CS FOR SENATE BILL NO. 71(TRA) "An Act relating to funding for transportation projects; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. [NOTE: The initial portion of the sponsor's testimony was not recorded due to recording technicalities. In lieu of verbal testimony, Senator B. Steven's Sponsor's Statement is incorporated into the minutes as follows.] Sponsor Statement Committee Substitute for SB 71: Transportation Enhancement Projects. Federal law, TEA-21, and its predecessor, ISTEA, mandate that states expend at least 10% of federal Surface Transportation Program funds on enhancement such as trails and landscaping. Over the past several years, the State of Alaska has expended amounts well beyond the minimum requirements for enhancement projects that could otherwise be applied to roadway construction and improvement projects. CS for Senate Bill 71 decreases the amounts allocated for the TRAAK program and other enhancement projects to be in line with federal minimum requirements to free up millions of dollars to be available for roadway construction and improvement projects. The committee substitute for Senate Bill 71 proposes to reduce the Department of Transportation's allocation of non- restricted federal apportionments to projects classified under the Trails and Recreational Access Program (TRAAK). Under current DOT regulations, the department allocates at least 8% percent to TRAAK projects; CS for SB 71 reduces the allocation to not more than 4%. The bill redirects the other 4% into the DOT allocation for projects classified under the Community Transportation Program, increasing this program's allocation to 37%. Administrative Order #161 of the previous administration in 1996 established the Trails and Recreational Access for Alaska (TRAAK) program to address features such as trails, scenic highways, recreational access points and interpretive facilities. From 1998 to 2003, over $150 million was allocated for the TRAAK projects while the federal minimum for transportation enhancement (i.e. trails, landscaping scenic beautification) expenditures was $43 million; more than a 200% increase. These expenditures do not include separate bike paths or waysides that were included in individual construction projects in the National Highway System program, the Alaska Highway system or Community Transportation Program. Only a municipality that is federally recognized as a Municipal Planning Organization (MPO) would be impacted by this section (c) of this legislation, which are Anchorage and Fairbanks. In 1998, the Anchorage Metropolitan Area Transportation Solutions (AMATS) adopted a policy of programming 15% of its transportation funding allocation for enhancements. The three-year average at 15% for transportation enhancements from 2000-2002 Transportation Improvement Program averaged roughly $5.5 million. The Department of Transportation is expecting the Anchorage share of TEA-21 federal-aid transportation funds to increase within the next Statewide Transportation Improvement Program. With the anticipated overall increase, 10% of the three-year average of federal-aid highway funds allocated to AMATS during 2004-06 will be roughly $5.8 million, slightly more than what was allocated during 2000-2002. [Note: Recording resumes.] Senator B. Stevens directed the Committee to a spreadsheet titled "Comparison of Minimum TE Expenditures Required Under Federal Law, and Total Level of TRAAK Project Funding 1998-2003," [copy on file] provided by the Department of Transportation and Public Facilities. He explained that this information depicts the federal surface transportation funding, the federal and State funding allocation, and the total TRAAK Program allocation for the years 1998-2003. He summarized that the federal and State ten percent match for these years totaled approximately $43 million; however, he declared, the State spent in excess of $150 million. Senator B. Stevens advised that Section 1(a) of the bill addresses the federal and State funding levels, and Section 1(c) addresses AMATS. He stated that the spreadsheet titled, "Comparison of the Anchorage Metropolitan Area Transportation Solutions (AMATS) Enhancements Allocation at 10% and 15%,"[copy on file] provided by that AMATS 2001-03 TIP and Draft 2004-06 TIP depicts the year 2000- 03 AMATS allocations, the actual amounts allocated, and the 15 percent and ten percent funding levels. He referenced the proposed year 2004-06 program funding increases at the 15 percent and ten percent levels, and he argued that, rather than remove money from the Anchorage trail system, the ten percent level of funding specified in this bill would allow the recent average of funds to be maintained or increased while allowing more funding to be allocated to actual road projects which, he advised, should be a priority of the State. Senator B. Stevens referred the Committee to the pie chart titled "Distribution of Federal-Aid Transportation Formula Funds Per 17 AAC 05.155-200" within the "Trails and Recreation Access for Alaska (TRAAK) Program" pamphlet provided by the Department of Transportation and Public Facilities. He explained that the larger of the two pie charts reflects that 41 percent of the federal funding is allocated to fund the CTP (Community Transportation Program) that funds the STIP. He stated that eight percent of the total 41 percent funding is designated for TRAAK with the remaining 33 percent designated to fund the MPOs and all other State transportation projects. Senator Stevens summarized that Section 1(b) reduces the level of TRAAK funding to four percent thereby increasing the CTP to 37 percent, which would benefit all statewide road projects. Senator Olson commented that while he understands the concern regarding road project funding needs, he asked whether this legislation would affect rural trail funds. He emphasized the importance of rural trails, which serve as the primary transportation link for many communities SFC 03 # 18, Side A 10:58 AM Senator Olson continued that snow machine trail markings provide an "essential link for people traveling between villages" in rural areas of the State. Senator B. Stevens stated that the intent of the bill is to continue to fund TRAAK trail needs at the four percent level. He stated that some of the projects on the "Tentative Advertising Project Schedule as of Friday March 7, 2003" [copy on file] provided by the Department of Transportation and Public Facilities are not trail enhancement projects "but are actually large road projects that are being funded." He pointed out that Item #12 is a highway and that Items #13 and #14 are road rehabilitations. He asserted that the TRAAK program should continue to provide funding for "rural transportation corridors." Senator Olson clarified that while he understands the intent of the bill, he is requesting verification that the rural trails would not be negatively impacted by this legislation. JAMES ARMSTRONG, Manager, Transportation Planning, Municipality of Anchorage, testified via teleconference from Anchorage and voiced support for the bill. He noted that the March 3, 2003 letter from the Municipality of Anchorage Mayor, George Wuerch, to Senator Ben Stevens [copy on file] endorses the legislation. TED VOLIN testified via teleconference from Anchorage to voice support of the four percent TRAAK funding level as specified in the bill. Senator Hoffman voiced concern that, while this legislation would result in more dollars being available for road improvement needs, federal standards might prevent the money from being spent in rural areas. Therefore, he suggested that consideration be given to specifying an allocation for Rural projects. Senator Hoffman asserted that restrictions should be imposed on the TRAAK program to prevent further abuses in the program; specifically to ensure that urban road projects should be required "to vie" for designated road project funding rather than TRAAK funds. He expressed that, without restrictions, rural areas would be required "to compete" against larger community "mega-projects" for funds of "a smaller pie." Senator B. Stevens voiced that this legislation would provide an additional $13 million "to meet all other State and local needs," which, he argued, would include Rural needs. Mr. Ottesen voiced that the issue of whether rural trials that are used by machines should be viewed as TRAAK or CTP projects has been debated for years. He voiced the position that rural trails should be recognized as part of the CTP program "as they are moving people and their goods for the sake of commerce and daily living," rather than being used "as a recreational asset." Therefore, he continued they would be "more adequately funded" than they currently are if the CTP funding increases from 33 percent to 37 percent. Senator Hoffman countered that the Department's "ranking criteria" rates Rural projects "very low" and "favors" higher service areas. Mr. Ottesen assured that the formula would be revisited when the next STIP is developed. However, he continued, that while many Rural trails have been funded, the Department has experienced a backlog of projects due to the difficulty in implementation. He stressed that the Department supports village trail projects "as they save lives," they help people move food and fuel from community to community, and "they are a highway in the very real sense of the word." Senator Bunde understood that, were this bill adopted, $3 million of AMATS funding and four percent of TRAAK funding, amounting to approximately $13 million, would be available for road projects. Senator B. Stevens clarified that the total amount of federal funding would remain the same; however, he continued, four percent, rather than the current eight percent, would be allocated for TRAAK funding. He stated that this would result in additional CTP funds. Mr. Ottesen verified that were the percent allocated to TRAAK reduced to four percent, an additional $13 million would be available for road projects in FY 04. Senator Bunde surmised, therefore, that approximately $15 million would be made available to transport people above the current allocation. Mr. Ottesen agreed. Senator Olson asked whether this legislation would affect marine transportation; specifically channel markings. Mr. Ottesen explained that the State is unable to use federal highway funds for ports or navigation aides. He voiced optimism that, through the Denali Commission, these types of projects might be eligible for funding, and he noted that the Department, in anticipation of this funding, is supplying the Denali Commission with pertinent information "on the types and needs that exist." Senator Olson asked who is currently responsible for the maintenance of channel markers in rivers. Mr. Ottesen responded that "aides to navigation" are currently the responsibility of the US Coast Guard. Co-Chair Wilken asked the Department's position regarding the legislation. Mr. MacKinnon responded that the Department has issued a "Best Interest Finding" from Commissioner Mike Barton, signed in January 2003, that reflects a Department funding reduction to TRAAK by approximately $11.5 million for remaining half of federal fiscal year 2003. Senator Hoffman reiterated his concern that rural projects would be competing for fewer TRAAK dollars; therefore, he asked whether the additional monies available for CTP could be specified to address rural needs. He further inquired as to whether language could be added to the TRAAK program to ensure that the "mega-projects, particularly the road projects," do not absorb the available funding. Mr. Ottesen conveyed that this money is designated as Transportation Enhancement (TE) funding. He communicated that rural projects are eligible through CTP and TRAAK; however, he noted, the State has spent beyond the federal TE specifications for TRAAK which has allowed for rural boardwalks and trail markings. Therefore, he suggested, "a better approach might be to revisit" the State formula to ensure that rural projects could "compete on a even basis with more urban and suburban projects." Senator B. Stevens moved to report CS SB 71(TRA) from Committee with previous fiscal note and individual recommendations. Senator Hoffman objected. He requested that the issue of rural trail funding be addressed as the bill proceeds through hearings in the House of Representatives. Senator Hoffman withdrew his objection. Without further objection, the bill REPORTED from Committee with previous fiscal note #1, from the Department of Transportation and Public Facilities.