Municipal leaders ask state to borrow cash for Anchorage port and other harbor projects

The Alaska Municipal League is asking state lawmakers to take out a loan to pay for needed port and harbor improvements across Alaska, including work at the Port of Alaska in Anchorage.

But top lawmakers aren’t yet willing to go along, saying the state first needs to resolve a $1.5 billion deficit forecast for the fiscal year that starts July 1.

Alaska has slashed its capital budget for years, leading to a billion-dollar backlog of deferred maintenance projects at state facilities and on municipal infrastructure that was built by the state in fat years when oil prices were high and revenue was available.

“There is a lack of funding. There’s a need for funding so we can maintain and improve the facilities around the state,” said Bryan Hawkins, Homer’s harbormaster and president of the Alaska Association of Harbormasters and Port Administrators.

Last year, harbormasters submitted requests to the state for $12 million in grant aid. The governor’s proposed budget includes enough money to cover less than half.

In November, the Alaska Municipal League formally requested “a coastal infrastructure general obligation bond," and the harbormasters will soon consider whether to follow suit.

The municipal league represents 165 Alaska boroughs and cities on state and federal issues.

Though the bond is envisioned as a statewide issue, its core goal is to fund repairs for the Port of Alaska.

“This coastal infrastructure bond was Anchorage’s resolution ... put forward to the whole body to vote on,” said Anchorage Assembly chair Felix Rivera, adding that the municipal league passed it 49-1.

“Essentially, this is an ask by the Port of Alaska, the Port of Anchorage, for funding,” said Carl Uchytil, director of the Port of Juneau.

Nils Andreassen, director of the municipal league, said Anchorage was “the driver, but (there is) plenty of room for broader considerations.”

The port needs at least hundreds of millions of dollars in work, and simply raising fees would also raise the cost of groceries and gasoline across Alaska.

“How much is that going to be? That depends on what sorts of state and federal grants we get to support it,” said Jim Jager, director of external affairs for the Port of Alaska.

The Anchorage Assembly also put a second, broader bond request at the top of its legislative priorities this month. Where the municipal league has supported a bond focused on ports, the Assembly’s new suggestion is a statewide bond, the better to sell the idea to non-coastal legislators.

“I think it’s important, however the bond looks ... that we maintain our infrastructure,” Rivera said.

Any bond issue for infrastructure must be approved by the Legislature before being put to a statewide vote in the next general election.

Voters haven’t been confronted with a statewide bond issue since 2012, when they approved $453 million for projects across the state, including $50 million for what was then called the Port of Anchorage.

Alaskans have approved every statewide bond package since 1980, but Rep. Jennifer Johnston, R-Anchorage, and Sen. Natasha von Imhof, R-Anchorage, said there’s a significant problem with borrowing money. Johnston and von Imhof are co-chairs of the House Finance Committee and Senate Finance Committee, in charge of the capital budget in their respective legislative bodies, and each said that borrowing money isn’t a good idea until the state figures out how to pay for what it already has.

“How can we in good conscience put ourselves in more debt when we have a $1.5 billion deficit?” von Imhof said. (The state is preparing for a previously authorized $1 billion bond issue to pay oil and gas tax credits.)

That deficit figure is based on the budget proposal from Gov. Mike Dunleavy, which includes an estimated $3,170 Permanent Fund dividend, spending down slightly from the current fiscal year and no new taxes.

The state’s credit rating has fallen in recent years, but the latest annual look at Alaska’s debt capacity suggests the state could borrow up to $1.9 billion in the next 10 years without a further credit hit. That doesn’t include any downgrades that might happen if the state were to put off resolving the deficit, von Imhof said.

“There is a mantra: Just because you can doesn’t mean you should,” she said.

Johnston said “there’s no question” that the Legislature has “shortchanged” the state’s capital budget in recent years, but the key question remains “whether we can afford it or not,” she said.

She said members of the House majority have started having discussions about a bond, but one isn’t likely until legislators first figure out how to resolve the deficit.