With Budget Shortfalls Looming, Questions Raised About Knik Bridge Finances

A bill authorizing the state to build a billion-dollar bridge across the Knik Arm is back for consideration.

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The legislation was shelved for a year, after an audit found traffic estimates for the project were “unreasonably optimistic.” During a hearing before the Senate Finance Committee on Tuesday, the bill sponsor dismissed skepticism that the project would pencil out. Rep. Mark Neuman, a Republican from Big Lake, said he “absolutely” believed there would be enough traffic to serve a two-mile long bridge connecting Port Mackenzie to Anchorage, so long as a Mat-Su population boom continues.

“If the Knik Area were a city, it would be one of the fastest – one of the top 50 fastest growing cities – in America,” said Neuman.

The current iteration of the bill scraps the idea of using a public-private partnership to build the toll bridge. Instead, the project would be funded through a mix of federal grants, federal loans, and state revenue bonds. Those loans and bonds would then be paid off using toll revenue from the bridge.

But rural legislators who heard the bill expressed doubt that the tolls would be enough to cover those costs. Sen. Lyman Hoffman, a Bethel Democrat, noted that the state would be responsible for making up the difference if there isn’t enough bridge traffic. He said if it were clear the bridge would pay for itself, there would be “broad support” for the project across the state.

“I think that was the crux of the concern: that the State of Alaska would be on the hook,” said Hoffman. “It was always portrayed that this was going to be a toll bridge, and that would adequately address the construction.”

Sen. Donny Olson, a Democrat from Golovin, worries that the cost of the project — and the risk that comes with it — is too high, given that the state is looking at a period of serious budget shortfalls.

“It’s a public policy issue I’ve got a problem with where we’re dealing with state revenues going down,” said Olson. “And certainly we’ve got an excellent bond rating, but in five years when all our savings are spent and we’ve maxed up to the hilt with bonding and indebtedness that’s out there, that’s where I’ve got problems.”

To keep the project moving, the Legislature would have to appropriate $10 million for the bridge in the next fiscal year.

The Senate Finance Committee will continue discussion of the bill Wednesday morning. The House passed the bill last session.