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The cost of travel by sea

State heads plan cutback ferry budget

Posted: April 13, 2014 - 12:09am
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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Steven Rosales
Steven Rosales 04/13/14 - 02:41 pm

I agree with the BS Roads. Ferry extendind money was like Nancy Pelosi saying food stamps are good for our country.

Ronald Lind
Ronald Lind 04/13/14 - 05:21 pm
McDowell group report

Where can I read a copy of this report?
Interested in the assumptions used.

Matt Wilkens
Matt Wilkens 04/13/14 - 07:08 pm
Travel by Sea

Matt Woolbright has presented the DOA commissioners propoganda as facts without any apparent research. The cost of travel, 120,000,000 divided by 400,000 is not $1100. The Cost of living differential was a decade of negotiated cost of living increases paid as a separate payment to AMHS employees. These were the same negotiated increases the other state employees received in their wages. Passes are space available, period, no cost. If someone somehow abused that they should be disciplined. The legislators "free travel" is the one that should be scrutinized. A Decade of poor management at the DOT and legislative level has led to problems that can't be fixed by blaming labor. The AMHS ship employees are US Merchant Mariners with training, licensing and credentials the average state employee does not have. One can make up the requirements for a state employee,, not so a federally licensed mariner. Alaska is paying less than industry standards and trying to take away more. If they really want a shipping company, now is the time to man up.

Matt Wilkens
Matt Wilkens 04/13/14 - 07:19 pm
Travel by Sea

The AMHS has almost half the federal highway miles in the state and brings in it's share of federal funding, so the real costs are not portrayed in this inaccurate article. I would like to see the cost of building, operating and maintaining the land highways. what is the cost per citizen of the road from Fairbanks to Prudhoe Bay, used by less than 1% of the residents. Time to stop this bickering about costs when you claim the AMHS is a road system. Time to run it without some made up deputy commissioner spot created by Murkowski for his old friend Robin Taylor.Time to get the legislators out of the operation process.

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