Legislature(2009 - 2010)SENATE FINANCE 532

03/02/2009 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 123 SUPP./CAP. APPROPS: ECON. STIMULUS TELECONFERENCED
Heard & Held
*+ SB 124 AUTHORIZE ECONOMIC STIMULUS PARTICIPATION TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 123                                                                                                           
                                                                                                                                
     "An Act making supplemental appropriations and capital                                                                     
     appropriations; amending appropriations; and providing                                                                     
     for an effective date."                                                                                                    
                                                                                                                                
9:39:49 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman announced  that public  testimony would  be                                                                   
taken at a later date.                                                                                                          
                                                                                                                                
FRANK  RICHARDS,  DEPUTY COMMISSIONER,  HIGHWAYS  AND  PUBLIC                                                                   
FACILITIES,   DEPARTMENT   OF   TRANSPORTATION   AND   PUBLIC                                                                   
FACILITIES, gave  an overview  of the legislation.  He framed                                                                   
what the  America Recovery  and Re-investment  Act (ARRA)  is                                                                   
providing  to Alaska  for transportation.  He emphasized  the                                                                   
intent to create  jobs and invest in assets  so that citizens                                                                   
would  benefit.  The  stimulus   funds  through  the  formula                                                                   
programs  include  approximately  $175 million  for  highways                                                                   
projects, $42 million  for transit projects, and  $85 million                                                                   
for  aviation  projects.  The  department  has  been  working                                                                   
diligently  with federal  funding  partners  to maximize  the                                                                   
potential use of the funds for Alaskans.                                                                                        
                                                                                                                                
Mr.  Richards   explained  that  funding  for   highways  and                                                                   
transit  projects will  be provided  through regular  formula                                                                   
programs,  while aviation  funding  will go  directly to  the                                                                   
FAA  for discretionary  allocation.  Expectations  were  high                                                                   
regarding  easy  access  to and  use  of  the  transportation                                                                   
funds.  However,  the funds  will  flow through  the  regular                                                                   
federal  formula programs,  which  means following  mandatory                                                                   
rules and regulations.                                                                                                          
                                                                                                                                
Mr. Richards  listed requirements  that apply to  funding for                                                                   
roads and bridges:                                                                                                              
                                                                                                                                
   · To access the funds, the funds must have been                                                                              
     developed under Title XXIII rules.                                                                                         
   · Funds will flow through state DOTs.                                                                                        
   · At least 50% of the funds must be obligated within 120                                                                     
     days  (June 15,  2009 deadline).  This  leaves 104  days                                                                   
     from the  time of enactment  to make sure the  funds are                                                                   
     obligated, or  the funds will  be lost to  another state                                                                   
     (use it or lose it provision).                                                                                             
   · Remaining 50% must be obligated by one year (February                                                                      
     17, 2010).                                                                                                                 
   · The funds specifically for the highway and transit                                                                         
     program come with an allocation defined by the bill. Of                                                                    
     those funds:                                                                                                               
        o 3% goes to transportation enhancement projects,                                                                       
          such as sidewalks, waysides, bike paths, etc.67%                                                                      
          to be used on state highways and roads.                                                                               
        o 19% must go to communities of less than 5,000.                                                                        
        o 11% must go to communities with populations of                                                                        
          greater than 200,000.                                                                                                 
        o The remaining 67% will go to state roads,                                                                             
          highways, and bridges.                                                                                                
   · All projects must be in a current State Transportation                                                                     
     Improvement Plan (STIP); Amendment #18 is out for                                                                          
     public comment.                                                                                                            
                                                                                                                                
Mr.   Richards  stressed   that   the  provisions   will   be                                                                   
challenging  to accomplish  within the  short timeframe.  The                                                                   
guidelines  must  be  followed  or Alaska  will  lose  funds.                                                                   
Essentially,  Congress has  mandated that  funds be  spent on                                                                   
projects that  have previously  been developed following  the                                                                   
federal rules.                                                                                                                  
                                                                                                                                
9:44:39 AM                                                                                                                    
                                                                                                                                
Mr.  Richards  stated  that  SB  123  contains  projects  the                                                                   
department  felt  would meet  the  required  rules. The  bill                                                                   
represents  about  $330  million   in  highway  projects.  He                                                                   
stressed  that  the projects  have  already been  before  the                                                                   
legislature and received authority to proceed.                                                                                  
                                                                                                                                
Mr. Richards listed the criteria  developed by the department                                                                   
to put  together a  priority list  of projects. The  criteria                                                                   
correspond to ARRA emphasis areas, projects that:                                                                               
                                                                                                                                
   · Address safety issues                                                                                                      
   · Are located in economically distressed areas, where the                                                                    
     unemployment rate is 1 percentage point higher than the                                                                    
     national average                                                                                                           
   · Provide gasline logistic benefits                                                                                          
   · Leverage other funds                                                                                                       
   · Could be under construction by 2009                                                                                        
                                                                                                                                
Mr.  Richards referred  to a  letter sent  the previous  week                                                                   
identifying  the   projects.  The  letter  also   provided  a                                                                   
spreadsheet  listing  the  priorities   for  the  recommended                                                                   
projects as well  as contingency projects following  the same                                                                   
criteria.                                                                                                                       
                                                                                                                                
Mr.  Richards  pointed  out  that  SB  123  contains  several                                                                   
appropriations  with  individual   project  allocations.  The                                                                   
governor's priorities are included  in the highway and bridge                                                                   
stimulus projects list. There  is also a contingent list with                                                                   
eligible projects.                                                                                                              
                                                                                                                                
Mr.  Richards reported  that one  unfortunate consequence  of                                                                   
the  stimulus  bill  was  the  use  of  a  1991  formula  for                                                                   
allocation of  "local funding."  Alaska has been  exempt from                                                                   
the  formula  since  1991.  Under   the  formula,  funds  are                                                                   
allocated  to communities  of greater  than 200,000 and  less                                                                   
than  5,000.  Remaining  funding  could  be  spent  in  other                                                                   
communities with populations between  5,000 and 200,000, such                                                                   
as Fairbanks, Ketchikan, Juneau,  Palmer, Wasilla, and Sitka,                                                                   
if the funding  level met 110 percent of the  1991 allocation                                                                   
to those communities.                                                                                                           
                                                                                                                                
9:47:01 AM                                                                                                                    
                                                                                                                                
Mr. Richards stressed  that Alaska is the only  state without                                                                   
the  ability  to  allocate projects  under  the  category  of                                                                   
funding to the mid-sized communities.                                                                                           
                                                                                                                                
Mr. Richards pointed out that  not all the funding would flow                                                                   
through  the  state.  Under transit,  $42  million  has  been                                                                   
designated  for   Alaska;  $32.5  million  will   go  to  the                                                                   
Anchorage Metropolitan  Planning Organization (AMPO)  and the                                                                   
Fairbanks   Metropolitan   Planning    Organization   (FMPO).                                                                   
Alaskans will probably receive  $85 million for aviation, but                                                                   
FAA will determine where the money  is spent. Portions of the                                                                   
aviation funds will be given to  local sponsors, meaning non-                                                                   
state-owned  airports, such  as in  Juneau Municipal  Airport                                                                   
and Merrill Field Airport in Anchorage.                                                                                         
                                                                                                                                
Mr.  Richards reminded  listeners that  the department  still                                                                   
has STIP Amendment 18 out for  comment and he urged committee                                                                   
and  community members  to  participate.  The department  has                                                                   
been  learning  that  communities  have  projects  that  some                                                                   
believe are  eligible for the  stimulus funds.  He emphasized                                                                   
the importance  of dialogue between  the communities  and the                                                                   
department   to  determine   if   projects   will  meet   the                                                                   
requirements of  Title XXIII.  He warned that  the department                                                                   
does not  have authority to  provide funding if  the projects                                                                   
are not currently on the federal STIP.                                                                                          
                                                                                                                                
Co-Chair Stedman  queried the  communication process  between                                                                   
the  communities  and  DOT/PF.  Mr.  Richards  reported  that                                                                   
DOT/PF  had  recently  been approached  by  communities  with                                                                   
projects. Department  staff would  work with the  communities                                                                   
to determine  if procedure  was followed regarding  right-of-                                                                   
way  certification and  environmental  and design  documents.                                                                   
The   process    takes   time.   Communities    should   have                                                                   
communications with  FHWA regarding project  eligibility. The                                                                   
stimulus funds flow through DOT/PF,  so projects must be part                                                                   
of the STIP.                                                                                                                    
                                                                                                                                
9:50:36 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  underlined the  need for communities  to be                                                                   
proactive  and  get  in contact  with  DOT/PF.  Mr.  Richards                                                                   
agreed;  otherwise,  the department  has  no  way of  knowing                                                                   
about  potential projects.  Co-Chair  Stedman  asked how  the                                                                   
department  would assist communities.  Mr. Richards  answered                                                                   
that the  department has developed  a matrix tree  to provide                                                                   
to communities for determining  the eligibility of a project.                                                                   
                                                                                                                                
Co-Chair Stedman  asked for a  brief synopsis of  amounts for                                                                   
projects,  not including  funds that could  be obtained  from                                                                   
other states.  Mr. Richards  summarized  that the amount  for                                                                   
highways and bridges is $175,461,000.                                                                                           
                                                                                                                                
Co-Chair Stedman  emphasized the  difference between  federal                                                                   
receipt  authority  and  cash  in  hand  to  move  a  project                                                                   
forward. The priority is to move projects forward.                                                                              
                                                                                                                                
Mr.  Richards added  that there  will  be approximately  $9.1                                                                   
million for transit projects.                                                                                                   
                                                                                                                                
9:54:12 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  stated that  he was  interested in  a broad                                                                   
overview  of  projects  because  of  an  administration  news                                                                   
release regarding additional funds.                                                                                             
                                                                                                                                
Mr.  Richards added  that there  would  be approximately  $75                                                                   
million worth of aviation projects.                                                                                             
                                                                                                                                
Co-Chair  Hoffman  asked  for  a  delineation  of  funds  for                                                                   
transportation. Mr. Richards answered  that a spreadsheet was                                                                   
attached to  the February 20,  2009 letter ("Alaska  Transit,                                                                   
Highway and Bridge  Stimulus List, Based on  ARRA 2009," Copy                                                                   
on  File).  The spreadsheet  identifies  projects  that  were                                                                   
stimulus (recommended), with transit,  transportation, local,                                                                   
and state  dollars identified. Each  of the projects  is then                                                                   
funded  under one  of the categories  that  is shown as  2009                                                                   
stimulus   funds   needed.   The    specific   transportation                                                                   
enhancement projects are on the bottom of page 1:                                                                               
                                                                                                                                
   · Valdez   Areawide   Bike    and   Ped   Trail   Pavement                                                                   
     Refurbishment                                                                                                              
   · Denali Highway Wayside Project                                                                                             
                                                                                                                                
Mr.  Richards  referred  to  page  2,  the  transit  projects                                                                   
totaling approximately $9 million.                                                                                              
                                                                                                                                
9:57:17 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  asked how long  the five priority  items on                                                                   
page 1  of the document  had been on  the STIP.  Mr. Richards                                                                   
replied  that  the project  descriptions  in  the bill  would                                                                   
indicate when  each project first  showed up on the  STIP. He                                                                   
said he could get the information.                                                                                              
                                                                                                                                
Co-Chair Stedman  asked what  the timeframe  would be  if the                                                                   
STIP  were modified  to  deal  with community  projects.  Mr.                                                                   
Richards replied that FHWA procedures  require an entire STIP                                                                   
amendment for  a new project  funded with federal  money. The                                                                   
amendment  process includes  a  public comment  period;  from                                                                   
initiation of the STIP amendment  to sign-off by FHWA and FTA                                                                   
is approximately  90 days,  with very aggressive  scheduling.                                                                   
The  department  believes  it  will  be  able  to  accomplish                                                                   
Amendment  18,  which  includes  the funding  cycle  for  the                                                                   
projects that  have been identified  in SB 123.  New projects                                                                   
brought forward  that meet  the requirements  for use  of the                                                                   
stimulus funds would require a new STIP amendment.                                                                              
                                                                                                                                
10:00:29 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman spoke to the  67 percent funds category that                                                                   
can  be  used  in  any area  of  the  state  and  noted  that                                                                   
appropriations are  concentrated in area. He  asked why there                                                                   
was  not  more  equity  in  the  location  of  projects.  Mr.                                                                   
Richards  answered  that  the   department  wanted  equitable                                                                   
distribution  across the  state.  The news  that local  funds                                                                   
could not  be used for  communities with populations  between                                                                   
5,000  and 200,000  upset plans  for equitable  distribution.                                                                   
The department had to act quickly  to meet the new guidelines                                                                   
provided  by Congress.  He felt  the project  list in SB  123                                                                   
meets the  intent of Congress  of providing for  safety, jobs                                                                   
in    economically    distressed   areas,    and    equitable                                                                   
distribution.                                                                                                                   
                                                                                                                                
10:03:12 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman   queried  the  process  used   to  develop                                                                   
prioritization,  as the fund amounts  are lower  than numbers                                                                   
mentioned in  the administration's  news release.  He pointed                                                                   
out that  federal  receipt authority  was a  good way to  get                                                                   
allocations but  not to accomplish  anything. He  wanted cash                                                                   
in  hand for  projects around  the state  instead of  federal                                                                   
receipt authority that may not materialize.                                                                                     
                                                                                                                                
Senator  Thomas  wondered  if   the  prioritization  criteria                                                                   
considered how  close a project  had to be  to an area  to be                                                                   
considered a stimulus for that area.                                                                                            
                                                                                                                                
10:06:10 AM                                                                                                                   
                                                                                                                                
Mr. Richards stated  that the department was  willing to talk                                                                   
about prioritization  factors  used for individual  projects.                                                                   
He  added that  the presentation  letter included  a list  of                                                                   
projects previously identified  as eligible when the timeline                                                                   
to  obligate  was thought  to  be  18 months.  When  Congress                                                                   
condensed  the timeline to  12 months,  some of the  projects                                                                   
dropped off  the list; the dropped  projects can be  found on                                                                   
page four of the spreadsheet.                                                                                                   
                                                                                                                                
10:08:08 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hoffman  stated concerns  that  the  administration                                                                   
limited  flexibility  by  making  early  decisions  regarding                                                                   
where  the stimulus  funds would  be  spent. Early  decisions                                                                   
meant  that the  projects  had to  be funded  out  of the  67                                                                   
percent  discretionary   funds.  He  emphasized   that  other                                                                   
conditions  needed to  be considered  when making  decisions,                                                                   
such  as high  unemployment  and  equity of  distribution  of                                                                   
projects. He did not feel those  considerations were utilized                                                                   
when decisions  were made about the discretionary  funds. The                                                                   
early decisions tied  the hands of the department  as well as                                                                   
the  legislature.  He  questioned  if the  bill  treated  all                                                                   
Alaskans fairly.                                                                                                                
                                                                                                                                
10:11:04 AM                                                                                                                   
                                                                                                                                
Mr. Richards replied  that 60 percent of the  funds will flow                                                                   
to areas in economic distress.                                                                                                  
                                                                                                                                
Co-Chair Hoffman  wanted to see  a list of the  projects that                                                                   
fit the  criteria. Mr. Richards  replied that the list  is on                                                                   
the  spreadsheet  under  the  prioritization  factor  "serves                                                                   
economic distress" column.                                                                                                      
                                                                                                                                
Mr.  Richards addressed  the question  regarding whether  the                                                                   
projects  on the  governor's  recommended  list provides  for                                                                   
equitable distribution  across the state. He  stated that the                                                                   
question  is multi-faceted.  Because Alaska  has the  ability                                                                   
under the  regular federal funding  formula to use  the funds                                                                   
on all  roads within the state,  the state has  experienced a                                                                   
major  reduction  in  its ability  to  use  national  highway                                                                   
system funds. National highways  include the Parks and Dalton                                                                   
Highways, roadways that serve  the vast majority of the state                                                                   
and not  any particular community.  Ten years ago,  the state                                                                   
was able to  do approximately 12 projects per  year. Now, the                                                                   
normal program is underfunded  at about $75 million per year,                                                                   
covering  only  two  or  three projects  per  year.  The  top                                                                   
priorities  in  the  governor's   recommended  bill  are  the                                                                   
national   highway  system   assets   that   have  not   been                                                                   
sufficiently  funded  to  address  needed  safety  and  other                                                                   
related  issues. The department  felt  that the projects  put                                                                   
forward  and recommended  by the  governor were  some of  the                                                                   
most needed.                                                                                                                    
                                                                                                                                
Mr. Richards  stressed that if  the projects are  selected by                                                                   
the legislature  to fund,  other STIP  projects will  advance                                                                   
and be  funded, greatly benefiting  the state  and addressing                                                                   
the needs of smaller communities.                                                                                               
                                                                                                                                
10:14:29 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman  observed that the administration  seemed to                                                                   
have  a  high  degree  of  assurance   that  the  contingency                                                                   
projects  will move  ahead and  be  funded. He  asked if  the                                                                   
administration was saying that  the legislature should not be                                                                   
concerned  which  group  is  the first  group  and  which  is                                                                   
contingent,  because  both  would  be  funded.  Mr.  Richards                                                                   
answered that based  on the current level of  federal highway                                                                   
program funding  in 2009  and the likely  level in  2010, the                                                                   
administration  feels that  both  recommended and  contingent                                                                   
projects will  be addressed in  the near term because  of the                                                                   
economic stimulus funds.                                                                                                        
                                                                                                                                
Co-Chair Stedman  asked why  the administration  is concerned                                                                   
about re-arranging  the list  if all  the projects  that will                                                                   
get done  in the end. Mr.  Richards replied that his  goal is                                                                   
to  present   projects  that   would  meet  the   eligibility                                                                   
requirements   of   the  stimulus   bill.   Previously,   the                                                                   
department was asked to provide prioritization of projects.                                                                     
                                                                                                                                
Co-Chair Hoffman reiterated concerns  that there would not be                                                                   
a  stimulus package  next year  and  that the  administration                                                                   
would not  utilize the  same criteria  on future projects  as                                                                   
the  stimulus  bill  utilizes.   He  questioned  whether  the                                                                   
administration  could   ensure  that  future   funding  would                                                                   
address the  concerns of  economically distressed  areas. Mr.                                                                   
Richards  replied  that  Congress   placed  emphasis  on  the                                                                   
creation of jobs. Most of the  recommended projects are those                                                                   
that can  be under construction  in 2009. The focus  has been                                                                   
to provide  for jobs in  2009 and some  in 2010.  The regular                                                                   
STIP funds projects were already in line.                                                                                       
                                                                                                                                
10:18:07 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hoffman   referred  to   prior  testimony   by  the                                                                   
department that  projects in other  areas of the  state would                                                                   
be  addressed  "next  year."  He  stated  that  by  then  the                                                                   
criteria  could  be different;  there  is no  guarantee  that                                                                   
projects in  economically distressed  areas would  be funded.                                                                   
He asked  if the  administration would  use similar  criteria                                                                   
[to that used in the stimulus package] for the 2011 budget.                                                                     
                                                                                                                                
Mr.  Richards addressed  the question  regarding  the use  of                                                                   
funds in next  year's STIP. Major projects will  be taken out                                                                   
of the  lineup because of  economic stimulus funds,  enabling                                                                   
funding  of   the  vast   majority  of  remaining   projects.                                                                   
Concurrent with STIP  amendment 18, the 2010 to  2013 STIP is                                                                   
out for  public comment. The  public and the  legislature are                                                                   
being  asked  to  look  at existing  criteria  used  to  rank                                                                   
upcoming  projects. He  invited the  legislature to  identify                                                                   
different  criteria.  The  STIP  ranking  for  the  2010-2013                                                                   
programs will  occur soon after the legislative  session ends                                                                   
in April.                                                                                                                       
                                                                                                                                
Co-Chair  Hoffman wanted  the stimulus  package to  stimulate                                                                   
jobs throughout  the state. He  stated concerns  about equity                                                                   
of  the projects  throughout  the state,  particularly  areas                                                                   
with the highest  unemployment rates. He questioned  what the                                                                   
committee  could  do  to  change that.  He  referred  to  the                                                                   
community of Emmonak.                                                                                                           
                                                                                                                                
10:22:28 AM                                                                                                                   
                                                                                                                                
Mr. Richards stated  that Emmonak was part of  the governor's                                                                   
recommended   list.  Co-Chair   Hoffman   pointed  to   other                                                                   
communities in Western Alaska that were not on the list.                                                                        
                                                                                                                                
Senator  Huggins   referred  to  $130  million   that  DOT/PF                                                                   
requested  during the  summer 2008 special  session.  The co-                                                                   
chairs told  the department  to come  back with the  requests                                                                   
during the  regular session.  He asked  if the same  projects                                                                   
are now in  the stimulus package. Mr. Richards  answered that                                                                   
they were.                                                                                                                      
                                                                                                                                
Senator  Huggins asked  if the administration  looked  at the                                                                   
capital  budget with  an  eye towards  using  state funds  to                                                                   
stimulate the state economy, since  there is flexibility with                                                                   
the   capital  budget.   Mr.  Richards   believed  that   the                                                                   
amendments put  forward for the capital budget  would address                                                                   
the issue for transportation.                                                                                                   
                                                                                                                                
Senator Huggins  asked for examples  that meet  the criteria.                                                                   
He  asked  whether highway  safety  corridors  projects  meet                                                                   
criteria to get pushed forward.  Mr. Richards answered in the                                                                   
affirmative.  He referred  to  the Parks  Highway, which  has                                                                   
high  traffic incidents  and fatalities.  Interim steps  have                                                                   
been taken to address the issue.  The challenge with projects                                                                   
like the  Parks Highway from Wasilla  to Big Lake is  cost. A                                                                   
project  that  costs $125  million  could consume  nearly  75                                                                   
percent of the stimulus funds.  The project also did not meet                                                                   
the initial cut.                                                                                                                
                                                                                                                                
10:26:36 AM                                                                                                                   
                                                                                                                                
Senator Olson  opined that there  was an uneven  distribution                                                                   
of the  stimulus money, with  $175 million going  to highways                                                                   
and bridges and  only $75 to aviation. He thought  more money                                                                   
should  go  towards  aviation  projects  in  a  region  where                                                                   
aviation  is so  essential. Mr.  Richards  agreed. He  stated                                                                   
that the  compromise bill had  a smaller amount  for aviation                                                                   
than originally hoped for. He  urged continuing communication                                                                   
with   FAA   regarding   aviation  needs   in   Western   and                                                                   
Southwestern Alaska.                                                                                                            
                                                                                                                                
Senator Olson asked for clarification  of what aviation funds                                                                   
would be used for.                                                                                                              
                                                                                                                                
10:29:12 AM                                                                                                                   
                                                                                                                                
Senator Huggins  asked about  railroad funding. Mr.  Richards                                                                   
replied that the railroad is eligible  to receive funds under                                                                   
transit  funding. Of  the  $42 million  that  the state  will                                                                   
receive,  more than  $32  million will  go  to Anchorage  and                                                                   
Fairbanks. Fairbanks  will receive $760,000 for  transit. The                                                                   
remainder to Anchorage will be  distributed by formula, which                                                                   
favors  the Alaska railroad  because of  its passenger  load.                                                                   
The  railroad  will  receive   approximately  80  percent  of                                                                   
Anchorage's  funds. Railroads  also have  the opportunity  to                                                                   
apply  for discretionary  funds  that  USDOT  is writing  the                                                                   
criteria for,  related to projects of national  significance.                                                                   
Once the criteria are developed,  there may be other projects                                                                   
that would qualify.                                                                                                             
                                                                                                                                
Senator Ellis asked where the  Port of Anchorage ranks on the                                                                   
priority  list. Mr.  Richards  responded  that currently  the                                                                   
Port of  Anchorage is available  for the discretionary  money                                                                   
that will come  in the future. There is no Port  of Anchorage                                                                   
money within SB 123.                                                                                                            
                                                                                                                                
Senator Ellis queried the rejection  of the Port of Anchorage                                                                   
project.  Mr.  Richards  answered   that  SB  123  identified                                                                   
highway, bridge,  and transit projects that have  been in the                                                                   
pipeline  through  DOT/PF.  These   are  projects  that  have                                                                   
already  received legislative  authority and  that have  used                                                                   
federal dollars for design and permits.                                                                                         
                                                                                                                                
10:32:58 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman requested  information regarding  non-state                                                                   
airports.                                                                                                                       
                                                                                                                                
CHRISTINE KLEIN, DEPUTY COMMISSIONER  OF AVIATION, DEPARTMENT                                                                   
OF  TRANSPORTATION   AND  PUBLIC   FACILITIES,  provided   an                                                                   
overview  of  funds  provided  by the  stimulus  package  for                                                                   
aviation. Alaska  will receive  7.7 percent, or  $85 million,                                                                   
of the $1.1 billion allocated  to all states. Allocations are                                                                   
based  on  the   number  of  airports.  The   funds  will  be                                                                   
distributed under the discretionary  program according to FAA                                                                   
criteria,  which focus  on projects that  contribute  most to                                                                   
safety, security,  aviation capacity,  and efficiency  of the                                                                   
state's airport  system. The  criteria also consider  airport                                                                   
activity  levels,  whether  for small,  medium,  and  non-hub                                                                   
airports, or for commercial service.  The largest airports in                                                                   
Alaska are medium hub. Also considered  is the priority level                                                                   
of  work,  based  on  work  already   underway.  Routine  and                                                                   
preventative  maintenance projects  are discounted.  Airports                                                                   
with compliance actions are ineligible.                                                                                         
                                                                                                                                
Ms. Klein stated that there is  approximately $10 million for                                                                   
municipal airports,  such as Merrill  Field in  Anchorage and                                                                   
the Kenai,  Palmer, Wasilla,  and Juneau airports;  basically                                                                   
the airports  that submit grant  applications first  will get                                                                   
the funding.  The money has to  be obligated within  120 days                                                                   
and the projects have to be completed within two years.                                                                         
                                                                                                                                
10:36:45 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  referred  to  the Port  of  Anchorage  and                                                                   
railroad  integration  and the  expansion  of facilities.  He                                                                   
hoped there  would be a  gasline in  the next ten  or fifteen                                                                   
years, but regardless  of what happens with  the gasline, the                                                                   
Port  of Anchorage  will  be  shipping  in most  of  Alaska's                                                                   
goods. He  emphasized the importance  of projects  that would                                                                   
benefit the state for some time to come.                                                                                        
                                                                                                                                
Senator  Olson  asked  about   the  eligibility  of  deferred                                                                   
maintenance  projects. Ms.  Klein  answered that  maintenance                                                                   
and   operation  projects   are   not  eligible   under   the                                                                   
discretionary  formula; under  federal law, those  activities                                                                   
are the obligation of the state.                                                                                                
                                                                                                                                
Senator  Thomas  pointed to  the  $45.6  million in  SB  123,                                                                   
approximately  half of  the  total funds.  He  asked if  more                                                                   
money was  coming for  aviation projects.  Ms. Klein  replied                                                                   
that  there  were   $104  million  in  projects   that  could                                                                   
potentially  be   ready.  The  amount   in  SB  123   is  the                                                                   
legislative   authority  needed  in   order  to   finish  the                                                                   
projects. The projects have been  approved by the legislature                                                                   
already for permitting, design, and planning.                                                                                   
                                                                                                                                
10:39:40 AM                                                                                                                   
                                                                                                                                
Senator Thomas  asked how much  was coming to the  state. Ms.                                                                   
Klein  answered  $88 million.  Senator  Thomas  asked if  the                                                                   
balance was coming soon.                                                                                                        
                                                                                                                                
Ms. Klein  listed the projects  that would be  recommended to                                                                   
move ahead:                                                                                                                     
                                                                                                                                
   · Akiachak Airport Relocation                                                                                                
   · Allakaket Airport Improvements                                                                                             
   · Fairbanks International Airport Security Access Control                                                                    
     Improvements                                                                                                               
   · Fairbanks International Airport Taxiway and Apron                                                                          
     Improvements                                                                                                               
   · Fort Yukon Airport Improvements                                                                                            
   · Hoonah Airport Improvements                                                                                                
   · Kodiak Chemical Storage Building                                                                                           
   · Kotzebue Apron Expansion                                                                                                   
   · Ouzinkie Airport Relocation                                                                                                
   · Cordova Apron Improvements                                                                                                 
   · Anchorage International Airport North Terminal Gate                                                                        
     Reconstruction                                                                                                             
   · Lake Louise Runway Rehabilitation                                                                                          
                                                                                                                                
Ms.   Klein  said   the  project   total  on   the  list   is                                                                   
approximately $104  million. Around $75 is available;  if the                                                                   
legislature   approves  the   projects,   $45.6  million   in                                                                   
legislative authorization would  still be needed to bring the                                                                   
projects to completion.                                                                                                         
                                                                                                                                
Co-Chair  Stedman  clarified  that  the  white  page  in  the                                                                   
aviation  section   of  SB  123   is  the  list   before  the                                                                   
amendments; the yellow page has a different total.                                                                              
                                                                                                                                
Ms. Klein  explained that FAA  is still developing  criteria;                                                                   
on Friday [February 27], FAA asked  the administration to put                                                                   
forward  the  Huslia  and Lake  Louise  projects,  which  had                                                                   
previously been lower on the list.                                                                                              
                                                                                                                                
10:42:25 AM                                                                                                                   
                                                                                                                                
Senator Olson  asked the difference between  a rehabilitation                                                                   
project and deferred maintenance.  Ms. Klein answered that it                                                                   
usually  depends on  how much  work has  to be  done and  the                                                                   
cost. A project  that will take a significant  amount of time                                                                   
and material becomes a reconstruction  project, which is what                                                                   
happened to the  Lake Louise project. Co-Chair  Hoffman asked                                                                   
if she meant a rehabilitation  project. Ms. Klein answered in                                                                   
the affirmative.                                                                                                                
                                                                                                                                
Co-Chair Hoffman asked if she  meant King Salmon and Cordova.                                                                   
Ms.  Klein replied  that the  King Salmon  Apron and  Taxiway                                                                   
Resurfacing project  was added.  The two amendments  had been                                                                   
added because FAA wanted the projects to move forward.                                                                          
                                                                                                                                
Co-Chair   Stedman   noted   several    appropriations   with                                                                   
allocations.   He reminded  the public  that the  legislature                                                                   
appropriates  funds and the  department has flexibility  with                                                                   
appropriations.  He asked  why  the legislature  should  give                                                                   
broad appropriation  and a lot of allocations  versus smaller                                                                   
numbers  of  appropriations   and  have  DOT/PF   go  to  the                                                                   
legislature to move projects around.                                                                                            
                                                                                                                                
Mr.  Richards explained  that  the appropriations  in SB  123                                                                   
were  designated   by  airport  stimulus   projects,  transit                                                                   
stimulus projects, and highway  and bridge stimulus projects.                                                                   
The   structure  is   similar   to  annual   capital   budget                                                                   
appropriations  for  the  highway  program.  Funds  within  a                                                                   
program  can   be  used   within  the  projects.   Individual                                                                   
appropriations  by  project  would  present  challenges.  For                                                                   
example,  if  a  certain amount  were  appropriated  and  the                                                                   
department went out  to bid and the bid came  in high, DPT/PF                                                                   
would not  have the  ability to go  forward with  the project                                                                   
until coming back to the legislature  in the next legislative                                                                   
cycle to  ask for additional  monies. The stringent  timeline                                                                   
of the stimulus  legislation requires the flexibility  to use                                                                   
the funds for cost increases.                                                                                                   
                                                                                                                                
10:47:07 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman  pointed out there were 21  projects costing                                                                   
approximately  $139 million and  queried whether  the finance                                                                   
committee  should give  the department  flexibility with  the                                                                   
whole  amount  or break  the  number into  compartments.  Mr.                                                                   
Richards  responded   that  there   would  not  be   complete                                                                   
flexibility,  as the projects  have been  through the  public                                                                   
and legislative  process. The  department was now  asking for                                                                   
the authority  to use the  federal dollars from  the stimulus                                                                   
package for  the projects  in SB  123. The legislature  would                                                                   
determine the allocation within the appropriation.                                                                              
                                                                                                                                
Co-Chair  Stedman added  that  there were  18  non-contingent                                                                   
projects  costing $148  million. The  legislature would  work                                                                   
the details out through time.  Mr. Richards stressed that the                                                                   
important deadline  is the 120-day  obligation limit  by June                                                                   
15. He stated that  he was available as much  as necessary to                                                                   
work  with   the  committee   regarding  project   needs.  He                                                                   
emphasized the need  to work within the parameters  placed by                                                                   
Congress,  and the  dynamic nature  of the  process. Much  is                                                                   
still being learned.                                                                                                            
                                                                                                                                
10:50:38 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman drew  attention to page 8, lines  8, 14, and                                                                   
20, which address  appropriation issues from  2001, 2002, and                                                                   
2003.                                                                                                                           
                                                                                                                                
NANCY SLAGLE, DIRECTOR, DIVISION  OF ADMINISTRATIVE SERVICES,                                                                   
DEPARTMENT   OF   TRANSPORTATION   AND   PUBLIC   FACILITIES,                                                                   
explained  that  the  stimulus   bill  requires  tracking  of                                                                   
activity. Therefore,  a funding  source has been  established                                                                   
to identify any funds received  and expended from the federal                                                                   
economic   stimulus  bill.   Legislative  authorization   has                                                                   
already  been   provided  for  several  of   the  recommended                                                                   
projects.   Section   4   in    SB   123   changes   previous                                                                   
appropriations  from  the regular  federal  authorization  or                                                                   
source  codes  to  the new  federal  economic  stimulus  fund                                                                   
source codes.                                                                                                                   
                                                                                                                                
Co-Chair Stedman  added that a different process  may be used                                                                   
to clean up. Ms. Slagle agreed  that there were other ways to                                                                   
deal with  old appropriations;  one option  was reflected  in                                                                   
the bill. Items  could also be repealed  and re-appropriated,                                                                   
or the  full amount  of the project  costs could  be provided                                                                   
with the new source codes.                                                                                                      
                                                                                                                                
Co-Chair Stedman  said the committee would work  with OMB and                                                                   
DOT/PF to  make the  process more  transparent. He  stated an                                                                   
interest in housekeeping, which  might be an interim project.                                                                   
                                                                                                                                
Co-Chair   Hoffman  noted   looking   forward  to   continued                                                                   
collaboration with the department on the stimulus package.                                                                      
                                                                                                                                
SB  123  was   HEARD  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
10:55:27 AM                                                                                                                   
                                                                                                                                

Document Name Date/Time Subjects
2009-02-24 Co-Chairs Letter.pdf SFIN 3/2/2009 9:00:00 AM
SB 123
DOT Aviation Revised 2-24.pdf SFIN 3/2/2009 9:00:00 AM
SB 123
DOT Hwy and Bridge Revised 2-24.pdf SFIN 3/2/2009 9:00:00 AM
SB 123
DOT response 2 20 09.pdf SFIN 3/2/2009 9:00:00 AM
SB 123
Economic Stim Fund Source Change DOT 2-20-09.pdf SFIN 3/2/2009 9:00:00 AM
SB 123
Stimulus project lists 2 22 09.pdf SFIN 3/2/2009 9:00:00 AM
SB 123
SB 124 Hearing Request.pdf SFIN 3/2/2009 9:00:00 AM
SB 124
US DOT Letter.pdf SFIN 3/2/2009 9:00:00 AM
SB 123
OMB response 3-2-09.pdf SFIN 3/2/2009 9:00:00 AM
SB 124
DOTPF Project Ready for Stimulus.pdf SFIN 3/2/2009 9:00:00 AM
SB 123