HOUSE FINANCE COMMITTEE April 27, 1999 6:50 P.M. TAPE HFC 99 - 108, Side 1. TAPE HFC 99 - 108, Side 2. TAPE HFC 99 - 109, Side 1. TAPE HFC 99 - 109, Side 2. TAPE HFC 99 - 110, Side 1 CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 6:50 P.M. PRESENT Co-Chair Therriault Representative Foster Co-Chair Mulder Representative Grussendorf Vice Chair Bunde Representative Kohring Representative Austerman Representative Moses Representative G. Davis Representative Williams Representative J. Davies ALSO PRESENT Kenneth Bischoff, Director, Division of Administrative Services, Department of Public Safety; Laurie Perkins, Director, Division of Administrative Services, Department of Revenue; Nancy Slagle, Director, Division of Administrative Services, Department of Transportation and Public Facilities; John Mallonee, (Testified Via Teleconference), Assistant Director of Child Support, Department of Revenue; Larry Persily, (Testified via Teleconference), Special Assistant to the Commissioner, Department of Revenue; Daniel Fauske, CEO/Executive Director, Alaska Housing Finance Corporation, Department of Revenue; John Bitney, Alaska Housing Finance, Department of Revenue; Peter Bushre, Chief Financial Officer, Alaska Permanent Fund Corporation, Department of Revenue; Chris Christensen, Staff Counsel, Alaska Court System; Wendy Redman, Vice President, Statewide Programs, University of Alaska; Kurt Parkan, Deputy Commissioner, Department of Transportation and Public Facilities; Nancy Slagle, Director, Division of Administrative Services, Department of Transportation. SUMMARY HB 52 An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date. HB 52 was HELD in Committee for further consideration. HOUSE BILL NO. 52 "An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date." DEPARTMENT OF PUBLIC SAFETY Aircraft and Vessel Repair and Maintenance $1,000,000 KENNETH BISCHOFF, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF PUBLIC SAFETY, stated that the request would address 15 major vessels. Trooper Law Enforcement Equipment $350,000 Mr. Bischoff stated that the request would be used to purchase equipment. Co-Chair Therriault asked if the request is an on-going and standard amount. Mr. Bischoff noted that the amount fluctuates a little from year to year. Representative J. Davies asked if the amount was adequate. Mr. Bischoff stated that the Department believed it was adequate. He stated that the Department would support the Governor's budget. Vice-Chair Bunde spoke to frustration voiced by constituents regarding funding continual maintenance repair. He suggested that air taxi business would be interested in this business. Fish and Wildlife Protection - Statewide Equipment $250,000 Mr. Bischoff noted that the Division of Fish and Wildlife Protection has equipment on their skiffs that need replacing. Co-Chair Therriault asked if surplus equipment was disposed of through State auctions. Mr. Bischoff stated that the items would be surplused when they had reached their useful life. Breath Alcohol Equipment Replacement $139,500 Mr. Bischoff noted that the request was federal funding for alcohol test equipment. Approximately 5,000 DWI and teats are administered each year. This is an item that is used to test drugs and alcohol and the equipment is no longer effective. The request would fund approximately 23 alcohol testing devises. Blood Alcohol Test Equipment $50,000 Mr. Bischoff noted that this item would replace 20-year-old equipment in the crime lab used to test blood for drugs and alcohol. Fish and Wildlife Protection-Enforcement Replacement Vessels $537,500 Mr. Bischoff stated that this would purchase a 50-foot vessel. The past Legislature authorized the sale of several vessels. The Department has applied for a lapse on funds. Co-Chair Therriault asked if the Department had the means of selling the old equipment. Mr. Bischoff replied that the department comes to the legislature for approval to sell vessels. Alaska Public Safety Information Network - Upgrade $1,389,000 Mr. Bischoff noted that this request would require a 10% state match to federal dollars for software. Current software is 15 years old and needs to be updated. Representative Austerman asked if it was incorporated into the operational budget. Mr. Bischoff affirmed that the network upgrade is incorporated into the legacy system. Representative Foster asked about aircraft accidents. Mr. Bischoff replied that they do not have the accident statistics. There have been no fatalities this year. There are a number of old Cessna's and super-cubs. Representative Foster asked what provisions are made for injured or deceased troopers and their families. Mr. Bischoff believed that would be addressed through Title 39. He referred to a helicopter crash which occurred in the spring of 1999. Risk Management came up with replacement money. The Risk Management Fund is a separate budget. DEPARTMENT OF REVENUE Child Support Distribution and Disbursement System $1,700,000 JOHN MALLONEE, (TESTIFIED VIA TELECONFERENCE), ASSISTANT DIRECTOR, CHILD SUPPORT ENFORCEMENT DIVISION (CSED), DEPARTMENT OF REVENUE observed that the appropriation would bring CSED into conformity with federal law. The funding would be 80% federal funds with 20% state matching funds. It would allow implementation of the new system and if it is not completed by October 1, 1999 there will be a penalty to the state. The request would bring the system up to date. Representative J. Davies asked if the software would be Y2K compliant. Mr. Mallonee stated that it would. Child Support Personal Computer Replacement $70,000 Mr. Mallonee noted that the request would replace some of the older computers. It would not be economical to repair the computers. They need to be replaced. There are approximately 260 computer devices, which have been purchased over the past 6 years, and they need to be replaced. Vice-Chair Bunde asked why do they need to be replaced. Mr. Mallonee replied that almost all the work of the Division is done on computers and each computer is attached to the mainframe system. Computers in their sixth year are beginning to fail. PF MIS Consolidated Reporting and Data Warehouse $535,000 PETR BUSCHRE, CHIEF FINANCIAL OFFICIERS, PERMANENT FUND CORPORATION, DEPARTMENT OF REVENUE commented that the request for the data warehouse would overlay unrelated programs that would provide needed reports for specific systems. Additionally, it would provide web site information. Currently, the fund has three unrelated management systems. The reports are done manually. PF Environmental Systems Replacement and Upgrade $355,000 Mr. Bushre noted that request would provide for a building generator. The Gold Belt building was built in 1921 and it does not have the capacity to feed the computer system. It is essential that there be a power supply that cannot be interrupted. The worse scenario is that the computers go down and the cooling system goes down. That can cause serious problems with the equipment. Representative Williams asked how old the generators were. Mr. Bushre stated that they were purchased in 1981. Representative J. Davies asked if the system starts up automatically. Mr. Bushre stated that the current one does not start up automatically. The current system has an automatic telephone system for both the computers and the cooling system. The equipment belongs to the State. He stated that these funds are corporate receipts. Vice-Chair Bunde suggested that these funds should be listed in the general fund category. AHFC Supplemental Housing Development Program $9,000,000 DAN FAUSKE, EXECUTIVE DIRECTOR, ALASKA HOUSING FINANCE CORPORATION, DEPARTMENT OF REVENUE pointed out that the total fund request is for $38 million dollars. Mr. Fauske observed that staff developed the budget. The Board has approved the proposed budget. Many of the projects are similar to those in the past. It would be an issuance of bond for the State for renovation and deferred maintenance. LES CAMPBEL, BUDGET OFFICIER, AHFC, DEPARTMENT OF REVENUE spoke to the capital project for the supplemental housing development project. The request is in the amount of $9 million dollars. Funds can be used for on site water and sewer needs by the regional housing authorities. The request would construct 340 affordable homes. Co-Chair Therriault asked if it would be restricted to on sight. Mr. Campbell stated that it would be used for the connection and need to get the house up to system. AHFC Low Income Weatherization $5,400,000 Mr. Campbell spoke to the request, which would upgrade existing homes. It would provide a better standard of living for the low-income persons and improve heating efficiency. The corporate funds will be used for health and safety. Co-Chair Therriault asked, if the total amount was not available, would the areas be pro rated. Mr. Campbell replied that it would. AHFC Senior Citizens Housing Development Program $4,000,000 Mr. Campbell discussed the project and noted that funding would be used to support the fastest growing population in the state, senior housing. The program targets the housing needs of the low-income seniors. Representative G. Davis asked if it was a grant program. Mr. Campbell stated that it is. Also, there are awards that are made to that program. In response to Representative Austerman, Mr. Campbell stated that these facilities are new units. Representative J. Davies asked how the operation was handled. Mr. Campbell replied that the seniors pay a portion of the rent. These are privately held units. The funding is a combination of different funding and the operation of the units is up to the developer. Co-Chair Therriault asked if "other" funding is always available for these projects. JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE CORPORATION, DEPARTMENT OF REVENUE, explained that all the projects could apply for other funds, however, those programs have strings attached that certain units have to be set aside for specifics. These projects do not have these strings. Some units are high priced. In putting together those grant applications are often contain a common area development. That common area would be used to build more units. In response to Co-Chair Therriault, Mr. Bitney spoke to the State involvement. (Tape Change HFC 99-108, Side 2). Mr. Bitney added that there would be additional units built if the need exists. Discussion followed among Committee members regarding the cost associated with the various building sites and how those costs differed. Mr. Campbell noted that all the units would be fixed for the mobility impaired. Eventually, these would become the Senior Center for the areas they are built. Mr. Campbell noted that the supplemental housing do not require a match. The federal dollars would be there without this money. Vice-Chair Bunde asked who decides if this is the best use of State money. Mr. Fauske replied that these are competitive bids; the Senior Housing Authority submits some of the plans. Vice-Chair Bunde reiterated his concern regarding the criteria used to decide what is built. Mr. Bitney noted that the allowance for the cost could be authorized and would be used for the common area. Mr. Bitney continued that the common area would serve functions that the seniors need to be able to stay in their homes. AHFC Parkview Manor Renovation, Phase II $3,000,000 WES WIER, DIRECTOR, AHFC, DEPARTMENT OF REVENUE explained that this request would provide funding for the Parkview Manor. Co-Chair Therriault asked how much of this would be for the Gateway learning center. Mr. Wier replied that this is a new program and would be a minor portion of the requested funding. Representative Austerman asked who owns Parkview Manor. Mr. Wier stated that it was owned by AHFC in partnership with the federal Housing and Urban Development (HUD) agency. Representative Austerman asked why AHFC was involved in the learning center. Mr. Wier replied that funding resulted from a number of grants. A majority of Welfare to Work programs penalize individuals returning to work. The Financial Self Sufficiency Program places benefits into a program, which are paid unrestricted to the individual. The Corporation has a unique position. The program is run off a HUD grant. The HUD money is used to pay for the program. Representative Austerman requested a list of all programs involved in Welfare to Work. Co-Chair Mulder asked if the people living in Parkview Manor pay rent. Mr. Wier replied that the program requires payment of 30% of the adjusted gross income and goes into the fund for the cost of operating the facility. The rents do not come close to the cost of operating the facilities. He observed that HUD helps with meeting these needs. Representative Austerman asked if there was an Anchorage Housing Authority. Mr. Wier stated that there is a Cook Inlet Housing Authority, which serves that function. There is no component that operates similar to AHFC. There is housing to 14 places in the State. Co-Chair Mulder asked how much of the AHFC's budget is HUD funded. Mr. Wier replied that there is $3.3 million dollars in the capital budget request. Most projects receive some HUD funding. He observed that AHFC, through a number of programs, provides grants and low-income loans and support. The communities can go to HUD themselves for the funding. There is overlap between some of the agencies. AHFC Mountain View Senior Units, Phase II $3,917,000 Mr. Wier noted that Mountain View is the second phase of a project. This project would be a major renovation of the facility and will tie together the previous phases. The facility is at full capacity. AHFC Senior and Statewide Deferred Maintenance and Renovation $4,000,000 Mr. Wier spoke to the request, which is an annual request to prioritize statewide maintenance compensation. This is an attempt of AHFC to protect their investments. This is an implementation of the plan on an annual basis. The request would include cost of staff and implementation of the projects. Design would be included in the priority items staff funding and charge-back to the overall staff function. Mr. Campbell stated that there are 345 positions within AHFC. AHFC Riverbend Multi-Purpose Building $500,000 Mr. Wier stated that the request would provide for a multi- purpose center in that project. Currently, AHFC is in negotiation with the landowner. The request would provide funding for the building. The funds are partially from a Court settlement. Vice-Chair Bunde asked if this was part of the original plan. Mr. Wier stated that this was part of the original plan. Co-Chair Therriault asked if the settlement money went into shoring up the riverbank. Mr. Wier stated that was correct. AHFC/HUD Comprehensive Grant Program $2,800,000 Mr. Wier commented that the HUD share has been declining. Five projects have been targeted. These would provide for management improvements. The money would be placed into hard costs in addressing federal mandates. AHFC Public Housing Environmental Cleanup and Abatement $303,000 Mr. Wier stated that the request would address the asbestos clean up at the Geneva Woods housing project. Co-Chair Therriault asked if this would remove asbestos materials that are not problematic. Mr. Wier stated that this represents a severe problem to the maintenance people. AHFC Central Terrace/Fairmount, Phase III $724,000 Mr. Wier stated that this would be Phase 3 to renovate facilities in Anchorage. It is expensive to maintain scattered sites. The intent is to sell some of those sites. AHFC Southall Manor Renovation $4,715,000 Mr. Wier stated that this was the last of the major facilities to be renovated. This is a 40-unit facility and it would be totally renovated in a single phase. Mr. Wier noted that this would coincide with the work done on the Golden Towers. These individuals would have the option to continue living at the Golden Towers or move back to the Southall Manor site. Vice-Chair Bunde asked how large the units are. Mr. Wier replied that they are around 450 to 500 square ft. Co-Chair Therriault noted that the original facility was poorly constructed. There are a number of units that are in dire need of repair. AHFC Housing and Urban Development Federal HOME Grant $3,750,000 Mr. Campbell observed that the appropriation would allow AHFC to help low income families to have home ownership opportunities. The funds are used to support the development of supportable housing. He listed ways the funds could be used. This is a statewide grant, with the exception of Anchorage. AHFC Federal and Other Competitive Grants $2,750,000 Mr. Campbell stated that the program would target the low income and special needs group. AHFC Competitive Grants for Public Housing $1,000,000 Mr. Campbell noted that the request would be used for public housing to low income families and disabled people. Grant funds within this category would be used to prevent substance abuse and crime. AHFC Energy Efficiency Monitoring Research $350,000 Mr. Campbell noted that the request would be used for grants and information projects of information to the homebuilders associations. The industry has asked for research throughout the State. These funds would be used to offer reduced interest rates for remodeling homes. The funds would be used to conduct research analysis. Co-Chair Therriault pointed out that State law applies to single family dwelling. Mr. Bitney replied that the appropriation would be for single family to four-plex family dwelling. Mr. Wier stated that HUD and ASHA built a number of these facilities and they contained 4" walls. In the renovation, all 5 star technology is being incorporated. Co-Chair Mulder asked how much arbitrage federal money is available to AHFC this year. Mr. Fauske replied that there is a potential for $70 million dollars. Funding is for programs with a reasonable anticipation of loan repayment. The bonds are used for housing. The total amount of loans anticipated for this year is approximately $867 million dollars. Mr. Bitney noted that there were approximately 1000 loans last year. Mr. Bitney listed all the projects that the loans can be used for. He emphasized that the money needs to be used for loans and not grants and added that the key language is reasonable expectation of payment. Mr. Fauske stated that AHFC has tried to target the funnel activity. Now they are trying to buy pieces of the interest. He stated that in the loan capacity, it is used to fund low- income housing. They try not to pass the cost on to the consumer. (Tape Change, HFC 99 - 109, Side 1). Mr. Fauske stated that AHFC is trying to encourage more private developing. Representative Austerman believed that the Kodiak Senior housing facility was privately built. Mr. Bitney stated that was correct. Co-Chair Mulder stated that the private sector could usually do it cheaper than the State does. AHFC Builder and Rater Education Program $300,000 Mr. Campbell spoke to the request that would allow AHFC to provide techniques that target a large consistency. He observed that AHFC remains committed to its energy-rating program. These costs would allow continued marketing for home energy rating systems. Vice-Chair Bunde asked if the $200 thousand dollars would go to educating builders. Mr. Campbell noted that AHFC would contract out for education classes. He stated that there would not be a charge for the class. Vice-Chair Bunde recommended that a charge be made for that service. Mr. Fauske agreed that the issue of charging the homebuilder for the information should be addressed in the future. AHFC Homeless Assistance Program $450,000 Mr. Campbell stated that this program was established in 1993 to address emergency needs of homeless Alaskans. He observed that AHFC is requesting funds that would be matched. Mr. Bitney noted that the projects are ranked. AHFC Beneficiary and Special Needs Housing $1,700,000 Mr. Campbell noted that this is also found in the Mental Health bill and would provide funds for the trust beneficiaries. This would authorize leverage with federal funds. He observed that AHFC would administer these funds. Representative J. Davies asked how this money is spent. Mr. Campbell stated that this is an ongoing project with the Department of Health and Social Services. Mr. Bitney stated that the application process for these programs would all occur at the same time. When the applications come in, they can select funding from one or a combination of grant funds. There are no other AHFC grants funds contained under the total cost funds. Most of these would be loans. Grants would be rewarded under one process. Representative Kohring asked about the home assistance program and where the dollars are directed. Mr. Campbell replied that the programs are restricted and the criteria must be followed. Services are ranked the highest rather than salaries. Mr. Fauske acknowledged that there are restrictions to these programs and that the dollars are going to help the homeless rather than to the administrators. Co-Chair Mulder spoke to the leveraging of federal funds. Mr. Fauske replied that one supplemental development grant was $50 million dollars. Mr. Wier added that it shows just short of $10 million dollars. Mr. Campbell added that the federal funds for the operating budget are not shown. Mr. Fauske stated that it is a good leverage according to the dollar amount. He asked for consideration of the proposed construction projects and the ongoing work with SB 360. AHFC is taking care of its own facilities. He stressed the need for on going maintenance and repair. Vice-Chair Bunde observed that the self-supporting dorm at UAA is receiving extra funding this year. Representative Foster voiced appreciation for all the work done in Bush Alaska by AHFC. ALASKA COURT SYSTEM CHRIS CHRISTENSEN, STAFF COUNSEL, ALASKA COURT SYSTEM provided information regarding CIP projects for the Alaska Court System. Equipment for Completion of Computerized Case Management System $1,300,000 Mr. Christensen explained that this project is divided into three component parts. He noted that the Alaska Court System has some labor intensive systems. The computer system will provide tremendous benefits to the public and agency because the public will be able to access court files over the Internet. He noted that the second project would be for videoconference equipment. He observed that this would allow a reduction in travel for pretrial hearings. It would be a pilot project in Anchorage, Juneau and Fairbanks. The third project is for microfilming. They will film 150,000 cases. He explained that turning microfilm back into paper is very expensive. This will provide a digital disk at the same time as items are microfilmed Deferred Maintenance Projects $2,000,000 Mr. Christensen explained that the Alaska Court System has $4 million dollars in deferred maintenance. There are 14 projects on the list. The request would fund the first 6 projects. Court Security Projects $1,000,000 Mr. Christensen noted that the request would fund the first year of a three-year project for court security. There has been a drastic increase over the past 10 years. There are ways to improve security. These would be stand-alone projects that do not have a personnel cost. Statewide Court Building Code/Energy Upgrade $400,000 Mr. Christensen observed that this is the second year of the project. The project is not ADA compliant. Co-Chair Therriault noted that the security projects would be phased. Mr. Christiansen stated that other phases would have personnel costs. UNIVERSITY OF ALASKA UAF-Tanana Valley College/ Hutchinson Career Center Renovation $3,000,000 WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY OF ALASKA explained that the request is a joint project. The two units have been cooperating since 1972. It would allow a 9-12 vocational education high school in the Tanana Valley. The school district would bond for $14 million dollars. The University of Alaska would be responsible for $7 million dollars. Planning was funded last year. She reviewed the project. Vice-Chair Bunde spoke in support of the project. Co-Chair Therriault stated that the money that the Governor has requested is not enough. He added that they are attempting to locate additional funding. DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES was available for questions. KURT PARKAN, DEPUTY COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES provided members with a hand out "Department of Transportation and Public Facilities, Legislative Briefing (copy on file). He explained that there are 300 projects. He provided a brief overview. He noted that the philosophy of TEA-21 is similar to ISTEA. He observed that the funding is tied to gas tax receipts. One area that is different is the area of discretionary funding. There would be more discretionary program funding. He emphasized the importance of flexibility to assure that there is sufficient match to federal funding. He noted problems with the state structure for the match requirement in FY99. Mr. Parkan observed that the Governor's proposal to increase the gas tax would cover half of the match requirement, $26 million dollars. He noted that Alaska currently charges only .08 cents on a gallon. This is one of the lowest gas taxes in the nation. In response to a question by Vice-Chair Bunde, Mr. Parkan noted that legislation would create a statutory dedication that would deposit gas tax funds into a fund. Money from the fund would be used to match federal funding for construction projects. Representative J. Davies noted that it would be still be up to the legislature to appropriate the funds. Mr. Parkan noted there are three discretionary programs. He reviewed the three programs. There is also a Public Lands Discretionary Program. He noted that the state received funding under this program in FY99. This program does not require a federal match. The state is applying for funding under this program. There is an amendment to add federal authorization for projects under the program. There are bridge and ferryboat discretionary programs, which have 20 percent match requirements. He discussed projects that the department would submit under these programs. Mr. Parkan noted that there is $57 million dollars of federal funding that will not be in the budget next year. This does not require a state match and can only be used on the Haines Highway. He reviewed funding the state received under this program. Mr. Parkan noted that the department has applied for $10 million federal dollars for work on the Dalton Highway. Representative Williams asked if funding for roads in Metlakatla is covered through federal funds. Mr. Parkan clarified that the military is building the road, but noted that funds were requested extra funding for the project. He noted that the project has turned out to be a slower and more expensive project than anticipated. Mr. Parkan discussed high priority projects. Congress appropriated funding for these in the last year. There is a required 20 percent match. The state anticipates receiving 88 percent of the funding that was approved. He discussed the projects on page 4 of the handout. Co-Chair Therriault asked for additional information on the North Denali Access route. Mr. Parkan noted that there is a required 20 percent match on this program. (Tape Change, HFC 99 - 109, Side 2) In response to a question by Representative J. Davies, Mr. Parkan explained that state has applied for a $10 million dollar grant under the National Corridor Preservation Grant program. If it were received it would be part of the total plan for the Dalton Highway. Mr. Parkan noted that the department captured $2 million federal dollars in FY99 through another federal program in TEA-21 and hopes to capture more in FY00. In response to a question by Representative Williams, Mr. Parkan noted that there has not been interest in funding the Bradfield Canal Road. Mr. Parkan discussed page 5. It demonstrates the process used in developing the Statewide Transportation Improvement Program (STIP). The department is currently under the public comment process. They anticipate a draft in the fall. Representative Austerman noted that legislators should let the department know which projects on the list are important. Mr. Parkan reviewed the series of maps provided in the handout. He observed that the Dalton Highway grant project was located on the first map. Areas needing the greatest amount of attention were identified on the maps. Mr. Parkan further discussed plans for the Dalton Highway. The intent is to reduce maintenance costs and keep the dust down. Mr. Parkan reviewed the National Highway System schedule. Mr. Parkan discussed the Gravel to Pavement Program. He noted that the program reduces maintenance and improves roads. Projects were identified in the handout. Co-Chair Therriault noted that the projects are broken down by region. Mr. Parkan clarified that their projects were not prioritized within the list, but that the department intends to complete all the projects on the list in FY99. In response to a question by Representative Austerman, Mr. Parkan stated that he did not know to what extent local communities could take over the roads. He emphasized that local communities would be more disposed to take over roads that were well maintained. Mr. Parkan explained that the department is requesting $30 million dollars for projects approved in FY99 and FY00. Co-Chair Therriault questioned if projects were grouped by location. Mr. Parkan emphasized that it makes sense to group projects by location. Representative Williams referred to the STIP review process. He questioned how priorities were received for the city of Ketchikan. Mr. Parkan reviewed the process used to prioritize community projects. Further discussion occurred regarding the prioritization of projects in Ketchikan. Representative J. Davies pointed out that the Tongass Highway is part of the federal highway system and would not be scored. Representative Austerman asked how many miles would be paved on the Dalton highway. Mr. Parkan explained that it would be paved over 10 years. In response to a question by Representative Austerman, Mr. Parkan gave the location of the Taylor highway. He explained that it doesn't rank as high in the scoring process. Representative J. Davies asked about the Denali Highway. Mr. Parkan noted that the department is trying to decide whether to pave the Denali Highway. Representative Grussendorf asked if the department is anticipating a new revenue source of the gasoline tax. He asked what the department's plan would look like without funding from the gasoline tax. Mr. Parkan stated that the only other funding would be the general funds. He observed that the department's budget contains the minimal amount of matching state general fund dollars needed. The program budget would be from the anticipated funding for federal match. If the state match amount were lost, federal funds would have to be returned to the federal government. He noted that it was a 10% match. Representative Austerman maintained that providing a general fund match to new federal dollars takes funding away from maintenance of existing roads. Mr. Parkan stated that the formula program TEA-21 has increased largely. The federal program has been $220 for the past couple years and this year it is over $300 million dollars. He stressed that the additional funding covers old and new projects. He emphasized that providing a hard surface on gravel roads reduces road maintenance. Representative Austerman stressed that the current system requires that roads must deteriorate before federal funding is available to rebuild them. Further discussion ensued regarding federal funding for road maintenance. Mr. Parkan noted that the Department has added about $9 million dollars to address maintenance needs. The intent is to prevent major repairs. Representative Foster pointed out that the Department of Transportation and Public Facilities' budget is the same as it was in 1994. Airport Improvement Program Mr. Parkan reviewed graphs relating to the Airport Improvement Program (AIP) funding, contained in the department's handout (copy on file.) There has been an increased in categorical and discretionary funding. The FAA requires that each project receive legislative authority for each project before discretionary grants are awarded. Projects that look like they will receive high FAA scores are included. Representative Austerman asked if FAA airport funding is all capital funding. Mr. Parkan replied that it is all capital; no operational funding is included. Representative Austerman noted that the airport has priority over the roads. Mr. Parkan agreed and pointed out that there is a safety issue. Mr. Parkan spoke to the sources and uses of funds for the Anchorage International Airport. He noted substandard airports throughout the State. A standard of 3000 feet is used for airports throughout the State. Mr. Parkan observed that the Office of Management and Budget submitted an amendment for a reappropriation of $2.2 million dollars, which would allow the match requirement to be reduced. He emphasized that grouping the state match into a "single pot" would allow better use of state funds. NANCY SLAGLE, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF TRANSPORATIONS AND PUBLIC FACILITIES answered questions by Co-Chair Therriault regarding federal funding of highway and negative billing concerns. Sometimes general fund money is used at the beginning of a project. Co-Chair Therriault questioned if the state could jump start a project with state general funds and request reimbursement from the federal government based on their anticipated level of participation. Ms. Slagle stated that general fund money is sometimes used at the beginning of a project an reimbursed by the federal government. Prior federal approval is required. Cooperative Reimbursable Projects $10,500,000 Ms. Slagle noted that projects in this request are a mixture of federal receipts and statutory program designated receipts. The authority allows the department to receive funds for work requested by utility companies and others in conjunction with projects by the department. There is $9 million dollars in statutory designated program receipts and $1.5 million in federal receipts. This is the approximately the same level as other years. Engineering Equipment replacement $1,500,000 Ms. Slagle stated that the request allows the Department to charge a fee for specialized projects, which cannot be charged directly to one specific project. This would guarantee up-to-date equipment. Federal Emergency and Contingency Projects $8,000,000 Ms. Slagle she noted that this request is for federal receipts. This allows the department to receive money from the federal government during disasters. She noted that the funding has been used to respond for flood repair. There is no state match required. Federal Transit Administration Grants $930,000 Ms. Slagle noted that there are $900 thousand dollars in federal receipts and a $30 thousand dollars state match. Funding is for competitive grants to non-profit agencies for elderly transportation. Skagway Maintenance Station and Acquisition $120,000 Ms. Slagle stated that this request is for general funds dollars for the purchase of maintenance shop and land in Skagway. State Equipment Fleet Replacement Program $11,800,000 Ms. Slagle pointed out that the request would be used for replacement and refurbishment of all state vehicles serviced by the department. Funding is covered by replacement rates charged to the agencies. (TAPE CHANGE, HFC 99 - 110, Side 1). Ms. Slagle stated that 80 percent of the request is related to operation and maintenance within the Department of Transportation and Public Facilities. Alaska Marine Highway System Overhaul $4,390,600 Ms. Slagle observed that this request is for general fund dollars that would be used for overhauling the ferry system vessels. The request also includes $390,600 for mandatory training that the federal government will not reimburse. Representative J. Davies asked why training money was included in the capital budget. Ms. Slagle replied that the request is for the hardware and software training packages. All marine highway system employees need to receive training by the year 2002. The department needs $390 thousand dollars a year for 3 years to train everyone. She explained that the request was not incorporated into the operating budget because it is not a long-term expense. She added that there is some money identified in the operating budget to train new employees. The request would guarantee that everyone in the system is trained by the year 2002. Airport Deferred Maintenance $900,000 Ms. Slagle observed that this is a request for general funds and is at the same level received by the department in previous years. The request would address paving and repairs at rural airports. She reviewed projects included in the request. These projects are not eligible for federal funds. Facilities Deferred Maintenance and Critical Repairs $1,028,000 Ms. Slagle observed that this request provides for maintenance needs in state owned facilities. Mr. Parkan noted that the Deferred Maintenance Task Force identified more projects than can be included in the department's request. Harbor Deferred Maintenance $900,000 Ms. Slagle observed that the request is for general funds. The request is for backlog maintenance at state-owned harbors. Highway Deferred Maintenance $1,000,000 Ms. Slagle noted that the request is for general funds to address highway deferred maintenance. There are many problems dealing with brush control. Co-Chair Therriault referred to culvert problems that are the result of beavers. Mr. Parkan acknowledged that beavers present an on going problem. Emergency and Non-Routine Repairs $1,000,000 Ms. Slagle stated that the general fund request would be an increase over FY99 ($500,000). The Department has typically received $1 million dollars. They received an additional supplemental amount for FY99. She gave examples of repairs that are addressed by this component. Relocate and Consolidation Marine Highway System Operation $1,500,000 Ms. Slagle stated that the request would be funded through the Alaska Marine Highway Fund for consolidation of work groups for the Alaska Marine Highway System. The department is working with the Department of Administration on an analysis to consider potential options. The current facility houses reservations and warehouse storage. Representative Williams suggested moving the office to Ketchikan and noted that the city has offered to build a facility. Slagle clarified that the facility in question only handles reservations. Co-Chair Therriault indicated that the state would be interested in relocating if the building were rent-free. Representative Austerman asked how many employees were involved in reservations. Ms. Slagle offered to provide that information. She noted that there are seasonal employees to address summer traffic. Corps of Engineers Program $6,381,000 Ms. Slagle noted that $2.2 million of the request would come from Alaska Industrial Development and Export Authority funds. The rest would be a state match. She reviewed Corps of Engineer projects that would occur if the funds are provided. The match amount depends on the type of project. Some communities provide part of the match. Coordinated Transportation and Vehicles $150,000 Ms. Slagle explained that this is part of the Mental Health Trust request for care-a-vans. Municipal Matching Grants Co-Chair Therriault observed that municipal matching grants of $15 million dollars are put together by communities. ADJOURNMENT The meeting adjourned at 10:30 p.m. H.F.C. 2 4/27/99 pn