HJR 10-CONST. AM: TRANSPORTATION FUND  [Contains discussion of HB 123.] 1:23:36 PM VICE CHAIR ISAACSON announced that the next order of business would be HOUSE JOINT RESOLUTION NO. 10, Proposing amendments to the Constitution of the State of Alaska creating a transportation infrastructure fund. 1:23:42 PM REPRESENTATIVE P. WILSON, testifying as sponsor of HJR 10, began by explaining the reason the state should create an Alaska Transportation Infrastructure Fund (ATIF). She stated that in FY 14, 79 percent of Alaska's transportation funding will be derived from the federal government, which is reduced from 84 percent of federal funding for transportation in FY 10. The state currently has $20 billion in backlog for transportation projects as well as $700 million in deferred maintenance projects. The state cannot even keep up with maintenance needs let alone its other transportation needs. She reported that the federal government has passed a new two-year highway bill, MAP 21. The overall federal funding remains consistent with the Federal Highway Administration's (FHWA) Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) funding; however, funding for roads not on the national highway program has been cut by 50 percent. Alaska only has eight roads on the national highway program - the least in the nation - which means that Alaska will see substantially less funding for borough or city roads, she said. This will happen since categories of funding have been reduced and the FHWA is much more restrictive than in the past. In fact, Alaska's U.S. Congressional delegation has told the legislature that Alaska needs to rely less on the federal government and should start shouldering some of the burden of improving its transportation infrastructure. Federal funding has been diminishing in many other areas, which translates into the general fund dollars also shrinking, making every department's portion less, as well. This resolution is about meeting the ever growing transportation needs. She asked how Alaska will keep up when it cannot even keep up with its transportation maintenance, let alone financing new roads. 1:26:32 PM REPRESENTATIVE P. WILSON related that over the past four years this transportation committee has listened to the DOT&PF, grassroots organizations, and transportation companies to identify challenges in transportation in Alaska's geographically diverse state. This committee traveled to villages and viewed rural airports and rode Alaska's urban highways to see the challenges with respect to safety and deferred maintenance. This committee heard from the Alaska Municipal League (AML) and the Matanuska-Susitna Borough (MSB), who have teamed together to contract an independent study on the fiscal challenges of transportation. This committee has heard from the National Conference of State Legislatures (NCSL) to hear solutions other states have implemented to address their transportation problems. She pointed out that Larry Persily, Federal Coordinator for Alaska Natural Gas Transportation Projects, has put together a list of all the transportation funding options available to address the fiscal shortfalls of our long range transportation plan and his list is in members' packets. The culmination of all those hours of committee hearings, travel, and research has resulted in a three-part solution. 1:27:53 PM REPRESENTATIVE P. WILSON summarized the three part solution: One, the legislature should reinstate the dedicated transportation fund; in other words pass the Alaska Transportation Infrastructure Fund. Two, the legislature should maintain Alaska's existing transportation funding by maintaining its operational and capital budget and address the deferred maintenance backlog. Three, the DOT&PF should execute more 100 percent state-funded projects rather than using federal funds. She clarified that state-funded projects do not have to follow the highly constrictive and lengthy Federal Highway Administration (FHWA) procedures which are often expensive and time consuming. With state-funded projects, Alaska's constituents will see the direct benefits. For example, state funds were used to construct the Elmore Road extension in Anchorage, which was completed in three years rather than the ten years it normally would have taken under federal funding processes [FHWA]. This resolution, HJR 10, is not intended to diminish the state's partnership with the federal government, but its goal is to create a dedicated revenue stream in addition to the capital projects to provide for transportation needs. She emphasized that this fund is not intended to supplant capital budget funds. Additionally, the ATIF will grow as the investment returns on the fund compound. 1:29:51 PM REPRESENTATIVE P. WILSON related the endowment would initially be seeded with $2 billion [in general fund appropriation]. In addition to the investment returns of the endowment, HJR 10 will require revenues from fuel taxes, the Division of Motor Vehicle's fees, taxes on tires, drivers' license fees, fees for identification cards, and motor vehicle rental taxes to feed the fund. The ATIF can expect to generate approximately $86 million in the first year and $133 million the second year, and will increase by about $4 million each subsequent year. She referred to a spreadsheet in members' packets developed by the Legislative Finance Division that estimates the [ATIF] fund balance and the amount that is projected to be available each year based on provisions of the enabling legislation. 1:30:45 PM REPRESENTATIVE P. WILSON said historians have reported that the drafters of Alaska's Constitution were concerned that dedicated funds would impair future legislatures from responding to evolving public needs. Thus the drafters created two dedicated funds: one for highways and one for water and harbors. The public's need for dependable and efficient transportation hasn't changed since the constitution was written; instead, the needs have only grown. An excerpt from the speech Governor Hickel gave for his State of the State address almost twenty years ago demonstrates that a dedicated transportation fund is not such a radical a proposal to consider. She quoted Governor Hickel as saying, "Over half the states already have one. Alaskans will receive more stable service levels with a dedicated revenue stream and if new revenues are needed, Alaskans will be assured that any new transportation fees will go to transportation." She urged members that Alaska needs to take action now. The future of the economic and social well-being of Alaska's citizens is critically dependent on a reliable transportation system. This change to Alaska's Constitution would allow a reinstatement of the dedicated transportation fund is needed to create a modern and reliable transportation system for Alaska. Transportation investment creates a competitive environment which would attract additional economic investment to grow the general fund, she said. This resolution is not the enabling statute that will define how the fund will be managed, how the funds will be distributed, or who the funds will receive the funds. She concluded by reminding committee members that this resource, [the ATIF] will allow the public to vote on recreating the ATIF. She respectfully requested the committee move HJR 10 today. 1:32:52 PM VICE CHAIR ISAACSON said he appreciated the fact that Chair Wilson has been working on a dedicated transportation and he is delighted to help move HJR 10 forward. He recalled the Division of Motor Vehicles (DMV) will be funded such that it will not diminish the fund, but will help reduce general fund expenditures. REPRESENTATIVE P. WILSON responded that the DMV currently is funded through the receipts it receives and [the resolution or bill] will not change the funding mechanism. In fact, the funding mechanism for fees and taxes already designated will remain the same, including fees for specialized license plates or airplane fuel taxes, she said. 1:34:24 PM VICE CHAIR ISAACSON understood [the ATIF] is not just to provide for maintenance and operations (M&O) but will connect Alaska's communities to each other. REPRESENTATIVE P. WILSON agreed. She explained that she hoped [the ATIF] would make a big difference to the economy of the state. She offered her belief that Alaska currently does not have enough transportation infrastructure in the state. Thus, by using the fund she hoped many Roads to Resources (R2R) projects would be finished and these projects will connect communities to one another. VICE CHAIR ISAACSON remarked the ATIF would also possibly fund Revised Statute 2477 rights-of-way trails (R.S. 2477). 1:35:02 PM REPRESENTATIVE KREISS-TOMKINS asked for the legal relationship between the HJR 10 and HB 123. He understood HJR 10 is necessary for the bill to take place and if the resolution passes the legislature and the voters, the [ATIF] fund would be ready to go. REPRESENTATIVE P. WILSON answered yes; but clarified that HB 123 is the enabling legislation that provides the framework and HB 122 would appropriate the $2 billion into the endowment fund. 1:36:13 PM AVES THOMPSON, Executive Director, Alaska Trucking Association, Inc. (ATA) stated that the ATA is a statewide organization representing the interests of its nearly 200 member companies from Barrow to Ketchikan. He said that freight movement represents a large chunk of Alaska's economy and impacts all of us each and every day. He also said, "The simple truth is, that if you got it a truck brought it." One of ATA's top priorities is to establish a state transportation fund to invest state dollars in our transportation systems. Trucks rely on the road system to deliver the goods to ensure a safe and productive transportation system and it is necessary to fund road improvements. MR. THOMPSON said that thousands of truck drivers are on Alaska's highways every day and it's important to keep their workplace safe and productive. Thus ATA supports a state funded transportation program that will fund Alaska's highway projects over and above current capital expenditure levels. He understood he ATIF would also allow Alaska to focus Alaska's federal dollars on the National Highway System (NHS) in Alaska. He identified these connecting routes as ones that carry the most traffic and freight on highways in Alaska. The state has heard repeatedly that the Federal Highway Administration funding (FHWA) will be reduced in the near future. Alaska's network of highways allow for safe and efficient movement of more than 62,000 tons of freight each day and Alaska needs to continue to provide a reliable and predictable funding stream to support this system. A number of mega projects are on the horizon that will require a dependable system of freight corridors to maintain to support and maintain the flow of equipment that Alaskans will need. The ATIF will help provide the necessary funding for these roads and highways and will help meet local project needs. He stated that HJR 10 will put a vote before the people to give voters a chance to decide on whether to create a dedicated transportation fund. Transportation user fees and taxes are much easier to pay when they are used to build and maintain Alaska's highway system. He concluded by stating that ATA supports HJR 10. He urged the committee to move this resolution forward. 1:39:04 PM BARBARA HUFF TUCKNESS, Director, Teamsters Local 959, stated the Teamsters Local 959 [Teamsters] consists of 7,000 members that strongly support HJR 10. She said that the constitutional amendment is long overdue. Additionally, she added the Teamster's support for HB 123, which ties the package together. She pointed out that the Teamsters represent members who work in the trucking industry, and other industries, including health care, mining, and telecommunications with the exception of tourism and fisheries. She indicated Alaska has experienced a lack of road systems and timeliness in receiving goods is important. She stated that some of you have had my boss in your office and heard him ask, "When's the last major road construction project that you've seen in the state?" She recalled that the answer goes back to the Pogo mine when former Governor Steve Cowper was in office. The Teamsters hope this constitution amendment will move forward. It puts in place a system that takes away Alaska's dependence on federal funding. She suggested that U.S. Congressman Don Young has worked very hard to secure federal funding for Alaska. The Teamsters believe it's time the state prepares for its own needs. Alaska should move forward with its own transportation projects, whether they are new roads or maintenance of existing roads. She reiterated Representative P. Wilson's plan for cost savings by using state dollars on projects instead of federal [FHWA] dollars. In fact, state dollars have the ability to go farther than federal funding since Alaska doesn't have the constraints attached to its funding as does federal funding. She urged members to support HJR 10. 1:42:20 PM JOHN MACKINNON, Executive Director, Associated General Contractors of Alaska (AGC-AK), stated that the AGC-AK is a construction trade association comprised of 650 businesses in Alaska. He related that a state-funded transportation program is an essential element. He said his comments are relevant to both HJR 10 and HB 123. He thanked Chair P. Wilson for her support and persistence in pursuing this effort. He recalled this is the third or fourth year she has pursued a dedicated transportation fund. He acknowledged that Chair Wilson is as passionate about this issue as are many of his members. He related that he speaks from a position of knowledge and experience. He previously served as a deputy commissioner of DOT&PF in 2003-2007 and for the past five years has served as the executive director of AGC-AK. He related he has a good understanding of the current transportation program, the federal program, the state appropriation process, the transportation priorities, and problems and needs of the state. He highlighted the important aspects of the ATIF, including that it would provide substantial state funding to adequately address the needs of Alaska; a user fee program; and in HB 123, prioritization of projects based on need and not politics. The goal of a state-funded program is to increase the level of funding for transportation projects to supplement the declining federal program. A regular source of state funding allows alternatives to the federal program. Prior testifiers have indicated state dollars go further than federal dollars, he said. He offered his belief that this is not an exaggeration. He explained that the DOT&PF routinely estimates a federal dollar being worth about 75 cents compared to a state dollar. He offered his support for HJR 10 and HB 123. 1:45:02 PM VICE CHAIR ISAACSON, after first determining no one else wished to testify, closed public testimony on HJR 10. 1:45:17 PM REPRESENTATIVE FEIGE moved to report HJR 10 out of committee with individual recommendations and the accompanying fiscal note. There being no objection, HJR 10 was reported from the House Transportation Standing Committee. VICE CHAIR ISAACSON returned the gavel to Chair P. Wilson.