HOUSE BILL NO. 227 "An Act relating to the Alaska Capital Improvement Project Authority; relating to the powers and duties of the Department of Transportation and Public Facilities; and providing for an effective date." MARCO PIGNALBERI, STAFF, REPRESENTATIVE JOHN COWDERY, commented that the purpose of HB 227 was to increase public involvement, stability and discipline in capital project planning for the State of Alaska. Planning for Alaska's capital improvement projects is presently carried out by the Planning Division of the Department of Transportation and Public Facilities (DOTPF). Three regional planning teams carry out research and planning. These regional planning teams coordinate with the local governments, including Anchorage Metropolitan Transportation System (AMATS) and Fairbanks Metropolitan Transportation System (FMATS) within their region. These regional plans are feed into the statewide planning team in Juneau at which point they are consolidated into statewide plans. These stipulations are required for internal management and to meet requirements for federal funding. Mr. Pignalberi noted that HB 227 would come into play at the level of statewide prioritization and funding alternatives. It would not change the basic planning process now in use, although, it would change the method by which projects are rated, prioritized and submitted to the Governor and the Legislature. Mr. Pignalberi pointed out that despite efforts of DOTPF to make the planning process more inclusive and transparent to the public, capital project planning remains a science for most Alaskans. He suggested that planning was hindered by a lack of continuity at the executive level. He noted that past DOTPF commissioners have had an average tenure less than two years. Permanent professional planners become committed to the project which they work on. Mr. Pignalberi explained that the provisions of HB 227 are intended to make the capital project planning process more comprehensive, coherent to the public and stable in its role of building Alaska's infrastructure. The Authority would have a single purpose mission rather than be entangled with the multi-purposes of the Governor, Legislature and DOTPF. Mr. Pignalberi urged passage of the proposed legislation. He noted that both the federal highway administration and the federal aviation administration have testified in other committees expressing deep "fear" of "potential" problems in the legislation. He guaranteed that this would not happen. Mr. Pignalberi closed, noting that no one knows what the State's priority projects are now for any mode of transportation. HB 227 will provide policy and continuity. Representative Martin voiced concern with the separation of the proposed authority and the Executive Budget Act. Additionally, he believed that by such an Authority establishing fees would be in direct competition with the powers of taxation. He stressed that the legislation would be interfering with the Executive Branch of government. He pointed out that the role of the commissioner would loose all power to the proposed authority. Representative Grussendorf noted that under the current system, it is clear who gets held accountable for problems which occur and credit due. He questioned who would ultimately be responsible in a system proposed in the bill. (Tape Change HFC 98- 128, Side 1). Mr. Pignalberi addressed Representative Martin's concern, pointing out that it was the intent that the proposed legislation fall within the Executive Budget Act. Representative Martin recommended that there be an amendment which specifies that the authority stay under the Executive Budget Act. Co-Chair Therriault suggested checking with legal drafters to find that statute placement. Representative J. Davies thought it preposterous that more duties would be added in order to create an authority. Mr. Pignalberi noted that this was an issue that some attorneys have differed over and that it was not central to the sponsor's interest. He pointed out that Legal Services had recommended that it be added and he felt it could be removed. Representative J. Davies referenced Page 3, Line 21, and asked what authorization the authority would have power to revise. Mr. Pignalberi replied that all planning powers that currently reside within the Department would move to the Authority. Representative Martin asked if Mr. Pignalberi thought by statute, the legislation could change the power of the Executive Branch authority. Mr. Pignalberi stated that was the intent, which could be done by changing statute. Representative Martin disagreed, pointing out that there need to be a change to the Constitution. The Constitution states that all commissions are part of the Executive Branch. Mr. Pignalberi pointed out that all changes being made are changes in statute. He advised that 17 positions in the Department's Headquarters Planning Division would be moved to the Authority. The Department has many other functions which would not be moved such as operations, design and maintenance. Representative J. Davies asked if it would be funded by general funds. He stressed that the federal government will not fund a separate planning effort. Mr. Pignalberi stated that the federal government would fund whatever process the State comes up with. They will not fund a duplicative activity. HENRY SPRINGER, (TESTIFIED VIA TELECONFERENCE), DIRECTOR, ASSOCIATION OF GENERAL CONTRACTORS, ANCHORAGE, spoke in favor of the proposed legislation. (Testimony inaudible). THOMAS BRINGHAM, DIRECTOR, DIVISION OF STATEWIDE PLANNING, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, commented that HB 227 was a well intentioned effort to add stability to the transportation project development process. However, close examination of the bill has left the Department to conclude that if enacted, it would cause many problems in an attempt to solve problems that no longer exist. As a result, DOTPF does not support the legislation. DOTPF believes the process available for prioritizing and selecting projects is fair, stable and provides well for statewide transportation needs. He enumerated the problems created by the bill: ? The proposed Authority is not a true authority or commission which would be responsible for all capital and operating activities of the department. Capital programs approved by the authority would still be subject to legislative approval on a project by project basis. Under the Authority as proposed in HB 227, the Department and staff would be serving two masters, the Governor and the Authority. There are 13 states which have commissions with direct line authority, i.e., the commissions are responsible for all aspects of the operations of the department. There are 15 states that have commissions that are advisory to DOTPF or the Governor and DOTPF. Unlike these two types of commissions with clearly defined roles, the Authority proposed in HB 227 would establish an Authority with responsibilities that are more than advisory but less than a commission with line authority. The in-between status lead to confusion both inside and outside DOTPF. ? The intention of HB 227 in regard to the day-to- day operation of the Authority is unclear. ? This Authority will increase the cost of project selection and add costs and delays to programming efforts. It would add another layer to the existing project approval process, and would reduce responsiveness and add general fund administrative costs. ? The legislation would give the Authority the ability to delete and add projects to the Statewide Transportation Improvement Plan (STIP). Changes to the federally funded program must be made in accordance with the STIP process. Deviation from the process would render the project ineligible for funding. Mr. Bringham added that the Department has submitted a note outlining what the fiscal impacts of the legislation would be. These impacts total over $500 thousand dollars per year. All staff and related costs are to be paid for with State general funds. Representative G. Davis voiced frustration with the current process and the lack of public input. He noted that there is a lot of flexibility in the planning process regarding how federal dollars are spent. Representative J. Davies asked how the prioritization of projects would occur when the bill was in place. He asked if the Authority made a change, would the proposal need to go through the public process again. Mr. Bringham replied that was not clear to the Department. At present time, the regional staff works with the communities to pool the projects together and the highest scored ones go to statewide competition. Representative J. Davies asked the relationship between the AMATS and the FMATS. Mr. Bringham responded that federal law protects the AMATS program. That program must be totally incorporated into the Department's STIP. The State agency does not have any authority to change it. (Tape Change HFC 98- 128, Side 2). JACK KREINHEDER, SENIOR POLICY ANALYST, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, stated that the Office of Management and Budget (OMB) believes that the proposed Authority would be an unnecessary level of bureaucracy. Mr. Kreinheder agreed with Mr. Bringham in problems which would occur during a turnover, when the Authority becomes "out-of-sink" with the Administration. At that point, they would become a dual entity to do business with. He projected that the Governor would end up ignoring the commission, as the Governor's constitutional power can not be changed by statute. He pointed out that OMB would suggest to the Governor that the proposed legislation would create constitutional problems. Mr. Kreinheder advised that the Administration is open to suggestions for improving the planning process with public and legislative input. In conclusion, Mr. Kreinheder stated that in regard to the legislative amendments, the entire concept is flawed. He recommended against going with a full commission, suggesting that an advisory commission could address some of the problems. Mr. Kreinheder would recommend the bill be vetoed. HB 227 was HELD in Committee for further discussion.