The state recently reversed its decision to reduce operations this summer on the Alaska Marine Highway System.
That decision came after the Department of Transportation realized thousands of summer travelers would be affected if ferry service was cut. But ferry officials told the Marine Transportation Advisory Board last week, there will be cuts in the future.
The ferry system is facing a one-two punch to its budget. Like most departments within the state, the plummeting price of oil is affecting revenues. But the ferry system is also losing another source of money – something called the fuel trigger. That’s a formula that provides additional funding for some state agencies when oil prices are high.
The fuel trigger was estimated to provide $5.3 million in the next budget for the ferry system. But low oil prices eliminated that funding, leaving officials with an even bigger revenue gap. Deputy commissioner Capt. Mike Neussl says he proposed cutting ferry service by taking three ferries offline this summer.
“The nature of the budget savings measures was going to be the Malaspina, the Taku and the Chenega being laid up in July, August, September,” Neussl said.
But thousands of travelers had already purchased summer tickets for those ships. As of mid-February more than 1,400 summer itineraries had been reserved, totally about 5,600 passengers. That amounted to a revenue of $694,000.
“The governor didn’t like that idea,” Nuessl said. “We sold tickets, we told people we were going to sail the ships, and now we’re going to cancel those runs and attempt if possible to rebook them on different ships, cancel itineraries, change their plans, I’m sure some would not be able to make the transition. And the capacity of the remaining ships serving those communities may not be enough to cover that demand.”
With that in mind, Neussl said Gov. Walker shifted $6.2 million from other parts of the DOT budget to make sure the ferry services could run as advertised this summer. That’s what the governor wants to do, but Neussl warned the advisory board that the legislature has the final say.
He also says that the reprieve won’t last long – the state is already looking at how the budget shortfall and oil prices will affect winter schedules.
“I think we all need to be aware that unless there’s a dramatic recovering in oil prices in the state budget coffers that this was just the first round of cuts. All schedules going forward including and starting this winter will need to be looked at with a very fine-tooth comb.”
It might seem that low oil prices would be a good thing for a department that uses nearly 11 million gallons of fuel each year. But low oil prices mean no fuel trigger, leaving the marine highway to pay the full retail price for fuel. In many communities where the ferry service purchases fuel, those prices are still high.
No one on the advisory board argued that ferry service will be affected in coming years. Chair Robert Venables says the board should keep advocating for the reinstated summer service this year. Then the board will have to help plan for futures years with reduced funding in mind.
“Each board member should be as proactive as possible to stay in touch with the legislators and keep reminding them of the mission and commitment to keep Alaskans moving in these communities that don’t have a road,” Venables said. “It’s obvious cuts needs to be made but we want to really embrace our responsibility to assist with the long term planning.”
Neussl put it more bluntly. He says the marine highway system is going to look a lot different in the future. He will be asking communities not what they want in terms of ferry service, but what they need on the most basic level.
“Communities, what is basic service, what does it take to keep your community running?” Neussl said. “Not what is most convenient, not what you would like to see, not what is nice to have, not what you’ve had in the past, but what is basic service mean for your community in terms of how many ferry visits per week your community needs to survive.”