Alaska got the lowest August federal transportation allocation among states at $19 million after error-filled submission

The state of Alaska was awarded $19 million by federal highway administrators in August, the lowest amount given to a state this year from an annual reallocation of unused federal transportation funding.

Alaska transportation officials had requested $71.4 million from the August redistribution. But $52 million in projects was rejected due partly to errors made in the state’s submission. Alaska contractors are disappointed and concerned what that will mean for next summer’s road construction season and beyond.

At the end of each August, the Federal Highway Administration redistributes transportation funds among states that cannot be obligated by the end of the federal fiscal year on Sept. 30.

The Federal Highway Administration announced on Aug. 30 that a record $8.7 billion would be redistributed to state transportation departments across the nation. Texas got the largest allocation at $1.17 billion. California got the second largest share with $622 million. Alaska received $19 million in spending authority — the lowest figure among 50 states and Washington D.C.

State transportation officials say this year’s reduced redistribution was due to several factors: Fewer big pots of money available to fund projects, changing federal requirements and added scrutiny on Alaska’s transportation spending.

“We are actually pleased to have captured this $19 million,” said Shannon McCarthy, a spokeswoman for the Alaska Department of Transportation, in an interview last week.

State transportation officials acknowledged that the state’s delayed and error-filled four-year, $5.6 billion transportation plan was a contributing factor to the Federal Highway Administration’s rejection of $16 million in projects from Alaska’s August redistribution request.

According to a transportation planning document obtained by the Daily News as part of a records request, much of the state’s ask for unused federal transportation funds was denied because of significant errors made in the submission.

Basic and significant errors

The State Transportation Improvement Plan, or STIP, is a separate and comprehensive plan for highways, roads, ferries, and even bicycle lanes to be implemented in Alaska through 2027. States typically had their four-year transportation plans approved by last October, the start of the federal fiscal year.

Alaska’s first transportation plan was rejected by federal highway administrators four months late in February due to significant errors with dozens of proposed projects. After scrambling to correct mistakes and to remove ineligible projects, Alaska’s transportation plan was only partially approved in March.

Additionally, state officials were required to submit an amended transportation plan in late August that made corrective actions to numerous projects.

“There are a pretty significant number of them, and they are detailed and take a lot of work to address,” said Aaron Jongenelen, executive director of AMATS, Anchorage’s local transportation planning organization.

Some of the same problems associated with the state’s first four-year transportation plan have persisted through the process to correct those errors.

Last year, AMATS and Fairbanks’ transportation planning organization, FAST Planning, said they were excluded from drafting the state’s plan as required by federal regulations. Projects were added to the state’s that were not also supported by the local planning organizations, such as bridge improvements to serve a contentious ore-haul project near Fairbanks operated by Kinross.

In late July, FAST Planning said they “were again excluded during development” of the state’s draft amended plan. Many of the concerns from local planning organizations were subsequently addressed by state transportation officials, but others remained.

The Alaska Department of Transportation has wanted to improve a stretch of the Seward Highway between Potter Marsh and Bird Flats, but the costly project has not been fully included in AMATS’ own transportation plan, which is required by federal regulations. The project was added to the state’s amended transportation plan despite a warning by AMATS that it would again be declared ineligible for federal funding.

A group of 12 Democratic and independent state legislators wrote to Transportation Commissioner Ryan Anderson in early August with concerns that the state’s amended transportation plan made allocation decisions that risked projects in next summer’s construction season.

Anchorage Democratic Rep. Zack Fields was scathing at the blatant errors that continued to be made by the department on critical state transportation funding requests. He said in an interview that Alaskans would broadly feel the impact of delayed or denied road construction projects.

“Anyone who works in the construction industry, anyone who doesn’t want to drive through a two-foot deep pothole, anyone in the resource development industry who relies on a functioning surface transportation system. Literally, everyone is screwed by their incompetence,” he said.

Alaska’s amended four-year transportation plan was submitted on Aug. 28. That triggered a 30-day window for the Federal Highway Administration to review and potentially approve the new plan.

That uncertainty helped reduce Alaska’s August redistribution. Federal highway administrators rejected over $16 million of proposed projects because they were contingent on the state’s amended transportation plan already being approved.

According to the transportation planning document obtained by the Daily News, another $35.7 million in projects were rejected because they “were not ready to move forward.”

Some proposed projects were denied because of errors made in the state’s request, including by again adding projects that were not also in local transportation plans. Other projects could not be obligated by the end of September — a federal deadline.

Emails obtained by the Daily News showed state transportation officials were warned ahead of time by the Federal Highway Administration that certain projects would be rejected because of errors. They were submitted anyway.

As part of Alaska’s August redistribution request, the state asked for $462,780 for rockfall mitigation at mile 113.2 of the Seward Highway. State transportation officials were told the project would be ineligible for funding. The project was submitted and was duly denied.

A federal highway official wrote in comments attached to that request: “Resubmission - why are design funds being added 4 years after construction ATP??”

Fields was not convinced by state transportation officials’ explanations about the reduced August redistribution being caused by changing federal regulations or added scrutiny.

“Every other state is administering these programs and getting way more money,” he said. “So how are we the only ones who are getting less money?”

‘Surprised and disappointed’

The $19 million in federal transportation funds obligated to Alaska in August stands in stark contrast to the recent past. Last year, Alaska got a record $108 million. The year before, the state received a then-record $87 million in authority to be used for seven projects.

“Alaska is geared up to build projects that address safety and fix our existing infrastructure,” Anderson said in a news release two years ago.

The Associated General Contractors of Alaska, which represents over 600 local contractors, was concerned by this year’s reduced funding and what it could mean for future construction seasons.

“AGC members were surprised and disappointed to see Alaska receive the lowest August redistribution funds of any state in the nation,” said Alicia Amberg, executive director of AGC, in a prepared statement.

Amberg noted that Alaska’s 2024 redistribution was down 82% compared to last August. That was despite a nearly 10% increase in transportation funds available nationwide for redistribution, she said.

“We don’t know how and if this will impact the construction program in the coming months, but less money going toward safe and reliable infrastructure in Alaska is always a concern,” Amberg said.

She added that AGC was working with state transportation officials “to understand the bigger picture funding strategy in place that will ensure ample opportunity and predictability for the construction industry moving forward.”

McCarthy, a spokesperson for the Alaska Department of Transportation, emphasized that Alaska is set to receive $590 million in federal transportation funding this fiscal year before accounting for the August redistribution. But not all of that funding has been made available.

FAST Planning in Fairbanks said by Aug. 21 that it had been obligated $13.3 million, which represented 43% of the nearly $31 million in funding it has anticipated receiving this federal fiscal year.

By the end of June, AMATS in Anchorage had obligated just $14 million of $50 million, which was just 28% of the funding it had anticipated receiving this year. More funding could be made available before the end of the federal fiscal year, which is typical. But Jongenelen said the gap this year was substantial.

“The big difference this go around is the estimates are much higher of how much we don’t anticipate obligating,” he said.

Jongenelen, executive director of AMATS, said the delayed federal transportation funding available for Anchorage was directly connected to the delays in getting federal approval for the state’s amended four-year transportation plan.

He said that can have real consequences. A project to rehabilitate a stretch of Spenard Road to improve safety for drivers and pedestrians would likely be delayed, but he didn’t know by how long. He said that can have “a butterfly effect.”

“So one project is delayed a year. That could delay two other projects. Those could delay three other projects,” he said. “It’s kind of this effect that you don’t really know — it looks small at the beginning, but it can grow into being a larger thing as time goes on.”

Correction: A previous version of this article incorrectly said Rep. Zack Fields, D-Anchorage, is a member of the House Transportation Committee. He has been closely following transportation funding issues as a legislator, but is not a member of that committee.