Alaska Marine Highway System Talks Budget in Kodiak

Neussl gives a presentation on the ferry system budget at the Kodiak Island Borough assembly chambers. Kayla Desroches/KMXT

Kayla Desroches/KMXT

The Alaska Marine Highway System held one of its six coastal Alaska community engagement meetings in Kodiak yesterday and spoke about the challenges of a struggling budget and how it plans to approach them.

Deputy Commissioner Mike Neussl presented a PowerPoint in the Kodiak Island Borough assembly chambers and included a slide that showed how costs to the ferry system went up while its revenue numbers did not.

He said in 2004 and 2005, the ferry system’s fleet increased from nine to eleven ships, a change which called for more employees and fuel.

“The price of fuel went up around that time frame, so that cost more money, and our labor contracts actually got negotiated and more expensive during that time frame with some pretty significant cost increases to the state in terms of labor costs over a larger labor pool with eleven ships than nine ships. So, all those things combined to make that $70 million a year system all of a sudden become a $160, $170 million a year system to operate.”

Neussl said this year the ferry system is shrinking the amount of service it can provide. He said they ran a 378 week schedule last fiscal year, a 354 week schedule this fiscal year and plan to run a 320 week schedule for the fiscal year 2017.

Available funds are also shrinking.

He said from fiscal year 2015 to 2016, the ferry system has about $16 million less in operating funds available and about $4 million less in capital funds to maintain the ships and get their certificates of inspection.

The proposed service cuts for the coming summer reflect those limitations.

Neussl said back when the ferry system was fully funded, they would usually receive only a few comments from the public.

“This year, as you might imagine, when we put the summer schedule out, we didn’t get 25 or 50 comments, we got 300 comments, and we didn’t get comments like ‘gee, can you move it from this day to this day?’ We got comments like ‘your schedule is unacceptable, it’s not even meeting our basic needs. It’s cutting our service from five or six or seven days a week service to two days a week service. It’s creating a six week gap with no service in our community.’ That’s unacceptable.”

Neussl said they’re working to fix those gaps and provide a summer schedule that works for everybody. He said one of the complaints he hears is that the ferry system’s first cost-cutting measure is to decrease service to Alaskans, but he says that’s untrue.

At the meeting, he detailed some non-essential services the ferry system has eliminated.

“Bars on ships. Certain ships had them. Gifts shops. Some of the ships had those. 25 vessel positions were eliminated because of that, and that saved I think $750,000 a year on bars and about a million dollars a year on gift shops. We eliminated 30 shore-side positions. About half of those were part-time, on call, seasonal ferry terminal workers, and we lost staff here in Kodiak under that cut.”

Neussl said the other half were full time employees.

He said cutting those positions saved the ferry system about $1.3 million a year, and all the cuts together saved the system about $5.5 million.

In addition to explaining budget constraints, Neussl spoke about the marine highway system’s new vessels.

“There’s two Alaska class ferries being built down in Ketchikan right now, that will come online in 2018 that are supposed to operate in northern Lynn Canal. And there’s the Tustumena replacement vessel which you’re probably all interested in that is nearing completion of its design state right now. This month or early next month it should be done with design, and the next step there is to identify the federal funding source to fund that and actually get a construction contract underway to build it.”

He said it will be a couple of years before the Tustumena replacement vessel is ready for use.

According to an Alaska Marine Highway System press release, representatives held community engagement meetings in Sitka, Ketchikan, and Cordova before dropping by Kodiak. They are scheduled to stop in Juneau and Haines next.