Politics

Federal money triggers Alaska capital budget increases

JUNEAU -- Many Alaska politicians may rail against federal overreach, but when it comes to money, the state often has its hand out to Washington. But as the struggles over this year's budget show, sometimes there are risks in taking that money.

With low oil prices making it difficult to find general fund dollars to spend on capital projects, more than 80 percent of this year's $1.5 billion capital budget comes from the federal government. That capital budget is scheduled to be voted on Sunday by the state House of Representatives.

Past decisions to take federal money have caused that budget to grow in the last few days as the House Finance Committee has added new projects to the budget.

One of those projects was a new ferry route in Southeast that the committee added at a cost of $500,000 even while proposing more cuts to the Alaska Marine Highway System.

The federal government funded construction of two new ferry terminals at a cost of $27 million, but when the communities served by the terminals were unable to support the service, it was abandoned.

Now, the feds want their money back.

"If we don't have service into those port communities where the infrastructure was built, then we'd have to pay the federal government back $27 million," said Rep. Cathy Munoz, R-Juneau.

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Funding for the new route took many by surprise, including the legislators who represent the region and the Inter-Island Ferry Authority, the recipient of the money. The authority will be asked to create a ferry service between Coffman Cove on Prince of Wales Island and the terminal near Petersburg on Mitkof Island.

The new ferry service wasn't the only surprise money in the capital budget.

The Juneau Access Project, a road running north from Juneau to a new ferry terminal that would connect to Skagway and Haines, also got $25 million in the budget.

The Department of Transportation's Jeff Ottesen said that if federal officials think the state is abandoning the Juneau Access Project, it cold require the millions of federal dollars already spent on it to be repaid.

State officials have expressed concerns that both Juneau Access and the Knik Arm Crossing could face calls for refunds as well. They have included $25 million for Juneau Access and $43 million for Knik Arm Crossing in the budget, but that's not state money.

Instead, Ottesen said it is in federal receipt authority, and will help show the federal Department of Transportation that the projects have not been abandoned, reducing the risk of repayment calls.

The state has spent $73 million in federal money on the Knik Arm Crossing and $25 million on Juneau Access, and doesn't want to trigger repayment calls by canceling the projects without fully studying them, transportation officials said.

DOT officials say that the completion of the ongoing environmental impact statement for Juneau Access, likely early next year, would likely be a point at which the project could be abandoned with less repayment risk.

But in the House Finance Committee, critics of both the Knik Arm Crossing and Juneau Access projects expressed concerns that any additional funding, even if it were only "receipt authority," could move the projects forward.

Rep. Les Gara, D-Anchorage, said the state can't afford its local match for the Knik Arm Crossing, which he said involved more than a billion dollars in additional associated road improvements that are not part of the actual bridge project.

"I personally believe it's time to say, 'We're not going forward with this project,'" he said.

Voting along caucus lines, the Republican majority rejected attempts to cut funding for the two projects from the budget.

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