Call to Order and Roll Call
The 3rd meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday, September 7, 2010, at 1:00 PM, in Room 154 of the Capitol Annex. Representative Hubert Collins, 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., David Givens, Jimmy Higdon, Bob Leeper, R.J. Palmer II, John Schickel, Brandon Smith, Gary Tapp, and Damon Thayer; Representatives Eddie Ballard, Leslie Combs, Tim Couch, Will Coursey, David Floyd, Richard Henderson, Melvin B. Henley, Jimmie Lee, Charles Miller, Lonnie Napier, Tanya Pullin, Marie Rader, Steve Riggs, Sal Santoro, Arnold Simpson, Jim Stewart III, Tommy Turner, and Alecia Webb-Edgington.
Guests: Mike Hancock, Secretary, Russ Romaine, Executive Advisor, Winn Turney, Commissioner, Department of Aviation, Transportation Cabinet; Tom Zawacki, Commissioner, Department of Vehicle Regulation, Transportation Cabinet
LRC Staff: John Snyder, Brandon White, Dana Fugazzi, and Jennifer Beeler.
Consideration of the Committee's August 10, 2010 Minutes
Representative Simpson made a motion to amend the minutes from the August 10, 2010 meeting as submitted. The motion was seconded by Representative Miller and adopted by voice vote.
Report on Programs of the Department of Aviation
Mike Hancock, Secretary, Transportation Cabinet introduced Winn Turney, Commissioner of the Department of Aviation and Russ Romine, Executive Advisor. Mr. Turney stated that many of their projects are funded through the Federal Aviation Agency (FAA), 95 percent coming from the FAA, 2.5 percent coming from local government, and 2.5 percent from the state.
Mr. Turney said that Kentucky has 60 airports. Three of those airports are the larger, commercial, airports: Cincinnati, Louisville and Lexington, which are self-sufficient with their own staff and not maintained by the state. The Department of Aviation oversees the other 57 general aviation airports. Because of ongoing budget problems, the main priorities at these airports are maintenance and safety; the Department is working year to year on maintenance as they can afford it.
Russ Romine, Executive Advisor responded to Chairman Collins question regarding jet fuel tax revenue, stating that the jet fuel tax paid by commercial carriers is capped at $1 million annually, as of yet they have not seen any of the airplane carriers fall below that $1 million cap level. Because they are capped, there has not be any lost revenue to date based on the current economic situation from the large carriers.
Chairman Harris commented that there is not a loss in revenue from the fuel tax, but the economy is suffering so there has been a loss in income to the state from ridership being down.
Representative Pullin asked in terms of aviation generally how many of the Department of Aviation staff works directly with the Air National Guard. Mr. Turney stated that they work with them directly as needed particularly with disaster relief.
Senator Schickel stated the need for a regional airport in Gallatin County, and the state is responsible for purchasing the land. Mr. Turney stated that there has been a site selection in Gallatin County and are now in the process of updating the EPA and airport layout plans.
Department of Aviation Implementation of Recommendations from 2008 Audit by the Auditor of Public Accounts
Mr. Romine stated that in November of 2008 the Cabinet submitted their official response to the audit completely by the Auditor of Public Accounts (APA). Included in the audit were ten findings that dealt with specific recommendations to improve the aircraft and maintaining the aircraft in the state. The recommendations from the audit performed by the APA and the Cabinet's responses include:
Finding 1: Administrative Regulations were not developed as required by KRS 36.410(2) to establish usage rates for flights on state aircrafts.
Response: Formal policy was established through an official order communicated by Secretary Prather in a memorandum dated November 6, 2008 to all office heads and Cabinet Secretaries.
Finding 2: The purpose of flights on state aircraft cannot be determined when statutorily required flight request forms are not submitted.
Response: A form has been prepared and has been in use since July 1, 2008. It contains a line for stating the purpose of the trip, destination, and passengers names.
Finding 3: The written form developed by Capital City Airport Divisions (CCAD) for collecting flight request information from agencies does not include the minimum information required by statute.
Response: There is a new form developed and in use since July 1, 2008 and includes all the statutory information required by KRS 174.508.
Finding 4: Kentucky's broad allowances for passengers may result in non-essential persons flying on state aircraft.
Response: Policies are in place and part of the CCAD policy manual. They mirror the statutory requirements included in KRS 174.508.
Finding 5: CCAD does not verify the identification of passengers on a state aircraft.
Response: The new form developed states that a photo ID is required prior to boarding. Also, this requirement is included in the CCAD policy manual.
Finding 6: CCAD has not billed agencies for flights in a timely manner.
Response: The CCAD has implemented a monthly billing cycle. Average billing time has gone from 90 to 120 days down to 30 days.
Finding 7: CCAD is not able to control scheduling and use of air charter flights, as required by law.
Response: Workflow rules have been changed in the accounting system that route approval of all such requests through the CCAD. A written procedure has also been created.
Finding 8: It is unknown how much "downtime" is incurred by Kentucky's state employee pilots.
Response: The cabinet created accounting activity codes to track the information, as pilots record work hours on their time sheet, they note the amount of time spent on flight related activities and the amount of time on non-flight related activities.
Finding 9: Kentucky has the oldest general aviation aircraft fleet when compared to surrounding states.
Response: The current average age for the fleet is 36.5 years. There has been a thorough review of the state fleet (all agencies) and the needs and have looked for opportunities to down-size where possible.
Finding 10: Kentucky has not fully centralized its state aircraft fleet.
Response: The Transportation Cabinet has had several meetings and discussions with the Justice Cabinet and the Governor's office and developed an arrangement that has been in place for several months. The new arrangement serves the flight services needs of the Commonwealth. As part of this arrangement, the Cabinet has centralized the maintenance and repair of all state-owned aircraft under the Transportation Cabinet.
In response to Chairman Collins, Mr. Romine stated that currently the state has 8 helicopters and 7 fixed wing aircraft.
Chairman Collins asked what Department uses the aircraft the most. Mr. Romine stated that each agency serves different purposes, for example the Justice Cabinet's primary function is for law enforcement and also operation of the Governor's executive plane. Mr. Turney commented that other than the Justice Cabinet there is no other agency that uses the aircraft more than anyone else.
Representative Riggs asked that in taking consideration of maintenance and repair costs and fuel efficiency would it be safe to assume the current state fleet is not the most cost efficient to operate. Mr. Romine stated that the Cabinet has looked at the costs and it does cost more to maintain older aircraft, given the current economic climate the cabinet has looked into purchasing new aircraft there just is not the funding to purchase at this time.
Senator Harris commented that with the distances that the aircraft would be flying around the state there would be no significant fuel savings with a modern aircraft as opposed to the older aircraft that the state currently has in their fleet, and that the current fleet is within the ordinary lifespan of such aircraft.
Discussion of Statutory Changes Requiring Separate Identification of Voluntary Fees for Special License Plates
Chairman Collins stated that the committee has been concerned with some of the voluntary contributions appearing on vehicle license renewal cards. Citizens do not know that those contributions are voluntary they just assume they are part of the total to license a vehicle. The statute states these contributions are voluntary, and anything voluntary the citizens should know about it.
Tom Zawacki, Commissioner, Department of Vehicle Regulation, Transportation Cabinet stated that in the state of Kentucky there are approximately 4.5 million plate renewal notices mailed out each year by the Department of Revenue. Of those notices, approximately 300,000 notices fall under the category of special plates, most special plates require a special mandatory fee. Farm plates and about 30 other special plates carry special fees which are optional, allowing the plate’s holder to opt out of paying that special fee.
Mr. Zawacki stated that currently the registration renewal notice does not indicate that the fee on these special plates is optional. Also, it does not break out the special fee from the total registration fee. The registration receipt provided by the County Clerks also does not provide a breakdown of the fees paid.
Mr. Zawacki said that there are two forms that would have to be programmed and redesigned and that would be the registration renewal notice and the registration receipt. Each of those notices would cost about $60,000 of Commonwealth Office of Technology reprogramming. There would also be additional cost from outsourced vendors for redesigning. There would probably be a decrease in revenue once plate holders are aware that special fee is optional.
Chairman Collins, Representative Couch and Senator Harris all concurred that if special fees are included in the statute to be optional then the public should be made aware of that fact and have the option to opt out of such fee.
Report of the Subcommittee on Kentucky Waterways
Senator Leeper thanked the co-chairs for allowing the Subcommittee on Kentucky Waterways to be formed to bring attention to what Kentucky can do with the waterways and infrastructure improvements. Senator Leeper presented the report from the subcommittee's August 20th meeting in Paducah where the subcommittee heard testimony on and toured the construction of the Olmsted Lock and Dam project.
Consideration of Referred Administrative Regulation 601 KAR 1:201 -- Record Keeping and audit requirements of taxes imposed in KRS 138.655 through 138.7291
Chairman Collins wanted to briefly explain the item of business which pertained to the consideration of Referred Administrative Regulation 601 KAR 1:201 – Record Keeping and audit requirements of taxes imposed in KRS 138.655 through 138.7291. He explained that it was just a cleanup of language and citations regarding the International Fuel Tax Agreement. No objection was raised to the proposed Administrative Regulation.
Before adjournment, Chairman Harris informed the members that the next meeting would be held on October 1st, 2010 at the Brown and Williamson Club, Papa John's Cardinal Stadium, University of Louisville. He stated that after the meeting the committee will be taking a tour of the McAlpine locks and dam.
With no further business before the Committee, the meeting adjourned at 1:55 p.m.