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The cost of travel by sea

State heads plan cutback ferry budget

Posted: April 12, 2014 - 11:09pm
The Alaska Marine Highway System's M/V Kennicott pulls away from the Auke Bay Ferry Terminal on Tuesday. The Kennicott is the newest of the fleet's mainline ships.  Michael Penn | Juneau Empire
Michael Penn | Juneau Empire
The Alaska Marine Highway System's M/V Kennicott pulls away from the Auke Bay Ferry Terminal on Tuesday. The Kennicott is the newest of the fleet's mainline ships.

Not many shipping companies pay more than $1,100 for every passenger they service, but that’s the average cost to the state of Alaska for each Marine Highway System user.

Less than 1 percent of everyone who travels across Alaska without flying does so via the Marine Highway System, yet that budget dwarfs the cost of maintaining the roads used by the remaining 99 percent.

The marine highway budget is about $170 million, with only $50 million coming from revenue generated from the system. The rest comes from the state operating budget, and that means like everything else it’s getting cut.

“There is a push to cut back on the ferries’ operating budget,” said Pat Kemp, the commissioner of the state Department of Transportation. “The only option we have left right now is to reduce service.”

About $3.5 million was cut from the system’s budget last year and the current budget being considered by Juneau lawmakers includes another $3.1 million in cuts. Kemp told the Empire Friday that the trend would likely continue next year as well.

“I need some cost reductions to run the ferries the same way,” Kemp said. “If we have to lay up some ferries, that’s less jobs and work for people. You can only cut corners so long.”

In a recent memorandum sent to DOT employees, Kemp asked for suggestions to cut costs within the system. While some suggestions like changing light bulbs have tinkled in, there hadn’t been any ideas for the ferry system as of Friday.

Currently, state officials are considering options such as reducing the frequency of some routes and increasing fare costs to offset the budget cuts, Kemp said.

“We’re going to be lucky to keep what we have,” he said.


Manning the fleet

As much as 60 percent of the operating costs for the ferry system is gobbled up by paying the salaries and benefits of the men and women who make the ships go.

Department of Administration Commissioner Curtis Thayer said the employees as a group are “by far the highest compensated” unions working for the state.

The state is currently negotiating a new contract with the three unions who work the fleet, but those talks have slowed as the sides are struggling to agree on a couple of issues.

The first is a cost-of-living adjustment mandated in 1977. Currently, the contract rate is between a 14 to 22 percent increase in pay over someone living and working out of Washington state.

Other unions in the state also have cost-of-living adjustments depending on where the workers live, but those bumps are in the 5 percent range, Thayer said.

The entry wage for any Alaska resident working on the ferries — such as dishwashers or bus boys — is $23 an hour. Non-Alaska residents start in the $18 per hour range.

The total cost of the added wages for Alaska residents is just under $10 million annually, Thayer said.

Sen. Fred Dyson, R-Eagle River, proposed legislation this year that would have grandfathered in current employees’ cost-of-living adjustments while allowing a new rate to be set for future employees.

But that bill is dead because there was “no support” among senators, said Sen. Lesil McGuire, an Anchorage Republican and Rules Committee chair who schedules bills for floor debate.

At this point, an unwillingness to change the cost-of-living differential for future employees would be a “deal breaker,” Thayer said.

All employees are eligible for overtime, and due to state holiday pay and ferry schedules most work about 29 more days than the average 8 a.m. to 5 p.m. worker, Thayer said.

The state is also seeking to rework a system that allows marine highway workers and their families free usage of the system.

Employees have abused that system by shipping materials or moving vehicles to avoid paying parking fees while working multiple days on the longer ferry trips, Thayer said.

He added that efforts to get workers to pay “a couple hundred bucks” for an unlimited seasonal pass have met stout resistance from union negotiators.

“Once you start looking at all the costs, they really add up,” Thayer said, adding that the current offer from the state would increase wages without cutting benefits for current workers.

“We’re not asking to give up anything for current members,” he added.

Ron Bressette, representative for the International Organization of Masters, Mates and Pilots, said the unions have rejected deals that cut benefits for future members because the work requirements are not slated to change.

“Future members should receive the same benefits as current members,” Bressette said. “They’re out doing the same job, so they should get the same benefits.”

He added that characterizing the negotiation as “at an impasse” would not be accurate.

“We’re continuing to negotiate,” he said.

A spokesperson for the Inlandboatmen’s Union of the Pacific declined to comment for this story, and calls to a representative from the Marine Engineers Beneficial Association were not returned Friday.

Because the negotiations spilled past a legislative deadline to get new contracts in this year’s budget, the unions will not be able to receive a pay bump next year, Thayer said.

“They missed that opportunity,” he said.

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Karl Ashenbrenner
Karl Ashenbrenner 04/13/14 - 07:32 am

Pure crap...passes are on space available basis, employees cannot use the pass for their vehicle while working, trailers and the like are not on the pass and must be paid for and it is on SPACE AVAILABLE. If an employee travels on pass they must pay for room and food. For the Empire to write such an article without doing a little BASIC research is an abuse of the tenets of journalism and for them to believe what the Administration spouts as fact without FACT CHECKING borders on the very definition of yellow journalism. 18-23 dollars per hr starting for a dishwasher? That is the starting wage for an ABLE BODIED SEAMAN which is a lot more qualified and happens to be below the NATIONAL average. Again it is unbelievable to me that in this day and age with Google and the Internet someone could write an article like this and that their editor could let it slide by.

Steven Rosales
Steven Rosales 04/13/14 - 09:47 am
I think this just goes to

show what a waste the ferries are. Trying to cust cost by being cheap never works in any business. Truth is it would be cheaper to pay partial airfare and just fly people around the state. Pay AK airlines and other small planes half price and let passengers pay the other half. State would come out on top. Sorry for employees but businesses private or public are not in existence just to provide jobs.

Clay Good
Clay Good 04/13/14 - 11:26 am
AMHS Will Save a Fortune -

If we build a new, duplicate ferry terminal at the dead end of a frequently closed 100 mile road to nowhere.

Steven Rosales
Steven Rosales 04/13/14 - 12:09 pm

you could not be more wrong. The costs of the road combined with maintenance and still needing ferries makes it still nonsustainable. Ferries are in big trouble. There is no solution.

Karl Ashenbrenner
Karl Ashenbrenner 04/13/14 - 01:23 pm
The ferry

system returns 2.5 dollars for every dollar spent on it according to a McDowell Group study. The economic disaster that would result in Kodiak, the Aleutians and SE Alaska if the system ended is to much to contemplate. With the IBU having 750 employees scattered throughout SE and the 250 main office employees in Ketchikan alone can you see the economic devastation. Meanwhile the Legislature is going to build another bridge to nowhere at a cost of a billion dollars and wants to continue the Juneau Access at another billion. Fiscally conservative my butt.

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