By GARLAND KENNEDY
Sentinel Staff Writer
The draft of a state-commissioned report on possible reforms to the Alaska Marine Highway System concludes that changes in the long-term will be “extremely difficult.”
Options studied included selling or leasing vessels, and eliminating high-cost, low-use routes. The report is in response to Gov. Mike Dunleavy’s proposal to cut the operating subsidy of the marine system by as much as half.
But some options are not financially viable if even basic services are to be retained, the report said.
“Selling or leasing AMHS assets to private entities is not feasible if minimum levels of service are also stipulated,” the report stated.
The study was conducted by the Seattle-based consulting service Northern Economics.
The only routes that would be fiscally viable for a private operator would be in Lynn Canal and between Ketchikan and Metlakatla, the consultants said.
Another option analyzed was the possibility of creating a public corporation to operate the AMHS. This, said the report, “was the only studied option that achieved the target subsidy level and also provided minimum levels of service to most (but not all) communities currently served by AMHS.”
Other options included dropping service to Bellingham, Washington, cutting all service except for the Ketchikan-Metlakatla corridor, or cutting service to Southeast feeder routes (to such communities as Hoonah, Tenakee and Pelican).
Based on their research, the report made a number of recommendations.
The first was emphatic: “Increase prices.”
The report said that cuts in routes and service should focus on reducing the operating subsidy.
Regarding Sitka in particular, the report argued that higher fares would not decrease demand for service. The report also revived a proposal that has been studied and analyzed for decades: a road from Sitka across Baranof Island to Baranof Warm Springs. A terminal on Chatham Strait would eliminate the long two-way side trip through Peril Strait that ferries are now required to serve Sitka.
“Development of the Warm Springs Bay road and terminal would shorten sailing mileage between Juneau and a terminal with road access to Sitka,” the report said. Past studies have indicated the cost of a road across the island would be in the hundreds of millions of dollars.
The Northern Economics report concluded that overnight sailings are the most expensive to operate.
“When reducing service, look for ways to reduce the number of sailings and operating costs... (and) if port calls are to be eliminated, look to cut communities that make it difficult to offer 12-hour or 14-hour day-boat service,” the report said. It cited Pelican, Tenakee Springs, and Chenega Bay (in Prince William Sound) as examples of communities to be cut off because of high cost.
Beyond specific cost-cutting ideas, the report suggested that the Legislature create a board of directors to ensure long-term stability within AMHS.
The Anchorage Daily News, reporting on the state Marine Transportation Advisory Board Wednesday, quoted DOT deputy commissioner Mary Siroky as saying the Legislature “made a huge policy statement” when considering 2019 budget cuts.
This statement drew a sharp response from Sen. Bert Stedman of Sitka.
“It was disappointing to hear Department of Transportation officials try to pass blame from the Alaska Marine Highway System’s current woes onto the Legislature,” he said. “The (Dunleavy) administration’s proposed budget for the current fiscal year would have stopped all service on September 30.” The Legislature responded by reversing the reappropriation of $77 million of AMHS funds for other purposes and adding $17.9 million to the ferry budget as well.
Dunleavy announced on Friday the creation of a work group to analyze the results of the Northern Economics study.
“The Work Group will define the future needs and purpose of the AMHS, with the goal to ensure residents have access to essential transportation services,” Dunleavy said in a statement.
The budget Dunleavy sent to the Legislature this year is roughly the same as the figure resulting from the Legislature’s action last year in restoring funds that allowed the service to continue to Sept. 30, though with major cuts in service. Once again this year the final figure will be decided by the Legislature, which gaveled in today.
Earlier today, the state Department of Transportation published its proposed ferry schedule for May through September, 2020. (See story, this page.)
