Excuse me. That was loud. My first hammer of the subcommittee. I'm going to call this meeting of
the House Finance Department of Transportation Public Facilities Subcommittee to order at 1230
on Thursday, February 5th, 2026. So I'd like to remind everyone to silence their cell phones.
Present today are representatives Ayeshaide, representative Mina,
G. Nelson, Representative St. Clair,
Representative Carrick has told us she's going to be coming a little late,
and I don't know about Representative Moore, but it would be her first subcommittee with us.
Welcome everyone. I look forward to a collaborative and productive process
with the full membership of the Finance Committee.
The purpose of this subcommittee is to review and discuss
the agency budget transactions with
These transactions can include increments, decrements, transfers, new positions or
position changes, fund source changes and more.
Please bear in mind that our work will be focused on the number of sections of the operating budget only.
Issues in the language section of bill are the purview of full finance committee.
Our evaluation will often be based on comparisons between FY26's base budget and the FY27 governor's request.
While our recommendations are not binding, they are very helpful to the full finance committee's process of creating a committee substitute for the governor proposal.
Today we have Department of Transportation and Public Facilities Deputy Commissioner Katherine Keith and Program Management
Administrative Director Dom Pinion, and they will present a mid-year overview of the department's FY26 budget.
For those watching remotely, the PowerPoint presentation can be found under today's meeting documents on basis,
which is the legislature's online headquarters at www.akleg.gov.
Note that we'll be focusing on the department's FY27 budget requests at the next meeting scheduled for Tuesday, February 10th here in Barnes 124.
For members at table, you'll find the presentation under meeting tab one towards the very back of your binder.
With that, Deputy Commissioner Keith and Mr. Puneon, please come forward and
introduce yourselves and begin your presentation.
Good afternoon, Katherine Keith, Deputy Commissioner of the Department of Transportation and Public Facilities.
I'm here with Director Dom Pannon, Director of Program Management and Administration.
So thanks for having us here today to talk about our mid-year status of our operating budget of Federal Fiscal Year 26.
Just to start out with and I'm just going to touch on this briefly as some members of this committee have already
Heard us go through a review of our operating vision and this is the same as it's been now for
Quite a few years
But as we look at the context of decisions made within our
Operating budgets, this, is a lens at which we, look, at these decisions
Being modern, resilient, and agile is what helps us,
both within our organization and how we operate,
but then also sets our goals and targets for the transportation system itself.
As we make decisions, both of our operating budget and our capital, we again go back to the department's purpose within the statute of linking communities together.
So those connectors, improving and supporting commerce and industry, extraction and utilization of resources and economic and general welfare of Alaskans.
So with that, I think I'll hand it over to go on to next slide.
Director Penone for the record down, but known so this slide provides outline and comparison of three different budgets.
We will be showing some of the budget requests in the governor's FY 27 and
we'll be talking about how the fiscal year 2026 is leading into those requests.
So for comparison here in context, we provide the FY 2025 actuals.
That's what we actually expended.
compared against the fiscal year 2026 management plan, which is the budget we're in currently
until June 30th and then compared to the FY 2027 governor's budget.
So you'll see moving from 2025 to 20 26, a pretty significant reduction of 10.2 million in UGF.
We took advantage of an increased vehicle rental tax receipts,
some additional motor fuel tax funds,
and some GF program receipts there in our budget.
For the Fed increases,
we also moved the Whittier Tunnel back to federal receipts
in operating budgets,
that was responsible for the portion of that.
And then the other six million was largely due to
A significant increases in the international airport system, which has its own revenue fund.
I have a question.
Representative Stutes.
Thank you.
Madam co-chair, chair, I don't know how you want to be addressed.
I notice this as it excludes the Alaska Marine Highway System.
Why is that?
Through the chair, Representative Stutes, that's an excellent question.
So the reason we exclude the Alaskan Marine Highway System from this comparison is that we are still
wrapping up calendar year 2025.
We're still in that close out of those books, so we don't have the actuals yet.
We have a slide on the current year and we're going to discuss the revenue shortfall in the
current years.
And the 2027 amount is roughly a flat budget from 2020.
six so we didn't include it in this it would skew the totals and it might not
make for a good comparison perhaps you could remind us that the I guess I'll
just say it the last marine highway system we move to a calendar year budget
three years ago so it doesn't match the fiscal year
You said you took advantage of some vehicle tax receipts.
Can you describe those a little bit?
Through the chair, Representative McCabe.
Yes, we had some fun swaps at the legislature last session.
At the end of the year as it was moving through the process.
And some funds were swapped, what there was was an increase from the Department of Revenue.
In the projections for vehicle rental receipts.
So some of those funds were swapped for UGF, and those were leveraged by the legislature to appropriate to the department.
Follow up?
Certainly, go ahead, where I'll ask.
Be the cold rental receipt you're talking about like from money that we get from rental, from vehicle rentals.
Yeah, I think we're talkin' about.
Or are we talking about the receipts that you guys get from renting equipment?
Through the chair, Representative McCabe, I thank you for the question.
We are referring to vehicle rental tax receipts
that the public pays when they rent a vehicle.
Can I ask a specific follow-up on your behalf?
Do you know? Was that an increase?
Due to the change in the turo taxes being applied to rental cars, and we saw that already in 26 or in yeah, in
26 Madam chair, that's an excellent question. I don't have the expertise that would probably be a department of revenue question
You knew exactly what I was getting at.
I know, but let's just say it there, right?
Yeah, so we should ask the Department of Revenue
if it is already in a half of a fiscal year
generated additional revenues for allocation.
So if you don't mind, one comment,
a portion of that, I believe,
is supposed to go to state parks.
Just.
Boy, yeah.
Okay.
I'll leave that in your capable hands, Madam Chair.
Well, we'll make sure we ask the Department of Revenue.
Mr. Pignon, will you make
sure because the bar graphs at the top of this chart
use two colors for DGF and FED that are very close in color
and one is a really, really tiny sliver.
So make that we are understanding it correctly.
And I want to specifically look at
Bump up in federal receipts or federal monies from FY26 to the F from 25 to 26 management plan
So could you make sure we know what that money was?
Yes, thank you madam chair
Several years back the federal highway administration did an audit on
toll facilities and
Found
Or suggested the state was not eligible for funding the Whittier Tunnel the way we had been funding it.
We received a demand for back payment of roughly $15 million.
And we changed the budget as we worked through that with the federal government.
The department did prevail and in that year we transitioned back from UGF back to federal dollars.
And that was resolved and we didn't end up having to back pay the the monies
So the
FY26 actuals or 25 is showing us where we weren't taking it and then we've gotten it back in the FY 26
Management Plan that is correct
Anyone else and We've been joined by Representative Moore at 1240
All right, if we may move to the next slide, slide three.
Slide three outlines some of the reductions that our maintenance and operations took in the current years budget.
Many of these reductions, as you can see, these are excerpts of
the budget action sheet that went through conference committee.
There were two significant budget reductions predicated on two different concepts.
One was that given the light winter, we would have a significant surplus in carry forward of revenue.
That would carry for it from 2025 to the current year.
That didn't materialize.
We certainly used every M&O dollar last year that we had been budgeted for.
The premise was that we could extend the life of our equipment longer.
And reduce the amount that pay into the highway equipment working capital fund.
And hold on to equipment, allow it to be older than we already, before we replace it.
That didn't materialize either because the department has been doing that since 2017 as a cost saving measure.
save or leverage additional funds through this cut.
And it turned out to just be a cut to our M&O maintenance
and operations budget.
Mr. Penion, because we had a conversation about that point,
I'd like you to expand on that slightly.
You did mention 2017, but if you'd walk us through the percentage
extension of vehicle life that you took in 2017.
And then I believe there was another year that
you did it and give us the full description so that every member
of why the department couldn't reach that goal of a 10% reduction.
Absolutely, Madam Chair, I'll attempt to elaborate.
So the Department uses houses the statewide equipment fleet,
which provides the vehicles for most of the executive branch,
all of these executive branches, and even some of other branches.
The equipment fleet division manages the highway equipment working capital fund so when we purchase an asset
We pay two rates an operating rate for the mechanics and for
the fuel and
For the things we need in the current year and we also pay a depreciation rate
So we pay for
The value of the asset that we've consumed in that year on a on
A specified schedule so that at the end of that assets life
We've paid in enough to replacement, and we don't need to re-inject capital every year.
We're paying for the depreciation.
So in 2017, or there about, we started extending that schedule and
lessening the amount that we would pay in from our operating budget.
So we have several classes of vehicles and
we could have an entire presentation on that.
For a specific class, it may be 10 years of useful life for 20 years, and we would extend it by 10 to 20% for that savings.
And we had been doing that to mitigate cost pressures since 2017.
We continue to do that.
So let me, when we met in our heads up meeting, I believe you cited two different times that the department did.
Who was the other one earlier than 2017?
I thought you had referenced maybe 2014 and then again in 2017 that you took 10% reduction or extensions
Or is it only the 2017
Madam chair, I can't recall. I could say we started doing it in
2017 and we have done it every year
Since we've kept the practice so to absorb
Cost increases in our maintenance and operation so every years since 2017
All right, go ahead and proceed
Moving to slide five
So when the department
received that reduction
That was the equivalent of a 12% reduction to our unrestricted general funds
And so we took action to minimize the impact to are frontline maintenance and operations so that we could
continue
maintaining and operating our infrastructure, snow removal, line of sight, aggregates at the
level we were and tried to shift the cut wherever we could to minimize impact to the public and
to our streets and our operators and equipment. So we took a lot of measures in the current year
You'll notice we have held regional director positions.
We've shared responsibility among our executive leadership team for leadership positions,
we've also looked at restructuring how we are organized, where we put the administrative
support and the IT support, and letting our other components share the I.T. responsibilities,
and doing everything we can to mitigate.
Which includes holding positions open longer, admin positions, or other positions while we keep our front line at the level it was.
Slide 6 is addressing our current 2026 Marine Highway System budget.
That's the budget that was appropriated last.
session and started January 1st of this year.
The total operating funds appropriated were $170.7 million.
This appropriation included a $77.9 million federal authority that was predicated upon
continuing a fourth operating grant from the Federal Transit Administration from a program
That revenue represents 45.6% of our total operating budget and we have for the prior three years been successful at
Receiving that revenue and using our UGF to match and receive the grant
last year
The federal transit administration did not issue a notice of funding opportunity for this grant
So the department is working with our federal partners and our congressional delegation to
Find ways to restore that funding in our budget
Could you help us understand what the word restore means in that sentence that you just had
Absolutely, Madam chair
We are trying to understand
if there's going to be a
Notice of funding opportunity within the year trying to understand the reasons that
There was not a notice of finding opportunity
And then exploring what what options we can take as far as mitigating any revenue shortfalls
In lieu of that notice a funding. Opportunity coming out
Representative McCabe thanks, so mr. Padone there's other no foes that are a problem with
Transportation, Federal Railroad Administration, FTA, is that just caught up because there
was the government shutdown for 30 days or whatever it was and some of those NOFOs that
would have normally gone out about then are sort of hung up.
So I think when you say we're trying to understand, you mean you're kind of waiting to see if
they're actually going to drop the NO FO so that we can get this money possibly.
Through the chair, Representative McCabe,
I think it's fair to say we're trying to wait
and find out if a NOFO is going to be released.
That's correct.
Okay, thanks.
And Mr. Pinot, in the previous three years,
once the notices come out,
what's the timeframe for the awards being granted?
Thank you, Madam Chair.
So in that prior three year,
it was approximately 190 days.
in the first two years and the third period was 152 days I believe from notice of funding
opportunity to the award announcement. I believed they provide a notice
of finding opportunity and give roughly 60 days for applicants to apply and then there's a review
period. So is it fair to say that even in best case scenario that the notice comes out tomorrow?
And we get as much as we are hoping for in our grant, we won't have that information before we would adjourn in May.
Madam Chair, I can't say whether or not they would do an expedited review or whether they
would continue to shorten the review period.
to with this discretionary program that they have.
Deputy Commissioner, did you have thoughts on that?
Yeah, thank you, Madam Chair. That's.
likely a good expectation is averaging out the last three years, but we're certainly having conversations with federal transit administration and
So we can communicate the urgency of this program to Alaska and perhaps through those conversations
We can find ways to expedite it
But we certainly want to be prepared for what would be the worst-case scenario so that we have a way that
we could maintain service without seeing any decline and
That's the conversations we're having right now is if that happened and we didn't have funding through the end of the state fiscal year.
What do we do after that?
And have you developed a contingency or thought?
Yeah, Madam Chair, we have several ideas, but we are still.
Flashing them out, one of them, for example, would be retiring the Matinuska, which currently has been used as a hotel vessel, similar to the Malaspina,
which we did sell several years ago.
That would provide potentially over $10 million back into the marine highway system budget.
So, several things like that that will continue to work through.
Work with or legislature on what we think could support this
Representative students. Thank you. I'm trying to tailor my comments and be nice about them
So you mentioned the melaspina and it being sold did those funds go back into the marine highway system or did they go into
the general operating fund
for the record down, but known through the chair, representative Stuitz.
When we sold the Malaspina by in statute, we're required to deposit those back into,
I believe the vessel replacement fund and all revenues get deposited there.
And just to clarify, the deputy commissioner was talking about
selling the matineusca, which we still hold today.
I'm wondering, my question was, did the Alaska Marine Highway System actually get the benefits
of the dollars that were received in selling?
Yeah.
Through the chair representative students. Yes, absolutely the vessel replacement funds continue to go back into the system
Especially capital investment. It's contributing to the replacement of the testimony replacement vessel and construction of that
Go ahead last question. So
Am I correct in presuming the funds are
available for the
cost of a
Through the Chair, Representative Stutz, yes, they are available and currently programmed
in our statewide transportation improvement program to be used for the test immunoreplacement
vessel construction.
Follow-up?
Okay.
So, when the testimony in a replacement vessel is completed, we're not going to have you
sitting in front of us saying, whoops,
we don't have enough money to fix this.
We need another appropriation.
So the chair representative stutes the testimony replacement vessel is out for bid currently, so we are eagerly anticipating those
Responses and we'll be able to work with the shipyards on what that ultimate cost would be right now for the projected cost
We do have sufficient funds
Thanks to the the rural ferry program and other funds being contributed through our federal funds through the step
But so right. Now. Yes, we have efficient funding
I would really hope not to come back and say we need additional appropriations, but
There's always a risk with cost escalations,
the cost of steel in those factors.
So my last follow-up, if I might, Madam Chair,
my Last Follow-Up would be, is it possible
that any of those replacement funds
are being used for operational costs?
Through the chair representative students right now the vessel replacement fund is being strictly used for vessel
replacement there are no operational
Yeah, through the Chair Representative students correct. Thank you. I
Will go back if there's any discrepancies with that. We'll be sure to report back on it
And I want to clarify something before I go to Representative McCabe.
Mr. Pignon, you'd said that when we sold the Malaspina, that by statute,
the money from sale of a vessel must go the vessel replacement fund.
So I wanna return to the idea of if we end up with a $78 million deficit in
operating funds or a 50 million or 20 million.
If we sell a vesal.
That money is not to go to operations, it's to the vessel replacement fund.
So we return to, do we have any contingencies that we could anticipate of how we will fill a $78 million operational deficit?
Yeah, Madam Chair and for the record, this is Catherine Keith.
What we would be looking at in that situation would
be an essence of fund swap.
Because right now we have some federal funds that are going
to vessel replacement if we could instead use vessel
replacement funds, those federal
funds could be used for operating.
Budget sets, we will be able to make that work so we had
some additional operational funds.
But maybe Director Penone could speak a little bit to timing
of available operating funds for AMHS.
For the record, Don Penone and Madam Chair, I'll clarify that by selling the Matt Nusca,
we have operating costs to keep the matt NUSCA running to
keep it a ship that we can house staff on.
There's significant cost with that in keeping it tied up with utilities and crew.
And by telling it, we would save the operating cost.
would be deposited into the vessel replacement fund.
And we can only spend from that fund with a legislative appropriation.
The only appropriation we have from
that funds right now is for the Tufts Amino Replacement Vessel.
So there is no way for
the department to access those funds unless appropriated by the legislature.
Okay, so one follow up then.
What are the operational costs right
now of having the Madanouska in Ketchikan working as a hotel vessel?
Madam Chair, we pay roughly.
There are some costs that we would continue to have and some cost that
we could not.
We can provide a breakout of historical costs.
I'd say a rough order of magnitude with crewing and all other items.
We, can roughly say $10 million to, to
have that ship as a hotel ship operation costs, okay.
Give me a time frame that it costs us 10 million, that's over a year,
that is per month. Madam Chair that for a
year. Okay, thank you. Representative McCabe,
thank for being patient. Yeah, no worries. And you're sort of
dancing around the question I was getting at because I remember when the
Malaspina was in layup for as long as it was
in layout while we were trying to make up our minds what we
were going to do with it. It was $800,000 a
year and that didn't go into the
Or come out of the vessel replacement fund one way or the other.
It actually was a net cost to the department if I'm not mistaken.
So I am wondering, once we make a decision to sell the, it's the Madnuska that's we're
using right now as a hotel right.
Once we made a decisions to that, we can leave that in lay up for a year as well.
incur another $800,000 worth of layup fees or are we going to dump it pretty quick and turn it into razor blades?
Yeah, through the chair representative McCabe we would continue using it as a hotel vessel until
We were able to implement a sale
The sale of the malice be or the Malice being a had several steps part of that requires getting federal approval
and
And beyond that, there's best interest findings and public comment that goes with that.
So we would keep it as a hotel vessel, but yeah, certainly those layup costs are extensive.
So at least as the hotel bus load continues to provide some big benefit to the marine highway system.
Okay, go ahead and proceed.
We wanted to touch briefly on the typhoon hollong emergency repairs that are underway right now as it is within this calendar year
With typhoons, I'm sure most
Everyone is aware of the extent of that because there were two storms one that hit
More in northern Alaska caught to be a gnome no attack and then the Typhoon that
impacted southeast Alaska, I'm sorry, southwest Alaska.
So overall, there were upwards of 60 impacted communities.
Right after the event occurred, the department had
launched drone programs so we could go and get
immediate drone footage, live video, go pro data so that we
could understand what emergency repairs had to happen
immediately and then what we can work on in upcoming
weeks. So in partnership with several other state agencies, including the Department of
Military and Veterans Affairs with their statewide emergency operations center,
there was a very extensive effort, which is still underway for the department.
When we first began implementing repairs, we had 17 contractors that were out in
over 30 communities, right now we have nine contractors, prime contractors that are active in over 13 communities.
The numbers are staggering.
We do have 14 communities that have the emergency repairs complete.
That doesn't mean they're fully recovered by any means, but the immediate emergency
sufficiently completed, but for awareness, we're expecting about $109 million for overall
costs and this is for the department's work.
not the entire disaster recovery costs.
Expanded to date, this is actual expenditures is 53.5 million.
We have several pending pay estimates from contractors.
So remaining work to be done is expected to
be about 36 million, but overall there's over 73,000 feet of board
road that need to completely replaced.
were 8,000 helical piles have to be drilled so we've looked for materials all
over Alaska, the United States, even Canada to get materials out into that
area and the weight it's over 12 million pounds of materials to do this work so
substantial effort we had over 240 staff out doing and being involved with this
Impressive the collaboration that's occurred what you can see on the images right now on
the upper right hand corner is just the heliocle piles which we're finally just now getting
to installing because conditions are right.
But to get materials when you're talking 10, 12 million pounds of materials out to all
these rural communities, the logistics of that are extraordinary.
Getting materials, what you can see here are 20 footers, and they're driving them out to the villages.
And so they get to participate in that repair process.
We also have these piston bullies that are driving all together,
100,000 pounds every couple days to different communities.
So this recovery has taken resources of the department,
and this is just an awareness item that likely, we hope to be talking a bit more about this as we move forward.
But the communities out here are all still in tremendous amount of still an emergency
state.
Water treatment plants are frozen, power plants still not repaired fully, schools are struggling
to stay open.
So we continue to staying active out there, but we do hope at least for these initial
emergency repairs to be completed by the end of the state fiscal year once it starts
to thaw and break up happens.
Very appreciative of the efforts of
the departments, all of our state agencies that responded rapidly and quickly and
shuffled money around to make it happen.
My question comes down to we heard in the news this week that FEMA,
although we thought we were going to have 100% reimbursement for this disaster,
has said we're going give you 75%.
So I want to know of 105 million or 109 in authority,
That we may not get all that we expected because my understanding in asking I think it was OMB
That the counter is we're contesting that but we are now hoping for 90 percent. So still
10 percent short of a hundred percent
Reimbursement from FEMA so out of that 109 how much is FEMA money?
Yeah
Thank You chair what I would estimate right now is that
We understand that FEMA is providing 100% federal share
through January 15th, roughly.
It's our expenditures to date through Jan 15
at that point, we're closer to 35 million,
and we can get some precise numbers from that.
The expenditures after that, yeah,
we'll certainly be.
working with Department of Military and Veterans Affairs who will be requesting supplemental for the disaster, as I understand it, overall.
And these numbers will being included with their request for what the state's portion would be.
So your question on the 105, if it's not all 100% federal, a portion of this then would
be from unrestricted general funds.
How much of this is UGF right now the authority is we've given you federal authority right
now hundred and five million total and then the makeup of that will be determined in those
conversations with FEMA and DMVA. Okay. Representative McCabe. Thank you chair hand and so how come
Transportation in a certain amount of it is probably state facilities, but it seems like a large amount
of this is not even really the responsibility of DOT. So I guess it's a two-part question.
How come it fell to you guys and are you shouldering the entire monetary load through your budget?
are other agencies that maybe should be contributing as well and in fact other
agencies maybe even other outside agencies such as native corporations or
nonprofits are is this a sort of a combined effort or are you guys doing
the whole thing?
Yeah, through the chair, Representative McCabe, I think DOT is very directly involved, because
we are an agency that has contracting capabilities at authority, and we have staff that know
how to do construction and build things and make work happen.
The governor was very clear to Commissioner Anderson, the expectation that the department
was out there doing everything possible to ensure that residents that wanted to go home,
at the when the time was right so that's our focus but but certainly it's
We've been working on utilities, a power pole, replacements,
residential houses, removing houses putting them up on blocks
so they don't freeze to the ground.
It's very actively still doing that, re-insulating homes,
thawing out the water treatment plants
on the Pasciac head frozen up and it's now thawed.
So as far as other agencies go, right now.
Yeah, we have had certainly collaboration with them over the months, but for doing this work
It really does fall well under the department's purview
native corporations
The state emergency operations center are very involved in the first
initial months along with a lot of support agencies for relocations
transitioning people into
longer
homes over The winner and in all of those things but
Yeah, well, we'll continue to be out there to get it done
Yes, so so the real question I'm trying to give that is
All of the money that it's costing this hundred and five million dollars are you guys are DOT?
Shouldering the whole burden of that or or is it actually costing more money and there are some other groups involved in in?
You know providing monetary support most fiscal support mostly
Yeah, through the chair, Representative McCabe, I'll do the first half of that answer.
But we do have agreements, memory and reimbursable services agreement with the Department of Military and Veteran Affairs.
And for each single project that we initiated,
Provided approval and so ultimately we will get reimbursed through the the DMV a as part of the emergency process
and
Yeah, right now. There's over 60 different
Resource requests and projects initiated at the request of communities
But director Pannon. Do you want to talk about the cash flow in of that?
for the record Tom Pano and as our deputy commissioner said there's two departments that
are well-versed in incident command system response.
And so, DOT also practices incident
command systems and receives the requests
from the state wide emergency operations center
for all of this work.
In our capital budget and our capitol budget finances,
we have appropriations for federal emergencies,
just such as this.
And, so the expenses are sitting on those
federal appropriations and we will
Again, work through the reimbursement process and the federal process as we as
we continue. Thanks. And I will say that DEC is also another department that has
a lot of money that's been spent on the disasters on that disaster. All right.
Thank you, Madam Chair for the record. Don Penone and this part of our
I suppose, previewing some of the fiscal year 2027 governor's requests and we've grouped
them into logical groups so that we can go through them.
The first group here is the information technology classification study implementation.
This is a group of changes that are classified as salary adjustments and are calculated automatically
for the department.
information technology staff reside within our information systems and services component,
but we also have IT staff throughout the department and other components who are affected by the
reclassification of these IT positions. The second group here is a larger grouping
where we have gone through in response to several initiatives, which is budget constraints and
reorganizational initiatives where we've deleted 23 positions and
able to have a cost savings here outlined of roughly $3.5 million dollars.
The last group is a transfer of positions from the Department of Administration for
both payroll and accounts payable and travel transactions.
We were in the past build for those positions and we paid from our budget.
We are just receiving those position back to directly integrate with our line of business staff.
Moving to slide nine, these are our highways and aviation budget requests.
The first one is for contribute airport power line replacement.
power line replacement, and they levied a tax against us on our bill.
So we're paying that with rural airport leasing receipts.
That's something they're required for that airport.
The South Coast Highways and Aviation component is receiving an increase in rural aviation receipts of 70,000.
That's for Gustavus Airport law enforcement coverage.
We're required by the FAA to have qualified law
enforcement when we're flying passenger jet service
into Gustavis.
The third item here is abandoned buildings on lease lots.
So many of our airports will have buildings
that were abandoned or are in poor condition.
We will use rural airport leasing receipts to recover that space and
make it available for other tenants or other airport purposes, and perhaps generate additional revenue.
Senator Stuitz.
Thank you.
Actually, before you get started, I've forgotten to say that Representative Karak joined us at 106.
Go ahead.
Thank You.
I find this abandoned buildings on leaf lots rather interesting and
rather frustrating at the same time.
I came to DOT three years ago in Kodiak when you have abandoned buildings and I said we have
a local businessman who is willing to not only lease that property but rehab those buildings
at his expense and i read in the Anchorage paper today that DOT is destroying all these buildings
to see nothing to have been done for three years and you could have
been receiving revenue.
You could've relieved yourself of having to tear these buildings down.
Now that they're saying they have contamination in them and it's to me
it is an example of not paying attention and I'll just leave it at
Legislative liaison Andy Mills does have some background on that if you'd like the department to respond, we could call him to the table.
I would like to have him respond. Thank you.
For the record, Andy Mills, Legislative Liaison and Special Assistant at the Department of Transportation and Public Facilities.
Through the chair, Representative Stutes, I was actually at that spot about a year ago,
topic and made sure that we mentioned at that time and all remind folks
I think this is different as a subcommittee that that building in question had a hazmat issue in it
And I it suggested it was a sensitive haz mat issue
That required that the building not be leased out
To someone who did desire it, but the condition of the Building was not such that
We could so I understand the frustration of seeing a building and having a business opportunity which again
Structures with issues that and anyway that I think that describes why that situation was not a tenable lease option
Madam chair, thank you. I'm not going to get into it
He said she said and I appreciate that mr. Mills
But this was long before last year that.I went to DOT so
It's history now, but
And I appreciate your response, and I
appreciate that it's finally being taken care of.
It's just, to me, it is just a waste of money.
Thank you.
Before, so back on slide eight.
You have some positions that are being deleted aligning staff with organizational change modernizing initiatives
35 12 is the figure and if we go to your blue book on page one where it it has more positions
That are been deleted
and
When again when we met on a heads-up meeting the discussion was that those were positions. That were either vacant
could have lateral moves. I'm going to ask specifically, when was the division
director in Anchorage position vacated? Madam Chair, the Division Director in
Anchorage, Director Holland resigned effective Friday. The date being
Yeah, sorry, if someone has a calendar this Friday.
So at the time that the budget was put together
and we were presented data that said
these are vacant positions,
that would be inaccurate,
that position was not vacant until last Friday?
Yeah.
Madam Chair, the position you're referencing
is the currently vacant Northern Region Director position,
which is currently the role is being taken
So I'm not looking at Northern Region, so I am looking
at Anchorage, is that Northern region?
Madam Chair, if you'd be willing,
if there's a position control number attached to that,
we could speak to it directly.
Well, I I looking the blue book that is put together
by legislative finance, when we had our heads up meeting,
it's on page one.
Is the position, we asked about these positions,
we were told that the Anchorage Deputy
Commissioners of vacant position.
The non-permaintance and operations vacant, vacant.
Many of them say vacant in the book.
And the Division Director,
we we're told was a vacant
position
My understanding is mr. Holland had been that that job for a year and a half
And it's only vacant now because he resigned last Friday versus being assigned to a job that he had no skills or background in
Yes, madam chair. I believe in some regions
We have the position classification, which is a director. Some regions had deputy directors where we would have
two director positions, and so
That's referring to the former
Deputy Director position that was vacant at the time
Okay, so Miss Keith was mr. Holland reassigned to a job that he did not apply for and felt uncomfortable
Overseeing and maintenance and operation because his design background and decided to resign versus delivering poor service as a state employee a chair
And for the record, Catherine Keith, director Holland
had resigned, and beyond that, there's
nothing to do with job performance or anything else.
No, I'm not saying he had poor job
performance, that his job was going away,
and he was being reassigned to a job
that he felt he wasn't going to be skilled for,
and resigned instead of going and doing a poor
job for a state and a jobs that had no background in.
Yeah, madam chair. He's departed state service entirely without being reassigned. So perhaps he provide a little more context
I'm perhaps misunderstanding your question
It's his job was published as vacant and his
has gone away, and we were told it was vacant,
and that's why these cost savings.
We'll see this 3512.
It's on that figure.
I understand that, Treannan, but you're
asking about his feelings and whether he felt qualified.
That's really outside of our purview.
I'm looking to see whether, he was given another job,
or whether we was told, your job is gone,
and you are unemployed today, when
we are told something different.
So, to follow up on your question, I guess Ms. Keith's question is, did he resign before
or after you told him his job no longer existed?
Yeah.
position number that is being referenced
is not the Central Region Director position.
There has been historically a deputy director
that reported to the central region director
and that has vacant that the person
that had held that position had also resigned
and we can get the exact time of that resignation
but that wasn't a reassignment.
All right.
I appreciate that, Ms. Keith.
I don't appreciate the double talk all right we're going to go back to the
bottom page eight I guess it's page nine now for the record dump known I'm going
back two page 9 our highways and aviation budget requests the next item
We're proposing to fund that with general fund program receipts.
So those would be right of way receipts that we receive for right-of-way permits.
Or revenues generated from right off way ownership from
right away leases in which real property was acquired with federal dollars.
And I'm McCabe.
Thanks, Chair Hannon.
So we're kind of into a spot where this seems like the best place to ask this question.
And you're probably not going to know this, but.
I know that when we do highway expansion,
such as the double lane or the four lane
between Church Road and Big Lake Road,
we buy rights away from businesses and owners
that own those rights of way.
And then we only use a certain amount, 10 feet
or 20 feet or whatever.
And that leaves a whole big chunk of property.
That we now own that the DOT now owns and and I would like a list of
Every one of those properties and how much money?
How much property the DOT actually has in their portfolio and the
Millions of dollars that we are holding on to and why we're holding it and not
selling it
and
To be fair DOT is not the only
One that does this, but there is a significant amount of property and not just in that area
But in other areas if I'm not mistaken and it would be great to have a list of that so we could
I'll talk about them maybe individually
Yeah, some of the chair representative mckay absolutely we will get that for you. Thank you
And i'm going to go just to that 250,000
uh under central highways for homeless camp and baitment
Do we anticipate that that would be the total cost of those abatements that you would anticipate in FY27?
Or will there be additional money needed to complete those?
Madam Chair, and for the record, Catherine Keith, the 250,000 is certainly an estimate.
It averages out the last two years of the cost
of right away clearing within the central region area, primarily Anchorage and Wasilla.
The record, don't be known.
So the next item here is a new component within our highways and aviation appropriation.
It's for statewide guardrail and roadside repair.
This is request for $1.7 million of motor fuel tax receipts.
The next one is for.
I'll just explain that this would allow our maintenance and operations across the regions and across this state to address a backlog of damaged guardrail and other roadside safety hazards, improving safety for the traveling public.
The next one there is a statewide wayside maintenance of 420,000 of motor fuel tax as well.
We'd be looking to expand the opening months of
Wayside stations keep them open longer and increase our maintenance at wayside station's across the state.
Are those funds currently available in the motor fuel tax fund, or is this we've got an elbow somebody else out of a dollar to get those?
Yeah, Madam Chair, that's an excellent question and something that legislative finance flagged in
the budget book.
And when we look at motor-fuel tax.
And the Department of Revenue's projection, we look at both the refined fuel surcharge which is an excise tax.
And, the tax on the transfers of motor fuel.
And when we both encompass the motor-fuel tax revenues, when look that we see that there is revenue available to fund these requests.
And that's the difference between the departments, calculation, and ledge finances calculation.
The next grouping of budget requests is $5.2 million of UGF.
This request is to restore the reduction that we received in the current year.
That reduction again was for 10% for extending equipment life and
based on a surplus presumed on on low low.
level winter. So we're asking to restore those funds here, given the savings that we've achieved
throughout the budget. And the last, the Last Request is to
restore a one-time fund swap. At the end of the session last year, there were some creative
funding strategies implemented. This fund source was put in our budget and we are requesting to
I'm suitable fund source for highways and aviation.
Representative Carrick.
Thank you through the chair.
What was that swapped to?
What with the fund sourced last year?
Through the Chair to co-chair Carick, it was swapped
to the Alaska Housing Capital Corporation.
And we are from UGF and we're asking to swap back to unrestricted general fund.
Follow up?
Go ahead.
Through the chair, why just Northern Highways in aviation?
I'm just trying to get a better picture of why that specific dollar figure in that
specific area, if you know.
Yeah, through the Chair, Co-Chair Carrick, this was something the legislature implemented
and maybe legislative finance would be the appropriate body to answer that.
Was Northern Region the only one that we did that fund swap for?
Yeah, the region's budgets madam chair. Yes, it was placed in the Northern region component only correct
Okay
Okay moving to slide 10
The first request is for five hundred thousand half a million dollars of highway equipment working capital fund to the operating budget for the statewide equipment fleet
This would provide them authority to seek mechanic contracting support in remote areas where we don't have staff or we're unable to fill staff.
This is meant to be a tool for the division to use and
with the reason we are requesting additional funds is so that we can continue to budget for our full.
fleet staff and recruit where we're able to, and then have additional funds as a contracting tool for locations where
we need, you know, we have equipment down and need a remote contractor to support that.
A request on this is for a request of $1.2 million of GF program receipts.
This would allow us to access funds from the sale of surplus buildings.
We're looking at buildings that we have that are currently vacant, and
we're look at reorganizing and placing staff closer to work.
So this would allows us, if we are successful in selling some buildings,
to relocate staff closer to the work.
I'm hoping that you could provide us a list
of those anticipated surplus buildings
because I know that people are thinking that right now.
They want to know some specificity
of where those buildings are
and where the relocations would be.
But we don't expect you to have that at this moment.
Are there any final questions?
Representative Nelson yes, thank you madam chair how much is currently in the vessel replacement fund
That was mentioned earlier
Through the chair representative Nelson
It's approximately
$40 million with
Approximately half of that appropriated to the department for the testimonial replacement vessel and I can provide a
An exact amount back to they committee happy to do that
Thank you
And we're the homework I'm gonna send them with representative more. Thank You chair, Hannon through the chair
I was just peeking through documents in here, and it looks like you guys had a feasibility study on the Dalton and
Can you guy's let me know how what was that cost or did the department?
Do that on their own?
I don't care if we can recall Andy Mills back to the table
But I have mr. Mills at the Table
for the record, Andy Mills, through the chair,
represented more.
So that was an in-house, the intent language
for The Industrial Use Highway.
So, that is an intent, language that
was placed in the FY26 budget.
We internally reviewed that, talked with trucking stakeholders,
as we were talking about maintenance and projects
on the Dalton through.
the interim and then also our MNO staff contributed heavily, of course, and northern
regions specifically to the intent language report. But if you have any specific questions
about that, you're happy to address it here and follow up.
Okay. Just one follow-up. Go ahead. So the results were that it wasn't approved and is
there any other... You have other ideas to rectify some of those funds to keep helping the
the highway continue to improve, and are there any other ways that we can explore?
Making sure that this road doesn't completely crumble.
Through the Chair, Representative Moore.
So the feasibility study at a very high level was to examine whether industrial
use designation under our toll authority was appropriate for the Dalton Highway.
It's the industrial use designation is for oversized enough for weight and really what
I believe most folks are looking for is revenue from existing traffic on the Dalton in addition
to that though the weights are frozen and so you by federal requirements can't operate
over certain thresholds so it wasn't a good fit is the short answer.
However, looking at alternatives like the potential of tolling facilities that could
the volume of traffic, as it stands at the moment,
and historically in the last few years,
has only been two to 300 ADT average annual daily traffic.
So it's a very low volume compared,
especially to the way to your tunnel,
which is another tolling facility.
And when we compared sort of looking at
the towing facility at The Whittier,
even that itself only produces enough revenue
to support about 25% of its own operations.
So.
Just at a high level, the report detailed, there's not an easy answer and industrial use is not feasible.
Okay, thank you so much.
Real quick, real quick because we're over time, you have another public hearing that a lot of people are showing up for.
Okay. Thank you, Madam Chair, and I appreciate the indulgence.
And I just want to say, I appreciated you coming.
I know that it's difficult, it I'm trying to understand the information.
It's frustrating for me as I am sure, as much as it is for you.
And in trying to understand these questions or this information when we ask a yes or a no question and we get a long answer.
It makes it more difficult to understanding the information.
So thank you for your time and appreciate you coming.
I appreciate you guys being here.
We're going to thank you for your time for Mr. Mills being
backup team, even though you weren't
in the designated hitter position.
Our next subcommittee meeting will be next Tuesday,
February 10th at 12.30 here in room 124.
And we are adjourned at 134.