SENATE TRANSPORTATION COMMITTEE February 19, 1998 1:30 p.m. MEMBERS PRESENT Senator Jerry Ward, Chairman Senator Gary Wilken, Vice Chair Senator Lyda Green Senator Rick Halford Senator Georgianna Lincoln MEMBERS ABSENT None COMMITTEE CALENDAR SENATE BILL NO. 263 "An Act relating to secondary roads; and providing for an effective date." HEARD AND HELD SENATE BILL NO. 264 "An Act relating to aid for municipal road maintenance; and providing for an effective date." HEARD AND HELD PREVIOUS SENATE ACTION SB 263 - No previous Senate committee action. SB 264 - No previous Senate committee action. WITNESS REGISTER Senator John Torgerson Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Sponsor of SB 263 and SB 264 Tom Bodecker, Manager City of Soldotna 177 North Birch Street Soldotna, AK 99669 POSITION STATEMENT: Supports SB 263 and SB 264 Boyd Brownfield Deputy Commissioner Department of Transportation & Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 POSITION STATEMENT: Commented on SB 263 and SB 264 Jim Swing Public Works Director Matanuska-Susitna Borough 350 East Dahlia Ave. Palmer, Alaska 99645-6488 POSITION STATEMENT: Stated support of the Matanuska-Susitna Borough Administration for SB 263 and SB 264 Ocie Adams Mat-Su Road Advisory Board HC 30 Box 200 Wasilla, Alaska 99654 POSITION STATEMENT: Commented on SB 263 and SB 264 Dennis Pouchard Special Assistant Department of Transportation & Public Facilities 3132 Channel Drive Juneau, Alaska 98901-7898 POSITION STATEMENT: Commented on SB 263 and SB 264 Pat Poland, Director Division of Municipal & Regional Assistance Department of Community & Regional Affairs 333 W 4th Avenue, Suite 220 Anchorage, Alaska 99501-2341 POSITION STATEMENT: Supports SB 263 and SB 264. Tim Rogers, Chairman Transportation, Utilities & Environment Subcommitte Alaska Municipal League P.O. Box 196650 Anchorage, AK 99519-6650 POSITION STATEMENT: Supports SB 264 Kevin Ritchie Executive Director Alaska Municipal League 217 Second St., Suite 200 Juneau, Alaska 99801 POSITION STATEMENT: Supports SB 263 SB 264. ACTION NARRATIVE TAPE 98-2, SIDE A CHAIRMAN WARD called the Senate Transportation Committee meeting to order at 1:32 p.m. Present were Senators Ward, Halford and Green. The first order of business before the committee was SB 263. SB 263 - SECONDARY ROADS SENATOR JOHN TORGERSON, sponsor of SB 263, gave the following summary of the measure. SB 263 recognizes secondary roads as a separate category eligible for federal transportation funds for road maintenance. Funds would be placed directly into that category and then be disbursed according to a ranking system developed by the Department of Transportation and Public Facilities (DOTPF). DOTPF's current ranking system is inadequate; secondary roads do not score high enough on the list of maintenance priorities to be paved. Examples of this problem can be seen in every district in the state. DOTPF's continual response to requests for maintenance of secondary roads is that when they score high enough, they will be repaired, however the ranking system prevents those roads from reaching the top of the list. Secondary roads are defined in SB 263 as dirt and gravel roads. Although the bill does not address any dollar amount, it reflects an appropriation of about $20 million. SB 263 contains a sunset provision after five years, therefore the five year cost will total $100 million. After SB 263 sunsets, gravel roads will be ranked amongst each other instead of against other highways and uses in the state. Number 053 SENATOR HALFORD asked how chip-sealed roads are categorized, since they are not actually paved. SENATOR TORGERSON said he considered writing standards into the bill, but current secondary road standards seem to evade everyone, are hypothetical at best, and can be changed at the discretion of DOTPF staff. To illustrate the problem, Senator Torgerson said a road in his district was slated to have a chip-seal covering, estimated to cost an additional $150,000 to a current project. Because of disputes and other factors, the cost escalated to $1.1 million. He felt everyone needs to know what a secondary road is and said that if he knew all of the technical terms for chip-seal or high-float, he would have included them in the bill. He maintained that his constituents want to drive on a hard surface, they do not care about the bells and whistles that go along with a fully fledged large federal highway project. He noted the definition of secondary road in the bill includes dirt and gravel roads only. CHAIRMAN WARD noted Senator Lincoln's presence. Number 091 SENATOR GREEN asked whether SB 263 will supersede any other projects and who will be sharing their pot of money to fund it. SENATOR TORGERSON stated if the amount of federal funds does not increase, he will advocate a reduction of an equal amount from three appropriations currently made by the Legislature (the National Highway System, the TRAC, and the Community Road Program). He has already devised a formula to raise the $20 million. Alaska might get an additional federal appropriation due to the reauthorization of ISTEA. He estimated that DOTPF exceeded last year's appropriation by about $280 million. He would like to see some of those projects reclassified to free up $20 million for gravel road paving. He stated he has not designed a ranking system at this time. SENATOR GREEN asked if most of these roads would be DOTPF construction projects, or whether the boroughs would receive funds from DOTPF and do the work. SENATOR TORGERSON replied SB 263 applies to state highways. He added that if projects such as the Juneau access road, the road to Whittier, the Dalton Highway, the Denali Highway, and the Kashwitna (ph) project are given a higher priority, the cost will be $700 million. He stated he does not oppose building new roads but believes it is more important to fix existing roads. Number 133 SENATOR LINCOLN commented that she receives repeated complaints about the dust control problem on gravel roads in her district, because of resulting health problems. It is especially problematic for smaller communities because gravel is removed from the riverbed and the sediment creates a very fine dust. She asked if that concern is addressed in SB 263. SENATOR TORGERSON replied the qualifications apply to any gravel road irregardless of community size which would then be ranked by DOTPF. SENATOR LINCOLN questioned whether villages could also participate in the municipal transfer provision under this legislation. SENATOR TORGERSON said any gravel road qualifies and DOTPF would be required to rank those roads higher if a local government wishes to take ownership of the road. SENATOR LINCOLN stated that as a member of the Deferred Maintenance Task Force, she was glad to see the transfer provision. SENATOR TORGERSON indicated that a substantial savings will occur "down the road" if some of the roads are upgraded and then transferred to local governments. He maintained he is taking a leap of faith by believing that DOTPF will devise a fair ranking system, but he believes it will, which is why he did not establish a ranking system in the legislation itself. Number 185 SENATOR GREEN asked what SB 263 accomplishes that cannot be accomplished right now without legislation. SENATOR TORGERSON stated the same thing could be done without legislation if the Administration was willing to recognize that there are gravel roads in the state that need paving. The Administration has recognized the problem just this year, but only to the tune of $800,000 in what is named the "Secondary Road Transfer Program." SENATOR GREEN asked if the unimproved secondary road definition in SB 263 is in statute elsewhere. SENATOR TORGERSON stated that he created that definition. SENATOR LINCOLN asked if, according to the definition in SB 263, Senator Torgerson's list of secondary roads needing improvement is compatible with DOTPF's list. SENATOR TORGERSON did not know whether DOTPF has a list, but repeated it would apply to any gravel road. He explained that there are paved roads in the state that are considered to be secondary roads, but SB 263 would set aside money to pave gravel roads. Number 214 MR. TOM BODECKER, City Manager of Soldotna, testified via teleconference. He said the City of Soldotna generally supports SB 263 because it addresses a problem with gravel roads that has resulted from the current system. Under the current standard, when a request is made of DOTPF to pave a gravel road, a cost estimate is completed and that number is plugged into the formula. In some rural areas, the cost estimates encompass a grand scheme plan to improve several roads. The high cost then lowers the project's ranking, and nothing gets done. [MR. BODECKER'S TESTIMONY WAS INTERRUPTED BY POOR TRANSMISSION.] MR. BOYD BROWNFIELD, Deputy Commissioner of DOTPF, stated DOTPF generally supports the concept of SB 263, but believes several areas need clarification. Section 1(a) begins by establishing the adoption of regulations formalizing secondary roads as a category within Alaska's highway system. The section also contains a subcategory that pertains to unimproved secondary roads, and instructs DOTPF to formulate a ranking system for those roads. Section 1(b) then relates to secondary roads again, and aims toward the ownership of a municipality or local authorities, and then instructs that a priority shall be given to unimproved secondary roads if a local request for transfer is made. He requested a chance to work with the sponsor to clarify the language. MR. BROWNFIELD explained that Section 1(d) defines unimproved secondary roads as dirt and gravel roads. DOTPF feels a road does not have to be dirt or gravel to be unimproved and suggests the definition include roads that may have some asphaltic treatment on it. The asphaltic treatment is also referred to as chip sealed and high float. Those types of roads in disrepair should be qualified as unimproved roads. He noted DOTPF is already in the process of establishing a separate local roads category in its project evaluation board process which should address this same issue. MR. BROWNFIELD pointed out DOTPF has a regulation that defines secondary roads (17AAC.05.030). He concluded by saying in any event, DOTPF supports the concept of SB 263. SENATOR GREEN referred to language on page 1, line 7, which reads: "Standards adopted for secondary roads under this subsection need not conform to those adopted by the American Association of State Highway and Transportation Officials" and asked if that language applies to improvements to secondary roads now. MR. BROWNFIELD answered DOTPF has the ability to create new standards now that would be accepted by the Federal Highway Administration (FHA). If federal funding is used, DOTPF has to touch base with the FHA somewhere along the line first. Number 294 MR. BODECKER continued his testimony via teleconference. One problem that prevents secondary road paving is that secondary roads tend to be designed for paving at a very high standard which results in a cost-benefit ratio that leaves those roads low on the list. He thought the idea of establishing a construction standard for secondary roads is important. He maintained that although the problem could be resolved through DOTPF's regulatory process, it has never occurred. Number 314 SENATOR GREEN informed committee members she prepared an amendment that includes gravel, chip sealed, or inadequately paved roads in SB 263. CHAIRMAN WARD asked SENATOR TORGERSON if he wished to respond to the comments made by Deputy Commissioner Brownfield. SENATOR TORGERSON felt Deputy Commissioner Brownfield raised three issues of substance. In response to any confusion about secondary roads versus unimproved secondary roads in Section 1(a), a definition of unimproved secondary roads is included in the bill. Senator Torgerson said this issue goes to the heart of the problem. DOTPF says it has defined secondary roads in regulation, but if the room were filled with city managers and people in the road construction business, no one could say what a secondary road is if asked to build one because the description is discretionary to DOTPF. The Legislature could adopt the standards used in the regulation, but the problem is the discretion DOTPF uses. Local governments cannot have an engineer visit their localities to review a project request, inform the local governments they are getting one thing, and then have the plan change completely. Regarding the asphalt and chip seal roads, SENATOR TORGERSON said he does not object to including both, but the object of SB 263 is to take care of roads that have never been paved. He pointed out his Borough has no paved secondary roads. He was not sure how many roads are chip sealed, but he assumed their inclusion will divide the pot up further. SENATOR TORGERSON stated DOTPF's Commissioner said DOTPF was looking at other ways to rank secondary roads several years ago. He felt if SB 263 spurs DOTPF along, that is fine, but he did not give that statement much credence. SENATOR TORGERSON said DOTPF's ability to create new regulations is what scares him about the process and is the reason he wants to put standards in statute. He said he talked this over with federal officials. Alaska would have to go through a process to amend the STIP, which requires a public hearing process and other things. Senator Torgerson pointed out that during previous DOTPF testimony he was told that federal money could not be used to upgrade gravel roads with more gravel, but federal officials said otherwise. Number 356 JIM SWING, Public Works Director of the Matanuska-Susitna Borough, testified on behalf of the Borough administration and the Department of Public Works. The Mat-Su Assembly has not had the opportunity to review either SB 263 or SB 264. The Road Advisory Board will be reviewing both bills tonight. The Borough administration is in favor of SB 263 but would like to see chip sealed or inadequately paved roads, that do not meet the standards established under this section, included in the definition. The Borough administration is interested in SB 263 from the standpoint of quality of life regarding paving state roads, and is also interested in taking ownership of some state roads, if improved to acceptable standards which SB 263 allows and encourages. He suggested soliciting local government participation when establishing standards because most local governments have standards of their own and could be of assistance. MR. OCIE ADAMS, Secretary of the Local Road Service Advisory Board for the Matanuska-Susitna Borough, stated he agreed with Mr. Swing regarding the definition of an unimproved road, and expressed concern that no standards are actually addressed in SB 263. He questioned whether state or local standards would be enforced. He stated the Advisory Board would be discussing the bill tonight and would provide the Legislature with written communication in the form of a resolution. CHAIRMAN WARD stated he would hold SB 263 in committee to allow Senators Green and Torgerson to work on a committee substitute, including Senator Green's proposed amendment. SENATOR GREEN maintained she is not trying to interfere with Senator Torgerson's purpose, however she believes it is important that attention be given to those roads that were sealed 20 or 25 years ago and are now essentially bare. Number 422 SENATOR LINCOLN referred to the definition of unimproved secondary road, and asked if roads that were asphalt or chipsealed but have been washed out would be classified as secondary roads rather than unimproved secondary roads. SENATOR TORGERSON replied that paved roads can be secondary roads. He said his definition only includes dirt or gravel roads because including asphalt roads will increase the pieces of the pie. He would oppose including chip-sealed roads if their inclusion means gravel roads will not get paved which was his primary purpose in introducing SB 263. CHAIRMAN WARD agreed with Senator Torgerson. SENATOR HALFORD pointed out the issue is further confused by the fact that primary roads can be gravel roads, such as the Haul Road. SENATOR TORGERSON added the word "unimproved" is in the eyes of the beholder also. CHAIRMAN WARD repeated his request that Senator Green work with the sponsor to prepare a committee substitute. SB 264 - AID FOR MUNICIPAL ROAD MAINTENANCE SENATOR TORGERSON, sponsor of SB 264, gave the following overview of the legislation. SB 264 takes funds for road maintenance out of the revenue sharing program and creates a stand alone program. The funds would come from a portion of the 8 cent per gallon fuel tax. Over the years, the municipal road maintenance revenue sharing portion decreased from $2500 per mile to $700 per mile because this program was incorporated into the larger revenue sharing program that is subject to reductions and the road money was never identified. SB 264 will increase the total appropriation to this program: currently $2.6 million is being shared with local governments, the bill will increase the amount to $8 million. The intent of SB 264 is to increase the amount to local governments for road maintenance to $1,000 per mile, which constitutes a 40 percent increase. A $3.5 million surplus will be used for two purposes: to continue with paving and upgrade for the road transfer program; and to provide a pot of money to equalize the funding so that if a new road was taken over by a local government, the entire pot would not be reduced by that amount of road miles. In essence, it would keep the $1,000 per mile constant even though new roads would be added to the system. Any remaining balance will be used for road construction and transferred to local governments. SENATOR TORGERSON explained his proposed amendment to SB 264 as follows. "In the revenue sharing portion currently in statute, if municipal governments -- once they run through the formula for revenue sharing and the different formulas, if the amount that is to be paid to them is less than $40,000, then they would receive the $40,000 -- the minimum entitlement portion of this program. If we just leave that constant and not make this amendment then they'd be paid for roads under the one program, through the formula to get up to the $40,000, as well as being paid separately for the roads. So what this does is take the road portion out of that and reduce the minimum entitlement share by the amount equal to the amount that has come out for roads, so again, to these minimum entitlement communities it would still be an -- it would be an increase to them because they are getting more money for the road miles but it does separate the programs and keep them entirely separate. That's something we overlooked when we drafted the bill at first." MR. PAT POLAND, Director of the Municipal Assistance Division in the Department of Community and Regional Affairs (DCRA), gave the following testimony. He noted Mr. Bill Ralston, program manager for the Revenue Sharing Program, was present in the audience, and could respond to technical questions. DCRA supports the spirit in which this legislation is offered, that is to support local governments in service delivery. DCRA supports financial aid to local governments and believes they are a vital and key part of the public service delivery system. The Governor's FY 99 budget proposal contains no cuts to the revenue sharing program and the Administration supports transfer of state services to local governments, which SB 264 promotes. DCRA has two fundamental concerns with SB 264. The first is dealing with revenue sharing local government financial support on a piecemeal basis. Essentially, it peels off a pot of the money and places an isolated priority on it. The second concern is that when the formula for the formula entitlement program is changed, winners and losers are created. If the appropriation was at the full amount proposed, all participants would win; if the amount remains at the current level, the funds will shift from the smaller rural areas to the urban areas. DCRA would like to see a process that gives all of the impacted communities a chance to comment and look for alternatives. TIM ROGERS, Legislative Program Coordinator for the Municipality of Anchorage, spoke in his capacity as the Chairman of the Transportation, Utilities and Environment Subcommittee of the Alaska Municipal League (AML). AML supports passage of SB 264 for three reasons. SB 264 will stabilize road maintenance funding. Funding through the revenue sharing program was at a level of $2500 per mile 12 years ago, today the average is $734, and for some municipalities, less than that. AML believes it is important that the gasoline tax be identified as the funding source. AML also believes it is important to have a mechanism for a transfer of responsibility for some of the roads from the state to local governments providing that the transfer has a funding mechanism for continued maintenance and that the roads be brought up to a specific standard prior to the transfer. SENATOR HALFORD asked Mr. Rogers if he thought SB 264 will create an incentive to pass increases in gasoline taxes. MR. ROGERS thought it may. Number 556 SENATOR TORGERSON pointed out he had requested that 3 cents per gallon of the gasoline tax be used, but the legal drafters advised him to include a percentage. He would have preferred to have included a set amount but the 8 cents per gallon has other restraints on it from prior legislation. SENATOR HALFORD indicated if a percentage of the total is used, there is an incentive to increase the tax. SENATOR TORGERSON agreed. MR. TOM BODECKER commented that he agreed with Mr. Rogers' position on SB 264. MR. JIM SWING indicated that the Matanuska Borough Administration and its Department of Public Works support SB 264. They presented some graphs to the Deferred Maintenance Task Force that show the decrease in revenue sharing for road maintenance and the increase in taxes in their area. The Department of Public Works maintains over 1,000 miles of road in the municipality and sees the need for a stable funding source for road maintenance. The Borough has been negotiating with DOTPF for take over of secondary roads and supports any mechanism to upgrade those roads and allow the transfer. MR. OCIE ADAMS stated he is taking no position on either piece of legislation but is on a fact finding mission for the Road Advisory Committee for its meeting tonight. He commented that currently the Matanuska-Susitna Borough does not have road powers. The taxpayers have resisted granting the Borough road powers for consolidation of road service areas. He questioned whether SB 264 will force that consolidation since Section 2 requires recipients to have road powers to receive funds from the motor fuel tax. SENATOR TORGERSON said boroughs have to exercise certain powers now to get the money so he did not see how SB 264 would have any effect on the revenue sharing pot. He emphasized it is not his intent to force some kind of consolidation of road service districts and he would be willing to add clarifying language to that effect. MR. ADAMS said he would appreciate clarification because Section 2(a) says that municipalities who exercise road maintenance powers are entitled to receive funds. The Borough does not exercise road service area powers over the entire service area, only on individual service areas through the appropriation of funds from residential taxes. It makes sure that money goes directly back to that particular service area as it cannot use those funds in another service area. SENATOR TORGERSON explained the Borough has non-areawide powers. Cities have the road power so all boroughs, except unified boroughs, adopted non-areawide powers through the service districts. That applies to all except unified boroughs. He repeated if the Borough is currently receiving funds, it has some sort of power on the books. MR. ADAMS said the Borough is currently receiving money. He noted the general consensus of the members of the Mat-Su Road Advisory Board is that SB 264 will force consolidation which they do not support. TAPE 98-3, SIDE B Number 549 MR. POUCHARD provided the following testimony on SB 264. DOTPF unequivocally supports the objective of improving and transferring roads to local governments and currently has a program that has not proved to be very successful. The main stumbling block has been that local governments do not want to pick up the costs of road maintenance because the current level of revenue sharing they receive is not a great enough incentive. DOTPF wants to ensure that the issue of road maintenance is reviewed comprehensively, taking into account the state's needs for state roads, so that doors are not closed to future options regarding state maintenance. Mr. Pouchard indicated DOTPF has a few technical concerns with SB 264. SENATOR HALFORD asked if DOTPF supports the repeal of the existing dollars per mile provision. MR. POUCHARD asked Senator Halford if he was referring to the amendment. SENATOR HALFORD clarified he was referring to the repealer in Section 5. MR. POUCHARD said he would not feel comfortable saying DOTPF supports the repealer; but it does support the concept of transferring roads to local governments and seeing that local governments have adequate maintenance funds. KEVIN RITCHIE, Executive Director of the Alaska Municipal League, echoed Mr. Rogers' and Mr. Bodecker's testimony and thanked Senator Torgerson for his support. AML hopes legislative support for revenue sharing remains strong. SENATOR GREEN asked, if this money is designated for this particular function, who will receive less. SENATOR TORGERSON replied there is no way to track that because the 8 cent per gallon goes directly into the general fund. He added SB 264 will cost $4 million so that money will have to come from another program which has not been identified. CHAIRMAN WARD stated that Senator Torgerson's amendment was not adopted at this time. He asked Senator Green to work with Senator Torgerson to prepare a committee substitute to SB 264 also. There being no further business before the committee, CHAIRMAN WARD adjourned the meeting at 2:32 p.m.