The first meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday, June 3, 2003, at 1:00 PM, in Room 149 of the Capitol Annex. Senator Virgil Moore and Representative Hubert Collins co-chaired the meeting. Representative Collins, who chaired the first half of the meeting, 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 Paul Herron Jr, Robert Leeper, Albert Robinson, Richard Sanders Jr, Ernesto Scorsone, Gary Tapp, and Johnny Ray Turner; Representatives Eddie Ballard, Carolyn Belcher, Mike Denham, Jimmie Lee, Paul Marcotte, Russ Mobley, Rick Nelson, Don Pasley, Marie Rader, Rick Rand, Ancel Smith, Jim Stewart, Jim Thompson, Tommy Turner, John Vincent, and Mike Weaver. Representative Rocky Adkins attended the meeting as a legislative guest.
Guests Appearing Before the Committee: J. M. Yowell, State Highway Engineer, Debra Gabbard, Office of Policy and Budget, Mike Hancock, Office of Program Planning & Management, Taylor Manley, Department of Fiscal Management, Mack Bushart, Vehicle Regulation, Chuck Knowles, Transportation Operations Center, and Elizabeth Baker, Assistant General Counsel, Kentucky Transportation Cabinet; and Fran Reitman, President, Kentucky Automobile and Truck Recycling Association (KATRA).
LRC Staff: Kathy Jones, John Snyder, and Linda Hughes.
The first item on the Committee’s agenda was a status report on Road Fund revenues. Mr. J. M. Yowell, State Highway Engineer, Debra Gabbard, Executive Director, Office of Policy and Budget, and Mike Hancock, Executive Director, Office of Program Planning and Management, Kentucky Transportation Cabinet, presented the report.
Ms. Gabbard said that the Cabinet was presently on target with road fund revenues. She noted that the state’s revenue forecasting group estimated that there would be a nominal gain (0.2%) in the Fund’s top two tax areas, motor fuels and motor vehicle usage, over FY 2002 and FY 2003. She noted that 10 months into fiscal year 2003, the state’s road fund revenues in these two areas were at a gain of 0.3%. That 0.3% computes to $919.1 million in FY 2003, as compared to $916.7 million in FY 2002.
Ms. Gabbard drew the members’ attention to the fact that the state’s six-year highway plan was approximately $1 billion dollars under funded, and explained the under funded dilemma occurred with the adoption of 2000 House Bill 502. House Bill 502 allowed the Transportation Cabinet to incur highway project obligations above the enacted appropriation limit, while keeping the expenditures associated with a particular project from exceeding its enacted appropriation. This “pre-financing system” allowed the Cabinet to begin spending down its then reserve fund of approximately $650 million, coupled with an investment income of around $40 million.
Senator Leeper asked Ms. Gabbard to clarify whether the road fund was actually under funded or if the problem really was that the six-year road plan is over programmed. Ms. Gabbard said the six-year road plan is overprogrammed.
Ms. Gabbard stated that total road fund revenues in fiscal year 2002 amounted to $1,119.0 billion, is estimated to be $1,121.1 billion in 2003, and $1,139.2 billion in fiscal year 2004. Representative Adkins asked if the 20 million dollars in settlements ($12 million bridge painting lawsuit and the $8 million McGarren lawsuit) had been deducted from fiscal years 2003 and 2004 revenues. Ms. Gabbard said no, that that $20 million was still incorporated in the revenue totals.
Mr. Yowell, State Highway Engineer, stated that because of the declining road fund revenues, the state now has a clause in all of its highway contracts that specify that if road fund money goes below a certain level, then the project(s) can be stopped. According to Mr. Yowell, out of the Cabinet’s average yearly budget of $1.7 billion, $885 million a year is already accounted for in fixed expenditures that must go to the Kentucky State Police and other agencies, revenue sharing of funds for city and county road programs, debt service, maintenance, resurfacing, vehicle regulation, and capital construction costs.
Mr. Yowell made two comments that reflected the serious nature of road fund problems. The first was that this July will be the first time the Cabinet may not be able to fully fund the statutory revenue sharing payments to cities and counties. The second was that the Cabinet had reached a point where new projects could not be added to the six-year road plan. Rather, the Cabinet is going to have to first rank projects based upon maintenance needs.
Senator Robinson questioned whether the Cabinet had the authority to reduce the statutory revenue sharing payments to local governments.
Mike Hancock, Executive Director, Office of Program Planning & Management, Transportation Cabinet, informed the members that the Cabinet had yet to slow down in their pre-financing approach. He said that with the state half way through the biennium, approximately 45% of the six-year highway plan projects have been let. Mr. Hancock noted that while there was a $294.8 million road fund balance in the fourth quarter of 2003, it was predicted that if the spending continued unrestrained, the fund would have a deficit $65.8 million balance by the end of fiscal year 2004. And, that that deficit trend would escalate rapidly from 2004 forward.
Senator Leeper stated that while new construction was great, he was concerned if the state was constructing more projects than it was capable of maintaining. He said that in his opinion, maintenance should be something that was considered when analyzing new projects. Mr. Hancock noted that maintenance was always considered, as well as the safety, purpose, environmental ethic, and respect for the dollar costs, of all projects initiated by the Cabinet. He noted that these issues were the Cabinet’s primary factors to achieving a functional success in its highway construction area.
Replying to Committee questions, Mr. Yowell said that, as of today, the road fund balance was $475 million, and that a report released this year ranked Kentucky 10th in the nation for efficiency in highway construction money expenditures.
Several Committee members questioned how the Cabinet was put into a position where it was fined $12 million in a lawsuit stemming from a bridge painting project. Mr. Yowell, said while he could only apologize once for the problem, he was proud of the Cabinet’s overall work performance and extremely sorry for this situation. He informed the Committee that the Cabinet had in the past, as well as it was currently, doing everything in its power to see that this type of situation did not occur. Chairman Collins noted that the Committee had a full agenda and did not want to go into a lengthy discussion on this matter, but if the members wished, he would be happy to place this topic on a future agenda. Chairman Collins did comment that this was why the state had prisons, because there are a few bad people in every workplace. He stated that it was a shame that this happened, but to totally blame the Cabinet was unrealistic. No one person can predict when another person is going to go bad. Several members asked that this incident be put on a Committee’s future agenda.
Senator Tapp asked Mr. Yowell if change orders were affecting the Cabinet’s ability to manage funds in the highway program. Mr. Yowell replied that change orders run approximately $60 million per year, and the Cabinet is always looking for ways to reduce the number of change orders but often circumstances arise that force the Cabinet to approve a change order. He cited an example of the costs of a project needing to be increased because local officials insist the scope be changed after the project is underway.
Senator Leeper asked if the Cabinet was considering using concrete in lieu of asphalt in any of their future construction projects involving intersections. Mr. Yowell said yes, that concrete would be used in several projects; he noted a project in Bowling Green and one in Louisville, and said that the Cabinet was looking for other intersections to test the use of concrete instead of asphalt and asked if Senator Leeper had any such projects in his area.
Representative Adkins asked Ms. Gabbard a series of questions relating to toll credits Kentucky has accumulated and if those credit could be used to pay for the state’s portion to match federal highway funds. Ms. Gabbard said yes, and that the state has approximately $100 million in credits. She noted that how this system works is that rather than the state needing to come up with a 20% match on highway projects involving federal funds the federal government pays 100% of the project’s cost.
Representative Adkins asked if the Cabinet had any plans to refinance bonds to reduce debt service expenditures. Ms. Gabbard noted that reductions would occur without refinancing because approximately $30 million in debt service would end in February 2005 because of some bonds being retired. She noted however that because the federal government paid off the bonds early on the Daniel Boone and Cumberland Parkways, the state is expected to lose $8 million in road fund receipts due to lost toll revenues
The next item on the Committee’s agenda was an update on the motor vehicle titling process. Mr. Mack Bushart, Commissioner, Vehicle Regulation, Transportation Cabinet, gave this update.
Mr. Bushart said that the Cabinet was still in the process of finding the best way to handle the flow of title requests, which come to the Cabinet in two different ways, via walk in traffic or mail in requests. Mr. Bushart stated that the Cabinet had tried a process whereby walk in traffic was restricted to two days a week and five title requests per person per visit. He noted that this process resulted in long lines and people having to wait several hours to have their titles processed. He stated that the Cabinet soon recognized that this process was not the most efficient way to handle the work flow and has since gone to a four-day a week walk in traffic, with a 10 title request restriction, and a one day turn around allowance. Mr. Bushart stated that the one-day turn around time did not cause undue hardships on the majority of individuals since most of these individuals brought title requests in daily for auto dealers.
Representative Stewart said that he thought the Cabinet should deal with the individuals who only bring in their personal title request separate from dealer’s requests. He commented that the one-day turn around time was a burden on a person, living in Western or Eastern Kentucky, who didn’t travel to Frankfort on a daily basis.
Ms. Fran Reitman, President, KATRA, spoke of the long waiting lines, attributable to the Cabinet’s two day process restriction. She presented pictures illustrating the long lines of disgruntled people waiting for their turn. She thought that the Cabinet’s decision to process walk in traffic four days a week would help the process, but didn’t believe it would eliminate the long lines. She asked if there would be adequate staff and waiting room for these individuals once the Cabinet moved into its new building. Mr. Bushart said there would be adequate room, however he hoped to find a workable solution to this problem for everyone involved.
Senator Robinson asked if Kentucky was doing the legwork for other states in the vehicle titling area. Mr. Bushart noted that a number of states have a category of title known as unrebuildable. Kentucky does not have this category and that sometimes out-of-state individuals would process their titles through Kentucky. But as a rule, Mr. Bushart said that was not a big problem. He did note that there are what is known as title thieves and some other areas of concern that needed to be addressed statutorily, and said that he would be happy to meet with the Committee, or any legislative member, to discuss these areas of concern. Senator Robinson said he hoped that the Committee would discuss these issues at a later meeting.
Chairman Collins asked Mr. Bushart to explain why a Motor Boat Transaction Record Application For Title/Registration was needed when titling a boat, since all the pertinent information contained on this application was also listed on a boat’s title. Chairman Collins also questioned the issue of someone being able to place a lien on another person’s boat or car without justifiable documentation. Rather than discuss this matter at today’s meeting, Chairman Collins asked that someone be available at the Committee’s next meeting to further discuss this issue.
After several additional questions arose as to the Cabinet’s new procedure of accepting walk in traffic four days a week, Chairman Collins elected to cut off the vehicle titling discussion and to further discuss this matter at its next meeting.
The next item on the Committee’s agenda was a review of highway work zone practices. Several members discussed the problem of the double fine signs not being taken down or covered up on week nights and weekends when no one was working and asked if a person was still fined double during those times. Mr. Bushart said that all construction companies were told that the double fine notices were to be taken down or covered up when no one was working, however, when the last person on the job is the one required to do this, that person sometimes forgets.
Mr. Bushart stated that motor vehicle enforcement officers were instructed not to issue double fine tickets if the double sign was posted, but no one was working. However, he noted, that an officer would still be issuing restricted zone tickets, which were different from the double fined tickets or regular speeding traffic tickets.
At this time Senator Moore assumed the chair to discuss implementation of the 2003 enacted transportation legislation.
Mr. Bushart and Mr. Chuck Knowles, Executive Director, Transportation Operations Center discussed this issue with the Committee. Mr. Knowles presented a chart depicting the roads that 2003 House Bill 124 permits vehicles over 102” wide to travel upon. This chart illustrated that well over 80% of the state’s highway system could now be used by such vehicles. Mr. Knowles stated that the Cabinet has solicited the help of the University of Kentucky in determining the long range impacts on the state’s highway system as a result of HB 124. He also commented that the Cabinet was concerned with the safety issue of allowing these vehicles to travel on certain roads during certain times of the year, i.e., in downtown Louisville during the Derby, and in northern Kentucky during the days the Speedway is in operation.
Mr. Knowles said that House Bill 234, which allows 102 inches wide travel trailers to travel on Kentucky’s highways, presented no impact. And he noted, that the Cabinet has also asked the University of Kentucky help determine the long effects of House Bill 467, which exempts a vehicle with 80,000 pound tags or less from axle weight provisions when operating on state-maintained highways rated AAA.
House Bill 293, allows vehicles hauling building materials to a home to travel on any state road without a permit and without being fined if the weight of the vehicle is within registration and axle weight limits. House Bill 293 also allows for the transport of agricultural products, exempts motor vehicles and farm trucks weighing over 44,001 pounds from motor vehicle usage tax, and exempts sales tax of repair and replacements parts purchased for the direct operation of a motor vehicle, including any towed unit, used exclusively in interstate commerce.
The last item on the Committee’s agenda was a review of two administrative regulations (600 KAR 6:070 – Contracting for professional engineering or related services and 600 KAR 6:080 – Financial records and audits of firms), both promulgated by the Transportation Cabinet. After a brief explanation by Elizabeth Baker, Assistant General Counsel, Kentucky Transportation Cabinet, Representative Collins moved to approve both regulations. Representative Smith seconded the motion, which passed by voice vote with Senator Herron voting no.
Representative Marcotte requested that the Transportation Committee, or the committee of jurisdiction, look into the matter of non-communication capabilities between the state’s different law enforcement agencies. Representative Marcotte said that the non-communication efforts played a large part in the death of a Fish and Wildlife officer who was killed earlier this year, and asked that the Committee place this issue on a future agenda.
Representative Ballard requested the Committee to review the process to issue handicapped parking placards.
With no further business before the Committee, the meeting adjourned at 3:10 p.m.