The House Finance Committee has rejected the governor’s proposal to rely almost entirely on federal funds to operate the Alaska Marine Highway System next year, with the Senate Finance Committee moving in the same direction.
The committees differ on the amounts but both want to see more state money in the budget for the ferries, using some federal infrastructure money to replace state dollars but not nearly as much as the governor.
Total appropriations for the ferry operating budget next year would be the same under all three versions — governor, House and Senate — the difference being how to divide the cost.
“The state’s got to have some skin in the game,” Rep. Dan Ortiz, a member of the House Finance Committee, said Saturday.
All three versions put next year’s overall ferry system operating budget at almost $142 million, a small increase over this year’s funding level. What concerned legislators was that the governor wanted just $5 million of that to come from the state treasury, with the rest covered by federal dollars.
The full House this week is debating the budget for the fiscal year that starts July 1. The House Finance Committee version of the spending plan cut by almost half the federal money Gov. Mike Dunleavy had wanted to use to replace state general fund dollars in the ferry budget, said Ortiz, who represents Ketchikan and Wrangell.
The committee swapped state dollars for much of the federal money.
Coastal legislators have expressed a fear of overreliance on the temporary federal aid, concerned that when the federal dollars from last year’s $1.2 trillion infrastructure spending plan run out, so too will adequate ferry service.
“Those federal dollars were meant to augment state money, not replace it,” House Speaker Louise Stutes, of Kodiak, said earlier in the legislative session.
The federal aid will run out in no more than five years.
The Transportation Department budget subcommittee of the Senate Finance Committee closed out its work on the ferry system last week, also reducing the reliance on federal aid and increasing the amount of state dollars, though at different percentages than in the House.
Differences between the House and Senate budget bills will be addressed in the final weeks of the Legislature, which faces a mid-May adjournment deadline.
Last year’s federal infrastructure act amended the law, allowing the state to spend federal highway dollars on vessel operations and repairs, in addition to new construction. Coastal legislators have argued that more of the money should go toward fleet replacement and maintenance rather than reducing the state’s contribution to running the ferry system.
In past years, state general fund dollars covered more than half of the ferry system’s annual operating services budget, with most of the rest of the money coming from ticket revenues. The pandemic cut deeply into ferry traffic the past two years, significantly reducing passenger and vehicle ticket revenues.
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