SENATE BILL NO. 124 "An Act relating to the authorization for the Department of Transportation and Public Facilities to participate in the American Recovery and Reinvestment Act of 2009; and providing for an effective date." 9:08:37 AM MICHAEL BARNHILL, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW (LAW), informed the committee that SB 124 ensures that the Department of Transportation and Public Facilities (DOT/PF) has the authority needed under state law to participate in the American Recovery and Reinvestment Act (ARRA) of 2009, otherwise known as the economic stimulus bill. The bill has three sections of intent language. The purpose of intent language sections A and B is to identify the sections of the economic stimulus bill in which DOT/PF will participate. Each of the sub-agencies of the U.S. Department of Transportation (USDOT) to which DOT/PF would apply for funding are identified. He noted that Section C, Title XII, gives the Federal Aviation Administration (FAA) discretion regarding funding. 9:11:48 AM Co-Chair Stedman asked about the timeline regarding the certification. Mr. Barnhill answered that action had to be taken as soon as possible. He anticipated making the governor's certification as early as mid-March. Funds would be ready to flow on 3/4/09. FRANK RICHARDS, DEPUTY COMMISSIONER, HIGHWAYS AND PUBLIC FACILITIES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, reported that the Federal Highway Administration (FHWA) has said the funds are ready as soon as the certification is provided. Co-Chair Hoffman stated that many legislators want to apply for all available funds. He quoted from Section C, page 2, line 14: "to seek to maximize the funding available." He noted the legislation mentions the intent of the legislature and queried who the administration had talked to regarding intent. Mr. Barnhill acknowledged that they had spoken with no one in the legislature; the language had been phrased in the usual manner of intent language. He believed it was the intent of the administration to maximize applying and receiving funding under Title VI and Title XII of the economic stimulus bill. The only notice made is that the FAA has discretion, which the state has no control over. Co-Chair Hoffman stated that his intent was open dialogue. Co-Chair Stedman returned to the question of when action needs to be taken. Some thought action should be taken immediately. He emphasized the need to know firm deadline dates. Mr. Barnhill answered that there are a variety of deadlines in the stimulus bill for certification by the governor. The governor has 45 days until April 3 to certify with respect to use of the funds. Another deadline is March 19. He stated the administration would do everything possible to meet the deadlines. He did not know of legislative deadlines except the backstop legislative certification; there was question whether the 45-day deadline applied to that. He thought an opinion was being sought regarding the deadline from the federal Office of Management and Budget (OMB). 9:16:09 AM Co-Chair Stedman asked for definitions of Title VI and Title XII. Mr. Barnhill replied that Title VI is Homeland Security and Title XII is USDOT. Co-Chair Stedman stated that legislators were under the impression that they could take action after the governor's deadline date; other information indicated that the legislature and governor had the same deadline dates. Mr. Barnhill reiterated than an opinion was being sought from the federal OMB. He stated that there is frenetic activity across the country with respect to details about deadlines. Co-Chair Stedman asked if he would get back to the committee when the deadlines were clarified. Mr. Barnhill reiterated that the governor has deadlines but he knew of no deadlines for the legislature. Senator Huggins stated that he was offended by Mr. Barnhill's tone and use of the language "frenetic activity." Mr. Barnhill apologized. He clarified that there was a great deal of activity around the country, including many emails with misleading, false, and changing deadlines regarding certification. Senator Huggins was surprised with the statement that Mr. Barnhill had not spoken to anyone in the legislature. He emphasized that both the administration and legislature work for Alaskans. He was surprised that the department had not spoken to the legislature. He wanted to cooperate and move thoroughly and thoughtfully to make the process go well. Senator Huggins queried the deadline for the approval of the legislation. 9:19:50 AM Mr. Barnhill stated for the record that he simply drafted the legislation and has no authority to speak for the administration or to negotiate. Senator Huggins understood and hoped to develop a positive relationship in order to move forward. Mr. Richards answered that regarding the timeline the stimulus bill requires DOT/PF to obligate at least 50 percent of the transportation funds awarded to Alaska within 120 days of enactment, or by June 15, 2009. The projects have to be developed and authorized by FHWA to solicit project bids in order to get Alaskans to work. The department has been communicating with the legislature and intends to continue dialogue so that the bill can be understood fully. Almost two weeks after enactment, the department is still learning the nuances of the legislation. Personnel are working many extra hours to maximize transportation funding for Alaska. Senator Huggins asked for more information regarding deadlines. Mr. Richards replied that at least 50 percent of the money must be obligated by June 15, 2009, and all of the funds must be obligated by February 17, 2010. Senator Huggins clarified that the purpose of the current phase is to maximize funding. He asked to be walked through the process of legislative involvement during the next phase. 9:22:35 AM Mr. Richards explained that the department is currently aware of funding formulas through FAA, FHWA, and the Federal Transit Administration (FTA). Criteria are being developed by the Office of the Secretary of USDOT for other discretionary programs within the bill. The department does not know yet what funds will be available for states to compete for. The department will communicate with the legislature about the additional programs when it knows more. Co-Chair Hoffman stated that he was under the impression that the legislature could apply for funds if it did not agree with the governor's application. He wondered if SB 124 addressed the issue of the legislature applying for different appropriations. He asked if other departments such as the Department of Health and Social Services would also look to the legislature to apply for funds. Mr. Barnhill understood that the intent of the bill was for the administration to apply for all funds available to the state under Title VI (Homeland Security) and Title XII (Transportation) of the economic stimulus bill. Co-Chair Hoffman pointed out that SB 124 states the intent of the legislature to have the department apply for the funds. He reiterated his understanding that the governor applies and then the legislature makes a determination and decides whether it wants to apply. He asked if the legislature would still have the authority to apply for projects if SB 124 were passed. Mr. Barnhill assumed Co-Chair Hoffman was referring to Section 1607 of ARRA, the "backstop authorization section." The section requires the governor to certify by April 3 that she will apply for and use funds available under the economic stimulus bill. If the governor does not certify, the backstop legislation gives the legislature the authority to certify that it will apply for and use the funds. He did not think the backstop authorization was triggered unless the governor did not apply for funds. Senate Bill 124 assumes the governor will apply for everything available. 9:26:43 AM Senator Huggins asked if there were other ways to apply for funds. Mr. Barnhill replied that there are a variety of other agencies drafting bills to get the authority to apply for other funding sources in ARRA. The objective is to have a collection of bills that will cover the entire stimulus bill. He noted the complexity of the stimulus bill. He admitted one option was to have a single, broad bill with more agencies and more funding, but he thought it might be easier to take smaller steps at the beginning. Co-Chair Stedman noted the lack of backup information and asked that more be included in the bill packet. Specifically, he wanted the governor's timeline with her planned actions clearly laid out. Senator Huggins asked if other states had been consulted regarding techniques used. Mr. Barnhill answered that several weeks previously LAW had conducted a national search for a pattern of response with respect to state implementation. At that time, there did not seem to be a pattern. Senator Huggins encouraged conversation with other states. 9:31:18 AM Mr. Barnhill offered to provide information garnered regarding the various task forces being put together by other states. He referred to a document with a list of approximately 26 states. Senator Thomas confirmed that other bills were forthcoming that would correspond to other titles [similar to Titles VI and XII] such as military and education. He asked for clarification regarding what he thought was a critical deadline, the thirty days from enactment. Mr. Barnhill replied that the thirty-day deadline referred to Section 1511 certification that must be made by the governor or the head executive of DOT/PF. The provision requires certification of maintenance of effort regarding the expenditure of funds. He stated that he could provide the committee with copies of a memo listing the governor's deadlines. Senator Thomas asked if the certification also indicated that the state would follow up on the projects. Mr. Barnhill offered to provide a listing of all of the deadlines. Senator Olson understood that SB 124 gave the authorization for DOT/PF to apply for the funding, but not to spend the money. Mr. Barnhill replied that a partner bill, SB 123, would provide for appropriations of the funds. 9:34:01 AM Co-Chair Stedman asked if there were a representative from the administration present to speak to the legislation. Mr. Richards replied that Karen Rehfeld, Director of OMB had been slated to speak to the bill, but her flight had been delayed. Co-Chair Stedman stated that the committee had made an effort to schedule the bill as soon as possible. He reiterated concerns about the lack of backup information. He stated that no action would be taken without more backup and without hearing testimony from the administration. Mr. Richards answered that he understood. Co-Chair Hoffman asked if the bill were required in order for the state to receive the funds. Mr. Barnhill replied that the bill was an exercise of due caution to ensure that DOT/PF has explicit authorization to participate. Co-Chair Stedman wanted to work before the next meeting for clarification regarding what the administration needs in terms of legislative authorization. Mr. Richards added that regarding the maintenance of effort, the bill requires the governor to certify that the state will maintain planned Alaska transportation funding. The department interprets this to mean its current year budget amount since next year's budget has not been enacted. The administration will certify that it will not supplant previous project funds with stimulus funds. 9:38:10 AM Senator Thomas asked if the department would not supplant FY09 budget but would supplant the FY10 budget. Mr. Richards answered with an example: if project X had $2 million in general fund dollars appropriated by the legislature, the department would not extract the $2 million general funds and use $2 million in stimulus funds instead. Senator Thomas thought that the money could be used for shovel-ready projects, but that the department would forward the state's allocated money to another project. Co-Chair Stedman said that the SB 123 discussion would cover the relationship between the maintenance of effort and general funds. SB 124 was HEARD and HELD in Committee for further consideration.