Alaska considers sinking laid-up ferry to save money for ailing Marine Highway

JUNEAU — The Alaska Marine Highway System is in such bad shape that the deliberate sinking of one of its ships could be an improvement.

In a series of hearings this week, members of the Alaska Legislature have been considering the ailing ferry system, which has seen its budget slashed from $175 million in 2014 to just over $103 million in the latest budget draft proposed by Gov. Mike Dunleavy’s administration.

Officials with the Alaska Department of Transportation and Public Facilities are considering whether to scuttle the ferry Malaspina, one of the oldest of the state’s eight ferries, as an artificial reef. The Malaspina has been tied up in Ketchikan since 2019 because of a lack of maintenance funding but still costs the state about $450,000 in upkeep per year.

Sinking it as an artificial reef would first require cleaning it, something that could cost between $500,000 and $1 million, but that may make long-term financial sense, said deputy DOT commissioner Rob Carpenter. Ship and scrap markets are glutted with disused cruise ships, and the state hasn’t had luck selling it, he said.

The state recently sold the ferries Chenega and Fairweather for much less than it had expected.

“Our fast vehicle ferries … The market for them was minimal. We were happy to get what we received. It’s challenging to get rid of a ship these days, especially one as old as the Malaspina,” he told members of the House Finance Committee.

Budget cuts have forced the ferry system to tie up ships because the state lacks the money to maintain them. There also isn’t money to build new ships that require less maintenance.

With fewer ships operating, problems caused by mechanical breakdowns have been exacerbated. Last year, some passengers were stranded in Juneau for weeks when a ferry broke down. At the time, it was the only operating ship in the fleet.

Another breakdown this month forced the city of Skagway to hire a private boat to carry residents of Haines and Skagway home from Juneau. Their cars are still stuck in Juneau.

Legislative subcommittees considering the ferry system’s budget are contemplating a $7 million increase above the amount proposed by the governor.

That would allow more service but wouldn’t address the system’s long-term problems, which include declining passenger counts, a need to serve small, widely spaced communities separated by rough seas, and ships that date to the 1960s.

In February 2020, Dunleavy ordered a commission to examine the ferry system and suggest improvements. The group concluded that privatizing the ferry system wouldn’t work and that further cuts would leave the system nonfunctional.

Retired Coast Guard Adm. Tom Barrett chaired the commission and told members of the Senate Finance Committee that turning the state ferry system into a self-funded state-owned corporation, akin to the Alaska Railroad, also wouldn’t work.

“You’re going to have to keep putting money into this system if you want it to operate,” he said.

The railroad benefits from landholdings that allow it to earn money even if railroad operations don’t break even. The ferry system doesn’t have that, Barrett said.

“You’re going to have to subsidize this for some time to come,” he said.

Barrett’s group did recommend changes to the way the ferry system is governed. For decades, long-term planning has been subject to the state’s annual budget cycle, creating problems like the Alaska-class ferries.

Built in Ketchikan entirely with state money, those ferries were designed to serve as shuttles between Haines, Skagway and a road built north from Juneau.

The road was never built, nor were the terminals in Haines and Skagway that the ferries were designed to serve. The plans for the ferries didn’t change until the ships were launched, forcing the state to spend millions more on alterations to the ships, which are now operating on longer routes than they were designed for.

Because the ships were launched without sleeping spaces for their crews, their sailing hours are limited, and the ships can’t be used in all places where they’re needed.

Dunleavy has proposed legislation that would create a ferry operations and planning board intended to address the problems outlined by Barrett’s group. A hearing has been scheduled for Thursday in the Senate.

Senate Finance Committee Bert Stedman, R-Sitka, is co-chairman of the Senate Finance Committee and said he hopes to use federal COVID money to implement some of the commission’s suggestions.

Stedman said he expects a proposal to emerge from the transportation budget subcommittee that he leads.