Legislature(2003 - 2004)

03/27/2003 09:03 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 27, 2003                                                                                      
                              9:03 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-03 # 34, Side A                                                                                                             
SFC 03 # 34, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened the meeting at approximately 9:03 AM.                                                             
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Lyda Green, Co-Chair                                                                                                    
Senator Con Bunde, Vice Chair                                                                                                   
Senator Lyman Hoffman                                                                                                           
Senator Robin Taylor                                                                                                            
Senator Donny Olson                                                                                                             
Senator Ben Stevens                                                                                                             
                                                                                                                                
Also Attending:  JOHN MACKINNON, Deputy  Commissioner of  Highways &                                                          
Public   Facilities,  Department   of  Transportation   and   Public                                                            
Facilities;  NANCY  SLAGLE,  Director,  Division  of Administrative                                                             
Services, Department of Transportation and Public Facilities                                                                    
                                                                                                                                
Attending via Teleconference: There were no teleconference                                                                    
participants.                                                                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 100-APPROP: CAPITAL PROJECTS                                                                                                 
                                                                                                                                
The Committee heard testimony from the Department of Transportation                                                             
and Public Facilities. The bill was held in Committee.                                                                          
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 100                                                                                                        
     "An  Act making capital  appropriations  and reappropriations;                                                             
     capitalizing a fund;  making appropriations under art. IX, sec.                                                            
     17(c),   Constitution  of  the   State  of  Alaska,   from  the                                                            
     constitutional   budget reserve  fund;  and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This was  the eighth  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Department of Transportation and Public Facilities                                                                            
                                                                                                                                
     Alaska    Marine    Highway    System-Vessel    Overhaul    and                                                            
     Rehabilitation                                                                                                             
     $ 4,900,300 general funds                                                                                                  
     Reference No.: 30624                                                                                                       
     Project Type: Renewal and Replacement                                                                                      
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 12/31/2004                                                                           
     On-Going Project                                                                                                           
     Annual  maintenance and overhaul  on vessels and at  terminals,                                                            
     particularly  component or system  failures, which will  impact                                                            
     service in the short term.                                                                                                 
                                                                                                                                
JOHN   MACKINNON,  Deputy   Commissioner   of   Highways  &   Public                                                            
Facilities,  Department  of  Transportation  and  Public  Facilities                                                            
informed  the Committee  that this  request is an  annual item  that                                                            
would provide for the annual  overhauls of the system's nine vessels                                                            
and for  the inspections  that  are required  by  the United  States                                                            
Coast Guard and  other regulatory agencies. He noted  that this work                                                            
would require  a vessel to be dry-docked,  as the work could  not be                                                            
performed  while a  vessel is  underway.  He noted  that while  $4.5                                                            
million of  the request would be used  to address vessel  needs, the                                                            
balance of the request  would be utilized to provide for such things                                                            
as shore facilities maintenance,  shipboard safety improvements, and                                                            
completion of the Maintenance Management System.                                                                                
                                                                                                                                
     Material  Stockpiles-Dalton Highway, Glenn Highway,  Richardson                                                            
     Highway and Tok Cutoff                                                                                                     
     $ 600,000 general funds                                                                                                    
     Reference No.: 33853                                                                                                       
     Project Type: Deferred Maintenance                                                                                         
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 06/30/2008                                                                           
     Phased Project                                                                                                             
     Pay  for crushing materials  used for  maintenance that  is not                                                            
     reimbursable  by federal funding. Materials stockpiles  will be                                                            
     contracted  in  conjunction   with major  federal-aid   highway                                                            
     projects on the Dalton Highway, Glenn Highway, Richardson                                                                  
     Highway and Tok Cutoff.                                                                                                    
                                                                                                                                
Mr. MacKinnon  stated that this request  would allow the  Department                                                            
to stockpile  materials that  would be used  to repair and  maintain                                                            
roads. He stated  that these stockpiles are required  in areas where                                                            
no local aggregate resource materials are available.                                                                            
                                                                                                                                
Senator  Hoffman  asked  whether  the  mild  winter  that  has  been                                                            
experienced would allow  some of the previous year's materials to be                                                            
available.                                                                                                                      
                                                                                                                                
Mr. MacKinnon  clarified that,  rather than  being material  that is                                                            
used  to  sand  icy  roads,  these  materials   are  used  for  road                                                            
maintenance  needs such  as chip sealing.  He noted  that while  the                                                            
State  did  experience  a relatively  mild  winter,  the  conditions                                                            
generated  more icing  conditions,  and therefore,  he shared,  more                                                            
sand and chemical treatment was required than normal.                                                                           
                                                                                                                                
     Airport Deferred Maintenance                                                                                               
     $ 850,000 general funds                                                                                                    
     Reference No.: 30633                                                                                                       
     Project Type: Deferred Maintenance                                                                                         
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 09/30/2004                                                                           
     On-Going Project                                                                                                           
     To repair the backlog  of maintenance items that cannot be done                                                            
     through the operating  budget funding levels. Typical items are                                                            
     pavement  repairs, lighting repairs, fencing  repairs, and bird                                                            
     and animal control.                                                                                                        
                                                                                                                                
Mr. MacKinnon  stated that this request  would allow the  Department                                                            
to address  a portion  of its  $20 million  accumulation of  airport                                                            
deferred  maintenance needs.  He reviewed  the items  that would  be                                                            
addressed as specified  in the project description.  In addition, he                                                            
stated that  the request would assist  the Department in  addressing                                                            
airport security  improvements that  have been required as  a result                                                            
of the September 11, 2001 terrorist attacks on the country.                                                                     
                                                                                                                                
Senator  Bunde  asked  whether  any  projects  at  the  Ted  Stevens                                                            
Anchorage International  Airport, the Juneau International  Airport,                                                            
or the Fairbanks International Airport would be addressed.                                                                      
                                                                                                                                
Mr. MacKinnon  responded  that primarily rural  and small  community                                                            
airport projects  would be addressed through this  request. He noted                                                            
that the Juneau airport  is a municipal airport and that a different                                                            
funding  mechanism  is  in  place  to  address   the  Anchorage  and                                                            
Fairbanks' airport maintenance needs.                                                                                           
                                                                                                                                
Senator  Bunde  noted that  airport  landing  fees are  the  primary                                                            
funding source for the  Anchorage and Fairbanks' airport maintenance                                                            
needs whereas  there is no local contribution  funding mechanism  in                                                            
place at the small rural airports.                                                                                              
                                                                                                                                
Mr.  MacKinnon  concurred,  and commented  that  the  Anchorage  and                                                            
Fairbanks'  airports  are encouraged  to  operate  with "enterprise                                                             
funds."                                                                                                                         
                                                                                                                                
Senator Taylor  asked whether the  Department or the Governor  Frank                                                            
Murkowski   Administration  is  considering   implementation   of  a                                                            
statewide airport-landing  fee. He  reminded Members that  the State                                                            
was obligated  to  provide maintenance  funds to  the Sitka  airport                                                            
after the city  turned its airport  operation responsibilities  over                                                            
to the State  a few years  prior. He commented  that other  than the                                                            
communities  of  Ketchikan  and  Juneau,  which  operate   municipal                                                            
airports,  no other  airports  in Southeast  Alaska  charge  landing                                                            
fees. He urged  the Department to consider imposing  landing fees as                                                            
a revenue source.                                                                                                               
                                                                                                                                
Mr. MacKinnon  communicated  that the City  of Sitka is considering                                                             
imposing  a passenger  facility charge  to address  airport  upgrade                                                            
needs; however,  he voiced that he is unaware of other  communities'                                                            
plans.                                                                                                                          
                                                                                                                                
Senator Taylor  asked whether the Department could  develop a report                                                            
regarding airport revenue generating options.                                                                                   
                                                                                                                                
Co-Chair Wilken  furthered that being  provided a list of  the FY 03                                                            
airport maintenance  expenditures and a list of the  projected FY 04                                                            
projects would be helpful to the Committee.                                                                                     
                                                                                                                                
NANCY  SLAGLE,  Director,   Division  of  Administrative   Services,                                                            
Department  of  Transportation  and  Public  Facilities  supplied  a                                                            
Department  Memorandum [copy on file]  from Frank T. Richards,  P.E.                                                            
Statewide M&O  Engineer to Regional  Directors, M&O Managers,  dated                                                            
July  5, 2002  to the Committee.  She  noted that  the Department's                                                             
identified airport deferred  maintenance needs are identified in the                                                            
Memorandum.                                                                                                                     
                                                                                                                                
Senator Hoffman  commented that a complete list of  deferred airport                                                            
maintenance needs would also be helpful.                                                                                        
                                                                                                                                
     Highway Deferred Maintenance                                                                                               
     $ 1,500,000 general funds                                                                                                  
     Reference No.: 30631                                                                                                       
     Project Type: Deferred Maintenance                                                                                         
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 09/30/2004                                                                           
     On-Going Project                                                                                                           
     To  address  some  of the  needs  that have  not  been  handled                                                            
     through the  operating budget maintenance funds.  Typical items                                                            
     are  surface  and embankment  repairs,  drainage  culverts  and                                                            
     ditch  repairs, guardrail  repairs, marking  and sign  repairs,                                                            
     and brushing.                                                                                                              
                                                                                                                                
Mr. MacKinnon read the project description to the Committee.                                                                    
                                                                                                                                
Senator  Taylor  asked  whether  this  request   would  address  the                                                            
earthquake damage that occurred on the Tok Highway.                                                                             
                                                                                                                                
Mr.  MacKinnon  stated that  this  request  does not  include  those                                                            
emergency repairs,  which, he noted,  would total approximately  $50                                                            
million.                                                                                                                        
                                                                                                                                
     Facilities Deferred Maintenance and Critical Repairs                                                                       
     $ 1,000,000 general funds                                                                                                  
     Reference No.: 30632                                                                                                       
     Project Type: Deferred Maintenance                                                                                         
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 09/30/2004                                                                           
     On-Going Project                                                                                                           
     To address the most critical deferred maintenance needs at                                                                 
     Department of Transportation maintained facilities.                                                                        
                                                                                                                                
Mr. MacKinnon  stated that  this request would  address some  of the                                                            
"absolute  most  critical"  maintenance   needs  for  facilities  to                                                            
prevent "further deterioration."                                                                                                
                                                                                                                                
Senator  Hoffman requested  that the  Committee be  provided with  a                                                            
complete list of facilities' deferred maintenance needs.                                                                        
                                                                                                                                
Mr. MacKinnon  responded  that the backlog  of deferred maintenance                                                             
projects "scares  me." He stated that  the needs are reported  to be                                                            
approximately $50 million.                                                                                                      
                                                                                                                                
Ms. Slagle  specified  that a  large majority  of  this $50  million                                                            
expense  addresses  the  Chandalar,  Willow,  East  Fork,  and  Nome                                                            
maintenance facilities  that the Department was forced  to close due                                                            
to structural problems.                                                                                                         
                                                                                                                                
Co-Chair  Wilken   asked  whether   the  aforementioned   Memorandum                                                            
includes  information  pertaining  to both  facilities  and  airport                                                            
deferred maintenance needs.                                                                                                     
                                                                                                                                
Ms. Slagle verified that both are included in the handout.                                                                      
                                                                                                                                
     Emergency and Non-Routine Repairs                                                                                          
     $ 700,000 general funds                                                                                                    
     Reference No.: 30634                                                                                                       
     Project Type: Health and Safety                                                                                            
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 09/30/2004                                                                           
     On-Going Project                                                                                                           
     Repairs to transportation  facilities needed because of natural                                                            
     disasters, such as  floods, snow, wind, earthquakes, etc. These                                                            
     repairs  would be ineligible  for federal  funds. Also  used to                                                            
     meet imminent failure needs caused by deferred maintenance.                                                                
                                                                                                                                
Mr. MacKinnon read the request description.                                                                                     
                                                                                                                                
Ms. Slagle provided  a list of the FY 03 "Emergency  and Non-Routine                                                            
Maintenance Projects" [copy  on file] to the Committee as an example                                                            
of the needs.  She pointed out that the list includes  approximately                                                            
$60,000 in earthquake repair  needs that did not qualify for federal                                                            
highway or Federal Emergency  Management Agency (FEMA) funds as well                                                            
as other  projects including  avalanche relief  funds for  highways,                                                            
airports, and facilities.                                                                                                       
                                                                                                                                
Co-Chair Green questioned  why these items could not included in the                                                            
supplemental  budget request  legislation  as she  stated that  this                                                            
request sounds like "a  slush fund for things that happen that might                                                            
happen unexpectantly."                                                                                                          
                                                                                                                                
Ms. Slagle  explained that the authorization  of this request  would                                                            
allow  the  Department  to  respond   to  a variety   of  unexpected                                                            
emergency needs  on an on-going basis  as opposed to being  required                                                            
to  present   specific   requests  via   the  supplemental   budget.                                                            
Furthermore, she stated  that approval of this request would provide                                                            
sufficient  funding  to  address   these  needs  without  placing  a                                                            
"burden" on the  Department's regular budget until  the supplemental                                                            
authorization  is  provided. However,  she  allowed  that while  the                                                            
Department  does include some projects  in the supplemental  budget,                                                            
it attempts to keep its supplemental requests "to a minimum."                                                                   
                                                                                                                                
     Chandalar Maintenance Station Replacement                                                                                  
     $ 5,202,000                                                                                                                
          $  850,000 Fed Rcpts                                                                                                  
          $4,352,000 general funds                                                                                              
     Reference No.: 32478                                                                                                       
     Project Type: Construction                                                                                                 
     Category: Transportation                                                                                                   
     Location: Chandalar                                                                                                        
     Election District: Unidentified Election District                                                                          
     Estimated Project Dates: 07/01/2003 - 06/30/2008                                                                           
     One-Time Project                                                                                                           
     After the  collapse of the Department's maintenance  structures                                                            
     at Cascade Station  on the Glenn Highway and 7-Mile Camp on the                                                            
     Dalton   Highway,  Commissioner   Perkins  ordered   structural                                                            
     evaluations    of  suspect    buildings.   From   the   initial                                                            
     evaluations, the Chandalar  building was found to be unsafe for                                                            
     occupancy and was  vacated and demolished in the summer/fall of                                                            
     2001.                                                                                                                      
                                                                                                                                
Mr. MacKinnon  read the project's needs description  and stated that                                                            
these  funds would  allow the Department  to  rebuild the  Chandalar                                                            
maintenance station.  He informed the Committee that  in addition to                                                            
the installation  of a temporary tent  at the site to allow  limited                                                            
winter service  to be available, a nearby the Alyeska  Pipeline shop                                                            
also provides temporary  space to the Department. He stated that the                                                            
new facility would  equate to approximately the same  square footage                                                            
as the  original station  and would provide  a warm maintenance  and                                                            
storage shop  for the heavy equipment  that is required to  maintain                                                            
the Dalton Highway  from Mile 210 to Mile 284. He  communicated that                                                            
because  the Department  would  also  be maintaining  the  Chandalar                                                            
airport,  the  federal   aviation  administration   (FAA)  would  be                                                            
contributing $850,000 to the project.                                                                                           
                                                                                                                                
Senator  Hoffman   asked  for  further  information   regarding  the                                                            
collapse  of  the  previous  structure,  specifically   whether  the                                                            
structure was insured.                                                                                                          
                                                                                                                                
Mr. MacKinnon  replied that the previous structure  was built during                                                            
the construction  of the Trans-Alaska  pipeline, and he shared  that                                                            
from the onset, it had foundation and structural problems.                                                                      
                                                                                                                                
Ms. Slagle informed the  Committee that the station was not intended                                                            
to be a permanent structure.                                                                                                    
                                                                                                                                
Senator  Hoffman  asked  whether  this  structure  and  others  were                                                            
insured.                                                                                                                        
                                                                                                                                
Ms. Slagle  responded that  all the State's  buildings are  insured;                                                            
however, she  clarified that rather  than collapsing, this  building                                                            
was  demolished  as  the result  of  an  engineering  analysis  that                                                            
determined  it to  be unsafe.  She noted  that the  collapse of  two                                                            
other  maintenance   stations  and  the  unsafe  condition   of  the                                                            
Chandalar station  "raised the level" of the Department's  awareness                                                            
regarding the structural conditions of its buildings.                                                                           
                                                                                                                                
Senator Taylor  asked whether  the State  built the Cascade  Station                                                            
and  7-Mile  Camp  maintenance  facilities.  He  additionally  asked                                                            
whether an engineer had  designed them, and if so, was it within the                                                            
last eight years.                                                                                                               
                                                                                                                                
Ms. Slagle  responded  that the history  of the  buildings would  be                                                            
provided to the Committee.                                                                                                      
                                                                                                                                
Senator Taylor  informed that, according  to State law, an  engineer                                                            
could  be liable for  structural  failures if  the situation  occurs                                                            
within the first eight years of the building's life.                                                                            
                                                                                                                                
Ms. Slagle  noted that the majority  of the Department's  facilities                                                            
"are pretty old."                                                                                                               
                                                                                                                                
Senator  Bunde asked  whether the  aforementioned  Alyeska  Pipeline                                                            
facility might  be available to the  State as opposed to  building a                                                            
new structure.                                                                                                                  
                                                                                                                                
Ms. Slagle responded  that, while the Alyeska Pipeline  facility has                                                            
been "generously"  made available,  she believed  that the  Pipeline                                                            
would  continue  to  use  to  facility  and that  it  would  not  be                                                            
available on  a long-term or lease  basis. She noted that  while the                                                            
Department is  continuing to use the temporary tent  facility at the                                                            
Chandalar site  to keep equipment warm in the harsh  conditions, its                                                            
functionality is minimal.                                                                                                       
                                                                                                                                
Senator  Olson calculated  that  the  proposed facility  would  cost                                                            
approximately  $500 per square  foot. He asked  how this equates  to                                                            
other comparable facilities in the area.                                                                                        
                                                                                                                                
Mr. MacKinnon  agreed  that the cost  appears to  be high;  however,                                                            
while  he could  not provide  a comparable  cost  analysis to  other                                                            
facilities  in the area, he stated  that the conditions of  the area                                                            
are harsh  and  the remoteness  of the  area would  tend to  elevate                                                            
material and  labor expenses. He stated  that further cost  analysis                                                            
information would be provided.                                                                                                  
                                                                                                                                
Co-Chair Wilken  agreed that the $482  per square foot price  of the                                                            
facility seems  high, particularly in that minimal  site preparation                                                            
would be  required. He  noted that  the cost of  building a  home is                                                            
approximately  $50 per square foot  and that the cost of  building a                                                            
hospital at Fort  Wainwright was $400 per square foot.  He asked the                                                            
Department to reevaluate the expense.                                                                                           
                                                                                                                                
Senator Bunde stated that  he was familiar with the site and that he                                                            
would not classify it a remote location.                                                                                        
                                                                                                                                
     Corps of Engineers-Harbors Program Formulation                                                                             
     $ 200,000 G/F Match                                                                                                        
     Reference No.: 7091                                                                                                        
     Project Type: Planning                                                                                                     
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 06/30/2008                                                                           
     On-Going Project                                                                                                           
     Participation with the Corps of Engineers and local                                                                        
     governments in harbor breakwaters, dredging, feasibility                                                                   
     studies, and program assistance.                                                                                           
                                                                                                                                
Mr. MacKinnon  stated that this request  would allow the  Department                                                            
to assist  communities  with the  initial planning  and feasibility                                                             
study stage  of developing  harbor projects.  He stressed that  this                                                            
work would allow communities  to have a harbor project "ready to go"                                                            
if  and when  the Corps  of  Engineers  announced that  funding  was                                                            
available.                                                                                                                      
                                                                                                                                
     Corps of Engineers-Harbors Program Construction                                                                            
     $ 8,250,000 G/F Match                                                                                                      
     Reference No.: 36453                                                                                                       
     Project Type: Construction                                                                                                 
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 06/30/2008                                                                           
     Phased Project                                                                                                             
     Participation with the Corps of Engineers and local                                                                        
     governments in harbor breakwaters, dredging, feasibility                                                                   
     studies, and program assistance.                                                                                           
                                                                                                                                
Mr. MacKinnon  stated that this request  would allow for  the actual                                                            
construction  of  harbor  projects;  particularly,  he  stated,  the                                                            
construction  of  a harbor  in Wrangell.  He  noted  that the  total                                                            
funding  of the  Wrangell  Harbor would  consist  of twelve  million                                                            
dollars from  the federal government,  six million dollars  from the                                                            
local  government,  and four  million  dollars  from the  State.  He                                                            
stated  that construction  could  begin once  the  City of  Wrangell                                                            
completes its financing plan for its share of the expense.                                                                      
                                                                                                                                
     Bethel Dock Deferred Maintenance and Transfer                                                                              
     $ 600,000 general funds                                                                                                    
     Reference No.: 37905                                                                                                       
     Project Type: Deferred Maintenance                                                                                         
     Category: Transportation                                                                                                   
     Location: Bethel                                                                                                           
     Election District: Bethel                                                                                                  
     Estimated Project Dates: 07/01/2003 - 06/30/2008                                                                           
     One-Time Project                                                                                                           
     The  city  of  Bethel  has  expressed   an  interest  in  local                                                            
     ownership   subject  to  the  State  addressing   the  deferred                                                            
     maintenance  issues. This  project was  not included in  HB 525                                                            
     (bonds) or HB 528 (debt reimbursement) last year.                                                                          
                                                                                                                                
Mr. MacKinnon stated that  this request would allow for "substantial                                                            
repairs"  to be made to  the Bethel dock,  and upon its completion,                                                             
the responsibility for  the dock would be transferred from the State                                                            
to the City of Bethel.                                                                                                          
                                                                                                                                
Senator  Bunde  asked how  the  overall dock  upgrade  and  transfer                                                            
program is going;  specifically he asked whether any  community that                                                            
received  title  to their  dock  has  requested  additional  funding                                                            
assistance since the transfer occurred.                                                                                         
                                                                                                                                
Mr. MacKinnon  responded that no community has requested  additional                                                            
funds. He mentioned  that the conditions of the recent  bond package                                                            
that was  issued to  support dock  upgrades  and transfer  endeavors                                                            
differed from  previous ones in that it established  a reimbursement                                                            
program rather than an  initial transfer of funds to a community. He                                                            
noted  that the  feedback  from  communities  is that  the  original                                                            
funding  transfer  is  the preferred  system.  He  avowed  that  the                                                            
program is a successful program.                                                                                                
                                                                                                                                
Senator Taylor  asked the number of  communities that are  currently                                                            
participating in the program.                                                                                                   
                                                                                                                                
Mr. MacKinnon  replied that several communities are  in the planning                                                            
stage.                                                                                                                          
                                                                                                                                
Senator Taylor  stated that some communities  have not been  able to                                                            
participate  in the  program because  of the  projected maintenance                                                             
burden the community  would assume or because the  bond issuance was                                                            
problematic.  He understood  that the revisions  to the most  recent                                                            
bond package that  Mr. MacKinnon discussed were supposed  to address                                                            
community concerns;  however, he attested  that he has continued  to                                                            
hear concerns.  He voiced, however, that the Department's  report is                                                            
"encouraging."                                                                                                                  
                                                                                                                                
Ms. Slagle conveyed that  there has been a lot of "enthusiasm" about                                                            
this program,  and she  noted that  a dock  facility transfer  would                                                            
transpire in the City and Borough of Juneau within a few days.                                                                  
                                                                                                                                
     Community Access Roads                                                                                                     
     $ 5,000,000                                                                                                                
          $ 1,000,000 Fed Rcpts                                                                                                 
          $ 4,000,000 General Funds                                                                                             
     Reference No.: 38455                                                                                                       
     Project Type: Construction                                                                                                 
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 06/30/2008                                                                           
     State Match Required                                                                                                       
     One-Time Project                                                                                                           
     Funding for potential Community Access Improvements.                                                                       
                                                                                                                                
Mr. MacKinnon  stated that constructing  access roads is  a priority                                                            
of Governor Frank Murkowski's  Administration. He noted that several                                                            
areas have  been identified  in which roads  could "very readily  be                                                            
constructed"  to  connect  communities   and  enable  them  to,  for                                                            
instance,  share an  airport or  school facilities.  He stated  that                                                            
sharing facilities could lower operating costs in the long-term.                                                                
                                                                                                                                
Senator  Bunde  attested   "that  history  doesn't   bear  out  your                                                            
optimism." Furthermore,  he pointed out that several  communities in                                                            
Southeast  Alaska that  are  connected by  roads  have two  separate                                                            
school districts.  He stated that perhaps the Legislature  should do                                                            
more to encourage communities to share resources.                                                                               
                                                                                                                                
Co-Chair Wilken  observed that relatively little backup  information                                                            
accompanies  this request,  and he asked  whether additional  backup                                                            
information is available.                                                                                                       
                                                                                                                                
Mr. MacKinnon  exampled that one proposed  road connection  could be                                                            
between  Illiamna  and  Nondalton.   He  noted  that  the  difficult                                                            
decision in  this case would be which  of the two airports  would be                                                            
closed.                                                                                                                         
                                                                                                                                
Co-Chair  Wilken asked that  the Department  work with his  staff to                                                            
develop additional backup  information, as he attested, a plan would                                                            
be required.                                                                                                                    
                                                                                                                                
Mr. MacKinnon stated that  the Department is identifying a number of                                                            
projects.   He  assured   that  additional   information  would   be                                                            
forthcoming.                                                                                                                    
                                                                                                                                
Senator  Hoffman   noted  that  one   obstacle  in  furthering   the                                                            
Illiamna/Nondalton   road  connection  is  the on-going   litigation                                                            
regarding  the  construction  of a  bridge  in  the area.  He  asked                                                            
whether this  issue has been resolved  as it has been a problem  for                                                            
more than ten years.                                                                                                            
                                                                                                                                
Mr. MacKinnon  responded that, "the  person that brought  suit has a                                                            
very good case."  However, he voiced optimism that  "a little bit of                                                            
language  change  in  statute"  could  provide  a  solution  to  the                                                            
situation.                                                                                                                      
                                                                                                                                
Senator  Taylor  observed  that the  Committee's  request  for  more                                                            
backup   material  for   this  nine   million   dollar  request   is                                                            
interesting, as he noted  that a similar request is not asked of the                                                            
Municipality   of  Anchorage  when   the  Legislature  appropriates                                                             
approximately $40 million  to it for its Anchorage Metropolitan Area                                                            
Transportation  Study (AMATS) road  system. He opined that  it would                                                            
be interesting to know how the lists would compare.                                                                             
                                                                                                                                
Co-chair Wilken  asked that the Committee's attention  remain on the                                                            
projects being presented.                                                                                                       
                                                                                                                                
Senator Stevens  interjected that a list of Anchorage  Road projects                                                            
is available.                                                                                                                   
                                                                                                                                
Senator  Taylor  declared  that  the  State  has  not  "build  roads                                                            
anyplace in this State in the last twenty years."                                                                               
                                                                                                                                
     Industrial Development Roads                                                                                               
     $ 5,000,000 general funds                                                                                                  
     Reference No.: 38454                                                                                                       
     Project Type: Construction                                                                                                 
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 06/30/2008                                                                           
     One-Time Project                                                                                                           
     Funding for potential Industrial Development Roads                                                                         
                                                                                                                                
Mr.  MacKinnon stated  that  building  industrial roads  is  another                                                            
priority of  the Administration as  their construction could  expand                                                            
economic  opportunities  in the State.  He exampled  that  providing                                                            
road access to such places  as the Donlin Creek Mine could encourage                                                            
additional resource development  in the area. He stated that another                                                            
road that  could be  constructed is  off the Dalton  Highway  in the                                                            
North Slope region. He  attested that this road would provide access                                                            
to acreage that could be  viable for oil development and exploration                                                            
leases  that  might generate  additional  royalty  payments  to  the                                                            
State.                                                                                                                          
                                                                                                                                
Co-Chair  Wilken  opined  that, were  Congress  to  reauthorize  the                                                            
federal  Transportation  Equity Act  for the  21st Century  (TEA-21)                                                            
funding, it would supplant these State funds.                                                                                   
                                                                                                                                
Senator Bunde  asked whether consideration would be  given to making                                                            
these  tolls roads,  were the reauthorization  of  the TEA-21  funds                                                            
disallowed.                                                                                                                     
                                                                                                                                
Mr. MacKinnon  responded that the Department is examining  a variety                                                            
of   financing  that   might   include   such  things   as   in-kind                                                            
contributions and financial  assistance from the affected industries                                                            
and regional Native corporations.                                                                                               
                                                                                                                                
Co-Chair Wilken  asked the Department  to provide additional  backup                                                            
information pertaining to this request.                                                                                         
                                                                                                                                
     State Equipment Fleet Replacement                                                                                          
     $ 15,000,000 Hwy Capiti                                                                                                    
     Reference No.: 30628                                                                                                       
     Project Type: Equipment                                                                                                    
     Category: General Government                                                                                               
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 06/30/2005                                                                           
     On-Going Project                                                                                                           
     Replacement  and/or  refurbishment  of equipment  and  vehicles                                                            
     which have  reached the end of their useful life  cycle and all                                                            
     extension periods  and for the continued conversion of vehicles                                                            
     to alternate fuel  and related alternate fuel program expenses.                                                            
                                                                                                                                
Mr. MacKinnon read the project description.                                                                                     
                                                                                                                                
Senator Taylor asked which  vehicles would be converted to alternate                                                            
fuel.                                                                                                                           
                                                                                                                                
Mr. MacKinnon  voiced uncertainty  as to whether any vehicles  would                                                            
be converted to propane.                                                                                                        
                                                                                                                                
Ms. Slagle expressed  that the Department's fleet  includes vehicles                                                            
that use natural gas; however  she noted that the number of vehicles                                                            
using  alternate fuel  is small  and typically  includes  sedan-type                                                            
vehicles.  She  stated  that,  as required  by  State  statute,  the                                                            
Department is investigating alternate fuel sources.                                                                             
                                                                                                                                
Senator Taylor voiced the  understanding that the State had a built-                                                            
in amortization  system  for equipment  replacement.  Therefore,  he                                                            
puzzled  as to the  reason that  general funds  are requested  on an                                                            
annual basis to fund equipment replacement needs.                                                                               
                                                                                                                                
Co-Chair  Wilken asked  Ms. Slagle  to explain  the Highway  Capital                                                            
Fund that is identified  as the funding mechanism  for this request.                                                            
                                                                                                                                
Ms.  Slagle stated  that  the Highway  Working  Capital  Fund is  an                                                            
account  to which  user agencies  make monthly  payments to  provide                                                            
monies  for  maintenance,   operation,  and  replacement   of  their                                                            
vehicles. She  stated that Legislative authorization  is required in                                                            
order to access  the funds. Therefore, she concluded  that this is a                                                            
request seeking  the authorization of those funds  to be utilized to                                                            
replace vehicles.                                                                                                               
                                                                                                                                
Senator  Taylor asked whether  the Department  has considered  lease                                                            
purchase agreements  as opposed to  maintaining and repairing  State                                                            
owned vehicles.                                                                                                                 
                                                                                                                                
Ms. Slagle  stated that, "when it  is appropriate for the  needs" of                                                            
the Department,  it does lease vehicles.  However, she stated  that,                                                            
rather  than  paying  lease  expenses,  it  is  more  economical  to                                                            
purchase  and maintain  vehicles  such  as snowplows,  graters,  and                                                            
heavy-duty trucks.  She noted that all vehicles that  are maintained                                                            
by  the Department,  including  trooper  vehicles belonging  to  the                                                            
Department of Public Safety, are included in this request.                                                                      
                                                                                                                                
Senator Taylor continued  to voice concern that numerous departments                                                            
purchase  rather than lease  their vehicles.  He questioned  whether                                                            
allowing the Department  of Transportation and Public  Facilities to                                                            
maintain other  departments' vehicles is a sound economic  decision,                                                            
as he attested  that the Department  charges "a very high  rate" for                                                            
that maintenance.  He stressed that "an aggressive  leasing program"                                                            
would result in significant savings to the State.                                                                               
                                                                                                                                
Co-Chair Wilken  understood that efforts  are underway to  develop a                                                            
lease program for FY 05.                                                                                                        
                                                                                                                                
Senator  Hoffman  requested  that  a list  detailing  the  types  of                                                            
vehicles  that  would  be purchased  and  their  usage  location  be                                                            
supplied to the Committee.                                                                                                      
                                                                                                                                
Senator Olson asked whether  a study has been conducted to determine                                                            
whether or not alternate fuel programs are cost effective.                                                                      
                                                                                                                                
Ms. Slagle responded that this information would be provided.                                                                   
                                                                                                                                
Senator Bunde echoed Senator  Hoffman's request concerning the types                                                            
of equipment  that would  be purchased. He  shared private  industry                                                            
concerns that the Department  might be purchasing major construction                                                            
equipment that might sit idle 50 weeks out of the year.                                                                         
                                                                                                                                
Mr. MacKinnon  surmised that Senator  Bunde might be referring  to a                                                            
drill  rig that the  State owns.  He assured  that  a list would  be                                                            
provided.                                                                                                                       
                                                                                                                                
     State Equipment Fleet Equipment Management System Replacement                                                              
     $ 2,000,000                                                                                                                
          $   200,000 CIP Rcpts                                                                                                 
          $ 1,800,000 Hwy Capiti                                                                                                
     Reference No.: 35835                                                                                                       
     Project Type: Renewal and Replacement                                                                                      
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 06/30/2008                                                                           
     One-Time Project                                                                                                           
     Replacement or upgrade of State Equipment Fleet's Equipment                                                                
     Management System (EMS) as recommended by the DMG Maximus                                                                  
     Consulting Review of the State of Alaska Fleet Operations.                                                                 
                                                                                                                                
Mr.  MacKinnon  stated  that  this request  would  provide  for  the                                                            
replacement of  the equipment management system that  the Department                                                            
uses to keep track  of its 7,000 vehicles statewide.  He stated that                                                            
the  new  system  would  allow  the  State  to  properly  conduct  a                                                            
preventative  maintenance  program  that would  extend  the life  of                                                            
vehicles and  keep them is safe operating  condition. He  noted that                                                            
the current  system  is antiquated  and  is not  able to  adequately                                                            
perform the necessary functions.                                                                                                
                                                                                                                                
Ms  Slagle  commented that  the  new  system  would also  allow  the                                                            
Department  to better track warranty  information and repair  costs.                                                            
                                                                                                                                
Senator  Taylor observed  that the  backup information  states  that                                                            
some components  of the original Equipment  Management System  never                                                            
functioned at all.                                                                                                              
                                                                                                                                
Ms. Slagle responded  that the current management  system is of poor                                                            
quality, is  not user friendly, and  is unable to provide  pertinent                                                            
management information.                                                                                                         
                                                                                                                                
Senator Hoffman asked whether  the new system would be sophisticated                                                            
enough  to recommend  the  types of  equipment that  would  function                                                            
better  in  certain   regions  of  the  State.  He   voiced  that  a                                                            
conventional, easy to repair,  piece of equipment would be preferred                                                            
to utilizing  a modern piece of construction  equipment in  a remote                                                            
area that  might be rendered  inoperable for  a long period  of time                                                            
while awaiting unique replacement parts.                                                                                        
                                                                                                                                
                                                                                                                                
SFC 03 # 34, Side B 09:51 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Ms. Slagle  stated that  the new Equipment  Management System  would                                                            
allow  the  Department  to better  track  those  areas experiencing                                                             
excessive equipment  downtime and  excessive associated costs.  This                                                            
tracking, she  avowed, would allow  the Department to better  access                                                            
the need to provide alternative vehicles.                                                                                       
                                                                                                                                
Senator  Olson assumed  that the  cost associated  with maintaining                                                             
other departments' vehicles is reflected in the backup material.                                                                
                                                                                                                                
Ms. Slagle confirmed.                                                                                                           
                                                                                                                                
Senator Olson asked whether  requiring other departments to maintain                                                            
their own vehicles would be cost effective.                                                                                     
                                                                                                                                
Ms. Slagle  stated that "decentralizing"  this responsibility  would                                                            
result in a duplication of efforts.                                                                                             
                                                                                                                                
Senator  Olson asked  whether the  various State  departments  would                                                            
agree  that  having the  Department  of  Transportation  and  Public                                                            
Facilities maintain State vehicles is a cost effective measure.                                                                 
                                                                                                                                
Ms. Slagle  hoped that they  would; however,  she allowed that  this                                                            
response could not be guaranteed.                                                                                               
                                                                                                                                
Senator Olson  communicated  that, in his  experience, this  has not                                                            
been the case.                                                                                                                  
                                                                                                                                
Ms. Slagle  voiced that the Department  is investigating  whether an                                                            
alternate billing structure could be implemented.                                                                               
                                                                                                                                
     Weights and Measures Testing Unit Replacement                                                                              
     $ 75,000 General Funds                                                                                                     
     Reference No.: 32605                                                                                                       
     Project Type: Equipment                                                                                                    
     Category: Transportation                                                                                                   
     Location: Statewide                                                                                                        
     Election District: Statewide                                                                                               
     Estimated Project Dates: 07/01/2003 - 06/30/2008                                                                           
     Phased Project                                                                                                             
     The Weights and Measures equipment which is beyond its useable                                                             
     service life.                                                                                                              
                                                                                                                                
Mr. MacKinnon stated that  this request would allow for the purchase                                                            
of a 500 Gallon  Trailer Mounted Stainless  Steel Volumetric  Prover                                                            
that  would travel  throughout  Southeast  Alaska.  In addition,  he                                                            
noted that  it would provide for federally  required upgrades  to be                                                            
made to the Anchorage Metrology Laboratory.                                                                                     
                                                                                                                                
Co-Chair  Wilken asked  whether  Senator Taylor  has  access to  the                                                            
AMATS road projects list  that Senator Taylor asked about earlier in                                                            
the meeting.                                                                                                                    
                                                                                                                                
Senator Taylor responded  yes; however, he reiterated that Committee                                                            
approval of AMATS projects is not required.                                                                                     
                                                                                                                                
Senator  B. Stevens  responded  that  AMATS projects  are  federally                                                            
reviewed.  He  voiced that  he  takes issue  with  Senator  Taylor's                                                            
comment that the Municipality of Anchorage "wastes" AMATS money.                                                                
                                                                                                                                
Senator  Taylor stated  that, rather  than implying  that  Anchorage                                                            
wastes the money, the intention  of his remark was to point out that                                                            
the list  of AMATS  projects  does not have  to be  approved by  the                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator Bunde informed  the Committee that during the previous day's                                                            
Department    of   Environmental    Conservation   capital    budget                                                            
presentation,  a question arose regarding the total  funds that have                                                            
been   required  to   support  the   Village   Safe  Water   Project                                                            
Administration  project,  reference  number  33820. He  stated  that                                                            
since the project's inception,  the amount has totaled $872,964,115.                                                            
                                                                                                                                
The bill was HELD in Committee.                                                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 09:59 AM.                                                                         

Document Name Date/Time Subjects