Legislature(2015 - 2016)SENATE FINANCE 532
03/17/2015 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB26 | |
| Overview: Fy 16 Budget University | |
| Overview: Fy 16 Budget Transportation and Public Facilities | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 26 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 17, 2015
9:04 a.m.
9:04:32 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:04 a.m.
MEMBERS PRESENT
Senator Anna MacKinnon, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Peter Micciche, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
Senator Donny Olson
MEMBERS ABSENT
None
ALSO PRESENT
Patrick Gamble, President, University of Alaska; Michelle
Rizk, Associate Vice President, Statewide Planning and
Budget, University of Alaska; Marc Luiken, Commissioner,
Department of Transportation and Public Facilities; Roger
Maggard, Aviation Improvement Program, Department of
Transportation and Public Facilities; Jeff Ottesen,
Director, Division of Program Development, Department of
Transportation and Public Facilities
SUMMARY
SB 26 BUDGET: CAPITAL
SB 26 was HEARD and HELD in committee for further
consideration.
OVERVIEW: FY 16 BUDGET UNIVERSITY
OVERVIEW: FY 16 BUDGET DEPARTMENT OF TRANSPORTATION and
PUBLIC FACILITIES
SENATE BILL NO. 26
"An Act making appropriations, including capital
appropriations and other appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
9:04:41 AM
^OVERVIEW: FY 16 BUDGET UNIVERSITY
PATRICK GAMBLE, PRESIDENT, UNIVERSITY OF ALASKA, revealed
that Michelle Rizk, Associate Vice President, Statewide
Planning and Budget, University of Alaska, would be heading
the newly created Strategy Planning and Budget Office.
9:06:05 AM
President Gamble presented Slide 2 of the University of
Alaska's FY16 Capital Operating Budget Overview, which
listed two capital requests:
· Deferred Maintenance Funding
· UAF Engineering Building
President Gamble relayed that the requests totaled
approximately $8 million each. He recalled that the system
had received $37.5 million out of $100 million over the
last five-years, which had made it easier for the
University to put the funds to work on the deferred
maintenance backlog. He hoped that the work could continue
toward further reducing the deferred maintenance list.
9:06:48 AM
President Gamble explained that each of the three
Universities had a list of deferred maintenance projects
that the money would be applied to, and that data could be
provided to assure the committee that the funds had been
used in an efficient and timely manner. He spoke to the
second request for funds to finish the University of Alaska
Fairbanks (UAF) Engineering Building. He shared that the
funding currently available would run out on August 15,
2015. He said that the $8 million would allow the
University to fund the current contractor through January
2016, resulting in the opening of two classrooms and a test
laboratory. He said that the project that the University
had been involved in with the Alaska Center for Energy and
Power (ACEP) no longer required a site, but would move into
the fourth floor of the Engineering Building, saving the
state approximately $25 million.
9:09:59 AM
Co-Chair Kelly understood that ACEP was specifically
oriented toward private industry solutions.
President Gamble replied that that was the hope. He said
that the spin-off from ACEP would be applied research,
which could result in the generation of significant future
revenue.
Co-Chair Kelly thought that moving ACEP into the building
had been a good move.
President Gamble agreed. He added that ACEP was popular
enough to generate its own funding.
9:11:19 AM
Co-Chair MacKinnon requested an explanation for the concept
concerning the completion of the UAF Engineering Building
and how it was incorporated into the Operating Budget.
President Gamble explained that the concept was still under
development. He offered that it was an incremental concept
that was working toward the completion of the building. He
warned that lack of funding could result in the
demobilization of the contractor. He said that mobilizing
and demobilizing contractors from year to year would be
counterproductive. He relayed that the state would see
operating costs of $100 million once the building was fully
occupied and operational.
9:12:51 AM
Co-Chair MacKinnon asked how many full-time students, or
full-time equivalent (FTE), were enrolled at UAF.
President Gamble stated there were approximately 30,000
students to equate 20,000 FTE. He added that there were a
lot of non-traditional students registered that were taking
lower credit hours.
Co-Chair MacKinnon asked if the ratio of students to square
footage was on average for other universities.
President Gamble replied no. He thought that the ratio was
a burden that was carried as a result of the decision to
build out the access for the system across the state.
Co-Chair MacKinnon queried a bond package or the
possibility of funding the building through UA revenue
rather than general funds.
President Gamble replied that UAF had taken on a bonding
and debt service in 2015, and were at the limit of their
capacity to guarantee the payment of the debt service. He
believed that it would be too risky to encumber the system
with additional debt service without knowing their ability
to pay into the future.
9:14:56 AM
Senator Hoffman asked about the increase in the Engineering
Program by 100 percent enrollment. He queried the timeframe
of the increase and the status of the engineering facility
at the University of Alaska Anchorage (UAA).
President Gamble related that the statistics referred to
the period of time between 2010 and now. He stated that the
Anchorage engineering building was not yet complete, but
was fully funded and would open without incident.
Senator Hoffman asked whether there were operational
dollars budgeted for the UAA building when it was
completed.
MICHELLE RIZK, ASSOCIATE VICE PRESIDENT, STATEWIDE PLANNING
AND BUDGET, UNIVERSITY OF ALASKA, stated that there had
been a request for operating funds in the Board of Regents
Budget that had not been included in the Governor's Budget.
She said that the $1.6 million that UAA would need would
need to be funded somehow through reallocation.
9:16:21 AM
Senator Bishop asked whether the construction of the UAA
building had involved any industry support.
President Gamble stated he was not aware of any donations
having been made.
9:16:40 AM
Co-Chair MacKinnon requested a status update on the power
plant, and a timeline for when savings would be realized.
President Gamble responded that the design for the plant
had been completed, but that the estimate for the project
had increased. The project had been put on hold until value
engineering was completed. He said that a delay in bringing
the power plant online would necessitate reassessing the
recent efforts to bring gas to Fairbanks. He hoped a cross-
over point where the gas option became more viable than the
current plan could be identified. He reminded the committee
that the gas option would lower construction cost, but
raise the cost of operating over the long run of the plant.
He noted that the market was changing and suggested that
the value engineering effort to reduce cost would save the
University further funding requests to the legislature.
9:18:39 AM
Co-Chair MacKinnon understood that the project was on hold
for evaluation.
President Gamble said that there was an evaluation that was
ongoing, the results of which would be brought before the
Board of Regents.
9:18:54 AM
Vice-Chair Micciche asked whether President Gamble had
engaged with Alaska Industrial Development and Export
Authority (AIDEA) on the issue of lowering the cost of
bringing natural gas to Fairbanks.
President Gamble replied that the University had been
observing the situation, and was interested, but had not
taken an active role.
Vice-Chair Micciche thought that the "earmark" for the
power plant was worth the University engaging in the issue.
President Gamble stated that the University was not yet
engaged in any partnerships on the matter.
9:20:13 AM
Senator Dunleavy asked whether the power plant was a time
sensitive issue. He asked how the reevaluation of the cost
factored into the timeline.
President Gamble stated that the risk was elevated. He said
that a major failure had occurred over the winter and
buildings had to be evacuated. He added that there had been
two incidents where there had been cracks in the piping
around boilers, which were repairable but were indicative
of an old boiler system. He said that the repairs to the
old boilers were complicated, risky, and inconvenient.
9:22:35 AM
Senator Dunleavy noted that a cost for the power plant had
been set and wondered what had occurred to derail the
project.
President Gamble replied that the initial estimates for the
program had been done very early on; the cost of the
engineering and design work had contributed to the increase
cost. He offered to provide a breakdown of the costs at a
later date.
9:23:31 AM
Co-Chair MacKinnon asked for a timeline detailing the
financial activity of the project. She queried how much the
state had contributed, and how much remained unallocated.
President Gamble outlined the past and future funding of
the project as follows:
FY11 Capital Appropriation - $4 million
FY13 Capital Appropriation - $46.3 million
FY14 Capital Appropriation - $15 million
FY15 Capital Appropriation - $5 million
Future FY16 Capital Appropriation - TBT ($28.3
million)
UA Revenue Bonds - $10 million
UA Non-General ACEP Funding (4th floor only) - $1
million
($5 million still needed)
President Gamble related that the total in capital
appropriations through FY15 was approximately $70 million.
9:25:10 AM
Co-Chair MacKinnon clarified that she wanted to know how
much was left, in cash, which the state had appropriated
for the project.
President Gamble responded $31.3 million had not yet been
appropriated. The $8 million that was being requested would
be $8 million toward the $31.3 million.
Ms. Rizk clarified that President Gamble was speaking to
the engineering building. She said that she could get back
to the committee with the numbers for the power plant. She
shared that the municipal bonds had not been issued, nor
the UA bonds. She agreed to provide the committee with
further information regarding financing of both projects.
Co-Chair MacKinnon understood that the University had spent
state dollars rather than bonding, which she categorized as
a good use of the money from the University's perspective.
Ms. Rizk interjected that the University was counting on
fuel savings in order to pay back the debt service; the
funding package was complex and the fuel savings were
necessary before the debt service could be paid.
Co-Chair MacKinnon retorted that the committee was
interested in what was left of the state appropriated
dollars in the bank for both projects.
9:26:49 AM
Senator Olson referred to removal of funding for the WWAMI
program [WWAMI is a collaborative medical school among
universities in Washington, Wyoming, Alaska, Montana, and
Idaho.] He offered a personal story about his acceptance to
medical school. He expressed concern that intent language
written by the other body would terminate the program. He
noted that he had been instrumental in funding the program
during its infancy. He lamented that the cuts from the FY16
budget would take effect July 1, 2015, after medical school
applicants had received acceptance letters. He feared that
those students would not have time to apply to other
schools or reconcile all of the disruptions that the change
would cause.
President Gamble shared that the action on the house side
had been surprising because the program was one of the
oldest and most successful programs that the University had
to offer. He said that a large percentage of the graduating
doctors returned to the state to reside and practice. He
asserted that the program's return on investment should be
considered a classic example. He added that normally in a
budget cutting process, projects that did not yield a
return should be considered for cuts, and the WWAMI program
did not fall into that category. He stated that the area of
study was one of high need. He related that 20 students had
received acceptance letters who would not be entered into
the program because of the cuts on the house side. He
warned that the unintended consequence of the cut to WWAMI
would be that there would not be doctors available in the
state to answer the needs of Alaskans in the future. He
reiterated that the program made significant returns to the
state.
9:30:58 AM
Vice-Chair Micciche requested an overview of the WWAMI
program in the state.
President Gamble explained that the program was a
cooperative partnership with the University of Washington
(UW), whereupon medical students spend one year in Alaska
and three at UW. He explained that, lacking a medical
school, Alaska established a relationship with UW in 1971;
students study in Washington State for three years and then
finish the fourth year in Alaska. He relayed that the
length of time distributed would be changing to two and
two, in an attempt to have more of the education take place
in Alaska. He related that the program had expanded to 20
students and had a 97 percent graduation rate, with a 70
percent rate of returning students back to Alaska.
9:32:43 AM
Senator Dunleavy commented that there would be a lot of
good programs that would be cut due to the state's fiscal
crisis.
9:33:23 AM
Senator Olson clarified that he was never a part of the
WWAMI program, but felt very strongly that the need was
worth the expense.
9:34:08 AM
Co-Chair MacKinnon revealed that her office had been
receiving a large amount of emails concerning the possible
termination of the WWAMI program. She believed that the
committee would be forced to scrutinize all state programs
in order to balance the budget. She felt that medical care
in the state was already expensive due to limited
competition in the field and that cutting the program could
drive prices higher.
9:35:24 AM
Co-Chair MacKinnon spoke to the deferred maintenance
request. She thought that strategic moves needed to be made
to protect the state's investments. She wondered about a
previous plan to bond in order to create revenue to keep up
with long-term deferred maintenance.
President Gamble stated that the University had requested
approval for bonding, which was a best practice for
universities with regard to deferred maintenance. He
lamented that the nature of deferred maintenance was that
it was a large number that represented old buildings that
were getting older. He stated that all of the University's
buildings had been evaluated for their mission value, as
well as their functional value, as a building and had
created a priority list. He reiterated that bonding
approval for $100 million had been granted by the
legislature in the past and then was reduced by half by the
governor at the time. He stated that the University had
bonded for the $50 million, which added on to the $37.5
million and took a large chunk out of the deferred
maintenance. He opined that five years had passed, the
money had stopped, and the $8 million request was an
attempt to keep funds flowing into the deferred maintenance
effort. He felt that looking ahead, the University would
not have the capability to provide the debt service in
regular payments. He revealed that the University needed to
put a moratorium on bonding because the risk was too high.
9:40:48 AM
President Gamble shared Slide 3, "Land Grant Equivalency":
• UA's Land-Grant Equivalency
• Based on Future Resource Development
• Future State Earnings in Oil/Gas/Mining
o Legislative-controlled account
o Appropriated annually
• University Building Fund (UBF)
• System-wide capital: capital maintenance
and equipment
• Reasonable Annual Limits
o Higher education deferred maintenance/renewal
and repurposing receives first
$XXM
o Legislature determines appropriation
• Long Term Goal
o Employ alternative source of revenue
o Reduce the annual UA budget request
o Modernize university technology, equipment
o Materially reduce facilities falling into DM
status
He testified that in 2000 the University lost a Supreme
Court case that determined that it was anticonstitutional
to give the University land that was dedicated for revenues
for the University. He opined that the system did not have
the dowry that most other land-grant universities received.
He shared that the first legislature after statehood had
tried to give 500,000 acres to the University, but the bill
was vetoed because it had been found anticonstitutional. He
shared that the legislature tried to override the veto in
2000, but lost the case. He assured the committee that the
University was still looking into ways to generate revenue.
He hoped that in the future it could be written into future
resource development contracts that would allow a
fractional share of future state royalties to be identified
into an account that would be used to fund the capital
needs of the University. He said that the state of Texas
had a program similar to this proposal. He clarified that
the money would not be dedicated to the University, but to
an account that the legislature could use for capital
needs. He asserted that it would not take long for the
account to make a significant difference in the deferred
maintenance funding request that the University brought to
the body on a yearly basis. He said that a lot of legal
research had been done on the matter, should the
legislature wish to draft a bill that spoke to the issue.
9:45:18 AM
Co-Chair MacKinnon expressed interest in meeting during the
interim to discuss the idea. She wondered whether the issue
could be put to the people of Alaska for a vote.
President Gamble opined that it was not likely to see land
legally deeded to the University. He said that the state
had been divided in so many different ways that the land
that was available was inaccessible and could not be
developed by the University for legal and monetary reasons.
9:48:12 AM
Co-Chair MacKinnon clarified that it was her suggestion to
allow the people of Alaska to modify the constitution in
order to assist the University in acquiring land to
develop.
9:49:17 AM
AT EASE
9:57:29 AM
RECONVENED
9:57:41 AM
^OVERVIEW: FY 16 BUDGET TRANSPORTATION and PUBLIC
FACILITIES
MARC LUIKEN, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND
PUBLIC FACILITIES, referred to the presentation outline on
Page 2 of his presentation, "Alaska Department of
Transportation & Public Facilities -FY16 Capital Budget
Overview":
•Introduction
•Budget Comparison FY13-16
•Federal Aviation Administration Program
•Federal Highway Administration Program
•FY16 Budget Highlights
Co-Chair MacKinnon noted that Michael Coffee, Assistant
Commissioner, Department of Transportation and Public
Facilities was available online for questions.
9:59:33 AM
Commissioner Luiken presented Page 3, "Budget Comparison FY
13-16." He relayed that the slide illustrated the genesis
of the departments funding sources, nothing that there had
been an increase in the federal authority request to meet
program requirements. He pointed out to the committee that
the departments general and other fund requests continued
to decrease.
10:00:30 AM
Commissioner Luiken discussed Page 4, "FAA Modernization
and Reform Act of 2012":
•Current FAA Authorization Bill --Effective FFY12
through FFY'15.
•Decreased Annual Authorized Airport Improvement
Program (AIP) Funding from $3.5 B to $3.35 B
Nationally.
•Alaska DOT&PF Airports FFY'12 -FFY'14AIP Annual
Average = $175M. FFY'15 is expected to be similar.
•Increased Alaska's Non-Federal Match Ratio from 5%
Back to 6.25% for Most Projects.
Commissioner Luiken stated that the changes to the
legislation had impacted what projects were eligible for
Airport Improvement Funding (AIP) and expired at the end of
FY15; the department did not have an idea of what the
funding would be after federal FY15. He said that the
department had been focusing work on runway safety areas,
particularly for airport with commercial jet traffic. He
added that new cost effectiveness criteria had been
introduced that made it difficult for projects to qualify
for federal funds. He stated that acquiring funding for
smaller community rural airports had been particularly
challenging.
ROGER MAGGARD, AVIATION IMPROVEMENT PROGRAM, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, added that over the
last three years, DOT had received approximately $175
million, per year, for the AIP. He anticipated the same
amount in FY15.
10:03:17 AM
Senator Olson asked whether there was an existing waiver
available to certain airports to bypass some of the
requirements of the reform act of 2012.
Mr. Maggard stated that it was possible to receive a waiver
from the FAA for a technical specification.
Senator Olson noted that Ketchikan airport had been the
site of a major Alaska Airlines accident. He asked how many
airports in the state had waivers or were in the process of
acquiring waivers for Part 139.
Mr. Maggard replied that he did not know how many airports
had waivers. He asserted that the state had complied with
the runway safety area requirements for all of the Part 139
airports with the exception of Adak, which the department
had planned to fund with non-AIP funding.
10:05:22 AM
JEFF OTTESEN, DIRECTOR, DIVISION OF PROGRAM DEVELOPMENT,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES,
presented Page 6, "FHWA Program," and explained that the
flow of federal funding over the past 10 years had been
steady. He noted that the red bars on the graph represented
funds that had been earmarked by congressional members. He
stated that earmarking ended in 2012 and now the state
could decide where to spend the formula funds. He noted
that the spike in 2009 was from the American Recovery and
Reinvestment Act (ARRA), the state was now running on $500
million in federal funding and anticipated the same funding
in 2015. He relayed that the state had received two-thirds
of the annual allotment of funding as Congress had yet to
act on the final one-third.
10:07:25 AM
Mr. Ottesen discussed Page 7, "MAP-21," which was the name
of the federal act that was currently providing surface
transportation funding:
•Down from $520 M in 2011 to $484 M in 2013 and 2014
(~7% decrease)
•Increased emphasis on NHS = less available for
Community Transportation Program (CTP); no new
projects being considered
•Less flexibility in use of funds.
•Significant streamlining of funding categories
•Highway Safety Improvement Program (HSIP) doubles for
Alaska
•No earmarks (which reduce formula funds)
•Now operating under continuing resolution until May
2015
Mr. Ottesen explained that as a result of the act, the
National Highway System (NHS) had been emphasized as the
primary purpose of the program. He noted that the NHS was a
collection of highways initially approved by congress; the
Federal Highway Administration now approved additions to
the list. He stated that these were the biggest roads in
the state that carried the most traffic and moved the most
freight. He added that approximately 58 percent of
department funding was directed to NHS roads, which only
comprised 25 percent of the road miles in the state. He
opined that as a result the state was responsible for the
funding needed for other road needs in the state. He stated
that MAP-21 had effectively tripled the amount of money
used for safety, which had resulted in very large safety
projects on Alaska highways.
10:10:00 AM
Mr. Ottesen turned Page 8, which was continuation of MAP-21
funding:
Performance Mandate
•FHWA to set National Highway System (NHS) Performance
Measures for:
•If National Highway System (NHS) system conditions
fall behind:
concerns
Mr. Ottesen said that there would be report cards issued to
every state in regard to the performance measures; if the
state received a bad report it would be expected to direct
a greater amount of money to performance improvement. He
furthered that if performance did not improve, the states
match contribution would be enlarged to 35 percent. He
shared that Alaska currently had a lower than 20 percent
match rate because of the high land base of federal lands.
10:12:13 AM
Mr. Ottesen referred to slide 9, "Sum Up FHWA Program":
•NHS Program:
performance, not capacity or new routes
•Non-NHS Program (STP):
slower pace of completion.
10:12:59 AM
Vice-Chair Micciche requested examples of performance
concerns in Alaska.
Mr. Ottesen referred to structural deficiency in bridges;
when a bridge rating fell below 50, on a scale of 1 to 100,
it would be considered structurally deficient. He said this
did not mean that the bridge could not carry traffic or was
in imminent danger of collapse, but could be load
restricted to heavier truck loads and signaled the time for
rehabilitation or complete replacement. He said that
pavement was tested with a tool that measured bounce, which
was difficult for Alaska because underlying permafrost and
tracked gravel contributed to roughness and caused the tool
to bounce. He added that the rule making that would
ultimately determine how measurements were taken was still
in progress which could provide some leeway.
10:15:38 AM
Vice-Chair Micciche understood that the structural
deficiencies were caused primarily by corrosion on carbon
steel support members.
Mr. Ottesen relayed that the structural deficiency had
historically been based upon three sub-grades: a grade for
the deck and railing, the horizontal support members, and
the foundation elements. He said that the grading criteria
had been dramatically increased, which added greatly to the
complexity and timetable of bridge inspections. He
concluded that all of the various pieces of the bridges
were being rigorously inspected.
10:16:53 AM
Co-Chair MacKinnon welcomed former Alaska State
Representative Ralph Samuels, who was present in the
gallery.
10:17:06 AM
Senator Bishop asked whether high float gravel had been
considered by NHS.
Mr. Ottesen explained that the fact that the Dalton Highway
was part of the NHS and did not have traditional asphalt
pavement created an issue for pavement performance
standards. He said that the issue had been noted. He stated
that a majority of the highway was a gravel surface that
was being held down with calcium chloride, which was
effective for the environment, but added roughness to the
surface.
10:18:10 AM
Mr. Ottesen shared that the non-NHS program (STP), which
was primarily the surface transportation program funding,
had decreased because the NHS programs had increased. He
opined that fewer non-NHS programs were being accomplished
than in prior years. He stated that projects that had been
scored and nominated for funding four years ago were being
accomplished at a half-pace. He opined that new projects
had been forced to be placed on hold, creating hardship
across the state. He relayed that 77 percent of the state's
road miles and 58 percent of the state's bridges were
dependent on the smaller level of STP funding.
10:19:21 AM
Mr. Ottesen turned to Page 10, "FY 16 Budget Highlights":
•Contract Award Summary
•FY16 Capital Budget
•GF Projects
•Other Funds
•Federal Projects
10:19:47 AM
Mr. Ottesen pointed to the pie chart on Page 11, which
illustrated the magnitude of the federal funding when
compared to the General Funds and Other Funds.
10:20:00 AM
Vice-Chair Micciche requested further detail of the Other
Funds.
10:20:09 AM
Mr. Ottesen drew attention to page 12, which denoted the
composition of "Other Funds":
•State Equipment Fleet Replacement $24.6M
•International Airports $11.1M
•Cooperative Reimbursable Agreements $12M
10:21:46 AM
Mr. Ottesen referred to page 13, "GF Projects":
•Federal Programs Match: $63.9M
•Muni Harbor Grant Program: $10.4M
•Deferred Maintenance: $8M
•AMHS Overhaul: $12M (via Repeal/Reapprop section)
Mr. Ottesen related that the state match for highways had
been underfunded for the past four years. He said that, on
average, $53 million per year in state matching funds had
been used for federal highway funding while receiving only
$40 million, this had effectively used up surplus and the
department was now funding 2014's federal program from
2015's state match funding. He believed that if the trend
continued the department would run out of matching funds
early and programs would stall until the start of the next
fiscal year effectively slowing projects and the state's
ability to use federal funds. He explained that the Muni
Harbor Grant Program was a cross-agency program where the
state provided money to municipalities for harbor work and
in exchange the municipalities were required to provide an
equal amount. He shared that the $8 million request for
deferred maintenance was approximate one-third the amount
the department had received in the past. He concluded with
the final bullet point explaining that inspections had to
be done on every vessel, and a certificate of inspection
had to be issued, in order for the vessel to go into
passenger service for the year. The funding for the project
had been reappropriated from the Kodiak Launch Facility and
was not an addition to the FY16 budget.
10:25:00 AM
Vice-Chair Micciche wondered if it made sense skip a
construction season to avoid utilizing the funds from the
following year.
Mr. Ottesen noted that skipping a construction season would
entail returning federal funds, which would stall
construction projects statewide; additionally, doing so
could jeopardize the ratio $6 federal dollars to every $1
state dollar, with the state receiving less match finding.
10:26:27 AM
Vice-Chair Micciche clarified that he was speaking to the
first bullet on Slide 13. He asked how the state could
avoid getting to the point where a construction season had
to be skipped.
Mr. Ottesen claimed that the match request in the FY16
budget would stop the cycle of borrowing from the next year
to fund the current year.
10:27:09 AM
Senator Bishop understood that the state could not afford
for the department to miss a year work because the
multiplier effect could have a $3 billion to $5 billion
ripple throughout the statewide economy.
Mr. Ottesen replied in the affirmative.
10:27:38 AM
Co-Chair MacKinnon asked whether the state had ever turned
back the ability to access federal dollars. She wondered
whether the intent had been to position the state to have
enough matching money available it other funds lapsed.
Mr. Ottesen explained that every year in the month of
August, the federal government polled states to determine
which ones were going to be able to use all of their
federal funding, and if yes, which states could use extra
funding. He related that the state had always been in the
position to reply affirmatively to both questions. He
shared that the money left over from states that did not
use all their funding was redistributed to states that
could use extra. He revealed that in September FY15, Alaska
received $8 million additional federal dollars.
Co-Chair MacKinnon commended the department making the
issue a priority.
10:29:51 AM
Vice-Chair Micciche asked whether the $63.9 million put the
state in the position for additional federal match funds,
or simply meet the requirement for 100 percent of the
expected federal match.
Mr. Ottesen replied that the $63.9 million was essentially
100 percent, with a "little cushion." He noted that Slide
14 would cover the issue. He said that there were two
possible upside events, in addition to the August
redistribution, that could provide extra funds, the state
had $154 million of earmarked funding that had yet to be
put under contract with the federal government and Congress
had a pattern of repurposing older earmarks. If Congress
repurposed the current unused earmarks the state would have
30 days to identify the projects that the extra money would
be spent on, and an additional 90 days to obligate the
funds. He said that this would give the state 120 days to
find the match and the legislative authority, and have
projects that had been designed, had the right-of-way done,
and had bid packages prepared. He said that those three
steps took two years for a simple project, and 5 to 10
years for a big project; it was impossible to start a
project, and be ready to begin the project, in 120 days. He
asserted that the only way the state could be ready to use
the funds would be to be working on extra projects now, and
have them already in the design pipeline. He added that the
other upside event was reauthorization by Congress, which
had historically increased the program by approximately 20
percent; a 20 percent increase for the state would equate
to an extra $100 million. He lamented that the state did
not have the match for either of the upside events.
10:32:49 AM
Mr. Ottesen turned to Slide 14:
•Several years of under-funding have dried all surplus
($40M provided; $53M used)
•If this continues could see projects delayed; federal
aid lapsed
•No match capacity to cover extraordinary needs such
as "repurposed earmarks"
•Request herein covers expected funding, but no
surplus for extra funding.
10:33:13 AM
Mr. Ottesen spoke to slide 15, which listed notable rural
aviation construction projects expected in federal FY15 and
16:
Runway Safety Areas
•Adak (No AIP Funding will be Used)
Pavement Rehab
•Bethel
•Gulkana
•Haines
•Shishmaref
•Talkeetna
•Wrangell
•Yakutat
Rural Access
•Ambler
•Cold Bay
•Coldfoot
•Cordova
•Hooper Bay
•Kotzebue
•Kwigillingok
•Pilot Station
Buildings
•Barrow
•Bethel
•Cold Bay
•Deadhorse
•Ketchikan
•King Salmon
•Togiak
•Unalaska
10:33:52 AM
Mr. Ottesen spoke to slide 16, which listed notable
Statewide Transportation Improvement Program (STIP)
projects:
•Highway Safety $60M (Passing lanes, RR grade
separation)
•NHS & Non-NHS Pavement and Bridge $155M
•Parks Highway Corridor $115M
•Seward Highway Corridor $90M
•Glenn Highway Corridor $45M
•Ketchikan: Tongass Highway Rehabilitation $33M
•Bridges: Seward Hwy, Gustavus, Ketchikan, TokR.,
ChickaloonR., Parks Hwy, Richardson Hwy., SlanaR.
10:36:20 AM
Senator Dunleavy referred to erosion on the Glenn Highway.
He asked whether preventative maintenance could preserve
the road and keep costs low.
Mr. Ottesen relayed that the department had been cataloging
geotechnical risks starting three years previous. He stated
that sometimes events unfolded faster than could be planned
for. He agreed that the Glen Highway needed to be relocated
away from the river. He offered to follow up with a more
detailed response at a later date.
10:39:00 AM
Mr. Ottesen spoke to Slide 17, which listed additional STIP
projects:
•M/V Matanuska Repower $34M
•AMHS Terminals Improvements: Gustavus, Ketchikan,
Tenakee and Auke Bay.
•Wastewater Treatment System Upgrades: Auke Bay,
Sitka, Haines, and Skagway.
Co-Chair MacKinnon solicited further questions from the
committee.
10:40:11 AM
Senator Bishop requested an update on the University Avenue
Project.
Mr. Ottesen said he would provide further information at a
later date.
10:40:25 AM
Co-Chair MacKinnon asked for a high-level overview on the
Kivalina Road Project.
Mr. Ottesen agreed to provide information at a later date.
Co-Chair MacKinnon asked about the Alaska-class ferry
currently under construction and whether it was being
redesigned.
Commissioner Luiken stated that the ferries were not being
redesigned.
10:41:58 AM
Co-Chair MacKinnon understood that general accounting
practices were going to start requiring states and
municipalities to place deferred maintenance issues on
their financial documents.
Mr. Ottesen responded that the accounting standards put
requirements on how the state and local governments had to
value assets. He said that the federal government was
leaning on locals to provide financial support and was not
helping with the assets.
10:43:38 AM
Senator Hoffman mentioned intent language that he had added
to the FY15 budget requiring the department to examine the
road between Metlakatla and Ketchikan.
Mr. Ottesen offered that a road had been built to the north
end of the island where a ferry terminal had also been
built.
Senator Hoffman clarified that the intent language was to
examine how the road could be used to improve the services
to the community of Metlakatla. He shared that the people
on the island were interested in a shorter route to
Ketchikan for medical and other services.
10:44:59 AM
Co-Chair MacKinnon discussed housekeeping.
SB 26 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:45:56 AM
The meeting was adjourned at 10:45 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 031715 University of Alaska Capital Budget Overview.pdf |
SFIN 3/17/2015 9:00:00 AM |
SB 26 |
| 031715 DOT Capital Budget Overview .pdf |
SFIN 3/17/2015 9:00:00 AM |
SB 26 |