Knowles administration seeks $425 million transportation package

Posted: Wednesday, February 28, 2001

JUNEAU (AP) -- Transportation Commissioner Joe Perkins unveiled a $425 million plan Tuesday to improve roads and build ferries by using some of the state's annual slice of federal transportation money to back bonds.

The six-year plan -- similar to one rejected by the Legislature last year -- would layer a thick coat of construction money over the annual capital budget, which is usually heavily tilted toward transportation projects. And it would tackle projects too large to fit in those annual spending plans, Perkins said.

Among the biggest chunks of spending:

--$70 million for new fast ferries, one to run between Juneau and Petersburg, the other to link Wrangell and Ketchikan.

--$58.2 million to eliminate the bottleneck on the Glenn Highway near Merrill Field in Anchorage.

--$28.8 million to extend Anchorage's C Street from Dimond Boulevard to O'Malley Road.

--$18.7 million to reconstruct Illinois and Barnette Streets and build a new bridge over the Chena River in Fairbanks.

--$17.8 million to expand the Palmer Wasilla Highway in the Matanuska-Susitna Borough.

--$15 million resurface roads in various Bush villages.

--$11.4 million to rehabilitate erosion-damaged Shore Avenue in Kotzebue.

--$10.6 million to repave the North Kenai Spur Road on the Kenai Peninsula.

Perkins touted several benefits of the plan, saying it would allow Alaskans to enjoy the benefits of transportation benefits sooner, decrease the impact of inflation and save the state millions of general fund dollars that would normally be required to back the federal money.

Here's how it would work: The state would sell Grant Anticipation Revenue Vehicles (GARVEEs for short), bonds backed by about 10 percent of its annual federal highway money over 15 years. Ordinarily, that highway money requires the state to chip in a 10 percent match. But the state would avoid that, Perkins said, by banking some of the proceeds from the bond sale and using the interest to pay the match.

''This is not going to cost the state one penny in general funds,'' said Perkins, who estimates that Alaska's transportation needs add up to $7.5 billion.

Budget leaders in the Republican-led Legislature expressed support for the general idea, but questioned some of the details, especially the scope of the package.

''We want to be sensitive to not overheating the economy,'' said House Finance Committee Co-Chairman Eldon Mulder, R-Anchorage. Mulder said he's concerned about the road projects combining with a big surge in school construction to pull in construction firms and workers from Outside.

In the Senate, Finance Committee Co-Chairman Pete Kelly said the plan might meet opposition because it doesn't call for a statewide vote of the people. General obligation bonds require a statewide vote, and Gov. Tony Knowles had said his transportation package would include one as recently as December. However, Perkins said state officials now believe a vote isn't necessary because the money to repay the bonds won't come from the state's general fund.

''I think the Senate is probably going to insist that ... there be a vote of the people,'' said Kelly, R-Fairbanks, although he conceded that a measure that spreads transportation wealth so widely would likely succeed at the polls.

However, Mulder said the House may not share that reservation.,

''In my mind and according to our legal beagles, it's not a requirement that it go before a public vote,'' Mulder said.

If lawmakers decide to back the package, disputes will almost certainly break out about some of the details, especially the two fast ferries. The Legislature -- which draws most of its members from communities on the road system -- has been reluctant to approve new vessels without commitments from the administration that old ships will be taken out of service.

The issue is not so much the cost of the new ferries as the increase in the cost of operating the Marine Highway system, which requires a big subsidy from the state's general fund each year.

''What I'm trying to avoid is a backdoor expansion of the ferry system,'' Mulder said. ''There could be expansion of services with fewer dollars, but only if you bring these large, inefficient ships off-line.''



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