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House | May 14, 2015 | Committee Room | Appropriations: Transportation

Full MP3 Audio File

Okay, members let's start we might have a little bit of a recess. because of passing off the budget in just a couple of minutes and also the Chair's consulting outside in twominutes. I would like to announce our page Sergeant-At-Arms Carvin Adams, Marvin Anderson, and Joe Austin Sergeant at Arms, Page is carrying alone back there, right Cane smart as Chris Malone, it must be candidate Chris Malone. Okay, so last time never brief recess while the budget passed out and the Chair's consult for just a moment. Take that five minutes Okay, can we get back in session [xx] set up slowly I present their will, the budget at any price that may come and after we've talked with other chairs we have [xx] to four minutes, this past year that were out in about an hour and a half, so if that doesn't work we'll do but the idea is that anyone test by amendment once they read the budget first get with the staff and for a moment and if we need some time to review those then we'll recess if not we'll move right into the amendments and this expedicious as possible given what we've got here there's this transportation and we are usually very efficient and hope we contain to that the presentation shall begin with Vice [xx] Good morning committee. Am braise call fiscal research, when I cover a few ground rules for the preparation of the minutes you should have ship before you those rules for subject area community procedures, the first rule of protocol is the amendment must be offered by formal amendments, amendments cannot increase total spending within the proposed committee report, amendment can only affect appropriation within the department, agencies or programs within the jurisdiction of other committees may not cause a change in other committee to appropriations amendments cannot adjust salary and benefit the appropriations for the department and agencies or programs within the committee report and amendment  cannot spend repulsion or include channel revert or carry foreign language and then it cannot use non occurring reduction to fund recurring items and amendment cannot change the recurring and non recurring definition of funds, amendment cannot change, substantive policy of  law, amendments may not fund item with many total reductions. Amendment may not affect the agency or programs to other committee, and finally amendment may not include fees to other financial related matter. Should the members have other questions with respect to this protocol staff will be available to provide interpretation so we're going to discuss them further with you. Okay, continue Representative Cameron. Thank you Mr. Chair. I'm the current physical research and that [xx] go over the money report with you starting on page K1, the first item is the reduction to the board of transportation travel expenses of 20%.  Item number two on page K1 want to continue organization of of the driver sources and vehicle services IT systems, the funding proposed here which is identical to the government purchase is primarily for face three of completion of the state automated Licence system replacement effort. Item three, this is a statutory increased if the power bill, also known as the Paid Aid to Municipalities, again it follows the amount of revenue in the motor fuel tax. Item four, under the construction fund is a $695, 000  appropriation non recurring for both years I do address a project with the grand strand NPO, next is $2.5 million non recurring for the Small Urban Construction Fund, this

is divided 14 ways last year you decided to fund that 5 million none recurrent, but now it is being in confirming its convened continued at 50% of the current amount, Looking to the bottom of page K1 under the division of motor vehicles header first item extends 44 times on the position in support of the tag and tax together program through March 30th 2015, it's a nine month extension item number seven, is an increase to the statutory compensation rates for commission contractors, as well as the provision of of additional funding for performance incentives associated with performance standards that are being incorporated into the revised standard operating procedures. allocation of $181, 000. Item number eight is a required verification of operation efficiencies divisional wide through the division of the vehicles are $250, 00 recurring. We will just that's an associated provision later but these funds won new position in the division of technical services for a a value management program engineer. This is a small group of duty that evaluates new technology so will enable POPs to enable TOT to evaluate technologies more quickly. Again on page K-2 item number 10 as proposed on the governors budget this is a realignment of receipts associated with state match for federal aid. Item number 11 under the inter-motor section is an allocation of $2.1 million for funding of the operating costs associated with the operations of the longer route between Harus and [xx] as well as for training requirements associated with oil spills response. Item number 12 is 7000 prime allocation is for the replacement of hydra-plating equipment to the water tower at the shipped door and also uprised underground water lines as opposed in the governor's budget. Item number 13 is modify from the governor's proposal that allocates 3 million recurring for the public transportation division, 1 million of which will go toward the State wide grant program, and 2 million will go for a rule capital grants and item number 14 complaining the inner motor section is now a case of 2.5 million recurring from state aid to airport program within the division of aviation. This would include eligibility for aviation related economic development projects. Item 15 under maintenance, this is a statutory adjustment to the bridge program, a slight reduction of about half a million dollars, item 16 is a significant extension of the contract re-servicing program, this includes an additional 87 million in the first year, and an additional 214 million in the second year bringing that total to 1.1 billion over the bi-annum. Next is the rebirth for a general maintenance [xx] small increase of $600, 000 in the can't see years roughly there is 12.7 million added to the secondary road maintenance program in the first year moving on number 19 the government budget included these 50 positions in elimination in its budget, and the House Chair is supported that those position eliminations. Next the committee has a modified program for the repair and renovation program there is no money provided in the first so right project has been removed including including the DMV facility building a list of those projects specifically will be in the capital section of the report is going to subcommittee at 10.00 A. M. Today and its report will be available at that time. The next section deals with adjustments to the revenue assumptions for the highway fund. Item number 21 is a consolidation of two available temporary registration options,

the temporary permit, 10 day temporary permit is being eliminated and the 10 day temporary tax is being increased from a fee of $5 to $10 under this proposal. Item number 22 proposes to increase from 1/6th of 1% to diversion of motor fuel tax revenue from the highway fund to the shallow draft navigation channel on lake dredging fund to one half percent, and you see the projected revenue diversion there is 3.33 million in the first year, and 4.3 million in the second year. Item number 23 incorporates part five from House Bill 927 concerning DMV fees projected revenue increase for the highway fund in the first year is 132.2 million, and in the second year annual lands revenue is expected to be around $219 million. And item number 24, makes a further revenue adjustments effective January 1, 2016, it reduces the motor fuel excise tax rate for gasoline to 33 cents per gallon, and maintains the excise tax rate on diesel fuel at 36 cents per gallon. Moving on to transfers, there is an increase of $3.7 million to the general fund, next, there's another statutory adjustment to a provision that directs how much sales tax is transfered to the states treasure from the Department of Transportation concluding that how we fund section on page k-4 item number 27 you see a numerated several adjustments that transfers to other states agencies for services rendered. This reflects in modification from the governor's proposal correction of budgeted receipts for one of the items. You'll see that this is a re-alignment based on actual spending in the prior year. Item number 28 is in allocation to the North Carolina States Port Authority for sea port modernization including Real Road roadway and dredging projects that the discretion of the secretary of transportation that would provide direct access to the sea ports. 21.8 million is allocated in the first year and 53.7 million is allocated in the second year. I will move on to the highway trust fund starting on page k-5. I will start at the bottom with revenue availability and again much like the highway fund and this show the changes from the additional VMV fees and the changes to the the motor fuel tax rate, and 32 and 33 and those changes affect the amount that is being appropriated to the STI program and number 29 as you can see about $43 million is being added over the course of the biennium. Item 30 is a reserve established in the 2nd year anticipation of a bond, and lastly item number 31 is from the Governor's budget, and this is simply re-budgeting for the correct amount of debt service needed for the triangle express way, moving on to the turn park authority on page case seven, again similar to the turn park authority this is a re-adjustment to the amount of debt service necessary for the turn parkauthority. And that concludes the money reports. Thanks [xx]. We'll take questions for the land report this time and then went along to the provisions after that. Questions from the committee? Representative Martin. Thank you Mr. Chairman If you don't mind, I've got at least questions and feel free to set me up after this before going out Certainly let's see, the beginning of the highway fund item number two has been [xx] modernization of [xx] services is one year only, item 32 is also a governor's request it is the age drug assistance program or [xx] again budgeting higher than anticipated Right Representative Martin the largest competitor again is for phase three or completion of the automated license replacement of audit you recall in prior

budget we've provided funding for phases one and two and to the largest chunk of this money is going for phase three in that includes office optimization, expenditures as well, really the preparation of the driver's license offices for the improvements that will be associated with the business processes as delivering with the solution. Follow up Mr. Chair. Follow up. And how does that surmounts in this budget differently? The delegation is identical to the governor's proposal Mr. Chair I'll move it down to number 38 of the municipalities to you, could you explain whether out there these actions. Mrs. Chairman. This is over the base budget for the year so the revenue forecast is simply less than expected, and then you have the addition of the. There's revenue associated with dropping the gasoline tax on the 33 cents per gallon, the 8 municipality program is . 4% of all motor fill tax revenue the reduction indicate here are in order of two things, one the reduction of income tax gas revenue and two just based on the existing statutory of performance on the [xx]. Craig is this about and the 80 municipalities is the year, they received money this year form last year's revenue, and the motor fuel tax changed increased the cuts to the power bill by a little over $2 million in the second year so 5 million of that was from and reduced revenue forecast over what we think instantiated have just a question. Number five on the construction we've got 2.5 non recurrent both years so that's down in this year. Its an excellent question Excuse me. That means given. Okay. The one thing at a time that was actually supposed to draw in the lines went to non recurrent last time at the discretionary funny and then there's five million, cone of the budget [xx]. So compromising two and a half million money not needed any more That's the contingency fund that the DOT board has discretionary fund, so the STI or the maintenance project system, so it's a matter of whether you want to budget that money or allow the board to take a risk. Thank you. Mr Apollo  answer there was a $5 million recurring and it was schedule to be discontinued all together and it's compromised again with half. And I could move down to page K2, item number 10, adjustment for federal revenue, I just want to check that fortunately, our reduction is plugging a variable into an existing formula based on what the federal government is anticipating Really this is more so a pure accounting adjustment, we've already budgeted this amount for state match and the amount required is very significantly with federal aid balance and so this is kind of the economy we're able to reconcile this to I could move down to the item 13 on that page, leads to a question, sure. Thank you sir, on state wide rule of capital grant program public transportation it's got $3 million recurrent votes years provided for that, how is that different from what the governer had in his budget. I can let staff answer. My recollection is this, identical except it was divided at 1.5 million and we went to one million and two million. Is that correct? A clarification to the response there, the governor had proposed three million overall to be allocated one million for urban programs, one million for state it wide than one million for raw capital and per year flexibility was provided to transit divisions

to move funds from [xx] operating creating sort of a gap there to the tune of around 3 million dollars and so the allocation here of $2 million is quite an impact essential [xx] gap thank you, Mr, with your permit me coming down to [xx] the contract servicing which I think you all committed series of presentations made a compelling case, that are a necessary items but because of the dealt with the bag and sort of adapts and perhaps it explains a little bit more how those numbers were derived. Like a personal here? Answer that. Representative Tony. Thanks for the question. You heard a commentary in a conversation we had all last couple of months. The need. I think you just said you pretty much understand that need. So the numbers from the DMV fees association  and just bump that up with 80% of that going to resurfacing and 20% going to the port modernization apart do we spell out the distribution inside of that how it's going to be allocate and provision? A follow up question on that. How will the allocations be decided? The allocation representative Tobit bill 927 [xx]. It's my opinion to have that disbursed equally between all 1100 counties. Follow up   By equally you mean each county get 1% of it or based on road population how is equally? Just addressing the additional revenue peaks not the revenue that we've had the past few years that is also in the budget. Just the additional revenue peak that will be equally distributed between 100 counties so in total divide it by 100 of just the additional increase. So that means that the county regardless of how many roads it has, how many people that has, how many miles traveled in the past To answer your question we didn't figure any population, we figured in per county so that way everone there receives road improvement throughout the State of North Carolina, irregard of through the population Chair, and I get out of you what to do today. Representative, the agent go a head. Thank you sir, move ahead to case three items 23, 24 reflecting proposed changes in increases in DMG and the reduction in gas tax support and question I think really relate to your proposed rules or amendments, do I read the rule says that this would not be subject to any amendment that could be offered in this committee. Alright. so I won't complain. I'll complain about that in another venue then. Okay. Mr. Chair, another member has raised the fence. I don't want menopolizer. Representative Born Godner. Representative Mark attention Mr. Chairman a lot more understand here that this section 23 I had the request, we will not have any arrangement here that's my understanding, is that correct? Rust That is correct under the sub committee procedures, so I've what will be eligible in finance and potentially based on the deficient of four chairs and the loose issue for appropriation as well. Paul. We have been here and 23 that wasn't cooperated, page five and page three to seven Internet and court file of agency 9.7 quite honestly has alot to do with a lot of things deserve increasing of fees across the board over 50%, so what characterizes pop five well if is correct that says progress 45 to increase the by 50% I'm not sure it includes all of the pathologist or just a part of the increases so he has been out, the elect staff. Sorry sir. Part five of the bill is actually listed on page

22 with the special provisions which you'll Google over in detail at a later time but unto your question part five still exclusively what did DMV fields or the exceptional of one table penalty that was proposed and as a termed lengthy for overdue regislation with that in detail during this presentation. If we do that for special agent coming that's we are trying all these representative Bob Gardner follow up The special provisions we've represented that over thousand times into the Mayor report I'm in out I have been working here until now and on the avail start line 32 page 5 and it goes to section 11 one of the first in boards 15 and 16 things long and has a lot of parts. This is the time I have a response The specific part that we're dealing with within the provisions of the pack that you've been handed out which are on page 22 shows the exact portion of it and shows the exact fees that are associated with it so that's the only part 947 that's included and you can see that in first part. So there are trying to kill all apart? it doesn't, but it's specifically in there for your view. Rep. Bungarden I'm not going to ask anymore about this right now, we'll get through it With special provisions you might have further questions at that time I need a lot more but will save it Sure other questions that are more important, Representative Orton. Thank you Mr. Chair, my next question is on, still on page k3, item number 25 Transfers to the general fund. I think we've also had a lot of talk throughout the presentation and really as long as I've been on this committee on this issue of transfers to from the general front how much does she keep for transportation how much does the general front and I wonder  if the chair we just talk about it they're are thinking deriving to 3.7 amount this year. Okay representative Carmen. I'm very smart professor of Cambridge. Professor of Cambridge. All right, there's no motivation behind what this $2.3 million will be used for, it is at the full chair's discretion to budget. So I'll follow up to that Mr. Chair so this, s a big chair dictate to the transportation chair you all got to cough up this amount to the general fund, he did it to me too when I was in your sit so you have my sympathy. Any explanation for that, but let me check the stuff real quick. Mr Chair. Representative Tobit. Thank you, as you know you should be doing for all that we have, this is simply the measure of the money comes from the dollar mark it goes to general fun, transportation committee has not said so on the administration of general fund so that is currently what clear decision, there was no actual man that authorize any kind of collective that is appropriate, those money that automatically shift and we have done the job and in transportation. So the answer is yes is it?. I just can't understand why I never have at work and a third question on that will that amount be appropriate for the ammendment on the no server because it would cross the committee. Thank you. Mr if I could on case four Item 28 on the ports authority again. I think all made a compelling case why we need to do a lot more for our ports but would appreciate a further discussion on the chairs thinking why on the jurisdiction for that amount while that was a priority over other items in the budget. if there was an expert who might be living in Detroit but if you'd like to speak to them. First and foremost it's a decision that we've all been looking at for several months, and we've addressed it I think in conversation, actually when we were talking about 927 for exampling committee, is that the need to move forward with that. This is an allegation that's satisfying, that is on the ready

to start some of the mend process of the ports. Once those are ready to go, we didn't want to put a huge number out there because you know, and I know that would be just money sitting on a shelf somewhere, until I tell it was ready but we want to have access to some funds that could be immediately put on to the improvements at the port. The hopes are as those start to materialize, say a year from now we can go back to short session said okay. Now we need to look at X number of dollars, we can go there and tweak, and make those adjustment so we're making use of the money at the time so there's no money sitting out there pretty much just resting doing nothing. So a follow up to that Mr. Chair and I guess representative Torbett. But how did you all to arrive at a $21 million and a $53 million figure? What projects at the ports do you see that money being used for? over this by [xx]. Personally speaking in a world according to John, reports both have made to be serious leap rehabed and modifed to bring from the 1960's up into the 21st century, so there's no specific dedicated anything as far as the aid project other than we have to look at the full complement of what our ports are capable of doing in the future maximizing that assets so the taxpayers of North Carolina get the full benefit of the revenue that report can draw for the state. we're not doing that right now. This gap's to get money in place to start moving to allow that to happen. We're getting shot on that jumping flame by the Rep. Bungarden. I have a question about number 28 also I'd be glad to listen some more. This part down here says We're going to cooperate really same here we're going to pick certain report turn on more head infrastructure and facilities, roadways, railroads, bridging at the discretion of the secretary of transportation. So if the secretary of rotation decides that we need to spend all this on one thing or another, then next what we going to do? In other words it takes 50 million to dredge those ports over the next two years, we're going to spend that. Clarifying coming from representative Boyce [xx] Representative Bungarden, your reading of the flexibility with the respect of spending of the funds is correct. However, if you recall from a prior presentation of Ports Authority, in terms of their master capital plan and the immediate need that they identified, that they made to the committee, boils to approximately $75 million over the course of three years, primarily for a berth eight reconstruction at the Port of [xx] as well as for container crane enhancement at the Port of [xx]. Those are the immediate priorities that they've identified within their master capital plan, but item number 28 from a funding scheme is flexible on terms of the prioritization for ports. representative Torbett additional. We got arrested and bump here, we absolutely brought the flexibility does arrive a lot at the serious risk of the secretary. Let's say we have a storm coming, we have an immediate need to dredge to actually keep the port open to keep navigation channel open or inland open, currently that battle is waged on the step of the nation's capital and this hopefully will provide at least enough funds to actively and immediately address the needs of those types of issues that would overnight negatively impact North Carolinian's, my hope is that it stays that way unless you want to leave it to the point where somebody has to call the general assembly back that appeared to Riley to address one funding need that's an emergency. This kind of like gives that capability and that flexibility to the person that's got to make those decisions at a potentially critical time additional question, follow up? Follow up. I understand we could have a storm or we could not have a storm, I just don't want to build another global transport at the coast representative Bob Gardner, there is no intend to build another global transport at the port is to build the port at the port. Thank you Mr. Chair.

I think this is a good story. I'm internally uploading them up. It is not a project there are projects that are known to exists that need to be done, that's what's anticipated, and we certainly have with your obsession to modify the second buying if in fact those things are not forthcoming as we think they are, additional questions referent. Yeah, had no issue, thank you sheriff. I got two different understanding of what this money is. I initially thought it was because there's projects ready that need to be done there, and it sounded like the department that identified about $35 million and set immediate needs and roughen up that's, I think that was over three year period. Three year yes, this is roughly 35 million dollar for a two year period, but you can see a connection there but as Representative Torbertt is talking about what sounded more on your description as a reserve fund a rainy day fund, in case there are faults let me say I'm not worried about reports becoming global transpart there's an engine to economic growth and we need to take care of them. I got no concern about that I'm concerned about using money that could go to other areas, for transportation budget where the needs also clearly take whatever we'd agree on immediate. Whether it's further further maintenance, bridges etcetera, which of all done a good job with presenting the case for and so if the goal is to have some money there held in contingency for what would be I think we'd all agree is pressing need. I would suggest that we find a better way to do this that we`re hearing rumors that we got some sort of revenue coming in, one potential use for that would be at the big [xx] level, filling up back up our then the day front, it has the day front on how you structure it it doesn't require call the general assembly but it can be suspended or you can at least have somebody there we do have to come back on session [xx] the money is there, appropriated, we don't have to make tough decisions so I'm just trying to get some clarity on what in the end $35 million is or is not going to be used for. Representative [xx] for just a second, but I think the excess I here front general funds, but will be used for rapid emergency [xx] Representative [xx] or I think the general makes a good point and you are exactly wrong, there's other needs through out the state and that's why we've taken a very exhaustive effort trying to address what appears to be the most immediate, without revenue enhancing improvements at the ports, then you'll have to worry about other needs because there would be no revenue to meet those needs. So we're trying to look everything we can to make it most efficient, effective and expeditious with folks from North Carolina from one of the state to the other end of the state and we can sit here all day and argue, that we should have more here, more there, more here, more there, which is nature of this beast we're in. But what you have is pretty much before you to the best of our ability. [xx] The additional capital that's raised in the provisions in 927 and the changes that are made there we looked at that as additional investment capital in state transportation. So what two things could give us the biggest bang for the the buck, and that's what those two things went towards and we'll see it later in the provision the one thing is repaving so that we can go ahead and make our roads safer as move forward and have an immediate impact on that. The second one port modernization in order to invest in something that has an economic return to North Carolina. So I mean those were the two priorities that outside of all the other budget that we still do, with the STI, and the maintenance and the bridge programs, ferries, aviation and everything else before driving additional revenue and trying to create an impact immediately for the State of North Carolina, those were the two things that the Chair has felt were the best investment and in listening to the committee and conversations to pay off as we move down the road, those things will shift obviously as we take care of issues and we you can start putting investment into other things you know this whole process is that we would eventually move towards STI and help fund more projects inside of there too as we brought those, but it's up to speed on ports, and fixed our roads and made them safe. for Chairman Tine and then one for Chairman want. Chairman Tine, you talked about the Chairs trying to get the most for the book, I thought that's what S. T. I was about and was no means it's perfect at all but it was a pretty good

way to move so could you talk further about what your way formula, what your valuation criteria were in determining banks for the book and why you felt the S. T. I formula, was it adequate to derive Bank for back  Right, well there's also [xx] to very complex formula that has a lot of moving parts in regard to whether they are ready to move forward, whether they where the impact was, one the maintenance portion re-pavement is going to be inside of S. T. I anyway, that's not funding for picture roads make them safe today and the opposed side of it is also modernization redoing I din't take that we're falling to STI either. So it's not disrupting STI in anyway, it's part of the maintenance of bringing us up to where we form behind. We have so much between five and ten years being behind on our maintenance schedule. So it's trying to get it's got up. So a follow up to that. What criteria did you all use when determining to invest that money, and resurfacing and ports versus following to an STI formula. But if the judgement can grudge which one do you want to do. Do want to invest in new roads that are with all the reasons that you invest in new roads inside of the STI formula or do you want to make our existing roads safe and ready to roll to debt. So to me I was trying to clean up my house, didn't make it before I go out and try and do anything out there, I'l try out, I'll try to make it my business, I try to make it physically strong and make sure that we're doing the things we need to do today, so that then I can starts investing in things that will pay off down the road to me that's my criteria. I can't speak for other chairs in their thought processes we went through, but that was my thought process that I went through Rep. Martin I don't necessarily agree with this contua just wanted to spend some time to go through it I do have more question Mr. Chair for Chairman Torbett. Going back to the money to the ports, I'm still not clear on what the money is. How long has the money The 25 million on 28 reports I want to be clear that is or is no a junk of that money that's going to be sitting there for contingencies which you described because that I thought that's how you were describing it and now it sounds like maybe that's not what it is so he is all portion that money satisfied therefore a contigency that may or may not require dredging or is that may there ready to go to projects that are identified needs now. Representative Torbett.   Thank you, all the above, next question. Alright, so follow up. What portion of that is set aside as a contingency fund? Can I answer that? Yes Sir [xx] that the sector in department of transportation Okay, I found this question may be for staff wealth in our transportation budget do we build in contingencies, and you have money set aside for storm or hurricane, or a mudslide name your disaster you partner said Miss Cameron I'm in several account to the highway fund actually of course you have your general maintenance reserved so for example you use your snow and ice rock side that can come out of that of course right place that someone about would be with eligible for federal reimbursement. I have put discretionary funds which would include your safety funds, your contigency funds, the small urban construction funds all of those are I'm all of those are impended to provide for quick reaction and should that why you have kind of construction section still in the highway fund is because some of those project simply are two time since this to go through the STI Follow up, would an amendment be an order under a rule to change the pending item 28 to the North of state port's authority of discretion oversight[sp?].

I think the chair will have to review that amendment Okay I'm sorry I was paying him absolutely no attention. The question was would it now be appropriate if you could change the name of that sign to North Carolina Contingency Fund, Transportation Contingency Fund. That matter was reprebuted[sp?] very strongly. Okay, the rules won't allow that, yes. Thank you. Okay, further questions on the mine report. [xx] note the provisions. Representative Martin[sp?] Thank you Mr. Chair, my next question is on page 205, line 29 strategic transportation investments. Could staff or you again just walk me through how those numbers are derived Miss Cameron[sp?] It's essentially a balancing number, you are just not much in the highway trust fund now, so you have your debt service payment, you have a very, you have a set appropriation for administration and so everything else goes into STI and and therefore because of senate bill 20, you have all of that influx of motor fuel revenue again 25% motor fuel revenue was deposited in the highway trust fund so that's why you see those gains, it's the revenue changes from senate bill 20 Miss Chair, I think I'm done with my last two questions and my last one has been easy one, but this one is what I'm not sure, so wouldn't have been the tens[sp?] budget, in items that we can't amend from house bill 927 reduces the motor fuels tax but increase the various feeds, what's the effect of reduction in the gas tax on this line item here You can read in item 32, in item 33 I'm [xx] decrease is hard for each of those, so in 32 you see it's 5.2 million in the first year 8.3 million in the cesaking[sp?] year from the DMV fees, 87.2 million, 7.6 million and 7.2 million from the motor fuel tax. So clarification request on that Mr. Chair Sir. Specifically what effect would those reduction have on the loan item in 29 There is a direct correlation, all of those reductions reduce STI by those amounts. So, Mrs. Sarah a comment and then I think my final question. I'll leave you alone. Just go ahead. So it seems to me that we've made decision that we were confirming[sp?] of the decision here that we're incorporating the reduction in the gas tax but the increase in DMV fees and because of the shift in where we're deriving transportation revenue there's a reduction in that are going to STIs because reduction of gas tax that does not being made up for by the increase in other fees. if that's an address tell me and then we talk a little later and maybe debate why that choice Mr. Boligan how about your thoughts to that. Still a clarification on item number 32 concerning the DMBCs  within house bill 927 at the end of section five there's proposed distributional change there's a certain segment of DMBC titled miscellaneous registration fees which go to the highway trust fund the same provision as you'll see in the staff provision package are included in this package which is in about 20% in the first year of those collective revenues over to the highway fund and in the second year 35% from the highway trust fund to the highway fund and those appropriation are reflected as you stare on the hurry fund section for contract servicing and report modernization those are temporary distributional changes and what made it out the end of the by-annul bu t that's why you see the DC here on the Highway trust fund sir, I though I knew what he was talking about as usual I'm wrong, so just to clarify that is it correct to say that the cause of the ship's source of revenue is moving away from gas tax towards fee increases there have been a resulting decrease for

money fro FTI is that accurate? If that is of those two items and the power magnitude seems to be accurate but the entire response and looking at the specific item I understand what you're getting at but the other thing to remember is the projected decline in revenue that's expected over the next 10 to 20 years because of declining revenue of the gas tax or decline in consumption of gas, and so we have an additional problem that you don't see in that provision, that we're expecting revenue drops as we move forward anyways. There is that also when we're shifting with the gas tax, and the fees to stabilize the gasses that's also a piece of this that you really haven't discussed in regard to policy at this point. My question is not so much aimed at the policy of shifting our source of revenue. I think, again, the chair has made a compelling case why we need to do something different. First my question is, in making that shift we've short-changed STI, and even if you go in the direction that, I think we'll all agree we need to go in, this is not necessary trends we need to make. Okay. And short-changing it, if I can read question back to Representative Martin. Short-changing in the first year by a difference between 7.6 and 5.2 is that what I'm seeing? Let's see. I'd have to pull the numbers up, but it's a reduction in the amount that otherwise would have gone I feel for the percentage of the total trust fund that actually impacts anybody. I have a number in set is that a fraction of 1% or is that a big percent or? Just a clarification not addressing the percentage question 32 and 33 operating concept about production to the availability to have any trust fund so don't consider those two in the solution the difference there so it's 12.4 million that is the adjustment that would otherwise go to STI and I dont know 29 Okay 12.4 reduction Mr. Chair That's what I heard yes To respond to that over the long term we're going to significantly increase the amount of funding into STI as we make the shift in the short term because of the change in the gas tax and where the form medically works on the side of STI in regards to how much gas tax goes towards which part it will take a short term supply $4, 000, 000 hits in the long term it will actually increase significantly the amount of funding that's going to go towards STI President Tyn you're saying STI is a 10 year plan to your budget?   Yes. Okay, Representative Martin. The point is that you're taking a step away from STI's process of determining how you spend your transportation money, regardless of the amount this represents a step back from that. I've got one more question, I'm done with my report. One more. Thank you, just a clarification. I think I know the answer, items 32 and 33 will not be appropriate subject for the amendments within the subcommittee, is that correct? That's correct. Thank you Mr. Chair. I believe you have lots of further explanations for some of these when you get to the provisions also. Mr. Chair.   Representative Torbett. To respond very briefly to that virtual point [xx] of representative Martin's comment. What we're trying to do is best manage that's currently there, so that money is not just sitting around and also address some of the existing needs out there, that have, for the lack of better term then overshadowed by the need for new arrivals. We have a very good plan in STI. It is working, it's previously, it's working effectively and it continues to work, the vote of your comment is addressed to just what the additional revenue is. yes, adjustment gas tax does temporarily take some of the money that would have gone the STI away but it does, it impacts negatively, it doesn't impound, it doesn't destruct. STI still moves forward because it's a multi-year plan not a singular year plan. So the monies are available for prospus [xx] still moving forward and it is our intent not to just like people here before just let things go. We're going to manage this thing from year to year to year to get the best

economical effective impact for the dollar that we have instead of just popping dollars into accounts and then not managing those accounts. It's our chance to provide an oversight which is our judicial responsibility to people here, and not allow the things that we see have happened, to happen again but try to and backed up the parts, Seth has our ports. Study has arose in every town, city and hammered across North Carolina. As well as the STI plans. Seth, are we ready to move on to provisions? Thank you Seth, are you going to have a serious look. We are giving water Judge Justin, for the ease of understanding since we do not have section numbers yet I'm just going to refer to the code number in provision and I have an example on page one of the provision package, you'll see 2015, trance H30 each provision I'll refer to the last letter and the last number. So for the first provision it'll be H30, subsections A and B set up the cash flow estimates established by D. O. T for the next four fiscal years for the highway fund and highway trust fund and subsection C directs the department of transportation in collaboration with LSBM to develop an eight year revenue forecast. Moving on to H 31 which follows the money and this deals with small contingent response on 2.5 million on non-recurring funds and the 12 million for the role of small urban highway improvement funds. Next chapter is 829. Subsection A deals with directing the prioritization [xx] work group to include certain factors of data and establishing their formulas. Sub-sections B and C clarify that the board of transportation does not review or approve any of the activities or decisions made by the workgroup. Subsection D, in determining local inputs, this language directs that greater wage shall be given to the rankings identified by the M. P. Os and the R. T. P. Os over the division engineers left with work group to figure out the percentage of the weights. Moving on to page five page 20 which follows the money as well it increases the [xx] fund from 16 to 1% to 1 1/2% H19 current law basically makes it optional for counties and municipalities to pay costs associated with project improvements like requested. This changes that to make it a requirement H18 at the bottom of page five there's extent to use bridge program funds to include and cooperates associated with the components of the state highway system at the bottom of page five going over to page six 835 in last years budget the fourth session budget there was a cap implemented on the funds that can be extended by the DOD for other state travels this maintains the cap but it excludes some expenditures in 816 which is on page six this extends the purpose of which DOD may use private council without seeking approval from attorney general they can now seek council for legal service related to project undertaken by the department and workers compensation brought by the department at the bottom of page six, H15, in order reduce the amount of uneconomic remnant property on the state, the department is directed to reduce the size of each acquired right away by 3%. Page seven, H14 the department is directed to develop a report, to develop a six-year capital improvement needs esimate under 143C-A-4. This provision merely requires them to report back on how they developed that report. H13, Product Evaluation Program Subsection A directs the

Board of Transportation to develop a plan to bring more visibility and public awareness to the Product Evaluation Program and it also directs them to include in their public meeting and item that basically discusses, one technology that's currently under review and one technology that's been approved. subsection C, directs the Product Evaluation Program to actually make a decision on a product of technology within one year the product or technology being submitted for evaluation. The bottom of page seven H11, various reporting changes. I think the title captures what's going on there, this is various reporting changes, basically it's change in the frequency of summer ports in subsection C and D it's actually combining two reports, and then in subsection H, in your reports submitted by the Board Of Transportation, can now be submitted by the 15th day of the month that the report is due. Page nine H8, this provision merely extends by a year, the outsourcing requirements that were set in the last year's short session page 985, this is the establishment of the DOT report program. There's several parts to this, and subsection B, in subdivision 1 of subsection B it essentially directs the Department of Transportation to more quickly address problems with the roads, in particular address potholes that are reported to them within two days of receiving the report. Subdivision 2 directs the Department of Transportation to establish a baseline unit pricing structure for transportation goods used in highway maintenance and construction projects. Subdivision 3 directs the secretary of the Department of Transportation to conduct an annual job satisfaction survey of all department employees. Subdivision 4 directs the Department of Transportation to reclassify the funding source for all full time positions for receipt supported to appropriations, subdivision five directs the JLTSC [xx] transportation oversight committee, to review the organisation staffing and operations of the division of highways within the department. And subdivision six, directs the department of transportation to adjust it's performance dashboard to allow for easier tracking of the progress of certain projects On page 12 H12, Study termpike[sp?] Authority, Department of Transportation is directed to study whether the amount of the profit the support and GS 136-89.215 is an excess of the actual cost to collect the process on paid open rot holes, at the bottom of page 12 H37, going over to page 13 the permissible uses of the funds and the payment preservation programmers expanded to include [xx] crack dealing and you will see in the middle of page 12 in new subsection B which direct department of transportation to spend doing [xx] all fund appropriated to department for pavement preservation by June 30th of the fiscal year on which the funds were appropriated. On page 13 H41 this provision direct the utility commission to submit a report to the joint legislative commission on governmental operation, jail TOC and which should be the environmental research review commission on the incremental cost incentives, policy of the commission and how they can adjusted to allow for the use of coal combustion residual and concrete. On page 14 34 current law is bonus allatation of available under 136 that is 189.11, current law direct that to go to the county, the MPO, the arch PO, this merely adjusted for one particular project and has distributed to

the highway division instead of the county, that on page 14 H2 this is directly from House Bill 771, deal your utility relocation, this increases the population threshold for when DOT must pay the none betterment cost for moving water and sewer lines, and it also creates a tied system where municipality with a certain population threshold must pay a certain percentage of the none betterment cost. Page 15, page 27, the rail division of department of transportation is directed to study establishing a commercial flight rail service in Jacksonville North Carolina. Page 15 at the bottom H3, this is from house bill 268, and it authorizes the department to run confessions , ties and cell naming rights for a passenger rail owned by the department. And in subsection B, it clarifies that these activities aren't subject to the onset act. Page 16 H1P, these expands the uses of the funds within the first rare and the rare process safety improvement funds to include court order or protection and reactivations. Bottom line page 16 going over to page 17, H21. Current law allows for the establishment of tolls to exempt from the room making pages and chapter 150B of the general statutes, this removes that exemption. Bottom of page 17, in the middle of page 17, H6, this provision does several things. It removes the replacement and rehabilitation of ferry vessels from STI, and in sub-section B it moves it to the Bridge Program. In sub-section C, except for the net proceeds from tools collected and other receipts generated from the operation of walk-on ferry vessels on Ocracoke-Hatteras ferry route, it directs any proceeds or other receipts generated from polls to go to the Bridge Program to be used in accordance with that statute. Page 19, page 36 this provision merely clarifies that, the acquisition of work can only [xx] shall not be subject to article 14B. We have chapter 136 which is a sensor STI, the middle of page 19, 826, this says that under appropriate the division of aviation my respond appropriate in the fact to the division for time sensitive aviation related economic development projects, page 33, on page 19, this is the entirety of house bill 4, what it implemented last session in the short session budget, there was an inconsistency which has been clarified in sub-sections A and B, there's also multiple changes for example change in the reference for local license or permit to martial of the federal law regulations we get confirmation to federal regulation and page 21, page 39, let's adjust the motor fuel excise tax rate beginning on January 1st it will be 33 cents or 36 cents per gallon for diesel and 33 cents per gallon for all other motor fuels and then beginning January 1st 2017 the new CPIU formula will kick in.  H38 on the middle of page 22 this is actually part five in its entirety from house bill 927. There's just a plethora of statutes that need to be adjusted, that's why there are so many sub-sections, but this essentially, as [xx] mentioned earlier increases the fee by 50% and I'll direct you to page 37 subsection N. This is the new federal penalty for late motor vehicle registrations. Page 30, page 32,

there apparently have been issues of correcting penalties for lapses in insurance. This clarifies that if you do not respond to the notice with one exception that the penalty would be accessed and your registration be revoked the one exception if it's the division mistake and they finally respond to divisio find that it's actually their mistake, the other change that should help with enforcement if you look on page 32 lines 44-46, the failure of an owner to pay any penalty [xx] with this section shall result in the division withholding registration of any vehicle and that owner page 33 H25 subsection A increases the amount of compensation an LPA my receive certain transactions. Page 34 subsection B includes language clarifying that licensing plate agencies is the subject of standard operating procedures established by the division in addition the division by rule is to establish standards for commission contracts entered into by the division the standards shall include performance standards which also includes monetary bonus for the LPA that they meet certain standards and also direct their be a term of duration included in any contract the initial commission contract shall not have a duration of term that exceeds eight years and then the renewal, some have a term that exceeds two years, this is caved in as you see from subsection B all new contracts will be subjected to those affected to the effective date of this act as the section and all contracts entered into before the effective date, it will happen till July 1st 2018 to become compliant page 34 [xx] 24. This merely qualifies that the operation by the division of motor vehicles of digital advertising and automated teller machines offices of the division or LPA agencies or LPA's are exempt for the Amistad act, bottom of page 34 135 and 817, this will require application to the highway you said when the vehicle is being, when [xx] vehicle when you're applying for [xx] title for at least 90 days prior to the date of application for stated title in the state page 35 H10 vicements in this earlier. This eliminates the 10 day trip permit and increases the temporary tax fee and also expands the purposes for what the temporary tax may be used, to accomplish what the tender trip permit was originally used for. At the bottom of page 35 going on to page 36H9, this is purely a technical correction there was just a mistake and how we've ordered, makes no substance sense whatsoever.  Page 36H7 this increases by nine months divisions are created your time limited full time accrue position for those credited, for I believe, no, Amber do you remember what this is credible? Tag and tag it increases the deadline for one of those positions [xx] eliminate by nine months to April 1st 2016. provision H4 on page 37, this just clarify that optive of the DMV and LPA can go to the current certain place and operate as a vessel agent to perform certain transactions for personal water canal and. Committee will meet for 10 o'clock, and almost stand there  start taking question for one and a half to two minutes. Wesays and reconvene 15 minute after session nameless due to stay up by 11 and we meet back in this room 15 minute after the session, so we are on recess.