Juneau playing dangerous game with rest of Alaska

Posted: Monday, March 14, 2005

Juneau can play a game of chicken with the rest of Alaska and the state Legislature and win being the capitol of Alaska forever.

Build it, and they will have to come! Juneau proceeds with building a new capitol building whether or not the Legislature agrees to lease it.

For the sake of argument let us say the Legislature absolutely refuses to lease the new building. Juneau threatens to default on the bonds used to finance the construction. If the Legislature still says no to leasing, Juneau defaults. What will this mean?

All state and local projects from that point onward that need bonding will either not happen or the interest rates will be so high as to likely make the projects unfeasible. No new roads, bridges, schools, government buildings, etc. No funding for Alaska Housing. Alaska Industrial and Export Authority funding will dry up or be too expensive to finance any economic development projects. Sooner or later the groups wanting to develop the Pebble Mine will want the state to float hundreds of millions in bonds to help build access roads, ports and other facilities, so this baby will sink because the cost will be too high.

The companies wanting to build a gas pipeline might find it impossible or too expensive to get financing for the project because of Alaska's bonding problems.

All this can happen. The state will have to knuckle under to prevent the destruction of the good bond ratings for the state and all other communities in Alaska. The state either takes over paying the bonds or leases the building from Juneau. Either way Juneau wins.

Would Juneau do this? Juneau sees the loss of the capitol as ending Juneau, so they have no incentive not to go all the way.

To stop Juneau the Legislature could pass laws to abolish the city/borough of Juneau. If Juneau does not legally exist, it cannot float the bonds. The court battles would take years to resolve.

Or the legislature could open the bidding for a new legislative hall to any Alaskan community and prohibit bonding and construction until a winning bidder is chosen. All the more reason for the Kenai borough and the cities of Kenai and Soldotna to pass resolutions supporting Rep. Rokeberg's bill to open the bidding. Get a shot at the capitol and protect their bond ratings!

William J Phillips, Kenai

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