The Senate Finance Committee on Sunday stripped funding for the completion of the Port MacKenzie rail extension project.
The committee removed a $58 million bonding authority section meant to complete the rail to Port MacKenzie, which is in the Matanuska-Susitna Borough on the opposite shore of Knik Arm from the Don Young Port of Alaska.
The committee retained the original bill, which was authority to issue up to $75 million in revenue bonds to replace the aging Seward dock and facility with a pier system to better handle Alaska’s 41-foot tides.
House Bill 122‘s funding for the Mat-Su project had been placed into the bill during House committee proceedings, but it had some Senate Finance Committee members skeptical because the previous funding, $184 million, has left the rail project uncompleted, and because the port itself is not completed.
Port MacKenzie has direct access to major road corridors to the Mat-Su Valley, north to Fairbanks, and south to Anchorage. It is still not utilized fully because it lacks rail access, but it’s the only port in Alaska with such massive potential, boasting 9,000-acres (14 square miles) available for commercial and industrial development. It has deeper draft capacity than the Port of Alaska in Anchorage, and is set up for the export of cargo that includes natural resources.
One of Alaska’s greatest champions who moved the project forward with previous state awards was former Department of Transportation Commissioner Joe Perkins, who passed away in 2019 while working on behalf of the Mat-Su Borough to complete the ambitious rail and port project. After his passing, the project slowed to a near standstill.
“The railroad is supportive of the Port Mackenzie rail extension project and rail extension in general,” said Bill O’Leary, president and CEO of the Alaska Railroad, testifying by phone to the committee. “We think that rail and rail infrastructure is key to unlocking many parts of Alaska and the resources that are otherwise trapped and can be a key part in moving the Alaska economy forward.”
Funding for the Seward dock facility will cost the state nothing in cash. Royal Caribbean Group has disembarked cruise passengers for two decades, including 188,000 passengers in 2023. O’Leary said the debt for the Seward project would be paid by future cruise customer use and the 30-year berthing agreement with Royal Caribbean.
But the Port MacKenzie project would still need customers before the railroad could even get bonding for the completion of the rail line. In an era when Alaska can’t seem to get the Ambler Mine or Donlin Mine permitted, and as environmentalists make Alaska coal unfeasible for export, it’s not clear who the customer would be that would make bonding for the rail expansion possible.
Sen. Olson said to O’Leary that the Don Young Port of Alaska “is going to be competing” with Port MacKenzie, “and we know some of the issues we’ve had with the Anchorage port [Port of Alaska] that’s gotten on the wrong track on a couple of occasions.”
The Don Young Port of Alaska is owned by the Municipality of Anchorage and moved 5.2 million tons of fuel and freight in 2022, including containers, liquid bulk, dry bulk, break bulk.
About half of all Alaska inbound cargo crosses Port of Alaska docks, about half of which is delivered to destinations outside of Anchorage, including Southeast. But it has aging piers and docks. Port of Alaska’s Modernization Program is a dock replacement program that would replace aging docks and related infrastructure before they fail. It has been a priority of the Mayor Dave Bronson Administration. It’s a project that may cost as much as $2.2 billion.
The Port MacKenzie project could be a backup dock for the Anchorage port. The railroad has been working on a federal grant that requires the state match — that effort will likely have to be sacked without the Alaska Legislature’s support.
Looking ahead, Sen. Bert Stedman emphasized the need for a comprehensive review of rail expansion projects in the 2025 legislative session, prioritizing initiatives that maximize statewide benefits. With the fate of the Port MacKenzie extension provision uncertain, the Alaska Railroad’s future development trajectory awaits further legislative scrutiny.
HB 122, sponsored by Rep. Frank Tomaszewski of Fairbanks, is now back to what it was in the beginning — funding to make the Seward dock usable in future years. After it is voted on by the Senate, it will be back a the House for a concurrence vote.