John Havelock: Sifting through the murky motives behind some state mega-projects

John Havelock

The Alaska Legislature, with the governor's support, has three huge continuing projects on the table as the session opens, each of which has already consumed tens or even hundreds of millions of dollars: a dam, a bridge and a pipeline. We have also a fresh example in the State Legislature's building in Anchorage of how well the Legislature manages even "little" multimillion dollar projects. And don't forget the Anchorage port mess.

At the same time we are told the state is going broke, facing a reported $2 billion annual deficit requiring dramatic cuts in education and other essential services. The biggest chunk of the anticipated deficit results from an amendment to the tax code gifting the three major oil companies a dramatic tax cut. Don't let them tell you otherwise. Much of the rest comes from expenses associated with mega-projects. The voters of Alaska can sort out responsibility in the elections later this year or snooze their way through to disaster.

There are at least four underlying principles that explain this state of affairs.

• First: The core support for undertaking a giant project comes not from those who, after carefully thinking it through, have concluded the project is a good idea for the long term benefit of the people. No, the driving force comes from those who see personal profit over the first decade from the study and construction phases. Alaskans get some of the labor employment but most of the work will be performed by temporary residents. Executive salaries and profits also go Outside. We could build a mile-high pyramid or grow strawberries on Denali and the benefit distribution would be the same. KABATA, the bridge organization, for example, was founded with advocacy as a purpose before feasibility was established.

• Second: Those who conduct feasibility studies are likely to find a project feasible if they are allowed to bid on the jobs for carrying out the project. Each of the mega-projects reflect the input of unrealistic estimates and the discounting of risk to move the project forward. If deliberately false information was fed into the decision, fraud is a possibility but how would we ever know?

• Third: In the American free enterprise system, the distinction between those things the government should do and those that should be left to the private sector should be honored, for good reason. State ownership is OK for public services, but socialism, the state promotion and ownership of enterprises intended to make a profit, is rarely a good idea, especially suspicious if large, private corporations are encouraging participation. Why and how have state officials been seduced into participating with the state's cash, credit and risk exposure in a profit-making activity like oil shipment and marketing? Which other states, and there are plenty with gas, are proposing to build pipelines?

• And fourth: Strict oversight is required whenever the state is doling out money. Where is the timely and objective oversight? National news offers a clue regarding what to do. In the case of New Jersey's probable misuse of Hurricane Sandy funds, the investigating agency is an inspector general.

Every few years, some legislator proposes a constitutional amendment to make the Alaska attorney general an elective office. New supporting reasons have emerged. It took the FBI to catch the North Slope Borough embezzlements. The Corrupt Bastards Club followed offering continuing proof that the state's attorney general has a difficult time with oversight of politically sensitive activity.

To attempt to cure this situation by making the attorney general an elective office would be an expensive mistake. Duplicate legal offices for a split executive power would run up costs and politicize the functions.

What Alaska needs is an independent Office of Inspector General with broad inquiry powers, its chief either elected or chosen in a manner similar to our choice of judges. There is plenty of reason to get a rigorous oversight office in place soon considering the hundreds of millions of waste in mega-projects still in process. Let's not wait for the FBI again.

John Havelock served as Alaska's attorney general during the second Egan administration, beginning in 1970.

John Havelock