Don't be surprised if Dunleavy refuses to back $23 million matching grant to replace ferry Tustumena

To make his budget appear a bit lower, don’t be surprised if Gov. Mike Dunleavy refuses to include $23 million in matching funds in his proposed budget next week to qualify for a $92.8 million federal grant to replace the 59-year-old ferry Tustumena.

The fear that he will refuse to ask the Legislature for the matching grant is real enough that Sen. Lisa Murkowski wrote him this week with a reminder that Dunleavy already promised to come up with the cash when the state applied for the grant.

“I urge you to include those funds, which the state’s applications committed to providing, in your December budget proposal to signal to the state Legislature that it is a top priority to secure these awards,” Murkowski wrote Dunleavy Tuesday, the Anchorage Daily News reported.

Murkowski would never have written this letter if the Dunleavy administration had assured her that the matching funds would be part of the governor’s budget.

Including money in the governor’s capital budget does not guarantee that it will be funded, but it’s easier to get something funded if it is already in the governor’s propose budget, which is due by Dec. 15.

If Dunleavy does not include the $23 million, the money would have to be added by the Legislature.

Refusing to include the money in the governor’s budget would reduce the overall total by $23 million, one of the gimmicks that might be employed in the preliminary Dunleavy budget to make it appear smaller.

Dunleavy will look for a variety of such gimmicks to make the budget appear smaller.

The ferry is needed. The matching funds should be part of any honest budget.

The new ferry will feature a diesel-electric propulsion system and will serve rural southwest Alaska with more reliable service and fewer greenhouse gas emissions.

In an interview with the Daily News, Murkowski said the ferry system has been in a “death spiral” because of a lack of investment. She has done more to reverse that death spiral than anyone could have imagined, securing hundreds of millions from the federal government.

On the other hand, no public official has done more to create the death spiral for the ferry system than Dunleavy, who introduced a budget in 2019 to kill it off with his so-called “Honest Budget.” He did lasting damage to the system.

Dunleavy and former temporary budget director Donna Arduin, who remains on the state legislative payroll, proposed a 75 percent budget cut for the ferry system five years ago.

“By changing our concentration on running as many ferries as possible to trying to concentrate on returns, we believe we can run the ferry system for about 25 percent of our costs,” Arduin said of the so-called “Honest Budget.”

Dunleavy proposed that year to take $25 million away from an account to fund replacement of the Tustumena and spend millions “divesting the Alaska Marine Highway System ferries and terminals.”

“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.

Announcing his 2019 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

In early 2023, Dunleavy hemmed and hawed about providing matching funds for federal ferry grants championed by Murkowski, but gave himself credit for the plan to replace the Tustumena.

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