SENATE BILL NO. 97 "An Act making supplemental, capital, and other appropriations, and reappropriations; amending appropriations; making appropriations to capitalize funds; making an appropriation under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date." This was the third hearing for this bill in the Senate Finance Committee. Co-Chair Wilken stated that the Department of Transportation and Public Facilities would be continuing its overview of its Regular Supplemental bill requests. AT EASE: 9:51:53 AM / 9:53:09 AM Item 124 Section: 17(i) RDU: Central Region Highways and Aviation Supplemental Need: Anchorage snowhaul and equipment fuel, utilities, sand and steel cost increases. $1,374,400 General Funds NANCY SLAGLE, Director, Division of Administrative Services, Department of Transportation and Public Facilities stated that these request is the result of fuel, utility, and commodity price increases as well as an increase of approximately $130,000 relating to Anchorage snowhauling expenses. Fuel expenses have increased approximately 30-percent or $500,000; utility expenses have increased approximately six-percent or $70,000; and steel price increases have directly impacted the Department's ability to replace grader blades, culverts, and road signs. Sand, salt and chemical costs have also increased. Commodity increases amount to approximately $680,000. The Department's FY 05 Anchorage downtown area snowhauling budget had been reduced "a little too aggressively" by $250,000. Item 125 Section: 17(j) RDU: Northern Region Highways and Aviation Supplemental Need: Equipment fuel, utilities, and steel cost increases. $1,399,500 General Funds Item 126 Section: 17(k) RDU: Southeast Region Highways and Aviation Supplemental Need: Equipment fuel, sand, chemicals and steel cost increases. $263,400 General Funds Co-Chair Wilken noted that Sections 17(i), 17(j), and 17(k) depict similar expenses for other regions of the State. Continuing, however, he asked the reason Anchorage snowhauling expenses were considered part of the Central Region rather than the Interior Region. Ms. Slagle informed that the State has assumed responsibility for downtown Municipality of Anchorage roads' snowhauling as State roads transit through the Municipality. She pointed out that snow removal in Anchorage "is more of an issue" than it is in other communities through which State roads travel. The State's Anchorage snowhauling budget was reduced in the FY 05 budget, based on historical snowfall records; however, snowfall has exceeded those averages. Ms. Slagle concurred that Sections 17(i), (j), and (k) are similar in nature. Section: 17(l) RDU: State Equipment Fleet Administration Supplemental Need: Fuel increases - credit card expenditures reimbursed by user agencies. $1,100,000 Highway Working Capital Fund Ms. Slagle stated that this Fund authorization is specifically related to fuel cost increases. The State equipment fleet contracts out the amount of fuel that is utilized, and the various State agencies are provided a credit card through which consumption charges are tracked. The bills are submitted to the State Equipment Fleet, which in turn, bills the agencies for reimbursement. This request pertains to the authorization to expend those reimbursed monies. Senator Stedman asked whether the State could track fuel consumption by vehicle. Ms. Slagle responded that the process is designed to track by credit card rather than by vehicle. Since the credit cards could also be used for bulk purchases, it would be difficult to track a specific vehicle's consumption unless a credit card was specifically used for one vehicle. Mileage and maintenance costs, however, are tracked per vehicle in the fleet. Senator Olson asked how the Department addresses the rising expenses of non-State employees who are under contract to service Bush Alaska airports. Ms. Slagle asked for whether the question regards general maintenance contracts that are in affect for Rural airports. Senator Olson affirmed that this concern regards those responsible for such things as snow removal in places like Savoonga and Shaktoolik. Ms. Slagle understood that such contracts are bid out and re- negotiated on a regular basis of approximately two years. This provides the ability to address increasing expenses. Senator Olson stated therefore, that when the airport manager at Salmon Bay contacts him and relays "that the price of fuel just jumped" by a certain percent that his response would be that he had to abide by a Department of Transportation and Public Facilities contract that would be re-negotiated every few years. He asked whether provisions have been made to address such a scenario. Ms. Slagle replied that further information regarding pricing indexes for Rural Alaska would be provided. While the Department does have the ability to incorporate such cost increases into the contracts for Rural areas, there is no specific need to address this currently as, had the situation been different, a request of that nature would have been brought forward. Therefore, she assumed that such matters are being addressed internally. Senator Olson voiced that rather than his concern being about the contracts, his concern is about the increased fuel costs to those independent contractors. Ms. Slagle responded that in several instances, independent contractors utilize State equipment for Rural airport maintenance. She was uncertain as to whether the fuel used in those cases was included in the contract conditions or whether the State was responsible for it. She would clarify this. Section: 17(m) RDU: Statewide Information Services Supplemental Need: Funding for telecommunications chargeback costs. FY 04 supplemental funding was not built into FY 05 budget, thereby causing a shortfall. $659,600 General Funds Ms. Slagle explained that this request is associated with the amount of funds that the Department pays to the Department of Administration for its Enterprise Productivity Rate (EPR) usage, which is specifically associated with technology that the Department of Administration is providing to the Department. These rates have been increasing over the years and a similar request was before the Committee in the FY 04 Supplemental legislation. The Department's budget has not been adjusted to accommodate this expense. Some "shifting of rates" did occur; however it did not alleviate the pressure on the Department's budget as was intended. Co-Chair Wilken asked the reason that this sort of request is specific to the Department of Transportation and Public Facilities and not to others. Ms. Slagle responded that these expenses relate to the usage of computers and associated peripherals such as printers. The current formula, which the Department of Administration developed a few years prior, is based on department position counts. This has "greatly impacted" the Department of Transportation and Public Facilities as it has equipment operators and over 1,800 Marine Highway vessel employees who work in the field and do not have access to computers or telephones. Another consideration is that many of the Department's operations are conducted 24-hours a day. The combination of these things incurs more of these expenses on the Department of Transportation and Public Facilities than other departments. Co-Chair Wilken asked what would occur were this request unfunded. Ms. Slagle responded that the Department would be required to make "drastic changes between now and the end of the year." The money would be drawn from other programs, specifically the highways and aviation program as those are the programs that have general fund dollars. Senator Olson asked whether not funding this request might result in "risk to life or limb." Ms. Slagle stated that the response to that question is difficult. Funding it with existing program general fund dollars would negatively affect the Department's ability to adequately address Spring road issues. Co-Chair Green asked whether general fund dollars were the only funding option; specifically whether federal funds might be utilized. Ms. Slagle stated that federal funds could be utilized for general administrative support as well as for indirect cost allocation plan (ICAP) funding which are those funds not designated for a specific project. However, the Department has utilized available ICAP funds to the maximum level and there is no further flexibility. Co-Chair Green asked whether other non-federal funding options might be available. Ms. Slagle responded that ICAP funds are calculated as a percentage of each construction project, whether the funding source is federal, State, or International Airport Bond Funds. The Department endeavors to maximize all funding sources. Section: 17(n) RDU: Central Region Highways and Aviation Supplemental Need: King Salmon air traffic control current year contract. $68,000 General Funds Ms. Slagle stated that these funds are in addition to the $44,500 request included in the Fast Track Supplemental bill that was specific to FY 04 expenses. This request pertains to the costs associated with the King Salmon Airport Control Tower for FY 05. Senator Olson commented that funding of this request is imperative as, from personal experience, he characterized the airport as resembling a busy mosquito beehive. He noted that this funding might have averted the incident in which an aircraft had knocked down the control tower a few years earlier. Co-Chair Wilken stated that this request would advance. Section: 17(o) RDU: Human Resources Supplemental Need: Shortage in realizing savings due to delay in implementing electronic timesheets. $140,000 Various Funding Ms. Slagle informed that funds had been reduced in the Human Resources component of the Department's FY 05 operating budget due to anticipation that the implementation of an electronic timesheet would reduce expenses. However, the implementation of that system has been delayed and the Department has been required to pay the Department of Administration for Human Resources services. Co-Chair Wilken understood therefore that the FY 05 budget reflected the decrement relating to this system. Ms. Slagle communicated that a $160,000 decrement was reflected in the FY 05 budget. A $20,000 general fund decrement of that amount is not being requested. Senator Bunde observed that, on numerous occasions, the savings anticipated to result from consolidation or improved technologies have not been realized. To that point, he asked whether this endeavor "would eventually save money." Ms. Slagle assured that it would, as an electronic timesheet system would avoid the process of duplicating data entries by staff as well as any associated errors that might occur in the current payroll process. Senator Bunde asked when the anticipated savings would be realized. Ms. Slagle responded that no related funding is requested in the FY 06 budget, as the system should be in operation. Senator Bunde hoped this issue would not resurface in the FY 06 supplemental request legislation. Section: 18(a) RDU: Capital Supplemental Need: Airport Improvement Program increase of $18 million in federal funds as allocated. Total Funds: zero JOHN MACKINNON, Deputy Commissioner of Highways & Public Facilities, Department of Transportation and Public Facilities, specified that this request is the result of additional federal funds being realized late in FY 05. The projects provided for by this funding would be of Statewide significance and would not displace existing projects. Item: 138 Section: 18(b)(4) RDU: Capital Supplemental Need: Statewide: Emergency Bridge Replacement $800,00 Federal Funds Co-Chair Wilken asked the location of the bridge addressed by this request. Ms. Slagle expressed that, rather than being a specific bridge, this request would allow the Department to temporarily stockpile goods in Anchorage and Fairbanks. The Department currently has sufficient material to replace an approximate 100-foot bridge; however, double that amount of material is required. Co-Chair Wilken understood therefore that no specific bridge would be addressed by this request. Item 136 Section: 18(b)(2) RDU: Capital Supplemental Need: Statewide: Comprehensive Highway Safety Plan. $500,000 Federal Funds Ms. Slagle stated that Congressional re-authorization legislation being considered would require states to develop a comprehensive safety plan. This funding would further this plan, which would include crash data, crash patterns, safety and education issues, and the potential implementation of methods through which to address these and other issues. She noted that the FY 06 budget contains a similar request. Senator Bunde asked whether federal funding would also support the FY 06 request. Ms. Slagle concurred. Co-Chair Green asked when the Safety Plan project began. Ms. Slagle voiced the understanding that this project has not, of yet, begun and that this funding would allow for its development. Co-Chair Green recalled a Committee discussion in which it was determined that only continuing projects could be included in the supplemental bill. Co-Chair Wilken asked the Department's understanding of whether new programs could begin in a supplemental bill. Ms. Slagle understood otherwise. Co-Chair Wilken commented that this might be a policy decision. Co-Chair Green understood the definition of a supplemental request to be limited to continuing programs only. To that point, she asked whether this project could be delayed until FY 06. Co-Chair Wilken additionally asked whether this request would require a State match. Ms. Slagle stated that a State match would be required, and that the Department does have adequate funding available in its FY 05 match program. Several of the associated projects have begun or are in the Environmental Impact Study (EIS) stage. The Department has not followed "any type of guideline or policy" that would prohibit a new project from coming forward. The money is available and the construction portions of the project could be advertised and begun as early as May. Beginning projects early in the construction season would be beneficial "in the long run." Co-Chair Wilken asked regarding the Match level. Ms. Slagle responded that the match would be approximately 4.5 percent, provided this was a Surface Transportation Program (STP) project. Co-Chair Green noted that a nine percent minimum State match might be required. Ms. Slagle voiced that the Department has a variety of federal highway funding options available, each with different match rate requirements. The bridge has a 20-percent match rate. Regular STPs require a 4.5 percent match level. Co-Chair Wilken stated that this concludes department presentations on both SB 97 and SB 98. The bill was HELD in Committee.