Legislature(2007 - 2008)CAPITOL 17
01/29/2008 01:30 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| Presentation: 2030 Plan | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
January 29, 2008
1:34 p.m.
MEMBERS PRESENT
Representative Kyle Johansen, Chair
Representative Mark Neuman, Vice Chair
Representative Anna Fairclough
Representative Craig Johnson
Representative Wes Keller
Representative Mike Doogan
Representative Woodie Salmon
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION: 2030 PLAN
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to report
WITNESS REGISTER
JEFF OTTESEN, Director
Division of Program Development
Department of Transportation & Public Facilities
Juneau, Alaska
POSITION STATEMENT: Discussed the 2030 Plan and answered
questions.
ACTION NARRATIVE
CHAIR KYLE JOHANSEN called the House Transportation Standing
Committee meeting to order at 1:34:21 PM. Present at the call
to order were Representatives Neuman, Keller, Fairclough,
Salmon, Doogan and Chair Johansen.
^PRESENTATION: 2030 PLAN
1:35:01 PM
REPRESENTATIVE FAIRCLOUGH informed members that she received a
letter from DOT&PF but has not yet had time to read it.
REPRESENTATIVE NEUMAN noted DOT&PF extended the public comment
period on the 2030 Plan so that legislators and the public have
more time to review it. He thanked Chair Johansen for
intervening in that matter.
CHAIR JOHANSEN announced that Representative Johnson had joined
the committee. He then thanked DOT&PF for being flexible in
extending the public comment period for the 2030 Plan and said
the commissioner assured him the extension will not be
problematic to the STIP process. He welcomed Mr. Ottesen and
asked him to continue his presentation.
1:36:08 PM
JEFF OTTESEN, Director, Division of Program Development,
Department of Transportation & Public Facilities, told members
his topic today would be the 2030 Plan. He said he would first
answer a question raised last week about efficiencies DOT&PF is
employing to address the increased cost of transportation
projects. He stated:
The three things that I can point to is we, a couple of
years ago, identified a software package that helps you
optimize the route selection of a new route when you're
working in through terrain and you have things like
wetlands and historic properties and any of a dozen other
considerations including cut fill, haul balances of cut
fill, software developed by the Australian Roads
Commission. They then took it commercial. It has since
been sold to Trimble, which is a company here in the United
States and is used in six continents to identify roads,
including about seven or eight DOTs. We identified that
software. I wish I could tell you that we bought it. We
can't. It's actually sold on a per use basis by the mile
so you rent the software per project per mile. We did
negotiate, they claim - they the company, the only
exception to their worldwide pricing policy, and we were
able to tell them that our low volume roads deserved a
lower price than say a four lane freeway in Texas. That's
one example.
Another example is one we're actually demonstrating right
now with [the Department of] Public Safety and the
Anchorage Police Department is a camera that you can use to
photograph a crime scene, and I'll get to engineering in a
minute. In that photograph it allows you to do
measurements after the fact, very accurate measurements so
you can photograph the crime scene or the accident scene,
take measurements, use them in court, do a lot of things
that now are done by hand and accelerate the opening of a
freeway or a highway after a fatal accident, which often
can take hours to clear. It's a very expensive camera.
It's over $200,000 but its engineering application is that
it can also be used to photograph a very busy intersection
and allow you to do measurements without having to put
people out in traffic lanes. You can photograph a bridge
from different angles. The State of Washington DOT
identified it last year as their technology of the year for
those applications so we're now going to be using that here
in Alaska. It has both highway safety benefits and
engineering benefits.
The third one, and one we implemented, is a technology
called video log. Video log is where you drive down the
road and take a lot of pictures. Those pictures can be
used and then put on the web and viewed by the engineers to
look at the roadway, say on a day like today when the road
is covered with snow and it's hard to get out. The
daylight is short. They can sit in their offices and see
that roadway in optimal conditions. Very high resolution
photographs - there are 1,200 of them taken per mile. It's
indexed in a way that it makes measurements possible of the
assets on the roadway. That's unique. Among all the
states only one other state has been able to do that
particular trick...to have it indexed in a way that you can
actually do measurements so we can do asset inventory in a
very cost effective manner as opposed to putting people in
the field and measuring things manually. It has two
benefits - asset inventory and for engineering, the
feedback I'm getting from engineers in the field that are
using this are saying this is wonderful. This allows us to
see every detail of that roadway sitting in their office,
be it Anchorage, Fairbanks or Juneau, without a field trip,
without travel, and without dealing with things like
traffic control and bad weather and snow cover, etcetera,
etcetera. So, those are three efficiencies.
CHAIR JOHANSEN asked if the [video log] camera would be
applicable to airstrips or other modes of transportation.
MR. OTTESEN replied the camera could be applied to Alaska Marine
Highway System (AMHS) projects. He was not sure whether it
could be applied to aviation projects. He said the law
enforcement community is intrigued by it. The FBI is using it
for crime scene investigations and, to demonstrate its accuracy,
can measure the diameter of a bullet hole from a photograph.
REPRESENTATIVE NEUMAN asked whether the cost of that equipment
is already included in DOT&PF's budget.
MR. OTTESEN said that equipment will be paid for with Highway
Safety Funds. DOT&PF will provide two cameras to law
enforcement; one to the Anchorage Police Department and one to
the Alaska State Troopers. DOT&PF could download accident scene
photos on the day the accident occurred.
REPRESENTATIVE NEUMAN asserted that he has been trying to get
departments to work together so he commended Mr. Ottesen for his
efforts.
MR. OTTESEN told members he would like to talk to them about
DOT&PF's Highway Safety Plan later in the session because it was
developed with remarkable cooperation among departments. He
noted highway safety is a very serious problem; the plan goes a
long way in identifying the scope of the problem.
MR. OTTESEN continued his presentation:
With that, I'm ready to begin, Mr. Chairman. I'd like to
talk about schedule first because schedule has really been
the key issue on people's minds, including Representative
Neuman's comments here before we gaveled in. There's a
diagram there in your chart, made from Excel, with about a
two-year time line. That diagram basically shows you the
schedule we thought we were following starting in the
summer of 2006 when the regulations were issued in draft
form that governed this planning process.
We knew then we had a potential problem in getting
everything done that we had to get done. We had to get
done under that a long range transportation plan in a
certain amount of time. We also had to get done a
strategic highway safety plan, which I just mentioned.
That was even on a shorter time frame. That was due to be
done by September of last year with about a $13 million
consequence if we didn't get it done. We'd lose that much
money.
As the summer of '06 wore on, we also knew we were going to
have a new administration, which added another dimension to
the problem. You couldn't really be starting a policy plan
when, one way or another, there was going to be a new
governor here in Juneau come December of that year. So,
whatever we did, we had to wait for the new administration
to get on board. Our solution to that was we will update
the STIP because the STIP is the thing that is really the
tool that US DOT is using to control the completion of the
plan. The plan has to be complete before we can amend the
STIP [Statewide Transportation Improvement Plan]. That's
the controlling factor.
So we said let's have a STIP that's amended before the
deadline, which was July of last year. We will then be
able to extend the time that we processed the plan given
the fact that we'd have a new administration. Our plan was
we would have the long range plan done by approximately the
end of 2006, at which time the STIP would have carried us
across that gap in time of about six months. The next
wrinkle, the card that got dealt that we couldn't
anticipate, was the way the money was allocated at the
start of 2008 in September of last year and I talked about
that a little bit in the STIP presentation, about how we
had a change and how much apportionment we're receiving and
that has changed our flexibility. We now have to spend
dollars in categories we weren't planning on spending it
in, specifically more safety projects and more bridge
projects, less highway reconstruction projects. The only
way we can change the STIP to then spend those dollars in
this fiscal year is to get the plan done and then to do a
STIP amendment and then we will be ready to do the project
work that will enable us to not lose those dollars.
I know this is confusing. If you look at this you see
where that first horizontal band of red is. That's really
where we lost our flexibility. That's when we said oops,
we need to do a STIP amendment now but we had to complete
the long range transportation plan and then do a STIP
amendment. You see there those arrows right below - or
between the two red lines. You can see that short amount
of red arrow there near the bottom. That's the amount of
time that will be left to obligate funds at the end of this
fiscal year after first completing the long range plan and
then completing the STIP amendment. So we're taking a
very, very generous amount of time, 10 or 11 months, and
compressing it into two to three months under the schedule
right now. There's really no one here to blame. We
thought we had a plan. It was identified given all of the
facts ahead of us, the new change in governor, the
requirement to do everything, the fact that we were also
working on a separate planning document but, when those
notices arrived in October, all our well-laid plans were
basically undone.
So if that's not entirely clear because it's a lot of
material here...I'd be happy to go over that further so you
understand. That's the push. That's why we tried to do
this plan quickly and it's because we literally have tens
of millions of dollars of state funding that's at risk.
REPRESENTATIVE NEUMAN asked Mr. Ottesen to explain the
unexpected events.
MR. OTTESEN said in the 20 years he has been in the business, he
has never seen DOT&PF lose the flexibility that it lost with
apportionment last October. He affirmed the rescissions are the
problem. Rescissions are a take back of apportionment, which is
hollow in most cases because it is an unfulfilled promise. When
that is left on DOT&PF's books, it gives DOT&PF latitude to
adjust when a project slips and another must be substituted. He
said now, DOT&PF now has to substitute like for like so that a
bridge project would have to be substituted for another bridge
project of a like dollar amount. Previously, DOT&PF could
substitute any project for another. He continued:
So the change in October of last year, I still describe it
internally as literally turning our world upside down in
how we manage projects. I don't know to this day that all
of our staff fully understands its implications. We've
spent time talking to them, explaining to them, but a lot
of people in DOT...really want to know what's my budget,
what's my schedule, let me get it done. They don't want to
deal with these arcane rules of the funding itself. There
are just a few of us that have to suffer those roles. I
hope that answers your question, Representative Neuman.
1:48:50 PM
MR. OTTESEN continued his presentation:
So, the plan itself - there's a PowerPoint presentation I'd
like to go through. On the bottom of page 1 there's - you
know, the question why is there another plan. Well the
feds make us do it in a simple nutshell. There's a
requirement in SAFETEA-LU that we not only have a statewide
long range transportation plan, but that we update it to
meet new requirements that were contained in SAFETEA-LU.
In our state we have chosen to treat the long range plan
as, what I call, a top level plan, a strategic plan, a
policy plan. Those are the kinds of words you see used in
other states. About a third of the states do it in that
approach. Some states - I'll pick out a state that I know
that doesn't do it that way is Kansas but Kansas doesn't
have ferries, they don't have aviation, they have a very
simple state highway system. They don't do a lot of local
roads. So it's fairly easy for them to write one plan that
covers all of their needs and get it done. The state of
Alaska - huge geography, lots of different systems, very
diverse sets of needs between urban areas and rural areas.
Trying to do one plan that covered everything and was the
definitive plan, there was no other document to turn to,
would just be a huge job. I don't think it's possible. We
do it in a tiered approach.
The policy plan is literally kind of a high level 30,000
foot view of where the state needs to go but it leaves to
those other planning documents the details. Their job is
to flush out the details, be it a modal plan, like an
aviation plan or a marine highway plan, or a geographically
constrained plan, like the Anchorage long range plan, like
the Southwest Alaska transportation plan or there are other
topics too. We have for safety, we have plans for ITS; we
have plans for other subsets. If you look at AS 44.42.050,
you'll find that state law actually provides, just for what
I'm talking about, a tiered plan done in multiple
documents.
1:50:40 PM
MR. OTTESEN continued:
On page 2 ... speaking here what I've just said at the top
of 3. This plan is a policy plan. It's not a list of
projects. We don't want it to be so unrealistic that we
just say that the sky is blue and the future is rosy and
let's go build everything we need to build. We wanted this
plan to have one overriding message: there's been a change
in funding, there's been a change at the national level,
there's been a change in what the dollars accomplish and we
think that was the key message to get out. If we don't do
something different as a state, our dreams for
transportation will be in peril.
And so, when we started this plan, we said that is the key
message. We have to communicate that one thing if nothing
else in this planning document.
REPRESENTATIVE DOOGAN said he is familiar with the 2030 plan.
Some projects were specifically mentioned but always under the
rubric of "among others." He asked whether a 2030 plan could be
submitted that did not include any projects.
MR. OTTESEN said the plan did not have to include any projects;
however DOT&PF felt such a plan would not adequately explain,
for example, system expansion so projects were included to
illustrate those phrases. He asserted that DOT&PF is not
attempting to let those named projects serve as projects that
must go forward. Some of the named projects are already in the
implementation stage.
1:53:23 PM
MR. OTTESEN continued:
Even our list of what we call strategic projects, $5.5
billion and we talk in there about that, we...deliberately
did not make that list part of the plan because to do so
would let everyone argue over the non-essential point. The
point is not which projects are in that 5.5 billion, the
point is we can't build that 5.5 billion without something
being different on the funding side. It's sort of moot to
talk about the projects as there isn't enough money to
build the list. And the 5.5 billion is a subset of needs,
not the entire list, and that's the key point. We can't
even build an important subset of needs, even if we could
all sit at the table and agree what the subset is. We have
to constrain further and that's really what we're trying to
say is the current funding stream will only get you so far
against the broad set of needs in this state.
The other thing about the plan I should talk about is just
that the funding itself that's shown in the plan ignores
the question of eligibility. It treats all of the funding
we get as essentially one color - aviation dollars, highway
dollars, marine highway operating dollars, etcetera.
That's only to make the point at the macro level, at the
30,000 foot level, how are we doing? We're not trying to
say well we need to shift aviation dollars to highways or
ferry dollars to something else. That can't happen
legally. We understand that. But the key point is there
are some real holes between what we think we need to do as
an owner of the transportation system and what our means
are to address those ownership responsibilities.
REPRESENTATIVE DOOGAN asked about a relationship between the
projects mentioned in the 2030 Plan and the projects in the
STIP, "that is, it doesn't make it more likely that a project is
going to get into the STIP if it's in the 2030; it doesn't make
it less likely if it's not."
MR. OTTESEN said it might make project inclusion more likely in
the subordinate plans. He then elaborated:
If you are writing an area plan, just pick a region, or the
YK Delta and you propose to build an 8,000 foot
strip...when the policy is we should be building 3,300 foot
strips because we have so many needs we need to allocate
funds judiciously ... we would probably tell the authors of
that regional plan you can't make that recommendation. It
isn't consistent with being ... fair with the money and
making it serve as many user groups as possible. So, it
might constrain what goes in a subordinate plan, which
would then constrain what goes into a spending plan. But
we're not trying to make this long range plan, and we could
put those kinds of words in the front end of the document
if that would make people more comfortable, we deliberately
keep this as a policy plan, as a strategic vision with a
message about funding. We think that's really the take
away message coming out of this plan. The truth is, most
of our long range plans up until now have been "yawners."
They have sat on the shelf and they have not drawn much
interest. For some reason this one caught interest and
it's kind of been an interesting phenomena.
1:56:24 PM
REPRESENTATIVE NEUMAN asked how he can communicate to his
constituents what DOT&PF's specific responsibilities are in his
district, particularly since his district has many borough
transportation projects underway.
MR. OTTESEN said that is a good question because the public
doesn't care who owns the road. The public wants to drive on
safe, smooth roads that are appropriate to their needs. He said
there is a hierarchy of roads in Alaska based on ownership:
state, local government, federal or tribal entities.
REPRESENTATIVE NEUMAN asked for information to provide to his
constituents.
MR. OTTESEN said he can provide maintenance district maps. He
pointed out that sometimes road maintenance is cross-shared.
1:59:09 PM
REPRESENTATIVE NEUMAN noted a local road service area (RSA) does
some of the crack seal work on state-owned roads.
MR. OTTESEN noted DOT&PF is statutorily required to maintain
lists of state roads, which are posted on the Internet.
CHAIR JOHANSEN said he recognizes why people are frustrated with
the 2030 Plan and how it affects future projects. He expressed
concern that if the long range plan policy is concentrated on a
certain area, it will affect specific projects.
MR. OTTESEN remarked it is far more likely that subordinate
plans will specify project prioritizations.
CHAIR JOHANSEN asked if constituents should focus on the modal
plans.
MR. OTTESEN replied in terms of allocating resources in the
short term, those plans are far more meaningful. The 2030 Plan
is treated as a call to arms for the state. The funding picture
has changed. A different approach is necessary otherwise
Alaskans must come to grips with what the state is able to
accomplish.
2:02:21 PM
REPRESENTATIVE JOHNSON asked if there is still an administrative
interest in participating in the upgrade and trade of municipal
roads and whether that should be included in the 2030 Plan. He
explained the upgrade and trade involve the state upgrading a
road and then giving it to the municipality, which would then
maintain it.
MR. OTTESEN said that strategy is not listed in the 2030 Plan
but should be. That policy has been in existence for almost 20
years. He noted that one complaint about the 2030 Plan is that
it does not sufficiently address ports and harbors. DOT&PF has
been devolving itself from ports and harbors for 20 years.
DOT&PF has transferred ownership of many harbor and road
facilities and will continue to do so if it has the funds to do
upgrades.
REPRESENTATIVE JOHNSON asked whether that philosophy should be
included in the 2030 Plan as an overriding plan and whether it
will limit DOT&PF if it is not in the plan.
MR. OTTESEN said that type of policy comes from the legislature
so it does not need to be included in the plan; however he
believes it should be included in the plan's overall efficiency
proposal because it makes DOT&PF more efficient. DOT&PF manages
many more roads than the typical department of transportation
elsewhere in the country. DOT&PF manages about 40 percent of
the state's road miles. The national average is about 20
percent.
REPRESENTATIVE JOHNSON encouraged Mr. Ottesen to include that
policy in the 2030 Plan to help DOT&PF get closer to 20 percent
and divest itself of roads within municipalities.
2:06:02 PM
REPRESENTATIVE FAIRCLOUGH cautioned the urban members of the
committee to be careful what they wish for. She continued:
When you enter projects like that you have long term
obligations that go out into the future that you burden
people who, from some urban areas, think they pay an
extraordinary amount of taxes and bonding capacity already
and so, again, from my service prior to this body, we have
been involved in my community before, taking over roads and
it does create clarity for who is responsible for the snow
being on them, but it also adds obligations about a decade
out in the future of when you have to repair them locally
and do that.
I just think that as a state representative we certainly
need to look for ways to reduce the state's responsibility,
and, from that perspective, I think it should be included
in the plan. But, as far as the community members that I
represent, I feel it an error in my way not to say that
that could in the future cause them to have a bond before
them that would require them over the next 30 years to have
to pay for that improvement out of their own pockets.
MR. OTTESEN continued his presentation:
Slide 4 - We're trying to address the state's
responsibilities in each of the modes that we're looking at
primarily. Obviously there's some question about ports and
harbors that I've already discussed. We are amplifying the
ports and harbors discussion. I should add we have reached
tentative agreement with two other organizations, the
Denali Commission and the Corps of Engineers, to do a
three-way study of the state's port and harbor needs
because it's kind of long overdue. One, it hasn't been
done in a long time and two, there have been a lot of
changes in what is needed out there, everything from the
change in shipping lanes due to the diminishing ice, to the
fisheries in western Alaska just due to the changes in
evolution that have gone on in fisheries, all gravitate
toward a need to look hard at what our ports and harbors
need across the state. So, there's a supplemental request
in the 2008 capital budget to fund the state's share of
that study that I think was announced this week or released
this week.
2:08:24 PM
REPRESENTATIVE DOOGAN noted the committee has heard testimony
that DOT&PF is building a lot of projects, such as bike trails
and sidewalks, and asked where those projects fit into the 2030
Plan.
MR. OTTESEN answered those projects are considered to be
ancillary parts of the highway system. DOT&PF occasionally
builds them in a different right-of-way but those are generally
transferred to local governments, such as trail systems that
follow green belts. He stated:
But, by and large, the trails that we build that are part
of the highway system, they are just part of our
responsibility and they are actually talked about in the
plan. There is discussion of them. In fact, internally we
ask ourselves are we doing a good enough job of keeping
track of them because right now all of our asset inventory
tools are focused on the highway itself. They aren't
focused on those other features so we think this new video
log tool will allow us to do a better job of getting the
grips of just how many miles of this and that that we own.
2:09:49 PM
REPRESENTATIVE DOOGAN asked how he would find out what DOT&PF is
doing to maintain sidewalks and trails associated with state
maintained roadways. He asked if those funds would be part of
the giant maintenance fund for roads statewide.
MR. OTTESEN said that is how it works; those funds would be part
of the highway operating budget. DOT&PF's Highway Safety Plan
identifies the importance of clearing those trails and sidewalks
for safety reasons.
2:11:04 PM
CHAIR JOHANSEN asked whether those numbers are separated out.
MR. OTTESEN replied trails and highway maintenance funds are not
separated; they are both part of the same operating budget
because the same equipment and workforce is used.
REPRESENTATIVE DOOGAN said he was informed that typically, the
equipment DOT&PF uses to clear roadways cannot be used to clear
pathways and that in the Municipality of Anchorage, DOT&PF has
no equipment to keep pathways cleared.
MR. OTTESEN agreed it is fair to say DOT&PF could do a better
job. DOT&PF managers say they do what they can within their
budgets.
2:12:35 PM
REPRESENTATIVE SALMON asked for information from DOT&PF about
improving the [airstrip] in Red Devil by adding lights, for
example.
MR. OTTESEN said he would refer that question to the new deputy
commissioner of aviation who will be on board in a couple of
days.
REPRESENTATIVE SALMON said the lack of improvements could be a
matter of life and death.
MR. OTTESEN said DOT&PF has been trying to bring airports up to
the minimum 3,300 foot standard in many areas of the state and
is now addressing the most difficult projects.
CHAIR JOHANSEN acknowledged that a representative from the
aviation division will address the committee next Thursday.
REPRESENTATIVE SALMON said the improvements should be fairly
simple and have been on the books for a long time.
2:14:17 PM
REPRESENTATIVE JOHNSON indicated that his district has several
state roads and asked if municipalities are compensated for
clearing trails adjacent to those roads.
MR. OTTESEN said DOT&PF has cross agreements and shared
responsibilities with municipalities so that, for example, if a
municipality clears trails along state roads, DOT&PF will use
its equipment to clear certain city roads. He said those
agreements are typically in writing; DOT&PF is trying to make
them formal in all cases. He continued his presentation:
On Slide 5, the only thing this slide is trying to show
you, these are all indexed to 100 at the time of statehood
that our population has about tripled since statehood but
our use of the roadways in terms of EMT or vehicle miles of
travel and the number of vehicles registered have both gone
up three times faster than population. This is a
remarkable statistic when you consider the fraction of
Alaska that it is really "unroaded." You've got almost 30
percent of the state's population not on a road system. We
actually have some of the highest registration of vehicles.
I think we have more vehicles than we have people in this
state, which is an unusual trend. In most states it's the
other way around.
2:15:59 PM
I think I won't belabor Slide 6. You've seen a similar
slide in the presentation last week. The price of things
is going up and it's going up in Alaska faster than it is
elsewhere in the United States. That has just played into
what is happening to the dollars and what they are able to
achieve.
On Slide 7 - no surprise here. We're heavily dependent
upon federal receipts. You can see those three bands. The
top two bands have not changed that much. Their thickness
is about the same over several years, whereas the federal
band is where all of the growth has been. For a state that
relies so extensively on federal funds, if something
happens to that source of funds, we are clearly at risk and
there's a lot of discussion that that could happen. There
could be changes.
CHAIR JOHANSEN asked where he can find a list of the revenues
for the remainder of the roads.
MR. OTTESEN clarified the bands do not represent revenue for
roads because Alaska has no dedicated fund for that purpose.
Revenues for roads from registration fees and gas taxes are
deposited into the general fund. Funds are then appropriated
from the general fund for the operating costs of the marine
highway and aviation systems and roads. The red band shows the
operating cost appropriations. He told members the amount
deposited into the general fund from registration fees and gas
taxes is very close to the amount appropriated for roads. He
pointed out Alaska is the only state without a transportation
fund of some sort.
REPRESENTATIVE FAIRCLOUGH commented:
Following up on Representative Johnson's comments about
personal responsibility inside of particular municipalities
or regions in Alaska, I noticed that it's mentioned inside
of 2030 about increasing or looking to local communities to
match. Is there any way to "incentivize" local communities
to qualify faster for highway federal dollars coming in by
coming up with more of a local match? Is that inside of
your strategy?
2:19:11 PM
MR. OTTESEN replied that is considered under DOT&PF's STIP
selection criteria. Communities that contribute more than the
required match are awarded more points.
REPRESENTATIVE FAIRCLOUGH asked, "But it is true that under the
STIP that we put roads or any other transportation modes in
without any kind of local community match."
MR. OTTESEN said DOT&PF does but several years ago the
Legislature included language that requires local communities to
provide a match for projects. He explained:
How our policy works is, we kind of look at the class of
road. Roads are characterized by a scheme called
functional class. They start at the top with the very,
very high level roads. The primary arterials, which would
be the NHS and the major arterials in a community that you
can drive here in town - Tudor Road, Glenn Highway, would
all be arterials. As you move down the functional class,
you move into what are called collectors, major collectors
and minor collectors and then eventually you get to what
are called local roads. Every road in the state gets
classified under this system. The DOT does it but we do it
under strict guidelines and the oversight of the Federal
Highway Administration who requires that we produce this
functional class study.
So our policy says major collector and above, regardless of
ownership, the state will match because those really are
roads that serve broad state interests. They carry a heavy
amount of traffic. In fact, one way to look at it is our
major collectors and our arterials, I've got the statistics
right here, represent 30 percent of our road miles but
they're carrying about 80 to 90 percent of our traffic in
the state. They clearly are where the economy occurs.
They are where our state, you know, our economy wins or
doesn't win when those roads are well maintained.
So there's a very, very high interest in those regardless
of ownership. Roads below that threshold, we start to
require a local match to participate. I should add
historically, federal aid dollars have never been able to
go below major collector - that has always been the federal
scheme and in 49 other states it remains the federal
scheme. Only in Alaska are we eligible to spend federal
dollars on the lower tiers of the functional class system.
It's good on one hand because it allows village roads to
use these dollars and local roads in general, whether they
be village or suburban or even urban. But it's the old
adage. When everything is a priority, then nothing is a
priority.
2:21:53 PM
REPRESENTATIVE FAIRCLOUGH commented that DOT&PF's criteria
pointing system inside of the regulatory side of the code
provides higher points. She asked the amount of the percentage
match.
MR. OTTESEN said that depends on the apportionment of funds,
however, in general the match is about 9 percent.
REPRESENTATIVE FAIRCLOUGH asserted that a community that has a
10 percent match would score higher.
MR. OTTESEN agreed that for every few percentage points above
the minimum, a community would get extra points.
REPRESENTATIVE NEUMAN requested information on DOT&PF's point
system and for information about whether those communities have
direct access to the federal funds or whether they must go to
DOT&PF.
2:22:57 PM
MR. OTTESEN said he would provide the point system information.
In response to the second question, he said federal funds flow
to DOT&PF, which is responsible for deciding what projects those
funds should be used for. DOT&PF also has fiduciary
responsibility for local government projects that use federal
dollars.
REPRESENTATIVE JOHNSON expressed concern about an actual or
perceived overbuilding of roads in Anchorage because some roads
have been built to a higher standard than the traffic merits.
He questioned whether the possibility of receiving funds might
motivate a community to overbuild roads.
MR. OTTESEN replied money does not drive the standard.
Standards for state roads are determined by the state; standards
for municipal roads are determined by the municipality. He said
the Municipality of Anchorage's standards include factors such
as providing space for snow removed, or for wider intersection
lanes to allow semi-tractor trucks to turn. He said there is
tension among different user groups but the standards are
decided by the road owner, not the funding source.
2:25:11 PM
REPRESENTATIVE JOHNSON asked whether a major collector road
scores higher so that an applicant might design a road
improvement project as a major collector road to score more
points.
MR. OTTESEN said DOT&PF controls the decision to build a major
collector road depending on the area it serves and based on
national criteria. He noted the group that requests funds does
not determine functional class. That is determined using an
independent review.
2:26:53 PM
REPRESENTATIVE SALMON asked if any major roads are included in
the 2030 Plan, such as the Stampede Road.
MR. OTTESEN responded DOT&PF has proposed new roads only if a
new source of funding has been established.
REPRESENTATIVE SALMON asked if federal money is included in the
2030 Plan for a [road] to the Pebble Mine if it is developed.
MR. OTTESEN commented the Southwest Alaska Transportation Plan
states a possible need for a road from Cook Inlet down to
Chignik and possibly farther south. It also says three small
segments should be focused on now. That plan, done five years
ago, took into account limited funding. He pointed out one of
those roads, the Iliamna Nondalton Road, has become a lightning
rod for people fearful of the mine's development.
2:28:48 PM
MR. OTTESEN noted public support for that road was originally
very strong and is now quite mixed because of the Pebble Mine.
REPRESENTATIVE KELLER said the Matanuska-Susitna Borough has
been asking that he and Representative Neuman work on a method
so that the borough can use its portion of matching funds to
affect the timeline and planning process. He noted the Borough
has built a connector but cannot get access to the Knik-Goose
Bay Road because of a timing issue.
MR. OTTESEN repeated DOT&PF is prepared to fund roads that are
major collectors or above, regardless of ownership. DOT&PF's
matching fund policy also applies to transit projects because
transit projects serve a group of users that often have no other
means of transportation. He said DOT&PF staff has had many
policy discussions on the topic. The Legislature directed
DOT&PF to hold the line firm a few years ago.
REPRESENTATIVE KELLER asked if a mechanism exists whereby a
community can affect a project's timeline by contributing local
money.
MR. OTTESEN said a community can affect the timeline through the
scoring process. He commented that the Mat-Su Borough has been
a leader in coming to the table to deal with its road needs, as
have Juneau and Anchorage.
2:31:52 PM
CHAIR JOHANSEN noted he would like to bring the committee's
attention back to the presentation after Representative
Fairclough asks her question.
REPRESENTATIVE FAIRCLOUGH stated:
Mr. Chairman, it was in response to Representative
Johnson's inquiry about ... projects spending more money.
That does happen on a local level. Local plans can, inside
of the process, at least in the community of Anchorage we
looked at trails or amenities on the side of the road, and
I believe inside of some sub-criteria for the National
Highway System's - I think there's some kind of demarcation
for a 5 percent for amenities alongside the road and then
Anchorage chose to increase that to a higher percentage so
th
if you look at a roadway like 15 Avenue, some feel that's
overdressed, some feel that's a nice way to slow traffic
down by those additional amenities and do that so dollars
can be ate up. It doesn't necessarily change the project
out but it does happen. And then - and it's usually by
community request in the area, it's not DOT coming in and
saying let's do more. It is local communities and
individual groups asking for amenity changes.
And then in response to Representative Keller, one of the
successes that we had at a local level was when you look at
mega-projects, if there's any way to bust those into
smaller projects. I thought that we were able to
facilitate for the first time ever private sector
contributions in the form of Fred Meyer, who actually came
in and, to advance their project, we splintered off the
Glenn Highway project that hasn't gone forward as quickly
and were able to provide local community match actually
from the private sector to come in, instead of bonding or
others. So, DOT has been responsive when people try to
step up and save the state money, per se.
2:33:58 PM
MR. OTTESEN continued his presentation:
Slide 8 - slide 8 is where we essentially have added up the
cost of ownership for these three major modes of
transportation broken down into, essentially, the cost of
improving that system, be it highways or ferries or
aviation. We call that system development. The cost of
life cycle management, which is simply the cost of being a
good steward to the things you already own, if you do
proper life cycle management, you preserve an asset and
actually lower your total costs in the future because it
lasts longer. It is said that $1 in pavement management
expenditures will save $4 of rehabilitation in the not-too-
distant future, so you spend a dollar now or you can spend
four later. Same thing with bridges. And then the cost of
routine maintenance, and if you look at the highway bridge
system, it's over a billion dollars to be full ownership.
This is a bottoms-up analysis. These numbers were really -
they spent a lot of time on consultant data in getting to
these numbers. They are all documented. They come from as
much data as we can bring to the table.
The same for marine highways: the cost of managing that
system is about $154 million a year including fleet
additions or replacement and refurbishment, recertification
costs per year, working on the terminals, and then the
[operation & maintenance] O&M cost. And then finally, for
aviation you see it's about $223 million to operate that
system, to be the owner of that system, including bettering
the system as well as maintaining what you have.
I want to talk a little bit about that system development
cost on highways in the next slide that we come up to on
Slide 9.
2:35:33 PM
MR. OTTESEN continued his presentation:
This is where we talk about a set of strategic priorities.
You could say it's the most important of a list of very
important projects. We knew going in we couldn't take the
full $10 or $12 billion and just say build that, because
it's completely off the table in terms of funding. So we
looked at ... I'd say the most critical projects to the
state and I think if you put 10 people in the room, you'd
probably get 80percent agreement on the list - that people
would agree - at least 80 percent - in common projects.
There will be a few projects that people say no, take that
off and add this. That's just the nature of our political
process. I think it was a fair look. We talked to our
regions about this. We looked at it and, again, the
important message here is not which projects make up the
5.5 billion. The important message is if you wanted to do
$5.5 billion worth of work in the future, how long will it
take you to do that with current resources. You're going
to find out, keep this 5.5 billion in mind as a straw man
list without agreeing to what's in it, that it will show
how long it takes to get it done under different funding
scenarios in a later slide.
So, as you can see, there's a very small amount of money,
less than 10 percent for new roads. Almost everything else
is some form of standards, upgrade, or an urban capacity
improvement including Anchorage, Mat-Su, Fairbanks and
other urban capacity.
2:37:10 PM
MR. OTTESEN continued:
So on Slide 10, which is unnumbered - I'm sorry, it looks
like the numbering went away here for some reason - but the
Alaska financing slide, there's some risk to rely upon the
federal program growth. I could talk at length about what
that risk is, but everything I'm learning about
reauthorization gives me pause. If you kind of, you know,
right now with [petroleum production profits tax] PPT just
passing, we look pretty good but when this was being
written, PPT wasn't passed yet and everyone was saying you
know, just a few years in the future with the decline of
production at Prudhoe Bay, oil revenues don't look all that
healthy. Some people would say that's still true, even
with PPT, is that 6, 7 percent decline at Prudhoe Bay is
really going to come - we'll have to come to grips with.
So, the prognosis for general fund revenue, long term, is
not great.
We also have the issue that we've never had a dedicated
fund for transportation - constitutional reality - we just
haven't done it. I think as a state, we've tried to look
to the federal purse as much as possible although it's
interesting, in early statehood we Alaskans were pretty
brave. We went from a 5 to an 8 cent gas tax increase at a
time that made it the highest tax in the land in the early
'60s. That stayed the same and every other state now has
passed us up. We stood pat and everyone else has run past
us.
REPRESENTATIVE NEUMAN asked if DOT&PF is looking at changes to
the gas tax.
MR. OTTESEN said it is not. He explained the Governor's Alaska
Transportation Fund would generate about $50 million per year at
the start. The gas tax would have to increase from 8 cents to
20 cents to raise $50 million. Alaska's small population base
makes it difficult to generate adequate funding. Additionally,
people see a surplus in the bank. He believes the Alaska
Transportation Fund is a fresh idea with merit.
2:39:34 PM
REPRESENTATIVE NEUMAN commented:
So when I'm looking at this and I'm reading the 2030 Let's
Get Moving Plan that's laid out, this big plan, in these
slides we're trying to keep this $5.5 billion in mind. I
don't see how we're going to get that and how we're going
to pay for the numbers that we see in here, correlate
equally into here.
MR. OTTESEN said that will become clear in 2 or 3 more pages.
He stressed that a lot of state owned and local projects are not
on that list. The list is a subset of needs but it leaves a lot
of projects unfunded. He then continued his presentation.
So, the top of the next page - The Alaska Financing
Realities. Most of the new financing strategies being used
nationally, and there are a bunch of them now that are kind
of coming to the front, just don't make a lot of sense in
our state. There's just an awful lot of tendency now to
look to tolls. Tolls are being used - the State of
Washington is about to toll an existing freeway. They're
also going to toll an existing bridge and they are going to
toll the bridge several years before they rebuild it so
they are starting to toll projects before they even do the
work that the public is paying for, which is a new concept.
In the past you got - once something was built, you got the
toll but you didn't get the toll well in advance of the
construction. They're going to have a $6 toll to cross a
one mile bridge in the State of Washington that's been in
existence since the '60s. And they've concluded it's the
only way they will get it built. All other funding sources
have dried up.
REPRESENTATIVE JOHNSON pointed out that the State of Washington
brought Alaska the container tax.
MR. OTTESEN added the Port of Long Beach also adopted a
container tax so that idea is beginning to leap frog around the
country. He continued his presentation:
Many other taxes, you've got what are called - the State of
Colorado built a freeway but built no on and off ramps and
if your area wanted an on and off ramp to use that freeway,
to get to it and get off it, to get customers there, you
had to do an LID, a local improvement district, and you
would pay not only for the cost of the on and off ramp, but
you are going to pay for part of the original investment in
the freeway. So that was how Colorado did it.
REPRESENTATIVE SALMON asked if the 8 cent [gas] tax is still
being charged.
MR. OTTESEN explained it is but it is deposited into the general
fund so there is no way of knowing for what it paid.
REPRESENTATIVE NEUMAN stated:
With that, could Representative Salmon find out so he can
get to the people in Sleetmute how much is the DOT putting
into that airport, I mean, what type of planning so he has
the capability to go to DOT and get that information to
provide it to his communities?
MR. OTTESEN replied, "Absolutely."
2:43:13 PM
MR. OTTESEN continued his presentation:
So, in general, if we scan the country and we look at all
of these - these are all basically one form or another of
user pay concepts. None of them really look very
promising. There are a few spots where we might use them.
I mean we do use user pay on the ferries. We use user pay
on our Whittier tunnel and we are proposing to use a user
pay concept on the [Knik Arm Bridge and Toll Authority]
KABATA project but I just don't think you are going to find
it works on say, the [Richardson] Highway with 500 cars a
day. It's just not a viable, practical alternative. So,
we're really not recommending that those techniques be
considered in our state.
REPRESENTATIVE DOOGAN asked if the user pay concept works on the
Whittier road.
MR. OTTESEN said the state supplements the [maintenance] cost
with several million dollars each year.
REPRESENTATIVE DOOGAN asked whether the user pay concept works
anywhere in Alaska.
MR. OTTESEN said the user pay system pays for about one-third of
the total cost of the ferry system. The KABATA project is
designed so that user pay would cover the majority of that
project's cost.
REPRESENTATIVE DOOGAN noted the user pay system always proposes
to pay the full cost of a project but seems to be more of a
supplemental funding source.
MR. OTTESEN agreed. As an example he noted the Dallas Toll
Authority is charging 11 cents per mile. He stated Alaska has
high construction costs and a low population, so these ideas
work elsewhere but may not work in Alaska. The federal aid
program is good to Alaska because Alaska receives a much larger
share than it contributes.
REPRESENTATIVE NEUMAN said he has heard a number of funding
options from DOT&PF but it is not proposing to raise the gas
tax.
MR. OTTESEN said in addition to the Alaska Transportation Fund,
DOT&PF is considering a return to the Local Service Roads &
Trails (LSR&T) program. That program is general funded and uses
dollars in a very cost-effective way.
2:46:39 PM
MR. OTTESEN informed members the LSR&T program began in the
1970s and expired in the 1980s. It is still in statute but has
not been funded for 20 years.
CHAIR JOHANSEN said Mr. Ottesen's presentation sounds like a
sponsor statement for the [transportation fund] bill in
committee.
MR. OTTESEN pointed out the 2030 plan was written not knowing
the transportation fund bill would be coming.
2:47:22 PM
MR. OTTESEN continued his presentation:
The slide here at the bottom, the two bar graphs, this
simply tallies up the cost of ownership for the three
systems that I showed on that table previously. It's a
little over 1.4 billion. That's really the cost of being
the owner of these systems, of maintaining them and
bettering them at a sustained pace. And then you look at
the total amount of revenue that we receive and it's about
half of that or about $700 million, round numbers. Some
systems, if you look at the aviation revenues and compare
it to the aviation cost of ownership, they are pretty
close, just a little bit short. If you look at the federal
aid highway receipts compared to the highway needs, it is
well under 50 percent. So, different systems are situated
differently in terms of how well they are being funded
today. And I think that's an important take away message.
While the state as a whole has about half the amount of
money we need, the degree of need is not the same among the
different modes, highways and marine highways being the two
that are most wanting for funds.
CHAIR JOHANSEN commented, "So our aviators are taking care of
themselves."
MR. OTTESEN said they are but he would love to see DOT&PF figure
out a way to finish about 12 airports.
2:48:40 PM
REPRESENTATIVE SALMON asked if DOT&PF works closely with the
Bureau of Indian Affairs (BIA).
MR. OTTESEN said DOT&PF is trying to collaborate with the tribes
to get Indian Road Reservation System funds and has had some
success but needs to make more of an effort. DOT&PF is also
coordinating with the Denali Commission to work on projects in
several villages. He said projects in rural Alaska are funded
from three or four sources including state funds, Denali
Commission funds, BIA funds, and coastal village funds.
2:50:00 PM
CHAIR JOHANSEN said that question parallels a question raised by
Representative Fairclough last week about using funds to the
greatest extent.
MR. OTTESEN pointed out each pot of money has a different set of
rules, which sometimes creates a challenge on projects with
different funding sources.
2:50:51 PM
MR. OTTESEN continued with his presentation:
This slide here with the two graphs that has the three
arrows on it, they just show you that how you bridge that
gap. The simple way to think of it is you constrain your
needs or you prioritize differently or you increase your
revenue or you do combinations of those three major
approaches. We are proposing to do a little bit of each of
those as you'll see as we get into the details of the
recommendation.
The first - and we then broke it down and there are three
strategies here, we could have made more but I think the
three strategies represent a pretty good cross-section of a
spectrum of strategies. One is that you maintain your own
annual life cycle management funding levels at about the
percentage you do now, leaving some money left over for
system development. Why is that important? Well, one, the
public clamors for system development perhaps more than
anything else. Come and fix our road. Widen our road.
Make it better. It also is part of our current economy of
the consulting community, the construction community and,
in fact, the DOT design staffs all come to rely upon that.
So, if you stop doing that thing, then all those parts of
the economy are left without a funding source.
What that means is there is some deterioration of the
system because we're not maintaining it, we're not doing
life cycle management steps to the level necessary so some
of your condition of the system starts to go down and that
$5.5 billion list of projects - that very narrow short list
of a much bigger set of needs wouldn't be completed until
about the year 2041. That's a long time from now - 35 some
years, 30, 40 years.
REPRESENTATIVE DOOGAN asked Mr. Ottesen to distinguish between
the operations and maintenance segment from the life cycle
management segment.
MR. OTTESEN explained that operations and maintenance are tasks
done annually to keep the system intact, such as fixing guard
rails or snow plowing. Life cycle management tasks prolong the
life of a facility, such as cleaning culverts or fixing a
cracked ceiling. Those tasks are major efforts and are DOT&PF's
major expenditure area.
2:53:19 PM
MR. OTTESEN compared it to replacing a roof on a home rather
than allowing the leak to ruin it.
REPRESENTATIVE DOOGAN asked if the distinguishing factor is that
a considerable amount of money is spent on life cycle
management.
MR. OTTESEN affirmed that is correct. He pointed out that
DOT&PF now takes $50 million out of the STIP each year to do
life cycle projects. Those projects were previously done with
general funds.
REPRESENTATIVE DOOGAN asked if the federal government knows
DOT&PF is doing that.
MR. OTTESEN said it does; preventive maintenance is considered
to be an eligible cost, operations and maintenance costs are
not. He said DOT&PF walks a fine line between bettering the
system and keeping it there.
2:54:39 PM
MR. OTTESEN continued his presentation:
Another scenario is let's focus on life cycle management -
excuse me, operations and maintenance, this optimized
operations and maintenance at the expense of system
development and so deterioration slows, you have a slower
increase in the life cycle backlog of projects but suddenly
now your ability to address that set of strategic projects
has gone from 2041 to 2064. You're talking about almost a
life time. It is politically almost impossible for people
to expect to wait that long for needs they can see today.
You're talking about asking them to wait almost 60 years
for a set of needs. It would be very, very difficult, I
think, for the department and I think for people in your
seats to see that policy implemented. It's sort of a non-
starter right out of the gate.
The third scenario is sort of equally a non-starter.
Instead, you optimize on life cycle management. You put
all of your money, as much as possible, to manage the
system we have, better our ferries, better our roads, not
improve them to the point that you're widening them, but
you keep them smooth, you keep them maintained. You can't
even perform operation and maintenance at the necessary
level with the dollars we get and there's no money left to
mow down the backlog of that $5.5 billion list. In other
words, it's not being through infinity. This is a
completely non-starter from the standpoint of trying to do
a little bit of everything to keep all the needs addressed.
2:56:07 PM
REPRESENTATIVE DOOGAN referred to the second scenario and said
if system development went bottom up, he could understand the
argument that DOT&PF could not wait much longer. He asked how
confident Mr. Ottesen is that system development is included
because citizens are clamoring for projects and not because
traffic engineers like the idea.
MR. OTTESEN replied in Anchorage, for example, the municipal
projects and the AMATS long range plan underwent a very public
process to create the list of projects. DOT&PF did not change
the list.
REPRESENTATIVE DOOGAN said he was not referring to what the
AMATS board or traffic planners want. He questioned whether
DOT&PF has given significant consideration to scenario 2 or
whether a plan "goes out the window" the minute someone squawks.
MR. OTTESEN replied:
I see the downside as being so large in my own mind that we
would never be able to politically implement it. You would
almost be shutting off whole sectors of the economy and
just telling them that your services are no longer needed.
That would be one almost immediate consequence of adopting
that. You would be telling communities that your needs
will simply have to wait for a very long time. That
constrained list of projects is now out to the 2060 time
period. That, too, would, I think, have consequences in
the political support for one approach versus another.
REPRESENTATIVE DOOGAN clarified that he is questioning DOT&PF's
definition of needs in that statement.
MR. OTTESEN said he understood.
2:58:55 PM
MR. OTTESEN continued his presentation:
I think I've given you kind of the three scenarios and I
know time is kind of short. I want to just talk quickly
about our national transportation investment policy and how
we stack up around the world, not only around the world but
around the country as a state. I think it's an eye opener.
It was for me when we developed the numbers.
If you look at Europe, the old continent as we love to call
it from our perspective, they are doing massive projects,
projects that are really much bigger in scale and scope,
everything from the tunnel to enormously large bridges,
tunnels, etcetera, building high speed rail. They are
spending about 3.5 percent of their [gross domestic
product] GDP on transportation. Keep that number in mind
as you go through the slides.
If you look at Asia, it's even more dramatic. Asia is -
China is building an expressway system that will be larger
when it's done than the U.S. interstate. They plan on
building it in a faster time period than we did the
interstate. They and Japan and India are all building high
speed rail. In fact, one takeaway number is - right now
there are 13 nations with high speed rail. If the United
States doesn't get something going here pretty quickly, we
will not be fourteenth. We will be later than fourteenth
so we're way behind in that particular technology. China
is spending 9 percent of their GDP and India about 3.5
percent of GDP on transportation investment. The United
States is spending as a nation less than 1 percent. As an
AASHTO official said, we were sitting on the investment of
prior generations and neither sustaining it or bettering
it. We've just simply sort of stopped that responsibility.
We, as a state, are spending less than one-half of one
percent of state GDP on transportation and that makes us
th
44 among 50 states in the nation. And then if you ask the
question well how do we stack up compared to the six or
seven states most like us, states with large geography and
a small population base, and there are seven of them that I
identified, we're seventh among seven. We're at the bottom
of that list too. So, even the Wyomings and the Montanas
are outspending us, let alone the bigger states.
REPRESENTATIVE NEUMAN commented:
...Somewhere in history I remember somebody saying it's the
economy stupid, you know? I mean if we don't take care of
that as legislators [indisc.] we take into these last
couple of slides here, it's so critical as to the - I mean
trying to view Alaska from the 10,000 foot level and if we
don't have a transportation system so that we can grow our
economy, whether it's a [indisc.] as Representative Salmon
talked about or anything that we're doing, we're at a loss.
And with our position in the eastern Pacific Rim, Ted
Stevens International, the third largest freight
transporter in the world, you know, with the polar ice cap
receding and the over-the-top route for ships, freight
ships coming up through there and to the Panama Canal, it's
only going to get more - more busy for Alaska and now is
the time. But the question I have for DOT is DOT prepared
to make those requests to the Legislature to get us to the
point where we have to get to this? You know, right now,
when we're looking here and you have Alaska spending less
than one-half of a percent on gross domestic product and
th
we're ranking 44... is DOT stepping up to the plate,
coming to the legislature and saying this is what we need
th
so that we're not ranking 44?
MR. OTTESEN said DOT&PF is willing to introduce the proposed
Alaska Transportation Fund proposal. It was scheduled to be
heard in the Senate Transportation Committee today but was
delayed. That proposal is the first new idea to fund
transportation projects. He said he believes that fund is
necessary. He recalled hearing about the need for air freight
capacity in Anchorage during the Cowper Administration.
Anchorage had lost its ability to serve the passenger market
because airplanes were not stopping in Anchorage to refuel. The
price of oil was down to the $9 range but the state made that
investment and it started a trend that has made Anchorage an
economic success. He said transportation investment is the
foundation to an economy sometimes.
3:04:41 PM
CHAIR JOHANSEN stated the transportation fund legislation is in
the House Transportation Committee so members will have a chance
to discuss it.
REPRESENTATIVE DOOGAN commented:
... Mr. Ottesen, I think part of the problem I am having
with this is that this presentation takes a look at ...
what's called on Slide 9 strategic priorities for surface
transportation. It is two different things. One is sort
of a consumer product so, when you say demand driven by
urban capacity is $2 billion of your $5.5 billion figure,
that's basically drivers want more roads so that sort of
treats that as a consumer product. Then there's a billion
dollars where we would have to match federal standards. I
guess it's a consumer project if we're spending money to
make federal highway planners happy. I guess they're the
consumers of that. As you go down this list, you really
don't hit a very big percentage of this $5.5 billion as
money that has a direct impact on economic development and
yet, on the other hand, as we go a little bit farther along
in the slides, suddenly we're talking about transportation
as an engine of the economy. I guess what I want to say
here is if our consideration is that we need transportation
development for economic development as Representative
Neuman said, why such a big part of the price tag here?
Essentially transportation is a consumer product.
MR. OTTESEN answered:
I understand why you are characterizing it as a consumer
product, but I think you can equally characterize it as an
economic benefit. If you look at the new Elmore Road that
just opened, it, by our estimates, is saving the customers
out there $10 million per year in travel time, fuel costs,
etcetera, just sheer benefits of the economic advantages of
that. That means those consumer benefits will pay for that
project in about three or four years, the entire state
investment. The problem is there is no relationship to the
benefits being generated and the state's ability to pay for
it. They're coming from different ...
REPRESENTATIVE DOOGAN said it will not pay for that project. It
may provide some numbers that offset each other.
MR. OTTESEN agreed there is no feedback loop. He said in
communities with severe congestion, the business leaders
complain that that condition is affecting the economy because it
affects delivery of goods and worker transport. He pointed out
the clamor in Seattle for new urban transportation capacity is
coming from Microsoft, Boeing and the large employers because
the traffic problem is affecting their economy.
3:07:59 PM
REPRESENTATIVE DOOGAN agreed that people want a shorter commute
and are willing to spend someone else's money to do that but
that expenditure differs from the necessity of improving
transportation for economic development. He stated:
I'm not trying to debate here. I'm simply trying to
clarify ... if you take $5.5 billion or whatever it is,
which is a lot of money even here, and if it's not all one
thing, how much of it is one thing and how much of it is
another because I think that insofar as the Legislature or
the policy makers here, we might be more willing to invest
in one thing than another, if that's the question that's
put before us. So, we just kind of need to know which is
which.
MR. OTTESEN asserted each project brings mixed benefits. Some
will jump start the economy, perhaps some are more consumer
oriented. He furthered:
The question is then can we capture some of those benefits.
If we make those benefits, can we capture them so that the
cost of building the improvement is borne? That's the
whole idea behind tolls, for example. That's really the
fundamental principal behind tolls. People are willing to
pay the toll because they want to drive a little faster and
not see their time eaten up. I think some of these are in
here if you look at, for example, the special needs. The
gas line, the truck weight restrictions, clearly have an
economic benefit. Some of those rail benefits in the
billion dollars there would be like the Port McKenzie
extension. That clearly has an economic jumpstart
characteristic to it but your point is well taken and I
respect that.
3:10:09 PM
MR. OTTESEN continued his presentation:
Half a percent - you know, in Alaska we're collecting a
half percent per mile if you assume, and well actually a
little bit less if you consume 20 miles per gallon, it's
about 4/10ths of a penny. Of course that's going to the
general fund. It's not directly helping highways but it
gives you some idea. But the cost to drive for triple As
is much, much higher. It's 50 cents for the standard sedan
and it's almost 75 cents for the pick-up truck or the large
SUV. So we, as users of the transportation system, are
willing to pay a lot to use it. We just aren't willing to
pay a lot for the road we drive on. It's sort of a take
away message and it's sort of interesting. The system has
just really been starved for capital, yet people are
already paying an awful lot of money to use that road.
I've already given you the Dallas example and I wanted to
just talk on this next slide about the constitution but
there clearly is a legislative mandate that we provide for
the utilization, development, and settlement of our lands,
use of our natural resources in that we also, through the
Legislature, would provide for those facilities'
improvements and surfaces that make that possible. I found
myself it is kind of useful to read this and not only to
see the statements. I'll give you an example. One of the
things we sometimes get criticized for is, if we propose to
build a road that might serve a private interest, we get
criticized by people who are watching transportation policy
yet constitutionally it is clearly a mandate that we will
provide for the settlement of lands and the use of
resources. We may, as a state, make that happen through
development of facilities. It's interesting that the words
"transportation" or "highways" are not found in our
constitution so this is as close as you get to defining
that relationship.
3:12:28 PM
MR. OTTESEN continued:
Kind of going back to the three scenarios at the bottom
slide here, what is the most viable scenario? I've already
telegraphed it, which is to maintain O&M and life cycle
management at approximately the same levels and to try to
do it a little bit more intelligently to - we do a lot of
what's called "worst first" in pavement work. There [are]
a lot of national studies that tell you that worst first is
kind of the wrong use of your dollar. I think managers are
on the horns of a dilemma.
Worst first means if you have a limited pot of money for
pavement management and you spend it on your three or four
worst roads that are so torn up they just need to be
completely redone, the money doesn't go very far. If
instead you took the same dollars and you spread it over
many more roads extending the life of their pavement, you
get better payback.
The problem with that approach is the people who live on
those really bad roads and the representatives in the
legislature who represent them are going to be on your case
for not doing those roads first. So you are torn between
the need to fix roads that have already failed, which is
sort of the wrong use of the money from a management
standpoint.
So, what we're saying in the plan is we need to find a way
to get out of worst first, which is what we're doing right
now but the only way you get out of it is you have to find
an infusion of dollars to catch up on the pavements that
have failed. One key number on the National Highway System
alone, $300 million of pavement have reached their useful
life - that is they have effectively failed. The growth
rate in that backlog of pavement is about $90 million a
year. So, we're losing about $90 million more a year each
year. We're only spending $50 million a year on pavement
management activities and that's beyond the NHS. It's the
NHS and everything else so, you can see just from that one
metric that kind of problem is growing, not shrinking.
3:14:23 PM
REPRESENTATIVE JOHNSON asked whether Mr. Ottesen was talking
about the number for Alaska.
MR. OTTESEN said that is the number for Alaska on the 2,100
miles of National Highway System alone.
REPRESENTATIVE JOHNSON asked how much of the total miles Alaska
is responsible for.
MR. OTTESEN said he would provide that number for the rest of
the state-owned system but DOT&PF does not have good numbers for
locally-owned roads.
MR. OTTESEN continued his presentation:
So, there is some kind of focusing going on in the
recommendations. One is - the focusing is we continue to
pay attention to the National Highway System as our first
priority. Again, it's where most of our use of the highway
occurs. It's where most freight travels. It's where most
people are driving their big miles, their high speed miles.
I lived on a gravel road in front of my house for a long,
long time and sometimes it was pot-holed, sometimes it
wasn't. But, you know, I didn't care that much because it
was only a half a mile and then I was on a state paved road
and life went on. So my road can be in pretty bad shape
and my commute wasn't really that big a deal. But when
you're driving on 10 or 15 miles a day of really bad road,
it's a different story.
So the question is, if you focus on the viable roads, what
do you do about that next tier, the tier that you're not
focusing on? This is essentially triage and triage is
about the art of making hard priority choices. It always
leaves something undone if you understand that philosophy.
The committee, the transition team for DOT, strongly
recommended that we do exactly this - that we focus on the
NHS first. I throw it out with a bit of caution because
it's like worst first. Every time you direct your dollars
here, you're going to leave something undone. It's that
undone component that raises the question how do we get to
that too.
3:16:27 PM
MR. OTTESEN continued:
So you've seen here on the next slide the strategic project
timeline. Under our scenario, we could only get to the
$5.5 billion list by 2041. If we brought more money to the
table and focused on that list, there is how fast we could
accelerate it at three funding scenarios: $100, $200, and
$300 million additional per year. You can see if we could
get $300 million a year, we could have that list done in a
decade; something less, it obviously stretches out into
another 10 years. So, it's just a way of understanding how
fast additional money would help you get to a prioritized
set of needs.
The bottom slide points out the obvious. I think it is
something that some times gets forgotten. Different
transportation systems in the state are kind of in a
different set of circumstances. Our state highway system
and our rural airport system have no internal funding
mechanism. The system managers are not allowed to adjust
funding, set rates, retain revenue - a constitutional
prohibition. At the same time, in the same state, we have
other transportation systems, including our international
airport system, the Port of Anchorage, which is
municipality owned, but also the Alaska Railroad and
KABATA, so three out of four of those are also under the
same constitutional rules but somehow they're going to be
allowed to set rates, retain revenue and, actually in some
cases, even raise capital.
REPRESENTATIVE NEUMAN said Mr. Ottesen mentioned that by statute
no internal funding is permitted for highways and airports. He
asked Mr. Ottesen if he has any suggestions to remedy that
problem.
MR. OTTESEN said he does not. He said he was pointing out the
difference so that people understand the problem. He commented
that he recently purchased an airline ticket and realized the
fare contained more taxes than he will pay in road taxes in one
year. Airports charge fees at every turn that make those
airports modern, efficient systems. He said a road is like a
utility. There is no hook-up charge or charge for the degree of
use. It brings traffic to private property and the property
value goes up. Then, the road needs to be widened because of
that success and the state must pay for the enhanced value that
it created.
3:20:36 PM
MR. OTTESEN said that is a complication of the current system.
He then told members that concludes his presentation. He
pointed out one of the biggest risks of his recommendation is it
assumes the continuation of a high level of federal funds. He
said he would like to talk to members about the bold ideas
associated with the federal reauthorization; some would not be
beneficial to Alaska.
CHAIR JOHANSEN asked if members had any final questions.
[No one responded.]
CHAIR JOHANSEN asked what would happen if DOT&PF inadvertently
omitted a longstanding DOT&PF policy from the 2030 plan.
3:22:22 PM
MR. OTTESEN responded DOT&PF experienced that situation on an
Iliamna-Nondalton project. The state court found that DOT&PF's
plan was not in keeping with statute because no cost effective
analysis was done for that project. DOT&PF had to re-open that
plan, which was part of the long range plan. That process took
about six months. The court allowed DOT&PF to proceed after the
analysis was done. He said the long range plan is typically
updated every five years and that it takes about two years to do
an update because an update requires more public involvement.
He said DOT&PF is now rushing because he does not believe the
federal rules took into account some states' election cycles and
that new governors would want to have input into their states'
plans.
CHAIR JOHANSEN asked if DOT&PF could remedy an omission.
MR. OTTESEN said the amendment process allows changes to be
made. He said the policy omission noted by Representative
Johnson probably would not prevent it from being adopted but he
believes that policy should be mentioned anyway as it is
important.
3:24:04 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 3:24
p.m.
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