The first meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday, June 2, 2009, at 1:00 PM, in Room 149 of the Capitol Annex. Senator Ernie Harris, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Ernie Harris, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Walter Blevins Jr., Charlie Borders, David E. Boswell, David Givens, Bob Leeper, R.J. Palmer II, Brandon Smith, Gary Tapp, and Damon Thayer; Representatives Eddie Ballard, Linda Belcher, Leslie Combs, Tim Couch, Will Coursey, Jim DeCesare, David Floyd, Richard Henderson, Melvin B. Henley, Jimmie Lee, Charles Miller, Lonnie Napier, Rick G. Nelson, Tanya Pullin, Marie Rader, Sal Santoro, Arnold Simpson, Ancel Smith, Fitz Steele, Jim Stewart III, Tommy Turner, and Alecia Webb-Edgington.
Guests Appearing Before the Committee: Representative Fred Nesler; and from the Kentcky Transportation Cabinet: Mike Hancock, State Highway Engineer; Russ Romine, Executive Advisor to the Secretary; Vickie Bourne, Executive Director of the Office of Transportation Delivery.
LRC Staff: John Snyder, Brandon White, Dana Fugazzi, and Linda Hughes.
The purpose of this meeting was to discuss the Federal Government’s American Recovery & Reinvestment Act (ARRA), sometimes r3eferred to as the Stimulus Package. Preceding this discussion, Chairman Harris asked Mr. Hancock to give the Committee a brief update on the state’s Road Fund as it relates to the state’s revenue shortfall situation.
Mr. Romine said that the official Road Fund estimate for Fiscal Year 2009 was adjusted down last November by $105 million, with an additional downward adjustment during the last session of $96 million. Unfortunately, Mr. Romine said that current receipts show that the state will be $130 to $140 million short of the state’s original estimate for FY 2009. He said that the Consensus Forecast Group’s official Fiscal Year 2010 estimate revision for next year shows the Road Fund down approximately $239 million from its original estimate.
Chairman Harris asked the Cabinet to send staff a brief chart showing the Consensus Forecast Group’s original estimate, where the state was at the end of March, and the Group’s latest estimate, as it pertains to the Road Fund and its various taxes.
Mr. Romine noted that Kentucky benefited from ARRA through two programs: Highway Infrastructure Investment, and Transit Capital Investment. From a total of $275 billion nationwide, Kentucky will receive $421.1 million for its Highway Infrastructure Investment and an additional $51.5 million for its Transit Capital Investment.
Mr. Romine stated that the state’s $421.1 million Highway Infrastructure Investment distribution will be $367.8 million to statewide projects identified in the 2009 Highway Plan; $12.6 million to transportation enhancement projects, which will be selected from projects submitted for the 2008 application process; and the remaining $40.6 million will be dedicated to MPO projects, selected by local planning committee members. The MPO breakdown is as follows: Northern KY will receive $8,761,860; Henderson receiving $831,184; Lexington receiving $7,845,004; and the remaining $23,149,098 going to Louisville.
Representative Simpson asked how the MPO amounts were determined. Mr. Hancock said the formula is a formula from the Federal Highway Trust Fund, and it is based primarily on population. Representative Simpson asked if the Cabinet had and oversight or veto measures in this formula. Mr. Hancock said that the state does have input on how the funds are used, but only as one voice on a committee, and that it does not have any veto powers.
Representative Webb-Edgington asked if there were any new projects considered outside the state’s Road Plan. Mr. Hancock said no new projects were included, only those projects already contained in the state’s approved Highway Plan.
Mr. Romine stated there were three Federal stipulations placed on the Recovery Act money – states must obligate 50 percent (for KY that is $147.4 million) by June 30, 2009; states must obligate 100 percent (KY - $421.1 million) by March 2, 2010; and the Recovery Act funds are only available until September 30, 2015. Mr. Romine stated that he did not believe Kentucky would have a problem meeting all three stipulations. He said that the state’s 2009 Highway Plan identified $442.7 million for the stimulus projects, and it has already met the 50 percent obligation ($163 million obligated and approved by Federal Highway Administration (FHWA) with an additional $56 million awaiting FHWA approval); plus $109.1 million has been bid and awarded to-date.
Mr. Romine stated that there is also Federal accountability involved. He said that the FHWA is the oversight agency for Highway Infrastructure Investment. There is monthly reporting required, as well as additional monthly reporting to the U.S. House Transportation Infrastructure Committee.
As for the Transit Capital Assistance, Mr. Romine stated that $32.2 million will be formulated through the Section 5307 Urban Formula and $19.2 million through the Section 5311 Rural Formula. The Federal stipulations for the Transit Capital Assistance Investment are as follows - states must obligate 50 percent of Transit funding by September 1, 2009; 100 percent by March 5, 2010; Of Kentucky’s $51.5 million, $21.4 million will flow through the Transportation Cabinet; and the remaining $30.1 million will flow directly from the Federal Transit Administration to individual transit agencies.
Oversight accountability will be monitored by the Federal Transit Administration, with monthly reporting, including a monthly report to the U.S. House Transportation Infrastructure Committee.
Chairman Collins asked what the $19.2 million rural transit funds covered. Ms. Bourne said that it will be statewide coverage, with the majority of the funds used for bus purchases. Chairman Collins asked if the Medicaid services come into play with this money. Ms. Bourne said, for instance, the Sandy Valley area is receiving $300,000.
Chairman Collins asked for an update on the local money that will be received from the 2 cents increase in the fuel tax. Mr. Hancock said that currently the Cabinet has obligated approximately $11.4 million for projects under the state bond program. He said that the Cabinet has yet to sell those bonds, but has made all the arrangements to do so. He pointed out that the state saves interest money by not issuing the bonds until it is ready to utilize their proceeds.
Chairman Collins asked if any of the local money derived from the 2 cents increase will be available this fiscal year. Mr. Romine said that there are two programs that affect the counties – the rural secondary program and the county aid program. He said that he thought Chairman Collins was referring to the county aid program distributions where counties receive three distributions during a given year. Mr. Romine said that the first two distributions happen in the fiscal year and the third happens after the fiscal year closes, and is based on actual motor fuels tax receipts. He said that the third distribution will take place during the July-August timeframe, and it will be based upon the actual motor fuel collections.
Representative Pullin asked if any of the stimulus money would be allocated to rail. Mr. Hancock said that as the Recovery Act came to Kentucky (the $421.1 million) there was eligibility for some of that funding to be used for rail infrastructure. However, none of that money has been earmarked for rail infrastructure; it has been identified primarily for highway and transportation enhancement projects. He said that there is a discretionary grant program for freight and passenger rail that has been introduced and the application period just opened last week. Mr. Hancock stated that the Cabinet is receiving a lot of contact from the rail industry on potential applications for those funds. In addition Mr. Hancock said that there is an $8 billion grant that Kentucky does not qualify for in the Recovery Act for high speed passenger and intercity passenger rail. However, the Obama Administration has just issued a strategic plan that identified the Chicago/Louisville route. Mr. Romine stated that the Cabinet has not currently applied for any of the high speed passenger, or intercity passenger, rail. However, he said, the Cabinet is watching the funding activity around Amtrak and if there is an opportunity for the state to participate it will do so.
Representative Lee asked for an update on the rehabilitation of the state’s interstates. Representative Lee stated that he is receiving 15 complaints a week just on the stretch of road between Louisville and Elizabethtown on I-65, which is particularly dangerous for motorcycles. Mr. Hancock stated that the past winter storms were extremely tough on Kentucky’s highways. He said the Cabinet has been trying to keep the highways in as best of a shape as it can. However, he said that that section on I-65 between Elizabethtown and Louisville has major problems and that those problems are a major focal point in the state’s stimulus program. Mr. Hancock said currently there is roughly $36 million that will be channeled to I-65 improvements.
With no further business before the Committee, the meeting adjourned at 2:05 p.m.