JOINT MEETING HOUSE TRANSPORTATION STANDING COMMITTEE SENATE TRANSPORTATION STANDING COMMITTEE January 28, 1999 1:34 p.m. HOUSE MEMBERS PRESENT Representative Andrew Halcro, Vice Chair Representative Bill Hudson Representative John Cowdery Representative Jerry Sanders Representative Allen Kemplen Representative Albert Kookesh HOUSE MEMBERS ABSENT Representative Beverly Masek, Chair SENATE MEMBERS PRESENT Senator Jerry Ward, Chairman Senator Drue Pearce Senator Georgianna Lincoln SENATE MEMBERS ABSENT Senator Rick Halford Senator Mike Miller COMMITTEE CALENDAR OVERVIEW BY THE DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES WITNESS REGISTER JOSEPH L. PERKINS, Commissioner Department of Transportation & Public Facilities 3132 Channel Drive Juneau, AK 99801-7898 Telephone: (907)465-3901 POSITION STATEMENT: Provided overview and answered questions. KURT PARKAN, Deputy Commissioner Department of Transportation & Public Facilities 3132 Channel Drive Juneau, AK 99801-7898 Telephone: (907)465-6977 POSITION STATEMENT: Presented information during overview. ACTION NARRATIVE TAPE 99-3, SIDE A [HOUSE TRA TAPE NUMBER] Number 0001 CHAIRMAN JERRY WARD called the joint meeting of the House and Senate Transportation Standing Committees to order at 1:34 p.m. House members present at the call to order were Representatives Halcro, Sanders, and Kemplen. Senate members present at the call to order were Senators Ward and Pearce. Representatives Hudson and Kookesh arrived at 1:35 p.m. Senator Lincoln arrived at 1:56 p.m. Representative Cowdery arrived at 2:05 p.m. OVERVIEW BY THE DEPARTMENT OF TRANSPORTATION AND PUBLIC  FACILITIES CHAIRMAN WARD announced the first order of business to be an overview of the Department of Transportation and Public Facilities (DOT/PF), and introduced JOSEPH L. PERKINS, Commissioner, Department of Transportation and Public Facilities, State of Alaska. MR. PERKINS introduced the "Department of Transportation management team," specifically: Kurt Parkan, Deputy Commissioner Boyd J. Brownfield, Deputy Commissioner Nancy Slagle, Director, Division of Administrative Services Michael L. Downing, Director, Division of Statewide Design and Engineering Services John D. Horn, Regional Director, Central Region Anton (Tony) K. Johansen, Regional Director, Northern Region Robert Martin, Jr., Regional Director, Southeast Region Dennis Poshard, Legislative Liaison/Special Assistant, Office of the Commissioner Thomas B. Brigham, Director, Division of Statewide Planning Robert J. Doll, General Manager, Ferry Operations SUMMARY OF INFORMATION MR. PERKINS described transportation as the lifeblood of the economy. The average American household spends $6000 a year, or one-fifth their annual income, on transportation, and it makes up 11% of the nation's gross national product. Additionally, 7% of Americans work in transportation. MR. PERKINS specified that Alaskans are particularly dependant on transportation. It is his feeling that the transportation system in Alaska has improved in the last four years. A recent survey showed 52% of Alaskans were completely satisfied with the roads and highways, 90% completely satisfied with the international airports, and 67% completely satisfied with the Marine Highway system. He related that 51% of people felt that their area was funded fairly. With regard to roads, 59% surveyed felt the DOT was correctly building roads, and 60% believed all gravel roads in the state should be paved. Number 0154 MR. PERKINS emphasized that the transportation system in Alaska has a long way to go; however, it was his belief that the newly increased federal funding will provide even more improvement. Despite reductions in the operating budget of the DOT/PF, progress is still being made in constructing and maintaining the highway system. Number 0176 MR. PERKINS referred to the chart on page 1 of the handout dated 1/28/99, titled "Legislative Briefing," which illustrates the increased use of federal funds. He reported that federal funding has recently "loosened up," including recently approved funding for striping. Federal funding does not cover any winter maintenance, brushing, culvert cleaning or shoulder work, and it is mostly limited to surface repair work. The funding is adequate for the time being, he explained; however, any decreased funding or increased restrictions could cause problems. Number 0212 MR. PERKINS further stated that DOT/PF crews doing maintenance work in the summer months are paid with federal funds. This allows the winter crew members to remain employed in the summer. He warned, however, that further operating reductions will affect winter maintenance in Alaska, as this is where the vast majority of the DOT/PF budget is currently going. MR. PERKINS cited examples of cost effective DOT/PF division reorganization within the last two years. He examined specific changes the department has made in materials and equipment: using chipseal instead of asphalt in permafrost areas, use of liquid treatments versus sanding, decreased usage of sand by means of computerized sand spreaders, and specialized trucks. Number 0282 MR. PERKINS noted that one of the biggest cost items for the DOT/PF is electricity. The department is aware of the need to "attack the electric bill" by means of increased insulation and weather-stripping. They are looking into "LED" signals in Anchorage which use about one-tenth the power of regular signals. He added that requests for lights have been resisted, not because money is not available to install the lights, but due to the fact that money is not available to pay the additional electric bills. Another increased cost for the DOT/PF, he continued, is the use of cellular phones. Employees plowing in wild country, in cold conditions, and in the middle of the night, he explained, are better served with cellular phones than radios. Number 0313 MR. PERKINS referred the committee to the second chart in the above-mentioned handout. This chart compared all western states by lane miles per DOT/PF employee, and Alaska had the highest number at 34.9 miles per employee. It is his belief that, considering the vast size of our state, the DOT/PF in Alaska is extremely efficient. Number 0344 MR. PERKINS considered the third chart in the handout to illustrate the 9.9% decrease in budgeted departmental positions since 1985. They have, however, requested 82 new positions in the 2000 budget, including 56 positions to run the Malaspina as a day ferry. He stressed that DOT/PF employees in rural areas take care of both the airport and the roads in their area. Number 0378 MR. PERKINS addressed transportation bill TEA-21. He noted that, although the bill funded fiscal year 1998, it did not get passed until the end of FY 1998. Therefore, the department operated on "a bunch of emergency measures," he continued. Despite the fact that information changed daily and they had little idea what TEA-21 would cover, Mr. Perkins proudly reported that the department was successful in obligating every cent of their 1998 funds. In addition to that, he continued, the DOT/PF was able to pick up an additional $3 million plus from the federal government in funds returned by states who could not obligate them. He summarized the benefits of TEA-21, including: * National funding levels tied to gas tax receipts * 94% of authorized highway funding "guaranteed" * Nearly states receive more funding * More discretionary program funding * More Congressionally designated projects Number 0410 MR. PERKINS reported that the DOT/PF recently submitted a request for funding to the United States Department of Transportation in the amount of $10 million. If approved, this would be used for improvements to the Dalton Highway. He reminded the committee that Alaska is competing against 49 other states for federal funding; therefore, it behooves the department to be well-organized. He referred to section 118F of TEA-21 which allows the state of Alaska to use federal money on any public highway in the state. With the exception of Alaska and Puerto Rico, the rest of the states must spend their money on federally-designated roads. Number 0466 MR. PERKINS referred the committee to the fourth chart in the handout which breaks down the available funding and illustrates the formula used. Despite the projected $315 million figure for 2000, it is his opinion that there will be an additional $1 billion in the trust fund, possibly resulting in increased funding for the state of Alaska. He cautioned, however, that beginning in 1999 every state is required to get back at least 90% of the money they paid in for gas taxes. If other states do not reach this percentage, he explained, the difference is taken from the states that collect more than 90%. The state of Alaska, he observed, collects $5 for every $1 paid. Therefore, if redistribution is needed, it may lower the program funding in 2000. He went on to offer a detailed explanation of each category in the chart. Number 0543 REPRESENTATIVE COWDERY questioned whether it was actually possible to build a bridge in Ketchikan that would be high enough for ships to go under. MR. PERKINS agreed that it was a difficult challenge, but he did not feel it would be impossible. Passing cruise ships would need to have at least 180 feet to clear it, he added. Currently, there is $20 million appropriated for the Ketchikan bridge, and an estimated $12 million of that will probably go to designing it with an option to do construction management. After that point, he continued, decisions would need to be made, such as where it would go, if a tunnel would be better than a bridge, or if a lower bridge with a draw on it be an option. SENATOR PEARCE asked, "Above and beyond the engineering difficulties, at what cost might we be able to land that bridge? Would $20 million cover it?" MR. PERKINS said no, and explained that total costs could be between $60 million and $100 million. The majority of the construction funds, he noted, would have to come out of another funding source, as the DOT/PF has elected to not even consider taking those funds from the regular program. Number 0579 MR. PERKINS referred the committee two pages ahead in their brochure to a chart titled "High Priority Projects - Cash Flow Plan With Adjustment for Reduced Spending Authority." He stressed that these projects were not submitted by the DOT/PF, but were suggested by "others." Each one of these projects listed, he added, require a 20% match. The darker shaded projects will be done by DOT/PF and match requests will be made. The lightly shaded projects will be done by the people who requested them, and responsibility for matches will belong those people. TAPE 99-3, SIDE B Number 0000 MR. PERKINS continued to explain that, historically, the DOT/PF can expect appropriations to be approximately 88% of the amount authorized. This requires them to go into projects and reduce each one individually. However, the funding does not expire, he observed, and will remain available for that particular project "forever." Number 0017 SENATOR LINCOLN asked where Gravina Island is located. MR. PERKINS explained that was the Ketchikan bridge previously referred to. SENATOR LINCOLN asked exactly who the "others" were that suggested these projects be "high priority." MR. PERKINS declared that in some cases he did not know; however, it can sometimes be assumed from title of the project where the proposals came from. SENATOR LINCOLN asked if this list represented the total amount of applications for funds. MR. PERKINS said that it had been the preference of the DOT/PF to use all of the TEA-21 funding on the Dalton Highway rather than these projects. By moving the Dalton Highway funding out of their regular program, he added, the community list could then be prioritized by the DOT/PF. SENATOR LINCOLN asked how is was decided who would be placed in the list where DOT/PF provides matching funds. MR. PERKINS cited the example of the Dalton Highway project. He pointed out that the DOT/PF initially requested $80 million for this project; however, only $3 million was approved. This project will actually displace a project from the regular program and will save that program $3 million, so it was decided funds should be matched. With regard to the Gravina Island bridge, the match was appropriated last year and authorized by the legislature. SENATOR LINCOLN wondered if money not used in a certain project could be moved into another or if the allocated funding always had to follow that project. MR. PERKINS reported that only the United States Congress could reprogram money to another project. CHAIR WARD asked Mr. Perkins to address the issue of the railroad. Number 0046 MR. PERKINS explained that transportation plans have been drawn up regionally. The DOT/PF is requesting funding for a Northwest Regional Transportation Plan. Such a study would include assessment of resources available and details regarding how the railroad would be put in. He announced that this plan has the support of individuals he has spoken with in Nome, Kotzebue and Fairbanks. Number 0070 REPRESENTATIVE SANDERS questioned whether the Cook Inlet shoal project would be a candidate for this program. MR. PERKINS indicated that nothing more could be added to this program for five years; however, changes would be possible after that time if the congressional delegation authorized it. REPRESENTATIVE HUDSON stressed that this was the first time many members of the committees had seen this list of high priority projects. It was his hope that both the House and Senate Transportation Committees would be able to take "a hard look" at each item on this list, and be able to make recommendations to the congressional delegation through the Administration. He questioned whether these projects were, in fact, the highest priorities for the state of Alaska. MR. PERKINS announced that he would support further review by the both the legislature and the Administration, and would be open to hearing suggestions for possible reprogramming. Number 0092 MR. PERKINS referred back to the TEA-21 chart: specifically, the program called "Alaska Shakwak." He again clarified the difference between authorization and appropriation of funds. Appropriation, he explained, is always done at a lower level than authorized. This discrepancy creates accounts of money left over. Due to legislation passed in the 1980s, he advised, the state of Alaska could give the balance of this money to Canada for the Shakwak project. This project is for the road from the Haines border to the Alaska border through Canada; however, specific wording states the money could be used for the "highway all the way to Haines and the Marine Ferry System that connects to the lower 48." That description has freed up $57 million that does not require a match. It is his recommendation that this money be spent as quickly as possible, because it is not in TEA-21 and could be changed in a yearly appropriations bill. The DOT/PF advised this be divided as follows: $11 million to a Haines highway project already under construction, $11 million to a Haines highway project scheduled for next year, and "$30 plus million" to the purchase of a new ferry. Number 0143 SENATOR LINCOLN sought clarification as to how the Southeast ferry system was chosen over other parts of Alaska. MR. PERKINS stressed that this was determined by minimum change to the current language describing how this money could be spent. Any attempt to apply that money to another region in Alaska, he added, would have required a new paragraph in the legislation, and it is his opinion that it never would have passed by the other states. He concluded by returning to the TEA-21 chart and examining the remaining projects. Number 0170 CHAIR WARD asked for a brief update on the status of the Anchorage International Airport project. MR. PERKINS proudly informed the committee that ratings have improved, and he is expecting that the bonds should already be signed off. It is his belief that the interest rate on these bonds will come in at under 5%. $25 million was authorized by the Federal Aviation Administration for this project; however, is was given as a Letter of Instruction (LOI). This mean that the distribution of this money will be throughout a ten-year period, he explained, and that will not be sufficient for construction. Consequently, the DOT/PF will be asking the state of Alaska to bond an additional $25 million, to be paid back with the federal money at the end of the ten-year period. Number 0209 REPRESENTATIVE COWDERY asked whether or not the $25 million estimation had, in fact, grown to $40 million. MR. PERKINS observed that there had been a lot of rumors about cost increases; however, that has not been the case. Some of the things requested, he explained, were not necessary and were removed. This did not affect the size, function or aesthetics of the airport, he added. REPRESENTATIVE COWDERY asked if $40 million was still coming from the FAA. MR. PERKINS clarified that, out of $40 million received as LOI, $25 million was committed to the terminal project and $15 million will go to other projects on the airport. REPRESENTATIVE COWDERY questioned whether passenger facility charges will be implemented. MR. PERKINS reported that a final decision on passenger facility charges has not yet been made; however, all of the major airlines will support them 100%. So far, he added, Juneau is implementing them and Ketchikan is on the verge of doing so. Number 0255 VICE CHAIRMAN HALCRO disclosed his lengthy experience working at the airport and added that his company has been there for 30 years. He expressed concern that there be adequate indoor parking so that customers do not have to walk so far in the ice and snow to get to their car. He further addressed the amount of money spent by companies on concessionaire fees. He requested that everyone of the concessionaires involved, regardless of their industry, have a "seat at the table" regarding decision-making. He acknowledged that the airport industry is seasonal, and stressed that the concessionaires are very important to the stability and livelihood of the airport. Number 0272 MR. PERKINS expanded on the issue of passenger facility charges, and stated that it has been requested in the national bill that small carriers be exempt from such fees. REPRESENTATIVE COWDERY agreed that small carriers service rural Alaska; however, he pointed out that some larger carriers, such as Alaska Airlines, also do so. He wondered if such exemptions from passenger facility charges would be done by specific airline or by rural location. MR. PERKINS explained that the exemption would be by community and not airline. Number 0305 REPRESENTATIVE COWDERY asked how much these fees might raise with or without exemptions factored in. MR. PERKINS stated he was unaware of the exact figure. KURT PARKAN, Deputy Commissioner, Department of Transportation and Public Facilities, informed the committee that it was estimated "a couple of years ago" to bring in approximately $5 million without exemptions. VICE CHAIRMAN HALCRO inquired if the estimated 1000 new jobs would be private-sector jobs through contractors or public state jobs. MR. PERKINS stated they would be private-sector jobs. VICE CHAIRMAN HALCRO wondered if the chart referring to lane miles per employee could be affected by the fact that some communities have state-maintained roads and other municipalities maintain their own roads. MR. PERKINS understood this chart to be a direct comparison of work, rather than where the work took place or what it was. Number 0325 VICE CHAIRMAN HALCRO asked how profitable it is for the Alaska Marine Highway to operate the current day ferries. MR. PERKINS clarified that there is currently only one day ferry, the Malaspina, and that has only operated for 71 days. The cost was $457,000 to operate between Juneau, Skagway and Haines, including overhead, risk management charges, and all other charges. The projected cost approved by the legislature last year was $577,000. The ferry carried an average of 515 passengers and 140 vehicles, and rented out an average of 15 cabins daily. It should be noted, he added, that there was a tremendous amount of public acceptance for this day ferry operation. CHAIR WARD asked for additional questions. Hearing none, Chair Ward and Vice Chairman Halcro thanked Mr. Perkins for his presentation and for bringing his staff with him. ADJOURNMENT Number 0352 CHAIR WARD adjourned the joint meeting of the House and Senate Transportation Standing Committees at 2:53 p.m.