Railroad funding is good news for state economy

There are a few crucial pieces of Alaska’s transportation infrastructure without which our oil-based economy could not function. Two of those key pieces are the Parks to Elliott to Dalton Highway route north to Deadhorse, and the other is the Alaska Railroad from Seward to Fairbanks.

Without these transportation links, it would cost oil companies like BP and ConocoPhillips exponentially more to move the thousands of tons of freight they ship by land and rail each year. Without these vital routes, the only way to transport freight and people into Deadhorse is by plane.

Oil production and the tax dollars it generates represent one-third of the state’s “three-legged stool economy.” And the industry’s tax dollars account for the vast majority of state revenue.

As such, it seems hard to overstate the value infrastructure links like our highways and railroad have on the overall health of state savings accounts.

We were pleased last week to learn that the Federal Transportation Administration is similarly convinced of the railroad’s worth. Congressman Don Young announced Thursday he was part of a committee that negotiated a new funding formula for the Alaska Railroad Corp.

It was good news for the quasi-public corporation, which faced a 75 percent reduction in federal funding under the Senate version of the bill. Now railroad CEO and president Christopher Aadnesen says the company is looking at a more manageable $4.8 million cut.

The move seems to recognize the uniqueness of the Alaska Railroad as a publicly held asset. The railroad is unique because it continues to carry freight and passengers, was largely built by the federal government and because it is one of only a few state-owned railroads in operation.

From 1914 to 1983, the federal government owned the Alaska Railroad. In January 1983, President Ronald Reagan signed legislation authorizing transfer of the railroad to the state of Alaska. And Gov. Bill Sheffield completed the transfer in July 1984, with legislation establishing the quasi-public Alaska Railroad Corp. and its seven-member board of directors.

The Alaska Railroad Corp.’s 2011 annual report shows net income of $13.4 million on total revenues of $185.7 million and an annual payroll of more than $83 million.

It is in the midst of two major line extension projects: The Northern Rail Extension that will bridge the Tanana River at Salcha and the Port MacKenzie Rail Extension. The railroad says both projects hold tremendous potential for new commerce.

With the solidification of this new federal funding, Alaska Railroad maintains its firm stance as a vital cog in Alaska’s economy, one that has helped build our future for nearly the past 100 years.