When Gov. Mike Dunleavy rolled out his proposed budget and a general obligation bond package in December, one item on the infrastructure shortlist raised eyebrows: $175 million allocated for the “Knik Arm Port.” When pressed on what that line item referred to, given that there are two ports in Knik Arm of very different scales and in two separate municipalities, the governor’s office said the money could be used by either the Port of Alaska or Port MacKenzie.
It was an answer that only raised more questions: If the money weren’t allocated specifically to one port or the other, who would decide how much money went to each port — and what it would fund? A month and a half later, we have some answers: The governor wants Anchorage and the Mat-Su to look into a regional port authority, which would govern both ports and coordinate project funding, as well as operations.
There’s a big problem with that plan: It doesn’t make any sense — fiscally or otherwise — to split resources between one port that’s bustling and another that is effectively dormant. “This isn’t a good idea, guys,” said Sen. Mike Shower, R-Wasilla, in a committee hearing on the bond proposal in late January. “We need something different than this.” Shower and other legislators appeared blindsided by the notion of funding a port authority that doesn’t exist — and worried that it would exacerbate tensions between the two ports, to the detriment of Alaskans.
Sen. Shower is right.
The Port of Alaska, at the mouth of Ship Creek, is the transport hub for the vast majority of goods coming to and from the state. In 2019, 4.3 million tons of inbound cargo crossed the port’s docks; in 2020, despite the pandemic, that number grew to 4.7 million tons, and in 2021 it nearly broke 5 million tons. A whopping 80% of all shipping containers and vans that come to Alaska do so via Anchorage’s port.
Port MacKenzie, by comparison, has handled just 14 large vessels in the past two decades and last served a deep-draft vessel in 2012, according to a 2021 strategic action plan for the port commissioned by the Mat-Su Borough. It has played host to a variety of “If you build it, they will come” initiatives that bore little fruit: A ferry prototype intended to transit between Port MacKenzie and Anchorage cost the Mat-Su Borough at least $12.6 million and never made a single trip with paying passengers. A conveyor system intended to load ships with “dry bulk” — wood chips — has been unused for a decade, was damaged by the 2018 earthquake and is now being sold by the borough. Most famously, a planned railroad extension built during Alaska’s last oil boom ran out of money five miles from the port and at least $125 million short of completion; the estimated cost to complete that project now is close to $200 million.
In fairness to Port MacKenzie, although it’s been the nexus of several pie-in-the-sky schemes during fat economic times, it’s far from the only example. Alaska has pushed money and political energy into various initiatives, from the ill-fated Knik Arm Bridge to the pipeline-era fever dream of “Seward’s Success,” a domed city of 40,000 built with oil money that would have been located at — you guessed it — Point MacKenzie.
It is the rail extension project to Port MacKenzie that Gov. Dunleavy is apparently hoping to restart — but if that’s the case, it would eat all of the bond proposal’s $175 million and have little to no beneficial impact on Alaska’s commerce or Port MacKenzie’s prospects. The port’s strategic action plan itself concedes that because Anchorage is the final destination for most of Alaska’s inbound freight, using ports other than the Port of Alaska usually results in additional costs, not savings. What’s more, $175 million might not even be enough to finish the rail extension, in which case the only accomplishment would be a further extension of a gravel berm primarily used by residents to scout for moose. Even in the best case, without a conveyor, without a crane, without stevedores to offload cargo, it’s hard to imagine Port MacKenzie attracting much new business unless the state were to invest several times the amount Gov. Dunleavy is proposing. Alaska can’t afford that.
Pouring more money into speculative schemes would be foolish in the best of times, but Alaska is tight on funds and the Port of Alaska — the port Alaskans depend on — has extensive, well-documented needs. The case for repairing and upgrading Anchorage’s port is so clear that even Mayor Dave Bronson and the members of the Anchorage Assembly see eye-to-eye on making it the city’s primary funding ask of the Legislature this session. The municipality also approved a $165 million revenue bond of its own for the port, demonstrating the will to not just ask for money from others, but to also help pay for its top capital priority with local funds.
Alaska has spent more than a half-decade coming to grips with the fiscal hangover that accompanied the 2014 oil price downturn. Now that prices have recovered, it isn’t the time to pick up pie-in-the-sky projects again as though nothing happened. Let’s be grateful for the money we have, and spend it carefully, where it will do the most good. When it comes to port projects, that means the Port of Alaska, not the “Knik Arm Port.” If the Legislature sees fit to retain port funding in the general obligation bond package, it should be specific and declare that every penny of that $175 million goes to the Port of Alaska, not a nonexistent port authority that would only add bureaucracy and divide the focus of Alaska’s commercial and industrial infrastructure.