Interim Joint Committee on Transportation


Minutes of the<MeetNo1> 4th Meeting

of the 2016 Interim


<MeetMDY1> September 6, 2016


Call to Order and Roll Call

The<MeetNo2> 4th meeting of the Interim Joint Committee on Transportation was held on<Day> Tuesday,<MeetMDY2> September 6, 2016, at<MeetTime> 1:00 PM, in<Room> Room 149 of the Capitol Annex. Senator Ernie Harris, Chair, called the meeting to order, and the secretary called the roll. The minutes of the Committeeís August 2, 2016 meeting were approved.


Present were:


Members:<Members> Senator Ernie Harris, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Joe Bowen, C.B. Embry Jr., Jimmy Higdon, Gerald A. Neal, Dorsey Ridley, Albert Robinson, Brandon Smith, Johnny Ray Turner, and Mike Wilson; Representatives Tim Couch, Donna Mayfield, Tom McKee, Russ A. Meyer, Charles Miller, Jerry T. Miller, Terry Mills, Rick G. Nelson, Marie Rader, Sal Santoro, John Short, Arnold Simpson, Fitz Steele, Jim Stewart III, Tommy Turner, and Addia Wuchner.


Guests: Ron Rigney, Director, Division of Program Management, Kentucky Transportation Cabinet; Robin Brewer, Executive Director, Office of Budget and Fiscal Management, Kentucky Transportation Cabinet; and John-Mark Hack, Commissioner, Department of Vehicle Regulation, Kentucky Transportation Cabinet.


LRC Staff: John Snyder, Brandon White, Dana Fugazzi, and Christina Williams.


Road Fund Update and Report on Planned Federal Highway Funding

Director Rigney and Director Brewer gave an update on the Road Fund status and planned Federal Highway funding. The total official enacted revenue estimate for FY 2016 was $1.558 billion ($870.5 million motor fuels tax, $445.5 million motor vehicle usage tax, and $242.4 million other revenues). Because 2015 HB 299 Assembly froze the motor fuels tax floor, a revised official revenue estimate was made resulting in a total revenue estimate of $1.445 billion. Of that $1,445.9 million, $742.9 million was motor fuels tax, $463.1 million was motor vehicle usage tax, and $239.9 consisted of other revenues. The estimated shortfall between the enacted revenue estimate and the revised revenue estimate was a difference of $112.5 million. Of that $112.5 million, motor fuels tax revenues were reduced by $127.6 million, motor vehicle usage tax increased by $17.6 million, and other revenues were reduced by $2.5 million.


Director Brewer compared the Road Fund revised official estimate of $1.445 billion total to that of the actual revenues. The actual total revenues were $1.482 billion of which motor fuels tax accounted for $750.0 million ($7.1 million over the revised estimate). The motor vehicle usage tax accounted for $484.4 million ($21.3 million over the revised estimate), and other revenues accounted for $248.1 million ($8.2 million over the revised estimate).


††††††††††† FY 2016 actual revenues were compared to FY 2015 actual revenues. In FY 2016, the total revenues were $1.482 billion, ($750 million in motor fuels tax, $484.4 million in motor vehicle usage tax, and $248.1 in other revenues). In FY 2015, the total revenues were $1.526 billion, ($850.3 million in motor fuels tax, $432.8 in motor vehicle usage tax, and $243.6 million in other revenues). The net difference is a shortfall of $44.2 million from FY 2015 to FY 2016, a -2.9 percent change.


††††††††††† Director Brewer compared the FY 2017 official enacted revenue estimates with the FY 2016 actual revenues. The FY 2017 official enacted revenue estimated that the motor fuels tax would equate to approximately $747.3 million, the motor vehicle usage tax would equate to approximately $469.5 million, and other revenues would equate to approximately $240.1 million, totaling a revenue estimate of $1.456 billion. When FY 2017 estimates are compared to the FY 2016 numbers of $750.0 million in motor fuels tax, $484.4 million in motor vehicle usage tax, and $248.1 in other revenues, totaling a total actual revenue of $1,482 billion, the result is a difference of a shortfall of $25.6 million total (-1.7 percent change). Of that shortfall, - $2.7 million is derived from motor fuels tax, -$14.9 million is derived from motor vehicle usage tax, and -$8.0 million is from other revenues.


††††††††††† Director Brewer presented a chart that explains the Road Fund cash balance history and projections from January 2013 to January 2018. Through the Transportation Cabinetís continued efforts to manage cash, the cash balance has improved from what was communicated to the Committee several months ago due to increased Road Fund revenue (36.6 million for FY 2016 that was not anticipated). The cabinet also took measures to reduce maintenance spending by approximately $30 million for FY 2016. The ďPause-50Ē plan includes placing approximately $145 million in authorized state funded projects on hold, which was held to manage the cash situation. The chart shown assumes that $50 million in state funded projects will be placed on the books in July, 2017.


††††††††††† Director Rigney explained the Federal-Aid Highway Program Funding. With the combined efforts of Congress and the current Administration, the passage of Fixing Americaís Surface Transportation (FAST) Act has set the stage for a successful and strong federal highway funding program. The FAST Act, the first transportation act in over 10 years that is a long-term bill, gives the states the ability to plan ahead. With the approval of a new highway plan, one of the first things the cabinet must do is going through the process and submittal of a new Statewide Transportation Improvement Program (STIP) to FHWA. The STIP document is used to improve federally funded projects in order to be approved for federal program dollars. The cabinet has gone through the 30 day public review process, and is in the final stages of completing the new STIP document to be submitted to FHWA for the final review and signatures. The cabinet is making sure it fully utilizes all federal fund dollars. The current STIP is still available for use for the next two years. The FFY 2016 Federal-aid Funding Obligation Authority was funded at $634 million. Of that $634 million, $604 million has currently been obligated with a remaining balance of $30 million to be obligated before October 1, 2016.


††††††††††† The cabinet anticipates receiving $688 million in FFY 2017, $702.7 million in FFY 2018, $718.6 million in FFY 2019, $607.5 million in FY 2020 (after rescissions), $735.9 million in FFY 2021, $735.9 million in FFY 2022 and the total Federal Funds for FFY 2016-2022 are $4.188 billion. A chart was provided that showing the anticipated federal funding for the highway plan, including highway plan funding and GARVEE Bond Debt Service funding. GARVEE Bond Debt service funding was set aside due to the requirement to pay those debt service payments each year. Director Rigney stated in FFY 2017, $96.3 million would be needed to go towards GARVEE Bond payments, $97.0 million in FFY 2018, $97.0 million in FFY 2019, $81.0 million in FFY 2020 (after recessions), $81.0 million in FFY 2021, and $81.0 million in FFY 2022 would all be needed to go towards the repayment of GARVEE Bonds and Debt Service funding.


††††††††††† Director Rigney stated the remaining core programs involved with federal funding include the National Highway Performance Program, the Surface Transportation Program, the Highway Safety Improvement Program, and other issues such as transportation enhancement and congestion mitigation. The chart provided broke figures down for each of those programs from FFY 2017- FFY 2022.


††††††††††† In response to questions asked by Co-Chair Collins, Director Brewer stated the difference between the 26 cent floor for the Motor Fuels Tax and the 24.6 cents she mentioned is the 1.4 cents that is allocated to the Petroleum Storage Tank Environmental Assurance Fund, which does not go to the Road Fund. She will follow up with the committee after the meeting to provide information concerning the dates of the last mowing cycles for the season.


††††††††††† In response to a question asked by Senator Embry, Director Rigney stated that some ďPause-50Ē projects will resume in the summer of 2017 (FFY 2018), while others may be started sooner. The director stated the cabinet is in the process of putting together a prioritization model to prioritize projects.


††††††††††† In response to a question asked by Representative McKee, Director Rigney stated there would not be a way to allocate the use of HSIP funds to repair, rebuild or construct rest areas for the purposes of truck parking unless there is an accumulated number of data driven accidents at a certain spot. However, the use of other federal dollars could be used to rework rest areas, and that has been done in the past. Representative McKee asked that the cabinet look into opening one of the two currently closed rest areas in order to help reduce the truck parking issues. Director Rigney stated the Hart County rest area is being reconstructed for reopening.


††††††††††† In response to questions asked by Chairman Harris, Director Brewer stated that some of the maintenance activities that have been slowed or suspended due to the $30 million in maintenance spending cuts include striping activities and mowing activities in some areas. Although spending was cut for maintenance activities, the maintenance budget was still over budget by approximately $30 million for the year. Toll credits have been able to be used as the state required match on federal programs. The credits are not spendable dollars but are credits that have been earned through the use of state dollars on the federal aid projects that would have been eligible for federal dollars, making the entire cost 100 percent federal. It is anticipated that the toll credits are set to run out in 2020. Approximately $30 million to $40 million will be needed for state match in 2020, and after that, roughly $100 million a year in matching funds will be needed for the federal program. Toll credits are being held back to pay off the GARVEE Bonds through 2027.


Activities and Operations of the Department of Vehicle Regulation

Commissioner Hack testified about activities and operations of the Department of Vehicle Regulation. The department ensures public safety through motor vehicle licensing, regulation, and driver licensing. It is involved in Road Fund revenue collection, supporting free flow of commerce and economic development through business services and regulation, and customer service in all of those areas. The department has 220 full-time state positions (including 26 vacancies) and 56 full-time temporary positions.


The Commissionerís Office consists of Commissioner Hack, Deputy Commissioner Rick Taylor, and 16 full-time state employees with one vacancy. There is an Administrative Support Branch, a Medical Review Board, and the Motor Vehicle Commission under the umbrella of the Commissionerís office. The Motor Vehicle Commission is headed by Carlos Cassady, Executive Director, and has 10 full-time positions. The Division of Driver Licensing is headed by Director Matt Cole and has 82 full time state employee positions, 14 vacancies, and three full-time temporary positions. The Division of Motor Vehicle Licensing is headed by Director Paul Mauer and has 51 full-time state employee positions, four vacancies, and 24 full-time temporary positions. The Division of Motor Carriers is headed by Director Brian Beaven, and has 54 full-time state employee positions, seven vacancies, and five full-time temporary positions. The Division of Customer Service is headed by Director Marty Greer and has seven full-time state employee positions and 24 full-time temporary positions.


The Division of Motor Carriers collected over $270 million of revenue in FY 2016. The division consists of three branches: Qualifications and Permits, Licensing and Registration, and Tax and Financial Processing. They serve approximately 120,000 customers such as trucking firms, independent truckers, U-Drive-It, solid waste companies, taxi/limo/TNC companies, buses, and household good companies on a daily basis. Approximately 95,000 over-weight and over-dimensional permits have been issued for FY 2016. Partnering agencies consist of the Federal Motor Carrier Safety Administration, the Federal Highway Administration, Kentucky State Police (KSP), Commercial Vehicle Enforcement (CVE), and IFTA, Inc. and IRP, Inc., which are tax collection entities.


Recent progress in the Division of Motor Carriers has consisted of the use of KATS real-time virtual monitoring, and KYU on-line tax payment system, which is a national award winning program. Some challenges that the division has faced are the historically low number of KSP CVE Officers, which affects weigh station hours of operation, poses public safety risks, and trucking industry concerns, and a decrease in safe truck parking solutions. The division is looking into implementing some new initiatives such as the Soldiers to Semiís program, which would be a one stop shop that provides CDLís on site to soon to be retired military personnel. Another new initiative is to transform the Motor Carrier Committee to a Motor Carrier Commission. Commissioner Hack hopes for training for KSP CVE Officers on use of new technologies. The training for public customers for online service utilization and continuous improvement to online resources is another new initiative the division is aiming to achieve.


The Division of Driver Licensing has three branches. The Hearings/Fraud Verification Branch consists of 12 field offices that handled 132,158 calls in 2015 and recovered $679,000 in license reinstatement fees in 2015. It also has the Court Records/CDL Management and the Driver Education/Records Branches. The Division of Driver Licensing serves 3,598,073 license holders, 135,814 CDL holders (240,000 Medical certification actions were handled last year), 251,586 Permit holders, and over 100,000 students served in 2015. The divisionís partnering agencies are Circuit Court Clerks, KSP Driver Testing Branch, and the law enforcement community.


Recent progress in the Division of Driver Licensing has consisted of driver license system improvements and process efficiencies, the use of CDL online portals for document submission, and internal cross-training within sections. The division faces challenges such as the loss of federally-funded CDL employees (57 percent of current staff), a mainframe system replacement, the Center for Advanced Traffic Solutions (CATS) program, and the ignition interlock program (1,758 cases in 2016).


The division has plans for new initiatives such as central issuance of licenses, a longer-term license, new CDL document processing software, new customer service training curriculum, creative ways for employee recognition, new vendor rollout for the online GDL/Online Traffic School programs in October 2016, and a progression toward exploring digital driverís licenses.


The Division of Motor Vehicle Licensing has two branches: Registrations, which processes approximately 3,019,052 vehicle registrations annually, and Title Processing, which processes about 130,000 titles per month using 21 examiners. The division serves personal vehicle owners, commercial fleet vehicle owners, and new, used, and rebuilt vehicle dealers. Partnering agencies include County Clerks, KSP, Fish and Wildlife, county sheriffs, law enforcement community, the Department of Revenue, and Kentucky Correctional Industries.


Recent progress in the Division of Motor Vehicle Licensing involves print-on-demand decal/document scanning, a storage and transmission system, and expanded online registration renewal. The divisionís challenges include the use of the AVIS mainframe system and problems with the special license plate program. New initiatives include streamlining fleet vehicle registration and print-on-demand license plate production.


The Division of Customer Service has 31 employees and consists of a call center and a website. Its customers include all Division of Vehicle Regulation customers. Approximately 425,479 customer support incidents were documented in 2015. There have been 290,777 incidents in 2016. The divisionís partnering agencies include County Attorneys, County Clerks, Circuit Court Clerks, the law enforcement community, the Department of Revenue, and various federal agencies.


Recent progress in the Division of Customer Service has been the ability for increased call volume handling by customer service professionals, improved first call resolutions, and upgraded software systems. Its challenges include high turnover of full-time temporary employees, which results in constant training costs, and reliance on third-party technology resources. The divisionís new initiatives include use of the Drive.KY.Gov website and new online services, including live chat, social media, and new payment options. It is also seeking continuous software systems improvement.


The Commissionerís Office for the Department of Vehicle Regulation consists of an Administrative Support Branch, the Medical Review Board (manages 6,000 cases per year), and the Motor Vehicle Commission, which license and regulates 2,700 vehicle dealers. New initiatives include completing the first comprehensive customer satisfaction survey, a commercial vehicle industry support initiative, changing the Motor Carrier Advisory Committee to the Motor Carrier Commission which would handle CDL processing, truck parking, CVE enforcement and revenue collection, and the Soldiers to Semis program. Two additional initiatives include the full scale launch of Drive.KY.Gov, and a paper reduction initiative.


Senator Bowen stressed the importance of enforcing the prohibition of texting while driving and reminded the committee and department to continue to make that a priority.


Senator Higdon proposed having area technical schools offer students the ability to obtain CDLs. He questioned if the vacancies in the department are due to a 37.5 work week schedule as opposed to a 40 hour work week. Commissioner Hack stated the 40 hour work week is being looked into as a possible solution.


In response to a question asked by Co-Chair Collins, Commissioner Hack stated the expense for the technical setup to roll out a new special license plate is approximately $35,000. The Road Fund loses approximately $12,500 from each newly rolled out specialty plate. A new print-on-demand license may solve problems in this area.


Representative Wuchner thanked the Medical Review Board for its difficult job and stated she appreciated the safety that the board enforces.


Representative McKee thanked Commissioner Hack for taking the lack of truck parking into consideration and looking into how to solve the issue.


In response to a question asked by Senator Harris, Commissioner Hack stated that a decision on REAL ID extension will be given at the beginning of October.


With no further business, Chairman Harris adjourned the committee at 2:10 P.M.