Governor wants $17 million more annually for ferries

Posted: Wednesday, November 21, 2001

State officials say they want nearly $17 million more annually to restore ferry operations to the service level that existed before the Columbia fire.

That's part of $115.5 million in increased general fund spending that the Knowles administration says is needed to maintain existing state services in the fiscal year that begins July 1, 2002.

Annalee McConnell, budget director for Gov. Tony Knowles, released the list of spending requests Tuesday. They will be part of the governor's official budget request, which by law must be unveiled no later than Dec. 15.

The proposal for the Alaska Marine Highway System is $86.1 million in expenditures. That includes $45.5 million in legislative appropriations, up from $28.7 million this year.

The projected fare revenue, $40.6 million, is down about $400,000 from this year's budget, while the proposed expenditures would be an increase of nearly $9 million.

The Department of Transportation wants higher expenditures to return service levels to 312 weeks of ship operations, near the 1999 level of 317. This fiscal year, ferries will provide 294 weeks of service.

"Today's service is unacceptable to our customers," said Capt. George Capacci, general manager of the Alaska Marine Highway System.

The balance of the proposed increase, $7.4 million, is due to

the exhaustion of the marine highway's reserve account.

The account has been used to fill the gap between overall revenue and expenditures, much as the Legislature uses its own Constitutional Budget Reserve to balance the general fund. While the Legislature has a few years before its budget reserve runs out, the Marine Highway System is now at the day of reckoning.

The marine fund has been depleted due to flat legislative funding and unusual events, according to Capacci and DOT spokesman Dennis Poshard. The Legislature appropriated $30.6 million in fiscal year 1992 and hasn't matched that amount since, they said.

"I think we've done a disservice to them over the years," said House Majority Leader Jeannette James, a North Pole Republican.

The reserve account also got depleted through lost revenue in Prince Rupert, with the temporary termination of service following a ferry blockade by British Columbia fishermen in 1997; the higher operating cost of the new ferry Kennicott, which replaced the Malaspina on a mainline run in 1998; and the sidelining of the system's top money-maker, the Columbia, due to the fire in June 2000.

Prospects for the increased appropriation are unclear.

"Myself, personally, I think we have to go there," James said. "Don't know about the Senate. They're a different mentality."

The Republican co-chairmen of the Senate Finance Committee, Dave Donley of Anchorage and Pete Kelly of Fairbanks, could not be reached for comment.

Asked if he thought the funding request would be approved, Juneau Democratic Sen. Kim Elton said: "If logic prevails, then yes. ... I think it will be heavily debated; that's not inappropriate."

"We can show the numbers are real," said Rep. Albert Kookesh, an Angoon Democrat.

Among other administration proposals to maintain the status quo are $18.8 million more to meet labor contract obligations, lease payments and reimbursements to local school districts for pupil transportation; $9.8 million to pay debt service on bonds; $5.7 million to "annualize" programs that began in the middle of the fiscal year; and $15.9 million to cover costs in enrollment-driven "formula programs," including $7 million more for K-12 education. Rep. James said at least $100 million of the $115 million request appears to be justified.

Bill McAllister can be reached at

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