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Second SE fast ferry hits funding roadblock

Time running out to act on transportation bill before adjournment

Posted: Thursday, May 03, 2001

Concerned about a possible "end run around the Constitution," Republican senators Wednesday held up a transportation bill that would provide another fast ferry in Southeast.

The Senate Transportation Committee needs better answers about legal issues before it can move the almost $400 million construction package, said Chairman John Cowdery, an Anchorage Republican.

With only six days until the scheduled adjournment of the Legislature, "This could be it" until 2002, Cowdery said Wednesday. He would prefer a public vote on the projects in next year's general election, anyway.

The transportation package, already passed by the House, calls for the issuance of debt through "certificates of participation," which would be repaid by future federal highway funds. That financing method jump-starts projects and avoids inflation, and would cost the state nothing because interest on the revenue could be used to pay the 10 percent state match, according to Department of Transportation officials.

"We may want to act with dispatch before somebody changes the rules," said Sen. Kim Elton, a Juneau Democrat.

But Cowdery said that a problem with the financing scheme is that "one Legislature can't bind another."

Sen. Gary Wilken, a Fairbanks Republican, said federal highway funds can't be guaranteed, which means the "full faith and credit" of the state might be necessary to make up any shortfall. That commits the state to "general obligation" debt without the necessary public vote, Wilken said. He also questioned whether it's legal to use interest earnings to pay the state match.

Kurt Parkan of DOT responded that the Legislature already is paying off debt incurred in past fiscal years.

Parkan said 10 states have used the proposed financing approach and the bond market has shown no skittishness about the revenue stream, which is projected to increase along with fuel taxes.

Sen. Robin Taylor, a Wrangell Republican, said committing 10-12 percent of annual federal highway funds to repaying debt is tantamount to "spending the future of the state of Alaska." If the Legislature did that each year, "Pretty soon, don't you run out of future?" he asked.

Although the fast ferry in the bill would link Wrangell and Petersburg in his district, Taylor, who questions whether the vessels can function as advertised, was sharply critical of DOT planning. Projects have been shuffled for political reasons, and aside from the $35 million for the ferry, there's not a lot for Southeast, he said. "Except for Juneau, it looks kind of like chump change to me."

In passing a separate capital projects bill, the full Senate has voted to eliminate a fast ferry for Prince William Sound, even though the federal funding source could be lost. DOT had sought two Southeast ferries in the transportation projects bill, but one was eliminated in the House, and now the entire bill is in jeopardy.

To compound DOT's problems, the one fast ferry that has been authorized, a Sitka-Juneau dayboat originally scheduled for operation in 2003, has been delayed because of a nonresponsive bid.



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