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 fund…". 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 touched. 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 concluded. 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 projects. 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 members. 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 committee. 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.