Anchorage Daily News

JUNEAU -- Voters in November will decide if the state should incur $315 million in debt to pay for road projects around the state.

One of the last actions of the Alaska Legislature in the session that ended Sunday was approval of a general obligation bond package.

It was introduced by Gov. Sarah Palin last January as a $140 million transportation bond package. The House added in $80 million worth of projects, and the Senate piled on another $95 million.

Despite concerns that voters might balk at its size, Palin said she will not veto the bill. She said it is still a manageable amount of debt for the state to incur.

"It truly is just a matter now of the voters having their say," said Palin. "That's the beauty of a bond package; they tell us what their priorities are."

Lawmakers estimate the bonds would be paid off in 20 years at a rate of about $24.6 million a year and an annual interest rate of 4.85 percent.

Palin said it would not affect the state's bond rating, currently at a comfortable AA+.

Not everyone was comfortable relying on bonds for projects, however. Senate finance leaders resisted at first, saying the state should use its burgeoning surplus to pay cash for projects.

Some lawmakers in the House agreed.

"I'm concerned that we are spending someone else's money," said Rep. Carl Gatto, R-Palmer. "We are putting our future progeny in debt."

But House Finance Committee Co-Chairman Kevin Meyer, R-Anchorage, said the proposal makes sense. The state can earn more in interest on its savings than it would spend to repay the debt, he said.

"With interest rates as low as they are, it just made sense to borrow and put more money into savings," Meyer said.

The projects range from $30 million to widen University Avenue in Fairbanks to almost $5 million to resurface a road on Prince of Wales Island.

The projects also include $22 million to build a new section of highway in Anchorage, $20 million for a bridge in Aleknagik, $14 million for Dalton Highway improvements and $10 million for Sawmill Creek Road in Sitka.

Some lawmakers grumbled that the bonds' regional balance was skewed in favor of some areas, but others said spending is distributed across the state through all of the budget bills.

The last time the state issued general obligation bonds was in 2002. That's when voters approved a $237 million bond package to pay for construction and repairs of schools, museums and the university.

House Bill 314 passed the Senate 15-5 and the House 24-16.

What's in the bill

Among the projects in the $315 million state transportation bond package:

• Anchorage: Dowling-Minnesota connector, $22 million

• Mat-Su: Fairview Loop reconstruction, $22 million

• Aleknagek: Wood River bridge, $20 million

• Seward Highway: Windy Corner upgrade, $20 million

• Fairbanks: University Avenue widening, $30 million

• Anchorage: Port expansion, $10 million

• Anchorage: Victor Road upgrade, $14 million

• Statewide: Emergency bridge, repair $20 million

• Kenai Peninsula: Various projects, $8 million

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