HJR 4 - CONST. AM: TRANSPORTATION FUND [Contains brief mention of HB 30 and HB 31, which address the funding and other necessary statutory changes related to HJR 4's proposed transportation infrastructure fund.] 2:13:25 PM CHAIR GATTO announced that the final order of business would be HOUSE JOINT RESOLUTION NO. 4, Proposing amendments to the Constitution of the State of Alaska creating a transportation infrastructure fund. [Before the committee was CSHJR 4(TRA).] 2:13:50 PM REPRESENTATIVE PEGGY WILSON, Alaska State Legislature, speaking as one of the joint prime sponsors, explained that [if passed by the legislature,] HJR 4 would place before the voters a proposed amendment to the Alaska State Constitution establishing a dedicated fund - in the form of a transportation infrastructure fund - that would be used to fund Alaska's transportation projects. In fiscal year 2010 (FY 10), 87 percent of Alaska's transportation budget came from the federal government, but the current federal reauthorization legislation has already expired and been extended many times, and so those federal funds are only going to be available through September of 2011. Furthermore, the new federal reauthorization is rumored to be quite a bit smaller, and is considered to be unfavorable to states with small populations due to its emphasis on mass transit, high-speed rail, and "green" transportation. Therefore, as federal funding continues to diminish, Alaska will have to shoulder more financial responsibility for its transportation infrastructure. Investment in the state's transportation infrastructure creates a competitive environment that attracts additional economic investments, which translate into jobs for Alaskans. House Joint Resolution 4 is intended to provide for Alaska's ever-growing transportation needs. REPRESENTATIVE P. WILSON noted that over the last couple of years, the House Transportation Standing Committee has been seeking and receiving testimony from the Department of Transportation & Public Facilities (DOT&PF), "grassroots organizations," and transportation companies regarding the challenges of transportation in Alaska resulting from its geographical diversity, and has visited rural and urban communities across the state, learning about their airports and basic transportation infrastructures, and the challenges they face regarding safety, [traffic] congestion, and deferred maintenance. Furthermore, the Alaska Municipal League (AML) and the Matanuska-Susitna (MAT-SU) Borough arranged for an independent study to be conducted regarding the fiscal challenges of transportation; the National Conference of State Legislatures (NCSL) provided information regarding what other states are doing to address their transportation-infrastructure budget gaps; and the federal coordinator for Alaska natural gas transportation projects provided a list of all funding options available to address the fiscal shortfalls that Alaska's long- range transportation plan has outlined. REPRESENTATIVE P. WILSON relayed that HJR 4 is the culmination of all that research, and is not intended to diminish Alaska's relationship with the federal government. Instead, the intention is to provide for a dedicated revenue stream that would allow more transportation projects to be completed more quickly and for less money. Alaska needs to take advantage of both the cost- and time-savings afforded by state-funded projects in order to address the state's growing transportation- infrastructure needs. It is anticipated that the proposed transportation infrastructure fund would move projects along much faster, from conception to completion, because state-funded projects do not have to follow the federal government's highly- prescriptive and lengthy procedures - which are often expensive and time consuming - thereby allowing constituents to enjoy the benefits of such projects much sooner. For example, because state funds were used for the Elmore Road extension, that project was completed in less than three years rather than the seven to ten years it would have taken had following federal procedures been required. 2:17:53 PM REPRESENTATIVE P. WILSON explained that the proposed transportation infrastructure fund, in addition to being seeded with $1 billion and receiving yearly revenue from Alaska's motor fuel taxes, vehicle registration fees, studded tire taxes, and vehicle rental taxes, would continue to grow as its investment returns are compounded. Under HJR 4, in any given year, the legislature could appropriate up to 50 percent of its yearly revenue, and up to 6 percent of its market value averaged over the previous five fiscal years. According to a handout in members' packets developed by the Department of Revenue (DOR), the proposed transportation infrastructure fund is anticipated to generate approximately $103 million the first year, and to increase every year after that by between $3 million and $3.5 million. The legislature would use the same process to appropriate money from the fund as it currently uses for the capital budget. REPRESENTATIVE P. WILSON indicated that there are three pieces of legislation that together would enable the establishment of the proposed transportation infrastructure fund: [HJR 4 would place the proposed change to the Alaska State Constitution before the voters, HB 31 would provide for the appropriation of the initial $1 billion to the fund, and HB 30 would provide the other necessary statutory changes]. As currently outlined in the legislation, appropriations from the proposed transportation infrastructure fund could be used for any transportation-related needs such as capital projects and large deferred-maintenance projects. And should the legislature later choose to, it could make further statutory changes such that appropriations from the fund could also be used for DOT&PF operations, thereby ensuring that the legislature has the flexibility to use the appropriated funds as it sees fit. 2:20:32 PM REPRESENTATIVE P. WILSON relayed that those who've testified before the House Transportation Standing Committee on this issue agree that the state needs a reliable revenue stream that won't fluctuate from year to year, and proffered that HJR 4 would provide just that; with such a reliable revenue stream in place, the state would be able to implement a transportation plan that would be independent from the federal government. Historians, she proffered, write that the drafters of the Alaska State Constitution were concerned that providing for dedicated funds would impair future legislatures from responding to evolving public needs. However, 24 states have constitutionally-required dedicated funds, and the public need for dependable and efficient transportation has only grown since the Alaska State Constitution was written. She offered her understanding that in one of his speeches, former Governor Hickel indicated support for the Alaska State Constitution being changed to provide for a dedicated transportation fund. REPRESENTATIVE P. WILSON went on to explain that under a change made by the prior committee, the proposed transportation infrastructure fund would no longer include revenues from [airport leases] due to a federal requirement that such revenues be returned to the airports they were collected from. [Chair Gatto turned the gavel over to Representative Keller.] REPRESENTATIVE P. WILSON mentioned that members' packets include a list of those who support HJR 4 and would be seeking its passage in the November 2012 general election. In conclusion, she opined that Alaska must provide for and maintain a modern, reliable transportation system in order to ensure the economic and social wellbeing of its citizens, and that the constitutional change provided for via HJR 4 - establishing a dedicated transportation fund - would allow the state to do just that. REPRESENTATIVE HOLMES - referring to language on page 1, lines 14-15, of HJR 4 regarding aviation fuel taxes, and to a memorandum by Legislative Legal and Research Services dated February 25, 2011, [commenting on federal law as it pertains to such taxes] - questioned whether, if HJR 4's proposed constitutional change is approved by the voters, any future changes to Alaska's aviation fuel taxes would require an additional constitutional change. [Representative Keller returned the gavel to Chair Gatto.] 2:25:24 PM BECKY ROONEY, Staff, Representative Peggy Wilson, Alaska State Legislature, on behalf of Representative P. Wilson, one of HJR 4's joint prime sponsors, offered her belief that any changes the legislature wishes to make in the future regarding the appropriation of aviation fuel taxes could be addressed via a statutory change rather than via another change to the Alaska State Constitution, and mentioned that under current law, 60 percent of aviation-fuel tax revenue must be refunded to the municipality responsible for the airport from which the tax revenue came, and that [the aforementioned HB 30 would additionally allow] a portion of the appropriations from the proposed transportation infrastructure fund to be used for aviation-related projects. In response to another question, she indicated that use of the phrase, "other transportation-related fees and funds designated by the legislature" on page 2, lines 2-3, is meant to provide the legislature with the [constitutional] flexibility to address such fees and funds should any be established in the future. REPRESENTATIVE HOLMES surmised, then, that use of the phrase, "transportation and related facilities that are designated by law" on page 2, lines 9-10, is meant to provide the legislature with similar [constitutional] flexibility regarding what appropriations from the proposed transportation infrastructure fund could be used for. REPRESENTATIVE P. WILSON concurred. In response to another question, she ventured that allowing for up to 6 percent of the market value of the proposed transportation infrastructure fund averaged over the previous five fiscal years to be additionally appropriated would provide the legislature with sufficient flexibility, and pointed out that the legislature could choose to appropriate less than 6 percent. In response to a question, she offered her understanding that currently the fees referenced in HJR 4 are deposited into the general fund (GF). MS. ROONEY added that under HJR 4, appropriations from the proposed transportation infrastructure fund could be used for costs related to motor vehicle licensing and registration that are designated by law. In response to another question, she offered her understanding that under [HB 30,] certain specialty- license-plate fees would be exempt from inclusion in the proposed transportation infrastructure fund. REPRESENTATIVE P. WILSON, in response to further questions, offered her understanding that the federal funding of Alaska's FY 10 transportation budget totaled approximately $400 million, and explained that under [HB 30, a 19-member Transportation Infrastructure Fund Advisory Council] would be established that would prioritize eligible transportation-related projects and then submit a report to the governor and the legislature making recommendations regarding which projects should receive funding from the proposed transportation infrastructure fund. 2:34:51 PM TOM BRICE, Alaska District Council of Laborers, relayed that the Alaska District Council of Laborers supports HJR 4, and is always interested in ensuring long-term, stable funding sources for Alaska's transportation projects, viewing HJR 4 as one of the instruments that would help accommodate such. He concluded by saying that the Alaska District Council of Laborers encourages the committee to move forward with the resolution, and looks forward to [promoting] the adoption of the proposed constitutional change. 2:36:17 PM DON ETHERIDGE, Lobbyist, Alaska American Federation of Laborers - Congress of Industrial Organizations (Alaska AFL-CIO), relayed that both the Alaska AFL-CIO and the Teamsters Local 959 support HJR 4, and look forward to [promoting] the adoption of the proposed constitutional change, adding that he, himself - as a seasonal maritime captain - supports HJR 4, and is looking forward to having something like [the proposed transportation infrastructure fund in place] to help out with the state's harbor needs, particularly given the atrocious state of disrepair some of the harbors are in, and given the current limitations of the "municipal grant fund." 2:37:45 PM RON AXTELL, Vice President, Laborers' Local 341, said that as someone who's worked in the "heavy highway sector" for many years, he strongly supports [HJR 4's] proposed change to the Alaska State Constitution establishing a transportation infrastructure fund. Regardless that the state does its best to maintain its roads and highways, Alaska will always be lagging behind unless it can find a way to fund maintenance and development, and the recent receipt of American Recovery and Reinvestment Act of 2009 (ARRA) monies illustrates the effect of not having such a funding plan in place, he ventured. Alaska's major highways are in terrible shape, with rutting from studded tires. How long will Alaskans have to wait before their highways are repaired? This, he opined, is just one example of the many problems with Alaska's existing transportation infrastructure. As a young Alaska moves forward, it will be forced to pick up the funding burden as the federal deficit grows and federal monies to states decrease. With financial uncertainty looming on Alaska's horizon, not moving forward with [HJR 4's] proposed constitutional amendment could very well produce a greater strain on future state budgets. MR. AXTELL offered his belief that the proposed transportation infrastructure fund would help the state resist the influence of outside organizations that would prefer Alaska to remain undeveloped, and predicted that with the establishment of such a fund, Alaska would have more control over which projects to proceed with. With many jobs and businesses reliant upon transportation projects, completing such projects in a timely and efficient manner would be a win-win for everyone, and it would be a large disappointment for the state to have to tell its citizens that it would like to do more development and improvement but it just can't seem to find the money. In conclusion, he asked the committee to support HJR 4 and bring the proposed constitutional amendment before the voters. 2:40:24 PM KEVIN POMEROY, Laborers Local 942, said he supports HJR 4 and agrees with the sponsor that Alaska isn't going to be able to continue relying upon federal funding, and characterized [HB 31's $1 billion in seed money] as a wonderful investment at a time when the state has a little bit of money to spend - unlike some states in the Lower 48. Alaska is going to have to become more accountable with regard to where it obtains funding, particularly given that because Alaska has such a small population, other states are more likely to receive any available federal funding. For the state to invest in its own development is a great idea, he opined. Consider, for example, that many discussions often revolve around ways to enhance/promote tourism and bring development to the state, and yet one of the first things visitors to the state see when they arrive is the condition of the state's airports, ferry terminals, and roadways - Alaska's transportation infrastructure - and so it's important for the state to be able to illustrate that it's capable of taking care of its own infrastructure, which, in addition to promoting development, is used daily by Alaskans for a variety of reasons. In conclusion, he reiterated his support for HJR 4. CHAIR GATTO, after ascertaining that no one else wished to testify on the resolution, closed public testimony, and relayed that HJR 4 would be held over.