Monday, November 05, 2012

Fairbanks Voters Split Over The Value Of Alaska 2012 Bonding Proposition A

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

Many of us in Anchorage are not enthused about the $453 million-and-change Alaska 2012 Bonding Proposition A, discussed in specific detail in this previous post. We're put out over the mismanagement of the Anchorage Port Expansion project -- and the fact that the Municipality of Anchorage signed a confidentiality agreement barring the public release of a 2,200-page draft report from the U.S. Maritime Administration documenting the flaws in the expansion until three days after the election. We feel like we're being asked to buy a "port in a poke", and don't want to throw another $50 million in good money after the bad money that has been spent so far. To counter the growing Anchorage backlash, Former Anchorage Mayor Matt Claman has just published an educated and eloquent plea for passage of the proposition. Claman offers three specific reasons why we should hold our nose and vote Yes:

-- First, the cost to complete the work on the port -- whether finishing the open cell design or changing to dock-on-piling -- will exceed $50 million.

-- Second, the economic benefits to the state from issuing bonds and protecting its assets may not be available in later years if interest rates rise.

-- Third, state investment in a project that had relied primarily on federal funds will give our public officials even more reasons to give the project the scrutiny it needs -- with an open and public process that has been missing for many years.

Even though Paul Fuhs, a former Commissioner of Commerce and Economic Development, tries to build public confidence by stating in this separate ADN Compass piece that the Municipality of Anchorage will be taking over the port project now and they are taking every precaution to have the correct design and capable project management on board to see this project through to completion, the problem is I'm not sure Anchorage voters are willing to trust any level of government with any more money for the port project, and are willing to vote the proposition down, even though it might stop the remaining 89 percent of the projects throughout the rest of the state.

What we've been lacking is input on Proposition A from Alaskans outside of Anchorage. Fortunately, some input is now surfacing in Fairbanks, and Fairbanks appears to be split over the value that Proposition A will convey. The Fairbanks Daily News-Miner has come out in editorial opposition to the proposal. In their November 4th editorial entitled "Many questions: Big bond proposition hasn't been justified", they question whether stuffing a bunch of transportation projects into a huge general obligation bond package that bypasses both the statewide transportation planning process and the annual legislative competition is the most rational way to meet Alaska's transportation infrastructural needs.

But the News-Miner also takes issue with a specific local project -- the $24 million Old Steese Highway to McGrath Road Reconstruction and Extension. Here's their concern:

The project has become extremely controversial. 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?

They believe there should have been more local discussion on these issues, and so they urge local voters to turn down Proposition A.

However, Tony Johansen of Fairbanks, who is president of Associated General Contractors of Alaska and co-owner of Great Northwest Inc. and Royce L. Conlon of Fairbanks, who is president of PDC Inc. Engineers, support Proposition A. In their November 3rd community perspective entitled "Maintain Alaska's many paths: Vote for Bonding Proposition A", they serve up a fast pitch for the local projects:

Projects in or near Fairbanks — totaling $51.4 million — include the Old Steese Highway to McGrath Road reconstruction and extension, the Wendell Street Bridge replacement, the Plack Road improvements and the Richardson Highway Ruby Creek Bridge replacement, as well as the Nenana-Totchaket resource development corridor access and the Elliott Highway Milepost 108 to 120 reconstruction. The entire list of proposed projects may be viewed at Although many of these projects are not in our backyard, this investment in statewide transportation facilities will strengthen all of Alaska’s infrastructure and economy.

They also justify the use of bonds because bonds are a mechanism to help develop a sustainable state-funded transportation program in a reasonable and controlled manner with voter approval. Alaska is one of the very few states lacking a state-funded program, relying almost exclusively on federal dollars to fund our transportation infrastructure. Approval of these bonds will demonstrate Alaskans’ commitment to independence and self-reliance to ourselves and to the federal government; with fewer federal highway dollars expected to come our way, we can choose to invest our own funds in our own infrastructure in our own state, thus helping to secure our own successful and independent future. And a significant benefit of using state rather than federal funds for projects is the speed with which state and municipal officials can obtain environmental clearances and permits, develop design documents and advertise projects for construction. This process is quicker than the federal process, not because steps are skipped but because processes can be conducted concurrently rather than consecutively as prescribed under the federal program.

Good reasoning. However, note that the Associated General Contractors of Alaska would be in line to compete for contracts if this bond is passed, thus there is also personal financial interest involved. Note that another member of the Associated General Contractors has also published a pitch for the proposition in the Anchorage Daily News. John MacKinnon, the executive director, echoes the same points made in the News-Miner, but adds that a little understood benefit of bonds is the fact that Alaska can issue tax free bonds with lower interest rates at the same time they can invest in higher yielding taxable bonds without incurring any tax liability. MacKinnon adds that the same generation of Alaskans which votes for the bonds will be on the hook for repayment, so there is no generational transfer of responsibility--the very Alaskans who benefit most from these projects will be the ones responsible for the cost of bond payments. Most of the work would be completed by 2018.

Too bad I haven't seen any input from the rest of Alaska on this proposition. We don't want to screw the rest of the state out of projects they might need, but I am appalled at the way the Anchorage Port Expansion project has been handled, and the lack of public accountability displayed by the Municipality of Anchorage. I can hold my nose easily enough -- but can I vote Yes? I'll find out on November 6th.

1 comment:

  1. I'm about to vote. It'll be yes on this bond proposition. There is some big time inflation coming in the latter half of this decade, so better now than later.

    On the whole, I don't like bonds as the default option. I'd like to see a 'save and spend' political culture develop. It is better to collect interest, than to pay it.