The state appears to be in prime position to capture well more than $1 billion in federal funding for its ferries that many Alaskans hope is the catalyst for long-sought change in the Alaska Marine Highway System.
The $1 trillion Infrastructure Investment and Jobs Act signed in November by President Joe Biden establishes new national programs and boosts existing funding to collectively offer nearly $1.6 billion in ferry-specific funding, according to information from Alaska Sen. Lisa Murkowski, who was among a bipartisan group of 10 senators who negotiated the framework of the bill with the White House.
As it turns out, most of that $1.6 billion is likely headed to Alaska over the next five years due to the specific language of the provisions. Though it’s not a foregone conclusion all of the money that flows to Alaska will go to the state ferry system, it represents the opportunity for a sharp turnaround from the constant pressures that budget cuts and an aging fleet have put on the system and the communities it serves.
Less than two years ago, 10 of the then 12 Alaska Marine Highway ferries were laid up for repairs or lack of funding, with little prospect of significant changes.
“There’s basically a billion dollars set aside for the next five years,” said Robert Venables, executive director of Southeast Conference, a community development group. “It’s historic and game-changing, if we use it wisely.”
Venables was also the longtime chair of the state’s Marine Transportation Advisory Board, which sunset last year and was replaced by the newly formed Alaska Marine Highway Operations Board, though the new group is still an advisory panel.
Most of the overall $1.6 billion in federal funds will go to a new program aimed at improving rural ferry services nationwide. The program will provide $1 billion spread over five years to eligible ferry systems that operated between 2015 and 2020, according to the bill. The catch is that the money is only available for ferry routes over 50 miles in length that serve rural areas, of which Alaska has many and other states very few.
A program to fund pilot project electric or lower-emitting ferries also provides up to $250 million for those endeavors across the country, but a provision in the bill requires at least one of those pilot projects be undertaken in the state with the most qualifying marine highway system miles — which is Alaska.
The state is also set to receive $73 million from $342 million in grants aimed at ferry vessel and terminal construction through an existing capital program, according to Murkowski’s office.
The Alaska Marine Highway System has had an annual operating budget of roughly $140 million in recent years.
Alaska Department of Transportation Commissioner Ryan Anderson said the state will be “aggressive” in its pursuit of the federal funds.
According to Alaska’s congressional delegation offices, the new programs should be established by Oct. 1, the start of the next federal fiscal year, but the timelines will depend on agency rule-making procedures.
Meanwhile, the state is starting to use other federal funds available from the infrastructure bill to replace the 57-year-old Tustumena that serves Southcentral and Southwest Alaska communities on some of the longest, harshest runs in the system.
The $200 million to $250 million Tustumena replacement vessel has been designed since 2016, but construction of the 330-foot ferry had been on hold as Alaska struggled to deal with budget deficits.
Anderson said a 30% to 40% increase in annual federal highway capital project funds to the state — approximately an additional $1 billion over five years — makes now the time to move on the new ferry.
Another key provision (of the federal bill) allows federal highway money formerly restricted to capital projects on roads and ferries to be used for ferry operations, which has been at the center of the debates between Dunleavy and legislators over the budget.
Venables said he and other coastal community leaders are concerned politics will cause much of the ferry money to be used for short-term budget fixes instead of forward-looking investments. Coastal legislators are concerned that the federal aid will be used to replace state funding, at no net gain in services.
“There’s an unprecedented amount of funding available to the Marine Highway System, but it needs to go toward the new Marine Highway System, not the old concepts and models of the last 50 years,” Venables said.
Cordova Mayor Clay Koplin, an outspoken advocate for changing and investing in the state’s ferries, said he’s skeptical the funding will lead to significant improvements in ferry service and reliability unless bigger, structural changes are made to the system’s governance.
“I hate to say it but I’m somewhat pessimistic that we’re going to see real change going forward,” Koplin said.
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