Alaska Gov. Bill Walker’s recent decision to halt the Juneau Access project has some residents hopeful the new administration will pull the plug altogether, while others are worried how failure to complete the project might affect state finances.

Walker issued the order Dec. 26 to freeze the Juneau Road and five other statewide “megaprojects” pending further review. “With the extensive drop in market oil prices contributing to a large budget deficit, there is a need to take immediate and responsible action to ensure the state remains in a healthy fiscal position,” Walker said.

The announcement came as a day-late Christmas present to some Haines residents, including Scott Carey, treasurer of Lynn Canal Conservation.

“We’re real excited about that, of course,” Carey said. “(Former Gov. Sean) Parnell was so headed in that one-way direction that I was super hopeful when (Walker) was elected that the road issue would cease for a while, anyway.”

Carey and many other members of the community have opposed the East Side Lynn Canal Road since the Department of Transportation initiated the project in 1994. DOT breathed new life into the project in 2011 by pursuing a Supplemental Environmental Impact Statement after a U.S. District Court found the department’s first document invalid.

Carey said he was also glad to see Walker fire former DOT Commissioner Pat Kemp. Walker sacked Kemp in early January after the commissioner submitted a memo defending the road project.

“We are very happy that the DOT commissioner has changed hands and we are optimistic what can go on there,” Carey said. “We’re very happy he’s not in charge of the situation down there right now.”

Southeast Alaska Conservation Council transportation campaign manager Emily Ferry echoed Carey’s hopefulness about the potential death of the project. SEACC, along with other conservation groups including LCC, successfully challenged DOT’s original environmental impact statement in 2009.

“I think it was a really smart decision,” Ferry said. “I think this is a good first step. Take a break before we lose any more money on these projects.”

Road supporters, though, say shutting down the project could cost the state.

In the memo that got Kemp fired, the commissioner warned failure to complete the road project or move it along in a timely fashion could result in a penalty from the federal government, since it has received millions in federal funds.

Haines resident and longtime road supporter John Norton said he has been following the issue and believes “there is a financial angle that still supports continuation of the road project.”

According to DOT spokesperson Jeremy Woodrow, the state could be responsible for paying back as much as $26 million in federal funds spent thus far on the project. (The state has spent an additional $19 million of its own money.)

“That number seems to have some credibility,” Norton said.

Norton also continues to support the road project because of escalating ferry costs and the potential for new vehicle technology that would make the road trip from Haines to Juneau less expensive and more environmentally-friendly.

Woodrow said DOT is in conversation with the Federal Highways Administration to determine whether they will have to refund any or all of the $26 million. “The way that federal law is written, if the project doesn’t move forward within a certain time frame there is a potential penalty of owing some or all of the federal money back,” he said.

Woodrow clarified the state doesn’t just return the money to the federal government. The feds require the state to put whatever amount they determine needs to be paid back into other transportation projects in the same state.

For example, if the $26 million needs to be “repaid,” Alaska would be required to spend $26 million of its own money on other statewide transportation projects, whether it be roads, airports or ferries.

LCC’s Carey called the threat of repayment “a scare tactic,” and SEACC’s Ferry agreed DOT’s claims are overblown.

Ferry said the federal government frequently pays for studies associated with the National Environmental Policy Act, which are required by federal law. That includes the Supplemental Environmental Impact Statement, which likely makes up a good chunk of the $26 million, she said.

Making states pay for the NEPA process would be “illogical,” Ferry said, because that process determines whether a project goes forward or not. If the agency knew a “no action” determination on a potential project could result in having to pay back millions of dollars, that would heavily bias the agency in favor of other alternatives, she said.

Based on her calculations, “the most we could be on the hook for is $6.8 million,” Ferry said.

Under Walker’s order, DOT cannot hire new people, enter new contracts or amend existing ones, spend any federal money or spend any money previously appropriated by the Alaska Legislature that hasn’t yet been obligated.

Woodrow said DOT can continue with the Supplemental Environmental Impact Statement process under Walker’s order, though it won’t be able to finish unless Walker’s order is lifted.