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State Legislature Continues Megaproject Discussion

by Phillip Manning ~ April 3rd, 2014

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As this year’s session of the Alaska Legislature enters its final weeks, discussions about the state’s capital budget are likely to take up a good deal of time in the House and Senate Finance Committees.  The Senate committee recently moved a bill forward that included a new financial plan for the proposed Knik Arm Bridge.  Other megaprojects are also on the table, including the Susitna-Watana Hydroelectric Project and the new plan for a gas pipeline.  For the last week, words and actions of various legislators suggest a trend toward prioritizing projects in anticipation of what may be a series of lean budget years.

While Senate Finance did approve a new plan for the Knik Arm Bridge, it was not without opposition.  The new plan scraps the original proposal that the state partner with a private company to fund construction.  That could have left the state holding the bag for a large portion of the project’s cost if projected toll revenues fall short.  The new plan envisions using a type of federal transportation loan that the administration says would cap the state’s liability at $450 million in a “worst case scenario.”  For Senator Donald Olson, however, even the diminished state liability is too much in the current fiscal climate.

“When we look at what’s happened in the past, when we have had money, and some of the boondoggles that they’ve built:  the Anchorage seafood plant, the Point MacKenzie dairy project, the Seward grain elevator, even the Healy clean coal project out there.  The state has a nasty history of being able to go ahead and put the people’s money out there into projects that were dubious at best.  That’s why, even though I’m not opposed to the project, I’m saying the timing is not right.  What I’m seeing is that we’re flying full-throttle into a hurricane that is going to cause us a fiscal crisis, and this is another nail in the coffin of financial responsibility.”

On Thursday, Representative Bill Stoltze, Co-Chair of House Finance, told reporters that there are a series of phased projects that have already taken a significant amount of funding, and which will require significant additional funding to move forward.

“You’re seeing in the capital budget–we’re feeling the pinch of commitments that were made for phased projects.  You’re seeing some pullback on Susitna right now, and that’s one–there’s more of a holding pattern, wait-and-see on that one.  The plug hasn’t been pulled, but I consider the decision the administration made is more of a restraint…on that project.  That’s one big example.  I think the economics long-term will bear out.  Alaskans don’t always have patience to see, and healthy skepticism as well.”

Though Representative Stoltze says Susitna-Watana is in a “holding pattern,” there is still the question of Governor Sean Parnell’s request for $32.7 million in supplemental funding for the current fiscal year, which the legislature will take up before the end of session.  Multiple legislators have expressed hesitation about adding supplemental funds to the five-plus-billion dollar project in the current session, but explicit opposition to the supplement has been scant.

Hearings on the capital budget were scheduled to start in House Finance on Thursday, but may be put off pending approval of a budget by the Senate.

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