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Menzies mentioned the price increase in Haines last week when speaking to the Haines Borough Assembly and Planning Commission. The project is estimated at $189 million for road building, $16 million for a new ferry terminal and $53 million for new shuttle ferries - a combined $258 million, according to the project's environmental impact statement.

"We believe construction costs will rise (above the numbers quoted in the EIS). But will it make the project insurmountable? We don't think so," said Menzies, as quoted by the Chilkat Daily News.

The director's comments were confirmed Tuesday by Mary Siroky, special assistant to department's commissioner. Menzies was referring to market inflation but not specific factors when he made the statement, she added.

"Could the cost go up? Yes," Siroky said. "But we have no hard estimate on what that number might be."

The project's price tag has been irksome to those who do not favor the planned highway, but advocate a better ferry system.

"Their original estimate is way off," said Juneau resident Dean Williams.

More money may be needed to build avalanche snow sheds - costing up to $12 million each - and the state has not focused enough on the expense of road and shuttle maintenance, Williams said.

The road project will be funded mostly by federal dollars that are allocated annually and placed into the state Transportation Improvement Program, which lists state highway projects in order of priority. The road-ferry link is high on the list, Siroky said.

Also, the Alaska Legislature can give state funds to the project; some $45 million was set aside by lawmakers this year.

Deputy Mayor Randy Wanamaker, a supporter of the state's plan, said the news of the project's price going up is not a surprise. The demand is high nationally and globally for construction materials and labor, and that has driven up the costs of building a new high school and other local projects, he said.

By the same token, costs to operate ferries continue to rise because of the widespread demand for diesel engines and related parts, he added.

"I think it's something we're going to have to live with," Wanamaker said.

Juneau Democrats Sen. Kim Elton and Rep. Beth Kerttula said their offices also heard the price was rising. The two lawmakers are filing a formal request with the state, asking that their offices be informed of any estimates that show an increase in expenses or any plans to reallocate funding towards the project.

"The DOT manages money around in odd ways," Kerttula said. "We want to be told about any changes before they are implemented."

The plan to construct a 50.8-mile road from Juneau to a planned shuttle terminal at the Katzehin River has been heavily pushed by the Murkowski administration.

As Alaska will soon have a new governor, the project's cost may determine its fate, Kerttula said.

"I have a feeling whoever is elected will not just take a look at this road, but a lot of the projects of the Murkowski administration and see if they were well thought-out and funded," she added.

Republican candidate Sarah Palin favors improved access to the state's capital, but she has several questions about the highway's cost and its risks to drivers and passengers, because it will run through a series of avalanche chutes, said Curtis Smith, spokesman for the Palin campaign.

"She wants to learn if that is the best route," he said.

In a recent letter on this topic written by Democratic candidate Tony Knowles, he questions if fair consideration was given to a route running along the west side of Lynn Canal.

"This route, which also has a short ferry link, may cost less to build and maintain (without avalanche issues) and would not affect Berners Bay," Knowles wrote.

The state has cleared brush for a 4-foot-wide trail from mile 53 to 67 along the road's proposed right-of-way. Next, the state plans to award bids to contractors after the U.S. Army Corps. of Engineers issues the necessary permits for construction. The permit is expected sooner than the end of the year, Siroky said.

• Andrew Petty can be reached at andrew.petty@juneauempire.com.