$5.6 billion Alaska transportation plan rejected by feds, putting road construction projects in jeopardy

JUNEAU — Alaska’s four-year, $5.6 billion transportation plan has been rejected by the federal government, which could delay or jeopardize planned road construction projects across the state.

The State Transportation Improvement Plan, or STIP, is a comprehensive plan for highways, state ferries and general transportation projects to be implemented in Alaska through 2027. State officials have until the end of the month to revise the rejected plan and resubmit it for federal approval.

Alaska’s current plan expires March 31. Over $100 million in construction projects has already been obligated for this upcoming summer, but without a new plan or an approved alternative, the state Department of Transportation could not spend federal funds on new construction projects starting in April, state officials said.

State Transportation Commissioner Ryan Anderson said Thursday that the priority is to resolve foundational problems with the state’s plan under a tight deadline so a first tranche of federal funding can be approved. Then, the department can continue negotiating over other issues with projects that were flagged by the Federal Highway Administration, he said.

“I believe we have a good strategy to get this done, and I’m confident that we can do it,” Anderson told the House Transportation Committee.

Under the rejected plan, the state would receive roughly $5 billion in federal funds for hundreds of new projects across the state. More than $522 million would be required in state and local government matching funds over the next four years, according to the Alaska Department of Transportation and Public Facilities.

The Federal Highway Administration and the Federal Transit Administration recently issued a 24-page finding that listed significant errors and problems with dozens of proposed projects that need to be addressed.

Several projects introduced by the Dunleavy administration were determined to be ineligible as written, including funding for the West Susitna Access Road, and for bridge improvements that could help haul gold ore from a mine in the Interior.

Shannon McCarthy, a spokeswoman for the state transportation department, said Wednesday that the agency would attempt to address every corrective action flagged by the feds. Some projects may be removed from the plan to ensure it receives approval, but the goal is to resolve as many issues as possible, state officials said.

’No coordination’

Local transportation planning organizations in Anchorage and Fairbanks have expressed frustration for months that there was no coordination from the state to develop the plan before it was first released in July.

In an August letter to state transportation officials, members of Fairbanks Area Surface Transportation, or FAST, Planning complained about “a lack of engagement” from the state.

“Considering the importance of this document, which shows how billions of Federal transportation dollars will be spent throughout the State over the next four years, a robust public outreach and engagement effort should have been carried out,” the letter said.

Another letter sent at the same time by Anchorage Metropolitan Area Transportation Solutions, or AMATS, complained that there was “no coordination” with the state before the draft plan was released, which is required by federal regulations.

FAST Planning and AMATS are municipal policy boards representing Fairbanks and Anchorage, which are designated to work with the state and local governments to formulate transportation plans.

McCarthy on Thursday said state officials are always consulting with the municipal planning organizations. But she said based on feedback, the state would establish a formal coordination policy in the future because some informal interactions were “vulnerable to miscommunication.”

AMATS wrote a list of concerns in August with the draft plan that were not resolved by the state. Some of those issues were cited by the feds in the disapproval notice, which was “very frustrating,” said Aaron Jongenelen, executive director of AMATS, in a Wednesday interview.

In its finding, federal highway administrators flagged projects added to the state’s plan by the Dunleavy administration that were not supported by local transportation organizations.

“They just put them in their funding plan, which is inconsistent with federal regulation. You’re not allowed to do that,” said Jackson Fox, executive director of FAST Planning.

Anderson said to state legislators Thursday that federal agencies told the state it needed to defer to municipal planning organizations for projects within their boundaries.

“We have a difference of opinion on certain aspects of that,” he said, acknowledging it was an issue that would not be resolved quickly.

Republican Rep. Kevin McCabe, co-chair of the House Transportation Committee, suggested FAST Planning had opposed bridge improvements in Fairbanks because of opposition to a contentious ore-haul project operated by Kinross Gold, which he said threatened the state’s transportation plan from advancing. Anderson said he did not believe that was the intent of the Fairbanks board.

‘Pretty blatant errors’

Four-year state transportation plans are typically approved by October, the start of the federal fiscal year. Alaska officials already received a 180-day extension. Anderson said he was unaware of another state facing the same predicament as Alaska.

Fairbanks Democratic Rep. Ashley Carrick said she was “very concerned” by the federal rejection notice. She said the state’s problems stemmed from a breakdown in communication during the drafting process.

“There has been a lot of community engagement,” she said about discussions at a local level in Fairbanks. “It’s just not been heard and received through the administration.”

Fox has worked in Fairbanks transportation planning for over 20 years. He said federal agencies usually note a handful of issues with the state’s transportation plan, but this version was filled with “pretty blatant errors.”

“It’s usually a pretty benign and cooperative process,” he said. “But I’ve never seen in my career this level of missing the mark.”

Federal highway administrators noted significant missing information in the plan on how projects would be operated, maintained and funded.

An Elliott Highway rehabilitation project had no construction timeline; it was unclear if a Haines Highway project was ready to advance to construction; design estimates for new state ferries “seem excessively high” and not based on an estimate, according to federal agencies.

Under questioning by Kodiak Republican Rep. Louise Stutes, Anderson acknowledged that the state transportation department did not have an experienced team who had worked before on a new state transportation plan, which take months to be developed before being submitted.

“We have a lot of new people,” he said.

‘Not the first warning’

Since last summer, federal highway administrators have worked with their state counterparts on numerous issues with draft transportation plans submitted by Alaska officials. But many of those concerns have been resolved, Anderson said, explaining that the administration had faced new federal regulatory requirements.

U.S. Sen. Lisa Murkowski noted on Thursday that “this is not the first warning” the state received that the plan had problems. Murkowski said she would urge Dunleavy in a meeting to “urgently” address a broad set of deficiencies because “there’s too much on the line.”

“I’m going to urge him that this is not a time to say, ‘Well, it’s the Biden administration and they’re just out to get us,’” she said.

In a prepared statement, a spokesperson for the governor’s office denied on Thursday that there was a “top-down” planning process. Dunleavy, like all Alaska governors, had expressed support for projects in the transportation plan, but final approval was up to the department, the statement said.

A spokesperson for the Federal Highway Administration said in a statement Wednesday, in part, that it needs to ensure Alaska’s state transportation plan is developed consistently with federal law, adding, “We will continue to work with Alaska to bring the state into compliance with federal requirements and move forward needed projects.”

Joelle Hall, president of the Alaska AFL-CIO, said Wednesday that she was concerned by the disapproval notice because for the last 10 years, federal highway dollars have funded the bulk of Alaska’s capital improvement projects and created thousands of jobs.

“Probably the most nonpartisan thing in the whole state is roads,” she said.

Alicia Amberg, executive director of the Alaska Association of General Contractors, said in a Wednesday statement that the organization was watching the situation closely on behalf of its 600 members.

“We are hopeful for a swift resolution to the issue, ensuring that the critical construction activities planned for the 2024 season can proceed without delay,” she said.