Legislature(2025 - 2026)SENATE FINANCE 532
02/25/2025 09:00 AM Senate FINANCE
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| Presentation: Department of Transportation and Public Facilities | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
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SENATE FINANCE COMMITTEE
February 25, 2025
9:00 a.m.
9:00:41 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:00 a.m.
MEMBERS PRESENT
Senator Bert Stedman, Co-Chair
Senator Mike Cronk
Senator James Kaufman
Senator Jesse Kiehl
Senator Kelly Merrick
MEMBERS ABSENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
ALSO PRESENT
Ryan Anderson, Commissioner, Department of Transportation
and Public Facilities; Ms. Katherine Keith, Deputy
Commissioner, Department of Transportation and Public
Facilities; Dom Pannone, Director, Program Management and
Administration, Department of Transportation and Public
Facilities; Christopher Hodgin, Senior Project Manager,
Statewide Public Facilities, Department of Transportation
and Public Facilities.
SUMMARY
PRESENTATION: DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES
Co-Chair Stedman relayed that the committee would consider
a presentation from the Department of Transportation and
Public Facilities. He commented on the length of the
presentation and noted that the committee would reflect on
some challenges with the Statewide Transportation
Improvement Program (STIP) and how to move forward.
^PRESENTATION: DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES
9:02:20 AM
RYAN ANDERSON, COMMISSIONER, DEPARTMENT OF TRANSPORTATION
AND PUBLIC FACILITIES, introduced himself.
9:02:28 AM
KATHERINE KEITH, DEPUTY COMMISSIONER, DEPARTMENT OF
TRANSPORTATION AND PUBLIC FACILITIES, introduced herself.
Co-Chair Stedman noted that there would be upcoming
Department of Transportation and Public Facilities (DOT)
budget subcommittee meetings. He thought it would be
beneficial to point out some of the department's challenges
and discuss solutions to move the department forward.
Commissioner Anderson discussed a presentation entitled
"DOT&PF Overview, STIP Update, Large Projects, and Deferred
Maintenance" (copy on file). He acknowledged that the
presentation was lengthy. He noted that the committee had
asked for a streamlined presentation. The department had
been asked for a STIP update, including the construction
outlook, deferred maintenance discussion, and DOT's FY 26
operating and capital requests.
Ms. Keith looked at slide 2, "PROJECT and PROGRAM FUNDING -
STATEWIDE TRANSPORTATION IMPROVEMENT PROGRAM (STIP) AND
AIRPORT CAPITAL IMPROVEMENT PROGRAM (ACIP).She noted that
the department had put out the Statewide Transportation
Improvement Program (STIP) the previous week for public
comment. The STIP Amendment 2 included changes in
formatting to the fiscal constraint tables, review of
eligibility of fund types, changes to project costs, and
changes to years in which the projects occurred. She
encouraged members to look at the STIP and make note of the
new platform, which had the ability to review and compare
Amendment 1 to Amendment 2.
Ms. Keith made note of red and green arrows denoting levels
of funding. Formula funding each year amounted to roughly
$850 million. In addition, Federal Highway Administration
(FHWA) funds (including carryover funds and Federal Transit
Administration [FTA] funds) were roughly $85 million. The
funds came to the department for the railroad and transit
services for Anchorage, Fairbanks, and the Mat-Su Borough
area. Also, there were discretionary grants included. The
STIP overall had $6.9 billion in programs over the four
years.
Ms. Keith noted that the aviation program was a large part
of DOT's delivery. She cited that in FY 24, DOT received
approximately $305 million in funding from entitlements,
discretionary programs, and grants that could be seen in FY
25 projects. The funds were not programmed in the STIP but
rather were programmed in the Alaska Capital Improvement
Program (ACIP).
9:07:11 AM
Ms. Keith spoke to slide 3, "STATEWIDE TRANSPORTATION
IMPROVEMENT PROGRAM," which showed a series of graphs and a
copy of proposed Amendment 2. She noted that the slide had
a quick-response (QR) Code which led to the STIP dashboard.
She continued that of the $6.9 billion programmed over four
years, there was $1.05 billion in discretionary grants
through FHA, FTA, and the United States Department of
Transportation Office of the Secretary. The department had
$3.6 billion of the funds for construction, with about $396
million for pre-construction activities. There were
altogether 303 individual STIP identifications throughout
the program, with 189 individual projects. There were 80
programs that encompassed one or two to over one hundred
projects per program.
Ms. Keith referenced slide 4, "STIP TIMELINE," which showed
a graphical flow chart depicting the STIP approval path.
She pointed out an error on the chart and corrected that
the STIP 2024-28 was approved March 27, 2024. She noted
that there had been a great deal of dialogue with federal
partners, including stakeholder meetings. She noted that
Amendment 1 had been a massive resolution of many items
that were brought to DOT's attention in federal planning
findings after submitting the original STIP. There had been
ongoing discourse on items that resulted in resolution of
10 of the 14 items that had been originally called out. The
department had continued to resolve the issues and there
was a request of both agencies to review DOT's amendment
early. The department had provided a draft version of the
amendment one month previously, while staff had met with
the agencies.
Ms. Keith noted that a large number of the items had been
resolved and incorporated in Amendment 2. She explained
that other items would take more of a programmatic shift
and would be included in the next rolling STIP for 2025 to
2028.
9:11:36 AM
Co-Chair Stedman asked for more detail on how the STIP was
staffed. He noted that historically there had been an
employee whose primary job was just the STIP. He asked how
the role was structured currently at DOT.
Ms. Keith relayed that there was a large number of
positions across the department that had a primary or
supporting role in the STIP. She continued that when
preparing lists previously there were up to 30 people
working on the STIP, and now there was expansion to include
transportation planners, pre-construction engineers, and
project managers.
Co-Chair Stedman rephrased his question. He recalled one
individual, Jeff Otteson, that had been in charge of the
STIP. He asked who was currently in charge of the STIP.
Ms. Keith relayed that there were three divisions in the
department whose division directors had sole
responsibilities within the STIP. She mentioned components
of the STIP, including the fiscal constraint and budget,
which was the responsibility of Administrative Services
Director Dom Pannone. The chief engineer ran the project
delivery section, which was concerned with scope, schedule,
budget, and cost estimates. The project delivery section
also included transportation planners.
Ms. Keith referenced the Data Management and Information
Office (DMIO), whose director oversaw the GIS and digital
data components. All of the divisions reported to Ms. Keith
and the commissioner for overall approval of the document.
She emphasized the importance of a team approach that had
been utilized for the previous couple of years.
Co-Chair Stedman shared that the legislature had concerns
related to challenges with the STIP that had not been seen
before. He recognized that there was employee turnover. He
asked for more information related to the management of the
STIP structure for the last several years.
9:14:28 AM
Commissioner Anderson expressed that the STIP was different
than it was in the days of Jeff Ottesen. He noted that
federal programs had become more complex, and federal
requirements for a new STIP were an entirely new
experience. He thought ultimately the STIP had always
rested with the commissioner, and thought it was written in
statute.
Co-Chair Stedman recognized that Mr. Otteson had worked
under the commissioner.
Senator Kiehl acknowledged that the STIP was bigger and
vastly more complex. He thought that Mr. Ottesen had about
50 employees, and contrasted that there were now 30
individuals working on the STIP. He thought that Ms. Keith
had expressed that there were some outstanding issues with
the federal government that approved the STIP, which were
expected to be resolved for the 2025 through 2028 document.
He asked if the department expected to have the problems
resolved for the current STIP amendment.
Ms. Keith relayed that DOT expected a fully approved STIP
Amendment 2, and would be working with partners over the
next month during the public comment period to resolve any
issues. She explained that the items outstanding were more
high-level programmatic issues that the agencies would like
to see done differently. She mentioned the example of the
way DOT programmed "parent-child" projects. She mentioned a
major corridor as a "parent project" and breaking out the
project in stages. She reiterated that DOT would be working
on the issue to see if the process could be simplified and
more efficient. The item was not called out as a finding,
but there were things that DOT wanted to continue to
improve upon.
9:17:29 AM
Commissioner Anderson turned to slide 5, "DOT&PF MEETS WITH
FEDERAL PARTNERS IN DC FOR CLARIFICATION NOVEMBER 20-21,
2024
99% of Projects Approved
DOT&PF and LAW met with FHWA and FTA leadership at
their Washington, DC headquarters, including FHWA
Executive Director Gloria Shepard.
Richardson Highway Milepost 346: Must be
programmed in the STIP not TIP (Transportation
Improvement Plan)
•Safer Seward Highway: Allowed to change termini
•'MUST' Statements (28): Require attention
•'SHOULD' Statements (38): Lack measurable goal
and/or legal requirement
•MPO Engagement Finding: Ongoing; completion
measured in stakeholder happiness
•Discretionary Grants: USDOT lacks a
comprehensive list requiring inclusion in the
STIP
Commissioner Anderson thought the slide spoke to one of
Senator Kiehl's comments. He stated that DOT worked with
federal partners but also had to take care of Alaskans and
would stand up to differences in federal law and
regulations. The department was consulting with Department
of Law attorneys. He recounted that after Amendment 1, the
department had not been happy with some findings, after
which staff had visited Washington D.C. to meet at
headquarters at FTA and FHWA. There were about 16 staff
from the federal agencies, and four state employees that
participated in two 4-hour meetings. After the meeting, the
FHWA had approved a project (Richardson Highway milepost
346) that it had rejected. The state had disagreed with
FHWA's original interpretation but received approval after
elevating the issue.
Commissioner Anderson mentioned the Safer Seward Highway
project, for which there had been disagreements about state
planning authority on National Highway System (NHS) routes.
He explained the differences in FHWA "must" and "should"
statements as related to findings.
Co-Chair Stedman asked for Commissioner Anderson to touch
on advanced construction. He mentioned concerns and
diminishment of dollar amounts.
9:20:51 AM
Commissioner Anderson considered slide 6, "FFY2025
CONSTRUCTION PROGRAM," which showed two tables. He
discussed the construction program and noted there had been
a huge focus on DOT and what it was delivering over the
summer. He mentioned a four-hour meeting with the
Association of General Contractors (AGC). He discussed
Advanced Construction (AC), where there was a tool to
borrow from future years to enable a project that did not
fit into the fiscal constraint of the STIP to engage in
construction. He explained that the authorization of AC was
in the range of $400 million. There was a future obligation
to the state that would be paid for. He noted that about a
year and a half previously the AC balance had increased to
about $550 million to $600 million. There was discussion
about the AC balance and whether the state was comfortable
with the threshold. The fund could be revolved and paid
down and then more added. The advantage of AC was to be
able to fund projects that were shovel-ready.
Commissioner Anderson mentioned a concerted effort over the
previous year to pay the AC balance down, and that it had
been paid down to about $400 million. He relayed that there
was ongoing discussion with contractors regarding the
threshold, and noted that it was possible to put more work
on the street by increasing the AC balance.
Senator Kaufman asked about the $15 million listed on the
right-hand table on the slide for "Currently Advertising."
He mentioned concerns about not optimizing the construction
season because of delays in getting projects out. He asked
the commissioner to comment on the issue.
Commissioner Anderson explained that there was a constant
revolving schedule in which early steps were completed
before getting approval, funding, and advertising the
project. Once the package was with FHWA, it could be
advertised. He thought $15 million was the current
advertising amount. There were some big projects going
through the process, and DOT projected a significant amount
of work over the following two months. He noted that DOT
was taking steps to accelerate projects. He mentioned that
AGC was concerned with getting work on the street before
the construction season.
9:25:52 AM
Senator Kiehl appreciated the commissioner's mention of
taking steps to accelerate projects. He asked for the
commissioners confidence level of project bids according to
the advertisement schedule.
Commissioner Anderson relayed that staff had put together a
list of projects and a confidence-level ranking, that the
department had presented to the AGC. He offered to provide
the information to the committee. He noted that DOT teams
also included consultants across the industry. The
struggles with delivery were not just with DOT but also
consultants. He made note of a list of Key Issues on the
slide:
• Utility Agreements and Buy America Build America
• Bureau of Land Management Highway Easement Deeds
• Late Federal Aviation Administration Grant Awards
• Late Congressional Release of Funds
• Project Cost Increases
• Section 106 Compliance
Commissioner Anderson mentioned supply chain issues and
struggles with utility companies that were concerned they
could not get compliant materials. He discussed having
construction contractors moving utilities. He mentioned the
Kenai Spur Highway and the importance of getting the
project going.
Senator Kiehl asked if the commissioner had a high, medium,
or low confidence that the next two months of things on the
tentative schedule out to bid.
Commissioner Anderson had confidence. He acknowledged there
could be a utility situation or issue that would need hard
work to overcome, but he was going forward confidently.
Senator Kiehl noticed that Commissioner Anderson had
discussed the process and the need project by project to
get FHWA to sign off. He asked if there were any new
difficulties related to cutbacks and staff responsiveness
that could lead to issues.
Commissioner Anderson relayed that DOT had been tightening
up its protocols for the team that put packages together
for FHWA. He had not seen delays yet but had been told that
certain fund types or key words (such as carbon reduction)
were being held and were possibly going to Washington D.C.
for approval. There was also a notice put out that
Amendment 2, when submitted after public comment, would
also go to Washington D.C. for approval.
9:31:05 AM
Commissioner Anderson displayed slide 7, "PROJECT
DELIVERY and explained that the new direction for DOT
staff was to talk to a supervisor or elevate to higher
ranks if there was a problem with a project or "project
slippage." He explained that the change had been made
within the last month to address project slippage.
Commissioner Anderson discussed the release of funds, and
explained that FHWA released money in tranches over the
months, and DOT was able to obligate funds as they were
available. He described challenges on the FAA side of
things, and noted that the previous year the funds were not
released until August and September. Typically, FAA grant
contracts were not awarded until the funds were in hand,
but the department had been assessing the risk and
discussing the ways DOT could award contracts prior to
grants. He mentioned a grouping of projects that would be
shelf-ready by April 1, and DOT would have the ability to
advertise the projects if it got assurance that DOT would
be reimbursed in the future.
Co-Chair Stedman asked for more details on the August
redistribution.
Commissioner Anderson explained that every August for the
previous five to ten years, there was a distribution of
authority or a limitation. Every year DOT got an
apportionment from the federal government, including many
fund types. He mentioned Infrastructure Investment and Jobs
Act (IIJA) funds. The federal government would give a
limitation to allow spending to a certain level. In August
there was a distribution of all the limitation from the
nation, to whomever had projects that could use the correct
fund types. He noted that often there was more
apportionment than limitation. He mentioned carry-over
funds that were available after not having enough
limitation to spend apportioned funds. The August
limitation was the way to spend the carry-over funds. In
the current year, there was an opportunity for $120 million
for the August re-distribution, and DOT was building its
plans for obligating funds. The previous year the
department did not have all the projects in the proper fund
types and did not do as well as hoped, receiving $20
million of the $70 that was anticipated.
9:35:10 AM
Senator Kiehl asked if using the funds would take a third
STIP amendment, or if the items in the baseline and
Amendment 2 cover the state for the August distribution.
Ms. Keith relayed that the current Amendment 2 allowed the
department to meet the august distribution goals, which
would obligate the full $126 limitation.
Ms. Keith highlighted slide 8, "NORTHERN REGION (NR),"
which showed a map of the state's Northern region with
current construction projects. She relayed that the
projects were highlighted on the Alaska Project Exchange on
DOT's website. She mentioned Northern Region projects
continuing from previous years as well as new projects for
2025. There was about $300 million to $330 million going
out in contractor payments for active work in communities,
$55 million of which was going into the Fairbanks
metropolitan area. She highlighted highways projects,
including several major corridor projects including Alaska
Highway milepost 1252 to 1268, multiple segments on the
Dalton Highway including milepost 289 to 305, and a Yukon
River Bridge re-decking. She mentioned rehabilitation of
milepost 51 to 63 on the Elliot Highway, and Richardson
Highway milepost 346 Chena Flood Bridgen Project. In rural
Alaska there was also a Kotzebue to Cape Blossom project.
Ms. Keith mentioned several airport improvement projects
underway, including projects in Chalkyitsik, Marshall, St.
Mary's, Buckland, and Deadhorse. She mentioned projects in
Nome, Ruby, and Shishmareff. In the Fairbanks area there
were multiple Americans with Disabilities Act (ADA)
improvement projects in the streets. There were also safety
improvements in roundabouts and on the Richardson Highway.
She mentioned resurfacing and reconstruction projects.
9:39:11 AM
Ms. Keith looked at slide 9, "SOUTHWEST ALASKA," which
showed a map of the state's Southwest Region with current
airport and bridge construction projects. She highlighted
airport projects in Kwethluk, Kongiganak, and Nightmute;
and bridge projects. There were three bridge replacements
in Takotna. She discussed the status of the projects.
Co-Chair Stedman asked Ms. Keith to highlight delays in
awarded funds in different regions.
Ms. Keith referenced the table on slide 6 which showed a
"Currently Advertising" project total of $15 million. She
noted that there was a bucket of projects that had gone out
to bid but were pending award, which was normally about a
60-day period. Currently there were over $120 million in
projects that had been bid but were going through final
contracting paperwork, pending award. The department
expected the $120 million to be awarded the following
month.
Ms. Keith addressed slide 10, "2025 Construction," which
showed maps of the Anchorage Metropolitan Area as well as
Eagle River and Chugiak, and a list of 2025 construction
projects. She highlighted that there was about $32 million
overall in contract payments happening for new work in the
area. She mentioned new projects on Eagle River Loop Road
and VFW Road. She listed projects in the Anchorage area.
She mentioned safety improvement projects in light of
fatalities that had occurred in the last year. Highway
safety improvement projects had been added to the
Transportation Improvement Program (TIP) in Anchorage.
9:42:10 AM
Senator Kaufman asked if the slate of projects and funding
seemed typical for the projects in the Anchorage area.
Commissioner Anderson thought the department wanted to get
back to some of the bigger projects in the area. He
mentioned the repaving of the Glenn Highway from Anchorage
to Palmer and mentioned needed drainage work. He discussed
integrated traffic management features, which would create
alternative routes. He mentioned that there were a lot of
fund types and there were carried-forward funds that DOT
would love to get on the street. He shared that DOT had
worked with the Municipality of Anchorage to help getting
some projects going and get past obstacles. There were
projects in the works that DOT had not been able to
deliver.
Co-Chair Stedman asked to address the presentation without
listing every individual project.
Commissioner Anderson advanced to slide 11, "ANCHORAGE
INTERNATIONAL AIRPORT," which showed a map of Anchorage
International Airport with 2025 construction projects. He
identified that there was an enormous amount of cargo
growth. He stressed that DOT was going to push to expand
the airport to accommodate the cargo growth. He mentioned
old gate infrastructure.
Commissioner Anderson looked at slide 12, "KENAI
PENINSULA which showed a map of the area with continuing
and new projects listed for 2025. He commented on the
robust program planned in the Kenai/Soldotna area and near
Homer. He noted that some of the projects were highway-
safety corridor projects, and some related to longstanding
pavement issues near Homer.
Commissioner Anderson showed slide 13, "MAT-SU," which
showed a map of the area with continuing and new projects
listed for 2025. He commented that Mat-Su also had a robust
construction season upcoming. He noted that DOT had
established a district office in the area, which had been
helpful in getting projects out to deliver. He pointed out
pavement rehabilitation planned in the area.
9:46:57 AM
Ms. Keith referenced slide 14, "SOUTHCOAST REGION," which
showed a map of the state's Southcoast Region with current
construction projects. She highlighted a Haines Highway
project, and Skagway State Street rehabilitation. The
Skagway project had seen some delays related to changing
processes in the STIP. The delays had necessitated an
amendment prior to project award. She pointed out that
projects in the Southcoast Region were related to slope
stability, rockfall mitigation, culvert replacements, and
general rehabilitation and improvement projects.
Co-Chair Stedman asked about the delay in awarding the
Haines Highway project, and asked for a synopsis.
Ms. Keith agreed that the Hains project was bid in November
and expected it to be awarded as early as the following
week.
Co-Chair Stedman hoped for the best.
Senator Cronk discussed the Glenn Highway and reported that
there was a section of the road (mile 75 to 90) that was
part of the original road. He thought the road was
dangerous and wondered when it would be redone.
Commissioner Anderson recounted that the most comments from
STIP Amendment 1 had been about the portion of highway
mentioned by Senator Cronk. He noted that the project had
changes in Amendment 2. There had been challenges for DOT
to address but the department was moving forward.
Ms. Keith turned to slide 15, "SOUTHCOAST REGION
CONTINUED and highlighted further projects. There were
several safety improvement projects in the Juneau area.
There were several major airport improvement projects
including a significant number of improvements at Kodiak
Airport. There were projects in Sitka, False Pass, Haines,
and Wrangell.
9:50:53 AM
Commissioner Anderson considered slide 16, "AMHS VESSEL
REPLACEMENT," which showed a graphic depiction of Alaska
Marine Highway System (AMHS) vessels and planned/future
vessels. He mentioned the AMHS Long Range Plan, which was
scheduled to go out for public notice on Friday. He noted
that the plan was done in conjunction with the AMHS
Operations Board. He highlighted several projects such as
on the M/V Aurora, the M/V Hubbard, the M/V Lituya. The M/V
Columbia was currently the one vessel running as a
mainliner. The Wi-Fi upgrades had been installed. There had
been project for a propulsion upgrade on the M/V Columbia,
but after review it would not have any big scheduled
overhauls or capital projects.
Commissioner Anderson discussed the M/V Kennicott, which
was currently in Everett Shipyards with a $25 million
required emissions and exhaust project. The M/V LeConte was
in extended overhaul. He mentioned the assessment in
progress on the M/V Matanuska, which was tied up in
Ketchikan serving as a hotel ship as it did not meet Coast
Guard requirements to serve Alaskans at sea. He continued
that DOT had a $37.5 million grant from the Rural Ferry
Program to upgrade the vessel, and pondered what the final
upgrade cost would be. There had been estimates as high as
$100 million, and DOT had planned an upcoming meeting with
the AMHS Board to discuss the topic.
Commissioner Anderson mentioned a crew quarters project on
the M/V Tazlina for about $20 million. He noted that due to
challenges with the LeConte and the extended overhaul, he
had asked about staff capabilities of getting the M/V
Tazlina up and running to help support North Lynn Canal. He
discussed planned/future vessels, including the M/V
Tustumena replacement vessel, the new mainliner, and a
no/low emissions ferry. He noted that DOT had secured
funding for the M/V Tustumena replacement, as well as $10
million for the new mainliner design, and a $53 million
grant for the new no/low emissions ferry.
9:55:04 AM
Co-Chair Stedman thought it did not appear as if the
Matanuska would sail in the fleet again and encouraged DOT
to cut its losses and move on. He thought some wanted to
see the ship refurbished to function while waiting for new
vessels. He mentioned the option of using the ship as a
hotel. He thought the quicker the matter was resolved, the
better.
Commissioner Anderson acknowledged that there were
challenges with the vessel. He mentioned the M/V Malaspina
and affirmed that there would need to be a public process
for the M/V Matanuska as well. He explained that the hotel
challenges were real and noted that currently there were
many people housed by the M/V Matanuska.
Co-Chair Stedman asked about the construction of the M/V
Tustumena replacement and the new mainliner, and thought it
would be nice to take advantage of any symmetry between the
two ships. He asked Commissioner Anderson to address a two-
page document addressing grant funds (copy on file), in
response to a request from the Legislative Finance Division
(LFD). He mentioned concerns with what was happening in
Washington D.C. and delivery of funds including funding for
Medicaid and schools. He asked the commissioner to address
the document and speak to when the funds might arrive in
the state's treasury.
9:58:20 AM
DOM PANNONE, DIRECTOR, PROGRAM MANAGEMENT AND
ADMINISTRATION, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, introduced himself.
Co-Chair Stedman appreciated Mr. Pannone putting the
document together and thought the document would be
addressed at the subcommittee level. He wanted the members
to be aware of what was being worked on. He reiterated his
concerns with changes in Washington D.C. and delays in
funding.
Mr. Pannone explained that the purpose of the document was
to illustrate how successful DOT had been in receiving the
awards from the program and that there was $410 million
remaining to be awarded in future years.
Co-Chair Stedman asked for Mr. Pannone to explain the
program.
Mr. Pannone explained that the program was the Rural Ferry
Service Program, which had been part of IIJA. The program
had authorized $200 million annually for five years to be
awarded through a discretionary grant program for ferry
services that provided service to communities that were
separated by 50 sailing miles. He thought AMHS would be a
prime recipient of the grants. Over the previous two years,
DOT had submitted grant applications for capital projects
and for operating funds under the program and had been
awarded almost $540 million.
Co-Chair Stedman asked if the program was successful.
Mr. Pannone answered affirmatively. He noted that some of
the awards required the STIP amendment to establish a
grant. Until DOT established a grant, there was no contract
in place for delivery. He noted that DOT had not yet
experienced delays form the FHWA, but had certainly
experienced delays from the FTA. Some applications had been
pending for a few months. The department was hopeful that
the program would be reauthorized in the next
transportation bill and continued into the future.
10:01:53 AM
Co-Chair Stedman pointed out that some of the funds had not
been received yet, and understood that the state was
funding some issues through the treasury.
Mr. Pannone explained that an established grant was
essentially a reimbursement program. For the grants that
were pending, the state had pre-award authority and would
get reimbursed for any expenses.
Co-Chair Stedman reasoned that he mentioned the funding
structure because the committee was discussing the budget
for the following three years and considering cash flow
availability for the state. He emphasized that the state
could not take the CBR blance to zero. He pondered that if
the program was not extended, the state could be in a
position of having to backfill about $70 million in AMHS
budget. The budget subcommittee would ponder the issue.
Co-Chair Stedman considered the eventuality of the program
not being extended, in which case the state would have to
provide significant funds. He thought the committee needed
to be aware of the issue and prepare for the eventuality.
Co-Chair Stedman asked if Mr. Pannone had heard anything
from the administration regarding the electric ferry
between Metlakatla to Ketchikan.
Mr. Pannone relayed that the electric low-emissions ferry
was under a separate program under the same law. The
department had an established grant for the design of the
ferry. He relayed that under normal circumstances, the
department continued with the grant agreement, delivered,
and got reimbursed for expenses under the established
grant.
Co-Chair Stedman encouraged Mr. Pannone to inform the
legislature immediately in the event of the program being
stopped or delayed. He mentioned concerns with Medicaid and
education federal funding. He expressed a desire to track
the cash flow and construction of the replacement vessels
and the AMHS as the state worked forward to keep the system
running.
10:05:50 AM
AT EASE
10:06:00 AM
RECONVENED
Co-Chair Stedman mentioned Letters of Agreement (LOA),
which had been utilized to increase salaries and fill holes
to have adequate staff in state agencies. He asked if AMHS
used LOA to bring in licensed mariners that were needed to
run the ships.
Commissioner Anderson affirmed that DOT used LOA, which was
one way to modify a collective bargaining unit agreement
after it had been negotiated. He recognized that LOA
complicated matters and mentioned that the department was
currently negotiating with the three maritime unions. He
emphasized that the department's goal was to not have LOAs,
due to complications downstream when trying to calculate
pay.
Co-Chair Stedman recognized the complexity of the issue,
and mentioned that there was difficulty tracking the LOAs.
He encouraged AMHS to do what it could to fill positions.
Commissioner Anderson displayed slide 17, "AMHS TERMINAL
RECONSTRUCTION," which showed a map of shore-side
terminals. He emphasized the need for ship and dock
compatibility to make flexibility in the system. The
department was fully funded at $170 million for all the
facilities shown on the slide in 12 communities. He noted
that there would be a lot of construction over the
following two years.
10:08:55 AM
Ms. Keith highlighted slide 18, "KEY ACTIONS AHEAD which
addressed external factors such as the impact of inflation
and the timing of federal fund distribution. She relayed
that DOT wanted to focus on dealing with external
situations and accelerating projects. Many projects were
not seeing significant inflation, but rural airport
projects were seeing an impact from inflation in the form
of big increases over original estimates. The effect was
having the projects pushed out to following years. She
mentioned the National Highway Construction Cost Index
(NHCCI), which was 60 percent up from the fourth quarter in
2020. The department was working to mitigate the issue by
standardizing low-level inflation to help forecast cost
estimates by year. The department wanted to expand the
method to apply correct inflation rates to materials and to
be more dynamic with cost estimates.
Ms. Keith mentioned timing of federal fund distribution and
highlighted the commissioner's mention of FAA projects that
had been delayed. She mentioned strategies to pull projects
earlier in the year in order to advertise in April rather
than in late summer. She mentioned AC, and referenced the
STIP and use for advanced construction, where the goal was
to increase flexibility to deal with project changes while
not tied to specific fund sources.
Ms. Keith addressed Buy America/Build America (BABA)
compliance and right-of-way acquisition and mentioned
ongoing conversation about how the department could be more
proactive when seeing acquisition delays or utility
relocation challenges in order to be on top of the
situation earlier in the process.
10:12:26 AM
Co-Chair Stedman asked if there had been problems issuing
contracts due to escalating costs of inflation above the
contractors' bid price.
Ms. Keith answered affirmatively and mentioned the Skagway
State Street project, which was significantly delayed after
an over 20 percent increase in the engineer's estimate.
Part of the problem was procedural, and the project had to
go out for amendment. On the airport side, there were a
couple of instances that had come back at 200 percent to
300 percent at cost. She mentioned instances in which DOT
had to re-budget the program for the year. The previous
year there were 14 projects that had not been awarded, and
the majority came back too high to move forward with the
program. The strategy and scope of the projects had to be
adjusted and now they were moving forward in 2025.
Co-Chair Stedman thought the information would be
applicable to decisions made on future large projects that
didn't seem to be represented with inflationary impacts. He
identified escalation on the NHCCI chart on the slide. He
would be shocked if the gasline project was inversely
related to the chart. He made a side note that other things
the committee was working on were also affected like DOT
projects.
10:14:29 AM
Ms. Keith looked at slide 19, "KEY ACTIONS AHEAD." She
mentioned other strategies for pre-construction with
consultants to support the projects. She mentioned general
engineering consultants, which worked with department staff
in close proximity to move an area of projects forward
similar to a term agreement in procurement. She highlighted
that if there was a general engineering consultant on
board, DOT could potentially have a shortened period of
time for approvals and onto environmental approval.
Co-Chair Stedman thought the subcommittee would be
interested in working with the department to facilitate
some of the process, including how the STIP was managed. He
mentioned interest in making the process smoother.
Ms. Keith highlighted the bottom two items on the slide,
which included DOT's agile project management strategies
and its modernization of project delivery and forecast
tools. She mentioned conversations in the Senate
Transportation Committee. She explained that DOT had a
project management office with three positions. The sole
focus was to support project managers and provide directive
support where helpful. For data driven decisions on
projects it was needed in a digital platform. She mentioned
that the modernization of the STIP gave the Project
Delivery Plan (PDP), which was a digital format of every
project that the state was running. The PDP allowed the
department to see where the program was and provided
transparency for delays. As the tools continued to develop,
she thought the system would save staff significant time.
Co-Chair Stedman thought the system would save legislative
staff time with inquiries also.
10:17:53 AM
Commissioner Anderson addressed slide 20, "STERLING HIGHWAY
MILEPOST 45-60 RECONSTRUCTION - COOPER LANDING BYPASS,"
which showed a map and timeline overview of the Sterling
Highway reconstruction project. The update had been
requested by the committee. He thought the project had a
lot of history. The slide showed the sequencing of the
project, and he noted there had been many cost increases.
He mentioned escalating prices due to federal requirements.
The project was funded through stage 1 through stage 4. He
discussed the active Stage 2 of the Juneau Creek Bridge.
Commissioner Anderson noted that there was a current
discussion about Stage 1B, which would be the next logical
sequence of work. The project was shovel-ready and was an
alternative contracting method. The discussion was whether
the stage could fit in the program in the current year, and
it was added in the STIP. He pointed out Stage 5, and that
there was still about $40 million worth of archeology that
had to happen on the segment. He noted that there was still
some work that needed to be done in advance of
construction. He emphasized that the department was
thinking through the process.
10:20:37 AM
Commissioner Anderson advanced to slide 21, "INFLATION
IMPACTS ON PROJECT COST," which showed two tables
reflecting the inflation of the project cost history of the
bypass project. He referenced the financial plan update for
the FWA. He offered to provide the document to the
committee. He cited a total project cost of $893 million.
Ms. Keith looked at slide 22, "ALASKA AND LARGE
TRANSPORTATION PROJECTS," which showed a graph depicting
what was planned on the NHS and what was programmed in the
STIP. The detail showed what was planned for the following
four years. She highlighted that on the Sterling Highway
milepost 45 to milepost 60 had $210 million programmed in
the STIP. The Seward Highway milepost 98.5 to milepost 112
included a changed terminus from the original plans and was
programmed for $182 million. Along the Dalton Highway,
several major segments totaled $137 million. She noted that
DOT tried to have a distribution of work over several
corridors, so as to not bog down any one corridor for the
year. She estimated that the NHS program was planned out
for about ten years. The department was working towards a
ten-year statewide plan statewide.
10:23:48 AM
CHRISTOPHER HODGIN, SENIOR PROJECT MANAGER, STATEWIDE
PUBLIC FACILITIES, DEPARTMENT OF TRANSPORTATION AND PUBLIC
FACILITIES, spoke to slide 23, "DEFERRED MAINTENANCE,"
which showed a pie chart. The division owned 706 facilities
across the state, with 668 of the facilities being DOT
mission-specific; such as highways and aviation maintenance
stations, equipment storage buildings and campuses in
Anchorage, Fairbanks, and Juneau. There were some other
categories of multi-tenant, multi-agency facilities.
10:25:04 AM
Mr. Hodgin referenced slide 24, "DEFERRED MAINTENANCE," and
cited that current division backlog in deferred maintenance
was $373 million, which represented $163 million in DOT-
specific usage facilities, and multi-agency facilities.
The public building fund category had an estimated backlog
of $210 million. There were 12 major office buildings that
were able to gain funding for the deferred maintenance
through leases. The bottom left graph illustrated
allocations for the previous year for DOT and Division of
Facilities Services (DFS) buildings, which averaged $3.5
million. The bottom right graph depicted the allocation in
prior fiscal years for an average of Public Building Fund
(PBF) facilities, which averaged about $4.8 million.
Co-Chair Stedman asked Mr. Hodgin to discuss what the
governor's budget had proposed for deferred maintenance.
Mr. Hodgin understood that the amount would be in the $20
million range.
Co-Chair Stedman asked if there was $20 million in the
current budget.
Mr. Hodgin answered affirmatively.
Co-Chair Stedman asked why the bottom right chart only went
through FY 21.
Mr. Hodgin noted that there was a corrected chart that had
all the fiscal years and offered to provide the document.
Co-Chair Stedman asked for more detail.
Mr. Hodgin relayed that the department had data from FY 15
to FY 24.
Mr. Hodgin turned to slide 25, "DEFERRED MAINTENANCE
which showed examples of deferred maintenance projects. He
highlighted upgrades in Fairbanks and Yakutat.
Co-Chair Stedman asked who was responsible for Mt.
Edgecumbe High School (MEHS).
Mr. Hodgin relayed that his section provided helped provide
design and construction with the Department of Education
and Early Development through a reimbursable services
agreement.
Co-Chair Stedman asked if the agreement included
destruction of old World War II structures.
Mr. Hodgin noted that over the previous year there had been
a master plan assisted by a consultant. Part of the master
plan included potential teacher housing, which would be in
the same place as demolished structures on campus. The
project would be a potential project if it was funded in
the future.
Co-Chair Stedman thoguht the structures needed to be
addressed.
10:29:28 AM
Senator Kiehl asked to go back to slide 23. He asked if
there were almost 4.4 million square feet outside the PBF
and the whole maintenance backlog was $163 million.
Mr. Hodgin explained that the $163 million was for the 668
facilities.
Senator Kiehl asked how recently the facilities had been
surveyed and updated.
Mr. Hodgin relayed that forthcoming slides would address
the topic.
Mr. Hodgin considered slide 26, "DEFERRED MAINTENANCE," and
explained that the department had a three-tiered approach.
The first tier was facility condition assessments, and over
the last year DOT had completed 28 assessments on large
facilities with high occupancy to help inform and
prioritize deferred maintenance needs. There would be
additional facility condition assessments on other specific
DOT-usage buildings to help the team understand more of the
deferred maintenance needs and priorities at the buildings.
The department had chosen the high-square footage buildings
first in order to analyze consultant data for a high
proportion of facilities. Many other facilities were
remote.
Mr. Hodgin displayed slide 27, "DEFERRED MAINTENANCE," and
discussed next steps. He identified that DOT would
prioritize its deferred maintenance projects to present to
the state's facilities council for prioritization and
recommendation to the Office of Management and Budget
(OMB). The projects would be funded by state capital
General Funds. For the PBF projects had been submitted, and
once the projects were funded and confirmed, the projects
would be completed by the maintenance and operation teams
or through the design and construction process.
Mr. Hodgin highlighted slide 28, DEFERRED MAINTENANCE
• Age and capabilities of the facilities become
increasing factors and considerations over time
• Facilities in need of major system repairs,
upgrades, or system replacements may exceed what is
achievable through deferred maintenance
• Designs in progress for replacement facilities of
DOT&P facilities nearing end of life
Mr. Hodgin discussed design for replacement of aged
facilities and mentioned a maintenance station in Haines.
10:33:14 AM
Senator Cronk asked if the committee could have the same
systems built in every building (such as heating). He
thought consistency was needed in building for efficiency.
He used the example of schools.
Mr. Hodgin relayed that DOT would love to have as
consistent and similar designs as possible throughout the
state. He mentioned different climates, different
geotechnical conditions, and the availability of fuel types
as unique design considerations. He described a balance
between the similarities and unique conditions in the
designs.
Co-Chair Stedman emphasized the desire for consistency in
design of schools, ferries, and other structures. He
mentioned the expense of being inundated with different
systems.
Co-Chair Stedman asked how the department went through the
process of prioritizing deferred maintenance projects and
bringing forward the items for consideration by OMB for
inclusion in the budget.
Mr. Hodgin described a prioritization methodology that used
a project index value. The value was comprised of the
importance to the specific agency, a system factor (impact
to its operation), and the need. The items were
mathematically interpreted to rank the project index value,
and brought to the statewide facilities council, which used
the same methodology.
Co-Chair Stedman asked if Mr. Hodgin could provide the list
to the committee. He referenced maintenance areas for
harbors and schools as additional items for the committee's
consideration.
Mr. Hodgin agreed to provide the list.
10:37:09 AM
Commissioner Anderson looked at slide 29, "DELIVERING THE
FY2026 FEDERAL CAPITAL PROGRAM," which showed two pie
charts. The chart on the left compared the capital program
(at $1.8 billion million) with the operating program (at
$800 million). On the right was the breakout of the capital
program in all fund sources. He drew attention to the
surface transportation program, the airport improvement
program, and the increasing rural ferry grants. He
mentioned the Alaska West Coast Resiliency Projects, and
authority for the 10-megawatt solar array at the Ted
Stevens Anchorage International Airport. He highlighted the
PBF deferred maintenance item, Wood River Canyon and
trails, and other specific projects including a critical
connector to Lake Iliamna.
Commissioner Anderson continued to address slide 29, and
mentioned a project on the Dalton Highway, and State
Managed Seaplane Base and Harbor Facility Funding. He
highlighted the Silver Tip Camp bunkhouse, which provided
shelter during storms for increased highways response times
during storms.
Co-Chair Stedman asked for help with prioritized ranking of
capital items in the budget. He discussed a significant
deficit.
Senator Kiehl looked at slide 29 and noted that a couple of
the projects highlighted funding sources. He asked about
projects with matching funds or leveraged funds.
Commissioner Anderson identified that the resiliency
project was with federal matching funds. He mentioned
state-funded projects such as the Wood River Canyon Bridge.
He relayed that the department was always looking for
opportunities and mentioned a port infrastructure
development program.
Co-Chair Stedman suggested Commissioner Anderson save the
project listing for the budget subcommittee. He emphasized
prioritizing projects for consideration during the budget
process, including funding sources so as to not miss
federal matching funds.
10:41:33 AM
Ms. Keith addressed slide 30, "FY2026 OPERATING: ALASKA
DOT&PF," which summarized governor's proposed operating
budget for DOT. She observed that personal services
comprised 61 percent and the majority of the operating
budget. She cited about 808.6 million for all components.
Contractual services was 26 percent while commodities,
travel, and other capital outlays comprised 15 percent. The
right-hand side of the slide showed DOT job classes
including operators, drone pilots and a breadth of other
positions.
Commissioner Anderson advanced to slide 31, "FY2026
OPERATING BUDGET: FUND SOURCES," which showed a pie chart
and tables. He listed about $184 million in Unrestricted
General Funds (UGF) and $72 million in Designated General
Funds (DGF) (which consisted of GF program receipts, AMHS
Fund, vehicle rental receipts, and about $37 million in
motor fuel tax receipts. There was about $81 million in
federal receipts and various other sources. He pointed out
the International Airports Revenue Fund at $127 million and
the capital improvement project receipts at $207 million.
Co-Chair Stedman asked to address deferred maintenance. He
wanted information on what was included for OMB. He
mentioned schools and what was included in the budget. He
wanted an understanding of several years' worth of
appropriations for state deferred maintenance.
Commissioner Anderson agreed.
10:44:36 AM
Commissioner Anderson turned to slide 32, "FY2026 OPERATING
BUDGET: OVERVIEW," which showed two tables and two pie
charts showing all funds and UGF/DGF. He highlighted
highways, aviation and facilities as the primary
expenditure at $180 million. International airports were
self-funded at $127 million, and AMHS was funded at about
$160 million. Design, engineering, and construction for
project delivery was at $132 million. He discussed UGF, and
cited that AMHS was at $82 million, international airports
had none, but highways/aviation/facilities was at $136
million. He noted that the department had done a lot of
work to try and leverage federal funds.
Co-Chair Stedman discussed the AMHS and federal funds to
rebuild the system. He mentioned banking funding to be
carried forward as a backstop for unforeseen disruptions.
He asked Commissioner Anderson to discuss the issue. He did
not think the banking of funds was happening as frequently
as the committee would like.
Commissioner Anderson agreed to provide the committee with
the value of the [AMHS] fund. He mentioned inflation and
that it was affecting AMHS. He mentioned discussion about
staff shortages and employees on holdovers incurring
additional expenses. He thought incurred costs had not
helped in banking the funds.
Co-Chair Stedman affirmed that the committee would work
with the department on cash flow as it did annually. He
mentioned similar challenges with the Department of
Corrections and massive overtime.
Senator Kaufman mentioned the issue of snow removal the
previous year, and wondered how the state was doing on
spending thus far on snow removal.
Commissioner Anderson acknowledged the challenge of
budgeting for extreme years and light snow years. He
discussed quarterly projections and relayed that the budget
was currently "ok." He mentioned a big ice storm in the
Northern part of the state, and some subsequent stresses on
the budget. He referenced the strategy of being able to
scale up with contractors on term agreements. He mentioned
the variability in weather events.
10:49:30 AM
Senator Cronk mentioned two bridges including one over the
Johnson River. He mentioned rumors about pushing projects
through the STIP. He noted that the bridges were from the
World War II era. He asked when he could expect to see
progress on the bridges.
Commissioner Anderson mentioned visiting the Yukon and that
his counterparts there were going through a similar
experience replacing WW II era bridges. He thought the two
bridges mentioned by Representative Cronk were in progress.
Ms. Keith commented that both projects were in the STIP
within the following two years to have contracts underway.
She offered to provide a specific project schedule.
Senator Cronk asked what the state was doing to address
state staffing at certain camps including the Northway DOT
station. He mentioned the road to Minto being closed.
Commissioner Anderson acknowledged that there was a tough
situation at the intersection of the Dalton Highway and the
Road to Minto. He mentioned the Livengood Camp and that the
department was actively recruiting. He mentioned a line
item in the budget for Dalton Highway contracting, which
provided options. He mentioned consideration of incentive
ideas including a Letter of Agreement to a bargaining unit
for incentive payments, with varying degrees of success. He
pondered reasons for the issue. He mentioned areas that
were fully staffed.
10:53:23 AM
Senator Cronk thought people were not being paid enough to
stay in certain remote areas. He mentioned that there were
certain remote areas and wondered about recruiting in
places like Manely.
Commissioner Anderson appreciated the committee's questions
and emphasized working together to solve problems. He
affirmed that the committee would see transparent
communications from the department. He mentioned two
opportunities for communication through the STIP Amendment
2, and the long-range plan for AMHS.
Co-Chair Stedman affirmed that the committee wanted to be
part of the solution to keep projects moving forward
throughout the state. He encouraged the commissioner to
keep in touch. He discussed the agenda for the following
day.
ADJOURNMENT
10:56:46 AM
The meeting was adjourned at 10:56 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 022525 SFIN STIP Large Projects DM.pdf |
SFIN 2/25/2025 9:00:00 AM |
|
| 022525 DOT response to LFD - Rural Ferry Program.pdf |
SFIN 2/25/2025 9:00:00 AM |
|
| 022525 DOT Response to Questions Enclosure - Org Charts.pdf |
SFIN 2/25/2025 9:00:00 AM |
|
| 022525 DOT Response to SFIN.pdf |
SFIN 2/25/2025 9:00:00 AM |