Alaska’s transportation funding is facing significant uncertainty after Governor Mike Dunleavy vetoed $62 million in state match funding.
State lawmakers are voicing concerns that this veto could jeopardize as much as $600 million in federal funding designated for various transportation projects across the state.
During a recent hearing with the Alaska House Transportation Committee, Rep. Ashley Carrick, the committee’s co-chair, emphasized the lack of communication from the state transportation department regarding the implications of the veto.
Dunleavy defended his decision by stating that the vetoed funds have already been allocated to previously funded projects or have been completely spent.
The $62 million was initially earmarked for stalled projects such as the Nome deep-sea port and improved ferry services to Juneau.
Originally, lawmakers intended to redirect this funding to serve as state matching funds for federal highway and aviation projects.
However, Dunleavy’s administration argued that the funds in question are tied to ongoing projects, thereby creating potential fiscal and compliance issues for Alaska’s federal match program.
Transportation Commissioner Ryan Anderson indicated that using old project balances could lead to audit findings or potential loss of federal funding.
He stated, “While well-intended, using old project balances — some of which have already been spent or are tied to active work — creates fiscal and compliance risks for Alaska’s federal match program.”
Should the state fail to secure alternate funding, Alaska could stand to lose billions in federal dollars, reducing the potential $600 million federal contribution significantly, considering the ratio of $9 in federal spending for every state dollar.
Anderson mentioned that without restored state funding, the department would have to limit new project starts and modify its long-term plan.
He expressed that addressing this issue promptly could help ensure that Alaska’s full transportation program could proceed without disruption.
Despite being made aware of the issue, the state transportation department did not attend the committee hearing, which further frustrated lawmakers.
Carrick noted that she had requested the department provide a list of potential projects at risk but had yet to receive this information, particularly regarding aviation projects in the northern region.
The urgency around this funding issue is highlighted by Carrick’s assertion that jeopardizing between $500 million to $600 million in federal match funding is not in the state’s best interest.
As lawmakers prepare to reconvene in January for the regular legislative session, the question remains whether they will find alternative sources for the $62 million needed to replace the vetoed funds.
Carrick remarked, “The budget climate is very, very challenging right now. It was last year, hence the need to think outside the box when making tough decisions.”
One significant portion of the vetoed funds—$37 million—was initially allocated for the Juneau Access Project, a long-standing initiative aimed at connecting Juneau more effectively with Haines and Skagway.
Shortly after the reappropriation of these funds was approved, the Dunleavy administration stated plans to redirect this amount towards funding a new ferry terminal at Cascade Point, located 30 miles north of the existing Auke Bay ferry terminal.
The transportation department is set to award a $28.5 million contract for infrastructure improvements necessary for the ferry terminal.
Despite these plans, the construction of the new terminal is not expected to commence until 2027.
Officials from the Dunleavy administration argue that the Cascade Point terminal, pursued for several years, seeks to reduce ferry ride times between Juneau, Haines, and Skagway.
However, community leaders have expressed skepticism and concern about the project.
Senator Jesse Kiehl, who represents the regions encompassing Cascade Point, Haines, and Skagway, has voiced opposition to the reallocation of funding from the Juneau Access Project.
He acknowledges his openness to the Cascade Point terminal project only if thorough feasibility studies demonstrate its financial and transportation viability.
Amid the debate, Carrick reiterated the importance of the transportation department providing details about the Cascade Point project, raising concerns that no feasibility or cost-benefit analyses had yet been conducted.
Although the transportation department is currently drafting a document termed
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