Sponsor Statement for HB 432

"An Act relating to International Airport Revenue Bonds"

by Representative John J. Cowdery

This bill amends the statutory bonding limit for the State of Alaska to sell International Airport revenue bonds. The current limit is $100,825,000. This bill changes the limit to $280,000,000. The difference between the old amount and the new amount is $179,175,000, which is the amount of new debt proposed to finance passenger terminal improvements at Anchorage International Airport.

This increased bonding authority is only one component of the financing for proposed airport improvements. Another component includes federal highway funds for curbside improvements and a surface transportation access corridor. A third component is federal airport funding for ramp and airside improvements.

The bonding cap contained in this bill is $25 million less than a similar bill introduced by the governor. This bill contemplates an additional $25 million in federal funding. Consequently, we can reduce the amount the state needs to borrow. By taking the $25 million off the table, it will not be available to expand the project.

The $179 + million in proposed terminal improvements represent the single largest public works project the state has ever undertaken. The wisdom of taking on such a high amount of debt, and whether the International Airport Revenue Fund (IARF) can afford the debt, remains to be proven in the committee hearing process.

Several of the small air carriers have expressed concern that the proposed project is too big. They voted against it but they lost. Still, their concerns may be valid and we owe it to them to make the project no more expensive than is necessary.

This bill is also notable for what it does not contain. It differs from the governor’s bill in that it does not change the statutes to allow for undefined brokerage fees and unspecified "obligations" to be charged against the IARF.