The first meeting of the Interim Joint Committee on Transportation was held on<Day> Friday, January 24, 2003, at 10:00 AM, in Room 149 of the Capitol Annex. Senator Virgil Moore and Representative Hubert Collins Co-Chaired the meeting. Senator Moore called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Virgil Moore, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Charlie Borders, Paul Herron Jr, Ray Jones II, Albert Robinson, Ernesto Scorsone, Gary Tapp, and Johnny Ray Turner; Representatives Eddie Ballard, Carolyn Belcher, Kevin Bratcher, Howard Cornett, Mike Denham, Keith Hall, Paul Marcotte, Charles Miller, Lonnie Napier, Rick Nelson, Don Pasley, Rick Rand, Ancel Smith, Jim Stewart, Jim Thompson, and Tommy Turner. Senator Robert Leeper attended the meeting via videoconferencing from Paducah, Kentucky.
Guests Appearing Before the Committee: Transportation Cabinet employees, Debra Gabbard, Executive Director of Policy and Budget; Mike Hancock, Deputy State Highway Engineer; Taylor Manley, Deputy Commissioner, Department of Fiscal Management, Pat Foley, General Counsel and Elizabeth Baker, Assistant General Counsel; Chuck Knowles, Director of Operations, Robert Russell, Executive Director, Office of the Inspector General; Margaret Plattner, Deputy Commissioner, Division of Vehicle Regulation; and Mack Bushart, Commissioner, Division of Vehicle Regulation. Also appearing before the Committee were: Nancy Black, State Board for Proprietary Education, Beverly Haverstock, General Counsel, and Jamie Justice, Director, Technical Education and Workforce Development, Kentucky Community and Technical College System; and Captain Tim Lucas, Kentucky State Police.
LRC Staff: Kathy A. Jones, John Snyder, Bart Harden, John Torshi, Geri Grigsby, Paula Payne, and Linda Hughes
Senator Moore and Representative Collins welcomed the Committee members, particularly the eleven new members on the Committee, Representative Collins welcomed Representatives Carolyn Belcher, Kevin Bratcher, Rick Nelson, Don Pasley, Rick Rand, Ancel Smith, and Jim Stewart, and Senator Moore welcomed Senators Ray Jones, Ernesto Scorsone, Gary Tapp, and Johnny Ray Turner
The first item on the Committee’s agenda was a discussion of the State Road Fund and Six Year Road Plan Projects. Testifying before the Committee on these matters were Debra Gabbard, Budget Director, Taylor Manley, Commissioner of the Department of Fiscal Management, and Mike Hancock, Deputy State Highway Engineer, Kentucky Transportation Cabinet.
Ms. Gabbard said that 80% of the Road Fund money came from the motor fuels and motor vehicle usage taxes, and that 2003 tax receipts for those two taxes was only up 2.8% over the 2002 receipts. She noted that since 1994, the Road Fund has only increased 27%, compared to the General Fund’s growth of 43%. Road Fund revenues were $1,119.0 million in FY 2002, and estimated to be $1,121.1 million in FY 2003 and $1,140.2 million in FY 2004.
Ms. Gabbard illustrated how the Road Fund revenues ($1,119.0 million in fiscal year 2002) were divided - 27% to maintenance and resurfacing, 19% for revenue sharing, 16% for projects funded totally from state moneys, 15% to debt service, 14% to administration, and 9% to the Federal Aid match.
Responding to a question, Ms. Gabbard said that the state receives approximately $14 million a year in toll road receipts. In answering a second question, she noted that the McGowen law suit refunds should go out in early February and that those refunds would be in the neighborhood of $8 million, as opposed to an earlier predictions of $9-$10 million. Ms. Gabbard concluded her presentation by informing the members that the McGowen lawsuit involved trade-in credit on new vehicles purchased out-of-state, as well as those purchased in Kentucky.
Mr. Taylor Manley, Deputy Commissioner, Department of Fiscal Management, discussed pre-financing of highway projects with the Committee. He said that prior to the 2002 Session, the Cabinet used an obligation basis for funding highway projects, i.e., funds were reserved for the entire estimated cost of an authorized project. He said that while that was a good approach it limited the amount of projects due to the limited appropriations, in any given year. Mr. Manley noted that other states have gone to a more aggressive approach involving pre-financing of projects.
Mr. Manley said that the Cabinet is now implementing a pre-financing program on a cash flow basis, i.e., when a project is authorized the Cabinet only sets aside the money needed for that current year, and relying on future allocations to complete the project. He noted that risks are involved with this technique and that the Cabinet must be able to accurately forecast its future needs to eliminate such risks.
Mr. Mike Hancock, Deputy State Highway Engineer, gave an overview of the current Six-Year Road Plan. He said that in 1998 the Cabinet had a fiscally balanced Plan, based on an obligation basis. He noted the Cabinet’s 2000 Plan was balanced; however, the Plan was based on an anticipated six- cent gasoline tax increase, which did not occur. Since that gasoline tax did not pass, the state was unable to support the projects the Cabinet had in its Plan. Mr. Hancock said that at that time the Cabinet was still operating on an obligation basis of funding and had $650 million in the bank drawing interest. The argument in 2000 then became, why did the Cabinet need more money when it had $650 million sitting in the bank. Mr. Hancock said that the 2000 General Assembly authorized the Transportation Cabinet to use their existing $650 million.
In the 2002 Special Session, the Cabinet was instructed to move forward using what the Cabinet called the “almost enacted Plan” from the 2002 Regular Session, maintaining the additional projects that had been added due to the anticipated six-cent increased gasoline tax. He stated that, to date, the Cabinet has authorized approximately $900 million worth of work from the “almost enacted plan,” as well as many of the 2002 Budget line items.
Mr. Hancock informed the Committee that between 1990 and today, the project development staff has increased by 6%, whereas the Six-Year Plan output has doubled. In 1996 and 1997 the state authorized 300 project phases and between 2001 and 2002 there were over 800 phases. He said, coupled with the Cabinet’s current $4.5 billion list of projects that have been awarded since 1996, that the Cabinet has been kept busy.
Mr. Hancock said that the Cabinet is concerned about the budget, but also the cash flow management situation. He noted that the Cabinet will not be able to continue to move projects forward as it is presently doing. Mr. Hancock stated that this year the Cabinet will have to make some difficult decisions about which projects will continue to be funded, which ones will be trimmed, and which ones will be put on hold.
Chairman Moore commented that the Cabinet needed someone capable of looking to the future and that the state could not continue to lag behind in the maintenance fund. Ms. Gabbard said that the Cabinet would be happy to offer some revenue bearing suggestions to the Committee. Chairman Moore said he would be interested in seeing those suggestions. Ms. Gabbard noted that a gasoline tax increase would probably be one of the obvious choices since Kentucky ranks 47 in the nation, is lower than its surrounding states, and because the tax has not been raised since 1986.
The next item on the Committee’s agenda was the Transportation Cabinet’s legislative package. Ms. Gabbard noted that one of the Cabinet’s four proposals dealt with Grant Anticipation Revenue Vehicle (GARVEE) Bonds. These bonds allow a state to issue debt today and pay for the interest and the principal with future Federal Highway receipts. Ms. Gabbard said the GARVEE Bonds proposal was only an enabling legislation tool, and that the Cabinet would still need to seek the authority to issue those bonds through future appropriation bills.
Mr. Knowles, Director of Operations, Kentucky Transportation Cabinet, discussed the next two legislative proposals. The first one was reorganization legislation authorizing the Transportation Cabinet’s Operation Center. He stated that the highway miles individuals travel these days is up from the last ten years and that the Cabinet’s system, as well as Federal Government systems, are not keeping up with the highway congestion. According to Mr. Knowles, the Transportation Operation Center would combine existing Cabinet departments, along with their current functions and budgets, into a more efficient single unit. The Center will be a clearinghouse for transportation related information, such as State Police accident reports, National Weather Service weather information, and road construction and maintenance from the Cabinet’s highway districts. He said that this information would be shared with the general public.
Mr. Knowles said the Cabinet’s third proposal dealt with what it called “fast clearance legislation,” which would reduce some of the congestion on Kentucky’s roads. He said that as the Cabinet has learned that congestion often leads to secondary crashes. This legislation would enable the Cabinet to clean up accidents in a more timely manner.
Mr. Robert Russell, Executive Director of the Office of Inspector General discussed the Cabinet’s last proposed legislation. He said that this Office was created by an executive order, which was recommended by the Cabinet’s internal Program Review and Reform Committee. The office is charged with monitoring the Cabinet’s business processes and promoting accountability and efficiency.
Ms. Margaret Plattner, Deputy Commissioner, Department of Vehicle Regulation, Taylor Manley and Pat Foley, discussed the Committee’s next agenda item, Kentucky trucking companies licensing vehicles out-of-state. Ms. Plattner informed the members that the Cabinet currently has a process in place, which identifies carriers that the Cabinet suspect are in violation of registration laws. She said letters were sent out to those carriers where discrepancies arose, informing them that they needed to properly register their vehicles in Kentucky. She noted that there has been some success. Ms. Plattner stated that the Cabinet is also conducting fuel weight distance and registration audits in the hopes of identifying additional offenders. She said that the Cabinet plans to follow-up with those individuals that have ignored the Cabinet’s warnings. Ms. Plattner said she believed the Cabinet was making progress, however that progress was slow.
Chairman Moore asked for an update on the Oklahoma situation. Mr. Manley said that the Cabinet became aware of the Oklahoma problem several months ago and found the appearance that some Kentucky base carriers were improperly registering their vehicles in the State of Oklahoma. He said that the Cabinet asked for and received information from Oklahoma that identified discrepancies between Kentucky carriers registered in Oklahoma. Mr. Manley said that, as Ms. Plattner had stated earlier, notices have been sent out to those carriers, warning them that the Cabinet would be following up these discrepancies with possible audits.
At this time Representative Collins assumed the chair. The next item on the Committee’s agenda was a review of C.D.L. testing procedures being implemented as a result of HB 190 in the 2002 Session. Speaking on this issue was Nancy Black, Executive Director, State Board for Proprietary Education, Beverly Haverstock, General Counsel, and Jamie Justice, Director, Technical Education and Workforce Development, Kentucky Community and Technical College System.
Ms. Black stated that the regulations governing the C.D.L. training schools were filed as emergencies and are currently in place. Chairman Collins asked if there were any problems for out-of-state individuals taking the training. Ms. Black said no, not to her knowledge.
Chairman Collins asked how the C.D.L. testing was progressing. Mr. Justice said that the State Board has been working closely with the State Police in developing a plan for testing. He said currently there are approximately 70 applicants to become testers. Interviewing these applicants will begin around the first week in February, and he said they hope to be completed by mid-February. He said there are plans with the State Police for a training and certification session during for the first week in March, and for the identification of consistent test routes by the second week in March. Mr. Justice stated that it was their hope to begin testing by the end of March. Chairman Collins asked if House Bill 190 in any way hurt the way the testing is performed. Mr. Justice said that he thought the current legislation gives trucking companies more confidence that they would have qualified, well trained, drivers. He said there is also a consistent curriculum package that consists of 160 hours training, that is based on the Federal Motor Carrier Training Standards. Ms. Black said that she agreed with Mr. Justice in that standardizing the testing requirements produces better students.
Senator Herron commented on the lack of training schools in the western part of the state and asked if more schools would be forthcoming. Mr. Justice said that it was their hope to identify more schools in the western part of the state that would participate. Ms. Black informed the members that there was a commercial driver training school in Owensboro that had recently closed but that the State Board currently has an application for a new C.D.L. training school in the area between Elizabethtown and Paducah. She noted that the application is on the Board’s February agenda for review, and hopefully approval. Mr. Justice said that individuals still have the option of going to their county clerk’s office and arranging a testing time with the State Police. He also said that Gateway Technical College and Northern Kentucky and Elizabethtown Colleges are offering new programs beginning in March, and that it could be feasible that other colleges might offer similar programs in the future.
Senator Herron asked how many testing sites the State Police have. Captain Tim Lucas, State Police, said that the State Police have nine C.D.L. testing sites around the state, Louisville, Georgetown, Somerset, Ashland, Paintsville, Mayfield, Owensboro, and two others that escaped his memory.
Representative Jim Stewart asked if the tests were given orally. Captain Lucas said yes. Representative Stewart asked why Louisville offered the oral test on a daily basis while it was only offered once a week in eastern Kentucky. Captain Lucas stated that Louisville was the only exam station in the state that offered automated (computerized) testing.
The last item on the Committee’s agenda was a review of regular and special license plates. Ms. Foley, General Counsel, Kentucky Transportation Cabinet, said that plate registration fees technically go into the Road Fund, and because of that there could be a question raised about additional revenues being collected and distributed to other organizations from that fund. She said that the issue arises when additional revenues are transferred elsewhere from the Road Fund. She stated that whether or not the state can collect additional money for particular groups with road funds revenues, which she believed is currently happening, is a possible constitutional concern. Chairman Collins commented that the legislature could change the manner in which the extra fees are collected. Ms. Foley said in her opinion, having the fees collected and distributed by the local county clerks’ offices would eliminate any constitutional problems.
Chairman Collins said that many plates have come under the revenue neutral situation and do not have enough applications to print the plate. He said he was aware of several organizations not having more than 100 of the required 900 applications, even after offering the specialty plate for several years. Chairman Collins stated that legislation could be drafted to limit the amount of time an organization has to reach the 900 application threshold. He asked the Cabinet’s opinion on what would be a logistical timeframe for reaching 900 applications. Mr. Mack Bushart, Commissioner for Vehicle Regulation, stated that the Cabinet currently has about 10 plates that have been enacted, but have failed to reach the 900 threshold. He said 106 applications are the most any one of those ten organizations have obtained. Mr. Bushart said he believed two years would be a realistic timeframe, and even then, if an organization was showing a sizeable progress, 100s of applications as opposed to 15 or 20 during that timeframe, the legislature might want to allow that organization a little longer to reach their 900 threshold.
Representative Marcotte asked if the Cabinet would give the Committee a comprehensive report on all of the special license plates. Mr. Bushart said that they would supply the Committee with such a listing. Representative Collins requested that information be made available at the House Committee’s next meeting on February 6th.
With no further business before the Committee, the meeting adjourned at 12:20 p.m.