Legislature(2017 - 2018)SENATE FINANCE 532
02/22/2017 09:00 AM Senate FINANCE
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| Audio | Topic |
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| Presentation: Fy 18 Operating Budget - Department of Transportation and Public Facilities | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 22, 2017
9:01 a.m.
9:01:47 AM
CALL TO ORDER
Co-Chair Hoffman called the Senate Finance Committee
meeting to order at 9:01 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Mike Dunleavy
Senator Peter Micciche
Senator Donny Olson
Senator Natasha von Imhof
MEMBERS ABSENT
None
ALSO PRESENT
Mark Luiken, Commissioner, Department of Transportation and
Public Facilities; Senator Mia Costello; Amanda Holland,
Administrative Services Director, Department of
Transportation and Public Facilities.
PRESENT VIA TELECONFERENCE
SUMMARY
PRESENTATION: FY 18 OPERATING BUDGET - DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES
Co-Chair Hoffman relayed that this would be the last
overview from one of the four major cost drivers in the
state's operating budget. He hoped that each of the four
could cut their budget a nickel on the dollar in their
departmental budgets. He lamented that the state was in
financial crisis and that the senate was revisiting budgets
that had remained at the status quo for further cuts.
^PRESENTATION: FY 18 OPERATING BUDGET - DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES
9:03:15 AM
MARK LUIKEN, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND
PUBLIC FACILITIES (DOT), discussed the presentation "Alaska
Department of Transportation and Public Facilities -
Department Overview" (copy on file). He presented Slide 2,
"Transportation & Public Facilities - Keep Alaska Moving
through service and infrastructure":
The Department of Transportation & Public Facilities
is responsible for providing these core services:
• Preserve Alaska's Transportation Infrastructure
• Operate Alaska's Transportation Infrastructure
• Modernize Alaska's Transportation Infrastructure
• Provide Transportation Services
Sources:
Department Home: dot.alaska.gov
Strategic Plan:
dot.alaska.gov/comm/strategic_plan.shtml
Department Fact Sheet:
dot.alaska.gov/comm/legislative/docs/FactSheet.pdf
Commissioner Luiken relayed that the mission of the
department was to keep Alaska moving through service and
infrastructure. Per AS 44.42, the department is responsible
for planning, research, design, construction, operation,
maintenance, and protection of all state transportation
systems and many public facilities. He said that the
mission was achieved through the core services and
strategic approach known as "results based alignment":
· Preserve: extends the life of existing
infrastructure; surface preservation and bridge
preservation
· Operate: allowed movement on existing
infrastructure; snow and ice removal, illumination
· Modernize: updated infrastructure to meet modern
standards and capacity; plan, design, construct
· Provide: encompassed the services the department
provides to move people and goods; ferry system and
international airport system
Commissioner Luiken noted that the department had shifted
from a regional, or modal, orientation to a service
orientation.
9:05:14 AM
Commissioner Luiken showed Slide 3, "Our DOT&PF People:
Alaskans Serving Alaska":
Joshua McGrath
Vessel Captain, Alaska Marine Highway System
• California Maritime Academy graduate
• Responsible for all shipboard activities and safe
navigation of the vessel
• Received the department's recognition award for
Leadership in 2014
• Captain McGrath donates his time by volunteering for
Mercy Ships, the world's largest civilian hospital
ship
Vanessa Musich
Project Engineer, Northern Region Construction, Nome
• University of Notre Dame graduate
• Manage Western Alaska projects - Shishmaref Airport
Resurfacing
• Rural Alaska depends on safe and functional
infrastructure, especially airports, for access and
transportation of goods
• Exemplifies DOT&PF core values - open, respectful
communicator
Commissioner Luiken emphasized that DOT was not a
bureaucratic organization.
9:06:01 AM
Commissioner Luiken turned to Slide 4, "Who is DOT&PF?"
Over $7.5 Billion in infrastructure asset value under
DOT&PF responsibility, consisting of:
• Roads, highways and bridges
• DOT&PF staffed maintenance stations
• Rural Airports
• International Airports
• Ferries
• Ferry Terminals
• Ports and harbors
• Public facilities
• State equipment and vehicles
• Weigh Stations
• Anderson Memorial Tunnel
DOT&PF consists of approximately 3,662 permanent
fulltime, parttime and nonpermanent employees in 8
labor unions in 85 locations throughout the state.
Commissioner Luiken relayed that DOT maintained 242 state
owned and operated airports, 822 bridges, and 731 public
facilities - occupied by 17 different agencies.
9:06:38 AM
Commissioner Luiken displayed Slide 5, "Who is DOT&PF?":
Regions
• Northern
• Central
• Southcoast
Systems
• Alaska Marine Highway
• Alaska International Airports
Statewide functions
Commissioner Luiken related that the department had 3
regions and 2 systems that encompassed a variety of
transportation modes: airports, roads, and the ferry
system. He noted that statewide functions included services
such as: administrative services, program development,
planning, measurements and standards, and commercial
vehicle enforcement.
9:07:01 AM
Commissioner Luiken discussed Slide 6, "One DOT&PF":
· Leaders at all levels influence effectiveness and
efficiency
· Fosters communication and sharing of best
practices up, down, and across a vast
geographically diverse organization
· Those closest to front line delivery often have
the best ideas
· Unites department through Trust, Teamwork, and
Results
Commissioner Luiken elaborated that his team embraced the
guiding principles of public service, core values, mission
focus, solutions oriented teamwork, and transparent and
proactive communications. He explained that "One DOT&PF"
was a strategic framework from which standardized policies,
procedures, and delivery of services were ensured. Best
practices were used to provide the most efficient system
possible, while supporting the departments second
initiative of results based alignment.
9:07:39 AM
Commissioner Luiken reviewed Slide 7, "Transportation &
Public Facilities - Results Based Alignment: Core
Services":
PRESERVE ALASKA'S TRANSPORTATION INFRASTRUCTURE
Preserve extends the life of existing infrastructure
OPERATE ALASKA'S TRANSPORTATION INFRASTRUCTURE
Operate allows movement on existing infrastructure
MODERNIZE ALASKA'S TRANSPORTATION INFRASTRUCTURE
Modernize updates infrastructure to meet modern
standards and capacity
PROVIDE TRANSPORTATION SERVICES
Services provided to move people and goods
Commissioner Luiken explained that results based alignment
was the service delivery framework from which the
contribution of the department's services, delivered in
support of the mission, were measured. The four core
services linked the work of the department to its statutory
and regulatory requirements. He shared that results based
alignment had started 18 months ago after being introduced
to the legislature in 2016. He said that since its
inception the department had involved over 200 employees in
refining core services, developing direct services to
support core services, and defining the measures that
support core services.
9:08:18 AM
Commissioner Luiken presented Slide 8, "Results Based
Alignment: Direct Services":
PRESERVE ALASKA'S TRANSPORTATION INFRASTRUCTURE
· OffSurface Preservation
· Surface Preservation
· Vehicle Management
· Bridge Preservation
· Vessel/Terminal Preservation
OPERATE ALASKA'S TRANSPORTATION INFRASTRUCTURE
· Illumination
· Signals
· Snow & Ice Removal Signage
· Striping
· Operate Certificated Airports
MODERNIZE ALASKA'S TRANSPORTATION INFRASTRUCTURE
· Plan Infrastructure
· Design/Engineer
· Construct
PROVIDE TRANSPORTATION SERVICES
· Manage Ferry Reservation System
· Operating Ferry Terminals
· Operating Ferries on Routes
· Retain and Expand Business
· Transit
Commissioner Luiken stated that he had relied on employees
within the department to define the direct services and
then to develop performance measures related to each direct
service. He highlighted the direct service of providing
transportation services. He said that the department's 2017
operating budget had been aligned to the core and direct
services.
9:09:05 AM
Commissioner Luiken showed Slide 9, "Budget Breakout by
Core Service," which showed a pie chart separating the FY
17 operating budget by identified core services. He said
that the slide contained the total operating budget and
included all fund sources. He noted that 6.7 percent of the
budget had been assigned to "other services", which
primarily represent the services DOT provided supporting
other state agencies.
9:09:46 AM
Commissioner Luiken turned to Slide 10, "Example:
Budget/Core Service Alignment (FY2017 Management Plan),"
which showed a pie chart depicting how DOT planned to
depict their operating budget into the future. The slide
reflected DOTs operate core service portion of the 2017
operating budget and depicted the components that performed
the duties in support of the core services. He noted that
the size of the slice of pie was proportionate its amount
of the core service budget.
9:10:27 AM
Co-Chair Hoffman asked if the previous slide (Slide 9)
included all funds.
Commissioner Luiken answered in the affirmative.
Co-Chair Hoffman asked whether the commissioner to provide
a budget breakdown of only general fund dollars.
Commissioner Luiken replied that there would be a slide
with the information later in the slide deck.
9:11:22 AM
Commissioner Luiken displayed Slide 11, "Example: Direct
Service Level," which showed a flow chart detailing the
operating budget of the "operate" expenses of the direct
services. He noted that the right side of the slide listed
the direct services provided under the core service; the
left side of the slide provided an expanded breakdown of
the direct service of snow and ice removal. He relayed that
the department spent approximately $77,997.4 million across
the state per year for snow and ice removal. The pie chart
also showed which components performed snow and ice removal
functions, as well as their proportionate slice of the pie.
He pointed to the 385 positions dedicated to the service.
He mentioned that on the far left of the slide was the
effectiveness and efficiency measure tied to the service.
He said that each direct service had at least one
efficiency and one effectiveness measure. He stated that
the alignment of function to core service allowed the
department to report more accurately what was being
accomplished and measured accountability.
Co-Chair Hoffman asked whether DOT could provide the
committee of a detailed breakdown of each pie chart on the
slide.
Commissioner Luiken agreed to provide the information.
9:14:20 AM
Co-Chair MacKinnon referred to a question submitted to the
department by her office concerning how road service areas
managed inside of municipalities. She relayed that the
state had entered into several agreements with
municipalities where the responsibility was transferred to
local communities. She revealed that she had received
feedback that local communities had been able to get the
job done for less than the cost had been to the state. She
wondered whether there were more municipal, or private
sector companies, that could provide the service for a
lower price than the state.
Commissioner Luiken relayed that DOT was gathering the
analysis and would provide the comparison of cost per road
mile.
Co-Chair Hoffman asked whether the information could be
provided to the committee in time to inform decisions to be
made during the current legislative session.
Commissioner Luiken replied that getting communities to
take over the service areas was the biggest hurdle.
Co-Chair Hoffman disagreed. He believed that larger
communities in the state would be responsive to the
request.
Commissioner Luiken was certain that legislative intent
would be helpful.
9:17:03 AM
Co-Chair MacKinnon relayed that Eagle River had actively
pursued a relationship with the state to take over road
maintenance operations. She said that she had preliminary
numbers from both the state and the municipality that
reflected that the state's cost for services was higher
that the municipality.
9:18:35 AM
Senator Micciche said he had visited the topic when he held
the office of mayor. He wondered whether DOT was
considering an evaluation of a comprehensive plan for the
most efficient delivery of the service. He thought that a
formal evaluation of each community could help deliver
savings.
Commissioner Luiken knew that the practice took place in
the Municipality of Anchorage, and that responsibility
agreements had been transferred. He asserted that DOT was
constantly trying to find the most efficient delivery of
the service. He said that the department worked to share
best practices with municipalities. He noted that some
municipalities had different road power laws, which was a
complicating factor. He stressed that DOT would be happy to
work with municipalities on the matter. He agreed that
local municipalities had the best ability to operate and
maintain their infrastructure.
9:20:57 AM
Senator Micciche reiterated his desire for a comprehensive
statewide plan. He felt that a creative approach was
necessary in the current fiscal climate.
9:21:51 AM
Vice-Chair Bishop agreed that everyone at the table was
working to more efficiently provide services. He relayed
that his priority was the safety of the traveling public.
He concurred with previous statements that municipalities
could become responsible for snow and ice removal in their
communities.
9:22:55 AM
Senator von Imhof asked whether there was a way to identify
the barriers prohibiting the department form being
efficient within various municipalities around the state.
She felt that the legislature could address and remove any
barriers to efficiency. She wondered whether, in response
to the fiscal crisis, the department was decreasing all
services across the board, or prioritizing certain services
and holding them harmless.
Commissioner Luiken relayed that the department had tried
to apply budget cuts equally across services. He reiterated
that the safety of the traveling public was the
department's priority. He noted that, while overtime had
been decreased in the winter months, it had not been
eliminated. He asserted that conditions on roads would be
addressed to ensure the safety of the public. He shared
that funds that were set out in the budget for other
activities could be used if necessary.
9:25:08 AM
Commissioner Luiken noted that the effectiveness measure on
Slide 11, had referenced road priority levels, the
definitions of which were on Slide 12, "Results Based
Alignment - Consistent Levels of Service":
Roadway Priorities and Performance Targets
Priority 1
High volume, high-speed roadways, such as expressways
and safety corridors
Priority 2
Major highways and arterials connecting communities
Priority 3
Major local roads or collector roads
Priority 4
Minor local roads that primarily provide residential
or recreational access
Priority 5
Roadways that are designated as "No Winter
Maintenance" routes, such as Denali Highway and Taylor
Highway
Commissioner Luiken noted that Winter Performance Targets
did not include Priority 5 roads.
9:26:46 AM
Commissioner Luiken reviewed Slide 13, "Sample Performance
Data - Highway Winter Performance Targets":
Percentage of times Target Condition was achieved
within time goal: 96.6 percent
Average precipitation per event in inches: Southcoast,
10.0; Central, 5.2; Northern, 4.4
Time to restore roads to Target Conditions:
Priority 1
Time Goal: 24 hours
Average: 9:59 hours
Priority 2
Time Goal: 36 hours
Average: 13:06 hours
Priority 3
Time Goal: 48 hours
Average: 19:16 hours
Priority 4
Time Goal: 96 hours
Average: 31.25 hours
Commissioner Luiken shared that the department's website
provided an interactive map that could provide screenshots
that the public could access to determine their road
priority level. He pointed to the example screenshots on
the bottom of Slide 13.
9:27:50 AM
Co-Chair MacKinnon believed that DOT was committed to the
safety of Alaska's public. She wondered whether safety
should be considered as a performance measure. She spoke to
winter road conditions on the Glenn Highway, and shared
that the road was unsafe due to ruts. She thought that the
ruts increased accident rates. She asked whether there were
additional criteria for performance measures other than
snow clearing.
9:29:46 AM
Commissioner Luiken stated that DOT did have other
performance targets, but was unsure if there was one
specifically for rutting. He discussed the high volume of
traffic on the Glenn Highway, and relayed that the road was
cleared to the surface the best possible condition. He said
that the highway would be resurfaced in summer 2017, from
Airport Heights Road to Highland road, which should solve
the rut problem for a few years.
Co-Chair MacKinnon asked whether DOT had a performance
measure based on the safety of the road. She appreciated
that the ruts were going to be addressed, but she worried
about the damage that could be done to vehicles and the
subsequent rise in individual car insurance rates. She
asked whether there was a performance measure for anything
to improve the safety of the roadways in high-priority
areas.
Commissioner Luiken believed that the identification of
safety corridors spoke to the issue of performance measures
for safety. He relayed the Glenn Highway was one of those
corridors and received more attention than other
thoroughfares.
9:32:03 AM
Co-Chair MacKinnon asked whether sand was being put on the
Glenn Highway despite the ruts in the road. She reiterated
her concern for the safety of the drives on the Glenn
Highway.
Commissioner Luiken stated that DOT addressed each road
based on the weather forecast, temperatures, and expected
precipitation. He believed that the Glenn Highway had been
sanded before the snowfall of the previous weekend.
Co-Chair Hoffman asked whether rutted roads had different
sanding requirements than other roads.
Commissioner Luiken reiterated that all roads were treated
based on their road priority. He said that the use of
chemicals, or sand, was dependent upon precipitation,
temperature, and the current condition of the road.
Co-Chair Hoffman asked if there was priority for sanding
rutted roads. He asserted that rutted roads caused more
roll-overs than roads without ruts.
Commissioner Luiken said that he would consider the matter.
He reiterated that roads were addressed based on the
priority system on Slide 11.
9:34:16 AM
Senator Micciche queried the department's process for
clearing roads to surface condition A, as shown on Slide
13.
Commissioner Luiken reiterated that Priority Level 1 roads
were expected to be cleared to surface condition A after a
weather event. He noted that there were mitigating factors
such as volume of traffic and safety corridor designation
that would increase the priority level of the road. He said
that DOT was constantly checking forecasts and current
weather conditions, and making decisions about application
of chemicals or sand based on that information. He stressed
that the department could not instantaneously address all
roads simultaneously.
9:36:49 AM
Senator Micciche asked whether DOT applied a special focus
to area that traditionally had different weather exposure
than the remainder of the road system.
Commissioner Luiken replied that the priority level of the
road would determine when the department would address
certain sections of road. He understood that it was not a
perfect system, but he believed that the results based
alignment would help DOT identify areas where additional
work needed to be done. He explained that different ways to
deploy forces could be determined by measuring, and
continually examining, the way that services were
delivered.
9:39:07 AM
Senator Micciche felt that DOT was lacking in the
understanding of road conditions at the local level.
Commissioner Luiken related that the department had
instituted a framework that would allow for the measurement
of employee performance, with the goal of improving
performance in a meaningful way. He stressed that the goal
was to provide the safest possible transportation system in
the most efficient and effective way possible.
9:40:54 AM
Vice-Chair Bishop spoke to the ruts on the Glenn Highway.
He wondered how many tons of sand had been put on the road
in the last few weeks. He hoped more sand could be applied.
9:41:37 AM
Senator Dunleavy discussed the Portage Road and tunnel. He
said that he had driven the Glenn and Seward Highways over
the weekend and had witnessed many flipped cars. He asked
whether plow operators had the authority to dump sand where
they thought necessary, or where dump areas and amounts
predetermined.
Commissioner Luiken responded that the new system was
allowing the department to give operators the opportunity
and discretion to make those decisions. He added that
operators shared information in the hopes of continually
improving the system. He described a way this had been
helpful in Fairbanks. He believed that the power of using
the results based alignment measures was the ability to
share successes, and failures, to create a more efficient
way to address the system.
9:44:39 AM
Senator von Imhof thought that it would be helpful to look
at the measurements in each priority corridor over time,
and how the department had responded to issues from year-
to-year.
Commissioner Luiken relayed that the data was being
collected for the first time in 2017, and would take time
to process. He reminded the committee that DOT had
predicted differences in the department's ability to
respond to heavy snowfall based on the 24 percent cut in
their operating budget over the past two years. He argued
that no organization could absorb a cut that substantial
without noticing a hinderance in operations.
9:47:21 AM
Commissioner Luiken pointed out to the committee that the
department had successfully removed snow from roads in 2017
despite fiscal challenges.
9:48:27 AM
AMANDA HOLLAND, ADMINISTRATIVE SERVICES DIRECTOR,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, showed
Slide 14, "Kaizen - Project Control". The slide showed the
results of a recent Kaizen event for the project control
process of the department, and compared the current process
to the future process, reflecting improvement after
applying Kaizen.
Ms. Holland explained that in addition to measuring
performance through results based alignment, the department
had been analyzing ways to streamline business processes;
Kaizen was the practice of continuous improvement, evolving
from total quality management and was recognized worldwide
as an effective way to eliminate waste and rework. She
related that Kaizen was a lean tool that improved quality,
productivity, safety, and workplace efficiency. She said
that the state had begun using Kaizen to improve functions
and eliminate work processes that were overly difficult.
She asserted that the department was committed to
continuous improvement and increased effectiveness, and
believed that the Kaizen event would help to optimize
resources, including personnel, equipment, assets, and the
budget.
9:50:43 AM
Ms. Holland turned to slide 15, "FY2018 Governor's Proposed
- Operating Budget: Results Delivery Units (RDU)," which
showed a pie chart for 'All Funds,' and a pie chart for
'Unrestricted General Funds.' She detailed that the total
operating budget for FY 18 was $581,260.5, and the
unrestricted general fund (UGF) budget was $145,691.4.
Co-Chair MacKinnon appreciated the new approach by the
department. She worried that the Alaska Marine Highway
System was subsidized by nearly 60 percent UGF, while
benefitting a small percentage of the state's population.
9:54:06 AM
Commissioner Luiken related that the marine highway system
contribution from the UGF represented a cut to the system
and the amount of funding needed to sail the schedule
published for the public. He said that revealed that the
department had assured the Alaskans that depended on the
system that the published schedule would be honored. He
lamented that one of the challenges with the system was
that a schedule had to be published before a budget was in
place.
Co-Chair MacKinnon argued that Alaskan's dependency on the
system was being subsidized at $.60 on the dollar, which
created an unfair business practice. She contended that the
state did not have the funds to continue to subsidize the
system at that rate. She stressed that a limited group of
people benefitted from and depended on the marine highway,
and that there were other methods of transportation
available to most of the routes services by the system. She
felt that communities were actively choosing not to build
roads, which she felt would reduce the states contribution
to the system. She assessed that $51 million was moving 90
percent of the population, while $85 million was moving 10
percent. She expounded on the reasons why the Alaska Marine
Highway System was too expensive for the state to maintain.
9:58:36 AM
Commissioner Luiken responded that the department had laid
up 2 vessels in the fleet, one of which was for sale. He
added that the crews that ran those 2 vessels had been
placed on lay-off. He shared that operating weeks of
service for other vessels had been reduced from 178 to 133
operating weeks of service. He believed that these actions
demonstrated the realization that the system was expensive,
and a commitment to reducing operating costs. He pointed
out to the committee that Highways and Aviation were
intended to receive a larger portion of the total operating
budget, included UGF and designated general funds through
the Alaska Transportation Maintenance Fund.
Co-Chair MacKinnon appreciated the efforts, but felt that
they were small in relation to the deficit faced by the
state. She reiterated that more people traveled on roads
than by ferry, and that the spending should be equal. She
asked whether the 24 percent cut the department had faced
in its budget was for capital and operating, or operating
only, and was it spread evenly across all services provided
by DOT.
10:01:46 AM
Commissioner Luiken detailed that there had been a 24
percent cut to the operating budget, the marine highway
system had received the largest cut to their budget.
Ms. Holland said that a forthcoming slide would show the
UGF reductions experienced by the department in the past 5
years and how they affected each division's budget.
10:02:58 AM
Co-Chair MacKinnon asked whether Commissioner Luiken could
tell how much freight was moved on the ferry system,
compared to people. She wanted to know the number one
vendor using the system to ship freight because she
believed the state was subsidizing the shipping.
Commissioner Luiken responded that he did not have exact
numbers on hand. He shared that the freight that was moved
consisted primarily of groceries, which were delivered to
rural communities; additionally, the system delivered goods
and services to communities that many Alaskans on the road
system easily enjoyed. He agreed to provide specifics as to
exactly how much freight was moved and by who.
Co-Chair MacKinnon offered an anecdote of her experience
seeing heavy equipment being moved, via the ferry, by
private contractors. She understood that it was less
expensive to ship some things on the ferry, rather than by
barge.
Commissioner Luiken agreed again to provide more detail on
the shipping matter.
10:05:12 AM
Senator von Imhof asked whether DOT had examined shorter,
more direct ferry routes that could be serviced by private
vessels.
Commissioner Luiken stated that the Southeast Conference
was leading a study to investigate the entire system and
alternative governance models for the system.
10:06:16 AM
Ms. Holland displayed Slide 16, "FY2018 Governor's Proposed
Operating Budget: All Funding Sources," which showed the
breakdown of each fund category by fund source. She pointed
to the two pie charts in the upper right corner, which
compared the FY 17 management plan breakdown to the FY 18
proposed breakdown. She stated that the largest change in
the distribution of fund categories was UGF and DGF, which
was related to the governor's fuel tax bill and the Alaska
Transportation Maintenance Fund. She said that the fund
would provide a direct link between fee for service. She
relayed that the bubble chart portion of the slide showed
the fund sources that made up each fund category; the size
of the bubble demonstrated the proportionate amount of the
fund category. She noted that many of the "other" fund
sources had restrictions tied to them in terms of how they
could be used in the department.
Co-Chair MacKinnon requested further information of the
Alaska Transportation Maintenance Fund and the Marine
Highway System Fund. She felt that some balls on the bubble
chart had been made smaller than they should be.
Ms. Holland explained that the DGF was the proposal for
motor fuel tax, aviation fuel tax, and marine fuel tax for
composing the Alaska Transportation Maintenance Fund. She
said that the motor fuel tax would result in $62.4 million,
and would fund the highways and aviation facilities
component. She said an additional $4 million of aviation
fuel tax would fund the aviation portion of airport
operations.
10:09:33 AM
Co-Chair MacKinnon requested a breakdown of how much the
AMHS would contribute to the transportation fund. and
whether the funds would be a highway fund - or a marine and
highway fund.
Ms. Holland stated that 50 percent of the motor fuel tax
that entered the fund would be marine fuel taxes. She said
that $2.5 million of the total transportation maintenance
fund would be allocated for the AMHS, the remainder would
go to highways and aviation.
Co-Chair Hoffman understood that the transportation fund
money would supplant general fund dollars.
Ms. Holland answered in the affirmative.
Co-Chair Hoffman asked whether there had been consideration
to address the problem of using a portion of those dollars
to subcontract out to local municipalities to address snow
removal.
Commissioner Luiken stated that the idea was to create a
direct link between what was paid at the pump, and where
the dollars were spent for road preservation and operation,
which included snow removal. He said that regular general
funds would be supplanted with the designated general
funds. He said that at the time the fund and distribution
were created there had not been a consideration of revenue
sharing with the various municipalities for their road
maintenance.
10:11:43 AM
Co-Chair Hoffman asserted that the scenario could not be
called revenue sharing, but rather providing services at
the local level. He said that municipalities would be
reimbursed for services rendered and would not be viewed as
revenue sharing.
Co-Chair MacKinnon clarified that the numbers on Slide 16
were current, or did they rely on the passage of the
governor's budget.
Ms. Holland stipulated that the numbers were considered
with the passage of the bill. She relayed that
approximately $40 million had been collected for 2017, with
the current fuel tax.
10:13:03 AM
Senator Dunleavy asked whether the marine highway was
exempt from the proposed fuel tax.
Commissioner Luiken replied that the marine highway system
did not currently pay the motor fuel tax and would continue
to be exempt.
Senator Micciche referred to Slide 16, and offered his
understanding that the reduction of UGF proportion and the
increase in the DGF was illustrative of the passage of the
fuel tax bill that was being considered this legislative
session.
Commissioner Luiken replied in the affirmative.
10:13:59 AM
Ms. Holland discussed Slide 17, "FY2013-FY2018 Governor's
Proposed - Unrestricted General Fund by RDU," which
depicted a five-year retrospective of UGF in the operating
budget, and showed the FY 18 governor's proposed UGF
budget. She shared that that amount of UGF in the
department's operating budget had steadily declined over
all results delivery units. She said that FY 18 reflected
the funds source change from UGF to the Alaska
Transportation Maintenance Fund. He pointed to the blue
section of the bars, which represented administration and
report, often associated with overhead and process costs.
She said that the administration and support deliver unit
results represented 5 percent of the total UGF portion for
the budget; 95 percent of the UGF portion of the budget
provided core services to Alaskans. She pointed out to the
committee the green section of the bars, which reflected
the cuts to the AMHS, and had decreased from $118 million
in 2015 to $85 million in 2017. She said that the highways
and aviation function reflected the fund source change from
UGF to DGF in FY 18.
Co-Chair Hoffman thought that funding for highways and
aviation had dropped disproportionately to the amount being
spent on the AMHS.
10:16:03 AM
Senator Micciche understood that the AMHS did not have the
advantage of federal matching funds.
Commissioner Luiken stated that the marine highway system
was considered as part of the highway system by the federal
government. He said that if there was a capital project
related to the AMHS, then it would benefit from the same
federal match enjoyed by the highway and aviation systems.
Senator Micciche stressed that the committee wanted to see
a downward trend in the spending for the AMHS. He argued
that costs were being reduced for every service in the
state and to maintain safety standards on highways, which
served 100 percent of Alaskans, there needed to be a shift
in spending. He thought that the stability of the funding
for AMHS was unfortunate.
10:20:00 AM
Vice-Chair Bishop referred to Governor Bill Egan's 1964
transportation plan, which had the goal of connecting more
communities by road. He expressed support for the Juneau
Access Road Project.
10:21:02 AM
Co-Chair MacKinnon understood that two new ferries were
currently being build that would need to be staffed. She
wondered how much the service increase was going to cost
the state.
Commissioner Luiken believed that the intent of the two new
day boats being built was to supplant the service in Lynn
Canal, and would ultimately replace the vessels currently
working in Lynn Canal. He said that the entire fleet was
being scrutinized to determine whether all the vessels
would be needed once the two new ferries came online.
10:23:01 AM
Ms. Holland reviewed Slide 18, "FY2018 Governor's Proposed
Operating Budget Changes":
Increases
· International Airport System increases for
maintenance and security contracts, deicing
chemicals, safety
· supplies, feasibility study (OTI) and records
management (Intl Airport Fund Receipts) $2,590.8
· Authority for Facilities Maintenance and Operations
(Interagency Receipt Authority) $286.8
Total $2,877.6
OneTime Items
· Reverse OneTime Appropriation of Alaska Marine
Highway System Funds ($2,000.0)
Organizational Changes
· Dissolution of Knik Arm Crossing Component ($736.4)
Salary Adjustments
· Salary and Health Insurance Increases $4,037.8
· Supervisory Unit 15 Hour Furlough Contract Term
Reduction ($171.4)
$3,866.4
Reductions
· AMHS Service Level Reductions ($2,501.4)
· Savings from Shared Services of Alaska
Implementation ($271.7)
· Delete unrealizable receipt authority ($179.2)
Total ($2,952.3)
Position Count Reductions
· Delete 76 Federal Program Positions & Partial
Funding ($4,553.3)
· Delete 12 Vacant Positions & Partial Funding
($529.3)
Total ($5,082.6)
Agency Transfers
· Transfer PCN from Alaska Court System for
Maintenance of Court Facilities
· Transfer 35 PCNs to Dept. of Administration for
Shared Services of Alaska Implementation
Fund Source Swaps
· Maintain Existing Programs With Capital Improvement
Project Receipt Authority $1,131.1
· Maintain Existing Programs With Rural Airport
Receipts $1,499.9
· Replace General Fund with Aviation Fuel Tax Funds
$4,512.3
· Replace General Fund with Motor Fuel Tax Funds
$64,821.0
· Replace General Fund Program Receipts with Rural
Airport Receipts $12.7
Total $71,977.0
(funding in thousands)
10:24:27 AM
Co-Chair MacKinnon asked whether the reversal of the one-
time appropriation for $2 million for the AMHS was savings
from shared services.
Ms. Holland specified that the one-time item was a one-time
appropriation to the marine highway for $2 million. She
said that the budget for AMHS was $2 million less in 2018.
She noted that the positions transferring to the Department
of Administration would result in a 10 percent savings for
the listed positions.
Co-Chair MacKinnon understood that the 10 percent equated
to $271.7 of savings to the state.
Ms. Holland answered in the affirmative. She reiterated
that the initial savings would be 10 percent, and that the
goal of shared services was that as the back-office
functions were absorbed into the shared services office,
additional savings could reach as high as 30 percent.
Co-Chair MacKinnon stated that Senator Dunleavy's
administrative service review had reflected a reduction of
50 percent overall and out into the future. She wondered
whether the department predicted similar numbers.
Ms. Holland replied that the department anticipated a 30
percent decrease in 2019.
10:26:45 AM
Senator Olson asked about the exemption for international
aviation carriers from the fuel tax. He wondered whether
the administration had discussed reversing the exemption in
order to bring in additional revenues.
Commissioner Luiken answered in the negative. He said that
the fuel for international fights was sold in a foreign
trade zone and was not purchased in Alaska.
Senator Olson asked whether the administration would
support a proposal to reverse the exemption.
Commissioner Luiken said that the economic impact would
need to be studied before he could answer the question.
10:28:41 AM
Ms. Holland presented Slide 19, "FY2018 Proposed
Reductions":
Administration & Support RDU
• Position Reduction5 (3 PFT; 2 NP)
• Deletion of unrealizable receipt authority $179.2
Design & Construction RDU
• Position Reduction71 (31 PFT; 11 PPT; 29 NP)
• Dissolution of Knik Arm Crossing Component
• Position Reduction 6 PFT
State Equipment Fleet RDU
• Position Reduction (5 PFT)
Highways & Aviation RDU
• Position Reduction4 (1 PFT; 1 PPT; 2 NP)
International Airport System RDU
• Position Reduction (2 PFT)
Shared Services of Alaska Implementation
• Transferred 35 PCNs to Dept. of Administration
• $271.7 reduction
Marine Highway System RDU
• ($2,501.4) UGF
• ($482.5) AMHS Funds
• Position Reduction (119 PFT; 24 PPT, 35 NP)
• Reduce operating weeks by 1.2 weeks
• Reduction in annual vessel operating weeks from
335.1 to 333.9
• The Taku and Chenega are not scheduled to operate at
all in FY2018
• Bellingham and Prince Rupert will receive service on
alternating weeks for 7.5 weeks from January
2nd through February 21st while the Kennicott is in
her annual overhaul project
• No major service gaps compared to FY2017
• Service levels are approximately equal to FY2003
levels
• Reverse OneTime Appropriation of Alaska Marine
Highway System Funds ($2,000.0)
Ms. Holland noted that 35 PCNs would be transferred to the
shared services of Alaska, 34 of which would focus on
travel and expense and accounts payable, 1 would be the
CIO. She said the two vessels from the AMHS had been docked
and de-crewed, and 177 positions had been eliminated from
the division.
Co-Chair Hoffman asked about the future of the two vessels.
Ms. Holland relayed that the M/V Taku would be put up for
public sale, while the M/V Chenega's status was still under
evaluation.
10:30:14 AM
Commissioner Luiken showed Slide 20, "Capital Program
Optimization":
ENDSTATE: a DOT&PF team with the core competencies
necessary to ensure all program work meets current
quality standards and federal regulatory requirements
in the most effective and efficient manner possible.
Commissioner Luiken assured the committee that the
department would demonstrate to investors, stakeholders,
and customers that all funding was being well stewarded.
10:30:43 AM
Commissioner Luiken turned to Slide 21, "Commitment to:":
• Honor Collective Bargaining Agreements
• Respect DOT&PF employees
• Ensure the end state is sustainable
• No negative impact to our federal program
• Account for potential infusion of stimulustype
federal $$
10:31:31 AM
Commissioner Luiken displayed Slide 22, "Upcoming Action":
Focused Position Management:
No layoffs in FY2018
Feasibility Study / Capital Program
Process / Organizational Review:
Report Fall 2017
Innovation:
Northern Region Project Delivery
Pilot - Currently in Process
Commissioner Luiken stressed that the department was
working to advance a culture of continuous improvement.
10:32:07 AM
Commissioner Luiken discussed slide 23, "What to Expect":
FY2018
• Governor's Amended is DOT&PF's mission for FY2018
• Feasibility Study Final Report in Fall 2017
FY2019
• Study Final Report considered during budget
development
• Prepare for 2018 Legislative Session
10:32:24 AM
Co-Chair MacKinnon wondered whether numbers could be run
that would reflect budget cuts that had not yet been
considered, specific to the AMHS.
10:33:07 AM
Vice-Chair Bishop suggested that the committee might not be
in alignment with the department concerning the design
privatization section on Slide 19. He hoped for further
discussion.
10:33:41 AM
Senator Micciche asked for the total reduction in annual
vessel operating weeks from 2015 to the present. He noted
that Slide 19 reflected a less than one-third of one
percent of a reduction in the FY 18 budget. He felt that
this illustrated the proportional imbalance between
aviation and highways, and the AMHS.
Senator Olson understood that the department faced
challenges at the state and the federal level. He felt that
safety should be the priority.
10:35:39 AM
Senator Dunleavy said that transportation, public safety,
and education were the top issues on the minds of Alaskans.
He lamented that the state currently did not have the tax
revenue to support all the services and programs Alaskans
had enjoyed in the past. He understood that downsizing
could be painful, and he noted that what the department had
already accomplished was greatly appreciated. He expressed
confidence that the budget would bounce back within the
next couple of years. He thought that at that point
transportation would be a significant component of the
growth of the private sector.
Co-Chair Hoffman commented that airports were crucial in
rural Alaska. He felt that the department had done well in
operating and maintaining airports. He countered that there
was always room for improvement. He relayed that the
committee believed that there were more areas of the DOT
budget where savings could be realized. He reiterated the
committee's desire that all departments cut "a nickel on
the dollar" from their FY 18 budgets.
10:38:29 AM
Commissioner Luiken thanked the committee for its comments,
and that the department looked forward to working with the
committee.
Co-Chair Hoffman relayed that the department's subcommittee
would be chaired by Vice-Chair Bishop.
ADJOURNMENT
10:39:20 AM
The meeting was adjourned at 10:39 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 022217 DOT&WD SFC Overview.pdf |
SFIN 2/22/2017 9:00:00 AM |
Operating Budget FY18 |
| 022217 DOT&PF Operating Budget Pie Charts.pdf |
SFIN 2/22/2017 9:00:00 AM |
Operating Budget FY18 |