Legislature(2003 - 2004)

04/01/2003 09:02 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 01, 2003                                                                                      
                              9:02 AM                                                                                         
SFC-03 # 37, Side  A                                                                                                            
SFC 03 # 37, Side  B                                                                                                            
SFC 03 # 38, Side  A                                                                                                            
CALL TO ORDER                                                                                                               
Co-Chair Gary Wilken convened the meeting at approximately 9:02 AM.                                                             
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde,  Vice Chair                                                                                                  
Senator Robin Taylor                                                                                                            
Senator Ben Stevens                                                                                                             
Also Attending:   SENATOR  JOHN COWDERY;  GEORGE LAVASSEUR,  Acting                                                           
State Maintenance Engineer, Office  of the Commissioner, Department                                                             
of Transportation and Public Facilities; BILL CORBUS, Commissioner,                                                             
Department of Revenue;  RICHARD SCHMITZ, Staff to Senator  Cowdery;                                                             
MARK O'BRIEN, Chief Contracts Officer, Contracting, Procurement and                                                             
Appeals, Office of  the Commissioner, Department of  Transportation                                                             
and Public Facilities;                                                                                                          
Attending  via Teleconference:    Offnet: JIM  JOHNSON,  President,                                                           
Johnson Tire Service;  CHUCK MCGEE, US Representative  for Ugigrip;                                                             
RICHARD  NORDNESS,  Executive  Director,   Northwest  Tire  Dealers                                                             
Association;  BRUNO WESSEL,  Bruno  Wessel Inc.,  Member,  National                                                             
Safety Council, and Member, Scandinavian Tire and Rim Organization;                                                             
EDEN  LARSON, President  and  Chief Executive  Officer,  Associated                                                             
Builders  and Contractors  of Alaska; From  Mat-Su: CLINT  QUIGGLE;                                                             
From  Kenai:  HANNELE   ZUBECK,  Associate  Professor,   School  of                                                             
Engineering, University of Alaska-Anchorage;  From Fairbanks: ROGER                                                             
BURNS; JEFF ALLING, Alcan Builders, and Member, Associated Builders                                                             
and Contractors  of Alaska; From  Anchorage: DON VALESKO,  Business                                                             
Manager, Local 71;                                                                                                              
SUMMARY INFORMATION                                                                                                         
SB 106-FEE FOR STUDDED TIRES                                                                                                    
The  Committee heard  from  the Department  of  Transportation  and                                                             
Public Facilities,  the Department  of Revenue,  the University  of                                                             
Alaska, members of the public and industry representatives.                                                                     
SB  40-CONSTRUCTION OF HIGHWAYS BY DOTPF                                                                                        
The  Committee   heard  from   the  sponsor,   the  Department   of                                                             
Transportation and Public Facilities  and industry representatives.                                                             
The bill was held in Committee.                                                                                                 
SB 115-CORRECTIONAL INDUSTRIES PROGRAM EXPENSES                                                                                 
This bill was scheduled but not heard.                                                                                          
Co-Chair Wilken indicated the presence of students representing the                                                             
Close-up program.                                                                                                               
     CS FOR SENATE BILL NO. 106(TRA)                                                                                            
     "An Act relating to studded tires; and providing for an                                                                    
     effective date."                                                                                                           
This was  the first  hearing for  this bill  in the Senate  Finance                                                             
Co-Chair Wilken  explained this bill  "imposes a ten dollar  fee on                                                             
retail sales of studded tires in Alaska.                                                                                        
GEORGE LAVASSEUR, Acting State  Maintenance Engineer, Office of the                                                             
Commissioner,  Department of Transportation  and Public  Facilities                                                             
testified this bill would impose  the $10 surcharge on the purchase                                                             
of all studded tires beginning July 1, 2003. He cited Department of                                                             
Revenue  estimates this  would  generate approximately  $2  million                                                             
annually  and would cost  approximately $50,000  to administer.  He                                                             
noted  businesses collecting  this  surcharge would  be allowed  to                                                             
retain  five-percent  of the  surcharge,  up  to $1,000,  to  cover                                                             
Mr. Lavasseur commented  that many drivers use studded  tires as an                                                             
aid  to winter  driving to  improve traction  on  icy surfaces.  He                                                             
shared that an analysis  of Alaska winter driving conditions  found                                                             
that primary roads with highest  traffic roads are covered with ice                                                             
or snow only about five-percent of the time. The remaining "studded                                                             
tire season" he reported that pavements are bare and/or dry.                                                                    
Mr. Lavasseur instructed that pavement in Alaska wears at a rate of                                                             
".3 inches  per million studded  tire passes," which he  translated                                                             
"we lose  about a dump  truck full of  asphalt" every four  million                                                             
cars with studded tires traveling  over a mile of roadway. He added                                                             
that each  studded tire  causes approximately  $50 worth of  damage                                                             
over its  life. He informed that  the Department of  Transportation                                                             
and Public Facilities expends over $5 million annual to repair ruts                                                             
caused by studded tires.                                                                                                        
Mr. Lavasseur  directed attention  to a  photograph and stated  the                                                             
condition of the road depicted is typical of "what we're seeing" in                                                             
portions of Southcentral Alaska, as well as in Juneau.                                                                          
Senator Bunde relayed that he has  heard that this damage caused by                                                             
studded tires does not occur on roadways in Interior Alaska. He had                                                             
been  told  this   is  due  to  the  usage  of  different   asphalt                                                             
Mr.  Lavasseur attributed  the  lesser-studded  tire  wear to  less                                                             
vehicle  traffic  and  different  weather  conditions  in  Interior                                                             
Alaska. He  stated that more icepack  is present on Interior  roads                                                             
during a larger percentage of time.                                                                                             
Senator Bunde  asked if the different  damage rates are in  any way                                                             
related to the materials and application methods used.                                                                          
Mr.  Lavasseur  answered  it  is  not   related.  He  stressed  the                                                             
Department is "doing several things"  to attempt to improve asphalt                                                             
performance.  He admitted that  the asphalt  used in Alaska,  which                                                             
originates  as  North Slope  crude  oil,  is  soft. He  listed  the                                                             
additives to  strengthen the asphalt,  including the use  of larger                                                             
and harder rock material imbedded in the asphalt. He qualified that                                                             
rock in Alaska is very soft due to the areas geological newness. He                                                             
listed the two hard rock sources in Alaska, one at Cantwell and the                                                             
other near  Haines and informed of  the high cost to transport  the                                                             
hard rock to the road sites.                                                                                                    
Mr. Lavasseur gave the Egan Expressway  in Juneau as an example and                                                             
detailed the project utilizing materials from Haines and Washington                                                             
State.  He remarked  this project  is "holding up  quite well."  He                                                             
spoke  to the  difficulty  in locating  hard  rock  sources in  the                                                             
interior regions of the State.                                                                                                  
Senator Bunde asked if it has therefore  been determined that it is                                                             
less expensive to repave the road than to import hard rock.                                                                     
Mr.  Lavasseur  replied that  no  studies  have been  conducted  to                                                             
research this  matter; however the  "economy" in utilizing  Alaskan                                                             
hard rock is "very  important" to the refiners in Alaska.  He added                                                             
that it is expensive to barge hard rock into the State. He informed                                                             
that the Department is initiating a project to ascertain the amount                                                             
of hard rock in the area near Cantwell.                                                                                         
Senator  Bunde interpreted  the witness'  testimony  to state  that                                                             
roads in Alaska are "softer" due to the intent to subsidize asphalt                                                             
production from North Slope crude oil.                                                                                          
Mr.  Lavasseur  countered  that  "a  combination  of  factors"  are                                                             
responsible. He stated that the  Department is "fixing" the Alaskan                                                             
asphalt utilizing modified asphalt.                                                                                             
SENATOR JOHN COWDERY  told of studies conducted on  certain streets                                                             
in Anchorage,  which show  minimal development  of ruts due  to the                                                             
addition of rubber and other materials to the asphalt.                                                                          
Mr. Lavasseur added  that speed also impacts the wear  of pavement.                                                             
Senator   Cowdery  indicated   the  cost   per  studded  tires   is                                                             
approximately $11  more per tire than non-studded tires.  He opined                                                             
that "lightweight"  studded  tires hit the  pavement with  the same                                                             
force and cause the same amount  of damage. He then told of an "ice                                                             
tire"  developed  in Finland  that  could be  utilized  year-round.                                                             
Although the  cost of these  tires is  higher, he asserted  options                                                             
other than studded tires are available.                                                                                         
Co-Chair  Wilken drew attention  to a packet  of the  "lightweight"                                                             
studs, which he would share with Committee members.                                                                             
Senator Taylor spoke of cement roads in Wrangell and the process of                                                             
two-inch overlays  of asphalt on other roads. He compared  the wear                                                             
on both  road types and  questioned why cement  is not more  widely                                                             
Mr. Lavasseur replied that Portland  cement is excellent for use in                                                             
areas with a stable base. However,  in areas with unstable bases he                                                             
stated the cement  cracks, noting that most of Southcentral  Alaska                                                             
has an unstable base due to freezing and thawing.                                                                               
Senator  Taylor challenged  that  the base  of  Egan Expressway  is                                                             
stable. He asked  if the Anchorage area roads were  "that unstable"                                                             
that cement pavement would be unviable.                                                                                         
Mr. Lavasseur answered yes.                                                                                                     
Senator Taylor suggested chains would cause greater damage to roads                                                             
then studded tires.                                                                                                             
Mr.  Lavasseur  detailed   "an  aggressive  chemical   program"  of                                                             
magnesium chloride utilized in Southcentral Alaska to keep roads as                                                             
ice free as possible throughout the winter.                                                                                     
Senator Cowdery asked the witness  to compare damage caused by cars                                                             
versus trucks.                                                                                                                  
Mr. Lavasseur  listed the  width of cars  versus trucks noting  the                                                             
width  of the  ruts match  the width  of mid-size  passenger  cars,                                                             
indicating the majority of the damage is caused by cars.                                                                        
Mr. Lavasseur then showed a photo of a lightweight studded tire. He                                                             
described how the  ruts are caused and reported that  for every one                                                             
million passes,  approximately one-tenth  of an inch of  roadway is                                                             
eroded. He stated that with the 40,000 vehicles traveling the Glenn                                                             
Highway daily, the damage accumulates in a short period of time and                                                             
the road must be repaired every two to three years.                                                                             
Mr. Lavasseur stressed that the ruts cause hydroplaning when filled                                                             
with rainwater, and also hamper the visibility of drivers traveling                                                             
behind a vehicle riding in a rut as the water sprays. He furthered.                                                             
Senator Taylor  asked if  differential exists  between the  wear of                                                             
cement and asphalt.                                                                                                             
Mr. Lavasseur  told  of his experiences  in the  1960s with  cement                                                             
roads  in the  State of  Minnesota. He  stated  that studded  tires                                                             
caused significant  damage  to the cement  roads and therefore  the                                                             
cement roads were discontinued.                                                                                                 
BILL CORBUS, Commissioner, Department  of Revenue, read a statement                                                             
into the record as follows.                                                                                                     
     The  Governor  and I  very much  appreciate  this  Committee's                                                             
     consideration  of this  important legislation.  As you  may be                                                             
     aware,  the companion bill,  House Bill 173 was  substantially                                                             
     changed  in the House  Transportation  Committee last  week to                                                             
     apply a  $2 fee on all tires.  The Governor is not  opposed to                                                             
     the changes contained in CS HB 173.                                                                                        
     Why is  this legislation necessary?  SB 106 is a  critical and                                                             
     necessary element of the Governor's  overall budget investment                                                             
     plan and investment plan for FY 2004 and he recently submitted                                                             
     it to you for your consideration. Governor Murkowski's primary                                                             
     mission  is to  build a  robust growing  economy and  generate                                                             
     sufficient  State revenue to  fund programs and services  that                                                             
     Alaskans  need  and expect.  Passage  of  SB 106  will  ensure                                                             
     increased  State  revenues  and  may  prevent  elimination  or                                                             
     diminution of other important programs and services.                                                                       
     What this  legislation will accomplish.  SB 106 will  attach a                                                             
     fee of $10 per studded tire sold in Alaska to begin in July 1,                                                             
     2003. Businesses, including tire dealers, service stations and                                                             
     garages  will fill out monthly  reports of studded  tire sales                                                             
     and  remit the fees  to the Department  of Revenue  containing                                                             
      five percent of the fees not to exceed $300 per month.                                                                    
     Anticipated  additional  revenue  to the  State  of Alaska  is                                                             
     approximately $2 million. The amendment contained in CS HB 173                                                             
     to apply a $2 fee to all tires is expected to generate revenue                                                             
     of approximately $2.5 million.                                                                                             
     Impact on Alaskan businesses. Although Alaskan businesses will                                                             
     be called  upon to collect and  remit the fees, SB  106 allows                                                             
     studded tire  sellers to retain their administrative  costs up                                                             
     to five percent, not exceeding  $300 per month. I believe this                                                             
     allowance is fair.                                                                                                         
     In conclusion the fee of $10 per studded tire is necessary and                                                             
     essential to  the Governor's spending and investment  plan for                                                             
     Alaska.  The Department  of Revenue can  and will  efficiently                                                             
     administer  the fee  as discussed in  the Department's  fiscal                                                             
     note. I urge and appreciate your serious consideration of this                                                             
     legislation  and ask that you  pass it out of Committee  today                                                             
     with your support for enactment this session.                                                                              
Senator  Bunde voiced  concern about  the volume  of paperwork  and                                                             
asked if quarterly reports have been considered.                                                                                
Mr. Corbus was unsure if this had been considered and indicated the                                                             
Department would not oppose a quarterly reporting method.                                                                       
Senator  Taylor asked  if the intent  is to  dedicate the  revenues                                                             
generated by the fee to highway maintenance or repairs.                                                                         
Co-Chair Wilken answered  the revenues would be deposited  into the                                                             
State general fund.                                                                                                             
JIM  JOHNSON,  President,  Johnson   Tire  Service,  testified  via                                                             
teleconference from an offnet location  in Anchorage and referenced                                                             
his written testimony [copy on file]. He told of testimony given by                                                             
physicians and engineers serving  on the Swedish Road and Transport                                                             
Research  Institute (VIT)  at the  1994 Winter  Cities  Conference,                                                             
attesting to the increased deaths and property damage that would be                                                             
caused by a discontinuance  of studded tires. As a  result of these                                                             
findings, he informed  that the VIT participated in  development of                                                             
lightweight  environmental   studs  weighing  1.1  grams  and  also                                                             
recommended  better road  construction,  particularly  to the  road                                                             
base. He  relayed that  the VIT  charged the  Alaska Department  of                                                             
Transportation and Public Facilities with building "terrible roads"                                                             
and recommended  the use  of the lightweight  studded tires,  which                                                             
would  minimize  damage.  He stated  that  his  company  introduced                                                             
environmental  lightweight studs  to North  America  in 1994 in  an                                                             
attempt to be "good corporate citizens".                                                                                        
Mr. Johnson opined that the damage  caused by studded tires is less                                                             
significant than claimed by others  and pointed out that the annual                                                             
cost of $5  million to repair roads  has not increased  since 1993,                                                             
which he calculated would have  increased over time without the use                                                             
of the newer  lightweight studded  tires. He claimed the  damage is                                                             
the result of poor  quality road base, which is not  rectified with                                                             
Mr. Johnson charged that this legislation would impact lower income                                                             
residents, who might not be able  to afford the $40 additional cost                                                             
to purchase studded tires. He reported,  "Studded tires is the most                                                             
proven  safety device  that  is known  to  man." He  attested  that                                                             
although ice tires,  also known as "friction" tires,  have improved                                                             
driving safety,  they do not compare  to the starting  and stopping                                                             
ability and the length of wear  of studded tires. He questioned why                                                             
lightweight studded  tires were not  mandated rather than  the fees                                                             
for  all  studded  tires  proposed  in  legislation.  He  suggested                                                             
assessing a $2 fee for all tire  purchases and utilize the revenues                                                             
for better  road construction.  He predicted  that if better  roads                                                             
were constructed damage would decrease  by 30 percent, and mandated                                                             
use of lightweight studs would  decrease road damage by 15 percent.                                                             
Mr. Johnson remarked  this legislation would benefit  no party, and                                                             
the  issue was  creating revenue  rather  than the  use of  studded                                                             
tires.  He remarked, "If  you're going  to tax  safety, you  have a                                                             
Senator Cowdery referenced  a study conducted by the  University of                                                             
Alaska and asked if the use of  studded tires has resulted in a per                                                             
capita decline in the number of accidents.                                                                                      
Mr. Johnson  did not know,  but emphasized  that if motorists  were                                                             
discouraged from purchasing studded  tires, fatalities and property                                                             
damage would increase and more  sand, gravel and chemicals would be                                                             
required to provide better traction on roads.                                                                                   
Senator Cowdery  asked the  number of states  with similar  weather                                                             
conditions to Alaska that ban studded tire use.                                                                                 
Mr. Johnson listed Wisconsin and Minnesota, but pointed out that no                                                             
bans  have been  issued since  1975 and  that studded  tire use  is                                                             
permitted  on emergency  vehicles.  He stressed  that injury  rates                                                             
"skyrocketed" when the bans were implemented.                                                                                   
Senator Cowdery asked about bans on studded tire use in Canada.                                                                 
Mr. Johnson that  use of studded tires is permitted  in Canada with                                                             
the exception of Toronto.                                                                                                       
Senator B. Stevens asked if the  witness has reviewed the committee                                                             
substitute for HB 173, which would impose a $2 fee for the purchase                                                             
of all tires.                                                                                                                   
Mr. Johnson supported that bill.                                                                                                
Senator  B.  Stevens  took  issue  with  the  assertion  that  more                                                             
accidents would  occur. He stated  that he has driven in  the State                                                             
his entire life, never with studded tires and has had no accidents.                                                             
He questioned the applicability of the statistics showing increased                                                             
accidents  in Wisconsin and  Minnesota following  the studded  tire                                                             
ban, suggesting that  winter conditions over the time  period could                                                             
have been more severe than average.                                                                                             
Mr. Johnson and Senator B. Stevens debated the issue.                                                                           
CHUCK MCGEE,  United States representative  for Ugigrip,  testified                                                             
via teleconference  from an  offnet location  in opposition  to the                                                             
bill.  He told about  the lightweight  tire  studs manufactured  by                                                             
Ugigrip and other  manufacturers, which have been proven  to reduce                                                             
road  wear.  He  attested  to  the  better   braking  and  traction                                                             
capabilities of studded  tires, citing the Swedish  VTI studies. He                                                             
stated  that any  cost  increase would  cause  drivers  to not  use                                                             
studded tires. He spoke to the  benefits of the newer studs and the                                                             
lesser damage caused by them.                                                                                                   
RICHARD  NORDNESS,  Executive  Director,   Northwest  Tire  Dealers                                                             
Association, testified  via teleconference from offnet  site in the                                                             
state  of Washington  in  opposition  to the  bill.  He stated  the                                                             
Association's  position that studded  tires is an important  safety                                                             
feature for Alaskan  residents. He remarked that a  $10 per studded                                                             
tire fee would be have a negative  impact on winter driving safety,                                                             
as many  motorists could  not afford  the $40  total and that  many                                                             
drivers would chose to not purchase the tires.                                                                                  
Mr. Nordness also opposed tire dealers acting as tax collectors. He                                                             
told of  efforts in  conjunction with  legislatures in  Washington,                                                             
Oregon to promote the use of lightweight studs.                                                                                 
Co-Chair Green clarified the Association represents tire dealers in                                                             
the states of Alaska, Oregon and Washington.                                                                                    
Mr. Nordness affirmed.                                                                                                          
Co-Chair Green asked  if the Association conducted  a comparison of                                                             
the licensing  and  taxation of  vehicles registered  in the  three                                                             
Mr.  Nordness  replied  the  Association  had  not  conducted  such                                                             
Co-Chair Green predicted the total  licensing and taxation cost for                                                             
vehicles is significantly less in Alaska.                                                                                       
Senator Bunde  asked if studded tires  are permitted in  Oregon and                                                             
Mr. Nordness answered they are.                                                                                                 
SFC 03 # 37, Side B 09:49 AM                                                                                                    
BRUNO WESSEL, Bruno  Wessel Inc., Member, National  Safety Council,                                                             
and Member, Scandinavian  Tire and Rim Organization,  testified via                                                             
teleconference from  an offnet location in Sarasota,  Florida, told                                                             
of his experiences as an importer of tire studs since the 1960s. He                                                             
opposed this bill,  as some motorists could not afford  the tax. He                                                             
disputed  the excuse  that ice  is only  present  on roadways  five                                                             
percent of the year, arguing that  in Minnesota it was learned this                                                             
was the time that 90 percent of accidents occurred.                                                                             
Mr. Wessel spoke to the ineffectiveness of overlaying roads because                                                             
the  ruts  return rapidly.  He  stressed  that  the roads  must  be                                                             
"milled",  or  ground  out, before  being  relayed.  He  referenced                                                             
"government studies"  that found that  one truck is equal  to 6,000                                                             
car passes.                                                                                                                     
Mr. Wessel also spoke of the VTI  and reiterated that findings that                                                             
reduced studded tire  use would increase accidents  and fatalities.                                                             
He  asserted  that  studded  tires   have  "the  added  benefit  of                                                             
roughening  road and  roughening  the ice,"  which provides  better                                                             
traction for vehicles without studded tires.                                                                                    
Senator Cowdery commented he has observed vehicles in Alaska's body                                                             
shops for repair that had studded snow tires.                                                                                   
Mr.  Wessel emphasized  that although  some  vehicles with  studded                                                             
tires would  be involved  in accidents, they  would be less  likely                                                             
than vehicles  without  studded tires.  He informed  that he  was a                                                             
delegate at the Winter  Cities Conference in 1994 and  has traveled                                                             
to Alaska on several occasions.                                                                                                 
CLINT QUIGGLE testified via teleconference from Mat-Su as a private                                                             
citizen about his 36 years "in the tire business" and in opposition                                                             
to  this bill.  He  suggested  the focus  is  on tax  revenue,  but                                                             
stressed the safety  issue. He stressed that studded  tires prevent                                                             
accidents  and save lives,  particularly on  ice covered roads.  He                                                             
predicted that because some motorists could not afford the tax they                                                             
would continue to  drive with old studded tires or  without studded                                                             
Senator  Cowdery  asked if  witness  agreed  the average  cost  per                                                             
studded tire is $11 higher than for non-studded tires.                                                                          
Mr. Quiggle responded  the amount varies from $10 to  $12 per tire.                                                             
Senator Cowdery asked if the witness had experience with ice tires.                                                             
Mr. Quiggle reported  that after driving with studded  tires for 30                                                             
years,  he experimented  with ice  tires  this year.  He liked  the                                                             
tires, but stressed  that in the event the vehicle  slides, the ice                                                             
tires respond significantly slower than studded tires.                                                                          
Senator Cowdery indicated most modern cars have an ABS brake system                                                             
and he told of his  driving experience with ice tires  on the hills                                                             
in Juneau.                                                                                                                      
HANNELE  ZUBECK,   Associate  Professor,  School  of   Engineering,                                                             
University of Alaska-Anchorage,  testified via teleconference  from                                                             
Kenai about a study she conducted  on the social-economical impacts                                                             
of  studded tire  use in  Alaska.  The preliminary  report,  titled                                                             
"Socio-Economic  Effects  of Studded  Tire Use  in Alaska:  Interim                                                             
Executive Summary-March 10, 2003" is on file. Her recommendation is                                                             
that a $10 fee per studded tire  would encourage the use of driving                                                             
with old studded tires, which may not provide adequate traction but                                                             
would instill driver confidence.  She predicted this would increase                                                             
the accident rate. She furthered  the same impact would result if a                                                             
$2 fee  were imposed on  the sale of all  tires, as proposed  in HB
173. She suggested  a higher fee for the conventional  heavy studs,                                                             
which would encourage drivers to  select lightweight studs and have                                                             
less impact on the State's economy.                                                                                             
Ms. Zubeck  addressed  the matter  of soft  asphalt informing  that                                                             
hardening  the asphalt  is possible;  however,  cracking and  other                                                             
problems  would occur.  She  stated that  aggregate  is the  actual                                                             
Ms. Zubeck listed the states that  currently ban the use of studded                                                             
tires  and  noted  Illinois  is  the  only  state  where  icy  road                                                             
conditions are present.                                                                                                         
Senator Taylor asked  the witness repeat of the conclusions  of the                                                             
preliminary report.                                                                                                             
Ms. Zubeck detailed  the findings of the studies, in  comparison to                                                             
data learned  from  research conducted  in Sweden  and Norway.  She                                                             
qualified that the  annual estimated damage amount  of $5 in Alaska                                                             
is inaccurate and should be reevaluated.                                                                                        
Ms. Zubeck testified  that studded tire use reduces  accident rates                                                             
and  that reducing  studded  tire use  would increase  the  overall                                                             
costs, despite  savings in road  maintenance and revenue  generated                                                             
from the studded tire fee.                                                                                                      
Senator Taylor  appreciated the University  of Alaska's  efforts on                                                             
this matter.                                                                                                                    
Senator Cowdery  asked if  the ruts caused  by studded tires  are a                                                             
safety issue as well.                                                                                                           
Ms. Zubeck answered, "absolutely". She noted the absence of studies                                                             
of summertime  accidents,  as most  studies  concentrate on  winter                                                             
accidents. She  remarked that that  information on hydroplaning  is                                                             
important to collect and analyze.                                                                                               
Senator B. Stevens referenced certain  information contained in the                                                             
section  of the preliminary  report  relating to  pavement wear  as                                                             
        • Traffic conditions (decrease wear by decreasing traffic                                                               
          volume and proportion of studded tires, decreasing winter                                                             
           speed limits and increasing lane widths); and                                                                        
        • Weather conditions (decrease wear by keeping the road                                                                 
          surface dry).                                                                                                         
Senator B. Stevens commented that the Legislature does not have the                                                             
authority  or ability to  decrease traffic  and keep road  surfaces                                                             
Ms. Zubeck clarified that salting the roads would assist in keeping                                                             
them dry and that subsidized public transportation could reduce the                                                             
amount of traffic  in urban areas. She noted that parking  costs in                                                             
Helsinki, Finland are high and  that with the availability of "park                                                             
and ride" and other public transportation programs, vehicle traffic                                                             
into the city has been reduced.                                                                                                 
ROGER  BURNS  testified   via  teleconference  from   Fairbanks  in                                                             
reference to the VTI report and a State of Alaska report, AK-RD-96-                                                             
1, issued in 1996  [copies on file]. He commented on  the amount of                                                             
anecdotal testimony  about road  conditions. He reiterated  earlier                                                             
testimony that "putting consumers in harm's way" for the purpose of                                                             
collecting $2 million in taxes is "unconscionable". Since this is a                                                             
revenue  source  proposal  rather  than  a  matter  of  safety,  he                                                             
supported the house bill plan to impose a $2 fee on the purchase of                                                             
all new tires, as it would raise $2.5 million per year. He asserted                                                             
that all studies  show that studded  tires reduce accidents  and he                                                             
opined that purchasers  should chose tires based on  the conditions                                                             
of the roads they drive. He noted  that the roads in Fairbanks have                                                             
ice and snow more often than roads in other parts of the State.                                                                 
Senator Bunde affirmed  the witness supports a tax  on the purchase                                                             
of all tires.                                                                                                                   
Senator Taylor  associated himself  with the previous speaker  that                                                             
the purpose of this  bill is to generate funds. He  noted the funds                                                             
would not be dedicated for road maintenance. He supported the house                                                             
bill  proposal to  add  a tax  to the  sale  of all  new tires.  He                                                             
suggested  it would remove  the arguments  for and against  studded                                                             
tires, which should be addressed in separate legislation.                                                                       
Senator  Taylor offered  a motion to  amend SB  106 to reflect  the                                                             
language contained  in CS HB 173 to impose a $2 fee  on the sale of                                                             
all new tires [This conceptual amendment was not numbered].                                                                     
Co-Chair Wilken requested the motion  be removed to all a committee                                                             
substitute to be drafted for Committee review.                                                                                  
Senator  Taylor  agreed  and  the  motion   was  WITHDRAWN  without                                                             
Senator Bunde indicated  he would offer amendments  for the purpose                                                             
of discussion,  although he  did not intend  action to be  taken at                                                             
this meeting.                                                                                                                   
Amendment #2:  This amendment deletes  "studded" from the  title of                                                             
the committee substitute. The amended title reads as follows.                                                                   
     "An  Act relating  to tires;  and providing  for an  effective                                                             
This amendment also eliminates  the proposed $10 fee imposed on the                                                             
retail sale  of studded  tires and  imposes a fee  of $2.50  on the                                                             
retail sale of all motor vehicle tires.                                                                                         
This  amendment also  deletes the  language  in Sec.  43.98.025(b),                                                             
relating  to a $10  fee for the  installation of  studs on  a motor                                                             
vehicle license, and inserts new language to read as follows.                                                                   
          (b)  In addition  to the  fee imposed  under (a) of  this                                                             
     section, a fee  of $5 a tire is imposed on the  retail sale of                                                             
     tires studded  with metal studs  or spikes weighing  more than                                                             
     1.1 grams each  embedded in the periphery of the  tire surface                                                             
     and protruding beyond the tread surface of the tire, or on the                                                             
     installation for a fee of  metal studs or spikes weighing more                                                             
     than 1.1 grams each on a motor vehicle tire in the state.                                                                  
Senator Bunde moved for adoption of the amendment.                                                                              
Co-Chair Wilken objected for discussion.                                                                                        
Senator Bunde spoke to the amendment. He recommended a fee of $2.50                                                             
for each tire  rather than $2 proposed  in the house bill  based on                                                             
conversations  with retailers  indicating  that  because tires  are                                                             
usually sold in sets of four, the  $10 total fee would be easier to                                                             
Senator Bunde  removed his  motion to adopt  the amendment  without                                                             
objection and Amendment #2 was WITHDRAWN.                                                                                       
Amendment  #3: This  conceptual  amendment changes  the  remittance                                                             
period for  submission of  the collected fees  by retailers  to the                                                             
State  from monthly  to  quarterly. The  amended  language of  Sec.                                                             
43.98.025(d) reads as follows.                                                                                                  
          (d) A seller shall  collect the fee from the purchaser. A                                                             
     seller  shall  file  a return  on  a form  prescribed  by  the                                                             
     department and remit the fee  collected to the department on a                                                             
     quarterly basis of the sale or installation.                                                                               
Senator Bunde moved for adoption.                                                                                               
Senator  Bunde removed  his motion  to adopt  Amendment #3  without                                                             
objection and the amendment was WITHDRAWN.                                                                                      
Co-Chair   Wilken   requested  members   submit   suggestions   for                                                             
incorporation into a committee substitute and ordered the bill HELD                                                             
in Committee.                                                                                                                   
Co-Chair Wilken  understood that  Department of Transportation  and                                                             
Public  Facilities  vehicles  are  exempt from  weight  limits.  He                                                             
requested Mr. Lavasseur to provide an explanation on the matter.                                                                
     SENATE BILL NO. 40                                                                                                         
     "An Act relating to construction of highways by the Department                                                             
     of Transportation and Public Facilities."                                                                                  
This was  the first  hearing for  this bill  in the Senate  Finance                                                             
Co-Chair  Wilken stated,  "SB 40 allows  the use  of force  account                                                             
construction  only for highway  construction projects estimated  to                                                             
cost  $250,000 or  less.  Projects greater  than  $250,000 will  be                                                             
subject to a competitive bid process as outlined in State statute."                                                             
RICHARD SCHMITZ,  Staff to Senator Cowdery, stressed  importance of                                                             
the competitive bidding process  to State government operations. He                                                             
explained this is to ensure fairness  and to garner the best prices                                                             
available. He noted the current  system does not accurately compare                                                             
the  expense  of  private  ownership   of  equipment  and  contract                                                             
employees with that  of State-owned equipment and State  employees.                                                             
Mr. Schmitz  spoke  to a  handout [copy  on file],  which reads  as                                                             
     Re: SB 40 alternatives:                                                                                                    
     Is DELIVERY ORDER CONTRACTING an alternative?                                                                              
        • DOC is used by, and was developed by, the Department of                                                               
          Defense (it's called JOC by the Army, SABER by the Air                                                                
          Force) and is being increasingly used by local                                                                        
          governments and educational facilities.                                                                               
        • DOC is a competitively bid, fixed price, indefinite                                                                   
          quantity,    indefinite    delivery    (IDIQ),    general                                                             
          construction contract.                                                                                                
        • The contract typically has a base year with 2 to 4 option                                                             
        • The contract sets parameters such as location of work,                                                                
          type of work to be done, design criteria, etc.                                                                        
        • A DOC contract uses unit price guides (UPG) and/or a                                                                  
          unit-price   book  (UPB)  to  establish  a  price  for  a                                                             
          multitude of lines items of work. A typical UPB has about                                                             
          40,000  line items  in order  to cover  just about  every                                                             
          imaginable task.  Items that are not in the book are then                                                             
          negotiated,  priced,  and added  to the UPB.  A UPG  uses                                                             
          computer cost databases, etc.                                                                                         
        • The contractor bids a coefficient that is a markup or                                                                 
          markdown to the UPB items, rather than a dollar price.                                                                
     What you get with a Delivery Order Contract:                                                                               
        • On-call general contractor where prices for line items of                                                             
          work are predetermined.                                                                                               
        • A contract that is easy to manage.                                                                                    
        • A contract that puts more money into "hard construction"                                                              
          instead of soft upfront costs.                                                                                        
Mr. Schmitz  surmised this legislation  would provide incentive  to                                                             
the Department of Transportation and Public Facilities to institute                                                             
new methods of contracting for smaller projects.                                                                                
SENATOR JOHN COWDERY  told of contractors that bid  on a $3 million                                                             
project located in Saint Mary's, in which the Department elected to                                                             
utilize a force account.  He opined this was an abuse  of the force                                                             
account. He reported that many  states have defined maintenance and                                                             
construction, separated by dollar amounts. He intended to provide a                                                             
"level playing field", understanding  that the Department must have                                                             
the ability to utilize a force  account. He considered the $250,000                                                             
limit  to be  adequate and  would  provide necessary  latitude.  He                                                             
relayed he  had asked the Department  the lowest cost of  a project                                                             
located  in rural  Alaska, in  which a  request for  bids would  be                                                             
issued. He was told  the amount was between $75,000  and $100,000.                                                              
Senator Cowdery stated this legislation would "get the State out of                                                             
the construction business".                                                                                                     
Senator Taylor asked if this legislation would prevent abuses.                                                                  
Senator  Cowdery responded  it would  require  competitive bid.  He                                                             
noted that currently no limitation is imposed.                                                                                  
Senator Taylor asked  the regulatory authorization  under which the                                                             
Department makes  the decision that only certain contractors  could                                                             
bid on a project. He gave the construction of high-speed ferries as                                                             
an example.                                                                                                                     
GEORGE LAVASSEUR, Acting State  Maintenance Engineer, Office of the                                                             
Commissioner,  Department of Transportation  and Public  Facilities                                                             
responded he  would provide an answer  at a later time  at Co-Chair                                                             
Wilken's request.                                                                                                               
Mr. Lavasseur  testified to his  29 years in Southcentral  Interior                                                             
Alaska maintaining highways. He gave a history of the force account                                                             
method beginning  with a meeting eight years ago in  Washington D.C                                                             
with the  National Highway  Administration,  where he learned  that                                                             
other  states  have  the same  problem  of  infrastructure  without                                                             
adequate  funding  to  maintain  it.  As  a  result,  congressional                                                             
approval  was  granted  to  allow  the use  of  federal  funds  for                                                             
maintenance  purposes, including  pavement  life extension,  bridge                                                             
repair and gravel-to-pavement programs.  Before this authorization,                                                             
he reminded that for several years  during the 1980s, the State did                                                             
not have enough funds to maintain highways.                                                                                     
Mr. Lavasseur  told  of significant  damage caused  by the melt  of                                                             
discontinuous permafrost and the  use of federal funds in the force                                                             
account  to maintain  road smoothness,  and  to rehabilitate  older                                                             
pavements.  He listed the  type of projects  undertaken with  these                                                             
funds, including  boardwalks, community roads and capital  projects                                                             
performed by the  Department maintenance staff. Of  the $42,600,000                                                             
appropriated  for  this purpose  in  2003, 86  percent  is paid  to                                                             
private  contractors.  He  detailed the  percentages  allocated  to                                                             
private contractors  and Department staff in each region,  based on                                                             
the availability of hot asphalt.                                                                                                
Mr. Lavasseur  indicated  photos showing heavy  equipment,  and the                                                             
process of repairing roads in the Northern Region.                                                                              
SFC 03 # 38, Side A 10:37 AM                                                                                                    
Mr. Lavasseur asserted the force account method allows efficiencies                                                             
for maintenance  work done in Interior  Alaska. He elaborated  that                                                             
the Department  combines  maintenance resources  from a variety  of                                                             
"camps",   which  allows   reduced  per  diem   costs  and   better                                                             
mobilization of units. He cautioned  that if this type of work were                                                             
contracted  to the  highest bidder,  the costs  would increase.  He                                                             
listed design problems,  since typical as-built specifications  are                                                             
not available  for 150 to  200 sections of  a particular  road that                                                             
could be worked on. He added that the sections only measure between                                                             
50 to 300 feet rather  than one continuous section  and that he has                                                             
learned from private  contractors they are not interested  in these                                                             
projects. He attributed  this to the short construction  season and                                                             
the large area in which equipment and manpower must be distributed.                                                             
He noted that when a project is  comprised of one section measuring                                                             
three  or more  miles, a  private contractor  is  employed, as  the                                                             
Department  only  addresses  spot  repairs.  He  assured  that  all                                                             
crushing  is done  by  the private  sector,  amounting  to over  $1                                                             
million annually  in the Northern Region. In addition,  he reported                                                             
that all  the emulsion  is purchased  from the  private sector  for                                                             
approximately  $2.5 million  annually,  and rollers,  belly  dumps,                                                             
tractor-trailers, and milling machines  are rented from the private                                                             
Mr.  Lavasseur  stressed  the  Department   performs  some  of  the                                                             
maintenance  work because of  the lower  costs associated  with not                                                             
paying  Davis-Bacon Act  wages, bypassing  bid packages,  preparing                                                             
construction engineering on the grade, and not paying for a profit.                                                             
He also spoke of the need to employ the "highly-trained" Department                                                             
staff for at least nine months per year, explaining that previously                                                             
the winter seasonal  workers fished commercially during  the summer                                                             
months before the fishing industry declined.                                                                                    
Mr. Lavasseur informed  that the Department has been  able to adapt                                                             
to  lower budget  appropriations,  inflation  and  unfunded  salary                                                             
increases because of cost saving efforts such as these.                                                                         
Mr. Lavasseur assured the Department  was committed that the abuses                                                             
of the  past would not  occur under the  leadership of the  current                                                             
Murkowski Administration. He warned that passage of this bill would                                                             
have a "devastating effect" on the highway maintenance program.                                                                 
Senator Taylor  asked if a  series of repairs  along 50 miles  of a                                                             
highway could be divided into separate  projects, each costing less                                                             
than  $250,000   and  complying   with  the   provisions  of   this                                                             
Mr. Lavasseur predicted the costs would be higher than $250,000. He                                                             
voiced concern that the Department would be limited by the $250,000                                                             
maximum amount  and indicated he preferred  a $1 million  limit. He                                                             
gave the repairs needed to the  Alaskan Highway between Tok and the                                                             
Canadian  border as  an example  of this.  He  stated that  private                                                             
contractors would  be hired to make repairs to the  larger sections                                                             
of the  highway, but the  Department would  conduct the repairs  on                                                             
damaged  sections  of only  several  hundred  yards in  length.  He                                                             
detailed the process of staging  equipment and a two-year supply of                                                             
materials  in key locations  along the  highway. He calculated  the                                                             
cost of repairs utilizing this method at approximately 65 cents per                                                             
square foot, or $100,000 per square mile of area actually repaired.                                                             
He predicted that to divide the repairs into smaller projects would                                                             
increase the cost significantly.                                                                                                
Senator  Taylor restated  his  scenario suggesting  the  Department                                                             
could address the smaller repair sections as separate projects, yet                                                             
still  utilize  the   efficiencies  of  stockpiled   materials  and                                                             
Mr. Lavasseur expressed  the Department would not chose  to violate                                                             
the  intent of  the bill.  He  qualified that  if  the division  of                                                             
repairs  as  Senator   Taylor  described  were  specified   in  the                                                             
legislation, the Department could utilize the practice.                                                                         
Senator  Cowdery countered  Mr. Lavasseur's  comments pointing  out                                                             
that the private sector also has  a trained workforce. He mentioned                                                             
one  project covering  38  miles.  He relayed  that  he spoke  with                                                             
Commissioner  Barton about  day-labor contracts  to address  larger                                                             
projects and had received assurance this would be done.                                                                         
EDEN  LARSON, President  and  Chief Executive  Officer,  Associated                                                             
Builders and  Contractors of Alaska,  testified via  teleconference                                                             
from an off net location  to dispute the Department  testimony. She                                                             
characterized this legislation as designed to prevent abuses to the                                                             
force  account system  in the  future.  While she  was assured  the                                                             
current  Administration would  not commit  such abuses, she  voiced                                                             
concern that  the proposed  limitation must  be imposed to  prevent                                                             
future administrations  from committing  abuse. She furthered  that                                                             
the limitation would  allow the Department to perform  efficiently.                                                             
Senator  Cowdery   asked  the  size   of  the  membership   of  the                                                             
Ms. Larson listed 145 contractors,  their associates and suppliers,                                                             
representing approximately 4,000 employees in the State.                                                                        
DON   VALESKO,   Business   Manager,  Local   71,   testified   via                                                             
teleconference   from   Anchorage   representing    Department   of                                                             
Transportation and  Public Facilities the 500 to 600  employees who                                                             
perform road and facility maintenance. He voiced concerns with this                                                             
legislation,  particularly  the impact  it  would have  on  regular                                                             
maintenance operations, such as  snow removal. He detailed the high                                                             
cost of clearing  roads after a  heavy snowfall, which must  be bid                                                             
upon under the provisions of this  bill. He understood one incident                                                             
brought this issue to light, but  stressed that one incident should                                                             
not "dictate bad legislation".                                                                                                  
Senator  Cowdery  told of  research  indicating the  definition  of                                                             
maintenance  is "tighter"  in other  states, and  that many  states                                                             
categorize projects  costing less  than $50,000 as maintenance  and                                                             
those over $50,000  as construction. He asked if the  witness would                                                             
favor such definitions.                                                                                                         
Mr.  Valesko  did not,  because  snow removal  after  even  lighter                                                             
snowfall would require the bidding process. He stated that the time                                                             
involved with the bidding process would cause unnecessary delays in                                                             
clearing the roadways.                                                                                                          
Senator  Cowdery  asked  what information  the  witness  based  his                                                             
comments on.                                                                                                                    
Mr. Valesko  calculated the $200 daily  salary paid to  an operator                                                             
plus  the $200  daily  cost for  equipment,  multiplied  by the  30                                                             
operators working  five days per week  in the Anchorage area  to be                                                             
$60,000  per week.    He remarked  this  would place  snow  removal                                                             
services in the category of construction, which he disputed.                                                                    
JEFF ALLING,  Alcan Builders, and  Member, Associated Builders  and                                                             
Contractors of Alaska, testified via teleconference from Fairbanks,                                                             
in support of the bill. He agreed  this legislation was prompted by                                                             
an  incidence  of  abuse  committee   by the   prior  gubernatorial                                                             
administration.   He  expressed the  intent is not  to hamper  snow                                                             
removal efforts,  but rather  to prevent  the State from  competing                                                             
with private industry on large construction projects.                                                                           
Mr. Alling  told of bidding on  a University of Alaska  project and                                                             
the use of multipliers to simplify the process.                                                                                 
Mr. Alling  questioned the representation  by Mr. Valesko  of union                                                             
Senator Bunde  asked if the employees  of Alcan Builders  are union                                                             
Mr. Alling  replied they  are not, although  he stated the  company                                                             
engages  unionized subcontractors  and  they  "work together  quite                                                             
Senator Cowdery asked if most of  the private contractors pay Davis                                                             
Bacon Act wages to its employees.                                                                                               
Mr. Alling answered yes.                                                                                                        
Senator Taylor understood the presence of a systemic problem of the                                                             
distinction of the Department between construction and maintenance.                                                             
He  commented  that   in  British  Columbia,  Canada,   maintenance                                                             
operations  have  been  contracted   to  the  private  sector  with                                                             
significant  savings  realized.  He  suggested  the  definition  of                                                             
maintenance and construction should be given further consideration,                                                             
because  this  legislation  as  written,   could  result  in  "more                                                             
disservice than good."                                                                                                          
Senator B. Stevens asked if Mr.  Lavasseur has reviewed the handout                                                             
titled, "Air Force  Guide: Simplified Acquisition of  Base Engineer                                                             
Requirements (SABER)"  [copy on file]. He asked if  the information                                                             
contained in this report address preventive maintenance.                                                                        
Mr. Lavasseur  affirmed and explained  that due to permafrost  melt                                                             
the destruction of roads has increased  rapidly, and more resources                                                             
have been necessary to perform repairs.                                                                                         
Senator B. Stevens echoed Senator Taylor's assertion that the issue                                                             
is  based  on the  definitions  of  construction  and  maintenance.                                                             
Senator  B.  Stevens characterized  snow  removal  as  one type  of                                                             
maintenance,  yet  preventative  maintenance  is  more  a  type  of                                                             
Senator B. Stevens next questioned the zero fiscal note, citing the                                                             
second paragraph of the analysis, which reads as follows.                                                                       
     Since it is  not possible to determine which projects  will be                                                             
     considered for FAC [Force  Account Construction] over the next                                                             
     six years, we will base the projected savings on Calendar Year                                                             
     2002.  The estimated  savings on 2002  force account  projects                                                             
     (greater than $250,000) was $4,267,700. Assuming the amount of                                                             
     force  account projects  remains  constant over  the next  six                                                             
     years, the lost savings would total $25,606,200.                                                                           
Senator  B.  Stevens asked  if  expenses  would increase  over  $25                                                             
Mr. Lavasseur  replied it  would for the  period of time  indicated                                                             
[six  years]. He  elaborated  this would  be  due to  the costs  of                                                             
issuing   bid  packages,   engineering   design,  advertising   and                                                             
construction management.                                                                                                        
Senator B. Stevens indicated a  fiscal note to separate legislation                                                             
applying  to  FY  01  [bill  number  and  further  information  not                                                             
provided],  estimated savings  of  $120 million  utilizing a  force                                                             
account.  He cited  the analysis of the unspecified  fiscal note as                                                             
reading "Assuming the force account managed costs over the next six                                                             
years,  loss of savings  would  be a total  of $120  million."   He                                                             
requested reconciliation of the information of the two fiscal notes                                                             
and the aforementioned  Air Force  report. He suggested  the matter                                                             
could be discussed after this meeting concludes.                                                                                
Mr. Lavasseur agreed to explain the matter.                                                                                     
Senator B. Stevens noted the funding  has been accounted more often                                                             
as "one line item" and wanted to understand the reason.                                                                         
Mr. Lavasseur  indicated the majority  of the projects  in question                                                             
have been gravel-to-pavement.                                                                                                   
Co-Chair Wilken  asked the year  the federal government  ruled that                                                             
federal National Highway System funds could be used for maintenance                                                             
purposes as well as construction projects.                                                                                      
Mr. Lavasseur answered 1998.                                                                                                    
MARK O'BRIEN, Chief Contracts Officer, Contracting, Procurement and                                                             
Appeals, Office of  the Commissioner, Department of  Transportation                                                             
and Public Facilities, testified  via teleconference from an offnet                                                             
location that he could answer questions posed by Committee members.                                                             
Mr. O'Brien  addressed Senator B.  Stevens's queries regarding  the                                                             
fiscal notes, stating that the  differences reflect a change in how                                                             
the savings was calculated.  He explained, "there were  significant                                                             
savings factors back in 2000 that  resulted in estimates of savings                                                             
as high  as 55 and  60 percent."  He informed  that upon review  of                                                             
competitive  bids  and  "the  current  marketplace",   the  savings                                                             
estimates  have been  recalculated  to  20 to  25 percent  and  the                                                             
current fiscal note reflects a savings of 28 percent. He noted this                                                             
percentage  is based  on a  comparison  of Davis  Bacon Act  wages,                                                             
profit and construction engineering expenses.                                                                                   
Mr.  O'Brien  next spoke  to  the definitions  of  maintenance  and                                                             
construction  projects,  indicating  AS 19.45.001(2)  provides  the                                                             
definition  of construction  as  "?construction  or any  derivation                                                             
meaning 'construction,  reconstruction, alteration,  improvement or                                                             
major repair?'" and (10) provides the definition of maintenance. He                                                             
assured  this  legislation  would not  hamper  routine  maintenance                                                             
projects,  such  as snow  removal.  However,  he pointed  out  that                                                             
because the  construction definition  does not specifically  define                                                             
major repair,  uncertainty over  the classification of  resurfacing                                                             
projects would require the $250,000 provision.                                                                                  
Senator  Taylor  asked  how  the  matter   could  be  resolved.  He                                                             
questioned  the  imposition   of  an  "arbitrary  number"  and  the                                                             
situation  of  the  cost  of  a  project  exceeding   $250,000  and                                                             
automatically  becoming  a  major repair  that  is subject  to  the                                                             
bidding  process.   He  requested  further  clarification   of  the                                                             
definition of repair and major repair.                                                                                          
Mr. O'Brien ascertained  the definition of repair was  unrelated to                                                             
the  provisions of  this legislation,  surmising  that  maintenance                                                             
would  continue  to  be  categorized   as  repair  rather  than  as                                                             
construction  and  not  subject  to the  provisions  of  the  force                                                             
account, although he assured he would review the matter.                                                                        
Mr. O'Brien  agreed with earlier  testimony that most  construction                                                             
should  be  undertaken  through the  competitive  bid  process  and                                                             
informed that currently  97 percent of the work is  handled in this                                                             
manner. He noted that of the three percent of the work done through                                                             
the force account process, half is contracted by competitive sealed                                                             
bid. He  stressed that less  than one-half  percent of the  work is                                                             
therefore not undertaken through competitive bid.                                                                               
Mr. O'Brien reported  that community roads and boardwalk  projects,                                                             
which   require  considerable   maintenance   activity,  is   often                                                             
transferred from the Department  to the Bureau of Indian Affairs or                                                             
Indian Health  Agency undertaking  other projects  in the  area. He                                                             
stated  it is  often  in  the State's  best  interest  and is  cost                                                             
effective to do so, as the other agencies have staff, equipment and                                                             
materials on hand to perform the work. He noted this practice would                                                             
be prohibited under the provisions of this legislation.                                                                         
Senator Cowdery asked the dollar amount of the three percent of the                                                             
projects  not  currently  addressed  through  the  competitive  bid                                                             
Mr. O'Brien replied that $61 million was expended through the force                                                             
account during the years 1998 through 2002. During the same period,                                                             
he  continued,  the  entire  program  expended  $2,279,000,000.  He                                                             
calculated the  force account comprised  2.68 percent of  the total                                                             
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
Co-Chair Gary Wilken adjourned the meeting at 11:13 AM                                                                          

Document Name Date/Time Subjects