Counting capital projects.

• Author: Ripley, Kate
• Position: Alaska's public works budget and the economic prospects of construction industry

With $349 million fueling a variety of design and construction efforts across the state, Alaska's 1991-1992 capital projects budget is bound to cause more concrete pouring, earth moving and nail pounding over the next few years than in the last five. The question some in the construction industry are asking, however, is whether that level of activity will be enough to sustain contractors, which have witnessed an overall decline in available work since 1986.

The 17th Alaska Legislature's capital budget was fatter by $87 million than the previous year. Although that point is not missed on contractors and state agencies, the project spending still is a far cry from that during the boom of the mid-1980s.

"Earlier in the year, I think people thought that the construction industry was going to grow another 5 percent or so," says John Boucher, an economist with the Department of Labor's Research and Analysis Division in Juneau. "On the horizon, it doesn't look like there's a whole lot of big projects."

Allen Vezey is secretary/treasurer of North Pole's Lakloey Inc., a firm specializing in heavy industrial work. "It's been a slow year," he says. "I think my total volume this year will be up from last year, but last year was the slowest year I've ever had."

In June, Gov. Walter J. Hickel's veto pen largely favored public works funding for repair of neglected state buildings, roads and harbors over municipal projects containing little or no matching contributions from local communities. He slashed more than $48 million of the legislative appropriations in the public works budget.

A few of the big-ticket items in this year's capital budget are $115 million for statewide roads and other transportation improvements, $52 million for school construction, $25.8 million for water and sewer projects in the Bush, and $25 million for deferred maintenance and equipment for the university system.

The largest chunk of transportation funding comes from the federal government, although Alaska usually kicks in between 8 to 12 percent as its match. By Sept. 30, the end of the federal fiscal year, Alaska had spent approximately $174 million in federal dollars on highway projects, says W. Keith Gerken, deputy commissioner for the state Department of Transportation and Public Facilities. For airports, the state spent about $40 million in federal money on a sizable list of runway upgrades and resurface projects.

"The federal program has been such a large part of what we've done, simply because that's the way it was allowed to be," Gerken says. "We have evolved, by default, almost totally dependent on the federal program."

That may have to change sometime in the near future, he predicts. "We will probably see the need for more general funds for minor construction in airports," Gerken notes. What happens with Alaska's federal allocation next year also depends greatly on what Congress does this year with the Surface Transportation Bill, which is up for renewal.

A Senate version of the bill would parcel out $200 million to Alaska next year, and that sum would keep increasing until the total reaches $300 million in five years. Meanwhile, a House version of the bill would hand over $137 million, about $20 million less than the amount Alaska has been averaging recently.

"One of the things we're doing is developing a statewide policy ... of what the state's transportation plan ought to be geared to do," Gerken says. "There are a lot of new economic development possibilities that can't happen without access...