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Alaska Legislature

With infrastructure funding in short supply, Alaska lawmakers look Outside for help

The U.S. Coast Guard Cutter Healy viewed from the Port of Nome causeway. (ADN archive)

JUNEAU — Alaska’s budget woes have lawmakers and others looking to the federal government and Outside business interests to shoulder the cost of new infrastructure projects in the state.

On Tuesday, the House Transportation Committee heard testimony on two such ideas: one related to a new deepwater Arctic port earmarked for Nome, and one related to a railroad link between Alaska and Canada.

The hearing came days before lawmakers are set to start debating the capital budget for the fiscal year that starts July 1.

The capital budget pays for construction and renovation projects across Alaska — the tangible capital of the state’s infrastructure. According to records kept by the Legislature’s nonpartisan finance division, the capital budget peaked in spring 2012, when lawmakers voted to spend more than $2 billion. Capital projects were among the first things cut when oil prices (and revenue) plummeted a few years later. Last year, lawmakers approved a capital budget with less than $150 million in direct state support.

This year’s capital budget could be even smaller. Sen. Natasha von Imhof, R-Anchorage and the capital budget chairwoman for the Senate, has warned that the state’s current levels of spending are not enough to keep up with maintenance.

Alaska already has a long list of maintenance projects deferred because of a lack of money.

Von Imhof said by email that it’s “hard to say” whether that list is growing, partially because the state may sell buildings. Gov. Mike Dunleavy has asked state agencies to give him a list of possibly surplus facilities by June 1, and legislation in the Capitol could also affect the situation.

Most of the money in the capital budget is used for federal matching grant programs. Last year, the $150 million in state support unlocked another $1.1 billion in federal money for construction.

Could the Legislature use that approach more broadly? Can the state convince the federal government (or businesses) to pay for large, new infrastructure projects?

“I think so,” said Rep. Cathy Tilton, R-Wasilla and the ranking minority member on the House Finance Committee. “I think that we have to look outside of our state government to help our economy and create the means to have a vibrant economy.”

Von Imhof said that “the state needs to be more innovative” and suggested that the state could leverage the accounts of the Alaska Energy Authority, Alaska Industrial and Development Export Authority and Power-Cost Equalization Fund for infrastructure investment.

“The state can also deregulate, streamline permitting, and maintain consistent and predictable budgeting and taxation to attract investment,” she said.

Rep. Neal Foster, D-Nome, is among the lawmakers seeking an alternative approach as he promotes a resolution supporting a long-planned Arctic port in Nome.

Planning has cost $3 million to date, according to figures presented to the Legislature this week. Dredging Nome’s port and building a new causeway to accommodate icebreakers — currently the U.S. Army Corps of Engineers’ preferred approach — will cost millions more.

Who pays for that is an open question: The Corps of Engineers needs a non-federal partner to shoulder some of the cost, and if the state doesn’t have the money, the city of Nome may have to come up with it.

It’s the kind of project the state would have funded on its own in past years. Now, Foster’s resolution calls for the state to help Nome develop “innovative funding strategies” to build the port.

“We really don’t have the money, the substantial money, like $100 million to throw that toward one project when we have substantial needs in the state,” Foster said.

An Alaska Railroad freight train travels near Girdwood next to the Seward Highway and Turnagain Arm south of Anchorage on Thursday, February 14, 2019. (Bob Hallinen photo)

The same is true for a long-planned railroad connection between Alaska and Canada. Private investors have come to the Capitol this year in support of the project, but they’re not asking for money — they’re asking for the state to smooth regulatory hurdles. A resolution passed by the Senate and under consideration in the House asks President Donald Trump to grant a permit allowing the project to cross the border.

“There’s great opportunity that could get spread around the state,” said Sen. Shelley Hughes, R-Palmer, speaking in favor of the railroad resolution Tuesday to the transportation committee.

Construction is estimated to cost $17 billion.

“It’s private dollars at this point?” asked Rep. Adam Wool, D-Fairbanks.

“Yes, it’s private investment,” Hughes said.

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