HB 322-TRANSPORTATION FUND 2:31:39 PM CHAIR JOHANSEN announced that the next order of business would be HOUSE BILL NO. 322, "An Act establishing the Alaska transportation fund and relating to the fund; and providing for an effective date." REPRESENTATIVE FAIRCLOUGH said that she supports the governor's $1 billion transportation plan as there are $1 billion worth of transportation needs in Alaska, which include projects, deferred maintenance, and future needs to address a gas pipeline. She offered her belief that an endowment approach with an annuity payout was worthy of discussion. She referred to a spread sheet titled "The Transportation Fund with a 10 year Annuity Payout" [included in members' packets] that shows an annuity payout that would put $1.2 billion into projects over 10 years. She remarked that the flip side to this spread sheet, "The Transportation Fund with an endowment approach" reflects that a 5 percent annual payout will erode the buying power and allow less opportunity to make a substantial inroad into the shortcomings of deferred maintenance and projects. She offered her belief that $50 million is too small an amount of money to spend for maintenance that has been deferred for so long. She expressed her belief that the annuity approach allows for a larger annual appropriation. 2:36:06 PM REPRESENTATIVE FAIRCLOUGH explained that the model can be adjusted for stock market fluctuations, commodity prices, and inflation. This allows the state the ability to more quickly respond to any needs. REPRESENTATIVE NEUMAN remarked that this is a totally different funding plan than the administration's plan. He asked if it is possible to do a side-by-side comparison of the two funding plans. He declared that he wants to see a Department of Transportation & Public Facilities (DOT&PF) project plan before he will consider a fund. 2:39:34 PM REPRESENTATIVE FAIRCLOUGH offered to do a side-by-side comparison, and she explained more about the analysis that her plan provides. She explained that after ten years the annuity plan will have spent its entirety, putting $1.2 billion into transportation projects; whereas, the administration plan will still have $945 million in the fund, but it will only have generated $507 million spent for projects. She expressed her desire to contain the discussion to an annuity versus an endowment approach, which she likened to the percent of market value (POMV) and the permanent fund. She explained that the POMV system will secure a fund and allow it to endure, whereas an annuity will zero out but will put more money more quickly into transportation projects. She offered her belief that the primary concern is fiscal planning and sustainability, not prioritization of projects. CHAIR JOHANSEN asked that DOT&PF be prepared to compare and contrast the two proposals during the next House Transportation Standing Committee meeting on Tuesday, April 1, 2008. REPRESENTATIVE DOOGAN requested DOT&PF prepare a statement of the annual appropriations for transportation projects from the general fund for the last few years to allow a comparison of the appropriation funding style to the two other approaches. 2:43:33 PM FRANK RICHARDS, Deputy Commissioner of Highways & Public Facilities, Office of the Commissioner, Department of Transportation & Public Facilities (DOT&PF), asked if Representative Doogan would like a list of all the capital appropriations from all the fund sources. REPRESENTATIVE DOOGAN explained that he wanted to know the state funds appropriated from the capital budget for each of the last five years to allow a comparison with these other proposed funding programs. 2:44:32 PM MR. RICHARDS offered his belief that a comparison of the fund appropriations is in Mr. Ottesen's presentation. REPRESENTATIVE DOOGAN asked if it is possible to receive a copy. MR. RICHARDS offered a copy to Representative Doogan. [HB 322 was held over.]