A study commissioned by Alaska Gov. Mike Dunleavy’s administration recommends running ferries as day boats where possible and providing long-term contracts to private companies to help fill service gaps.
The draft study by Northern Economics, released by the state transportation department Wednesday, found selling or leasing system assets to private entities is not feasible if minimum service levels are stipulated. Even without such stipulations, companies could have difficulty breaking even on existing routes, according to the draft.
The draft looked at other options, too, with an objective of reducing the system’s operating subsidy to $24 million. It found a public corporation model could work under that parameter with higher passenger fares, lower crew wages and service changes that would leave some communities without ferries for extended periods.
Northern Economics was asked to analyze options to reduce the state’s financial obligations for the ferries, an important transportation link for many coastal communities not connected to the road system. While Dunleavy proposed a roughly $95 million cut for the current-year budget, the Legislature agreed to a cut of about $44 million, which deputy transportation commissioner Mary Siroky called a “huge policy statement” that changed the way the marine highway system was to work.
Siroky told the Marine Transportation Advisory Board, meeting in Anchorage on Wednesday that the report can help in determining the “new paradigm” for the system.
Sen. Jesse Kiehl, a Juneau Democrat, in an interview said the policy decision made by the legislature was to keep the system going. “We couldn’t get the kind of funding that Alaska needs past this governor,” he said.
Rep. Sara Hannan, a Juneau Democrat, said she will argue this session that the cuts were “devastating beyond what we recognized them to be” and that additional funding should be restored.
The draft suggests any changes to service levels, schedules or fares be made keeping in mind how that would affect state financial support. It cites data that indicated increasing the number of sailings in Lynn Canal in southeast Alaska had appeared to increase revenue more than it increased costs.
The draft recommends looking at cutting communities that make it difficult to offer 12-hour or 14-hour day-boat service to higher-volume routes and whether any dropped communities could be candidates for service from private operators.
“With a stable operating environment, private operators may be able to develop profitable services to these, as well as potentially other unserved communities,” the draft states. “Even if these services were partially subsidized by the state, the overall subsidy provided for ferry services could likely be reduced.”
Meadow Bailey, a transportation department spokeswoman, said by email that achieving the goal of reducing the state’s financial obligation and liability to the system will require increases in revenues, cost reductions or a combination of the two.
She expects the legislature, administration and advisory group to work together on future decisions.