Legislature(2009 - 2010)

04/13/2010 02:42 PM Senate TRA

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             HJR 42-CONST. AM: TRANSPORTATION FUND                                                                          
CHAIR KOOKESH  announced consideration of HJR  42. [CSHJR 42(JUD)                                                               
was before the committee.]                                                                                                      
3:30:54 PM                                                                                                                    
REPRESENTATIVE PEGGY WILSON,  sponsor of HJR 42,  said the Alaska                                                               
Transportation Infrastructure  Fund (ATIF) requires  three pieces                                                               
of  legislation to  put it  into practice.  HJR 42  is the  first                                                               
piece. It will  put a constitutional amendment  before the voters                                                               
to   allow  a   dedicated  transportation   fund.  The   enabling                                                               
legislation, which will  be taken up later, defines  how the fund                                                               
will be  used and how  the appropriations will be  disbursed. The                                                               
third piece is to appropriate seed money into the fund.                                                                         
In FY10 Alaska received 87  percent of its transportation funding                                                               
from the  federal government, which  is more per capita  than any                                                               
other  state.  This is  not  likely  to  continue under  the  new                                                               
federal  highway  authorization bill,  she  said.  In any  event,                                                               
state-funded projects  that meet the same  construction standards                                                               
can be  done faster  and cheaper  because state  requirements are                                                               
less stringent.                                                                                                                 
REPRESENTATIVE PEGGY  WILSON told  the committee that  during the                                                               
interim  the House  transportation  committee met  and looked  at                                                               
ways  to  improve  the   transportation  infrastructure  in  this                                                               
geographically diverse  state. This  involved travel  to villages                                                               
and  urban areas  to look  at  transportation challenges,  safety                                                               
corridors,  congested areas,  and roads  in need  of repair.  The                                                               
committee also  heard from  the Alaska  Municipal League  and the                                                               
Mat-Su Borough about jointly contracting  an independent study on                                                               
the fiscal  challenges associated with transportation.  She noted                                                               
that Larry Persily  also completed a study on  the fiscal options                                                               
for funding infrastructure upgrades.  Day-long hearings were held                                                               
to highlight issues and pose potential solutions.                                                                               
3:34:09 PM                                                                                                                    
REPRESENTATIVE   WILSON   reminded   the   committee   that   the                                                               
constitution grandfathered  in two transportation funds:  one for                                                               
roads and one  for water and harbors. She said  she believes that                                                               
it's  time  to  reinstate  a  dedicated  transportation  fund  to                                                               
address the  state's transportation needs. With  a dedicated fund                                                               
it will be  clear exactly what funds are  available from year-to-                                                               
year  for  capital  projects and  major  maintenance.  For  these                                                               
reasons I  think the  voters will vote  to reinstate  a dedicated                                                               
fund for transportation, she said.                                                                                              
CHAIR KOOKESH asked for a  motion to adopt the proposed committee                                                               
substitute (CS).                                                                                                                
SENATOR MEYER moved to adopt the  work draft Senate CS for CS for                                                               
HJR  42,  labeled 26-LS1411\T,  as  the  working document.  There                                                               
being no objection, version T was before the committee.                                                                         
REBECCA ROONEY,  staff to Representative Peggy  Wilson, explained                                                               
three  changes  between  the  bill  versions,  one  of  which  is                                                               
substantive. The  current version T  has a small  language change                                                               
beginning on page  1, line 15, to clarify that  the revenue would                                                               
go into  the fund  after July  1, 2011  even though  the enabling                                                               
legislation isn't as yet following.                                                                                             
On  page  2,  line 1,  the  phrase  "provided  by  law" is  in  a                                                               
different position  in the  sentence to  clarify that  it applies                                                               
just to  the special  registration fees provided  by law  and not                                                               
all registration fees provided by law.                                                                                          
The substantive  change occurs on  page 2, lines 4-5  and relates                                                               
to the annual appropriation to  the fund. The version that passed                                                               
the House  said, "…the legislature  may appropriate  a percentage                                                               
of the  average market value of  the fund" each year.  The Senate                                                               
CS says,  "…the legislature may  appropriate a percentage  of the                                                               
state fuel  taxes and registration  fees received by the  fund in                                                               
that year  and a percentage  of the  average market value  of the                                                               
MS.  ROONEY directed  attention to  a spreadsheet  in the  packet                                                               
showing  two scenarios.  Scenario 1  shows a  $1 billion  initial                                                               
appropriation,  the  annual   appropriations,  and  the  revenues                                                               
realized from  the vehicle registration  fees and the  motor fuel                                                               
tax. Scenario 2 shows what  happens if you allow for expenditures                                                               
of 50 percent  of those fuel taxes and  vehicle registration fees                                                               
each  year. This  demonstrates  the  importance of  appropriating                                                               
more up front, she said.                                                                                                        
3:40:23 PM                                                                                                                    
SENATOR PASKVAN  expressed a desire  to see a table  showing just                                                               
the revenue coming from the fees.  He said he wonders what policy                                                               
concerns might arise  out of allocating $1 billion  that can't be                                                               
MS. RAINEY said she would provide that information.                                                                             
3:41:48 PM                                                                                                                    
SENATOR MEYER  asked what  would happen  to the  appropriation if                                                               
the fuel tax was repealed as it was two years ago.                                                                              
REPRESENTATIVE  WILSON  said  in  that  event  just  the  vehicle                                                               
registration fees would  be appropriated. But for  this to really                                                               
work, it's important to seed the fund initially, she added.                                                                     
SENATOR  MEYER said  he supports  the bill,  but he  worries that                                                               
that there might  be pressure on the Legislature  to increase the                                                               
fuel tax in order to get more money into the fund.                                                                              
REPRESENTATIVE  WILSON  said a  future  Legislature  may look  at                                                               
that, but the  federal government will be  providing less revenue                                                               
for  transportation in  the  future so  it's  important to  start                                                               
planning for  that. This  is the  best way we  could think  of to                                                               
start that process, she said.                                                                                                   
3:45:31 PM                                                                                                                    
MARK HICKEY,  representing himself,  stated that  he is  a former                                                               
commissioner of  transportation and he strongly  supports HJR 42.                                                               
He related  that he  has worked  on this measure  in one  form or                                                               
another  since the  mid '80s.  He  agreed with  the sponsor  that                                                               
Alaska had  this dedicated fund  at statehood; but when  the fuel                                                               
tax was  raised in the '60s  the Department of Law  (DOL) advised                                                               
that changing the rate of  taxation did away with the dedication.                                                               
Based on  that advice,  the accompanying  statute that  said that                                                               
these funds  shall be  used for highway  and harbor  purposes was                                                               
amended to say that the funds may be used for those purposes.                                                                   
MR. HICKEY said that since that  time DOL's advice has been shown                                                               
to be  incorrect. In  fact, in  the mid 90s  the tobacco  tax was                                                               
increased in  the dedicated school  fund and that has  never been                                                               
challenged.  It's clear  that the  constitution  framers did  not                                                               
intend for  there to  be a  need for this  measure and  it's also                                                               
clear that the  Legislature in 1960 didn't intend as  a policy to                                                               
eliminate the  dedication, he said.  That Legislature  thought it                                                               
had no choice.                                                                                                                  
MR. HICKEY  said changing the  constitution to allow  a dedicated                                                               
fund isn't done  lightly. To his knowledge the  permanent fund is                                                               
the only  one that's  been established  since statehood.  He said                                                               
that it's  been shown  that for  transportation there  are strong                                                               
arguments   in  favor   of  doing   this.  There   is  a   strong                                                               
understanding in the public that these  are user fees and that as                                                               
needs  increase there  may be  a need  to do  something different                                                               
with user fees. In the '90s  there was a proposal to increase the                                                               
fuel tax and the polling showed  that over 70 percent of Alaskans                                                               
supported an increase  if the funds were dedicated.  They did not                                                               
support the  increase without an  assurance that the  funds would                                                               
be used for transportation purposes.                                                                                            
MR. HICKEY noted that Alaska is  the only state that doesn't have                                                               
a  state-funded  transportation  program. HJR  42  provides  that                                                               
ability. This would  be most helpful to small  rural projects and                                                               
would keep federal dollars for larger projects.                                                                                 
Responding to  questions raised earlier,  he said  it's important                                                               
to  understand   that  the  fuel   tax  was  suspended   and  not                                                               
eliminated.  The   record  from  the   Constitutional  Convention                                                               
indicates that  if this measure  passes and then  the Legislature                                                               
eliminated the tax,  the dedication would be lost.  "I think it's                                                               
clear  from the  record that  a suspension  probably wouldn't  do                                                               
that," he said. Referring to  Senator Meyer's question he said he                                                               
believes that  the public  would support a  fuel tax  increase if                                                               
the funds were dedicated.                                                                                                       
3:51:57 PM                                                                                                                    
SHIRLEY  MARQUARDT,   Mayor,  City   of  Unalaska;   Second  Vice                                                               
President,   Alaska  Municipal   league  (AML);   and  board   of                                                               
directors,  Southwest  Alaska   Municipal  Conference,  said  the                                                               
conference passed a resolution in  support of this type of stable                                                               
funding for  the infrastructure needs  across the state.  AML has                                                               
made this a top priority for  several years. She related that the                                                               
City  of Unalaska  has a  five-year  capital budget  plan and  if                                                               
funding  opportunities for  projects are  up  in the  air, it  is                                                               
extremely  risky  and potentially  expensive  to  go through  the                                                               
permitting and  design process. In  the past the city  have spent                                                               
over  $1  million on  design  for  roads  and then  not  received                                                               
funding, she said.                                                                                                              
3:53:43 PM                                                                                                                    
KATHY  WASSERMAN, Alaska  Municipal  League  (AML), informed  the                                                               
committee about  of the caliber  of persons who were  involved in                                                               
the  study  that  the  sponsor  mentioned.  They  had  two  prior                                                               
commissioners of  transportation on  the study, which  was funded                                                               
by  AML,  the  Municipality  of Anchorage,  Mat-Su  Borough,  the                                                               
Alaska Truckers Association, and  the Alaska General Contractors,                                                               
she said.  This is  an issue  that has been  under work  for many                                                               
years and the people who  conducted the study were knowledgeable.                                                               
Everyone  who  has been  involved  with  these organizations  has                                                               
spent time  in Washington D.C. and  could see the writing  on the                                                               
wall a  couple of years  ago that Alaska  is in deep  trouble and                                                               
will be one of the states that suffers mightily.                                                                                
3:55:04 PM                                                                                                                    
LOIS  EPSTIEN,  Alaska  licensed engineer  and  Director,  Alaska                                                               
Transportation Priorities Project (ATPP),  said ATPP works with a                                                               
wide variety of organizations  to promote sensible transportation                                                               
policies  in  Alaska.  ATTP   supports  addressing  the  upcoming                                                               
decline   in  federal   transportation   money   by  creating   a                                                               
transportation infrastructure fund. However,  the language in HJR
42  could mislead  the  public into  thinking  that only  capital                                                               
projects  would  be  covered  by the  fund.  ATPP  supports  this                                                               
legislation  if the  language is  amended to  clarify that  money                                                               
from the fund  could be used for major  maintenance projects, she                                                               
3:56:53 PM                                                                                                                    
DAVID  LEVY,  Executive   Director,  Alaska  Mobility  Coalition,                                                               
stated support  for HJR 42. He  said the mobility coalition  is a                                                               
private  nonprofit  that  advocates   for  public  and  community                                                               
transportation statewide.  He echoed the comments  of Mark Hickey                                                               
and described HJR  42 as a creative way to  deal with capital and                                                               
maintenance transportation challenges statewide.                                                                                
3:58:27 PM                                                                                                                    
JOHN   MACKINNON,   Executive    Director,   Associated   General                                                               
Contractors of  Alaska (AGCA), said  AGCA, which  represents over                                                               
650  Alaska  businesses,  supports  HJR  42.  This  would  put  a                                                               
constitutional amendment  question before  the voters  to provide                                                               
dedicated revenue for a  transportation infrastructure fund. This                                                               
has been  a priority  of the  AGCA for many  years, he  said. The                                                               
proposed  fund  would  encompass   all  modes  of  transportation                                                               
infrastructure,  including maintenance.  The  collection of  fuel                                                               
taxes and  vehicle registration  fees directed  into the  fund is                                                               
commensurate to  a user-fee concept.  The public  understands and                                                               
can support user  fees as opposed to general  taxation going into                                                               
a general fund.  He restated support for the  legislation as well                                                               
as the amended language in the committee substitute.                                                                            
3:59:54 PM                                                                                                                    
DAVE CRUZ,  President, Associated General Contractors  of Alaska,                                                               
stated full support  for HJR 42 as a step  in the right direction                                                               
for Alaska to take control of its destiny.                                                                                      
4:00:27 PM                                                                                                                    
SENATOR PASKVAN  asked his  thoughts on  the suggestion  to amend                                                               
the language  to include maintenance  as opposed to  just capital                                                               
MR. CRUZ expressed  the view that maintenance  should be included                                                               
as opposed  to building a road  with state funds and  then trying                                                               
to get federal funds to maintain it.                                                                                            
SENATOR  MENARD   noted  that  the  suggestion   was  for  "major                                                               
maintenance" and asked if there  is a specific dollar amount over                                                               
which a maintenance project becomes a major maintenance project.                                                                
4:01:34 PM                                                                                                                    
MR. CRUZ  declined to state  a threshold without  consulting with                                                               
4:02:13 PM                                                                                                                    
FRANK    RICHARDS,    Deputy    Commissioner,    Department    of                                                               
Transportation  and  Public  Facilities  (DOTPF)  explained  that                                                               
DOTPF is routinely funded for  major maintenance activities under                                                               
the  capital  program.  This includes  deferred  maintenance  and                                                               
major  bridge   maintenance.  Regular  maintenance   efforts  are                                                               
undertaken  under annual  operating costs.  He stated  the belief                                                               
that  it  was  the  intent  of the  sponsor  that  HJR  42  would                                                               
establish an infrastructure fund  for capital projects that would                                                               
include  major reconstructions,  major rehabilitation,  and other                                                               
major maintenance efforts.                                                                                                      
SENATOR  MENARD  asked   what  would  be  included   in  a  minor                                                               
maintenance project.                                                                                                            
MR. RICHARDS replied  those would be the things that  are done on                                                               
an annual  basis including sweeping streets,  sealing cracks, and                                                               
changing streetlight bulbs.                                                                                                     
4:03:47 PM                                                                                                                    
SENATOR PASKVAN  said if he  would support amending  the language                                                               
to specifically include major maintenance.                                                                                      
MR. RICHARDS  said he  believes that  it's a  policy call  by the                                                               
Legislature  that  in  the regular  annual  appropriations  DOTPF                                                               
normally receives  capital project  funds for  major maintenance.                                                               
The current language is sufficient.                                                                                             
CHAIR  KOOKESH summarized  that  Mr. Richards  believes that  the                                                               
phrase "capital projects" on page  2, line 6, would include major                                                               
maintenance. He asked Representative Peggy Wilson to comment.                                                                   
REPRESENTATIVE PEGGY  WILSON stated  her belief that  the current                                                               
language  is sufficient  to include  major  maintenance, but  she                                                               
wouldn't object to inserting "major  maintenance" on page 2, line                                                               
6, following  "transportation". If  it would reassure  the voters                                                               
it might be a good idea, she said.                                                                                              
CHAIR  KOOKESH said,  based on  the testimony  from DOTPF,  he is                                                               
satisfied with the current language.                                                                                            
SENATOR PASKVAN concurred.                                                                                                      
CHAIR KOOKESH closed  public testimony and asked the  will of the                                                               
4:07:26 PM                                                                                                                    
SENATOR PASKVAN  moved to  report Senate  CS for  CS for  HJR 42,                                                               
version  T, from  committee with  individual recommendations  and                                                               
attached  fiscal note(s).  There  being no  objection, SCS  CSHJR
42(TRA) moved from the Senate Transportation Standing Committee.                                                                

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