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Federal funding makes a new Alaska state ferry possible -- but not guaranteed

Apr. 1—Second of two parts

SEWARD — The M/V Tustumena is preparing for its 60th birthday party.

This summer, the iconic Alaska state ferry will celebrate six decades since it went into service. In that time, the vessel has become a familiar and important part of life in communities between Homer and Dutch Harbor. But after years in the rough waters of the Shelikof Strait, the Aleutian Chain, and skirting the Barren Islands, the cost of keeping the Tustumena running is ballooning.

"This ship is a floating museum piece," said John Mayer, who has captained the ferry for years.

The Tustumena exemplifies the storms that the Alaska Marine Highway System has weathered, when waning funding forced residents of Southwest Alaska to wonder what their lives would be like when the "Trusty Tusty" was inevitably deemed too expensive to repair and maintain.

In March, Seward shipyard workers and ferry crew members worked — as they do every year — to keep the ferry seaworthy, despite its age. In the bridge, navigational equipment had been covered in white sheets while windows were replaced with new ones; in the passenger lounge, chairs were removed to allow water that had seeped under the flooring to be cleared; on the car deck, sparks flew as metal pieces were replaced and welded. Mayer is driven by the communities' appreciation for the ferry he captains.

"In the city of Kodiak, I swear to God, I walk down the street and people are like, 'Thank you for your service!' or honking their horn," said Mayer, who lives in Homer.

Replacing the Tustumena with a new ferry symbolizes for many the importance of federal funding in bringing hope of a sustained transportation network to coastal Alaska.

Talk of replacing the Tustumena has been driven by years of expensive repairs, prolonged overhaul periods and the impacts of extreme weather. Mayer said it costs between $1 million and $2 million per year to keep the Tustumena running. "And it's things that need to get done. It's not superfluous stuff," he said.

[Part 1: Sea change: Alaska's marine highway navigates an uncertain future]

But with insufficient money and planning to carry out the replacement, years went by without a new ferry.

"It's a never-ending battle because this is an older ship. A lot of times we experience what's called discovery work, where we'll come into the shipyard knowing what needs to be done, and then in the process of doing that, we'll encounter something else," Mayer said.

'30 years past your prime'

That happened in February, when workers encountered more corrosion than they expected. The ferry is still on track to leave the Seward shipyard for service in May, but "when you hit 60 years, you're 30 years past your prime," said Alaska Marine Highway System Director Craig Tornga, adding that the state must spend "quite a bit of money" to keep the Tustumena running.

Now, the federal infrastructure bill signed in 2021 is poised to provide the necessary funding to pay for a new ferry to serve Southwest Alaska, with more than $161 million promised so far — as long as the state can provide its own, smaller share of the funds. The state approved spending $21 million of its own money several years ago.

The replacement vessel is expected to cost around $350 million. Sam Dapcevich, a marine highway spokesperson, said the state has so far secured nearly $243 million, counting around $60 million in expected federal formula funds. That leaves more than $107 million needed to fund the project. The state is hoping most — if not all — of the balance can be covered through a federal grant.

As of March, amid months of delays, the Tustumena replacement vessel has yet to go out to bid. The design was changed to include batteries, reflecting a federal requirement for reduced emissions. A bid attempt in 2022 yielded no takers. Last summer, Tornga said he wanted to select a shipyard by the end of the year. In December, Tornga said he wanted to put out a request for proposals in January. Delays have piled on as Tornga held meetings with several shipyard officials to ensure that unlike in 2022, shipyards would, in fact, bid on the project.

Federal transportation officials must review the state's plans before the replacement can go out to bid, leading to further delays. Dapcevich said they hope to have approval from the Federal Transportation Administration for the project in April.

Tornga has said that construction of the new ferry could begin this summer, but he estimates that even if all goes as planned, the new vessel won't be complete until 2027.

"I've been saying 'soon' for too long," Tornga, who was hired as the marine highway director last year, told lawmakers in February. "I have to admit, I was a little ignorant of all it takes to get it out."

U.S. Sen. Lisa Murkowski, R-Alaska, who pushed for ferry funding to be included in the 2021 Infrastructure Investment and Jobs Act, said she's discouraged by the slow progress Alaska officials have made on the Tustumena's replacement.

"It's one of the things that I probably worked hardest on and one of the things that I'm most proud that we were able to include in the infrastructure bill, but also one of the things that perhaps I'm most frustrated about," Murkowski said in an interview.

Robert Venables, executive director of the Southeast Conference, an economic development group, has for years been working on keeping Alaska's ferry service afloat. He said he worked with Murkowski's staff as the infrastructure bill was crafted.

"The senator laid out her vision for what she wanted to see happen," said Venables. "As I fielded some questions from staff, I could see the direction that the senator was moving with this legislation and these opportunities, and that truly was hopeful to the point of excitement."

The funding holds promise for increasing ridership by addressing years of deferred maintenance and ship construction, but it is still up to Gov. Mike Dunleavy's administration and state transportation executives to determine when and how that money will be used.

Murkowski has been critical of the state's decisions. Repairs and investments left unmade resulted in decreased reliability, ridership and revenue.

"I've used the term 'death spiral,' and I know the governor doesn't like that, but he needs to look at what we have seen over the years," she said.

Murkowski sent Dunleavy a letter earlier this year urging his administration include a state match in the coming year's budget to ensure federal funding for the Tustumena replacement is secured. The Dunleavy administration is pushing for the use of federal toll credits to meet state match requirements, a path that has yet to be approved by federal officials. Murkowski called that "uncharted waters."

"Is this something that the state can bank on? I've been asking the questions," she said. "I want Federal Highways to also know that the state of Alaska is really committed to a sustainable marine highway system going forward, that the state of Alaska has put the necessary skin in the game."

Federal funding — though welcomed by ferry advocates — is also viewed warily by those who must parse the agency requirements that govern its disbursal.

"There are stories we tell ourselves about federal funding that are complete fairy tales," said Wanetta Ayers, a member of the ferries operation oversight board, during a March meeting. "We've had a lot of turkeys built because we had the federal money."

"Sometimes federal money leads us down the wrong path," she added.

Still, Venables said the passage of the infrastructure bill made him "exuberant."

"Because there was no other hope. There was no other means to make it happen. And this is the moment that I don't see will ever be repeated. It cannot be squandered. Failure is not an option," said Venables.

Tornga said that he approaches the operations of the Tustumena from the position "that we've got to keep this working for the next four or five years," until the replacement vessel is complete.

"Unfortunately, it means that you're spending more on your maintenance on a vessel than you really want to, but that's what you have to do to keep it going," he said.

Mayer — who has worked for the ferry service for more than 23 years — said he and the Tustumena "will retire together."

'Just doesn't work'

Work on the Tustumena replacement is just one of several projects that the marine highway is undertaking. Federal funding has also been allotted to cover design costs for new mainliners — which could eventually replace the Columbia and the Matanuska. Design work for those vessels is slated to begin after the Tustumena replacement is underway, Tornga has said.

But the completion of those projects is scheduled to be done over the next several years, and their impact will not be immediate.

Marine highway officials plan to have six out of nine vessels in the fleet running this summer. A seventh vessel could be added to the schedule only if enough crew members can be hired and trained before summertime. Without that seventh vessel, the cross-Gulf of Alaska sailing will remain off the schedule during the highway's busiest season.

The loss of almost all cross-Gulf sailings is just one of the impacts.

"Nobody takes the ferry now for fun. If they're moving, they take the ferry. If they are trying to get an RV to Bellingham, they take the ferry. Nobody just goes away anymore, because it just doesn't work," said Charlotte Glover, owner of a Ketchikan bookstore.

With the promise of federal funding keeping the system afloat, state planners are trying to answer a critical question: What level of service can the ferry strive to achieve?

Tornga said the ferry run from Bellingham was consistently full last summer, and the Hubbard — which runs the Lynn Canal from Juneau to Haines and Skagway — several times was over capacity.

"When the vessels are operating, we fill them up," he said.

"The more reliable we get, we'll see that come back, because the demand is there. Unfortunately, we're not reliable yet," said Tornga. "When you defer a year, it costs you, and unfortunately we've had some deferred maintenance."

Looking forward through the rearview mirror

Every community served by the ferry has seen a decline in service in the past decade. Even under the best of circumstances, a return to the ferry service remembered by longtime residents of Alaska's coastal communities — given the state's current budget constraints — is impossible, state transportation executives say.

Communities have found workarounds to the ferries that were once their bedrock, including using a barge service to move vehicles and spending more money on airline tickets. But if Alaskans can't rely on the ferry to make medical appointments, to attend sporting and music events, to repair their vehicles or to get from one community to another to celebrate a relative's wedding or funeral — what, and who, is the ferry system for?

"I'm not saying that we need to go back to the way it was when I was a kid, but I know the potential," said Murkowski. As a child, she lived in Wrangell, where the family home was on the water. She recalls seeing the ferry on a near-daily basis and traveling by ferry to see her cousins and grandparents in Ketchikan. As part of a family with five children, she said flying would have been unaffordable.

"Our families relied on the ferry system for everything from moving around to medical appointments to just getting out of town to go visit your grandma," she said.

Officials with the state Department of Transportation are working on a marine highway 20-year service plan, which is set to be complete at the end of the year.

The department is using as a baseline the service available in 2009, when nearly 318,000 people and 108,000 vehicles rode the ferries. In 2022, the other benchmark used by the department, those numbers were cut in half. In that time period, the number of ferries in service has also dropped by nearly half, from 11 to six.

"AMHS really looks forward through the rearview mirror," said Venables, referring to the agency's practice of basing service levels on what had been done in the past.

"Ultimately, they have to create a schedule that's based on a budget that they are handed externally. Neither process has as a starting point, 'What does a community really need? What type of service?'"

The Department of Transportation contracted with the Elliott Bay Design Group to determine the needed level of service in each community. The firm found that the minimum essential service needed was somewhere in between 7,000 port departures logged in 2009 and the 3,900 port departures logged in 2022.

"Will we have disappointments along the way? Will we have budget shortfalls? Will we have broken-down boats and lack of staff? All of those things can still play a major role in the disappointments that may lie ahead. But if you don't have a good understanding of what your goals are and why, then it's just a frustration that the community members have to grapple with, that we can avoid with the planning process that seems to be underway," said Venables.

Even amid federal investments in the ferry system, that feeling is likely to remain in the coming years.

"There will be some tough times this next five years, particularly as we have the aging fleet and begin seeing new assets brought on," said Venables.

In 2021, lawmakers created the marine highway operations board to create more continuity from one administration to the next. Earlier this year, Dunleavy attempted to change the make-up of the board so that all of its members, rather than five out of the nine, are appointed by the governor directly. Lawmakers rejected that effort, retaining the power of the House speaker and Senate president to appoint two board members each.

Since 2019, Dunleavy has not attempted again to put the ferry system on the chopping block. Venables and other observers of the system said their confidence in the state leaders responsible for the ferries has increased. But in coastal communities, the memory of the proposed cuts lingers.

"I am really worried about the Dunleavy administration," said Glover, the Ketchikan bookstore owner, adding that overseeing the ferry system "takes someone who has a commitment to the project and can see the big picture."

"Historically, we had 100% faith in our marine highway system. We knew the engineers were awesome and it was well maintained. Obviously, that is just a crapshoot now," said Glover.

After a $30 million cut to ferry funding in Dunleavy's first year in office, marine highway spending has gradually ticked upward, with federal funding making up an ever-larger portion of the operating budget.

Federal funding made up around 24% of the ferries' operating budget in 2023. In the current year, it is projected to make up around 36%. In 2025, state officials are banking on federal funding accounting for almost half of operating costs, according to figures provided by the state transportation department.

The story of Alaska ferries is the story of long shadows cast by a shrinking state spending, of the lingering impacts of the pandemic on once-common ways of life, and of the imperfect relief that federal funding can offer the state when its budget can no longer support services that were once its bedrock.

When Jon Erickson first arrived in Yakutat a decade ago, the 600-person community was served by two ferries per week — one going north to Whittier, and the other going south to Juneau. The ferry made it possible for elders to receive health care, for cars to be repaired, for groceries to be picked up.

First, the ferries stopped coming in the winter. Then, the ferry service declined to two voyages in each direction per month. Then, service was again cut in half. Last year, Yakutat — the only small community served on the cross-Gulf route — received no ferries at all.

"How do you get a contractor who wants to come to Yakutat when it costs $7,000 to bring a vehicle here by barge?" Erickson wondered.

"Not having the ferry — it's really caused a discouragement within town."

People began asking, Erickson said: "Do I want to live there?"

Yakutat was set to receive a single ferry service in April. But in late March, the marine highway announced that the Kennicott's lone cross-Gulf sailing for the season — which was scheduled to serve Kodiak while the Tustumena was in the yard — was canceled.

A mechanical issue with one of the ship's lifeboats meant that the ship was not safe for open-ocean trips, according to a Coast Guard assessment completed less than two weeks prior to the planned sailing.

Correction: An earlier version of this story incorrectly reported which mainline Alaska ferries could eventually be replaced using federal funding. The funding was allocated to design replacements for the Columbia and Matanuska, not the Columbia and Kennicott.