Sen. Click Bishop, R-Fairbanks, asks questions of Alaska Department of Transportation and Public Facilities Commissioner Ryan Anderson during a Senate Finance Committee hearing on Wednesday, Feb. 28, 2024 in Juneau, Alaska. (Mark Sabbatini/Juneau Empire)

State officials working to meet Friday deadline for revised transportation plan

The federal government rejected the plan on Feb. 9, citing numerous deficiencies

JUNEAU — The state expects to meet a Friday deadline to submit a revised plan for spending federal transportation dollars after revising numerous deficiencies that put the plan — and associated summer construction — at risk.

That’s what Ryan Anderson, commissioner of the Alaska Department of Transportation and Public Facilities, told members of the Senate Finance Committee on Wednesday, where a packed audience listened to Anderson answer questions from lawmakers about what went wrong with the first plan rejected by federal officials and what the department is doing to ensure it doesn’t happen again.

The presentation came several weeks after the federal Department of Transportation notified the state that its list of projects had been rejected.

Alaska’s State Transportation Improvement Plan, or STIP, for 2024-2027, is the state’s schedule of federally funded highway projects. The state submitted that plan to the federal government on Jan. 19 and received notice on Feb. 9 that it would not be approved.

The plan includes several projects on the Kenai Peninsula, including replacement of a failed culvert on Kalifornsky Beach Road and the widening of the Sterling Highway from two lanes to four between Sterling and Soldotna. Also in the plan are the reconstruction of Redoubt Avenue and Smith Way in Soldotna and the widening of the Kenai Spur Highway between Sports Lake and Swires roads.

The federal government sent along with its rejection a 24-page report of its findings and itemization of “corrective actions” Alaska must take to bring the plan into compliance with statutory and regulatory requirements.

The federal government identifies, for example, a list of projects that the state included in the STIP that are ineligible for inclusion. The state plan also fails to identify all funding sources for projects and doesn’t clearly document how the state collected public input and consulted with tribes to put the plan together, the federal response says.

In all, the federal government identified over a dozen elements of the state plan needing corrective action.

The clock is ticking for the Alaska Department of Transportation and Public Facilities to resubmit a plan that the U.S. Department of Transportation will approve.

The STIP Alaska is currently operating under expires on March 31. The federal government needs 30 days to review the resubmission, meaning the state must resubmit its plan by Friday.

There was discussion during Wednesday’s meeting about how, if at all, the revised plan would impact the Cooper Landing Bypass Project, designed to alleviate traffic congestion through Cooper Landing by constructing 10 new miles of highway in the area. State Transportation Department spokesperson Shannon McCarthy said Wednesday that the project shouldn’t be affected by revisions to the plan.

Bypass project costs have more than doubled over the last six years — from $350 million in 2018 to $840 million last year. Of that, the state has already designated about $450 million, including for construction of a steel arch bridge over Juneau Creek, which is expected to take between three and four years to construct. Because the bypass is a Federal Highway Aid project, costs are split between the federal government, which pays for 90%, and the state, which pays the other 10%.

McCarthy said that once a project’s cost estimate becomes higher than $500 million, the project is considered a “major” project, and states are advised to diversify their sources of funding. The bypass project crossed the $500 million threshold about a year ago, McCarthy said, so the state knew it wouldn’t be putting its next phases into the 2024-2027 STIP.

As recently as July 2023, though, the department had advertised the project as being part of the STIP and requested public input. McCarthy said the department had initially planned to include one phase of the project in the 2024-2027 plan, but ended up moving forward with construction of the Juneau Creek Bridge, which has already been funded, instead.

The document does include $220 million for the project over the next two years for “illustrative” purposes. However, McCarthy said the entry is a “placeholder” for the department to come back to if it can secure additional grant money for the project’s two additional phases. An entry will also appear for advance construction of the Juneau Creek Bridge, which has already been funded but is slated for construction in 2024.

“You won’t see any planned expenditures, or obligations I should say, for Cooper Landing between 2024 and 2027,” Anderson told committee members.

McCarthy said worth on the bypass project will continue as planned this summer and will include placing the order for the steel needed to construct the bridge and drilling work on the project’s west side. Contractors will begin excavating a flat area this fall on which the steel will be placed once it arrives in Alaska. The steel will be shipped out of California and is expected to arrive at the Port of Seward in November.

Anderson on Wednesday told senators that there were a few reasons that the original STIP came up short in the federal government’s eyes, and that the department had been working “seven days a week” since receiving the rejection to get the issues resolved.

The state, for example, debuted new software for the current STIP cycle that was later found to have flaws. In previous years, the plan has been presented as a “series of spreadsheets.” This STIP cycle, Anderson said the department wanted to present the information in a way that was more interactive for users and less burdensome on administration.

“One of the problems — and the primary problem — we found (was) that the numbers weren’t adding up,” he said. “We had some certifications where we had staff and others go in and test it, and it was apparent that that system wasn’t accurate for our needs.”

The department then pivoted to a different software — Airtable — to present the information, which is the public-interfacing program users can currently access on the department’s STIP webpage.

Anderson also said there are new interpretations of the federal rules outlining how the plan should be assembled, meaning the state had to do things differently this cycle than in previous cycles. For example, Anderson said the state has historically been allowed to “over-program” in the plan, by adding between 10% to the total plan price tag for projects the department expected to complete if the opportunity arose.

As reported by the Anchorage Daily News, federal highway administrators denied in a Feb. 23 letter that the department’s requirements have changed significantly since 1991.

“We’re now constrained in every year to the revenue that’s been forecasted,” Anderson said.

Multiple senators during Wednesday’s hearing impressed on Anderson the importance of Alaska’s STIP being approved by the federal government.

“It’s hard to downplay the importance of this program and the requests by the federal government for a resubmittal that I think is very important for the listening audience,” said Sen. Lyman Hoffman, a Democrat from Bethel. “This is no trivial matter.”

Sen. Click Bishop, R-Fairbanks, asked if the department had modeled any cash-flow scenarios depicting worst-case, middle-case and best-case funding scenarios depending on the federal response to Alaska’s revised STIP. Anderson said modeling will be done once the approved plan is submitted to the federal government.

“We are the finance table and I don’t have to stress to you the importance of not having the cash flow and (how) it would impact the construction industry in the state,” Bishop said.

McCarthy said the department should know by the end of March whether the state’s resubmitted plan has been approved.

The state has about $350 million worth of projects carrying over from last year, in addition to $200 million already obligated under Alaska’s existing STIP. If the federal government rejects the state’s resubmitted plan, construction on that $550 million worth of projects will continue, but no new transportation projects could move forward.

Wednesday’s Senate Finance Committee meeting can be streamed on the Alaska Legislature’s website at akleg.gov.

Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.

This reporting from the State Capitol was made possible by the Alaska Center for Excellence in Journalism’s Legislative Reporter Exchange. Alaska news outlets, please contact Erin Thompson at editor@peninsulaclarion.com. to republish this story.

Alaska Department of Transportation and Public Facilities Commissioner Ryan Anderson (left) answers questions from state senators during a Senate Finance Committee hearing on Wednesday, Feb. 28, 2024 in Juneau, Alaska. (Mark Sabbatini/Juneau Empire)

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