Ferry System Budget Issues On Tap for Alaska Special Legislative Session

A budget issue critical to the commercial fishing industry, the future of the Alaska Marine Highway System (AHMS), is on tap for discussion during a special session of the Alaska Legislature beginning on October 23.

At issue is a budget oversight that could leave the marine highway without sufficient funds to operate next spring, but it will be corrected, says Alaska Sen. Gary Stevens, R-Kodiak.

The ferry system is crucial to Stevens’ legislative district, which includes Kodiak, Homer and Cordova, as well as the commercial seafood industry and tourism in Alaska.

A 2016 economic report from Juneau’s McDowell Group notes that AMHS provides essential transport for passengers, their vehicles and freight, including fresh seafood and other products critical to businesses operating in Alaska.

“A number of seafood companies rely on AMHS for shipment of fresh seafood,” the McDowell report read. “The ferry offers an essential alternative to air freight, which can be prohibitively expensive, have insufficient capacity and lack proper refrigeration. Having a ferry option lowers transportation costs, allowing seafood processors to pay local fishermen more for their product,” the report concluded.

Commercial harvesters also use the ferry to transport nets, line, equipment and other supplies from the Kenai Peninsula, Anchorage, Mat-Su Valley and other locations to Cordova.

The budget shortfall for the ferry system came to light in September when legislative leaders were advised that AMHS would run out of money in early April of 2018.

Brian Fechter, an analyst with the Alaska Office of Management and Budget, said it was due to a bad timing situation, as legislators were struggling to pass a budget to avoid a government shutdown.

Every year legislators pass a budget bill to approve spending for the upcoming fiscal year. Knowing unforeseen events, including emergencies, may arise they add an allotment to cover those costs. That allotment comes from Alaska’s savings account, the Constitutional Budget Reserve. Last year legislators approved an allotment of $100 million, which was much lower than in previous years, and included covering the state’s commitment to Medicaid expansion. Also, there was no way of knowing what would be appropriate for the ferry system in the capital budget, so AMHS funding, which was to be $30 million, was cut down to $7 million. “Everything was moving so fast,” Fechter said. “By the time the bill was sent to the governor we were days before a government shutdown, and there was no time to review the situation.”

Stevens said it’s a situation that needs correcting and legislators will do their best to get funds back to continue smooth operating of AMHS.