Flush with cash from oil that topped $140 a barrel this summer, the Alaska Legislature - at the suggestion of Gov. Sarah Palin - decided to also borrow additional millions to fund more transportation projects around the state.
Alaska's voters are now asked to approve Bonding Proposition A on the November ballot, approving issuance of bonds for $315 million. The bonds would pay for more than two dozen projects around the state, nearly all of them roads.
For Juneau that could mean funding for improvements to the Glacier Highway and Back Loop Road intersection, a project for which $5 million is included in the bond issue.
Palin originally proposed the borrowing for transportation projects, but suggested $140 million. Both the House and Senate added additional projects to bring the total to $315 million.
The Back Loop intersection was added when the bill was in the Senate Finance Committee, on which sits Sen. Kim Elton, D-Juneau. He supports the bond measure.
Since the Legislature passed the bonding measure in April, billions of additional oil dollars have flowed into state coffers. At the same time, the economy has gotten worse.
"In an economic downturn, working on infrastructure projects makes sense," Elton said. "It keeps people employed."
Elton said that while the state does have the money now, the idea is to invest the money for a higher return than it is likely to have to pay to borrow the $315 million.
Rep. Carl Gatto, R-Palmer, said it was foolish to borrow money now and have to pay it back at a time the state would likely be producing less oil.
Alaska is "awash in money," he said, and should pay for needed projects as they are built, not passing the cost on to future generations.
Financing the projects instead of paying for them out of pocket means additional cost as well, said Jerry Burnett, deputy director of the Department of Revenue.
"You are going to pay a couple hundred million dollars in interest," he said.
At currently available interest rates, around 5.5 percent, and with a 20-year amortization schedule, the annual payments on the bonds would come to about $26 million per year, he said. The state would have to pay back $527 million, of which $212 million would be interest.
The bond rates eventually obtained may be higher or lower, he said, and all the projects may not be ready at the same time, and the bonds may be sold in stages.
The Juneau project is likely to include a roundabout at the Glacier Highway and Back Loop Road intersection that's similar to the one at the west end of the Douglas Island Bridge, said Roger Wetherell, spokesman for the Department of Transportation.
If the voters approve, the project will be designed this year. Right-of-way and environmental permits should be done by 2009, and the project could be out to bid by 2010, according to the Legislature.
The Department of Transportation agrees that the intersection has safety concerns, but it has not been a community priority, Wetherell said.
Legislators say one of the reasons for the bond package was to hold down the size of the capital budget, but to also allow Alaska voters decide if they'd like to spend more.
Had the bond projects been included in the $2.7 billion capital budget this year, it would have topped $3 billion.
While Palin originally proposed the bonding for transportation projects, she hasn't publicly endorsed the far larger proposal on the ballot now.
Palin spokeswoman Sharon Leighow said the governor also has not said publicly whether she'll be voting for the bonds.
"She has commented in the past that the $315 million price tag is still a manageable amount of debt for the state to incur," Leighow said.
Support and opposition in the Legislature crosses party lines. In the Senate it was approved 16-4, while in the House it was approved 24-16. The ballot measure also includes $43.35 million appropriated from the 2008 transportation project fund to be awarded as grants in a process similar to earmarking at the federal level.
That includes $10 million for expansion of the Port of Anchorage and $4 million for the second phase of the Heritage Harbor reconstruction.
The Alaska Transportation Priorities Project is not supporting the bond measure because of doubts about the size of the Port of Anchorage expansion, said Lois Epstein, the group's director.
"Personally, I'm going to vote for it because we need to support our existing infrastructure," she said, drawing a distinction between her personal and her professional views.