Capital budget cuts leave large projects unfunded for now

When Gov. Bill Walker released a bare bones capital budget Dec. 15, opponents of the state’s major infrastructure projects hailed the move.

Walker pulled $114.3 million from the “work in progress” capital budget of former Gov. Sean Parnell that Walker released without endorsement Dec. 5.

The latest 19-page capital proposal includes $104.9 million of total unrestricted general fund spending, and $73.8 million of that is money needed to match federal appropriations. It has no designated general fund spending, while Parnell’s budget had $40.8 million in designated funds; The largest appropriations were $22 million to the Alaska Housing Finance Corp.’s Weatherization Program and $15 million for the Alaska Energy Authority’s Renewable Energy Fund.

Walker’s total capital budget, with federal receipts, is $1.34 billion. Parnell’s budget totaled $1.41 billion.

The Legislature will almost certainly add back in some of the cuts Walker made and fund other work across the state that is time sensitive.

The current fiscal year 2015 capital budget passed by the Legislature in April was $2.12 billion, with $584.1 million of total unrestricted general fund spending. Of that, $444.2 million was unrestricted general fund receipts, the money that the state has the most discretion to spend on projects.

Just a few short years ago in fiscal year 2013, state lawmakers spent more than $1.66 billion at their leisure from the general fund.

It’s a sign of the times. Alaska North Slope crude sold for $57.70 per barrel on Dec. 16.

Notable cuts from Walkers budget include $20 million for the Susitna-Watana Hydro project, the major dam on the Upper Susitna River being pursued by the Alaska Energy Authority.

“Gov. Walker’s common-sense, economics-based decision to remove funding for the Susitna dam is a strong show of leadership and willingness to walk the talk from last fall’s campaign when it comes to doing what’s best for Alaskans,” Susitna River Coalition President Mike Wood said in a Dec. 16 release. “Spending over $5 billion to dam the fourth-largest king salmon river in the state doesn’t make sense for the future of Alaska.”

The need to prioritize expensive state infrastructure projects was a fundamental message of Walker’s campaign.

AEA Executive Director Sara Fisher-Goad told the authority’s board Dec. 16 that the dam, which would secure long-term electrical needs for the Railbelt, would likely cost $5.65 billion.

Authority spokeswoman Emily Ford said AEA has about $10 million in unencumbered funds from the $192 million it has received for the project to date.

The Legislature approved $20 million for the project last session.

“It has been challenging to execute full field seasons with annual appropriations,” Ford said. “In order to be in the field in May, we have to go to bid and contract with vendors before the capital budget is passed. As a result, we have worked to prioritize field efforts based on the level of funding received.”

AEA needs about $100 million more to get the project through the Federal Energy Regulatory Licensing process, Fisher-Goad said.

The Alaska Industrial Development and Export Authority’s study of a potential industrial access road to the Ambler Mining District in Northwest Alaska at least temporarily lost $8 million as part of Walker’s cuts.

AIDEA spokesman Karsten Rodvik said the development authority is continuing to listen to community input about the road and had several days of public meetings scheduled in Fairbanks the week of Dec. 15 to 19. AIDEA is working to submit its environmental impact statement application for the project soon, and would need $10 million to complete the multi-year assessment, according to Rodvik.

“We just need to wait and see what the administration wants to do,” he said.

The Alaska Railroad Corp. can’t wait much longer for state help to pay for its unfunded federal mandated to complete the Positive Train Control project.

The railroad is requesting $21.8 million in fiscal year 2016 to keep work moving on the technology system that would allow trains traveling at unsafe speeds to be slowed and stopped remotely. It would need another $31.7 million through fiscal 2018 to complete the $156 million project.

The Federal Railroad Administration has a December 2015 implementation deadline set for the nation’s railroads, but Alaska Railroad spokesman Tim Sullivan said only one of the more than 40 rail corporations nationwide is expected to meet the deadline. As a result, an extension is expected.

If a railroad does not meet the PTC deadline it can be fined daily or have its ability to offer passenger service revoked.

The University of Alaska Board of Regents is requesting $97.3 million from the State of Alaska for deferred maintenance and other work. Of that, $31.3 million is needed to finish the University of Alaska Fairbanks engineering building. The project was put on hold last year while the state pays for a new and much-needed combined heat and power plant at the university.

UAF spokeswoman Marmian Grimes said the original cost of the engineering building project was $108.6 million and $3 million has been added to that because of contingencies and delaying completion. About $2.5 million can be added to the total project cost each year it is delayed, she said.

The university is also asking for permission to bond for $5 million to put towards the engineering building.

Other projects up in the air include the $574 million Juneau access road, a project Walker criticized during his campaign.

In Southcentral, the Municipality of Anchorage will eventually need $350 million for the do-over of its port construction. The municipality has about $130 million in the bank for port work now and could look to bond for some of the remainder it will need, but Mayor Dan Sullivan said the importance of the port to the whole state means it focused on the state for funding help.

The Matanuska-Susitna Borough also needs $120 million over the next few years to finish its 32-mile rail spur from Houston to Port MacKenzie. Like Sullivan, Mat-Su Borough Manager John Moosey has said the rail would benefit the economy of the entire state and thus the borough should not be saddled with the bill.

The rail spur would allow bulk commodities to be imported or exported efficiently from the deepwater port. Port MacKenzie is set up as raw commodity operation, while the Port of Anchorage best handles containers, fuel and consumer good shipments.

Elwood Brehmer can be reached at [email protected].

11/18/2016 - 11:09am