SENATE BILL NO. 50: An Act making appropriations for capital projects; and providing for an effective date. Co-chair Pearce invited Commissioner Bruce Campbell, Department of Transportation & Public Facilities to join the members at the table Mr Campbell. COMMISSIONER BRUCE CAMPBELL provided the committee with a handout (copy on file) and said that the department had been asked to explain how state and federal funds are handled to complete projects in Alaska. He introduced Ron Lind, Director, Plans, Programs & Budget, the Department of Transportation & Public Facilities, to the committee. RON LIND said that he would provide definitions for some commonly used terms. He said "apportionment" meant Alaska's upper limit for a category of work available for federal funds usually over multiple years. "Authorization" meant spending approval given by the legislature for use of either state or federal funds. "Obligation" is a key issue and the reason authorization is needed by the legislature. An "obligation" is a federal government commitment to pay based on eligible work that is performed by DOT/PF. A document is signed for each project phase with the federal agency in Juneau. If a project is not committed or signed up for the year that it is available, those funds are lost. It is a use it or lose it process. Usually the amount of money available for obligation is less than the upper limit or apportionment available. At the end year, if DOT/PF has obligated or signed documents with the federal government and Alaska cannot use the obligated dollars available, the excess goes to other states. To date this has not occurred. At the same time, if other states have not used all their funds, Alaska could ask for an increase in its federal share. In order to take advantage of those extra dollars, DOT/PF must have work ready to go with authorizations signed. He said that the rest of the handout explained the typical funding process and why state authorizations are needed. He explained that if the legislature limited DOT/PF by making obligations project specific and if there was any failure or delay with that specific project, there would be no assurance that the federal obligation could be used in that single year and the state could possibly lose federal funds. Mr. Lind went on to explain how DOT/PF decides which projects are put in the capital budget each year, and how much money is requested for match appropriations. First, DOT/PF evaluates apportionments available by federal category for the budget year, estimates the total obligation (federal commitments available), projects the match available from other remaining years of appropriation and decides how much match is required for the budget year. The six year plan process prioritizes projects to insure that the funds available are used and allows for increase of funds or projects that can be substituted if a delay should occur in a project. All projects must be identified as already authorized, needing initial authorization or an increase of authorization. End SFC-93 #64, Side 1 Begin SFC-93 #64, Side 2 Mr. Lind went on to explain DOT/PF's expenditures over the past years and the need for additional authorizations in the next few years. In answer to Senator Rieger, Mr. Lind said that DOT/PF has enough projects ready to go to construction (which have already gone through the steps of location, design, right-of-way) that the state could take advantage of additional federal funds if available. Mr. Campbell said that a step-by-step process was definitely followed to insure federal funding. In answer to Senator Rieger, Mr. Lind said that he felt the state legislature could add any project that it desired, but before any actual work could be done, AMATS would have to amend its plan, decide to adopt the project into their plan, and make it part of the work. Outside of the AMATS area, the legislature can add any federal authorization for any eligible work in a borough or an unorganized borough realizing that the maximum level of activity must be governed by location, environment issues, and design. Another possible delay could be the required public input process. In discussing construction of the new marine highway vessel, Senator Kelly said that DOT/PF is using an $80 million figure, while a consultant who had come before the committee and said that the project would total $89 million. He asked how DOT/PF would acquire the total $89 million before smaller obligations were approved. Co-chair Pearce said there were various plans to finance the new ferry vessel, including the Exxon settlement bill for $5 million. She said that the House would rather take $7 million out of the mitigation account this year for the ferry because at the end of the year, the remainder of the mitigation account will go into the 470 fund. Mr. Lind said that DOT/PF was requesting an authorization for $60 million for the ferry. Discussion was had by Senators Kelly, Kerttula and Co-chair Pearce regarding the total cost of the new ferry. Recess 9:20am Reconvene 9:50am