HOUSE TRANSPORTATION STANDING COMMITTEE February 22, 2000 1:07 p.m. MEMBERS PRESENT Representative Andrew Halcro, Chairman Representative Beverly Masek Representative Bill Hudson Representative John Cowdery Representative Allen Kemplen Representative Albert Kookesh Representative Vic Kohring MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL NO. 319 "An Act providing for and relating to the issuance of state guaranteed transportation revenue anticipation bonds for the purpose of paying the cost of transportation projects that qualify for federal highway aid and the allocation of those bond proceeds; and providing for an effective date." - HEARD AND HELD PREVIOUS ACTION BILL: HB 319 SHORT TITLE: TRANSPORTATION REVENUE ANTICIPATION BONDS Jrn-Date Jrn-Page Action 1/26/00 2007 (H) READ THE FIRST TIME - REFERRALS 1/26/00 2007 (H) TRA, FIN 1/26/00 2007 (H) FISCAL NOTE (REV) 1/26/00 2007 (H) ZERO FISCAL NOTE (DOT) 1/26/00 2007 (H) GOVERNOR'S TRANSMITTAL LETTER 1/26/00 2007 (H) REFERRED TO TRANSPORTATION 2/17/00 (H) TRA AT 1:00 PM CAPITOL 17 2/17/00 (H) 2/22/00 (H) TRA AT 1:00 PM CAPITOL 17 WITNESS REGISTER JOSEPH L. PERKINS, Commissioner Department of Transportation & Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 POSITION STATEMENT: Presented HB 319. DEVEN MITCHELL, Debt Manager Treasury Division Department of Revenue PO Box 110405 Juneau, Alaska 99811-0405 POSITION STATEMENT: Answered a question regarding the department's fiscal note in relation to HB 319. DAN ELLIOT HC Box 5196 Wasilla, Alaska 99687 POSITION STATEMENT: Testified in support of HB 319. JOE LeBEAU PO Box 872922 Wasilla, Alaska 99687-2922 POSITION STATEMENT: Testified in support of HB 319. WAYNE WEIHING PO Box 1193 Ward Cove, Alaska 99928 POSITION STATEMENT: Testified in support of HB 319. FRANK DILLON, Executive Vice President Alaska Trucking Association 3443 Minnesota Drive Anchorage, Alaska 99501 POSITION STATEMENT: Testified on HB 319. ROBERT VENABLES, President Haines Chamber of Commerce (Address Not Provided) POSITION STATEMENT: Testified in support of HB 319. BRUCE GILBERT (PH) PO Box 318 Haines, Alaska 99827 POSITION STATEMENT: Testified in support of HB 319. JOHN MIELKE, Mayor City of Skagway PO Box 415 Skagway, Alaska 99840 POSITION STATEMENT: Testified in support of HB 319. NANCY WATERMAN PO Box 20993 Juneau, Alaska 99802 POSITION STATEMENT: Testified in support of HB 319. JEFF SLOSS 740 5th Street Juneau, Alaska 99801 POSITION STATEMENT: Testified in support of HB 319. JAMIE PARSONS 9218 Emily Way Juneau, Alaska 99801 POSITION STATEMENT: Testified on HB 319. MIKE MILLER, President Alaska General Contractors 7101 DeBarr Road Anchorage, Alaska 99504 POSITION STATEMENT: Testified on HB 319. PAULETTE SIMPSON 402 Alaska Belle Douglas, Alaska 99824 POSITION STATEMENT: Testified on HB 319. CLIFF LOBAUGH 3340 Fritz Cove Road Juneau, Alaska 99801 POSITION STATEMENT: Testified on HB 319. JAN WRENTMORE, Lobbyist City of Skagway PO Box 271 Skagway, Alaska 99840 POSITION STATEMENT: Testified in support of HB 319. JOSEPH M. BEEDLE, Representative Goldbelt, Incorporated 9097 Glacier Highway Juneau, Alaska 99801 POSITION STATEMENT: Testified in support of HB 319. ROBERT JACOBSON (PH), Representative Alaska Coastal Airlines, Skagway Air Service, Haines Airways, and Wings of Alaska Airlines 845 Goldbelt Avenue Juneau, Alaska 99801 POSITION STATEMENT: Testified on HB 319. ACTION NARRATIVE TAPE 00-10, SIDE A Number 0001 CHAIRMAN ANDREW HALCRO called the House Transportation Standing Committee meeting to order at 1:07 p.m. Members present at the call to order were Representatives Halcro, Cowdery, Kemplen, and Kookesh. Representatives Masek, Hudson and Kohring arrived as the meeting was in progress. HB 319 - TRANSPORTATION REVENUE ANTICIPATION BONDS CHAIRMAN HALCRO announced the first order of business as House Bill 319, "An Act providing for and relating to the issuance of state guaranteed transportation revenue anticipation bonds for the purpose of paying the cost of transportation projects that qualify for federal highway aid and the allocation of those bond proceeds; and providing for an effective date." Number 0070 JOSEPH L. PERKINS, Commissioner, Department of Transportation & Public Facilities, came before the committee and read the following into the record: Thank you Mr. Chairman. I'm pleased to be here today to introduce HB 319, a bond package that will provide funding to expedite construction of needed transportation projects across the state. Mr. Chairman, our ability to expand, diversify and strengthen our economy through approved transportation can be enhanced depending on action on this bill. Over the past five years, we've invested over $2 billion improving and expanding Alaska's transportation system. This includes highways, airports, marine highway, harbors and trails. This investment that we've made is possible thanks to the federal highway transportation dollars, which have increased from approximately $200 million to $350 million a year in the last three years. The Governor's top transportation priority, as announced about five years ago, was reconstructing our National Highway System [NHS], which includes the Seward, the Sterling, the Glenn, the Parks, the Dalton, the Richardson and the Alaska highways. Reconstructing these to current standards for grade, width and alignment. In the last five years, we've upgraded 210 miles of the National Highway System and have 125 more miles in the STIP [Statewide Transportation Improvement Program] for upgrading over the next three years. After all this work is complete, we'll only have about 150 more miles of NHS to rebuild. That's not counting the Dalton Highway. We will be continuing the priority on this program. The Alaska Highway is now up to standard and we will complete the rehabilitation of the Seward Highway, as well as major portions of the Glenn and Parks Highways over the next three years. Unlike most states, our National Highway System also includes the 1,900-mile Marine Highway System. This system is undergoing massive change as we implement the Southeast Alaska Transportation Plan. Not counting the [M/V] Kennicott, the average age of our state ferries is over 30 years. That's going to change with the addition of new high-speed ferries which will travel faster and more often between our communities. One of these high-speed ferries, which will cost approximately $35 million each, will be ordered this fall. Two more are included in the bond package. Under our 'gravel to pavement program,' we paved 52 miles of gravel road last summer, and we have 100 miles of gravel road scheduled for this coming season. It's time that Alaskans got out of the mud and into the twenty-first century, and we're gonna help them get there. Across rural Alaska, we've invested $300 million into 261 rural airports in the last 5 years, and we've opened up Alaska with more than 150 new trails and recreation projects. Under the regular transportation program through our STIP, we will continue to address many of the state's transportation needs. Yet even with these improvements, Alaska's transportation needs are not being met. We estimated addressing all identifiable projects, new construction projects, that we have needs in excess of $7.5 billion. Now, these are identified projects in our needs-list. This year, we have an innovate opportunity to expedite construction of some large, much needed highway projects. Major transportation construction projects in every region face the same hurdle in that each phase of the work much be fully funded before the project can begin. Fully funding a large project is difficult when so many needs across the state are competing for the same pot of federal dollars. But now, the federal government has created a mechanism for states to acquire full bond funding for projects ahead of the usual schedule of annual federal allocations. The NHS Act of 1995 revised Title 23 and lifted limitations on the use of federal highway funds for bond issuance and debt service by making the cost eligible for federal reimbursement. The passage of TEA-21 [Transportation Equity Act for the 21st Century] removed other hurdles to issuing debt against future federal-aid. Essentially, these programs are borrowing to build projects now and paying it back with future federal money. HB 319 is a $350 million accelerated transportation bond initiative that will allow us to take advantage of this new federally authorized flexibility just like other states have done, such as New Mexico, Massachusetts, Ohio, Colorado and other states, which are currently just starting the program, Florida, Virginia, California and a lot of other states will be on the market soon. We, in Alaska, can enjoy the economic and safety benefits of projects now by selling bonds funded by the flow of future federal dollars. We anticipate debt service payments on the bonds will amount to approximately 10 percent of our annual highway program. This is about $35 million per year. HB 319 allows for the issuance of general obligation bonds because our state constitution requires a vote of the people for the state to incur long-term debt. This is different than the airport bonds, which we sold last year. These were revenue bonds paid for by the airport enterprise fund. These bonds we're talking about will be paid with future federal funds, but will be secondarily backed by the full faith and credit of the state's general fund. This backing should give us an excellent interest rate on the market. The process for doing this is relatively simple. First, we identify the federal-aid project on the STIP. Second, we get approval for advanced construction from FHWA, the Federal Highway Administration. This preserves the project's eligibility for future federal dollars. Third, we issue bonds and start construction. Now, federal funds are used to pay the debt service. This is approximately $35 million, as I've said, per year over 15 years. State matching funds, approximately 10 percent, are not paid up front, but are paid in with each payment of debt service. There are many benefits to this bond initiative. First, money is saved because we avoid the cost of construction inflation by building project now instead of years into the future. This helps offset the interest paid on the bonds. Second, it will fund large capital intensive projects without affecting smaller projects. Level debt service evens the flow of federal funds for projects throughout the state by avoiding the peaks and valleys in funding large projects most recently experienced with the building of the $80-million [M/V] Kennicott. The impact on projects for the rest of the state when we funded the [M/V] Kennicott was substantial. Third, it will allow us to do critical projects that are needed now to address safety, congestion, and economic development, rather than waiting many years for the projects to be funded in the regular STIP. Fourth, with the use of interest earnings we believe we can generate sufficient funds to pay most of, if not all, of the state match requirement. We would provide matching funds with each debt service payment, not a lump sum up front. This alone would be savings in excess of $3.5 million in state general fund dollars per year. I think, this is very, very important because basically what you have is we are using the interest off of the money we've borrowed to pay the match. So, our match request would be decreased each year about $3.5 million. I guess, you could really say the feds are sort of paying the match. Fifth, it would increase the percentage of work being contracted to the private sector for design. And sixth, it does not negatively impact the current STIP. Debt service payments wouldn't start for three years. The accelerated transportation bond package includes 11 specific projects in different regions of our state. Let me briefly describe them to you. Congestion is a major problem in Anchorage. We intend to reduce it with two major construction projects utilizing this financing. The first project is the Glenn Highway near Merrill Field. The bottleneck there is due to the fact that we have six lanes coming in from Wasilla and Palmer narrowing to four lanes by the airport, and then after you pass the airport widening out to six lanes again. We will be spending $65 million to reconstruct this section of the Glenn Highway from Gambell Street to McCarrey, as recommended in the AMATS [Anchorage Metropolitan Area Transportation Study] 1991 long-range transportation plan. This project will consist of adding capacity and new interchanges to improve the flow and traffic into and out of downtown Anchorage. Construction should begin by the summer of 2003. The second Anchorage project is the upgrade of "C" Street. We have already completed the first phase of this project, which was that portion from Tudor Road to Potter Drive. It is already improving the traffic flow from south Anchorage and downtown. Phase II of the "C" Street reconstruction will add two new lanes from Potter Drive to Dimond [Boulevard], including lighting and pedestrian facilities. We'll also construct a new road link south of Dimond to Minnesota Drive. Construction of this phase will be in the year 2001 or next year. The final phase of the "C" Street reconstruction is the extension from Dimond to Minnesota. We will be constructing four lanes from Dimond to Minnesota including lighting, pedestrian facilities, and a separated railroad crossing at "C" Street. We'll also be constructing interchanges at "C" Street and Minnesota and at O'Malley and Old Seward. Construction of this phase will begin in 2002. The second and third phases will cost a total of $70 million. These projects should go a long way to relieving some of the congestions problems in Anchorage. We also intend to do something to improve the commute for drivers commuting to and from Anchorage. In addition to many projects we've completed and future projects we've scheduled on the Seward and Parks Highways, we would undertake a major project in the Mat-Su area. This project will consist of constructing an interchange at the intersection of the Glenn and Parks Highway, which will tie in with the construction now underway from the Parks-Glenn intersection to Wasilla. We will also be four-laning and upgrading the Glenn Highway from the interchange all the way into Palmer. In addition to the daily commuter benefits, this project will help with the congestion problems associated with the state fair. Construction of this phase will begin in 2002. The project will cost approximately $60 million. When you add this projects to the Anchorage projects, you get a total investment in South Central Alaska of $195 million. Another urban area that is included in this transportation initiative is Fairbanks. We intend to spend $55 million in the Fairbanks area on three projects. The first of these projects is the widening and reconstruction of University Avenue. This $20-million project will consist of widening University Avenue to five lanes, intersection improvements at University and Geist Road and the widening of the bicycle/pedestrian path on the Chena River Bridge. The second Fairbanks project is the reconstruction of Illinois and Barnette Street. This $25-million project will improve traffic flow to downtown Fairbanks and will include sidewalks and landscaping and a new bridge across the Chena River. The final Fairbanks projects is a reconstruction of downtown Fairbanks streets. Downtown Fairbanks is experiencing major infrastructure investment including a new court house and a new hotel. This $10-million project will complement that investment and will include major improvements to streets, sidewalks, lighting and landscaping in downtown Fairbanks. In Southeast Alaska, we plan to add two new high-speed ferries to the Alaska Marine Highway System to accelerate the implementation of the Southeast Alaska Transportation Plan. These ferries are in addition to the new high-speed ferry already funded for the Sitka corridor. The total cost of the two ferries is $70 million. One of the new ferries will serve Lynn Canal. This ferry will greatly improve transportation to and from our state capitol. The other new ferry will serve travelers between Ketchikan and Wrangell. We also have some important rural projects in the bond package. In Kotzebue, we will be reconstructing Shore Avenue and upgrading Ted Stevens Way. Currently, Shore Avenue, which is the front street of Kotzebue, has extensive erosion. This will correct the erosion problem plus fix their roads. In Nome, we'll be rehabilitating Bering and Front Streets. In Bethel, we will relevel and pave Chief Eddie Hoffman Highway, which is a highway that runs from the airport to town. In Dillingham, we will pave 15 miles of the Dillingham to Aleknagik Road, which is the entrance to the largest state park in Alaska. Why did we pick these projects? Number one, they are needed. They're the ones most ready to go. They're large dollar projects and they can be done now. They also represent the diverse transportation needs of this state. This won't address all of the transportation needs of this state. But it helps. Remember, there's a $7.5 billion backlog. Can the state handle this much engineering and construction in a short period of time? I think they can. I think you should ask the contractors, the labor leaders, and the consulting firms, and I believe they will agree with me. Mr. Chairman, we need to take this opportunity to build these needed projects now, so that Alaskans don't have to wait years in order to experience their benefit. We can do it responsibly and with much less state general fund match than would be needed, if we built them the old fashioned way. It's a 'win-win' situation, and it's the right thing to do. Thank you and I'll take questions. Number 1167 REPRESENTATIVE JOHN COWDERY asked Commissioner Perkins whether he's asking for authorization for $350 million in bonds. COMMISSIONER PERKINS replied, "Yes." The Administration is asking for general obligation bonds, which would go to a vote of the people this November. REPRESENTATIVE COWDERY asked Commissioner Perkins whether federal pay-backs are really guaranteed. COMMISSIONER PERKINS replied, he thinks, that it's a good guarantee if Wall Street will buy them. He cited examples in the states of California, Florida and Virginia, whereby Wall Street has bought their bonds at 100 percent. REPRESENTATIVE COWDERY asked Commissioner Perkins whether the streets he mentioned earlier in relation to Fairbanks are local or state. COMMISSIONER PERKINS replied they are mainly local streets. Right now, there is a tremendous amount of private investment in downtown Fairbanks, and the department would like to "fix it up" just like they did for 5th and 6th Streets in downtown Anchorage. REPRESENTATIVE COWDERY asked Commissioner Perkins whether the state would maintain those roads. COMMISSIONER PERKINS replied maintenance would stay with the city. REPRESENTATIVE COWDERY asked Commissioner Perkins whether there is a problem with binding one legislature to another in terms of matching funds. COMMISSIONER PERKINS replied these are bonds that would be paid back with federal funds. Therefore, if a legislature didn't want to use federal funds, they could use general funds. REPRESENTATIVE COWDERY asked Commissioner Perkins whether using general funds is the same as binding future legislatures. COMMISSIONER PERKINS replied he doesn't think so, but he will check on it and respond back. Number 1315 CHAIRMAN HALCRO asked Commissioner Perkins how he would respond to those who would say that the legislature is basically spending federal highway dollars of future legislatures. In other words, if the bonds are in anticipation of getting paid back through yearly dispersement of federal highway funds, how does this legislature get around the fact that it is basically spending money that future legislatures should be able to spend, especially as they relate to transportation projects that might be different than what is committed in the proposed legislation. COMMISSIONER PERKINS replied the proposed legislation requires a vote of the people, and it's the people who ultimately tell a legislature what to do and what not to do. Number 1356 REPRESENTATIVE ALBERT KOOKESH stated it's the people who will decide whether or not to bind future legislatures by way of a vote. COMMISSIONER PERKINS pointed out that these are general obligation bonds, which is no different than other general obligation bonds the state has issued; the concern, therefore, has probably already been addressed. Number 1387 REPRESENTATIVE BILL HUDSON asked Commissioner Perkins whether the state would sell the bonds to Wall Street all at one time then use the realized income to repay the obligation. Is that legal at the federal level? COMMISSIONER PERKINS replied when the bonds are sold they become state money, not federal money. The proposed legislation calls for federal money to repay the obligation. He said, I would envision us selling $350 million. We put it in the bank. We're not going to spend it all the first year. We'll spend maybe 50 or 60 of it, but it will probably stretch out to where you'll get 5 or 6 percent interest on three or four hundred million over one year, when you take the whole period. But what this does is kick 20 to 30 million of interest that we're going to make. And what I'm saying is we can take that interest money and use it for match. Now, you match each payment, so three years down the pipe when you make the first payment of $36 million on the bonds. Now, that thirty-six or thirty-five or whatever it is, it's somewhere in that ballpark, that's going to include our state match so it probably only be thirty-two fed and then another three million of state match. The state match, in my opinion, can come from this interest pot that we have that we got over the money. That would preclude the legislature having to appropriate state's match for that year. Now, our initial calculations show that if we do this, when we look at cash flows, that we're going to be very, very close to having enough interest money to pay the state match all the way through for the whole 15 years. And they probably would be 15-year bonds. Number 1544 REPRESENTATIVE HUDSON said he would like to see statistical information relating to this issue, especially since it puts the good faith and credit of the state on the line. He said, We are, essentially, putting the good faith and credit of the state over a long period of time on the line. I'm not saying that's bad. I'm saying that may be even good. But we need to know right up front that we are essentially obligating the payment after we sell these bonds at any rate of that amount of money that we're borrowing plus the interest over the next whatever years it is, 20, 30 years. And so the question that Representative Cowdery and I think also yourself Mr. Chairman raised is one that needs to be looked at is that if we can we legally bind future legislatures to that debt? I think we can, but we do need to have legal council at least tell us whether we can or not. COMMISSIONER PERKINS reiterated that these are general obligation bonds, which the state has sold before. He pointed out that the first payment would be federal dollars. He often wonders, however, what would be the full faith and credit of the state if the federal government "went down the tube." REPRESENTATIVE HUDSON replied the state would probably be better off in some cases. Number 1614 REPRESENTATIVE ALLEN KEMPLEN referred to the Anchorage International Airport construction project where costs have escalated because of increased demands and limited supplies of contractors. He asked Commissioner Perkins to comment on whether or not the contracting community can absorb this type of significant infusion of capital dollars without "drying up" available talent and "driving up" cost. COMMISSIONER PERKINS replied $350 million over a three to four year period is not that big of a program. Furthermore, there is a difference between this type of work and airport work. He pointed out that airport work is referred to as vertical construction, which involves pipe fitters and carpenters. This type of work is referred to as horizontal construction, which involves earthwork and bridging. They are different types of labor. He further stated that current bids indicate a competitive climate. In addition, he has been informed by the contracting community that the proposed legislation is not a "big deal." The same is true for the engineering side. He doesn't see that this would be a large impact on the state. In fact, it would be a relatively small impact, especially if the portion pertaining to the fast ferries was removed. Number 1855 REPRESENTATIVE KEMPLEN indicated that he wants to be more comfortable with the fact that these projects would not "overheat" the market. He would hate to see an import of labor from the Lower 48. COMMISSIONER PERKINS replied it is very difficult to import labor because wages and benefits are not as competitive as they used to be. He said, "This is not the day of the pipeline. This is a different era." The department is seeing Alaskans and Alaskan companies bid on these types of projects. Furthermore, there isn't much of a labor pool in the Lower 48 anymore that would come to Alaska. Number 1915 REPRESENTATIVE KEMPLEN said capital spending has been increasing substantially in the state. Federal dollars have increased 50 percent over the last two years, to a great extent because Senator Ted Stevens is chairman of the Senate Appropriations Committee. He wants to be more comfortable with knowing that the state is not "overheating" its capital economy. He would like to see numbers rather than anecdotes. REPRESENTATIVE KEMPLEN asked Commissioner Perkins where the department plans to get additional money to fund the operation and maintenance for these new roads and ferries. COMMISSIONER PERKINS replied the cost of operation and maintenance needs to be looked at on a project-by-project basis. He cited the airport project is less than a mile long, which would take an additional 15 minutes to plow in the winter. The "C" Street project would remove a few onerous stop lights for the plows. The downtown streets in Fairbanks would be maintained by the city; the state would not incur any costs. The cost for the fast ferries has been laid out in detail in the Southeast Transportation Plan. The paving of the dirt road in Dillingham would save about 50 percent of the maintenance costs currently spent on grading. The straightening out of the Bethel road would reduce costs. He pointed out that there are no new roads in the proposed legislation, except for maybe the extension on "C" Street. Number 2100 REPRESENTATIVE KEMPLEN asked Commissioner Perkins whether the department has conducted a quantitative analysis of the additional costs that would be incurred. COMMISSIONER PERKINS replied, "No." He doesn't see any sense in doing that; it would be a waste of time. REPRESENTATIVE KEMPLEN stated he would like to learn more about the costs of maintaining roads. In that way, he is better prepared to explain the department's budget to his constituents. COMMISSIONER PERKINS acknowledged Representative Kemplen's concern and indicated that he would provide him some information. Number 2173 REPRESENTATIVE KEMPLEN asked Commissioner Perkins whether the Glenn Highway-Gambell Street project has been certified as "ready to go," given the impact on the adjacent businesses. He indicated that the Municipality of Anchorage is not comfortable with moving that project forward expeditiously. COMMISSIONER PERKINS replied, as far as he is concerned, it is ready to go, except for the final environmental work. As indicated earlier, the start date for that project would be 2003. There are a lot of people who would indicate that this is a critical project, particularly those who commute from Eagle River and the Mat-Su Valley. Number 2314 REPRESENTATIVE KEMPLEN stated his constituents are not as comfortable in moving that project forward expeditiously. He wants to be assured that there is a sense of agreement before asking the people to vote on it and "locking it in." Number 2361 REPRESENTATIVE BEVERLY MASEK stated she is concerned about TEA-21 dollars shrinking, thereby putting the bonds in jeopardy. The state would still be liable. COMMISSIONER PERKINS answered Alaska is like every other state in the Union. He said, I think my first explanation--I think the Wall Street folks are better than we are at looking in the future because they buy these things. We are backing ours up with the full faith and credit to the state. We're about the only ones doing that. New Mexico sold all their bonds with nothing backing them up and they sold them. So, the people on Wall Street at looking at the federal highway program as something that is increasing every year. Now, one reason is because they have to spend all the money that comes into the trust fund. For instance, there was an extra $3 billion this last year came into the highway trust fund, of that, we'll get an increase in our program somewhere around $16 million. So, I foresee, unless the citizens of the U.S. quit driving cars or unless Congress did away with the gas tax, which I don't think they will ever do, I see this program getting larger each year. Now, as far as our percentage, we did okay, but we don't do all that well. We get, of the money available for these formula programs, we get about 1 percent total. Now, whether or not that'll continue, I don't know, but I would think it would, even if you cut it to a half of a percent we'd still get $175 million. So, I don't see us ever going back on the full faith and credit of this state. You're always going to have a federal highway program there, but all the projections are is to--is for that program to keep growing and I don't think even in the years coming--coming up that you're going to see a Congress, unless they're mad at us, that decreasing this less than 1 percent. So, I would--it's hard to project 15 years in the future, but I don't see a change in this... TAPE 00-10, SIDE B Number 0001 REPRESENTATIVE MASEK stated Alaska has a smaller population and not as many road miles as the rest of the states. If the state's congressional delegation happens to be in the minority and has to compete with the rest of the states for money, she doesn't feel that this [proposal] is looking out for the state's best interest, which could jeopardize future funding. REPRESENTATIVE MASEK asked Commissioner Perkins to explain the private investments he mentioned earlier in relation to the project in downtown Fairbanks. COMMISSIONER PERKINS replied there is a new hotel, and a new court house. Fairbanks wants to revitalize their downtown. He said, "We've helped Anchorage do theirs. I think it's only fair we help Fairbanks do theirs. We've also helped Juneau do theirs." Number 0069 REPRESENTATIVE MASEK asked Commissioner Perkins whether he has had any discussion(s) with these private investors. COMMISSIONER PERKINS replied no. They aren't investing in roads; they are investing in buildings, and they already have done so. Number 0147 REPRESENTATIVE MASEK referred to the fiscal note submitted by the Department of Revenue and asked whether there has been a ruling yet from the Federal Highway Administration. COMMISSIONER PERKINS replied there will not be a ruling per se. He explained that one individual from the Federal Highway Administration has indicated that this can't be done, but this is not federal money. As far as the state is concerned, it can be done. REPRESENTATIVE MASEK asked Commissioner Perkins whether he has any idea what the department's capital budget will look like. COMMISSIONER PERKINS replied each project is contained in an amendment to the capital budget that will be submitted shortly. REPRESENTATIVE MASEK asked Commissioner Perkins to supply that amendment to the committee as well. COMMISSIONER PERKINS indicated that he would. Number 0178 CHAIRMAN HALCRO asked Mr. Deven Mitchell [Department of Revenue] whether it's correct to say that the $3.7 million general fund match assumes the state will not be able to use bond-revenues or interest generated. DEVEN MITCHELL, Debt Manager, Treasury Division, Department of Revenue, replied, "Correct." He said, If, on an annual basis, we supplied the state match to federal dollars used for principle and interest costs that would be the expense that we might incur. Number 0208 REPRESENTATIVE HUDSON asked Commissioner Perkins whether it was an arbitrary capitulation to not back the proposed alternative of a road. COMMISSIONER PERKINS replied there is a difference between economic and financial feasibility, as was discovered when the state researched the Susitna hydroelectric project. The state discovered that it was economically feasible but not financially feasible. He said, It is our feeling that the road is the most economically feasible alternative in the long term for Juneau access. However, it is also our feeling that it is not financially feasible at this time. In the future it may be and could be brought up again, but we don't have $240 million to put into that project when we weighed all of the statewide needs, some of which were in this bond issue. Number 0274 REPRESENTATIVE HUDSON said, Obviously, we can borrow $350 million, and I'm assuming we could borrow more. And you indicated that the way we do this is quite simple. We identify the project, we get the approval, and we build it. I put those three down there. It sounded pretty good to me. I know having been in almost your shoes it's not that quite easy. But I guess what I'm interested in or concerned in is that the preferred alternative whether it's a road all the way up to Skagway or not, and I understand all of the pros and cons on that issue. I've listened to the communities on the upper end. I've listened to half of my constituents on one side of the issue and half on the other side and things of this nature. But I've always felt that when you go through some sort of a major project review you come up with some sort of a suggested long-term best course of action to take. And, what I'm wondering is, if you had or of there was still any opening or options to look at say a road to Katzehin [River] and just a 15 or 20 or 30 minute short shuttle ferry across, where you would pay less type of a situation to move across. And it would be almost like having a full road in and out of the community here. And I bring this up because a number of my constituents and then I felt it this summer myself when my wife, Lucy, and I put our truck, she and I on the ferry with our camper. We were heading down to Montana on a little vacation. I think the biggest part of the vacation was getting from here to Skagway because of the...It's the most expensive 50 or 60 miles of highway, I think, in Alaska. If they had to pay a comparable fee to drive from Anchorage to Homer, it would cost them about $600. Maybe a little less, but I mean five or six hundred dollars to go down there and back. The same thing to my good friends over there. [He pointed to Representative Albert Kookesh.] We either have to do something with the fares for the people who live on the route or we have to keep an open mind about whether or not the fast ferry...The fast ferry and the Malaspina, I'm not sure what we're doing with a combination there. Fast ferry is one-third the capacity and yet it now appears it's only going to make one run a day. The Malaspina can do that and it's got three times the capacity. Wouldn't we have been better off to at least seriously think before we leaped into the fast ferry option about moving the Malaspina to a shuttle route to say on up into Berners Bay, for example, and perhaps to run that road from Haines down a little bit further and then maybe consider a connecting ferry between Haines and Skagway in addition to the mainliners coming on through? Was any of that kind of dialoguing or discussion taking place? COMMISSIONER PERKINS replied, yes, all 14 alternatives were looked at. The most economically feasible option is the full road. He said, You know what we have right now of utilizing this fast ferry, and I think we got to look at the utilization of it. It would be in conjunction with the [M/V] Malaspina in the winter. But our problem in going to Haines and Skagway is winter service. Right now, if you want to go to Skagway or Haines, I think, you've got two days a week you can do it. The fast ferry we plan to run in the wintertime daily, which is a major improvement on transportation. Now, no matter if you had decided today that you're going to build a road and that you started and fronted the money and this legislature approved it, you're talking ten years and maybe longer than ten years based on our experience with Whittier, where the U.S. Supreme Court was the final decision maker on whether or not we could build that railroad. So, there's got to be something in the interim. And, basically, what we're saying is the road is the preferred alternative. We don't have the money to do it right now, but we're going to put an interim solution on which we think will improve this next--well within two years because that ferry will be delivered in two years. It will provide daily winter service plus it'll augment the Malaspina in the summer. Now, that's a short-term solution. That is not the long-term solution. The long-term solution, ultimately, according to our studies is a road. Now, all we need to do is come up with $240 million to keep the road going, and then it's still going to be ten years before you get it finished by the time... Number 0488 REPRESENTATIVE HUDSON stated he appreciates the fact that the department has a bottleneck and that it is taking steps to "uncork" it. He's not adverse to a fast ferry. In fact, he proposed such an "animal" a few years ago. He asked Commissioner Perkins whether it would be acceptable to the Administration for those who want a road to pursue funding in the form of revenue bonds or rolls, or whether he thinks the issue is "dead." COMMISSIONER PERKINS replied the department doesn't object to anybody looking at whatever they would like to. The reason the bond proposition is before the committee is because of the experiences in the Lower 48 and Wall Street. He further stated that the department doesn't want the payment to be much higher than 10 percent, otherwise there would be a greater percentage of the federal payment, which is already dedicated up front. Number 0584 REPRESENTATIVE COWDERY asked Commissioner Perkins his thoughts on project labor agreements in relation to the proposed legislation. COMMISSIONER PERKINS replied he doesn't know of any discussion(s) relating to project labor agreements, and he doesn't know of any project labor agreement for highway work. He doesn't anticipate it in the future either. Number 0665 REPRESENTATIVE COWDERY asked Commissioner Perkins whether the fast ferry is being built outside. COMMISSIONER PERKINS replied it is not being built yet. The department will have an RFP [request for proposal] ready in April, and the contract is scheduled to be awarded in the August-September time frame. He said, What we would like to do is we would put an option on this contract to buy two more so, we would let the contract for the one, but with an option to buy two. Then if the people, if you all approve, and the people approve this bond bill then we would add those two to the contract. But we would get a bid price and somewhere or another we need to consider in our evaluation for bids what that price is. So, we would be buying three of these, if this gets approved. I think we would save some money, sizeable amount of money, by buying three from the same company plus we would get three identical ones, the same parts, 'interchangability' and all of this. So, it really hinges on what happens to the bill both in the legislature and the vote of the people. If you all approve it, I will put it in the contract. Probably put it in anyway 'cause we'll put the contract out before you all make a final decision. And then if you don't approve it or if the people vote it down we just won't implement that option. Number 0665 REPRESENTATIVE COWDERY asked Commissioner Perkins whether there would be a competitive bid for the ferries. COMMISSIONER PERKINS replied it would be a bid that includes ranking based on a combination of both design and price. Number 0755 REPRESENTATIVE COWDERY asked Commissioner Perkins whether he anticipates any project labor agreements connected with the building of the ferries. COMMISSIONER PERKINS replied no. He further stated that a fast ferry has never been built in the U.S. before, which will probably spawn a lot of interest and innovative ideas. It could also be the start of a new business in this country; a lot of states are looking at fast ferries. He said, "I think we're on the cutting edge of developing perhaps a new industry in the United States." Number 0844 REPRESENTATIVE COWDERY said he's glad to hear that neither contract would be based on a project labor agreement. REPRESENTATIVE COWDERY asked Commissioner Perkins to provide him with statistical information on population versus road miles, including the marine highway. COMMISSIONER PERKINS acknowledged the request. Number 0899 REPRESENTATIVE VIC KOHRING commended Commissioner Perkins for his efforts. He likes his proactive and aggressive approach in trying to get these projects funded. He conceptually supports the proposed legislation. Number 0922 CHAIRMAN HALCRO asked Commissioner Perkins to give a brief overview on the problems associated with the intersection of Lake Otis and Tudor Roads [in Anchorage]. COMMISSIONER PERKINS explained that the Municipality of Anchorage recently moved the retaining wall and put a new lane for turning right, which helped but it did not solve the problem. The problem is, the state doesn't have the right-of-way at that intersection, which involves a church, a complete shopping mall and a few gas stations. He noted that AMATS is looking at Raspberry Road, but a study of that nature will take time. He announced that he would have included a project in the proposed legislation if he had one that was anywhere ready to go, given the time frames involved. CHAIRMAN HALCRO opened the meeting to public testimony. Number 1130 DAN ELLIOT testified via teleconference from Mat-Su in support of HB 319. He is in favor of the proposed legislation because the state's infrastructure is important, especially when the state can make use of federal assistance when it is falling behind in needs. He thinks that the fast ferry is a much better way to handle the transportation needs of Southeast. It's either that or to move the capitol up north. He is also in favor of the Parks-Glenn Highway interchange project and assumes that the other projects are of equal benefit. Having been in a laborer union for the past twenty-five years, he said, he knows that the Parks-Glenn Highway interchange is not a large project, even though it seems like a lot of money. It's mostly bulldozer and truck work. He thinks that the bonds are a very good way to go to handle the current needs. In conclusion, the people in the Upper Valley like himself are in favor of the proposed legislation. Number 1221 JOE LeBEAU testified via teleconference from Mat-Su in support of HB 319. He is especially in support of the high-speed ferries. He would like to see trails and bike paths included as well. He has driven on most of the roads included in the proposed legislation, except for the one in Dillingham. He indicated that the roads in Kotzebue and Nome clearly need repair, and that the Parks-Glenn Highway interchange certainly could use some redevelopment. He's not certain about the four-lane interchange from the Parks Highway to Palmer, however. In conclusion, he would like to see additional ferry terminals built closer to town so that people could walk. Number 1360 WAYNE WEIHING testified via teleconference from Ketchikan in support of HB 319. As a long-term resident of Southeast Alaska, a fast ferry is a wonderful way to address the need for better service. He also mentioned that Ketchikan has a shipyard that does a lot of maintenance and annual work on the state ferries. They have been very competitive with other shipyards. He would like to think that a competitive bid on the proposed fast ferries would bring economic stability to Ketchikan. Number 1482 FRANK DILLON, Executive Vice President, Alaska Trucking Association, testified via teleconference from Anchorage. He is also chairman of the Anchorage Chamber of Commerce Transportation Committee, and the Citizens Air Quality Advisory Board, which advises AMATS. In regards to the future, it's a pretty good bet that the state will continue to get highway funding and probably at a pretty good rate of return. The projects listed in the proposed legislation have been around for the last ten years, and in most cases the needs have grown worse. The time frames that Commissioner Perkins referred to in his opening remarks are quite reasonable. The questions raised earlier in relation to this being a good fiscal deal for the state need to be pursued, but according to his understanding, it can't get much better. In fact, it almost sounds too good to be true. In conclusion, the association supports the proposed legislation and would like to see it move forward. The association would also like to see the construction seasons extended so that these projects can be completed sooner. Number 1672 ROBERT VENABLES, President, Haines Chamber of Commerce, testified via teleconference from Haines in support of HB 319. He is especially in support of the allocation for the high-speed ferries. The current transportation system, as most people know, is inadequate. The proposed legislation, in his opinion, would make the provisions necessary to meet the current needs and allow for growth as it occurs. Access has been and continues to be a vital issue for Haines, Skagway, Juneau and the entire state; it's important that the ferries are included with the other projects. He noted that access to the capitol from Haines is a statewide need. In addition, the road option, in his opinion, is fiscally irresponsible and potentially destabilizing to the economy and environment of Haines. In conclusion, he thanked the chairman and committee members for their support and asked that they support the proposed legislation. Number 1761 BRUCE GILBERT (PH) testified via teleconference from Haines. He saw a need for more service in upper Lynn Canal in 1985, at which time, he built a catamaran to act as a ferry between Haines and Echo Cove. He made 57 trips, but unfortunately lost $40,000 as a result. He further mentioned that in 1994 at a Passenger Vessel Association meeting in Fort Lauderdale, Florida the Europeans and Aussies presented the idea of a fast ferry. He also mentioned that he attended the Boston International Fast Ferry Conference a year ago where the Aussies indicated that a fast ferry built in Australia would cost $12 million, while one built in the United States would cost $16 million. It was also indicated that 20 percent could be saved if a ferry is bought through a private party rather than a public party. He suggested pursuing that course of action. In conclusion, he hopes that the state passes the proposed legislation. Number 1957 JOHN MIELKE, Mayor, City of Skagway, testified via teleconference from Skagway in support of HB 319. He thinks that it's the right thing to do and that the timing is right. It also meets the transportation needs much sooner than any other purpose. It affects a huge portion of the state and is good for everybody. Number 2004 NANCY WATERMAN came before the committee to testify. She supports legislative approval to allow for a popular vote on issuing bonds. Public participation in transportation decisions is good, and this proposed legislation would encourage that. Number 2075 JEFF SLOSS came before the committee to testify. He has been associated with Alaska Discovery Wilderness Tours for about 19 years, the oldest recreational guiding company in the state. He echoes the previous comments in support of the proposed legislation, especially as they relate to the fast ferries. The fast ferries are long overdue; they would really help to serve the transportation needs of the region. Number 2162 JAMIE PARSONS came before the committee to testify. He served as Juneau's mayor from 1991 to 1994. He also served on the Alaska Committee from 1994 to 1997. His basic message is, the process has been shortchanged. Today is the first time that he has heard the official position of Department of Transportation & Public Facilities, and that their preferred access to Juneau is a road. After five years of extensive study and information gathering, the department developed a draft that features four fast ferry options and a road up the east side of Lynn Canal to Skagway with a shuttle service to Haines. Prior to 1998, department officials conducted an open house type of meeting in Skagway, Haines and Juneau, and for some unexplained reason their technical staff has been denied the opportunity to discuss the results and how the department proposes to address the issues that were raised. Yet on January 24 Governor Knowles announced his own plan - a smaller, faster ferry with 31 deck spaces - a concept that had never been contemplated before. The "Juneau Access" study records a daily count of over 600 vehicles a day, which increases threefold in the summer. The fast ferry alternative carries over 100 vehicles. In his opinion, the fast ferry option recommended by the Governor is not going to meet needs. There are a lot of questions about the Governor's fast-ferry proposal: How will the proposal increase capacity sufficient to meet existing travel demands? How will it increase flexibility of travel? How will it lower the cost of operating in upper Lynn Canal? How will it reduce travel time? In his opinion, the department needs to resume the Juneau Access EIS process that was shelved in 1997, throw in the Governor's proposal and see how it measures up with the other options, and then present the findings to this committee. That way, the final outcome is based on technical merit and a public process. Number 2429 MIKE MILLER, President, Alaska General Contractors [AGC], came before the committee to testify. AGC supports the concept of the proposed legislation. It would allow for the full-use of the contracting season. That way, projects can be bid on earlier in the year allowing for preparation and mobilization problems to be sorted out earlier. TAPE 00-11, SIDE A Number 0001 MR. MILLER continued. In reference to the issue of an influx of outside labor, chances are a person would stay south, given the choices available. Those being, Las Vegas or San Francisco. He doesn't think that this will create an influx of workers. Likewise, the downturn in oil construction/work is around $400 million, so an new infusion of $75 million to $125 million over the next couple of years is not a "big deal." The capacity is there in terms of companies and labor. He noted that for the last few highway projects that AGC has bid on there were between 5 to 11 bidders, which illustrates the capacity and desire for this type of work. In addition, the maintenance for these additional lane miles is considerably less than the maintenance on the current lanes that are congested or require a lane to be shut down to do any work. In the long term, he thinks it will be a cost-savings. In conclusion, the AGC supports the concept of this type of funding and asks that the committee members support the proposed legislation. Number 0141 REPRESENTATIVE HUDSON asked Mr. Miller whether it's normal in the industry to save money by bidding on a multi-work project as opposed to bidding on a project piece-by-piece. MR. MILLER replied there is an effective limit, which is the capacity of the contractors in an area. For example, the number of contractors that can bid on a $50 million project is substantially less than the number of contractors that can bid on five $10 million projects. He thinks that the projects in the proposed legislation would be "whole and phased" for market availability. Number 0227 REPRESENTATIVE HUDSON explained that he is interested in the small contractor. He wants to make sure that the small contractor can get a piece of the projects in the proposed legislation as well. Number 0300 REPRESENTATIVE COWDERY stated there is a limit to how small a job can be done effectively. REPRESENTATIVE HUDSON stated his point is that nothing in the proposed legislation would preclude equal opportunity for all sizes. REPRESENTATIVE COWDERY replied except for bonding ability. MR. MILLER pointed out that bonding capacity would preclude some companies from taking on larger work than they should. Number 0385 PAULETTE SIMPSON came before the committee to testify. As a twenty-three year resident of Juneau, she would never want to be perceived as arguing against $35 million worth of transportation funding. However, she believes that the bond package, particularly the fast ferries, would have an economic consequence to both the riders of the Alaska Marine Highway System and the state, which needs to be studied. She believes that good decisions are based on two components - vision and a good public process. The fast ferries took a lot of residents by surprise because the only thing that they had seen in the way of good public process was the Juneau DEIS - the $5 million, six year long study that supported a road as an alternative, which was technically based and very well researched. Her personal interest in this issue is because her family has maintained a second home in Haines for about 20 years. They ride the ferries and it's staggering to her that a family of four has to spend $306 to take their car to Haines. She said, We know how much the alternatives that were studied would have cost the state and cost the user, but we don't know that about this $35 million fast ferry. We don't have any data to backup that decision whatsoever. So, you can't really answer the question, How much will the subsidies be that the state has to provide to the Marine Highway System to run it, and how much will the cost to the users be? Will it be significantly increased because it is a faster ferry, presumably, consumes more gas? We don't know any of that, and I think that really before we move forward with this the public deserves to have the benefit of that research. MS. SIMPSON further stated she doesn't consider her family to be economically disadvantaged, but they can't afford to make too many more of these trips. She further stated that future legislatures and generations should not be "chained to the weight" of staggering subsidies. It will be expensive to operate and maintain these ferries. The bonds purchase the ferries, but they do not operate and maintain them. It's up to the committee members to "look down the road" to determine and evaluate whether or not the money and political-will is there to continue these types of subsidies. She hopes that it will not be because of political pressures rather than the right reasons that only the rich will be able to travel. In conclusion, she said, "I think you owe it to the public to use some vision and there certainly was vision that went into the development of this DEIS and to have some good public process attached to it before you put this forward to the public." Number 0704 CLIFF LOBAUGH came before the committee to testify. He is testifying today as a private citizen who has been involved with this issue since the 1960s. In reference to the marine transportation aspects, he explained that the first contract and study relating to Juneau's access was done by the Chamber of Commerce in 1890. The all-marine route was chosen, which ultimately was started with the Egan Administration, and has been favored by every administration since. He noted that the concept of a fast ferry was initiated about ten years ago. He even visited Catalina Island last year to see their fast ferry since everybody has been talking about it. He fully supports the marine transportation system. It doesn't require causeways, tunnels, shuttle ferries, bridges, avalanche mitigation, maintenance of additional roads, and many other environmental concerns. The problem is, it favors people instead of cars so it doesn't have that much support. But it has a lot of support in Southeast; the region is used to favoring people. Number 0884 JAN WRENTMORE, Lobbyist, City of Skagway, came before the committee to testify. Skagway is very excited about the idea of the fast ferries. It's important for the rest of the state to realize that Southeast is a marine environment, and that a fast ferry is the only reasonable and expedient alternative to provide access. The bonds are a good idea. The only other option is to wait ten years for some of these improvements. Number 0959 JOSEPH M. BEEDLE, Representative, Goldbelt, Incorporated, came before the committee to testify. He will speak in favor of the proposed legislation with one small change. That being, to utilize the existing road system as part of the Southeast Transportation Plan. In other words, "let's use the roads where they exist, and let's use the ferries where roads don't exist." He is also concerned that the subsidy for the ferries will fall below its current level because the legislature will start to replace existing ferries. He is concerned that the "recipe" for the solution does not include roads as part of the solution, when 30 miles of road is chipped sealed to Berners Bay beyond the existing ferry terminal, which is more than one-third of the distance to get to Haines and Skagway. If a supplemental ferry terminal can be located at Berners Bay, the M/V Malaspina can easily make the trip in 12 hours. It takes approximately 18 hours now. A fast ferry could make multiple trips and provide for this "pent up" demand. Last session, this legislature authorized but did not appropriate money for a terminal at Berners Bay. He recommended that the proposed legislation be amended to include the use of existing roads in Juneau going north to Berners Bay. With that amendment, he will speak in favor of the proposed legislation. Number 0884 ROBERT JACOBSON (PH), Representative, Alaska Coastal Airlines; Skagway Air Service; Haines Airways; and Wings of Alaska Airlines, came before the committee to testify. It was 16 years ago that the state funded a demonstration project where $33,000 a day was spent to test a fast ferry, which was very devastating. The project directly competed with the air carries. He said, "If anybody wanted to pay the air carries $33,000 a day, I guarantee you that we can fly the people for free year round." The air carriers are concerned about the competition that the fast ferries will present, especially for the Lynn Canal market in relation to mail, passenger and freight. He suspects that with the fast ferries the cost will go up significantly, when air carriers are not provided with a dollar-to-dollar subsidy. Personally, he supports a road. In that regard, air carriers can compete fairly. In other words, people can choose to drive or fly. The government can choose to ship mail by road or by air. The fast ferries are a different issue, however. They create competition head-to-head. Number 1280 CHAIRMAN HALCRO asked Mr. Jacobson (ph) what a round trip ticket costs between Juneau and Haines. MR. JACOBSON (PH) replied $79 [one way], of which, 11 percent to 12 percent is federal excise tax. CHAIRMAN HALCRO asked Mr. Jacobson (ph) whether that is considered regular fare. MR. JACOBSON (PH) replied, "Yes." REPRESENTATIVE KOOKESH pointed out that he pays $150 for a round trip ticket and 40 cents per pound for shipping between Juneau and Angoon. He doesn't think he should have to apologize for trying to find a cheaper way to travel or ship freight. MR. JACOBSON (PH) indicated that he doesn't disagree with Representative Kookesh. He is a very good customer. His point is, when a person can ride on the ferry for 40 percent of the true price, that person is not paying the full fare. Air carriers do not have that type of benefit. CHAIRMAN HALCRO called on Commissioner Perkins, and asked him to address the concern raised earlier regarding the "cutting-off" of communications in relation to the "Juneau Access" project. COMMISSIONER PERKINS replied the comments referred to the time between when the draft EIS was released, comments were received, and the time of the decision. The draft received well over 5,000 comments, of which, all were taken into account. But there is no requirement to hold a second group of public hearings. The next step would be to submit a final EIS to the Federal Highway Administration. However, after looking at the options suggested during the public review, it was decided that the project is not financially feasible; the department never went to the stage of submitting a final EIS to the federal government. He said, So, we have missed no public reviews. We have made our decision of the preferred alternative and it not being financially feasible prior to submitting the final draft which it would have gone back out for public review. That's sort of where we stand. We have had...I mean 5,000 comments is a lot of comments to get in on one draft document. Number 1523 CHAIRMAN HALCRO asked Commissioner Perkins whether the EIS in regards to the road has ever been completed. COMMISSIONER PERKINS replied the EIS for the road will be submitted to the Federal Highway Administration along with the preferred alternative, which is a road. He said, Now, if you was to do this whole process and if we hadn't said, 'Hey, we're not financially going into a road.' The next step is to get all the permits. We are talking about well over probably two more million dollars to get the permits. Now, the permits would be needed to have this final, final document that the feds would do a record of decision. We're not going into the permitting phase, but we are gonna submit what we have right now with a preferred alternative to the Federal Highway Administration. If we don't do this, then they could ask us to repay that $5 million that we've spent to date. Number 1592 REPRESENTATIVE HUDSON wondered why $6 million was spent to develop a preferred alternative when all of the technical studies indicate that a road should be built in the long term. It seems like a waste of millions of dollars and expectations for both sides. COMMISSIONER PERKINS replied the legislature directed and authorized the funding for the department to conduct a "Juneau Access" study. He cited that the state spent $149 million on an environmental impact study for the Susitna hydroelectric project. He said, Certainly, we didn't make the investment in Susitna, and now we're saying that we don't think we can afford to make the investment in Juneau access as it stands now. Now, if the money was to come from somewhere else, then that probably is a different story. But we don't have it in our program. We think the needs are greater in other parts of the state for the available money then putting $240 million in the Juneau access. Number 1719 REPRESENTATIVE KEMPLEN asked Commissioner Perkins what would be the cost for the interchange at Bragaw and Airport Heights. COMMISSIONER PERKINS replied he doesn't have that information with him. He would provide it to him later. Number 1766 REPRESENTATIVE COWDERY suggested holding the proposed legislation in committee; it has generated a lot of questions. CHAIRMAN HALCRO announced that he has a list of nine questions that he will submit to the department. He expects written responses to them, at which time, he will bring the proposed legislation up again. The only sticking point seems to be the questions surrounding the fast ferries. He will also re-open public testimony when the proposed legislation is brought up again. CHAIRMAN HALCRO asked Commissioner Perkins to discuss the concerns regarding the subsidaztion of the fast ferries and its impact on private enterprise. COMMISSIONER PERKINS replied the ferry runs at about 61 percent revenue and about 39 percent state appropriations for maintenance and operations. He further stated that the issue relates to road maintenance, which the state puts a lot of money into. The difference is, the state charges a fee to travel on the ferries, but it does not charge a fee to travel on the roads. He pointed out that a fee cannot be charged on roads built with federal money. In relation to competition, there have been attempts, but he doesn't think there is any way that a private enterprise can make money substituting the ferry system. In relation to the impact on air carriers, it's hard for him to discuss because they don't haul cars, when a lot of the traffic on the ferries are vehicles. He sees air carriers as providing one service - the movement of passengers. In some cases the ferries do compete with private air carriers, but he doesn't know the answer because the ferries would still be needed to move vehicles. Number 2003 REPRESENTATIVE KEMPLEN asked Commissioner Perkins why a fee can be charged for the Whittier tunnel; it was built with federal funds. COMMISSIONER PERKINS replied a fee can be charged for certain bridges and tunnels because of operational costs associated with them. He further noted that an authority was just granted through TEA-21 to allow for a toll for interstates. Number 2069 REPRESENTATIVE KEMPLEN asked Commissioner Perkins whether the Dalton Highway is part of the National Highway System. If so, would it qualify for a toll under the new authority? COMMISSIONER PERKINS replied, yes, the Dalton Highway is part of the National Highway System, but he's not sure whether or not it would qualify for a toll. CHAIRMAN HALCRO announced that the bill would be held over until the answers to his nine questions have been submitted by the department. ADJOURNMENT There being no further business before the committee, Chairman Halcro adjourned the House Transportation Standing Committee meeting at 3:20 p.m.