Next fast ferry in jeopardy

Senate cool to plan that would pay for ship with bond package

Posted: Wednesday, March 06, 2002

The entire Southeast Alaska Transportation Plan could unravel if the Senate doesn't approve a debt-financing package that includes a fast vehicle ferry for the southern Panhandle, according to state officials.

Senate President Rick Halford said today that the so-called GARVEE bonds for state road and ferry projects aren't likely to win approval this year, although they were approved by the House last year with only one dissenting vote.

"It would have a terrific blow to implementing the Southeast Transportation Plan," said Kurt Parkan, deputy transportation commissioner. "We would have to program these vessels in our normal program, and they would have to compete with every other project in the state for funding."

The Southeast plan envisions a shift to a "hub and spoke" routing system, with fast ferries making daily connections between key ports and averting higher crew costs associated with overnight, circuit operations stopping in every village.

Halford, a Chugiak Republican, said that senators would want a vote of the public at the general election in November to make sure that the debt-financing mechanism, based upon future receipts of federal highway funds, is constitutional. The constitution forbids pledging the "full faith and credit" of the state without such a vote.

In a closed meeting of the Republican leadership last week, members of the House said that the vote isn't necessary, which "short-circuited" the discussion, Halford said.

He also said that the Association of General Contractors, meeting last week in Juneau, passed a resolution opposing GARVEEs, based upon an experience in New Mexico. Association officials weren't available for comment this morning.

GARVEEs, short for "grant anticipation revenue vehicles," are a way to jumpstart projects by using the annual federal revenue stream as the debt repayment source. Parkan said that less than a tenth of Alaska's annual share of federal highway funds - about $35 million of $400 million would be reserved for debt payment on the $395 million transportation package.

Halford said he doesn't know if there will be hearing in the finance committee.

"It doesn't look like GARVEEs are going anywhere," he said.

Juneau Sen. Kim Elton, a member of the Democratic minority, said that reviving the concept will be "a tough sell."

"I've heard that GARVEEs are dying on the vine," Elton said. "I hope this isn't one of those decisions that's being made in the speaker's office or the Senate president's office without public discussion."

He said that the GARVEE concept has been validated elsewhere in the United States. "It's tested, tried and true."

Parkan disputed that there was any problem with GARVEEs in New Mexico, the first state to use them. The New Mexico highway department financed about 40 percent of a $250 million highway construction program through that debt instrument, completing the project last November.

The complaint by contractors in New Mexico was that many of them were not large enough businesses to bid on the one main contract for the project, Parkan said. In Alaska, "We're not bundling any big projects," and there will be work for smaller contractors, he said.

Halford said the idea of basing repayment of the debt on future federal highway funds is risky. Although Alaska's congressional delegation is powerful, retirements are likely to weaken that clout in the next decade, he said.

But Bob Doll, Southeast region director for DOT, said that unlike some special funding Alaska has received for particular projects, the annual share of federal highway funds is based on a formula that applies to all states.

DOT has signed a contract with a New York shipbuilder to construct the first fast vehicle ferry for the state, a Sitka-based vessel that will make daily trips to Juneau. That ferry, which will cost about $34 million, is being paid for with existing federal funds.

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