A new report examining ways to overhaul the Alaska Marine Highway System recommends transforming the ferry system into two public corporations, leaving a four-month gap in ferry service to Kodiak.
The report, prepared by Northern Economics, was commissioned by Gov. Mike Dunleavy in February 2019, with the goal of cutting public subsidies to the ferry system to $24 million annually, down from $44 million in the most recent fiscal year. A draft of the report was published on Wednesday, discussing possibilities for the future of the state-run ferries.
The $24 million budget was proposed by Dunleavy, who originally intended to set the AMHS budget at that amount for the 2020 fiscal year, but backed down due to pressure from the Legislature.
According to the report “reducing the AMHS operating subsidy to $24 million will be extremely difficult if there is also a desire to provide minimum levels of service to existing AMHS communities.”
The 145-page report examined 11 models for operating the ferry system that would cut costs. Of all options studied, only one transforming the ferry system into two public corporations “achieved the target subsidy level and also provided minimum levels (of service) to most communities.”
Under this proposal, Kodiak would be without ferry service from Dec. 22 through April 27, leaving a four-month gap.
The proposal suggests splitting AMHS into two public corporations, one serving Southeast Alaska and the other serving Southcentral Alaska. Kodiak would fall under the Southcentral corporation.
In this scenario, the Tustumena would no longer provide service to Ouzinkie or Port Lions, remote communities that rely heavily on the ferry for transporting groceries and other vital services. The Tustumena would operate on the Kodiak-Homer route as a day-boat, an option that reduces the number of necessary crew members.
Rep. Louise Stutes (R-Kodiak), has previously voiced vehement opposition to cuts to Kodiak ferry service, emphasizing the importance of the service to the island communities.
In a conversation on Thursday, Stutes said she had not yet read the report. However, she said the administration’s decision to commission the report, which cost $250,000, was “almost incomprehensible.”
“That money would have gone somewhere insofar as the operation of the ferries,” she said. However, Stutes, who is the chair of the House Transportation Committee, acknowledged that changes were necessary in order to make the ferry service more efficient.
Stutes also voiced concern over the delay in the publication of the report, which was originally slated for a November release. Meadow Bailey, a spokesperson for the Department of Transportation, said the delay was due to the length of the report.
“(The) draft report was released once the department had sufficient time to review for accuracy. It took time to work through the large volume of data and complex issues,” she said in an email.
Kodiak City Mayor Pat Branson attended the Marine Transportation Advisory Board meeting on Wednesday, where the plan was presented and discussed. She said all 11 proposals included in the report are still on the table, and that the advisory board is adamant about seeking public comment before making a final decision on the plan.
The 11 proposals include selling or giving vessels to private entities, leasing vessels to private entities or public corporations, eliminating services to some communities, reducing service frequency and reducing wages, among others.
“I don’t think the overall feeling from the advisory board is looking at two public corporations. It makes no sense to have two corporations. That’s just something that they came up with that we have to look at,” Branson said. “Everything is on the table. It just can’t be changing every year, with legislators and administrations putting in for more cuts. Cuts aren’t the answer. We have to think outside the box. I expect the advisory board as well as Alaskans will have a lot of input.”
After years of uncertainty for the Marine Highway System, she said this year represents a “turning point.”
“We want to have a plan in place, with stable and consistent service,” she said, adding that she hopes Kodiak will not face a months-long service gap, but that Kodiak ferry service will likely face some reductions.
Branson said the budget for fiscal year 2021 is “pretty much set,” with funding for the ferry system remaining at $44 million. The Department of Transportation hopes to implement the new plan by July 2022.
“We have to make it work. It’s not impossible. These kinds of paradigm shifts can happen,” Branson said. “We need to come up with a solution so we’re not changing funding and systems every year.”
Bailey said the report will provide the basis for discussions about the future of the ferry system.
“The objective of the study was to identify potential reductions in the state’s financial obligation and liability as related to AMHS. Achieving this goal will require increases in revenues, reductions in cost, or a combination of the two,” Bailey said. “Next steps start with a review of the report by the administration, the Marine Transportation Advisory Board and the Legislature. These entities will work together on future decisions.”