Alaska Marine Highway System not scheduling services past Oct. 1

The Alaska Marine Highway System is not scheduling sailings past Oct. 1 amid funding uncertainty in the governor’s budget proposal for FY2020.

Sen. Mike Shower, R - Wasilla, told the Senate Finance Committee on Wednesday that he had received a letter from the Department of Transportation that “they are planning zero ferry transports from October to June.”

If the budget is passed, the governor’s office confirmed funding would continue through summer, but no sailings would be scheduled from Oct. 1, 2019 until June 30, 2020. Shower said that lack of service could “strangle” communities over the winter that rely on ferries for goods and services.

"If you shut down the ferry operations, you’re potentially, I hate to say it, you’re strangling those communities because they may not make it through the winter, if the airports can’t support them, and I my guess is they can’t," Shower said.

Gov. Mike Dunleavy issued a directive on Feb. 12 to the Department of Transportation commissioner to enlist “assistance of a qualified marine consultant to identify potential reductions of the State’s financial obligations and/or liability to the Alaska Marine Highway System.”

The marine consultant will work with the department and the Office of Management and Budget to investigate options to reshape AMHS, including a possible public/private partnership. The report is due Aug. 1 and set to be implemented by July 1, 2020.

“It’s entirely possible that sailings may be less frequent but continue; that’s one of the things they are looking at,” said Amanda Holland, OMB’s management director. “That’s one of the things the consultant will help them review: What is the maximum service they can provide with the budget they are appropriated.”

Sen. Bert Stedman, R - Sitka, co-chair of Senate Finance, questioned how the system could be rejuvenated if it was shut down over the winter. Using a real estate analogy, he said it’s “very difficult to kick everyone out of an apartment house, let it sit vacant, and then turn around and try to sell your apartment house.”

On the budget’s potential impacts to state ferries, Stedman didn’t mince his words: “Now we’re facing a budgetary proposal for elimination. That is what this budget does, it’s an elimination budget, in my opinion, of the Marine Highway.”

The governor’s budget announced on Feb. 13 would see a reduction of around $96 million from the ferry system’s budget, which translates to around 75 percent of its funding.

Stedman asked the administration for its plan for funding the AMHS past Oct. 1, suggesting money may be required in a supplemental budget.

“Unless there’s a plan for a special session in the fall to implement an operational budget from Oct. 1 to June 30, and that may be the plan, I’m not aware of one,” said Stedman.

Holland said the state is facing profound fiscal challenges, and ridership aboard the ferry system has been dropping since the 1990s from a peak of around 450,000 passengers to 2016, when the AMHS averaged 250,000 passengers. Vehicle ridership has stayed steady in that same period at around 100,000 per year, said Holland.

Stedman asked Holland what would happen to the hundreds of staff members who work with the ferry system. Holland said the proposal would fund the existing positions for the next 3 to 6 months and the marine consultant’s plan would clear up staffing questions.

“It is our anticipation that through that plan we will have clear direction in terms of where those positions will be going and whether there will be a reduction in force or whether in fact there will be an elimination of positions,” said Holland.

In a statement, the governor's office writes that "positions will be required beyond the summer schedule to maintain vessels in layup, salable, or transferrable condition."