Imagine waking up one morning to find out that the lone highway in and out of your community has been shut down. For many folks living in Alaska, this scary scenario recently became a reality. In 2019, the Alaska Marine Highway System limited or shut down services to many remote communities after legislative budget cuts, equipment failures, and a workers’ strike threatened to ground the ships that remain a lifeline for areas off the road system like Kake and Sitka and Kodiak.
Add to those woes the pandemic of 2020, and you have a major transportation problem in a state covering an area more than twice the size of Texas.
The 13th highway
Consider that only 20 percent of Alaska’s 663,268 square miles can be accessed by a road system comprised of just 12 numbered highways, and it becomes clear that adequate transportation must include routes via water and air. This is why many folks consider the AMHS the 13th highway. And, while most of us consider our safe passage on black-top roads to be a basic taxpayer right of residents, the same can’t be said for the Alaska Marine Highway System, despite the fact that more than 300,000 people and 100,000 vehicles rely on the ferry system annually. In 2019, Alaska Governor Mike Dunleavy unveiled a proposed budget that would slash the state’s subsidy for AMHS from $90 million to $22 million, further stating that expenditures could not exceed existing revenue. That last part gave many people who use the system pause: You mean, the “roads” we use daily are supposed to create revenue? When was the last time a black-top road that wasn’t a tollway brought in revenue to the state? Isn’t that what taxes are for? And, if the AMHS must break even or make a profit in order to run, doesn’t that illegally discriminate against the 80 percent of Native villages that are only accessible by air or boat? But the problem runs deeper, especially when the system depends on who’s in office at the time.
The 58-year-old AMHS extends across 3,500 miles of coastline, serves 35 ports with 12 ferries, and is heavily subsidized by State of Alaska General Funds. Without this funding, AMHS would likely cease to exist. According to a recent survey, 73 percent of Alaska residents are opposed to the State of Alaska ending its subsidy support of AMHS, especially if it would result in higher fares or fewer port calls. That said, some routes serve predominantly locals, and others carry tourists from Outside. This might bring up the argument that locals should ride free or with subsidized fares, while tourists pay increased prices in order to ride. But tourism dollars generate state revenue, and for tourists to access and contribute money to communities like Ketchikan and Juneau, those Outsiders are going to need to use AMHS. Discouraging tourism between ports won’t help the economy. But the ships cannot run on fare revenue alone. The ongoing dilemma is complicated and critical.
In January 2020, the governor established the Alaska Marine Highway Reshaping Work Group, resulting in a 100-page draft outlining various solutions for the Alaska Department of Transportation and Public Facilities. In the report, 11 options were analyzed and considered. Among them, the study looked at privatization of the ferry system, including terminals and/or vessels; fare increases; dropping or reducing service to high-cost, low-volume ports; and renegotiating labor union contracts. By February 2020, only one AMHS vessel was running. By April 2020, the legislature had attempted to lessen the fallout of Dunleavy’s massive 2019 budget cuts by restoring $23.5 million to the AMHS subsidy fund to regain service to hard-hit coastal communities. The governor vetoed all but $8 million of those funds, which, though still an increase over 2019 budgets, was insufficient to sustain normal service operation levels. In October 2020, the final report concluded that selling or leasing AMHS assets to private entities would not be feasible to provide a minimum level of service to communities. Instead, a governor-appointed nine-member operations board began meeting at the beginning of this year to review and recommend changes to the fare structure for the summer 2021 schedule, along with developing a long-term operating strategy and vessel replacement plan. In the meantime, uncertainty reigns, with tourists and residents alike hoping for AMHS to remain afloat.