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Alaska lawmakers consider slapping priorities on megaproject wish list

Pat Forgey

JUNEAU -- Alaskans love big projects, but some in Juneau are coming to grips with the realization that the state's wants may exceed -- even far exceed -- its diminishing resources.

The state's billions of dollars in budget surpluses have resulted in $17 billion in available savings, but now that those surpluses have turned into deficits, they are expected to rapidly eat into those savings in coming years.

How long the extra billions last may depend on legislators' desires to feed capital project money into their home districts and a series of mega-projects that are also under consideration, including roads, dams, bridges and gas pipelines. At the same time, big pension debt is hanging over the state, further limiting legislators' options.

Sen. Kevin Meyer, R-Anchorage, is a co-chair of the Senate Finance Committee, and is handling the capital budget. He said the state isn't able to spend what it has spent in the last few years.

"We're in the process now of going through the governor's proposed capital budget and trying to find reductions we can make," he said.

Among those projects currently in the sights of some are a couple of billion-dollar projects, the Susitna-Watana Dam and the Knik Arm Crossing, and numerous smaller ones.

Meyer said it might be time to cut funding for the big dam project while the state focuses instead on a natural gas pipeline.

"I'm not convinced that has to be funded, the Susitna-Watana, they haven't used the appropriation that we've given them in previous years," he said.

Sen. Fred Dyson said that given the project's high cost, as well as costs for new transmission lines, it is a capital project the state can't afford at this time.

"I think that decision needs to be postponed for at least a decade," he said.

The Knik Arm Crossing bridge project has also come under fire from economist Scott Goldsmith, who warned the state was already drawing down its savings rapidly and heading for a crash. It can't afford to write "blank checks," he said, for the bridge between Anchorage and Point MacKenzie.

"The more I learn about the cost, financing and so-called benefits of this project, the more concerned I become," Goldsmith said.

Goldsmith, now retired, was with the University of Alaska Anchorage's Institute for Social and Economic Search for 37 years. He was speaking on his own behalf before the Senate Finance Committee this week.

The Knik project also came in for criticism in the report "Easy to Start, Impossible to Finish," questioning the prospects of several of the state's partially funded projects.

The Wilderness Society's Lois Epstein said Alaska simply can't afford to complete its started-but-only-partially-funded projects.

"That's the secret that a lot of folks in the Legislature know, but don't want to admit," she said.

Sen. Hollis French, D-Anchorage, said the demands those projects put on state savings are all too much.

"When is the state going to sit down and make some hard decisions about the many mega-projects that we're nibbling away at and not finishing any of," he said.

He identified the Susitna-Watana Dam, the Knik Arm Crossing and the Juneau Access Project road north of the capital as likely candidates for cuts.

Meyer said that the focus now should be efficiently finishing projects that are already underway, and identified University of Alaska engineering buildings in Anchorage and Fairbanks, which were allocated $5 million in Gov. Parnell's proposed budget, and the new State Library, Archives and Museum in Juneau, which got $15 million, as projects that need more than the governor proposed. Otherwise he said, construction delays will likely mean higher costs.

The geographic distribution of those projects in the state's three largest cities should help build political support for boosting spending to complete them.

And this year Parnell has already proposed more deficit spending, as well as taking $3 billion from savings to pay for past retirement costs, including the state's required $1 billion payment, plus an extra $2 billion.

But lawmakers may be reluctant to lock that money up in retirement trust funds, where they can't use it to pay for needed projects or for other priorities, Meyer said.

"We want to conserve our savings for as long as we possibly can," Meyer said. "That's the issue with pulling $3 billion out of savings."

He said capital spending this year, more than half funded by the federal government, will amount to $1.7 billion, down from last year's $2.1 billion.

Contact Pat Forgey at pat(at)alaskadispatch.com