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ARIZONA STATE LEGISLATURE
Fiftieth Legislature – First Regular Session
JOINT LEGISLATIVE REVIEW COMMITTEE ON
TRANSPORTATION BETWEEN SONORA, MEXICO AND ARIZONA
Minutes of Interim Meeting
House Hearing Room 5 -- 2:30 p.m.
Chairman Nelson called the meeting to order at 2:40 p.m. and attendance was noted by the secretary.
Members Present
Senator Nelson, Chairman 2011 Representative Jones
Senator Meza Representative Saldate
Members Absent
Senator Griffin Representative Williams, Chairman 2012
Explanation of Committee Charge
Justin Riches, Majority Research Analyst, House Transportation Committee, related the charge of the Committee:
PRESENTATIONS
Mr. Jones suggested that Ben Beutler from the Joint Legislative Budget Committee (JLBC) speak first about the SETIF funds.
Ben Beutler, Joint Legislative Budget Committee (JLBC), reviewed a handout, Safety Enforcement and Transportation Infrastructure Fund (SETIF) Funding (Attachment 1):
Mr. Jones related that SETIF funds are derived from permit fees for temporary operating authority for Mexican carriers who cross the border, unload trucks and return to Mexico. The carriers use Mexican diesel and do not pay Arizona licensing fees, registration, fuel tax or any other fee. The amount collected from permit fees has been declining slightly over the years.
Mr. Beutler continued the review of the handout (Attachment 1):
· since FY 2009 a total of $5 million was transferred from the SETIF to the General Fund
· $2.6 million of the $3.4 million transferred to the General Fund in FY 2009 is from elimination of capital projects, which is shown in the ADOT Capital Budget line
Mr. Jones noted that legislation was passed to earmark the SETIF funds to the Motor Vehicle Department (MVD) at ADOT for vehicle safety services and to DPS for safety personnel for commercial truck crossings within a 25-mile radius of the border ports of entry (POE). Another use of the funds is for infrastructure projects on the border. Up until 2008, the SETIF Committee met to review and allocate those funds to leverage federal funds from General Services Administration (GSA) and other agencies to get projects “shovel-ready”, perform feasibility and environmental studies, etc. Additionally, the legislation included a provision to make $600,000 available to the Arizona-Mexico Commission, the Arizona International Development Authority (AIDA) and the Arizona Department of Homeland Security (AZDOHS) for transportation-related projects, which he does not see accounted for in the handout.
Mr. Beutler continued with the review of the handout (Attachment 1):
· ADOT was originally appropriated $2.6 million in FY 2009 for capital projects: $600,000 to enter into agreements to provide funding to the Arizona-Mexico Commission, the AZDOHS and the AIDA; $2 million for design, planning and construction of the state inspection station at the San Luis II POE
· both appropriations were reverted to the State Highway Fund and transferred to the General Fund through the Vehicle License Tax
Mr. Jones remarked that the SETIF funds leveraged nearly $100 million in federal funds for federal inspection facilities.
Kevin Biesty, Arizona Department of Transportation (ADOT), stated that John Halikowski, Director of ADOT, met with Mr. Jones a few weeks ago to discuss this and other issues. Some questions were asked at that meeting, which he was prepared to address, but most were answered in the JLBC presentation. ADOT is a recipient of the SETIF funds per statute, which is used for employee-related expenditures (EREs) associated with 20 full-time equivalents (FTE) located at the POEs who are in charge of safety, weight inspections and issuing permits. About $600,000 is used for border safety maintenance projects.
He stated that one of the questions asked was whether the current fee structure will generate a balance of $4 million to $6 million, and if not, what fee amounts are needed. SETIF collected approximately $3.1 million in FY 2011; fuel use tax permits accounted for 38 percent of the total, motor carrier fees 26 percent and permit fees 21 percent. Based on those collections, an across-the-board increase between 30 percent and 100 percent would be necessary to generate a balance of $4 million to $6 million. He pointed out that this is not a dynamic analysis and does not take into account the potential negative impact of raising the fees to that level.
In response to questions, Mr. Biesty indicated that ADOT is reviewing its fees, some of which have not been increased for 20 or 30 years. Some fees are in statute and some are in rule. The fees in rule can be changed by the director through the rule-making process, but there is currently a legislative and executive hold on rulemaking, so the Legislature would have to provide an exemption.
Chairman Nelson stated that one approach may be to find out the needs vis-à-vis any increases that have not been promulgated in the last 20 or 30 years. Mr. Biesty said that could be done at the discretion of the Legislature, noting that any increase would have to be worked out with stakeholders.
Mr. Jones asked what the North American Free Trade Agreement (NAFTA) and the likelihood of an increase in foreign carriers will cost ADOT in personnel and the ability to inspect vehicles appropriately at the POEs. Mr. Biesty replied that any greater demand for services provided by ADOT requires additional resources, but the first response would be to reallocate existing resources prior to requesting an appropriation from the Legislature.
CoChairman Nelson submitted that if these issues are not addressed, they will become more serious and parts of the highway system may even have to be shut down.
Mr. Jones suggested that research be done to develop ideas, if not to increase the SETIF fund, at least to stabilize the fund to the amount it was five to ten years ago, and to gradually increase fees to keep up with the cost of providing services and infrastructure. There is also the issue of fairness and maintaining a level playing field for carriers in Arizona who pay the fees, registration, etc., and compete with Mexican carriers, who do not pay any fees.
Chairman Nelson remarked that the research should also include what is needed to keep the roadways operational.
Mr. Biesty noted that ADOT will be presenting to the respective Transportation Committees an austere transportation program in which many new facilities will not be built, but suggests that it is wise for the state to maintain its multi-billion-dollar investment in the current infrastructure. Bridges are different and can only be maintained to a certain point before replacement is needed, which raises the Interstate 15 issue.
Mr. Jones noted that the SETIF and ADOT funds leveraged a $200 million investment by the federal government to rebuild the Mariposa POE, but that budget does not include funding of roadways to or from the POE.
Chairman Nelson stated that trucks now not only contain two trailers, but maybe three, because it is more efficient and gas prices are high, etc. The roadway system is probably not designed to tolerate those kinds of loads for any length of time without continued maintenance, especially if carriers are hauling in both directions.
Mr. Jones said one recommendation that could be considered is whether it is in the state’s best interest to continue to sweep the funds rather than use the funds for the intended purpose in the border region.
Chairman Nelson commented that it becomes a sweeps versus use issue, particularly if the funds leverage more money.
Phil Case, Budget Officer,
Department of Public Safety (DPS), conveyed that DPS uses the SETIF funds primarily
for payroll and operating expenses of personnel for truck and vehicle enforcement
within the 25-mile radius of the border POEs. In FY 2011, DPS was appropriated
and spent about $1.5 million from the fund. In response to a question, he
indicated that the
$1.5 million covers DPS costs. In 1997, when the fund was established, the
allocation to DPS was $750,000, and since then, the amount has doubled, as have
costs. The Legislature has held DPS harmless in relation to SETIF funding.
Mr. Jones said the primary use of SETIF funds for public safety has been recognized by the Legislature, but in order to cover the cost of inspection personnel, funding for actual infrastructure needs and roadways has shrunk to the point where only $600,000 was allocated. Unless those funds are increased or stabilized, as expenses for providing services at the POEs increase, there will be even less money to address the necessary infrastructure.
Chairman Nelson said perhaps ADOT should review roadway conditions and facilities in those areas, i.e., estimated life expectancy, the cost to accommodate traffic and whether some of the money can be used to leverage federal funds to maintain roads and infrastructure.
Mr. Saldate asked if it would be feasible to find out the future cost of delaying such improvements, which Chairman Nelson replied could be included.
Mr. Biesty remarked that ADOT annually develops a five-year program in conjunction with local organizations, which includes infrastructure along the border and ultimately depends on what priorities the State Transportation Board will fund. There are approximately 135 federally funded programs that can be applied for, but the competition is fierce.
Mr. Jones asked if the border region can be extrapolated from that report and needs projected in order to deal with traffic volumes, as well as Mr. Saldate’s question about the cost of delaying improvements. Perhaps the appropriate person can update the Committee on those studies at an upcoming meeting.
Mr. Biesty agreed that can be done. He added that ADOT is preparing to release a long-range plan within the next month on infrastructure needs in Arizona for the next 25 to 30 years.
Public Testimony
Representative Karen Fann, representing self, said an issue the Committee may want to consider is the fact that because the roads and bridges are falling apart, an inordinate amount of money is being paid out to settle lawsuits, not only by the state with taxpayer money, but by insurance companies as well. The question is how the state will pay: through settlement of multi-millions of dollars worth of lawsuits or by keeping the roads safe and stable so lawsuits do not occur.
Chairman Nelson stated that when he was young, the roads were often gravel and stone with signs posted that read “pass at your own risk”. He would not like to get to that point.
Representative Fann responded that the roads in Mexico are mostly the travel-at-your-own-risk type because the country does not have safety regulations like the United States.
Margie Emmermann, Policy Advisor for Mexico/Executive Director, Arizona-Mexico Commission, Governor’s Office, said the Commission received SETIF funds at one time, although not in the past few years. The SETIF funds allowed the Commission to find, quantify and prioritize community needs along Arizona’s border, working with communities and other entities, to bring in almost $263 million from the GSA to improve some of the key POEs over a five-year period; with the additional dollars being spent on improvements and access to the ports, the total is about $375 million. She discussed the following:
Ms. Emmermann added that the
Commission collaborates with DPS and ADOT to work on very strategic and focused
projects, and it helps to collaborate with communities in order to do a better
job of being a competitive Arizona. In response to a question, she related
that
Vision 2015 is updated annually and she will provide copies to the Members.
Mr. Jones stated that David
Randolph, who formerly held an ambassadorial status with the
State Department and chaired the commission that reviewed all of the POEs at
the U.S. and Mexico border, planned to make a presentation. He had a family
issue and was not able to attend, but his written testimony will be distributed
to the Members (Attachment 2).
Without objection, the meeting adjourned at 3:35 p.m.
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Linda Taylor, Committee Secretary
November 21, 2011
(Original minutes, attachments and audio on file in the Chief Clerk’s Office; video archives available at http://www.azleg.gov)
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JLRC ON TRANSPORTATION BETWEEN
SONORA, MEXICO AND ARIZONA
November 9, 2011
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