A recent Alaska Journal of Commerce editorial called for punishing the public interest groups who challenged the proposed railroad out to Port MacKenzie. As the chief advocate for one of those groups, I think citizens should be rewarded for trying to save Alaskan tax dollars while protecting our dwindling salmon populations in the Mat-Su Valley.
I grew up in a Republican household and it was fiscally conservative. I learned not to spend more than I had. Today, the words “fiscal conservative” get a lot of lip service, but in Congress, in Juneau and in the Mat-Su Borough, any notion of true fiscal conservatism has been tossed out the window.
The Mat-Su Ferry is a classic case. The Mat-Su Borough for years touted its high-tech ferry as a transportation savior for Upper Cook Inlet. But anyone taking an honest look at the ferry’s business plan knew it was a bust. Now, after spending $4.5 million in public dollars on a fancy ferry terminal, the Mat-Su Borough is offering to give away — that’s right, give away — its $80 million ferry. It’s already spent over a million tax dollars just to store the ferry, and the Mat-Su Borough will have to pay back many millions more to the feds if and when it disposes of it. Assembly member Ron Arvin hit the nail on the head when he said “[w]e’re spending money like drunken sailors.”
But the Mat-Su Ferry is small potatoes compared to the proposed railroad to Port Mac. Current construction costs for the 32 mile rail spur to Port Mac are estimated around $300 million, but like all big government projects, that number will certainly rise. And project proponents estimate annual operations and maintenance costs at roughly $2 million a year, which is several hundred percent lower than similar per mile costs on existing Alaska rail lines.
The problem with the proposed Port Mac rail is simple math. Similar to its ferry project, the Mat-Su Borough relies on fanciful assumptions to sell its project to politicians willing to look the other way. For example, according to studies commissioned to support the project, the economic viability of the railroad to Port Mac hinges on a series of eye-popping “what ifs,” including: the development of a massive new Portland cement facility in the Interior (there is no plan currently for the facility or the mine to feed it); 3 million tons of coal annually for the shuttered Agrium fertilizer plant in Kenai, which has no plans to re-start using coal; 200,000 tons of benzene annually from a new production facility that’s not even in the planning stages; and 2 million tons of mineral ore exports annually, which is more than the Alaska’s largest mine — Red Dog — now produces. All this, and Alaska already has three tidewater ports along the railroad.
Unfortunately, the Port Mac rail spur threatens the Alaska Railroad. In its 2013 report to the state, the AKRR presents a bleak fiscal outlook, with net income dropping from $13.4 million last year, to around $11.5 million in 2012, and only an estimated $2.9 million in 2013. Yet, the AKRR only survives due to federal subsidies, so its “net” income disappears when federal earmarks dry up. Last year Don Young bragged how he bucked the anti-earmark trend of his own party to secure the $31 million annual subsidy the AKRR needed. Now, looking ahead at the fiscal gamesmanship in Congress, it’s hardly a sound business plan to continue to rely on federal hand-outs to keep the AKRR afloat.
The Port Mac rail spur has created valuable construction jobs, but those one-time jobs get overly expensive if the state or the borough loses money on operations and maintenance costs year after year.
For nearly a decade, Cook Inletkeeper and others tried to sound the alarm about irresponsible design and financing concerns around the massive Port of Anchorage expansion. We used every avenue open to us, short of litigation. But Bill Sheffield and his cronies pushed on and no political leader had the courage to question the crazy assumptions used to rationalize the project. Now, taxpayers have lost hundreds of millions of dollars, and the state’s most important port lies in limbo.
Having our valid cries fall on deaf ears at the Port of Anchorage makes it all the more important to use every available option to stop similar waste at Port Mac. Later this session, the Alaska legislature will consider spending up to another $130 million on the Port Mac rail spur. Before we throw more good money after bad, I encourage every fiscal conservative to take a hard look at the numbers behind the Port Mac rail spur and ask one of Jay Hammond’s basic questions: will it pay for itself?
Bob Shavelson holds the title of Inletkeeper with Homer-based Cook Inletkeeper.