Dunleavy, who promised no ferry system cuts, struggles to explain eliminating ferry system

In 1964, as Alaska struggled to recover from the Good Friday earthquake, Gov. Bill Egan invited W.E. Garrett, a great National Geographic photographer, to travel on the new ships of the Alaska Marine Highway System.

Garrett, who won Photographer of the Year honors in 1968 for his coverage of Vietnam, spent time with his family on the Malaspina, the Taku and took the Tustumena to Kodiak, noting that it was called the “Dramamine Express.” He saw the remains of old Valdez and went to Cordova on the Chilkat.

In Petersburg he met Lew Williams Jr., then the owner of the Petersburg Press.

The state ferry system, which Egan backed against hostility from the Anchorage Times, started with a $23 million bond issue narrowly approved by Alaska voters in 1960. Williams told Garrett the ferry operation had improved life and the economy in Southeast.

“We even have a parking problem now; thanks to the ferry we can afford to bring in cars,” Williams said.

Egan had promised that the ferry system would bind the state together and help the state economy by making transportation easier, promoting new businesses.

Garrett said that for many residents of the Alaska coast, the new year-round ferries “have brought a virtual end to isolation.”

As a candidate for governor, Mike Dunleavy couldn’t say enough good things about the ferry system when he traveled to towns with ferry service and asked for votes. He said he wanted to make it more efficient, which is what every candidate promises.

“That’s not code word for lopping off and chopping off big aspects of it,” candidate Dunleavy said in Ketchikan.

He has since changed his code word.

In each of the Koch Network/Dunleavy budget shows, either the governor or his temporary budget director, Donna Arduin, portrayed the marine highway system as an operation the state cannot afford.

Arduin referred to the ferry system as being on the “south coast,” a term that residents of Southeast Alaska say means as much to them as Dunleavy’s promise to not reduce ferry services.

In Kenai, Anchorage, Nome and Fairbanks, Dunleavy and Arduin complained about the size of the subsidy for the ferry system and said it is not sustainable. Had Dunleavy not promised the exact opposite as a candidate, he might have some credibility on this issue. He does not.

Arduin, who has been in Alaska for four months, said the ferry system never was self-supporting, but fare box returns once were a little more than 60 percent and have dropped off since the 1990s.

“We certainly haven’t profited on the system. We have $1 billion in assets and we’re now losing almost $100 million a year,” said Arduin. “Our farebox recovery is now down to about 37 percent. So we’re losing customers, we’re spending more, but we’re not getting more revenues. We think we can do better. We hope that we can. The governor’s proposed a significant reduction in the ferry system.”

“And by changing our concentration on running as many ferries as possible, to try to concentrate on returns, we believe we can run the ferry system for about 25 percent of the cost,” Arduin said in Anchorage.

At another event, she said, “We think we can do better. We think private operators can do better.”

“By simply changing our focus to return we could run the system at a fraction of the cost. We think we can do better than that with private operators,” she said.

Dunleavy said the ridership on the ferries is down by 100,000 people a year since the 1990s. “There’s less folks using it obviously because in many parts of Southeast and Southcentral and Southwest Coast we have airports as well. And so you have less people using it, yet the cost to the state to subsidize it keeps going up and the fares that you can charge keep going down. So things are going in a different direction for the ferry system,” the governor said.

Dunleavy said that some routes may be abandoned, while others may have reduced schedules and profitable routes may be turned over to private operators.

“I think most folks would agree that looking at the math, ridership going down, fare collections going down and subsidies going up, it’s an unsustainable proposition, so we’re trying to fix this, try and right the ship, no pun intended,” said Dunleavy.

At another event, Dunleavy said the people who are no longer using the ferries may be flying or using “some other type of watercraft vehicles to transport themselves and their goods.”

“Even some of the most ardent supporters of the ferry understand that there can be efficiencies and changes to make this a better system and cause less of a draw on the state’s treasury,” Dunleavy said.

He asked Arduin if she wanted to add anything.

“As government running the ferry system, we failed to be able to provide profitably not only the ferry runs, but also meal services, housekeeping services and we even failed to run a bar profitably,” said Arduin, who made the same joke at a few of the Koch Network/Dunleavy shows.

A 2017 report on reforming the system found “there is only modest potential for a meaningful financial benefit from contracted operations” of the bars, “given that gross sales have averaged less than half a million annually.”

That same study found that state general funds for the system declined by $38 million from 2013 to the current fiscal year and that a lack of stable funding is a major issue.

“There are no operating scenarios where AMHS can recover its operating costs through the fare box and still fulfill its critical public service mission. Given the small markets served, long distances between ports, and often extreme weather operating environment, AMHS will always be dependent on public support to provide safe and reliable transportation.”

Entirely missing from the Koch Network/Dunleavy portrayal of the marine highway system was any recognition that the ferry system is vital to many tens of thousands of Alaskans in Southeast, Southcentral and Southwest Alaska, not to mention tens of thousands of visitors to all parts of the state.

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