Legislature(2007 - 2008)CAPITOL 17
01/31/2008 01:30 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| State Transportation Improvement 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 31, 2008
1:33 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
STATE TRANSPORTATION IMPROVEMENT PLAN
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JEFF OTTESEN, Director
Division of Program Development
Department of Transportation & Public Facilities (DOT&PF)
Juneau, Alaska
POSITION STATEMENT: Continued is presentation on the STIP and
answered questions.
ACTION NARRATIVE
CHAIR KYLE JOHANSEN called the House Transportation Standing
Committee meeting to order at 1:33:23 PM. Representatives
Johansen, Johnson, Keller, Neuman, Doogan, and Salmon were
present at the call to order. Representative Fairclough arrived
as the meeting was in progress.
^State Transportation Improvement Plan
1:33:34 PM
CHAIR JOHANSEN announced the only order of business would be the
continuation of the State Transportation Improvement Plan (STIP)
presentation, and directed the committee to page 13 of the
handout. He asked Mr. Ottesen to explain the new handouts.
1:34:12 PM
JEFF OTTESEN, Director, Division of Program Development,
Department of Transportation & Public Facilities (DOT&PF),
explained to members that the blue, two-page draft document
summarizes the strategic highway safety plan. Its key point is
that four state agencies, several federal agencies, and many
local agencies jointly prepared the plan.
MR. OTTESEN said Congress mandated that states develop strategic
highway safety plans. Congress envisioned government agencies
making a joint effort to accomplish the task. He encouraged
members to read the document and stressed that highway safety
needs more attention.
1:35:29 PM
MR. OTTESEN began his presentation, as follows:
The simple take away number is if we do what we're
doing today, which is a pretty good job, if we just
continue doing that, in 10 years up to 1,000 deaths,
five to six times that major injuries, and $5 billion
in societal costs [will have occurred] from highway
accidents. That will be our tax as a state. If you
think about the chances of dying in a highway accident
with 1,000 deaths in 10 years, it's a remarkably high
set of odds. It's less than 1 in 1,000 for each
individual here in the room. It's very real. It's
very tragic. I just got a notice today of another
tragedy in the Kenai area - a 13 year old boy died.
It goes on and I now see those reports every time they
come in and they sometimes are just heartbreaking.
So, enough of that.
1:35:59 PM
The other handout is on functional class, a few
slides. We call them the pyramid charts. I'll take a
minute just to explain the first one and then the rest
of it will go easy. [These are] the four major
classifications in functional class from arterials,
the most important roads in terms of their purpose
down to local roads. And then the chart further down
is representative of the number of lane miles. So
this is a representation of how many lane miles of
each class and then it also illustrates who owns those
lane miles so you see for the top two classes,
arterials and major collectors, DOT is the predominant
owner and those two classes total up to about 30
percent of the lane miles in the state.
Prior to 1991, and a change in federal law at that
time, our federal dollars could only go to those top
tiers. There was no ability to spend them below on
minor collectors or local class roads. In 1991 the
law changed for Alaska and Alaska only. No other
state has this permission and it's both a good thing
and a bad thing.
1:37:09 PM
MR. OTTESEN continued:
The good thing is you can now work on roads that are
functionally classed in the lower tiers but the bad
thing is you've tripled your mileage that these
dollars could apply to and it makes it harder then to
focus on the top roads, which is really where the
action occurs. I'll show you that in the next two
slides.
... The second one presents the four tiers in exactly
the same order, arterials down to local, but it's now
reflecting the amount of traffic each is carrying. So
you can see those top two tiers are only 30 percent of
our miles of road but they are carrying 35 percent of
total traffic. So, that's really where people are
traveling, the predominance of their miles.
1:37:56 PM
REPRESENTATIVE NEUMAN asked how to incorporate the information
to specific areas. He asked if the same facts and percentages
hold true in the Mat-Su Borough.
MR. OTTESEN said they hold true for any place on the road
network. The community of Kenai would have the same numbers as
Anchorage and the same hierarchy of roads exists in both. The
Parks Highway and Glenn Highway are major arterials. The lesser
roads are classified as major collectors, minor collectors, and
local roads.
1:39:03 PM
MR. OTTESEN continued his presentation:
The third slide simply shows you where the accidents
occur in this state and we have a value we assign to a
fatal accident, to a major injury accident, to a minor
injury accident and to a property damage accident.
When the number of accidents is multiplied by the
class of accidents, 86 percent of the accidents occur
in the top two tiers.
1:39:36 PM
REPRESENTATIVE DOOGAN asked if roads are classified according to
their use in a specific area or whether it is a matter of how
roads are designed.
MR. OTTESEN replied roads are classified by both. Arterial
roads are at one end of the continuum, local roads are at the
other. The primary purpose of an arterial road is to move
traffic from place to place, not to provide access to adjacent
property. That is a function of local roads. He pointed out
local driveways are not located along the Glenn Highway. Access
to local property is from a second tier road.
1:40:34 PM
REPRESENTATIVE DOOGAN asked how the classification system would
apply to a 12-mile gravel road in, for example, Representative
Salmon's district that connects a village to the garbage dump.
MR. OTTESEN replied that road would be classified as either a
major or minor collector because it serves two purposes. People
might use that road to travel a distance but might also use it
to access a private home. That type of road falls in the middle
of the continuum; DOT&PF has difficulty assigning
classifications to such roads.
1:41:22 PM
REPRESENTATIVE DOOGAN commented that assigning road
classifications in an urban area would be easier because traffic
patterns can be studied and design standards can be applied. He
asked how DOT&PF assigns the classifications in rural Alaska.
MR. OTTESEN said the main road in a village is often linked to
an airport, school, or other major points. Those roads are
typically classified as major collectors and are eligible for
federal funding. He noted the arterial road classification is
relatively rare.
1:42:09 PM
CHAIR JOHANSEN questioned whether arterials are classified as
part of the National Highway System.
MR. OTTESEN replied, "That is a different classification but
there is a strong connection between arterials and the National
Highway System. He pointed out that not all arterials are on
the National Highway System but almost all National Highway
System routes are arterials. He continued his presentation.
So, I just wanted to show you the functional class and
how it relates to the use of the system.
1:42:47 PM
REPRESENTATIVE JOHNSON referred to the statistics Mr. Ottesen
talked about earlier and asked if 86 of 100 accidents happened
on arterial roads.
MR. OTTESEN noted the numbers are a reflection of the accidents
and their severity. He explained:
So a property damage accident only - that is there's
only property damage, there's no human injury, would
be weighted at a standard value for property damage
only accidents. An accident involving a fatality
would be weighted much, much higher. Several million
dollars is the typical value that's assigned to this.
1:43:31 PM
REPRESENTATIVE JOHNSON asked whether the value amount includes
any legal action involved or whether it represents the total
economic picture including any settlements. He also asked
whether two passengers in a vehicle would count as two
accidents.
MR. OTTESEN explained that a collision is considered to be a
single event. An average value derived from national standards
is assigned to it. The property damage category reflects damage
to the vehicle but no reported injuries.
1:44:32 PM
REPRESENTATIVE JOHNSON asked Mr. Ottesen if he could provide the
total number of accidents with the weighting or a copy of the
formula. He commented three accidents could account for 86
percent.
MR. OTTESEN pointed out the weighting contains values assigned
to accidents that are nationally recognized and used by DOT&PF
consistently. Those values and accident records are used in the
safety project selection process to identify which projects will
best serve the population. He stated, "In rough tiers, a
property damage accident is valued at several thousand dollars.
A minor injury is valued at about $10,000. A major injury is
valued at - it can be as much as almost $100,000 and when you
get to fatal they go up to the millions."
1:46:05 PM
REPRESENTATIVE JOHNSON ascertained that a fatal accident would
skew the numbers quite a bit so that the dollar factor of one
accident on a local road might cause DOT&PF to view the safety
of that road differently than reality would otherwise dictate.
MR. OTTESEN said when getting down to that much detail, traffic
engineers would have pretty good records on the cause of the
accident. Sometimes alcohol is involved and the road features
have nothing to do with the cause. The vast majority of
accidents, over 90 percent, are caused by driver behavior.
1:46:53 PM
REPRESENTATIVE JOHNSON remarked that number is used when
assigning a value for the purpose of deciding what projects will
be included in the Statewide Transportation Improvement Projects
(STIP). He continued, "You said that you did it on public
safety and so you evaluate it and you prioritize based on this
so I am assuming that this number feeds into the STIP
somewhere."
MR. OTTESEN said correct.
1:47:47 PM
REPRESENTATIVE JOHNSON expressed concern that the STIP could be
manipulated by assessing a value and using an inconsistent
formula and again asked Mr. Ottesen to provide him with more
information about the formula.
MR. OTTESEN said DOT&PF uses nationally respected sources to
determine the values. The department consistently applies those
values to all projects.
1:48:05 PM
REPRESENTATIVE JOHNSON asked if all states use the same numbers.
MR. OTTESEN said he believes they do and said the numbers are
from the American Association of State Highway Transportation
Organizations (AASHTO).
1:48:17 PM
REPRESENTATIVE SALMON asked what ownership the state has in
village roads and airports.
MR. OTTESEN answered the ownership of roads is often mixed and
varies from village to village. However, the functional class
is determined regardless of ownership. A road's primary purpose
determines its functional class.
1:49:15 PM
REPRESENTATIVE KELLER asked if accidents caused by driver
behavior are represented in the triangle.
MR. OTTESEN said it represents all accidents. The purpose of
the triangle is to illustrate that when DOT&PF designs a
particular segment of road, its engineers analyze data from the
accidents that occurred on that road that might influence the
design.
1:50:17 PM
MR. OTTESEN continued his presentation:
I was just going to say that when you asked us to
prepare this presentation you had four broad topics
and they are shown on page 1 of the slides. We are
done with two of them. We've done the general
overview and the federal funding rules. We've done
the SHAKWAK funding. We are now about to start the
federal funding process as it relates to state funding
and then we'll wrap up with the STIP, but I think
there's been so much building going on, we can go
fairly quickly from here forward.
1:50:57 PM
MR. OTTESEN continued:
We're at the bottom of page 12. The slide reads,
"Federal Funds and State Budget Authority," and I'm
going to explain how they relate and is there a one-
to-one relationship and I'll explain that term in the
next slide here.
At the top of page 13, here I compare the two terms of
art, the federal funds themselves and then their
presence in the state budget. You'll see there are a
lot of differences. The federal funds come to the
state by a funding type, the apportionment type, and
we talked about apportionment and all of the different
kinds of apportionment: bridge apportionment, safety
apportionment, National Highway System apportionment.
On the other hand, when we write the budget we write
it by the name of the project so we're now - we're
already sort of using two different systems. The
budget at the state level says project X, so many
million dollars, the fund source is federal funds.
It's already - we're not talking in the same terms.
We're not talking about apportionment. We're talking
about the name of a project and not the funding type.
The shelf life for those federal funds is generally
one year. An exception might be earmarks and a couple
other categories but the general shelf life of federal
funds is one year, whereas in the state budget, when
we get authority in the state budget to use federal
funds, that is ten years and in some cases even
longer. They say you can extend it indefinitely if
you can show that you are still working.
1:52:32 PM
MR. OTTESEN continued:
When we write a STIP with federal funds, we are
constrained to a dollar level, to an estimated or
predicted dollar level. In other words, we have to
write the STIP to a budget. The capital budget
doesn't have that same constraint on the federal side.
It certainly does on the general fund side but on the
federal side, there isn't a firm budget and what often
happens is we end up with more federal authority than
we will ever have federal dollars. So your state
budget doesn't have this one-to-one relationship and,
in fact, we might be building a project next year that
is relying upon state authority received in next
year's budget or received in a prior year's budget.
There is no absolute relationship to the year of
appropriation on the state side and the year of
expenditure with the federal dollars.
1:53:27 PM
The controlling documentation is quite different. The
STIP controls the federal side and its rules. The
whole state budgeting process, the capital budget
process, is the controlling document on the state
ledger side. How that is amended is different. The
STIP amendment is done by a STIP amendment. The
capital budget is done through [Legislative Budget and
Audit] LBA in the interim or through a
reappropriation, some type of legislative action.
And then, finally, the two branches of government are
involved: the executive branch on the STIP side, the
legislative branch on the capital budget side. Let me
just talk about this one-to-one relationship because
over the years I get asked this question a lot and
people will say, "Why don't we just have a capital
budget that is precisely what you think you're going
to spend on the STIP?" It's a very simple and I think
a concept that people want to grab on to and feel
would be a very good way to control DOT, if I may be
so bold. I think it would also be a very good way for
us to ensure that we lose federal funding in each and
every year. The federal project process invariably
has projects that slip. They hit a delay in
permitting. They hit a delay in the environmental
process, the community process that we go through, the
right-of-way certification process, and whenever one
of those projects gets delayed, we accelerate a
different project to ensure those federal funds are
not lost because those federal funds are use or lose
if we don't have another project in its place. So we
need to have enough authority on the state side that
we can move projects around to not lose them and this
happens every year in the July-August timeframe.
There is a mad dash to figure out what can go and
what's got to be substituted so that dollars are not
lost.
1:55:17 PM
CHAIR JOHANSEN said that is the main reason for the frustration
of his constituents and others - anticipating a project but
having it pushed back. When that occurs, he gets phone calls
from people who think the project has been pulled. He asked how
to relay to the public the reason for the delay and whether
DOT&PF gets similar phone calls.
MR. OTTESEN agreed that is clearly a problem. He was not sure
of a clear, easy solution. He stated that as the summer season
approaches, everything gets compressed. DOT&PF has to commit to
obligating the federal dollars by August. If DOT&PF cannot make
that commitment, it has to plan substitution projects, which
creates a mad dash to check right-of-way permits, etcetera. In
a perfect world, DOT&PF would take time to communicate its plan
to the public but if it tried to do so by August, the federal
dollars could be lost. He said if DOT&PF loses the dollars, it
would not be a good steward of the system or of the public
process. He repeated that he does not have an eloquent
solution.
1:57:58 PM
CHAIR JOHANSEN asked if DOT&PF chooses substitute projects from
the $200 million of projects that are ready to go.
MR. OTTESEN said DOT&PF usually picks from projects that are
already in the STIP. He explained:
What usually is happening is you have a list of
projects that are in the STIP. Let's just
hypothetically say it's 20 projects. Well there have
been cost increases on several of them and we don't
have enough money now to do all 20. We're only going
to be able to advance 16 of the 20. So what we're
really doing is taking that obligation limit planned
for four projects and spreading it across the other
16. So, 16 projects in my example are proceeding.
Four projects that were in the STIP are going to be
delayed. That's essentially what the give and take
is. Sometimes we're looking for a new project to slip
in. That's a little more rare.
1:59:04 PM
CHAIR JOHANSEN said he thinks that is also the cause of some of
the Legislature's frustration. He commented that legislators
know DOT&PF needs some "wiggle" room but some people think it
has too much.
REPRESENTATIVE DOOGAN said if he had an idea of the amount of
federal funds the state would have to forego to get control of
DOT&PF, he might agree to do so but he doesn't think the trade-
off is that exact. He then said Mr. Ottesen's document says the
executive branch decides on the federal funds in the state
budget. He asked if that means every STIP amendment is approved.
MR. OTTESEN said the state executive branch, i.e., DOT&PF,
prepares that amendment. The commissioner submits it to the
federal agency that actually approves it. That decision is made
internally.
2:00:19 PM
REPRESENTATIVE DOOGAN asked if the STIP amendments are routinely
approved.
MR. OTTESEN said the approval rate is 100 percent with the
caveat that a STIP amendment could be approved except for the
Fairbanks metropolitan area because of air quality issues. He
furthered:
They have some extra work to go through called
conformity and if their work was not complete, they
can approve the STIP...with geographic exceptions so
we would get a 95 percent approved STIP and two or
three weeks later the other piece of it would be
approved later on.
2:01:07 PM
REPRESENTATIVE NEUMAN said people want transparent
accountability in government. He stated, "I want to see some
correlation of where our state funds are and what's there as
compared to what may be there in federal and how those monies
are being spent." He asked if Mr. Ottesen's document provides
that information.
MR. OTTESEN indicated that DOT&PF's budget is partly federal but
state funds have also been appropriated to projects. That
amount has been sizeable in the last few years, hundreds of
millions. Those projects do not show up in the STIP; they fall
under another process. He said those projects could be included
[in the STIP] for the public to see, but DOT&PF is not legally
required to do that and the workload that would require would be
huge. He noted others have advocated that DOT&PF include
federal projects in the STIP for the sake of transparency. He
does not oppose doing that but is concerned about the workload.
He stated that on scored community projects, a project not
completed in '06 would be first to go in '07.
2:04:15 PM
MR. OTTESEN told members last year DOT&PF had to let two
Southeast projects slip; buses for Ketchikan and Juneau. DOT&PF
needed those dollars for a different project so that the project
could go to bid. He told the Southeast Region those buses would
be funded first next year.
2:05:08 PM
REPRESENTATIVE NEUMAN asserted that he has heard comments that
DOT&PF seems to be out of control in that it has a large budget
but no one seems to "know where it's at." He asked how he
should respond to those comments and repeated that he would like
to see a more transparent process.
MR. OTTESEN said one possibility is to make sure that all
projects are located in the same place so that people do not
have to look for information in separate silos. He noted that
to find a general fund project, one would have to find the
project name by region on the website. Federal projects are
found under the STIP. He acknowledged that is not the most
transparent of systems but is the system DOT&PF has right now.
The second issue of how to make the decision making process more
transparent is difficult because of the timing problem during
the summer. He said he is asking regional planners to tell
communities that projects are delayed and why and that those
projects will be given priority the next year. He reminded
members that federal funds will lapse if DOT&PF spends 60 or 90
days on a public process during the summer.
2:07:36 PM
REPRESENTATIVE SALMON asked Mr. Ottesen if he is familiar with
the Eureka to Rampart Road.
MR. OTTESEN said he is.
2:07:48 PM
REPRESENTATIVE SALMON said that 30 mile road has two bridges and
about 14 miles of that road have been completed although the
project has been ongoing for 30 or 40 years. He said he did not
see that project in the STIP and asked when it will be
completed.
MR. OTTESEN told Representative Salmon the Eureka-Rampart road
is part of the Alaska Highway System, which is comprised of 1500
miles. That system only gets about $16 to $18 million per year
statewide so it is grossly under funded. All Alaska Highway
System projects have been waiting to be completed for years.
2:09:39 PM
REPRESENTATIVE SALMON asked for written information about that
project.
MR. OTTESEN said he would have regional staff provide a report.
He pointed out the regional director would be addressing the
committee in two weeks and can also answer that question.
2:09:56 PM
CHAIR JOHANSEN noted he invited the three regional directors to
address the committee.
REPRESENTATIVE JOHNSON asked the number of projects that either
slip each year or from which funding is taken to finish another
project.
MR. OTTESEN said the number is in the 10s depending on the year,
and could be 20 to 30 in a bad year. He said the cause is not
only the high cost, it is also the erratic nature of the federal
funds.
2:11:13 PM
REPRESENTATIVE JOHNSON asked if DOT&PF has a public information
officer.
MR. OTTESEN said it does.
REPRESENTATIVE JOHNSON remarked:
So we're talking 30 projects that slip. ...Having been
press secretary for this body, I can tell you that
I've done 30 press releases in a day. I find it
appalling that...if a public information officer
cannot handle 30 information distributions to
communities, I've got some serious concerns. What do
they do?
2:11:54 PM
MR. OTTESEN said DOT&PF uses a different technique. Staff makes
personal phone calls to people in the community.
REPRESENTATIVE JOHNSON questioned whether that technique has
been working.
MR. OTTESEN replied, "The question is has it been working at
every level of the community. The city council may know, the
city manager may know. I'm not sure every person in the coffee
shop knows." He acknowledged the value of using a press release
and noted the public information officer has not yet worked over
an entire STIP cycle.
REPRESENTATIVE JOHNSON commented that he receives phone calls
from the people in the coffee shops. He said he'd much rather
they be notified because the mayor will find out elsewhere.
MR. OTTESEN said he appreciated that comment.
2:12:55 PM
REPRESENTATIVE DOOGAN indicated that Mr. Ottesen referred to $16
to $18 million in annual funds appropriated to the Alaska
Highway System and asked if those funds are federal dollars.
MR. OTTESEN replied they are federal dollars plus the associated
match; usually a 90:10 ratio.
2:13:35 PM
REPRESENTATIVE DOOGAN questioned why more money isn't available
for that program.
MR. OTTESEN explained that DOT&PF uses a formula that allocates
a pie. The formula is partly in regulation and partly in
statute. DOT&PF can change the regulation but not the statutory
requirement.
2:14:12 PM
MR. OTTESEN directed members to copies of the pie chart in the
committee packet that categorizes DOT&PF's flexible federal
dollars: 48 percent of those dollars goes to the National
Highway System; 8 percent goes to the Alaska Highway System,
which has about 1,500 centerline miles; 2 percent goes to the
TRAC program, which covers trails and recreational access; 39
percent goes to community class roads; and the remaining 3
percent is left to provide "a little wiggle room." He repeated
the Alaska Highway System is the least well funded; it consists
of state level highways that connect communities. The federal
government does not consider them to be at the level of National
Highway System roads. He said if one was to divide the funding
stream by the number of road miles and assumed an average cost
of $1 million per mile, a new project could be built every 120
years.
2:16:09 PM
REPRESENTATIVE DOOGAN asked if the federal government determines
the amount of Alaska Highway funding.
MR. OTTESEN said the state determines the Alaska Highway System
funding.
REPRESENTATIVE DOOGAN asked if that state-level decision is
based on road traffic.
MR. OTTESEN said the decision is made using a combination of
factors. However, the 1991 decision that determined community
roads to be eligible for federal funding tripled the miles that
were eligible but reduced the number of miles allowed for high-
level roads. He pointed out that DOT&PF is facing the dilemma
that when everything is a priority, nothing is a priority.
2:17:18 PM
REPRESENTATIVE DOOGAN asked:
If the Alaska Highway System is basically ... big
roads that don't fit the National Highway System ...
and because we've got it divided by category, I'm
going to make the assumption that these are more
likely to be big rural roads than big urban roads
because the big urban roads are more likely to be
National Highway System roads. Then, because this
information is divided by category as opposed to by
location, it is impossible for [legislators] to make
any sort of a reasoned judgment about the allocation
by area, i.e., if there are people living someplace in
Alaska because they have the misfortune to fall under
the Alaska Highway System as opposed to under
community roads or National Highway System roads that
their roads are never going to get finished. Right? I
mean how do we get to grips as policymakers with those
kinds of questions considering the way this
information is presented to us?
MR. OTTESEN said DOT&PF is trying to communicate through the
2030 document and legislative presentations the harsh reality of
the state's list of transportation needs versus limited funding.
He said the situation is a daily dilemma for him. The facts
that federal funding rules have changed, costs have increased,
and DOT&PF has no second or third source of funding have created
a situation where very deserving projects go wanting. DOT&PF
can, according to its regulations, spend National Highway System
funds on Alaska Highway System projects. The National Highway
System is where the economy is taking place because of heavy
commuter and freight traffic so DOT&PF is cautious about taking
funds from those projects.
2:19:48 PM
REPRESENTATIVE DOOGAN asserted that although he understands the
difficulty of decision making with limited funds, his point is
that he is not sure he can identify what is getting funded and
what is not, because he is unable to identify which roads fall
under which category. He needs to be able to locate specific
projects on a map rather than try to locate them by funding
source.
MR. OTTESEN said those maps are available on the Internet and
that he would provide copies to the committee.
2:21:07 PM
REPRESENTATIVE DOOGAN maintained the problem is that DOT&PF does
not manage it that way. He furthered, "You're managing it this
way and it seems to me that that's where a lot of the difficulty
arises, is if you're managing it by category when it's actually
built by location."
MR. OTTESEN said he was not sure that characterization is
correct. DOT&PF's system has evolved over time. Past give-and-
take interactions with the legislature created the terms and
some were codified in regulation and statute.
REPRESENTATIVE DOOGAN said he understood.
2:22:16 PM
REPRESENTATIVE FAIRCLOUGH noted she represents District 17, the
Eagle River area. That district has waited more than 10 years
for a road [upgrade] on a road that 35,000 people use every day
so the problem is not unique to rural Alaska. The list of
projects is prioritized according to lane miles, traffic and
other specific criteria. The regional offices can provide
layouts for the regions. She explained:
How it works, as I understand it from my community's
perspective is small community members, 5 or 10
people, get together and they form a list of projects.
In my community it's labeled the community council.
In a tribal entity it would be a tribal entity. They
forward those projects through to the mayor or
whatever the local government is. They are
prioritized there throughout their whole community so
Eagle River and the road that I'm talking about had to
go to the big city, Anchorage, stand before the big
city and say how our project and the miles that were
valuable to our community lined up against the needs
of C Street that was sort of a larger corridor, wider,
and they create a master plan inside of that tribal
government or a municipality that goes forward.
They fund that many different ways. In my community
we have a road service area board that we actually
handle and tax ourselves to go out and help implement
projects. The city of Anchorage goes to their voters
and they choose a different path. So there are all of
these different paths that we work with DOT on and
they advise us and we do a transfer of
responsibilities in different things to upgrade those
roads. But please don't let the public think that
there isn't a well thought-out process because,
believe me, I banged my head on this process for 10
years trying to get around it to see if there were
different ways that we could push or pull. Certainly
we are the legislative body that should say and feel
like we want to be involved in the process of picking
and choosing but I warned this committee early on that
you have to be able to give it a statewide approach in
your look and your application and not an Eagle River
approach to a statewide plan.
So I believe what Mr. Ottesen has been telling us, and
he has been trying to explain to us at our request,
was the federal component of this project. The
department has much bigger projects that have it all
lined up and he's referred you to the computer or on
to the website that has those master plans by inch and
miles, by road by miles, and we've asked them to
explain this component. That's not the entirety of
DOT. It's not the entirety of the Municipality of
Anchorage or all of the resources that we bring to
bear to bring projects so that rubber can meet a
surface that people can travel on or that water can be
traversed off of our ferry system.
I know that [we want] to get to the bottom of
something here but the people that work for the State
of Alaska in all of our departments do great work.
They should be very proud to be able to bring to us
from every department, including DOT, a set of
criteria and open themselves up to sit in front of us
and have us keep asking what, why, where, how and
when. Please know that they have systems in place
that you can challenge that hold water per se. They
are good systems. I've been - don't get me wrong but
bureaucracy is a nightmare. You can't breathe through
it. I understand that but we have good guides sitting
in front of us.
I'll get off my soapbox but it took me a long time to
get around the federal component of the process and
Representative Salmon, I'm with you. After 20 years
on my road, 10 we've been in the plan. We've been on
the entire erosion quantity of this for close to 20
years in trying to get one segment, I think it's nine
miles, done up to our park system and I understand.
Anyway I want to thank you and your team for all that
you do and I know that the federal process is
cumbersome and I appreciate you offering to the
federal delegation ways and means that they could make
our lives easier and I just would go on record again
to say that I do support the governor and looking at a
transportation fund so that we can, as Representative
Doogan and Representative Salmon have said, we have
roads that need to have maintenance done and we have
to look at a statewide approach to accomplish those
things. Thank you Mr. Chairman.
2:27:21 PM
REPRESENTATIVE JOHNSON referred to the chart and asked if the 2
percent for the TRAC transferred to the Anchorage Metropolitan
Area Transportation Solutions (AMATS) is a mandated amount or
the state match and how it filters down to the small chart.
MR. OTTESEN said AMATS has a great deal of latitude with those
funds once it receives them. The Legislature passed legislation
in an attempt to control the amount of money spent on TRAC-like
projects. That legislation was litigated in the Superior Court.
He said he believes the amount actually spent is about 10
percent.
2:28:52 PM
CHAIR JOHANSEN directed members to the bottom of page 13.
2:29:05 PM
MR. OTTESEN continued his presentation:
Let's turn to the top of page 14 if we may and just
talk about the Alaska STIP and what is coming up. At
this point in my presentation, when I was making it, I
really questioned which way I should take you. ... I
showed you the criteria and how we use criteria
because we do use a lot of criteria and there are very
elaborate nomination packages that answer dozens of
questions about each project. The regional staffs
work very hard with photographs and maps and write-
ups. We answer questions about economic purpose and
safety and a whole series of benefits and whether or
not the community is behind the project. A project
gets scored, at least in the CTP category. That
scoring then is followed as closely as we know how
when we prioritize them and put them into the STIP.
To me the real hiccup in our system right now is that
we're just not moving fast enough. We've got a good
list of projects. People want them but the dollars
for a series of reasons are just not coming at us fast
enough. We can only build what we're appropriated to
build to. That's been our dilemma. We've gone from a
system, low inflation, lots of federal dollars, not
too many strings, delivering good projects and all has
changed in about four years and those three or four
years have been nightmarish. High inflation, lots of
changes at the federal level, and it's been
frustrating. It's frustrating for staff, I can tell
you that. It's frustrating for communities. It's
frustrating for people sitting in your jobs and I
think if I can give you one takeaway message, we're
not going to solve this problem by re-dividing the pie
somehow. That's not going to solve it. The pie simply
has to get bigger. That's my takeaway.
CHAIR JOHANSEN said he thinks the committee understands that
point.
2:31:02 PM
MR. OTTESEN continued his presentation:
So if I can talk about '08 and '09 Mr. Chairman, those are
kind of the immediate years of the STIP. You've already
heard a lot of this and we can go fairly quickly and then
just for an eye toward what will happen in 2010 after
reauthorization.
The STIP is essentially a federal rule created, I
guess in part, because DOTs were thought to be not
disclosing their plans to the public. So it came in
1991. They were told to start writing these STIPs.
Do it in a public process that would tell the public
what, why, when and who and where are we going to do a
project. So they mandated that we write a STIP.
They've written rules now twice - the process rules in
'93 and then again now in 2007. It's all about giving
the chance for the public to understand what we're
doing and to understand when things change.
The two over-arching authorities to our STIP are
Federal Highways and Federal Transit. Federal
Highways is located here in Juneau. Federal Transit
is located in the Seattle office of Region 10. Those
two offices have to review every STIP and every STIP
amendment and approve those documents before we can
proceed to actually embark upon building the projects
that are in the STIP or doing any other work for that
matter, be it design work or right-of-way work.
2:32:13 PM
MR. OTTESEN continued:
So, on the top of page 15, this you've already heard
me talk about. We've got these rescissions coming.
They're going to require that the 2008 STIP be
modified through an amendment and that amendment will
be we're waiting on the 2030 plan to be done so that
we can start the STIP amendment and then we do that.
It takes so many days and then we can begin working
those projects. That's just - at this point it's just
a fact of life that we have to accommodate.
2:32:42 PM
There is another issue in 2009. When Congress passed
the bill known as SAFETEA-LU...in order to balance the
bill and balance the budget, they built in what is
known as a rescission in the 2009 year. It's written
into law. The Alaska portion of that national
rescission is $55 million so that means that we have
to be ready to give. When they give us that money in
2009, we're going to have to give $55 million of it
back. So we have to write the STIP with that
rescission in mind because it is law. The only way it
can be undone is if Congress changes that law so there
is no other mechanism available for that to change.
2:33:26 PM
A second issue with the Highway Trust Fund is that it
is simply not generating revenue as fast as they
thought it would so you also have a problem with its
solvency. That number has very much been in flux.
When I wrote this presentation about two weeks ago, we
were told that the insolvency was going to be about $5
billion but would require that they cut spending by
about $18 billion. That was the number I was getting
and, in fact, I even got that number from a source
this month, in the month of January. Since I've come
back from my meeting back East, that number has gotten
smaller. Now it's going to be a billion dollar
shortfall in that trust fund and it's going to slow
down spending $4 to $5 billion. I can explain if
you'd like why a $1 billion dollar shortfall results
in a slowdown of spending four times larger but it's a
pretty complex answer. I don't think it gives you a
lot of real meaning to understand it. Just know that
the program will have to be made smaller to
accommodate that.
So we have two 2009 issues that we have to accommodate
when we write a fiscally constrained STIP. There is
still a possibility that Congress could fix one or
both of those and so we have to keep that in our mind
too, that we may have a STIP that has to be amended at
a later date to deal with extra money if there are
fixes coming.
2:34:52 PM
REPRESENTATIVE NEUMAN asked, "With the $55 million in rescission
funds, and that's out of a total of how much expected to - an
estimate?"
MR. OTTESEN answered about $200 million.
2:35:15 PM
REPRESENTATIVE NEUMAN asked, regarding the immediate STIP
amendments necessary to avoid loss of funds, whether that loss
would be in addition to the $55 million.
MR. OTTESEN affirmed that is correct. He said DOT&PF has a 2008
problem, a different rescission. The 2009 rescission is planned
and written into the SAFETEA-LU legislation. The 2009
rescission was done in an appropriation bill.
2:35:44 PM
REPRESENTATIVE NEUMAN asked if the $55 million is Alaska's share
of the $9 billion.
MR. OTTESEN said yes. He added it is either a $55 million
rescission or an $86 million rescission, depending on which
interpretation of the law is applied.
2:36:24 PM
CHAIR JOHANSEN asked when DOT&PF sends its STIP to the Federal
Highway Agency, whether the process to adopt amendments is
completely internal and closed or whether the process allows for
input from the public or the state.
MR. OTTESEN stated the process is completely internal to the two
agencies. He reminded members that DOT&PF had a 45-day comment
period before it was sent to the federal agencies.
2:37:20 PM
MR. OTTESEN continued his presentation:
Okay - so the bottom of 15. We've already talked
about this one. This is the 2008 fund notices. I
talked about it on that slide last week or Tuesday
where we got notices that change the kind of funding
we're going to get for this year. I think we really
don't need to belabor that unless you'd like but it
means we're going to do less in the highway
reconstruction category and those dollars will have to
be shifted to spend on highway bridge and safety work.
At the top of 16, we talked about the rescission.
It's either $55 or $86 million. The lawyers are going
to, I guess, ultimately decide that back in D.C. It
obviously - it actually is going to create the
possibility where we're going to end up with more
obligation limit than we are when we have
apportionment because what we're rescinding is
apportionment. I don't know that it really makes a
difference. You can't spend the federal dollars. You
can't spend them but we've never been in a position
before where we had no spare apportionment and had
more obligation limit. Historically obligation limit
has always been the controlling factor. So that may
be a technical problem and not worth your attention
but it does, from our standpoint. It's like gee, this
has never happened before. It's just a new wrinkle to
our business.
2:38:44 PM
REPRESENTATIVE NEUMAN commented one apportionment plus one
obligation equals $1 dollar. He asked whether those dollars can
be moved to other jobs.
MR. OTTESEN said DOT&PF can move obligation limit to any
apportionment, but if DOT&PF has to rescind them to the federal
authorities, DOT&PF will end up with an obligation limit that it
cannot match to apportionment. DOT&PF will be short in a
different way. In the past, DOT&PF always had surplus
apportionment but an inadequate obligation limit. DOT&PF sees
itself with the opposite circumstance in 2009.
2:39:30 PM
REPRESENTATIVE NEUMAN asked if [those funds] can be recovered in
any way.
MR. OTTESEN said Congress will have to change the law. He
indicated that historically, changes have been made so he
expects Congress to do something. He cautioned that the country
is in a presidential election cycle and a new administration
will be coming on board.
2:40:05 PM
REPRESENTATIVE NEUMAN asked if the state can do anything to
facilitate those changes.
MR. OTTESEN suggested adopting a resolution of support to
address the issue. He said other states have adopted
resolutions. This is a nationwide problem nationwide because it
takes projects off the streets that would have put people to
work.
2:40:51 PM
REPRESENTATIVE KELLER asked Mr. Ottesen if he said apportionment
is a promise.
MR. OTTESEN said he did.
REPRESENTATIVE KELLER expressed concern, "They give you a
promise. With a promise they are going to take back a promise.
Just explain to me a little bit about what's going on there.
I'm missing something."
MR. OTTESEN stated the state needs that promise to be matched up
with a dollar of obligation limit to be able to spend the
obligation limit. He likened the formula to epoxy, which
requires mixing two parts to make it useable.
REPRESENTATIVE KELLER asked whether political good will is
driving the federal agency to make promises.
MR. OTTESEN said he believes the reason for the built-in
rescission in 2009 is that it was written into law in 2005.
Both the House and Senate wanted much bigger transportation
bills at that time. Representative Don Young, chair of the
House Transportation Committee at that time, wanted the bill to
include $375 billion. The President threatened to veto the bill
if it exceeded $275 billion. He recalled the Senate amount was
[$320] billion. The final bill contained a little more than
$275 billion. To raise revenue without raising taxes, a few
things were "tweaked," one being assumptions about future
revenue flow. If the revenue flow assumption is changed, the
model appears to have more money. The bill also included the
rescission feature to balance everything in four years.
2:42:44 PM
REPRESENTATIVE SALMON referred to page 7, and asked whether
DOT&PF has to follow all of the regulations for federal grants
or whether they also apply to state money. He also asked
whether the regulations apply to projects built on state land.
MR. OTTESEN said many of the laws represented on the document
would apply regardless of funding source but some of them do
not. For example, wetlands laws, the Endangered Species Act,
and the Clean Air Act are not affected by funding source but
other laws are only applicable to federal funds.
2:43:33 PM
REPRESENTATIVE SALMON asked whether the same applies to state
money.
MR. OTTESEN replied state money is easier to use but if a
federal action is required, such as a Corps of Engineers permit,
the National Environmental Policy Act (NEPA) must be followed.
If no federal action is required, DOT&PF could build the project
without a NEPA document. He said it depends on the impact on
water, land and animals.
2:44:07 PM
REPRESENTATIVE DOOGAN asked Mr. Ottesen to put the information
on rescissions into a timeline. He asked when, during the STIP
process, DOT&PF finds out which number [the $55 or $86 million]
it will have to account for in the STIP itself.
MR. OTTESEN said he could not answer that question for a year or
more. The department is writing those numbers this week.
2:45:00 PM
REPRESENTATIVE DOOGAN asked how DOT&PF deals with that
situation.
MR. OTTESEN said DOT&PF makes estimates and judgments.
REPRESENTATIVE DOOGAN asked if DOT&PF writes the STIP to the
worst case scenario.
MR. OTTESEN said DOT&PF writes it to the most likely scenario
and is prepared to make adjustments as time goes on.
2:45:24 PM
MR. OTTESEN continued his presentation:
We've talked about the Trust Fund balance at the
bottom of 16. There really isn't - I think this one
gets solved. This one they can solve and there's
actually a bill in Congress that will solve this Trust
Fund balance problem. I think the rescission is a
bigger fear. That's going to be harder to fix. But
let me say this. They'll fix it for a year. The fix
is not going to have any permanency to it. It's not
like a new tax that raises new revenue year after
year. They're going to move some money around between
some accounts and fix it.
So we deal in a world where federal funding is very
fluid, very dynamic with lots of unknowns to deal
with. We also deal with a world where the cost of
increases on projects has been pretty dramatic. You
also have scope creep where we start with a project
that is very simple and it ends up very complex for
lots of reasons. All that makes writing the STIP
incredibly difficult.
... So, on the bottom of 17 the major amendment that
we're writing right now is focused on - it will come
out here as soon as the 2030 plan is done. My STIP
author is sitting behind me. It's his job to write
that. He's not going to get much spare time on the
weekends, I can tell you. We will then also, as soon
as that's done, have to write a STIP for the 2009,
2012 cycle. That may be even harder to write because
now we're writing about three years for which we'll
have no knowledge until reauthorization is over.
Reauthorization, as I'm about to show you, offers
several more degrees of variables that we have to cope
with. So we've got a STIP amendment coming that will
cover 2008, 2009 and then our STIPs usually overlap so
we have a new STIP, a complete rewrite of the STIP
that will take place that covers 2009 to 2012.
Federal law has now changed the rule on how long the
STIP covers. It used to be three years. SAFETEA-LU
changed that to four years.
2:47:40 PM
MR. OTTESEN continued:
Slide 18 talks a little bit about earmarks and what
earmarks have done to the STIP and to the whole
process. At the time SAFETEA-LU passed, there was a
billion dollars in earmarks to Alaska. They were
authorized over all five years...you would not get the
funding for any given earmark until the fifth year
typically so you had to wait for an increment of
funding in each and every year, 2008, 2009, etcetera.
People tend to gravitate to the two bridges when we
talk about earmarks but the two bridges only represent
less than 40 percent of the total earmarks in the
state. There were a great many other earmarks. One
of the consequences of this is the deductive earmarks,
and I believe you got a copy of the deductive part of
the list; diverted funds to what were normally
ineligible needs. Some of the earmarks did. Parking
garages, port work, shipyard work are the kinds of
categories that historically would not be using
federal dollars out of the transportation programs.
These are dollars that came from drivers across
America to rebuild the road system and now they are
going to these other modes. I'm not trying to cast
any aspersions on the needs for those projects, I'm
just trying to point out that when you have a fairly
limited pot of money that's barely doing its job and
you shrink it further, there's going to be a
consequence. I think we're all feeling that
consequence.
2:49:00 PM
MR. OTTESEN continued:
One of the other consequences of many of the earmarks
is they were just a small down payment on a much
bigger cost project. We've had earmarks that are less
than 5 percent of the total cost of the project. So
that begs the question where does the other 95 percent
come from. Some people would say the STIP should
deliver the other 95 percent. Some people will say
well future earmarks will fill that out. Really there
is no answer but it's very hard for us to just stop
doing the core needs with the few STIP dollars that we
have left to make those earmarks whole so that's a
very difficult decision and I'm not sure that it would
be in the best overall interest to - I can give you
lots of examples of this. Chignik Road, for example,
got a little bit of money to do a very expensive road
project. It would take another $40 or $50 million of
diversion and where do you divert from? What other
project stands down to make that project whole? That
would be just one way of looking at it. And so we're
torn. We have - not to say it isn't a good project,
we just simply don't have enough money to go around
the state.
2:50:10 PM
REPRESENTATIVE NEUMAN expressed concern that the state is liable
for incomplete earmarked projects as that could cost the state a
lot of money.
MR. OTTESEN agreed.
REPRESENTATIVE NEUMAN asked how much money would be involved
right now if the earmarked projects could not be finished.
MR. OTTESEN said DOT&PF has adopted a draft earmark policy,
which only handles 12 or more earmarks. That list could amount
to one-half billion or more. He did not think the state is
facing that risk because DOT&PF is not proceeding with those
earmarks until the full funding path is evident.
2:51:02 PM
REPRESENTATIVE NEUMAN cautioned if the legislature is not
careful with its appropriations, the earmarks could become
problematic.
MR. OTTESEN said that is the risk DOT&PF is trying to avoid. He
pointed out that under the new federal rules, projects cannot be
put in the STIP unless full funding will be available when
needed. The department cannot be that reckless under the
federal rules.
2:51:47 PM
REPRESENTATIVE DOOGAN questioned whether a fully funded
earmarked project would be done in increments over a five-year
period.
MR. OTTESEN said that is correct.
REPRESENTATIVE DOOGAN asked if five years' worth of funding
would be necessary for a project to be included in the STIP.
MR. OTTESEN said that is a separate issue. He furthered:
We can see that funding. We can say it's coming and,
in fact, we have used that tool I talked about in a
previous session, advanced construction, in some cases
to build projects that we know have enough money and
we'll just wait for the appropriations to come in and
ensure that the state funds are reimbursed. But
that's just one way that we've done that.
2:52:32 PM
REPRESENTATIVE DOOGAN asked how DOT&PF would be sure it will
receive five years of funding for an earmark.
MR. OTTESEN explained that earmarks fall into two classes.
Authorization earmarks are written into an authorization bill.
Funding for those projects come automatically every year.
Appropriation earmarks depend upon who has the best ability to
write them.
REPRESENTATIVE DOOGAN asked if an authorization is more likely
to get into the STIP.
MR. OTTESEN responded, "Exactly."
2:53:16 PM
REPRESENTATIVE JOHNSON asked, regarding the earmark for the
bridge to Gravina Island, how the state could take that money
and spend it on other projects. He continued:
... where other earmarks, you're saying if we don't
finish or complete then we've already spent I think
you said $55 million on access roads and stuff for
that bridge that we may be in jeopardy of losing. So
how can we take - what's different in that earmark
than what you've described that, you know, if we don't
finish it we're on the hook for it? So what makes
that any different? Why is that a different category
of earmark or am I just totally missing something
here?
MR. OTTESEN said three earmarks apply to the Gravina Bridge.
One earmark was directed for roads only. The word "bridge" was
not in the title. The other two earmarks addressed the crossing
or the bridge. After Hurricane Katrina, Senator Ted Stevens
changed the earmarks for both bridges from earmarks specific to
the KNIK Arm and Gravina Island bridge projects to earmarks to
DOT&PF for any purpose eligible under the STP category of
apportionment, which is the most flexible category available.
Two of the three earmarks were given to DOT&PF. The third
earmark remained specific to roadwork on Gravina Island, which
is why that project went forward.
2:56:11 PM
REPRESENTATIVE JOHNSON asked how many requests to change all
earmarks have been made to Alaska's congressional delegation.
MR. OTTESEN said DOT&PF has asked the congressional delegation
to ensure that earmarks are additive and not deductive. He
acknowledged a difference of opinion on the value of earmarks.
The congressional delegation believes earmarking is a very
important part of its job.
REPRESENTATIVE JOHNSON maintained that if DOT&PF has total
flexibility with earmarks, it would be difficult to oppose them.
He said if only 10 percent of a project is funded so that the
money can't be used that is one thing, but if DOT&PF can be
given total flexibility, he questioned why anyone would oppose
them.
2:57:17 PM
MR. OTTESEN said slide 18 of his presentation will make the
point. He continued his presentation:
You can see here the number of earmarks that have
occurred in the federal transportation program since
it was sort of authorized in 1956. The key point here
is for 30 years we were building the interstate as a
nation. That was the motive behind this program. In
that 30 years, from '56 to '86, there were 12 earmarks
total in 30 years time in all 50 states so it was a
pretty rare event.
Since then, in the last 20 years, there have been over
9,000 earmarks. I would just sort of ask this one
question. Could we have built the interstate system
and achieve what that has done for mobility in the
United States under an earmark environment?
REPRESENTATIVE JOHNSON said he believes that would have been
possible if the number of required environmental impact
statements was the same as it was in the 1950s and 1960s.
MR. OTTESEN agreed and said his point is the earlier system
ensured projects in areas that were not politically powerful.
2:58:52 PM
REPRESENTATIVE DOOGAN asked what constitutes an earmark.
MR. OTTESEN replied, "An earmark is a sum of money assigned to a
specific project by name."
2:59:15 PM
REPRESENTATIVE DOOGAN questioned whether an earmark could fund
either a project in the STIP or a project not in the STIP.
MR. OTTESEN said that is correct.
REPRESENTATIVE DOOGAN asked if the problem is not the earmark
itself but the type of earmark.
MR. OTTESEN said that is correct. He said a certain number of
earmarks go directly to planned projects in the STIP. The
earmarks that cause problems are those that go to communities
for non-transportation related work. He continued:
The amount of work they involve is unbelievable. If
it's not funded, we really have to use state funds to
pay for that. It's been meeting after meeting and
dealing with agencies and trying to get earmarks re-
titled, and now we're at the point where we have
earmarks that are actually going back and leaving the
state because we couldn't use them. We never got the
problems ironed out.
3:00:42 PM
REPRESENTATIVE DOOGAN said discretion is one problem with
earmarks since DOT&PF may get an earmark for a project that no
one has looked at. The second problem is that earmarks are
often insufficient to complete a project.
MR. OTTESEN said that is correct.
3:01:07 PM
REPRESENTATIVE SALMON asked what happened to the federal funds
for the road from Juneau to Haines and whether that money was an
earmark.
MR. OTTESEN said a $15 million [federal] earmark must stay with
that project. In addition, a certain amount of state funds were
appropriated to that specific project. The balance of the funds
spent on that project would have to come from federal formula
dollars annually. He pointed out that road will consist of
several projects so that in each year one of the projects moves
forward, federal dollars will go toward it.
3:02:08 PM
REPRESENTATIVE SALMON asked if the project is dormant, dead, or
without funds.
MR. OTTESEN said it is dormant because its permits have not yet
been issued.
3:02:24 PM
REPRESENTATIVE DOOGAN asked:
So one of the problems figuring out the STIP is that
if you've got several large projects that are going to
eat up - essentially going to be trying to spend the
same money, you've got to determine which ones to
advance and which ones not in the STIP. Is that an
accurate ...
MR. OTTESEN said exactly. The department does a balancing act
that starts with a list of resources.
3:02:58 PM
REPRESENTATIVE DOOGAN asked if DOT&PF was looking at two large-
scale roads, how it would decide which one should go forward
when developing the STIP.
MR. OTTESEN noted a lot of conversation goes on with management.
The regional directors discuss their needs. Most often, the
decision is made with compromise. He maintained that everyone
at DOT&PF is frustrated because they would like to see more
projects go forward.
3:03:57 PM
REPRESENTATIVE DOOGAN asked if DOT&PF tries to make sure that
each region's priority projects are getting some attention in
the STIP.
MR. OTTESEN said it does and, for example, a three-year timeline
may be stretched to a five-year timeline.
3:04:22 PM
CHAIR JOHANSEN said his constituents are very frustrated because
the earmarks for the Gravina Island Bridge were removed because
of nationwide pressure after Hurricane Katrina. He has heard
the money was sent to the state with the intention of spending
it on that project. However, DOT&PF reprioritized those funds
and halted the project internally. The Governor has since
announced the project would be cancelled. He maintained that it
is frustrating for the federal delegation to get earmarks and
then have DOT&PF decide what to do with the funds.
MR. OTTESEN explained that is the tension between earmarks and
the federal process in law. The federal process requires a
long, involved planning process to identify priorities for the
STIP. Earmarks say do it this way. He pointed out when the
Gravina Island Bridge earmark was changed, it became subject to
the planning process. So, from a legal standpoint, the state
had no choice but to do what it did. He said an executive order
issued yesterday says when the federal government looks at
earmarks, it will look to what the law says, not to what
congressional committees or members say. The thinking is that
an earmark is an act of the congressional body, not of an
individual member. He continued:
We've been getting that through other written guidance
for several months now that the - and I'll give you
this example. Earmarks are often fuzzy - who gets
them, what they're for, what they really intended to
do with them, and we would write back to the
delegation and get an answer - well, I really wanted
it to go here and be for this purpose. We would take
that and show it to Federal Highways and [it would]
say fine, do that. It worked pretty well and we paid
attention to that guidance. Now we're being told it
has no standing, it has no merit whatsoever under a
new executive order signed this week. If anything,
it's kind of the tilting back to the planning process
is the dominant force as much as - earmarks are still
going to occur. I don't expect we'll see the end of
earmarks.
3:08:02 PM
CHAIR JOHANSEN said the point is moot as he cannot imagine that
Congress will approve an earmark with the name Gravina Island on
it for several generations.
MR. OTTESEN pointed out the one earmark that remained named for
Gravina Island was spent on Gravina Island.
3:08:33 PM
REPRESENTATIVE SALMON asked if DOT&PF will be back in the same
boat if the executive order changes after the presidential
election.
MR. OTTESEN said that is certainly possible, however executive
orders tend to survive administrations.
3:08:54 PM
MR. OTTESEN continued his presentation:
So on [page] 19, let me just give you the two kinds.
There are two kinds of amendments to the STIP. There
is what is known as an administrative modification and
then an amendment. An administrative modification is
a very simple, quick, internal process, no public
notice. We make a change. We write a letter to the
feds and inform them of the change and we put that on
our website to inform the public that that
administrative modification has happened and there are
some guidelines in the new regulations about what
falls under the threshold and becomes an
administrative modification and what has to go the
amendment route. The amendment route is much more
formal - advanced public notice. We go through a
comment period and give people the notice. Our
concern about this is that the guidance is not hard.
We can't tell you exactly where the line lies and we
have to negotiate that with the federal agencies. For
example, if you have a cost increase of - 10 percent
to 20 percent might be the range in the guidance - and
we have to decide at some point we'll reach the
threshold where we have to go to a formal amendment
but we're in an area where costs are increasing by 15
and 20 percent a year. So our ability to write a STIP
that won't end up with an amendment takes time and
slows the process down. It's very tedious - good for
public notice but it certainly is difficult in terms
of getting jobs out. We're in a state where the
construction season lasts five or six months so if we
slow down to do an amendment, that's going to take us
two or three months. We can be costing the
contractors some real dollars and that ultimately
delays the benefits to the public.
So, I'm going to tell you that the STIP before this
year was the good old days. As bad as it may have
been, it's bound to get a little bit worse because
we're going to be doing amendments, I'm afraid, that
are overlapping. If an amendment takes four months to
process, we may have to have three or four of these
amendments that are underway simultaneously. One
started in January and one started in February, one
started in March and the public is going to ask well
which one of these amendments is the one I pay
attention to. Well the truth is you can either pay
attention to all of those because they are all doing
something. That's the new rules of the game that
we're ...
3:11:19 PM
REPRESENTATIVE DOOGAN asked when DOT&PF does advanced funding
projects using state funds, whether it is gambling with state
money because getting reimbursed with federal funds involves
some degree of risk.
MR. OTTESEN likened the concept to a revolving fund so that as
federal dollars are reimbursed, they replenish the state fund,
which would be used year after year. The [revolving fund] would
need about one year's worth of money. He said he fears what
will happen when the bill is reauthorized in less than two
years.
3:12:30 PM
REPRESENTATIVE DOOGAN questioned whether the money would stop
revolving.
MR. OTTESEN said it might.
3:12:38 PM
MR. OTTESEN continued his presentation:
I'll close with the STIP on top of page 20. Our STIP
is a searchable database accessible on line. There
are many different search criteria, including election
district and borough name, census district and road
name, and etcetera. It's got a lot more information
than the old presentation. It's been recognized and
honored nationally. We have several improvements that
we are going to, as soon as we can find the time and
the money to make them. Now that it's an electronic
database everything takes programming time. I talked
a little bit about whether or not we should add state
general funded projects to this document even though
it wouldn't have the legal necessity of a federally
funded project. It would give the public one place to
see projects, to see what is planned and know what is
coming and have the sense of schedule. I would
actually enjoy input and see whether you thought that
was a good idea but that's certainly one possibility.
It wouldn't be that hard to do.
With that, Mr. Chairman, I've got a little bit of
bonus material about what the future holds for
SAFETEA-LU, the reauthorization. I think we've
answered the question on the STIP. The next slide -
in about two slides is about reauthorization - Key
[indisc.], it's called. We're 21 months away from
reauthorization, which is remarkably short. The three
issues to watch will be the funding levels. ... The
Highway Trust Fund has not had a gas tax increase
since '93 so you really don't have any real increase
in revenue other than more drivers but that barely
keeps up with the fact that there are more roads those
cars are on. The new committee that came out with a
report a week before last is recommending that the gas
tax jump from 18 cents to almost 60 cents, about a 40
cent gas tax increase. We can all guess just how
quickly that will get adopted in the middle of an
election cycle. When I flew back from the East Coast
two weeks ago, my seat mate was a congressman and he
basically told me don't hold your breath on this one.
3:14:53 PM
The other issue will be funding distribution. How
will the money be allocated? For years and years it's
been allocated by a complex set of formulas that have
benefited Alaska very well. We are the net big winner
in this formula game. We're getting, depending upon
whether you measure it by one year or several years or
40 years, somewhere between 5, 6, 7 dollars to 1.
It's a remarkable ratio. Hawaii is the next best
state with about 3 to 1. A handful of other states
are above 1 to 1. The vast majority of the big
population states are at the 90 to 95 cents to 1 so we
have a lot to lose if those formulas change and there
is now talk about complete redo of the formulas.
3:15:49 PM
MR. OTTESEN continued:
The other change that worries me, just kind of looking
into the crystal ball, is there's an awful lot of talk
about a greenhouse gas reduction policy being tied to
transportation. If you look to the past, Congress has
used transportation funding as a way to, you know,
change the behavior of states to get them to do
certain things whether it's seat belts or drunken
driving or the age of drinking or you name it. They
have had the Clean Air Act, they have had a number of
different ways where they attach - do this in your
state laws or you don't get money. So they have the
ability to use the highway bill as a way to change
behavior on greenhouse gases - a lot of talk about
that at the national level. The committees are
already doing their work. There are already proposals
before Congress as to how to write the bill and the
nickname for it is already on the street - it's Green
TEA. We've had ISTEA and TEA 21 and SAFETEA-LU and
now we may get Green TEA.
3:16:45 PM
REPRESENTATIVE NEUMAN noted the federal government has held
carrots before the Alaska Legislature, such as $345 million in
exchange for passing a seat belt law.
MR. OTTESEN said the amount was $3 or $4 million.
REPRESENTATIVE NEUMAN asked if the state is still getting that
money.
MR. OTTESEN said that was a one-time only payment.
REPRESENTATIVE NEUMAN asked if Mr. Ottesen expects to see more
"carrots."
MR. OTTESEN said some of the penalties take money away, for
example, a soft penalty took money away from highways but gave
it back for highway safety.
3:18:13 PM
MR. OTTESEN continued his presentation:
One other thing - I didn't bring you a copy but there
is this report out by a national commission that was -
and they are recommending the entire highway program -
all the existing rules basically be thrown out and a
new set of rules be put in place. There are 108
funding categories within U.S. DOT. They are
proposing that all the DOT departments or divisions be
changed and they no longer be highways or aviation but
they now have complete new focus on these 10
categories and they would include urban areas over a
million population. That would leave out Alaska.
High speed inter-city rail - that would leave out
Alaska. Out of those 10 categories there's only two
or three that look like they might be useful to us.
So it's just something to be aware of. Who knows how
much traction it will get, whether it will become law,
but it would completely rewrite the bill from top to
bottom. This could happen in the foreseeable future.
If you look at the top of page 21 you see that the
bills have been getting progressively a little bit
later. The last authorization bill took 22 months
past the due date before it was turned into law. I'm
hoping we get a couple of years of the old formula to
carry us through before some new formula comes along.
That's kind of the end of my slide, Mr. Chairman.
3:19:52 PM
REPRESENTATIVE JOHNSON said his questions are about the bonding
board. He stated:
It appears to me that if we had two years before we
really know what is going on that if we start issuing
bonds now and spending them, we may be gambling on any
federal money spent out of that unless the intention
of that is not to use it for any type of federal match
or any type of thing like that and just strictly use
it for GF construction. So will the proposed $150
million - I don't know how big the bond is.
MR. OTTESEN said it is $121 million for transportation.
REPRESENTATIVE JOHNSON continued:
How will that affect the STIP plan because that's a
defined revenue source that you are going to invest,
place in the STIP that 2½ years from now it may be
totally different, gone sideways, you know, nothing,
only the two things that you're talking about. All
these changes on the horizon - why would we want to
bond for that now, go into debt now with such an
uncertain future?
MR. OTTESEN said the uncertain future is really on the federal
side and comes down to whether the status quo will be
maintained. Alaska has become the state that is hard to love
from a national perspective. Alaska has not paid its way for
quite awhile and its citizens get a permanent fund dividend and
pay an 8 cent gas tax. The state funded bonds would have no
federal strings attached. The bond funds would have the
advantage of being available late into 2009, which is likely to
be a down year.
3:22:13 PM
REPRESENTATIVE JOHNSON asked if any of the bond money will be
used in the STIP as matching funds.
MR. OTTESEN said it will not. The funds will go to named
projects and, because they fall into the category of general
funded projects, the projects can move faster.
3:22:51 PM
REPRESENTATIVE DOOGAN asked if DOT&PF doesn't anticipate using
the STIP as a mechanism to get the bond money back and whether
the same is true of the proposed transportation fund. He noted
the original amount for the transportation fund is supposed to
be $50 million and asked if that money will be used to forward
fund projects that will be repaid by the federal government
through the STIP.
MR. OTTESEN said both are entirely unrelated to the federal
funds. One benefit is that they don't have federal strings. He
clarified that two packages of bonds were issued in 2003; a GO
bond issue and a Grant Anticipation Revenue Vehicles (GARVEE)
bond package. The GARVEE bond package was repaid with federal
funds. He explained:
So now when I write the STIP, just like paying off an
installment plan when you buy a car at that dealer and
you get an installment loan, we have to take a certain
amount of federal funds to pay off that GARVEE bond.
That one does rely upon federal funds being there.
3:24:26 PM
REPRESENTATIVE DOOGAN thanked Mr. Ottesen for his enlightening
presentation. He stated, "I'm surprised that a person who is
still walking around loose could actually understand it."
MR. OTTESEN replied, "I appreciate that - I think."
3:24:50 PM
CHAIR JOHANSEN also expressed appreciation to Mr. Ottesen for
his presentation. He announced that the committee hearings
would be scheduled from 1:00 to 3:00 pm in the future so that
two members can attend the full hearings. He said the committee
appreciates how hard DOT&PF employees work and is aware of the
challenges the department faces with the federal changes. His
goal is to shed light on the process because his constituents do
not understand why projects are not done. He expressed hope
that the presentation will educate people on the process.
MR. OTTESEN said he appreciates the attention given to the
topic.
3:26:21 PM
CHAIR JOHANSEN said at the same time, he believes DOT&PF has a
long way to go. He expressed concern for the need for more
communication with the public. He suggested if projects slip or
administrative changes are made, DOT&PF publish a one paragraph
explanation in the local newspaper.
MR. OTTESEN agreed with Representative Johnson's former comments
about notifying project applicants and the public and said
DOT&PF can start doing that this year.
3:27:52 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 3:27
p.m.
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