RYAN stated that he is informally involved in the Air
Carriers Association and reported the significant increase in
customer service to the industry with the creation of the Deputy
Commissioner of Aviation. He stated that funds are controlled
through the Federal Highway Administration (FHWA). It has been
helpful to have someone in DOT&PF that industry can contact with
respect to aviation issues. Previously, the communication
between the DOT&PF and industry was lacking, he stated. Many
aviation issues are important for life-safety so the DOT&PF
deputy commissioner's role is an important one and is needed by
the aviation industry.
1:40:59 PM
MS. SIROKY, in response to Chair Wilson, answered that the
DOT&PF Commissioner is actively searching for a replacement and
will take an active role in hiring a new deputy commissioner.
While the position is not posted, the vacancy is known in the
industry.
1:42:11 PM
REPRESENTATIVE MUNOZ understood that the federal funding will be
ending for the Medallion Safety Program.
MR. RYAN responded that as an operator the Medallion Foundation
provides a valuable program since it forces airlines to become
part of a program that increases airport safety. The Medallion
Foundation is focused on changing the culture and attitude of
operators and pilots flying in Alaska. The Medallion Foundation
provides training on system safety and human behavior in an
effort to reduced aviation accidents. The program helps smaller
carriers create a safety program and answers to safety concerns
outside the FAA and airports. He related the program includes
the tap root analysis and maintenance programs.
MR. RYAN explained that the Medallion Foundation provides a
shield program, which is a 5-Star program. Once an organization
has received all five stars, it is eligible to be evaluated for
the Medallion Shield. This evaluation focuses on company
management, corporate safety culture, and front-line employees
to determine if the concepts associated with the stars are
successfully incorporated into day-to-day company operations.
Some AAB board members are shield carriers, he said. Since
federal funding is disappearing, he suggested the state consider
funding this program as it is beneficial to small carriers, in
particular.
MS. KLEIN added that she works very closely with the Medallion
Foundation, mentioning that the foundation brought in flight
simulators last year to Southeast Alaska and Fort Hood. The
DOT&PF also works with the Medallion Foundation on the mapping
for the computer visualization of the topography. She advised
members that U.S. Senator Lisa Murkowski recently introduced a
bill in the Congress to continue the funding for the program.
1:45:34 PM
REPRESENTATIVE PETERSEN remarked that he observed the simulator
at Lake Hood and he could see the benefits to pilots, especially
for operators who are not flying often.
1:46:20 PM
^Update on Aviation by Christine Klein, Deputy Commissioner of
DOT&PF Aviation
Update on Aviation by Christine Klein, Deputy Commissioner of
DOT&PF Aviation
CHAIR P. WILSON announced that the next order of business would
be an Update on Aviation by Christine Klein, Deputy Commissioner
of DOT&PF Aviation.
1:46:49 PM
MS. KLEIN acknowledged the Aviation Advisory Board (AAB) has
been very helpful and advises the DOT&PF on technical issues,
provides support, and constructive criticism on their programs.
She pointed out several board members present today, including
Mr. Ryan and Mr. Jacobsen. She explained the board has met 12
times during the past 26 months.
MS. KLEIN provided some information previously requested by
members. Of the 258 airports, only 173 airports have gravel
runways. The state also has 22 certificated airports, which are
the airports that typically offer jet service. The AAB has been
very active with respect to the interrelatedness of the
transportation system. She said she appreciates their "broad
brush." She expanded on comments in areas covered by Mr. Ryan.
She related that the DOT&PF Division of Aviation's focus has
been on "safety first." She grew up in rural Alaska and
recognizes the rural issues. Alaska has the largest aviation
system in the world, and sustainability of the system is
important. She emphasized customer service as the division's
focus. Mr. Ryan previously mentioned that a majority of
funding, or 95 percent of the funding is federal funding, which
is an unusually higher level of funding than for most states.
However, the high level of federal funding assists the
department to complete projects and maintain and operate its
airports.
1:49:47 PM
CHAIR P. WILSON asked whether the airport maintenance projects
in villages are agreed to by the community and to describe the
process the DOT&PF uses.
MS. KLEIN answered that is not typically the division's
practice. Projects are scored, but the needs are always greater
than the funding for projects. Certain criteria must be met
when using federal funds, but some things are trigger points
which elevate the priority of a project. Trigger points may
include safety issues or to identify those communities without
any other type of transportation access. For example, a
community without a marine link or one without road access will
have a higher priority. She related that some communities have
offered to perform the maintenance to demonstrate their
commitment to the project or they may offer to provide the
aggregate for their runway. For example, Kvivak recently wanted
its runway extended so the communities affected offered to
provide some maintenance and gravel for the site. This type of
participation represents a new trend. Mr. Ryan previously
mentioned that the dust palliatives are helpful. She related
that the DOT&PF has been reviewing the methods or application
process for dust palliatives. She pointed out that dust
palliatives extend the life of the gravel runways and help
stretch the DOT&PF funds.
1:52:53 PM
MS. KLEIN highlighted that the AAB was instrumental in seeing
this project completed. The federal funds have been increasing
for some time, with the aviation capital funds ranging from $230
to $270 million for airports. Alaska has been extremely
successful in obtaining 7 percent of the federal AIP funds,
noting ever increasing competition for funds.
1:53:51 PM
MS. KLEIN related that the Aviation System Plan is a
comprehensive plan, which is required by the FAA to qualify for
federal funding. The plan is prepared about every five years
and focuses on inventories of the state's airports. The board
recognizes that a comprehensive plan should consist of more than
an inventory and should truly be a comprehensive plan. Part of
the process requires the department to compile and review
quantitative data. The DOT&PF has conducted its first Economic
Impact Assessment ever. She reported that the findings were
quite surprising. Although the DOT&PF knew that aviation is
important, it discovered that aviation provides 8 percent of the
GSP, consisting of 47,000 jobs in aviation. The assessment
should help the DOT&PF make better decisions in the future.
1:55:26 PM
MS. KLEIN stated the division has reviewed some maintenance and
operation needs, the U.S. postal hub exemptions in Alaska, and
other technical issues that will help prioritize funds. She
explained that the jet fuel shortage that occurred was limited
to the international airports, but jet fuel shortages could
impact other areas of the state. The Anchorage International
Airport ranks as the third largest cargo airport in the U.S. and
ranks as the fifth largest in the world. The air cargo fuel
uplift peak was in 2006, at 954 million gallons of fuel, and
this year reached a low point at 627 million gallons. She
related the decrease was largely due to the high cost of fuel,
the global economic recession, and the stress on the aviation
industry, with a 23 percent declines in air traffic. At the
same time the fuel refinery capabilities in Alaska declined.
About 78 percent of the aviation fuel is produced in Alaska and
the rest is imported. Alaska does have higher fuel costs and
the DOT&PF is working to find ways to assist the air carriers,
although the department does not get involved in jet fuel
procurement. The DOT&PF does help facilitate communication
between the carriers, fuel suppliers, and refineries.
1:58:03 PM
MS. KLEIN said she is very proud of the DOT&PF and Division of
Aviation's efforts to improve customer service, safety, and
sustainability. The DOT&PF recently hired its first airport
manager in Bethel, which is the third busiest airport in Alaska.
The Division of Aviation has worked to improve customer service
and return calls promptly. She noted that the division has a
website so people can log in and apply to receive specific
information of interest to them. She appreciated the support
from the legislature, the AAB, and the DOT&PF.
1:59:51 PM
REPRESENTATIVE T. WILSON asked for the matrix the DOT&PF uses to
evaluate aviation projects.
MS. KLEIN offered to provide the matrix and mentioned it is also
available on their website.
2:00:08 PM
MS. KLEIN, in response to Representative Petersen, restated that
in 2006, 954 million gallons was the amount of jet fuel tracked
through the carriers self reporting, and last year's self
reporting was 627 million gallons.
2:00:48 PM
HB 329-DEDICATED TRANSPORT FUND/PUB TRANSPORT
2:01:09 PM
CHAIR P. WILSON announced that the final order of business would
be HOUSE BILL NO. 329, "An Act relating to the transportation
infrastructure fund, to local public transportation, to motor
fuel taxes, and to the motor vehicle registration fee; and
providing for an effective date."
2:03:09 PM
CHAIR P. WILSON explained that HB 329 is up for a second
hearing. She provided some answers to questions raised. She
stated that meetings are subject to the Open Meetings Act, and
Brian Kane suggested submitting the report to the council, the
governor, and the legislature. She further stated all of
DOT&PF's meetings are subject to the Open Meetings Act. Another
question was how many states have dedicated funds, and how other
states are addressing transportation funding. She offered that
she has made a formal request to National Conference of State
Legislatures (NCSL), but also provided members with handout,
containing research from Illinois that indicates at least 15
states have dedicated funds for transit.
2:04:25 PM
CHAIR P. WILSON advised members that she is working to define
the terms "rural" and "urban". She recalled that a variety of
definitions currently exist for the terms in various programs.
REPRESENTATIVE GRUENBERG recalled a debate in the 1980s. He
recalled that a former representative included a bridge as being
listed as urban.
2:07:25 PM
TOM GEORGE, Alaska Representative, Aircraft Owners & Pilots
Association (AOPA), stated that the AOPA represents the private
pilots rather than the commercial pilots. Nationally, the AOPA
has 415,000 members, of which 4,300 private pilots belong to the
AOPA in Alaska. While he is a member of the Governor's Aviation
Advisory Board, he is only speaking today on behalf of the AOPA.
He offered to strongly support the concept of state funding for
transportation infrastructure, particularly due to reductions in
federal funding. His organization is just starting to study the
bill so he offered to make initial comments. He recalled other
states have dedicated transportation funds, and some are
multimodal, such as in Maryland, which have been successful. He
suggested flexibility in the percentages of funding for each
mode, that in some instances it might not be prudent to limit
roads to only 60 percent. He acknowledged frustrations with the
current DOT&PF process to prioritize and allocate federal funds,
and would like to explore a less contentious way to allocate
funds. He expressed interest in working with the committee and
commended it for its leadership. In closing, he thanked Ms.
Klein for her service, and stressed the importance of keeping
the aviation presence in the DOT&PF.
2:10:07 PM
REPRESENTATIVE GRUENBERG expressed his concern that HB 329 is
contingent on passage of a constitutional amendment. He
referred to page 9, lines 14-16, of Section 14. He offered his
belief that the language could remain as is, but if the
constitutional amendment does not pass, the committee's work
would be fruitless, or the committee could develop an alternate
plan to proceed in the event that the constitutional amendment
does not pass. He inquired as to whether the sponsor would like
to consider placing an alternate plan in this bill or create a
second bill. He stated that he introduced a bill that is
available, HB 330, and has no pride of authorship. He
recommended that an alternate plan be developed.
2:12:13 PM
REPRESENTATIVE T. WILSON offered her belief that the discussion
of a dedicated transportation fund is worthwhile, whether it
passes or not. The public needs to know that funding
transportation projects is important.
CHAIR P. WILSON expressed concern that to present two approaches
to establish a dedicated transportation fund might confuse the
public on the ballot proposition. She agreed that the
discussion is important.
REPRESENTATIVE PETERSEN recommended not mentioning the term
"permanent fund" when referring to the dedicated transportation
fund and to use the term "dedicated" or "long-term"
transportation fund so as not to confuse the public.
REPRESENTATIVE MUNOZ related that the bill contains a
contingency that states the bill has no effect if the
constitutional amendment to establish a dedicated transportation
fund is not approved by the voters.
2:15:14 PM
REPRESENTATIVE GRUENBERG stated that Section 14 indicates that
except for Section 10 of the bill the rest of the bill would not
take effect unless the constitutional amendment passes. He
suggested that a constitutional amendment must pass the
legislature with a two-thirds vote of each body and a majority
of voters must vote to pass the constitutional amendment this
year during the November election. Thus, the constitutional
amendment must pass these two hurdles. In terms of timing, he
thought it would be helpful for the committee to develop an
alternate plan. Otherwise, it would take time for the next
legislature to pass another bill to create a transportation
fund.
2:17:58 PM
CHAIR P. WILSON recalled the legislature established an
education fund and responded that the process is a simple one.
REPRESENTATIVE GRUENBERG recalled that the education fund has
become somewhat of a "slush fund". He suggested that if the
legislature developed a transportation fund statutorily, that it
would be important to encourage the funds be used to address
transportation needs.
2:18:57 PM
REPRESENTATIVE GRUENBERG, in response to Chair Wilson, suggested
the committee may need legal advice and might want a legal
opinion to identify the constitutional limitations for the
committee if it decided to create a transportation fund in
statute.
2:19:56 PM
CHAIR P. WILSON, in response to Representative Johansen, related
that she previously mentioned the education fund.
REPRESENTATIVE GRUENBERG recalled a fund exists that is not a
constitutional dedicated fund but is a separate account in the
general fund to be used for education. He characterized it as a
sub-account in the general fund, but nothing requires it to be
used for education. No penalty exists and the funds do not
lapse. He suggested a value to exploring the legal limits.
2:21:19 PM
REPRESENTATIVE JOHANSEN said he was disturbed by the term "slush
fund," which has negative implications, but he understood the
mechanics. He referred to page 1, lines 7-8, to the legislative
intent. He asked for ramifications if the legislature did not
appropriate the $1 billion.
CHAIR P. WILSON explained another bill, an appropriation bill,
would provide the vehicle for the funding.
2:22:29 PM
REPRESENTATIVE JOHANSEN referred to Section 3, on page 2, lines
1l-12. He inquired as to whether the Municipal Harbor Facility
Grant Fund would be capitalized as specified using the Fisheries
Business Tax.
2:23:10 PM
REBECCA ROONEY, Staff, stated the intent was not to leave small
funds that had potential funding from the collection of the
motor fuel tax unfunded. The intent is to move the Municipal
Harbor Facility Grant Fund to another section. She referred to
page 3, lines 25-26, which read, "(4) eight percent of the
appropriations from the fund may be used for projects related to
harbor facilities and state-owned marine facilities and for
deposit into the Municipal Harbor Facility Grant Fund (AS
29.60.800)." She stated the Fisheries Business Tax was left
alone.
2:24:33 PM
REPRESENTATIVE JOHANSEN related that the Fisheries Business Tax
specifically is a tax on commercial activities fishermen. He
expressed concern that the commercial fishermen may be singled
out as a possible source of funding.
MS. ROONEY stated that the Fisheries Business Tax language is
not new language in the statute, but is probably referenced in
this section since commercial fishermen use the harbor
facilities.
REPRESENTATIVE JOHANSEN referred to page 2, line 7, and
suggested he might offer an amendment to remove the language.
It would then read, "There is established the Municipal Harbor
Facility Grant Fund consisting of money appropriated to the
fund." He offered to discuss this further with the sponsor.
2:25:56 PM
REPRESENTATIVE GRUENBERG related his understanding that
currently, funds from the watercraft fuel tax can be deposited
to the Municipal Harbor Facility Grant Fund. Under HB 329, the
funding would be deposited to the dedicated transportation fund,
and then be disbursed to the Municipal Harbor Facility Grant
Fund. He cautioned that the possible amendment would prohibit
money from the Fisheries Business Tax from being deposited into
the Municipal Harbor Facility Grant Fund. He suggested that may
be a step back.
CHAIR P. WILSON recalled the Municipal Harbor Facility Grant
Fund was established by Senator Bill Thomas several years ago.
2:27:16 PM
BRIAN KANE, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency,
explained that basically Section 3, the Watercraft Fuel Tax
Account will not be in existence if this bill passes. Thus, in
Section 3, the money that would be separately accounted for is
the Fisheries Business Tax. This is accounted for separately so
to identify the balance that could be appropriated to the
Municipal Harbor Facility Grant Fund.
2:28:21 PM
CHAIR P. WILSON recalled that the Watercraft Fuel Tax would be
deposited to the dedicated transportation fund due to the Alaska
Marine Highway System.
2:28:51 PM
REPRESENTATIVE JOHANSEN asked if this bill is enacted and the
constitutional amendment passes, if anything precludes the
legislature from appropriating money to the dedicated
transportation fund.
MR. KANE responded that if HB 329 passes, that provisions in the
resolution provide an option for fees and taxes to be deposited
into the fund, as well as an option for additional funds to be
appropriated to the dedicated transportation fund.
2:29:40 PM
REPRESENTATIVE MUNOZ understood that in Section 3 of HB 329, the
Municipal Harbor Facility Grant Fund would remain in place while
the Watercraft Fuel Tax Account would be removed.
MR. KANE answered yes. In further response to Representative
Munoz, he responded that the option to have the Municipal Harbor
Facility Grant Fund receive funds from the Fisheries Business
Tax is not mandatory. The funds will be separately accounted
for with an option for the legislature to appropriate funds to
the Municipal Harbor Facility Grant Fund.
MR. KANE, in response to Chair Wilson, related that the
Fisheries Business Tax Fund will be deposited to the general
fund, except for monies directed to dedicated transportation
fund. In further response to Chair Wilson, he explained that
under the bill the only change is that less money will be
separately accounted for since the Watercraft Fuel Tax Account
(WFTA) will be deleted and the funds that normally would be
deposited to the WFTA will be directed to the dedicated
transportation fund. He was unsure if the WFTA is referenced in
other statutes. He offered to research the matter.
CHAIR P. WILSON indicated that it was not her intention to
divert funds from commercial fishermen, but wanted to insure
that the harbors can be maintained for the Alaska Marine Highway
System, barges, or other businesses.
2:32:30 PM
REPRESENTATIVE JOHANSEN referred to page 4, line 29, and asked
for the timing on the capital projects. He recalled that the
capital projects are submitted in late summer or fall and this
subsection would require the advisory council to provide a
report on December 31 of each year.
2:33:04 PM
JEFF OTTESEN, Director, Division of Program Development,
Department of Transportation & Public Facilities (DOT&PF),
answered that was correct, that the Capital Improvement Budget
(CIB) process begins in late summer to identify projects to
request general fund authority or federal funds, federal
aviation or highways. The CIB process includes preparing the
project lists, working with the Office of Management and Budget
(OMB). The general fund projects are scrutinized and cut. The
revised list is submitted to the Governor and is included in the
Governor's Budget request to the legislature. This list would
be developed by the decision-making body, the Transportation
Infrastructure Fund Advisory Council (TIFAC), which uses a
different source of funding. He was unsure whether any conflict
exists, but the timeframe differs from the CIB process. In
response to Chair Wilson, he agreed it would be better if the
timeframes were the same. He offered to provide the date that
the DOT&PF submits requests to OMB.
2:36:12 PM
REPRESENTATIVE JOHANSEN referred to page 4, lines 11-28, and
asked about the process to select the composition of the TIFAC.
He recalled that usually the presiding officers of the
legislature make appointments. He also asked whether the
specific cite listed in subsection (c) is correct for travel and
per diem expenses for legislative members.
2:37:23 PM
CHAIR P. WILSON agreed that usually the appointments are made by
the presiding officers of the legislature, that it could be
changed, as she is open to what makes sense to the committee.
2:38:16 PM
REPRESENTATIVE MUNOZ expressed concern that including
legislators as members of the TIFAC as a part of the decision-
making process for projects is risky, since they represent their
districts and may lose sight of the statewide perspective. She
suggested substituting the director of the AMHS, Aviation, or
their designees since they would represent the modes.
2:39:05 PM
CHAIR P. WILSON expressed her neutrality in the matter, stating
that that impartiality would probably depend on the person.
REPRESENTATIVE MUNOZ expressed a preference for the regional
representation, but thought that including a director from each
of the major transportation sectors would be preferable to
including elected officials.
2:40:21 PM
REPRESENTATIVE JOHANSEN pointed out that the proposed TIFAC
would only function as an advisory board, but that the decision
making process would remain with the department and the
legislature.
2:41:00 PM
REPRESENTATIVE GRUENBERG recalled that the committee should
consider the current tax on cruise ship passengers, which should
be reviewed. He recalled that a recent U.S. Court of Appeals
decision questioned the constitutionality on whether a ferry
system could charge a small fee to its commuters. He further
recalled that the court considered and judged the
appropriateness of the ferry expenditures. He suggested this
may be a good way to enshrine this in state law. He offered his
belief that the funds could be not be used for dredging since
dredging was not specifically required for the ferries to
operate.
2:45:01 PM
REPRESENTATIVE GRUENBERG recalled another court case in
Louisiana in which the U.S. Court of Appeals upheld that taxes
collected from ships using the Mississippi River that could be
used to provide fire-fighting services for ships. He suggested
using a similar concept on the Alaska Marine Highway System
(AMHS) could also benefit fishing industry.
2:46:06 PM
CHAIR P. WILSON, in response to Representative Gruenberg,
related her understanding the suggestion is to put similar
concepts in statute to prevent a lawsuit.
REPRESENTATIVE GRUENBERG agreed, stating that setting provisions
in statute on specific uses of taxes collected could inoculate
the state, and allow revenues to benefit coastal communities.
CHAIR P. WILSON offered to check into this with the attorney
general.
2:47:10 PM
REPRESENTATIVE JOHANSEN expressed concern over any hearings on
the constitutionality of the "head tax" since the state is
currently in litigation on the taxes collected on cruise ship
passengers.
REPRESENTATIVE GRUENBERG agreed it would need to be
confidential.
REPRESENTATIVE JOHANSEN maintained that he would not take part
in any discussion of the legality or constitutionality of the
cruise ship "head tax."
2:47:54 PM
REPRESENTATIVE T. WILSON asked how the allocation was arrived at
for each mode.
CHAIR P. WILSON responded that the allocation approximated the
current expenditure. She stated she is open to suggestions.
The allocation process should provide flexibility.
2:48:43 PM
REPRESENTATIVE T. WILSON suggested using a matrix similar to one
currently used by the DOT&PF for its other projects. In some
years the state might spend more on airports, and she wanted to
insure that the state maintains its flexibility. She referred
to page 3, lines 9-10, to subsection (b), and asked if capital
projects for transportation also included deferred maintenance
costs.
MS. ROONEY recalled discussions with the DOT&PF, that the major
deferred maintenance is provided from the CIB, but the CIB
funding would not be used for snow plowing or day-to-day
maintenance.
2:50:55 PM
REPRESENTATIVE T. WILSON asked whether a dollar amount defines
the difference between a maintenance and capital project.
MR. OTTESEN answered technically no. However, a maintenance
project is typically performed to keep the asset or facility
operational. Capital projects are generally large scale
maintenance projects, such as the systematic repairs to
guardrail on a large stretch of highway.
2:52:13 PM
MR. OTTESEN, in response to Chair Wilson, clarified that
deferred maintenance is just maintenance that has not been
performed over time. He characterized the difference between
maintenance and deferred maintenance as gray area, even for our
federal partners to determine.
CHAIR P. WILSON offered that she would not envision the proposed
dedicated transportation fund being used for routine
maintenance.
REPRESENTATIVE T. WILSON pointed out that it is important not to
put off maintenance projects, since what is maintenance today
could become a capital project later on.
2:53:27 PM
MR. OTTESEN clarified that routinely the CIB contains projects
that might be considered maintenance by the federal government,
but is funded in the CIB using general fund dollars.
REPRESENTATIVE T. WILSON asked what types of projects could be
funded in the proposed dedicated transportation fund.
MR. OTTESEN offered one example as the Dalton Highway. The
DOT&PF may initially resurface the Dalton Highway and it later
need more gravel for resurfacing. The federal partners would
allow federal funding for the initial project, but does not
allow the state to stockpile gravel for resurfacing. The state
typically would use general funds for stockpiling gravel, but
this provides a perfect example of how the proposed dedicated
transportation fund could be used.
2:55:08 PM
REPRESENTATIVE GRUENBERG expressed concern regarding the
Anchorage transit funding. He referred to page 3, to lines 27-
29, to paragraph (5), which allocates five percent of
appropriations from the proposed dedicated transportation fund
for projects related to local community transportation and
transit. He assumed that paragraph refers to public transit
projects.
MR. OTTESEN said he believed it refers to public transit
projects.
REPRESENTATIVE GRUENBERG suggested a larger percentage for
transit, and asked Chair Wilson to flag the item for
consideration.
CHAIR P. WILSON related that the AMATS will receive funding for
transit. She stated she would flag the item but will work for
an equitable allocation, noting a matrix may provide a better
methodology.
REPRESENTATIVE P. WILSON, in response to Representative
Gruenberg, responded that a matrix would be a scoring method for
projects.
2:56:54 PM
REPRESENTATIVE PETERSEN referred to page 4, lines 29-31, to
language previously discussed. He inquired as to whether the
report would be submitted early enough to allow the Governor to
include projects in the CIB.
CHAIR P. WILSON answered that she did not envision the
Governor's participation. She explained that the Governor
considers general fund projects. The proposed dedicated
transportation fund would be a separate matter, she stated.
2:58:11 PM
REPRESENTATIVE JOHANSEN suggested that the process should track
or be synchronized to achieve a smooth process. Since millions
of dollars are involved, the TIFAC could also inform the
governor of the proposed dedicated transportation fund
priorities instead of keeping the two project lists completely
separate.
CHAIR P. WILSON answered she has noted the request.
2:58:57 PM
REPRESENTATIVE MUNOZ referred to the revenue sources. She
related that 60 percent of the aviation proceeds are refunded to
municipalities. She asked for the total aviation revenues
collected.
JERRY BURNETT, Deputy Commissioner, Department of Revenue (DOR),
stated that the tax on 60 percent of the fuel sold at municipal
airports is shared back to municipalities. Currently,
approximately $125,000 is the total amount shared back, although
he was unsure of the total sales. The majority of the $125,000
is shared back to the Juneau International Airport (JNU).
MR. BURNETT, in response to Representative Munoz, agreed that
the structure would not change under the proposed bill. In
further response to Representative Munoz, Mr. Burnett answered
that the Juneau International Airport is not a state-owned
airport and that the airport receives its funding from planning
fees and direct federal grants.
REPRESENTATIVE MUNOZ understood that the state participates in a
share of the projects for municipal airports. She recalled it
might be 3 to 5 percent
MS. KLEIN answered that the municipal airports do not
participate through the state but can apply directly to the FAA.
Additionally, their sponsor, typically the municipality or the
DOT&PF, would also apply for the AIP grants on their behalf.
REPRESENTATIVE MUNOZ inquired as to whether the 96 percent could
be shared.
3:02:01 PM
MS. KLEIN clarified that the share depends on the type of
project. Terminal projects are treated differently than runway
projects. The sponsor would still need to provide matching
funds, she stated. For example, the Juneau International
Airport would need to provide its own matching funds whereas the
state airport would not.
REPRESENTATIVE MUNOZ asked whether municipalities have any
opportunities to receive state support.
MS. KLEIN answered that the state will participate in some
terminal projects to provide the matching funds since other
funds for certificated airports do not exist and municipal
airports do not have sufficient passengers to raise the
revenues. In some rare instances the state will participate by
providing matching funds for municipal airport terminal
projects.
3:03:22 PM
REPRESENTATIVE GRUENBERG referred to page 3, lines 1-4. He
understood that the funding for the proposed dedicated
transportation fund will be removed by appropriation. He
pointed out that the Governor would participate in the process
since he/she would need to sign the bill. He asked whether the
appropriations will be segregated and would be a separate
appropriation from the general fund. He asked if that was the
sponsor's intent.
CHAIR P. WILSON agreed that was her intent. She referred to
page 4, lines 1-4, which requires the DOR to determine the
market value of the fund and invest the fund. She asked Mr.
Burnett whether the DOR performs this function with other funds.
MR. BURNETT answered yes, and listed some examples, including
the Children's Trust Fund and the Public School Trust Fund. He
offered that the DOR manages about 100 funds with various payout
rules.
3:05:10 PM
CHAIR P. WILSON related that the fiscal note has not yet been
prepared.
MR. BURNETT responded that the fiscal note was prepared today.
He explained that the DOR would attempt to achieve a real rate
of return of 5 percent, which would require a mix of equities
and fixed income securities, perhaps a ratio of 55 to 45. The
DOR would charge contractual fees against that since external
management would manage the equities. He estimated the fees
based on $1 billion in appropriations would equal $424 thousand
per year, and based on today's market conditions would expect to
produce a spendable income of $50 million the first year. He
also estimated, based on the permanent fund and constitutional
budget reserve, that a similar asset like the dedicated
transportation fund over 20 years would probably incur losses in
15 to 20 percent of the time, but the probability that the
earnings would be double the anticipated projections would be
about the same percentage.. He related that he has not had an
opportunity to assess the exact probabilities for the dedicated
transportation fund.
3:07:29 PM
[HB 329 was held over.]
3:08:25 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 3:08
p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 329 Sponsor Stmt.pdf |
HTRA 2/9/2010 1:00:00 PM HTRA 2/11/2010 1:00:00 PM |
HB 329 |
| HB 329 AK Trans Finance Study.pdf |
HTRA 2/9/2010 1:00:00 PM HTRA 2/11/2010 1:00:00 PM |
HB 329 |
| Aviation advisory board Legislative Update 2010.pdf |
HTRA 2/11/2010 1:00:00 PM |
|
| legal opinion on open meetings.pdf |
HTRA 2/11/2010 1:00:00 PM |
|
| Illinois research on trans funds.pdf |
HTRA 2/11/2010 1:00:00 PM |