Ferry money suddenly a possibility

Last-minute negotiations restore Marine Highway Fund

Posted: Tuesday, May 14, 2002

Like pulling a rabbit out of a hat, legislators have found $20 million to re-establish the Marine Highway Fund.

Not only that, but the Legislature might reverse an action of the Senate last week and restore $20.1 million in additional funding for a fast vehicle ferry to serve Prince William Sound.

And suddenly, $12 million has surfaced as a down payment on a fast ferry that would link Ketchikan and Petersburg.

Today is the final day of the legislative session, and it remains to be seen what gets approved.

"I am amazed," said Bob Doll, Southeast region director of the state Department of Transportation. "I'm smiling, somewhat tentatively. I'm holding my breath until midnight. It could hardly be better."

"At this time of year, squirrelly things happen," said Rep. Bill Hudson, a Juneau Republican and former ferry system director, who negotiated for better funding.

This morning, it remained unclear how all of the funding got tucked into various pieces of legislation.

Annalee McConnell, budget director for Gov. Tony Knowles, said the $20 million for the marine fund is effective in the current fiscal year.

That has the ironic effect of making the 2003 budget look like an even bigger cut than it is, McConnell said. Republican budget-writers have said their "hold-the-line" numbers for 2003 would be an actual reduction, showing their commitment to fiscal discipline in a time of a recurring fiscal gap. But the $20 million addition would increase the fiscal gap in the current year, raising the draw from budget reserves.

The Alaska Marine Highway System recently depleted what once was a $40 million reserve fund. Flat general-fund appropriations over the past decade, along with emergency events such as the Columbia fire and the Prince Rupert blockade, drained the fund as fuel costs increased.

The ferry system might start drawing on the reserve fund right away, Doll said. The 2003 appropriation for the system is $37 million, or $8.7 million below what the Knowles administration has said is necessary to restore pre-fire service levels.

Hudson said he and House Finance Co-Chairman Bill Williams of Ketchikan worked with Senate Finance Co-Chairman Pete Kelly of Fairbanks on boosting ferry funding. The deal materialized early Monday morning.

Previously, Doll had warned that the budget being developed by the Legislature would have several adverse impacts, including an end to the Malaspina dayboat operation in the Upper Lynn Canal, fare increases and sharply reduced winter service, particularly in small villages.

On the fast ferry for Prince William Sound, DOT sent a letter to legislators explaining that the federal grant for that project couldn't be used for any other purpose.

"It was sort of a use-it-or-lose-it problem," McConnell said.

Also, $10.4 million approved by the Legislature last year for that ferry would have to be refunded to the federal government, McConnell said. That money already has been spent on "long lead-time" items, such as an engine, she said.

DOT has a contract with a New York shipyard to construct the state's first fast ferry, a Sitka-Juneau dayboat set to begin operations in 2004, and also the Prince William Sound vessel.

The tentative deal in the Legislature includes $12 million in federal funds for the next Southeast fast ferry, serving the southern Panhandle. Doll said, as far as he knows, that would have to come out of the state's annual share of federal highway funds, displacing money for other projects.

Bill McAllister can be reached at billm@juneauempire.com.

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