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The state Government of Alaska is proposing a radical shift in funding for the troubled Knik Arm toll bridge project that would make it entirely publicly funded and abandon prospects of a public private partnership.

Revenue Commissioner Angela Rodell said in December that it will be far cheaper for the bridge to be publicly financed rather than rely on what had been envisioned as a public-private partnership.

The problem came after a state audit released earlier this year found the authority's traffic and toll projections were overly optimistic.

Alaska hired an advisory firm, First Southwest Co., which proposed a more traditional public financing model. According to First Southwest, the state would pay much lower interest on the debt than a private entity would because it has a good rating.

First Southwest says besides $262 million in bonds, $300 million in federal and state transportation funds should be directed at bridge construction, including $112 million already appropriated for Knik Arm Bridge & Toll Authority (KABATA). Much of the rest could be steered to the bridge from projects that aren't "shovel-ready". Another $276 million would come from a federal transportation loan backed by toll revenues.

KABATA wants to build a 1.7-mile-long bridge across Knik Arm connecting the fast-growing, land-rich Matanuska-Susitna Borough to Anchorage. But its funding has never been assured, and after the audit, legislators began questioning whether KABATA can pull off the project.

The legislation would need to be revised to reflect a public financing model, if lawmakers agree with that approach. KABATA's traffic consultant, CDM Smith, is working on new projections but that report isn't yet complete.

KABATA had spent $2 million to develop a procurement process for a public-private partnership before the economy crashed in 2008.