House Transportation Committee Holds Hearing on a “Permanent Fund” for Transportation;
ATPP Director Testifies that the Proposed Fund Should Cover Maintenance

FOR MORE INFORMATION:

Lois Epstein, ATPP, 907.748.0448

Anchorage, AK - The Alaska House Transportation Committee today held a hearing on a resolution, HJR 42, which would ask voters to amend the state Constitution to establish the Alaska Transportation Infrastructure Fund, a transportation-specific endowment that would operate in a manner similar to the state's Permanent Fund. The hearing also covered HB 329, introduced by Committee Chair Peggy Wilson, which would create this fund to pay for transportation capital projects. The new fund would contain a $1 billion appropriation plus annual revenue from state fuel taxes and vehicle registrations, pending voter approval of the constitutional amendment.

Alaska Transportation Priorities Project (ATPP) Director Lois Epstein stated during public testimony that addressing the upcoming decline in federal transportation funds is wise however the proposed approach has several problems. She also discussed how the fund approach would be limited in its overall impact on state transportation funding since it does not address the millions of dollars the state spends annually on major projects that cannot be completed due to the lack of funding.

Epstein testified that HB 329 does not currently cover money needed for infrastructure maintenance, preservation, and operation – roughly $500 million per year for highways and bridges plus over $100 million per year for maintenance and operation of ferries. She testified that HJR 42 and HB 329 should allow funding for maintenance, preservation, and operation of transportation infrastructure as those are the greatest funding needs currently and potentially in the future. Epstein also urged the Committee to modify HB 329 to include ranges of funding for each transportation mode rather than specific numbers.

In support of including funding for maintenance and operations, Epstein stated that "Alaska should not build projects it cannot maintain." The proposed fund thus needs to cover both capital and non-capital transportation costs, she said.

Epstein testified that one of the key transportation funding issues - the Governor's and legislature's lack of leadership in canceling major projects for which there never will be adequate federal, state, or private funds to complete. These projects, which cost the state millions of dollars each year in staffing and studies, include the proposed Road to Nome (2010 estimated cost: $2.5 billion), the Juneau Road/Ferry project (2009 estimated cost: $0.5 billion), and the ongoing Gravina Access project (2006 estimated cost: $0.4 billion). Currently there is not a financial plan to complete any of these projects. Additionally, the federal government sent the Alaska Department of Transportation and Public Facilities a letter in November 2009 expressing its concern about the state's lack of "fiscal constraint." If the state cannot demonstrate fiscal constraint, future federal-aid funding for transportation could be jeopardized.

Epstein urged the Committee to hold a hearing on the lack of fiscal constraint, and offered to work with the Committee on that topic. Epstein's testimony to the Committee is available here.