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By NICK BOWMAN
Daily News Staff Writer
With another session of legislative gridlock expected and deep cuts surfacing for the Alaska Marine Highway System, Southeast Conference is aiming its legislative agenda to reform the state ferry system at 2018.
The president of the regional economic development nonprofit, Ketchikan’s Chelsea Goucher, gave an update this week on Southeast Conference’s ongoing effort to restructure the ferry system and create a long-term operating plan that will culminate in a 2018 push for action.
But in the short term, the legislation session is shaping up to be another bruising year for the state ferry system budget, which has a proposed budget of $138.1 million this year, including $85.4 million from the state general fund.
At the end of 2016, the group rolled out the results of phase one: A report suggesting that the ferry system — currently a line-item agency with the Alaska Department of Transportation — should become a state-owned corporation similar to the Alaska Railroad or the Alaska Industrial Development and Export Authority.
The system would still receive annual funding from the state, but would have a governing board and more flexibility to negotiate union agreements, set its schedule and raise its own revenue.
Since the fall of 2016, the reform effort has continued in the background. Its steering committee has continued to meet while the nonprofit beats the bushes for more fundraising dollars to pay its two contractors, the McDowell Group and Elliot Bay Design Group.
“It's a hefty project,” Goucher said, noting that the work of phase two will essentially say: “This is what we want the marine highway system to look like, and the public corporation model is what's going to get us there. It's making the case for the governance model that came out of phase one.”
Depending on the final scope of work, it could include the proposed legislation needed to convert the state agency into a public corporation.
But this session, the ferry system remains a state agency that in the Alaska Senate looks ripe for cuts.
“A limited group of people are benefitting and a limited group of people depend on the system,” said Sen. Anna MacKinnon, R-Eagle River, at a Senate Finance Committee on Wednesday. “There are other transportation opportunities for most of the routes that we're hitting. We have additional air. We have private sector (operators) that are carrying freight into these communities.”
MacKinnon co-chairs the powerful Senate Finance Committee with Sen. Lyman Hoffman, D-Bethel.
She said she understood that Southeast and Southwest rely on the ferry system, but argued to DOT Commissioner Marc Luiken that the state can no longer afford its 60 percent operating subsidy.
“We have to reduce the subsidy. We have to prepare for a strike,” MacKinnon said. “You publish the (sailing) schedule. The administration is aware that the farebox is being subsidized.”
Luiken noted that of the 24 percent cut to DOT since Alaska’s budget crisis began, the largest portion has come from the ferry system, which saw its payments from the general fund drop from more than $150 million under former Gov. Sean Parnell to $85 million proposed for this year by Gov. Bill Walker.
Meanwhile, it’s permanently laid up the ferries Chenega and the Taku, the latter of which next week will go to a public sale. The 177 positions on those vessels have been cut, according to Amanda Holland, director of administrative services at DOT.
“I appreciate the efforts. I'm suggesting they're small in relationship to the budget deficit we're facing,” MacKinnon said.
Some on the committee talked about partial privatization of the system, and Luiken reminded the senators that Southeast Conference is working on its reform project.
But in the short term, key senators seem set on year-to-year reductions for the state ferry system and lower levels of service.
“We'd like to see a continued downward trend in that funding and we'd like to see more of a shift to the highways that nearly every Alaskan counts on every day whether or not they have marine highway service,” said Sen. Peter Micciche, R-Soldotna.