Reporting From Alaska

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State ferry study obscures Dunleavy role in proposing massive subsidy cuts

The state released a report on cuts to the Alaska Marine Highway System Wednesday that didn’t mention all the promises Gov. Mike Dunleavy made as a candidate to support the ferry system.

It would have been awkward for the consultant, Northern Economics, to do that because Dunleavy has abandoned everything he said regarding the ferry system when he was trolling for votes in 2018.

The state general fund budget for the system has been cut nearly in half. The goal of the study is to cut the subsidy in half again. The study doesn’t say who came up with the target.

In a Sept. 12, 2018 appearance in Ketchikan, Dunleavy said he would look for ways to make the system last for generations, the Ketchikan Daily News said.

“Between the airport and the ferry system this is the transportation for Southeast Alaska,” he said.

Eleven days before the election, Dunleavy repeated the same sentiment.

“I stand behind the fact that it is the backbone of transportation in Southeast Alaska, that we're gonna do everything we can to work with local stakeholders to make sure that it remains the backbone of transportation in Southeast,” Dunleavy told the Ketchikan newspaper.

“There is no plan to hack, cut or destroy the marine highway system,” he said.

It came as a surprise, then, to the 4,050 people who voted for him in Ketchikan that after the election he produced a plan that the Ketchikan Daily News said would “scuttle the Alaska Marine Highway System, and fast.”

During the disastrous Dunleavy/Koch network budget road show, he said that some routes might be abandoned, or reduced, while profitable routes may be turned over to private operators.

“I think most folks would agree that looking at the math, ridership going down, fare collections going down and subsidies going up, it’s an unsustainable proposition, so we’re trying to fix this, try and right the ship, no pun intended,” said Dunleavy.

Dunleavy and Donna Arduin, the former temporary budget director, portrayed the ferry system as a wasteful extravagance, using language that would have cost him nearly all of those 4,050 Ketchikan votes had he been candid as a candidate.

Announcing his budget, Dunleavy said nothing to correct Arduin when she compared the cost of driving a vehicle one mile on a road to traveling one mile on a ferry.

“We certainly haven’t profited on the system. We have $1 billion in assets and we’re now losing almost $100 million a year,” said Arduin at one of the Dunleavy/Koch budget road shows. “We think we can do better. We hope that we can. The governor’s proposed a significant reduction in the ferry system.”

She claimed that by privatizing the system, and focusing on the most profitable routes, “we can run the ferry system for about 25 percent of the cost,” Arduin said in Anchorage.

“By simply changing our focus to return we could run the system at a fraction of the cost. We think we can do better than that with private operators,” she said at one of the other Dunleavy/Koch sessions.

Arduin is back in Florida now and Dunleavy is struggling to keep from becoming a temporary governor.

Arduin’s idea of privatizing the system is not feasible, according to a long-awaited consultant’s study released Wednesday.

“Selling or leasing AMHS assets to private entities is not feasible if minimum levels of service are also stipulated,” the study said. The only break-even routes would be in Lynn Canal and from Ketchikan to Metlakatla.

One obvious omission from the study is the decision to not give Dunleavy credit for proposing the target of the study—reducing the current subsidy by at least 50 percent from the $48 million in the current fiscal year.

“Thus, an operating subsidy of $24.0 million is considered the target for this project,” the document says.

By not mentioning who came up with the target or why, this seems to be a way of allowing the governor to avoid taking any responsibility,

The document should have included details on whether Dunleavy’s plan is a reasonable target, but it does not. State funds for the system have been cut in half over the last eight years, with a $44 million cut this fiscal year.

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