Legislators vow to put funds back into AMHS

DOT proposed options include selling, contracting out vessels, terminals, services

The M/V Aurora prepares for its final 2019 passenger run out of Cordova. (Sept. 19, 2019) Photo by Zachary Snowdon Smith/The Cordova Times
The M/V Aurora prepares for its final 2019 passenger run out of Cordova. (Sept. 19, 2019) Photo by Zachary Snowdon Smith/The Cordova Times

A draft report identifying options for reducing the state’s financial obligations and/or liability related to the Alaska Marine Highway System concludes that reducing the operating subsidy to $24 million would be difficult if minimum levels of service were to continue.

The report, prepared for the state Department of Transportation by Northern Economics, will be used to shape future plans for the ferry system, starting with the FY 2021 budget, according to DOT officials who released the document on Jan. 15.

According to the draft document, (online at dot.alaska.gov/project_info) just one option stood out as a way to reduce marine highway dependence on state funding.

That option would require an 8.7 percent reduction of vessel-based wage rates and a 25 percent general increase in fares and other major vessel operation changes that would require renegotiation of union labor agreements. Several route groups would have no service for extended periods of time, including Prince William Sound and the Homer-Kodiak route, which would be without service from Dec. 22 through April 27.

Gov. Mike Dunleavy meanwhile has established the Alaska Marine Highway Reshaping Work Group, to make recommendations regarding future finance and service levels of AMHS. The committee will include representatives of the Marine Transportation Advisory board, the Aviation Advisory Board, the Roads and Highways Advisory Board, one representative from one of three marine unions, two legislators and three members of the public.

According to the analysis, external service on the mainline runs to Bellingham and Prince Rupert would be severely curtailed with service provided only in summer months by the Kennicott in conjunction with its Cross-Gulf service. Other larger Southeast Alaska communities would be limited to service within Alaska, and service to Southeast feeder communities would be reduced a very limited number of trips annually.

Service to Tatitlik, Seldovia, Ouzinkie and Port Lions would be ended.

The study also found that selling or leasing the AMHS assets to private firms is not feasible in minimum levels of service are also stipulated.

Meanwhile, on the eve of the first session of the 2020 Alaska Legislature on Jan. 21, Sen. Bert Stedman, R-Southeast Islands and Sen. Gary Stevens and Rep. Louise Stutes, both R-Kodiak, were looking to boost funding to allow restoration of more ferry service vital to the economies of the coastal communities they represent.

“When the (Dunleavy) administration put their budget out originally it was to totally dismantle the whole system,” said Stutes, who chairs the House Special Committee on Fisheries. “As coastal legislators, we tried to come to a compromise with the caveat that would include year-round service.”

Shifting blame to the Legislature for the current state of the ferries, including boats in disrepair, is outrageous, she said. Their current status “tells me someone isn’t doing their job or doesn’t know how to do their job,” so far as overseeing the maintenance of these ferries for the past 18 to 20 years, she said.

“I find it very disingenuous to try to pass this on to the Legislature, because that is not the case,” she said.

Stutes acknowledged that it will take more than just her efforts to rectify the situation in the 2020 legislative session.

“It’s going to take the majority, (but) I would like to think the majority of Alaskans like to treat each other fairly,” she said.

Steven also said he was annoyed that DOT would blame the Legislature for the current financial issues facing AMHS.

“It was the Legislature that saved what we do have,” said Stevens, who was involved in meeting with the Senate Finance Committee on ferry issues.

“We have to find a way to get along with this governor and remind him how important the marine highway system is,” he said.

Stevens also support comments by Stedman, who was critical of DOT officials blaming legislators for fiscal issues with AMHS during a meeting with the Marine Transportation Advisory Board.

“The administration’s proposed budget for the current fiscal year would have stopped all service on Sept 30, 2019,” Stedman said. “This was an elimination budget that would have led to the system’s demise.”

Stedman had asked DOT to provide scenarios to keep the marine highway operating. His office held a number of meetings with DOT leadership and Office of Management and Budget officials, plus public hearings at the subcommittee level and in the full finance committee.

Stedman said he had negotiated directly with administration officials with three things in mind, including the importance of AMHS to the economies, businesses and lifestyle of coastal residents, and keeping the system operating at some level for the full fiscal year.

Stedman said he was told on the record that the additional $45 million in unrestricted general funds he negotiated would provide 289 weeks of service, compared to 85 weeks of service in the Dunleavy administration’s proposal.

The administration’s proposed capital budget used $47.3 million in vessel replacement funds for non-AMHS use; $15.1 million of AMHS funds to repay the federal government if ferries or terminals were sold off; and $14.5 million of AMHS funds for other state uses and non-AMHS purposes. Stedman made sure these were reversed and remained in the Vessel Replacement Fund and the marine highway system fund, he said. Legislators then added an additional $17.9 million in state funds to the budget for annual overhauls and repairs.

In the capital budget, Stedman noted, legislators reversed the use of $77 million of marine highway funds for other state purposes and added $17.9 million to the budget.