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Alaska Legislature

At $230 million, capital budget plan yanks some megaproject funds, supports Kivalina school and oil tax credits

  • Author: Alex DeMarban
  • Updated: July 26, 2017
  • Published July 26, 2017

Legislators who plan to jet into Juneau for an anticipated single-day session on Thursday unveiled the draft version of a $230 million capital budget compromise that takes money from two slowly dying megaprojects to support construction of a Western Alaska school.

The measure boosts state assistance to communities by $8 million. It provides what is needed to meet the bare annual minimum to make cash payments of tax-credit subsidies to oil companies — $77 million in total, with $20 million from the proposed capital budget joining funds approved in the operating budget in late June.

The state currently owes the oil companies more than $700 million in cash credits, but Alaska last year began holding payments to the legal minimum amid a giant deficit.

The draft capital budget, a compromise hammered out by legislative leaders, is expected to be approved Thursday. It is typically passed before July 1, the start of the state's fiscal year.

The delay, stemming from disputes over Alaska's deficit and how to resolve it, led to concerns that construction projects statewide would be delayed. The draft budget will provide state money that draws $1.2 billion in matching federal funds to support those projects.

"It's a compromise. I think Alaska wins in general because our construction season in general continues, and projects that communities expect get funded," said Laura Cramer, chief of staff to Sen. Anna MacKinnon, an Eagle River Republican who co-chairs the Senate Finance Committee.

MacKinnon played a lead role in compromise negotiations, along with Rep. Neal Foster, D-Nome, co-chair of the House Finance Committee.

The budget moves about half the money contained in two megaprojects mothballed amid Alaska's economic downturn: the Juneau Access project involving a 50-mile road from Juneau to an unbuilt ferry terminal on the line north to Haines, and the Knik Arm Bridge, a nearly 2-mile-long span connecting Anchorage and the Matanuska-Susitna Borough.

The deal on the table would move $21.3 million from the Juneau project to capital projects in the greater Lynn Canal area of Southeast.

It would also move $4.4 million from the Juneau project to support the Kivalina School, providing the bulk of additional funding for the school contemplated in the proposal.

The Juneau project will retain $21.3 million.

The Kivalina School would receive $7 million under the plan, boosting its total legislative appropriation to about $50 million, Cramer said.

A 7-mile road to the school is estimated to cost at least $40 million, but the road is currently not funded. The road could also be used as an evacuation route to high ground for Kivalina, which is threatened by sea erosion.

Another $500,000 for the school would come from money originally budgeted for the Knik Arm Bridge.

The bridge will also retain about half of the $5 million it contains in its accounts, with another $2 million being removed to support other transportation projects, Cramer said.

The capital plan provides an additional $8 million for community assistance, boosting this year's funding for the revenue sharing program that's critical in Alaska towns to $38 million, Cramer said. That's up from $30 million last year.

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