Call to Order and Roll Call
The sixth meeting of the Budget Review Subcommittee on Transportation of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, December 19, 2013, at 10:00 AM, in Room 131 of the Capitol Annex. Senator Jimmy Higdon, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Jimmy Higdon, Co-Chair; Representative Leslie Combs, Co-Chair; Senators Ernie Harris and R.J. Palmer II; Representatives Tim Couch, Jim Gooch Jr., Dennis Keene, John Short, and Jim Stewart III.
Guests: Steve Frank, Mayor Pro Tem, City of Covington; Mike Hancock, Transportation Cabinet Secretary; and, Tammy Branham, Executive Director, Office of Budget and Fiscal Management, Transportation Cabinet.
LRC Staff: Chuck Truesdell, Jennifer Anglin, and Spring Emerson.
Motor Fuels Tax Update
Secretary Hancock and Ms. Branham provided a brief update on the status of the Motor Fuels Tax.
In response to questions from Senator Harris, Secretary Hancock said that it was premature to recommend a stabilization rate. He added that sustainable revenues are a concern when planning for future projects.
In response to a question from Chair Higdon, Ms. Branham said that a decline in the tax rate to $1.786 is possible but unlikely. She said it is conceivable that gas prices could fall lower than the current price, adding that the current forecast is realistic.
In response to a question from Chair Higdon, Secretary Hancock said there is concern on the national level about the sustainability of the motor fuels tax. He added that according to the Transportation Research Board, the future for oil and gasoline is fairly bright in terms of supply, and if the demand decreases, prices could be driven lower. Ms. Branham said that, when comparing the Average Wholesale Price versus the motor fuel tax collected in surrounding states, there is not always a correlation between the price of gas and the tax collected.
In response to a question from Representative Couch, Ms. Branham stated that the last time the General Assembly took action to freeze the floor was in fiscal year 2009, when the floor was frozen at $1.786 which netted 16.1 cent per gallon.
In response to a question from Representative Stewart, Secretary Hancock said that he did not recall a specific discussion in which he told employees that there were funds available for raises. He added that the extent to which he would be willing to help Transportation employees is beyond measure.
In response to questions from Co-Chair Combs, Secretary Hancock said that there is approximately $500 million for projects. Ms. Branham stated that funds in the maintenance program do not lapse but carry forward to the next fiscal year. She added that some projects are seasonal and contracts that are awarded for one year often have a renewal option of four years.
In response to a question from Representative Stewart, Ms. Branham said factors such as weather conditions, terrain, fine turf mowing, available funds, and county priorities may determine the frequency of mowing throughout the state.
In response to questions from Representative Couch, Ms. Branham said that $110 million in Economic Development Bonds remain unauthorized and $200 million remain unsold. Secretary Hancock added that the original $400 million authorization of State Property and Buildings Commission (SPBC) bonds has been obligated and seventy-five percent of the SB2 bonds have also been authorized. The status of both bond issues is included in the Governor’s budget.
A motion was made by Representative Stewart and seconded by Co-Chair Combs to approve the minutes of the November 25, 2013, meeting. The motion carried, and the minutes were approved without objection.
Public-Private Partnerships
Steve Frank, Mayor Pro Tem, City of Covington, presented an update on the use of Public Private Partnerships (P3s) in large scale transportation projects.
In response to a question from Chair Higdon, Mr. Frank said that the best solution would be vehicle miles traveled, in which how much you pay is based on how much you have driven no matter how your vehicle is propelled.
A motion to adjourn was made by Co-Chair Combs and seconded by Representative Stewart. The motion passed, and the meeting was adjourned at 11:05 AM.