Mayor Frank Seludo talks to Gov. Mike Dunleavy and Sen. Bert Stedman

City of Saxman Mayor Frank Seludo talks to Gov. Mike Dunleavy and Sen. Bert Stedman, R-Sitka, in the Ketchikan Gateway Borough Assembly chambesr following a meeting with local officials on Thursday, April 22, 2021. Staff photo by Dustin Safranek

Gov. Mike Dunleavy and Sen. Bert Stedman, R-Sitka, addressed Alaska Marine Highway System topics with local media Thursday morning in Ketchikan, highlighting work toward forward-funding the system to help with scheduling, the potential of adding crew quarters to one of the new Alaska Class ferries, and considering the design of a new ferry to replace the aging ocean-going ferry Tustumena.

“What we've said we always want to do is ... stabilize the system, modernize the system and sustain the system, so that it's not up and down one year to the next,” Dunleavy said during the press conference that followed a meeting with local officials in the Ketchikan Gateway Borough Assembly chambers at the White Cliff Building. “So one of the things that we're going to introduce is 18-month funding.”

Doing a one-time budget of 18 months rather than 12 months would shift future budget cycles for AMHS from the current July 1 through June 30 fiscal year to a straight Jan. 1 through Dec. 31 calendar year.

Approving an 18-month budget that would cover the period of July 1 through Dec. 31, 2022, would allow AMHS to plan schedules farther in advance, according to Dunleavy and Stedman.

Stedman said AMHS has indicated that having sailing schedules available sooner can result in a 5% boost in sales.

In addition, AMHS would be able to schedule its routine maintenance and overhauls at the Ketchikan Shipyard better, said Stedman, allowing the shipyard to backfill its available space — “hopefully, because we want more volume in the shipyard, which the state owns.”

Stedman cautioned that the larger AMHS budget number that people will see represents a longer period of operations (18 months rather than 12 months), but not an increase in service levels over the budget enacted this past year.

The 18-month budget also will include about $6 million to cover a current negative balance in the AMHS budget, he said.

“So this isn’t a discussion of significantly changing the service level —there's some changes in there, but not much,” Stedman said. “It's a restructuring, fixing of the $6 million (shortfall), getting to a calendar year budget, which means we have to bridge that extra six months. And we're working on the numerics of all that. ”

Forward-funding the Alaska Marine Highway System is one of the recommendations made by the AMHS Reshaping Work Group that completed its final report this past October.

The work group, which included Stedman, recommended that AMHS be funded two or more years ahead so that the ferry system “can better plan operations, maintenance, and vessel schedules, publicize and conduct a more predictable future operating schedule.”

Regarding the Alaska Class ferries, Dunleavy said Thursday that the administration is looking at installing crew quarters on one of the two new vessels.

The Alaska Class ferries, which were built in Ketchikan, were constructed without crew quarters. However, the current routes (such as Lynn Canal between Juneau and Haines/Skagway) that the vessels are intended to serve are too long to comply with crew rest requirements.

“We're looking at what we're going to do in the northern part of the panhandle in terms of how we can provide a ferry service, you know, going up to Haines,” Dunleavy said.

Stedman said adding the crew quarters would make the ferry more versatile, and potentially “much more functional in Prince William Sound.”

Dunleavy and Stedman also mentioned Cascade Point, a potential site for a Lynn Canal ferry terminal that’s farther north than the existing Juneau-area terminal at Auke Bay.

According to the work group report, a Cascade Point terminal would reduce the one-way sailing between Juneau and Haines by about 30 miles and 2.1 hours.

“This enables use of a 12-hour dayboat to service the route, reducing ferry operating cost, and enhancing route revenue if the route includes service between Skagway and Haines,” stated the report.

Stedman said the Senate Finance Committee would work with the adminstration about what to do with the Lynn Canal service.

“If they want to try to get the Cascade Point, shorten that route, there's a lot of support for that,” Stedman said.

Dunleavy said the administration is looking at the design of a potential replacement ferry for the Tustumena, the 296-foot, ocean-going ferry that has served Southwest Alaska since 1964.

“We're going to be working on the design and have the conversations on what the big boat, the new boat would look like,” Dunleavy said.

The work group report noted that the “longterm fleet plan” for a Tustumena replacement — as well as the future AMHS system as a whole, is not clear.

“For example, if this $220 million plus vessel is not (Safety of Life at Sea maritime treaty regulations) compliant, ... it will likely not be able to carry passengers to or from Canada,” stated the report. “That may be OK, or not. Whether it is prudent requires rigorous cost benefit analysis informed by a clear vision of how it will fit long-term system demand, operational strategy and plans.”

Stedman said the Dunleavy administration is looking at a redesign to make the replacement more versatile and efficient.

“There was a lot of interest in SOLAS (during the work group process)  — that isn't decided yet,” Stedman said. “ It may not be SOLAS, but the advantage of being SOLAS, of course, is we can service Prince Rupert, (British Columbia) and most of the people want to go and it's more affordable for the Alaskans to get in and out of there. So we'll work on that going forward.”

Stedman noted the possibility of a large federal infrastructure funding package being approved this summer or fall.

“And in coastal Alaska, infrastructure capital needs for transportation deals with the marine highway,” Stedman said. “(In the) Railbelt, it’s roads. They need a lot of road work up there. So we'll have the ability then to, I think fairly easily, tackle the new ship.”

Without the new federal funding package, trying to shift funding from the more-regular amount of federal transportation funding out of roads for a new ferry would be extremely difficult given the combined political strength of Railbelt legislators.

“If you get $500 million a year from the feds for highways and you tried to take $250 million in one year from that (for a ferry), it’s politically difficult,” Stedman said. “... Just don't have the votes.”

In the shorter term, Dunleavy said AMHS will be making some changes to help boost ridership.

“We're lifting the (capacity limits) on the boats going up from 50%, 75%; we'll probably quickly move to 100%,” Dunleavy said. “And then we're looking at, short-term, some incentives for folks to get on the ferries this summer to help with ... the tourism in Southeast.”