Sunday, October 28, 2012

Alaska 2012 Bonding Proposition A Calls For Over $453 Million For Statewide Transportation Projects; But Anchorage Port Problems Make It A Tough Sell

Update November 6th: With 98.6 percent of votes counted, Bonding Proposition A passed with 56.57 percent of the vote.

Update November 5th: Former Anchorage Mayor Matt Claman calls for passage of Proposition A, but Fairbanks voters split on the proposal. Updated post HERE.

On November 6th, 2012, Alaskans will also be asked to weigh in on two ballot initiatives. Ballot Measure 1 asks voters if there should be a constitutional convention; this question appears every 10 years. And Bonding Proposition A asks voters' permission to issue $453,499,200 in general obligation bonds to pay for various state transportation projects not included in the capital budget.

However, when I visited the Alaska Division of Elections website, I found that only the language of the measures is provided. There are no pro or con statements, and most surprisingly, no list of the projects to be funded. The measures aren't even listed in the Alaska Voter Guides, either the online versions or the paper copies mailed to every Alaska household.

Well, excuse me if I would like to know what specific projects the state wants to spend this money on before I decide. There may be no individual tax dollars involved, but they are still public funds, and we still have an obligation to spend those funds wisely. So I did some digging, and I found that Bonding Proposition A was established by HB286, passed during the 2012 legislative session. The amount will be split up and awarded to two separate departments for the projects listed below; note that these projects are separate and distinct from those listed in the capital budget established by SB46:

DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT. The amount of $195,400,000 is appropriated from the 2012 state transportation project fund to the Department of Commerce, Community, and Economic Development to be awarded as grants under AS 37.05.315 or 37.05.316, as applicable, to recipients for projects as follows:

-- Anchorage - Port of Anchorage Expansion $50,000,000
-- Bethel - Harbor Dredging $4,000,000
-- Bristol Bay Borough - Port of Bristol Bay Expansion and Pile Dock Replacement: $7,000,000
-- Emmonak - Port Improvements $3,000,000
-- Haines Borough - Boat Harbor Upgrades $15,000,000
-- Hooper Bay - Boat Harbor $1,000,000
-- Kodiak - Pier III Replacement $15,000,000
-- Kotzebue - Cape Blossom Road and Deep Water Port $10,000,000
-- Matanuska-Susitna Borough - Bogard Road Extension East $13,500,000
-- Matanuska-Susitna Borough - Port Mackenzie Rail Extension $30,000,000
-- Nenana - Totchaket Resource Development Corridor Access $6,500,000
-- Newtok Traditional Council - Mertarvik Evacuation Road Construction $4,100,000
-- Nome - Port Design and Construction $10,000,000
-- Sand Point - Sand Point Road Rehabilitation $2,500,000
-- Seward - Marine Industrial Center Expansion $10,000,000
-- Sitka - Sawmill Cove Industrial Park Dock $7,500,000
-- St. George - Harbor Reconstruction $3,000,000
-- Togiak - Waterfront Transit Facility $3,300,000

DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES. The amount of $254,500,000 is appropriated from the 2012 state transportation project fund to the Department of Transportation and Public Facilities to be allocated among the following projects in the amounts listed subject to reallocation between projects in accordance with AS 37.07.080(e):

-- Anchorage - Glenn Highway, Hiland Road to Artillery Road Reconstruction $35,000,000
-- Anchorage - Glenn Highway/Muldoon Road Interchange Reconstruction $15,000,000
-- Anchorage - New Seward Highway/36th Avenue Reconstruction $26,000,000
-- Anchorage - New Seward Highway - MP 75-90 Bridge Repairs $10,000,000
-- Anchorage - O'Malley Road Reconstruction $15,000,000
-- Elliott Highway, MP 108-120 Reconstruction $6,500,000
-- Fairbanks - Old Steese Highway to McGrath Road Reconstruction and Extension $24,000,000
-- Fairbanks - Wendell Street Bridge Replacement $14,400,000
-- Juneau - Glacier Highway, MP 4-6 Improvements $5,500,000
-- Juneau - Mendenhall Loop Improvements $6,000,000
-- Kenai - Kenai Spur Road Rehabilitation $20,000,000
-- Ketchikan - Shelter Cove Road Construction and Improvements $19,000,000
-- Mat-Su - Fairview Loop Reconstruction $10,000,000
-- Mat-Su - Knik Goose Bay Road Reconstruction $15,000,000
-- North Pole - Plack Road Improvements $5,000,000
-- Platinum Airport Runway Extension $3,100,000
-- Richardson Highway - Ruby Creek Bridge Replacement $11,000,000
-- Sitka - Katlian Bay Road Construction $14,000,000

Bonding Proposition A is not necessarily a slam dunk. The Anchorage Port Expansion has become quite controversial due to design deficiencies and cost overruns. Indeed, although a recent $2 million evaluation of the port's design was conducted by CH2M Hill and overseen by the U.S. Army Corps of Engineers at the behest of the U.S. Maritime Administration, the details will not become available to the public until November 9th, three days after the election. The excuse cited is "confidentiality agreements", but this project has become so controversial that not even Mayor Dan Sullivan's personal assurances that it's going to be money well spent on a project that's absolutely necessary are sufficient to allay concern.

Update October 29th: The U.S. Maritime Administration, which sought the Port study by engineering firm CH2M Hill, now says that the study suggests the port expansion shouldn't go forward as designed because of the risk of shifting forces during an earthquake. Only the north end of the project was designed to withstand a major earthquake. And the Municipality was going to sit on this information until after the election? WTF, over? Dermot Cole of the Fairbanks Daily News-Miner says this lack of transparency is sufficient justification to vote No on this proposition on November 6th.

This concern about the port is the reason why opposition to Prop A has already emerged. First, the Anchorage Daily Planet has come out in editorial opposition, and the port question is their primary reason. Voting on funding a port expansion three days before an evaluation is to be released is like buying a "port in a poke". But the Planet also objects to "fiscal creep"; the proposition started life as a request by Gov. Sean Parnell for $350 million in general obligation bonds for six port projects, and then lawmakers blew it up with an entire plate of goodies palatable to voters, raising questions about whether the projects are really necessary, or could have been underwritten by other available funds such as federal dollars.

Another source of opposition is provided by Brad Keithley, who is a partner with Perkins Coie LLP, an oil and gas-related law firm. Keithley doesn't think we can afford the proposition, even though Alaska state government revenues never have been higher, Alaska has run apparent surpluses the last two years, and the latest state projections predict at least a few more years of apparent surpluses before Alaska’s fiscal situation becomes tight. But Keithley contends that Alaska is already engaged in deficit spending even though it's not showing up immediately, Alaska's current fiscal plan is nothing short of a ticking time bomb, designed to go off precisely when future "post-Prudhoe" generations will need a continuing revenue stream to avoid the onset of statewide income, sales and property taxes. He estimates that could happen as early as 2023. Keithley puts forth a couple of ideas that could defer or eliminate the problem, but he says spending must be cut NOW. So that means No on Prop A.

Update November 4th: The Fairbanks Daily News-Miner now editorially opposes the proposition. While they share the general concern about the Anchorage Port Expansion, they also have questions about the Old Steese Highway to McGrath Road Reconstruction and Extension project. They write "It would sit just inside the eastern-most boundary line of Creamer’s Field Migratory Waterfowl Refuge and would disrupt a number of the recreational trail routes in the refuge. Would a vote for the bond package be a vote for that route? DOT officials say no, but $24 million has a lot of momentum. In addition, if they’re correct, what exactly are we voting upon Tuesday?" However, two other Fairbanks notables support the proposition.

At the same time, we must consider the possibility that because of inflation, these projects will cost more in the future than they do now. There's also no reason why we should not capitalize as much as prudently possible on the present wave of ACES-generated revenue. While the Port may be questionable, the rest of the projects may well be necessary, particularly the three bridge projects. After the collapse of an interstate bridge in Minneapolis a few years ago, you don't want to take risks with bridges.



  2. These bonds are for retrofitting lighting and installing a control system (BAS) in a building. I need to know the rules so I know when to get these bonds more efficiently and quicker.