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Lawmakers look to federal funding to help bail out, stabilize AMHS for next 18 months

A plan released this week allocates nearly $77M in grant monies
M/V Kennicott. (KTUU)
M/V Kennicott. (KTUU)(KTUU)
Published: Apr. 23, 2021 at 6:05 PM AKDT
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ANCHORAGE, Alaska (KTUU) - Alaskans who utilize the Alaska Marine Highway System could soon benefit from a federal relief package designating tens of millions of dollars to the state’s transportation framework.

Following the December 2020 announcement from the Federal Transit Administration dedicating $14 billion of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 to support the country’s transit industry, a proposal from Gov. Mike Dunleavy and several members of the Legislature seeks to “stabilize, modernize, and sustain” the AMHS, according to a brief statement from Dunleavy’s office.

The proposal stretches 18 months and divvies up the $76,885,000 in federal support.

“The marine highway is critical for transportation in the Southeast,” said Sen. Bert Stedman, R-Sitka, who’s long been working on ways to improve the marine highway system. Stedman’s many constituents hail from communities that are on the AMHS route and depend upon it for commerce and other needs.

“It’s a big issue,” he continued. “A lot of people don’t grasp the importance of it. So when the Malaspina gets tied up, or a marine highway vessel breaks down and gets tied to the dock and becomes dysfunctional, representatives and senators in Anchorage, their phones don’t ring. Mine will ring off the hook.”

Under the plan, approximately $25 million would forward-fund six months of AMHS operations. Another $50 million or so would offset marine highway receipts, meaning all receipts collected by AMHS during fiscal year 2022 would go into the marine highway stabilization fund.

The governor’s office added that this “will provide stabilizing funds for 10 to 15 years of system sustainability.”

“For the forward funding of the ferry, we see that as a tool,” Dunleavy said via phone Friday, “to be able to have funding and then be able to set up their bookings. What we had was a fiscal year-fiscal year issue, and it was problematic for ferries to be able to set up the schedule.”

“It’s going to help them plan out, which will obviously help them capture fare box money,” he continued, “and folks paying a portion for the trip. So we see that as a short-term – but also as a mid-term and long-term – tool for them to use.”

The proposal also includes development of crew quarters on one of the state ferries to expand the range of the vessel. It would be a ferry that serves the Southeast region.

A plan to change the AMHS funding calendar overall from the fiscal year setup the state generally uses to a calendar year format instead is also up for consideration.

“We laid out the concept of putting forward 18-month funding so we can get to a position where, in July, when the fiscal year starts, the marine highway would then know how much money it will have for the coming calendar year,” Stedman said. “So they could do all their planning.”

Stedman noted that the change would allow for better haul-outs and maintenance scheduling, too, which should in turn help increase revenue since the public would know schedules in advance and the system wouldn’t face as many pop-up repair sessions on its ships.

He also said that the AMHS will likely end $6 million in the red this year, when it should’ve been up by about $20 million.

There are still a few more steps to go before the proposal would become official, with a solid plan being the first of those, well ahead of any distributions or changes such as ship construction or any similar action. A governance board of some form would also be constructed, Stedman said.

In the event the proposal passes the Legislature, its supporters will have seen federal relief funding provide a sense of relief, too, and a big hand up for the ferry system.

“That allows us, with transportation money from COVID (federal funding), to offset some of the expenditures and impacts,” Stedman said, adding that the state could “backfill” some of the marine highway funding. “If it wasn’t for that, we wouldn’t be able to do this, so we’re basically seizing the moment to be able to fix the marine highway fiscal position.”

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