Report into Alaska ferry system’s long-term future recommends management by public corporations

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ANCHORAGE (KTUU) - An independent report examining ways to overhaul the Alaska Marine Highway System concluded that privatization is “not feasible” but it recommends running the system through multiple public corporations.

In February of 2019, Gov. Michael Dunleavy requested that a qualified marine consultant examine the Alaska ferry system’s long-term future and find ways to cut costs. On Wednesday, the draft report written by Northern Economics was made public and discussed by the Marine Transportation Advisory Board.

The report was based on examining if the AMHS could be run with state spending slashed by almost 75% from the last fiscal year.

“In general, the study team concludes that 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 report reads.

The 145-page study examined 11 different models for how the ferry system could cut costs, it concludes that a system of public corporations and port authorities for each region was the only system that could operate on “the target subsidy level and also provided minimum levels to most (but not all) communities currently served by AMHS.”

The Alaska Legislature and the Dunleavy administration are now set to review the recommendations from the report and whether they should be implemented, said Mary Siroky, a deputy commissioner for the Department of Transportation.

Siroky said the Dunleavy administration aimed to enact a long-term reform of the ferry system by the start of the next fiscal year in July of 2020.

Robert Venables, the chair of the Marine Transportation Advisory Board, said he wasn’t surprised that the public corporation model was the one advocated for by Northern Economics. “It is big business and it should be run like one with a professional board that can outlast the political cycle,” he said.

He questioned the idea of setting up multiple regional public corporations instead of one single entity based on finding qualified people to staff them: “If you’re going to have a struggle to get one good board, how would you easily get six?”

Venables is also the executive director of the Southeast Conference, an organization that advocates for Southeast Alaska that has long called for a public corporation to manage the ferry system.

A 2016 report commissioned by then-Gov. Bill Walker in partnership with the Southeast Conference made the conclusion that a public corporation model similar to the Alaska Railroad Corp. was the best model for the marine highway system’s long-term future.

Venables said a big difference between the ferry system and the railroad is that the railroad is able to lease roughly 18,500 acres of land to garner a separate revenue stream.

Venables said the corporation model could see some services onboard ferries such as bar service privatized. “Do I think that the State of Alaska needs employees serving alcohol to the traveling public? That’s a tough sell for me.”

Alaska’s coastal communities are seeing a reduced winter ferry service with $43 million cut in state spending from last year’s budget. Some communities such as Cordova will see an eight-month service gap until May.

For the largest union representing ferry workers, the report signaled that there could be another trip to the negotiating table after a three-year labor agreement was finalized with the State of Alaska in the summer.

“[The public corporation] option required a 5 percent reduction of vessel-based wage rates and 25 percent general increase in fares and other major vessel operation changes that would require renegotiation of union labor agreements,” the report reads.

“You know, our members are really having a tough time now, there’s only really one vessel running at the moment,” said Robb Arnold, the vice-chair of the InlandBoatmen's Union (IBU). “Our members are really feeling the hurt, not just our members but the communities as a whole.”

Arnold said he and the union would need to examine the report and its conclusions. “I’d like to look more at this and see what this means for Alaska,” he said.

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