Dunleavy vetoes could delay $600 million in federal highway funds

A veto by Gov. Mike Dunleavy of state highway matching funds could delay hundreds of millions in federal highway funding for projects in Alaska.

Dunleavy vetoed $70 million in transportation match money that was transferred by legislators from dozens of older projects, money that legislators said has not been spent. The $70 million is necessary to qualify for $600 million in federal matching funds.

The Dunleavy administration contends the approach taken by legislators was improper because some of the money has already been spent or is still supposed to be spent elsewhere.

But there is more to it than that.

A big part of the money, about $37 million, was transferred by legislators from the Juneau access project, an effort that legislators said was stalled, though it is one that Dunleavy supports. There was also $3 million from an earthquake fund, $780,000 for electric vehicle infrastructure and a couple of dozen other items.

In May, the Dunleavy administration announced plans to move ahead with a new ferry terminal north of Juneau and a road extension, a competing use for the money the Legislature transferred.

The budget also transferred $10 million from the proposed Nome port. The Legislature did not go into this blind.

The Dunleavy vetoes on the dozens of individual transfers say that “funding is either still obligated in the original project or has been fully expended and is unavailable for reappropriation.”

After the vetoes, the state transportation department has just $32 million for matching funds, “which is essentially $60 million short of what was needed to run our program, which does equate to roughly $600 million in federal funds, when you consider it’s about 90 percent federal match ratio,” Katherine Keith, a deputy state transportation commissioner, told a Fairbanks transportation planning committee Wednesday.

“Without correction we have a negative match balance,” Keith said.

Keith described the situation at this meeting, 36 minutes into the proceedings.

She said that if the Legislature appropriates money from the general fund next year to cover the matching requirement, she expects there will not be delays. But that may be wishful thinking.

Keith told the Fairbanks transportation committee that DOTPF told the legislative capital budget co-chairs that the money from old projects could not be moved.

I am waiting to hear from legislators as to whether that actually happened or if this is a situation where the Dunleavy administration told legislators it preferred that the money not be moved.

“We just hope going into session that we can identify a fix to this that will keep our program whole,” she said.

Dunleavy had proposed a massive deficit for the fiscal year that begins July 1 and the Legislature took many steps to balance it, including the transfer of the $70 million.

Asked by Fairbanks Mayor Grier Hopkins what the legislators creating the capital budget said when told about this, Keith did not have a reply, other than to say their main focus was limiting general fund expenses.

“It sounds like the veto guarantees a delay,” said Hopkins, who added that the governor could have left the appropriations alone and got the Legislature to fix them next year, if necessary.

“The projects were funded and now they’re not funded and you’re going forward assuming they’re going to have funding,” Hopkins said.

Even if there is a problem with one or two of the specific transfers, those could have been worked out, allowing the bulk of the money to go ahead, Hopkins said.

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