Bond package would provide future road funding now

Editor's note: This is the third in a series of six stories relating to the ballot measures and propositions Alaska voters will find on the Nov. 5 general election ballot.

MAT-SU -- In the largest group of bond packages to come before the voters in about 20 years, the Alaska Legislature has placed Proposition B, nearly $227 million in transportation-related bonds, on the November ballot.

The bonds are broken up into two separate packages -- one is a nearly $103 million pared-down version of the Guaranteed Transportation Revenue Anticipation, or GARVEE bonds that had been tossed around the Legislature for the past two years. The other is a nearly $124 million general obligation bond package developed in the final stages of last year's session.

The money would pay for construction of some big-ticket road projects that have been languishing on State Transportation Improvement Project lists. Of the 29 projects on the list around the state, three projects totaling about $20 million would directly benefit the Valley.

On the list is $13.23 million to rehabilitate the Old Glenn Highway, $7.5 million to rehabilitate and extend the Seward Meridian Parkway from the Parks Highway to Seldon Road and $1.2 million to extend South Church Road.

Department of Transportation Deputy Commissioner Kurt Parkan explained that the difference between the two packages lies in where the money comes from. The GARVEE package, he said, is funded through federal dollars. Alaska receives about 90 percent of its DOT budget from federal money each year. Parkan said in the structure of the GARVEE package as originally proposed, 10 percent of Alaska's annual share of federal dollars would have gone toward paying off the GARVEE bonds. The revised GARVEE package would take less than 3 percent of the annual federal appropriation, Parkan said, and would be paid off in 10 years. Eight projects -- all primarily new construction -- would be funded under the GARVEE portion of the package. If passed, Alaska would join 10 other states in issuing guaranteed anticipated revenue bonds, or leveraging future federal dollars for big-ticket construction projects in the short-term.

The general obligation bond package would be funded through state general fund dollars, Parkan said. Money from the general fund, Parkan said, would be allocated for bonded indebtedness and paid off on a 15-year schedule. Both packages would have the financial backing of the state, or what Parkan called a "double-barreled approach."

"Our bond ratings are going to be as high as you possibly can get," Parkan said, referring to a report card-style accounting for how financially secure the bonds would be considered when sold by investment bankers. "The term of payback is so short -- a lot of bonds go for 30 years. These will be paid back within two cycles of their authorization. Rating agencies see that as very responsible."

Sen. Lyda Green, R-Mat-Su, had expressed several reservations about the GARVEE bond package when it was initially discussed by the Senate. She said, however, that several of her concerns have been alleviated through the decision to put the bonding package on the ballot for voter ratification. Green said she was pleased with the bill that was passed through the legislature and felt it appealed to communities across the state.

"Any time you have a bond issue that's going to go to the public, it has to have a balance to it," Green said. "I think it's a pretty good balance that we reached."

Green said she was comfortable that the structure of the bond package would allow the work to be spread over local contractors by spreading the projects in the bond package out over a few years. Initially, Green said, she was concerned that the flood of road projects would mean Outside contractors would reap the benefits of the bond package, leaving local contractors struggling to keep up with the existing workload and watching the big projects pass them by.

"This happens with lots of different growth problems that create temporary, fairly high-paying jobs," Green said. "Were it to be scattered over three years, our local contractors could probably continue to do the jobs. They do have the opportunity with this approval to put this out in an orderly fashion. You have a little distribution so that local contractors have and edge, and I think that's a good policy."

Parkan explained that the projects would be broken down into about $20 to $25 million each year for right-of-way, design and construction costs. He added that the Alaska Association of General Contractors backed the bond package because of the potential to keep the jobs local.

The bond package, Parkan said, would allow the state to knock a few projects off the STIP list.

"It will actually allow other projects to move up quicker," Parkan said. "We've estimated that our backlog of deferred maintenance needs is about $10 billion."

Green agreed with Parkan that the bonds would allow the state to catch up on projects it was significantly behind on.

"We are kind of behind the eight-ball on maintenance," Green said. "We just sort of have to get out in front with it, if the public agrees."