Murkowski: Give some ferry control to Southeast Conference

Ulmer disagrees, citing organization's nonexistent experience

Posted: Sunday, September 08, 2002

Proponents of reorganizing the state's ferry system got a boost earlier this month from Republican gubernatorial candidate Frank Murkowski, who suggested giving some decision-making authority to the Southeast Conference.

The Southeast Conference - an organization that includes Southeast Native and civic organizations, businesses and all major municipalities in Southeast - advocates for economic development in the region, including its transportation systems.

At a recent Juneau Chamber of Commerce luncheon, Murkowski suggested that the Alaska Marine Highway System might run more efficiently under a board of directors, similar to the one that oversees the Alaska Railroad.

"It seems to me, and I'll probably be taken to task for this, but my current mentality is let's put the Southeast Conference in the ferry system with a budget and a responsibility for performance and scheduling and let's see how they do," Murkowski said.

Fran Ulmer, Murkowski's Democratic opponent in the governor's race, said turning the ferry system over to an organization that has had no experience running it is ill-advised.

"If at some point the Legislature made the policy call that the state ferry system or any other service being delivered by the state should be privatized, it would need to go through an analysis of the costs and benefits of that privatization, and then go through a process of determining what organization has the right set of skills and experience to actually deliver that service," Ulmer said.

"But just to sort of throw out the name of a group and say let's just turn over this multi-million-dollar system with all kinds of important assets and responsibilities seems to me to be a very uninformed and ill-advised, off-the-cuff suggestion," she said.

Ulmer said she supports the Southeast Conference in continuing to operate as an advocacy group on behalf of the ferry system and issues of importance to the economy and communities of Southeast Alaska.

Murkowski spokesman Dan Saddler said the statement at the chamber meeting is not a firm stance on reorganizing the ferry system and that Murkowski simply was suggesting an alternative approach to operating the system.

Loren Gerhard, Southeast Conference executive director, said Murkowski's comments were encouraging and the group read them as an endorsement of its efforts to push for ferry system reorganization.

The conference supports instituting a board of directors and would like to be consulted on how such a board would be constituted, but it is not looking to run the ferry system, Gerhard said.

"With a new administration and a new Legislature we feel this is the most opportune time to make a change," Gerhard said. "But whatever is decided, the users (of the ferry system) need to be involved."

Year-to-year budget battles and inclusion in the decision-making process are the major struggles the Southeast Conference faces, Gerhard said.

"I'm not looking to denigrate any individual in the Marine Highway System or the Department of Transportation, but we need a different plan," Gerhard said.

Bob Doll, Southeast director of DOT and who oversees the Marine Highway System, said he is skeptical of any benefits that would be achieved by adjusting the ferry system's structure. He added that the ferry system is willing to consider any suggestion that has promise.

"The method of administration of the marine highway is not a significant element in its success," he said. "The comparisons made with the railroad should focus on the independent revenue source that the railroad enjoys, which is in the real estate area and not the operations area.

"What was lacking in the past and continues to elude us is an independent revenue source."

He said that source of revenue would have to produce millions in income.

"I don't think there is one," Doll said. "To my knowledge, no public transportation system in the country operates without a subsidy."

The Alaska Railroad runs from Seward to Fairbanks and operates under the authority of a governor-appointed seven-member board of directors within the Department of Community and Economic Development. The president and CEO of the railroad is hired by the board of directors.

The railroad is owned by the state but run as a private corporation. Not all trains operate at a profit, but the railroad last year made $6.6 million on revenues of $107.3 million, it said.

Railroad spokesman Patrick Flynn said passenger cars generate about 14 percent of the revenue, and freight cars about 75 percent. Another 10 percent, or about $10 million, comes from real estate along the Railbelt over which the railroad has leasing authority.

"That money goes toward the bottom line, and we can reinvest it," Flynn said.

It also keeps the railroad from operating at a loss and therefore prevents the railroad from being subjected to the legislative budgetary process.

In contrast, the ferry system is overseen by the commissioner of the Department of Transportation, the Southeast director of DOT and the general manager of the Alaska Marine Highway System.

In fiscal year 2003, the ferry system operated at a budget shortfall of $6.57 million. That will be made up from the Marine Highway Fund, in which the Legislature last session deposited $20 million.

The fund is expected to last about three years if the deficit remains at its current level.

Republican Sens. Jerry Ward of Nikiski and Robin Taylor of Wrangell authored a bill in the last legislative session that would have created a marine highway authority outside of DOT and given it 500,000 acres of land to generate revenue. But Senate Bill 271, which would have created the Alaska Marine and Rail Transportation Authority, never made it to a floor vote in the Senate.

The Southeast Conference does not have a silver bullet for reorganization, Gerhard said, but it is formulating a plan.

The group initiated a study last spring that aimed to identify similar ferry systems around the world that deal with the same issues and problems faced by Alaska ferries. The big-picture items include the building and deployment of vessels in a sustainable fashion and operate within the economic realities of the state, Gerhard said.

Whatever plan is acted on, Gerhard said, it needs to involve input from ferry users.

"It will be easier for the managers of the system when they are responding to a board that doesn't have to jump through the hoops that DOT has to," Gerhard said.

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