Legislature includes $200M for Port of Alaska rebuild in budget

The Alaska Legislature has included $200 million in funding in the capital budget to help rebuild the Port of Alaska.

That’s a third of the hefty $600 million state funding request made by Anchorage Mayor Dave Bronson and the Assembly in the city’s 2022 funding priorities, which Bronson and some Assembly members had lobbied for in Juneau.

The $200 million would go toward the $1.1 billion cost of replacing the port’s cargo docks. The entire Port of Alaska modernization project, which will take about 10 years, is estimated to cost a total of $1.85 billion, according to city officials.

The port’s infrastructure is failing, threatening a critical piece of the state’s supply chain.

Political resistance to spending state money on what many have viewed as an Anchorage-specific problem has stymied previous city requests for port funding. But Alaska is expecting billions in new revenue after a wartime surge in oil prices, opening the door for broader support.

Anchorage should receive half of the $200 million in state funds over the next two fiscal years, but the other $100 million comes with a contingency: The state will provide the money only if the city gets a matching $100 million in federal funds, said Ross Risvold, senior finance officer for Anchorage’s Finance Department. The city is currently reviewing and applying for federal funding opportunities, he said.

“We’re leaving, as the saying goes, no stone unturned,” Risvold said.

While the state funds would cover a portion of the project’s price tag, the infusion would keep it moving ahead, while total costs will be spread out over the project’s lifetime, said Jim Jager, director of external affairs for the port.

“The state money will also be key to unlocking federal money,” he said. Federal grants require a percentage match in non-federal funds.

[The Alaska Reads Act narrowly passed the Legislature. Policymakers are still divided on its benefits.]

Alaska Gov. Mike Dunleavy could still veto funding for the port. City officials say they expect the governor will keep the funding in the budget. The governor has about two weeks left to make decisions on the budget before he signs it.

Shannon Mason, deputy press secretary for the governor’s office, declined to say whether Dunleavy will strike the port funding.

“We are reviewing the budget and ensuring that the use of public funds is in the interest of all Alaskans,” Mason said by email.

It’s also not yet clear how much money the city will receive from a legal settlement related to a failed effort to expand the port. The U.S. Department of Transportation’s Maritime Administration, which was found at fault, has appealed a December court ruling, and a decision on the appeal could take a year or more, city officials say.

The city also plans to borrow money to pay for the project through low interest rate loans via the federal government and through bonds, Risvold said.

But much of the cost of borrowing will be repaid through raising fees on deliveries to the port. That cost is expected to fall back on Alaskans purchasing goods that come through the port, according to the city. State and federal grants are intended to help to defray the tariffs and the resulting increase in prices.

State Rep. Andy Josephson, D-Anchorage, said the usually politically divided Anchorage delegation worked in a rare bipartisan effort to get port funding into the budget.

“It was sort of inarguable that everywhere other than Southeast benefits from the Port of Alaska,” Josephson said. “... The tariffs that are going to be charged are going to be very, very aggressive and will impact everybody, so it’s ‘pay me now or pay me later.’ ”

Kolby Hickel, deputy municipal manager, said that 90% of Alaskans rely on goods shipped through the port, including fuel, food, construction supplies, ammunition, parts for vehicles and tools.

The 2018 earthquake caused significant damage to the port, and the city says it is at “imminent risk of failure” if an earthquake of a similar size happens.

Grocery stores only have about six days of food on hand, and a failure of the port would be a crisis, Hickel said.

The new petroleum and cement terminal will be finished in June, the first of five phases in rebuilding and repairing the port, which the city aims to complete in 2035.

Construction of a new port administration building is slated to begin this summer, said Jager.

Work to stabilize and remove a northern part of the embankment is scheduled for the following two summers, he said.

The earthwork and a defective wall north of the docks were made as part of the failed port expansion project, and it must all be removed before new cargo docks can be built, Jager said.

“It looks like land, smells like land, tastes like land. It’s not really land. It’s not stable. It’s behind an unstable wall,” Jager said. “And the danger is that either due to the piling that they installed incorrectly corroding, or use due to seismic action, or other things, that wall is going to fail, land will slide into the navigation channel, and even potentially take out the existing dock.”

Once the first phase of stabilization is complete, construction of two new cargo terminals can begin.

The city is currently working on the permitting, design and build of the terminal replacements, Hickel said.