Alaska legislators this week gave varying views of a McDowell Group report that found a return of $2.50 in economic benefits for every state dollar spent on the Alaska Marine Highway System.
“I appreciate the McDowell report, and was encouraged to learn that the state’s annual general fund dollars into the ferry system result in a 250 percent return in economic impact. I would think that the general fund dollars we put into highways and the general funds we put into airports also have a great return – and would guess possibly an even greater return than 250 percent,” said Rep. Shelly Hughes, a Republican from Palmer who co-chairs the House transportation committee.
In an email message, Hughes said the state “needs to look at ways to find efficiencies” with the ferry “to bring costs within our means” and suggested that ferry service could be reduced to communities that have road access.
“Some communities will never have road connections (Kodiak is a great example) and will always rely on ferry service. Ferry service to other communities could be reduced if road connections were available,” Hughes said.
Hughes, who directed the summer youth theater program in Haines a dozen years ago, said she has relatives in Juneau and Hoonah who depend on ferry service.
State Rep. Sam Kito, a Democrat whose district includes Haines, said the report provided new information on how the ferry system benefits towns on the road system located away from Southeast. “That’s something I don’t think everyone understood,” he said.
Also of importance were “multiple indicators that the ferry does more for Alaska communities than transport vehicles and people,” Kito said, describing the study as “another arrow in the quiver” that works to support the ferry system.
Kito is pushing a bill that would allow the ferry system to accept voluntary contributions from Alaska communities. Kito said it’s unlikely towns could donate enough to create a “pay-to-play” system of ferry service, but they might be able to pool money, resulting in an increased level of service.
Such a system might be able to relieve the existing schedule that eliminates service to some communities for weeks. “Communities would have a place at the table to have those discussions with DOT,” Kito said.
The McDowell report found that two-thirds of ferry riders are Alaskans and that more than half of summer ferry riders also visit Anchorage. In addition, it found that non-resident summer ferry passengers spend an average of $1,300 in Alaska, compared to an average of $941 for summer visitors to the state.
“With the State of Alaska facing severe fiscal challenges, this is an important time to examine how AMHS contributes to the state’s economy and quality of life,” the authors of the report say in the executive summary of the 40-page document.
Haines was one of three ferry destinations profiled in the study. “While the ferry system is clearly integral to Haines, Haines is also integral to the AMHS: Haines carries the second-highest number of AMHS passengers annually (70,000), after Juneau,” the study says.
The study said more than 25,000 vehicles arrived or departed here in 2014 and 574 container vans moved through the ferry port.
The profile identified eight types of travelers using Haines service, including military personnel from the Lower 48 and visitors traveling the “Golden Circle” route, and said the system spent $209,000 with Haines businesses.
Lack of jet service makes Haines residents “particularly reliant on the ferry system for activities like school travel, doctors’ appointments, retail purchases and other essential travel,” the report says.
The study was commissioned at the request of the Alaska Legislature and was intended to serve as an economic impact study, updating one that was more than 20 years old.
“There was interest in the legislature to produce a report on economics they could understand. It’s one thing to talk about economics and another thing to show it,” said Department of Transportation spokesman Jeremy Woodrow.
Haines tourism director Leslie Ross said the multiplier of impacts from spending are certainly higher here than in other communities.
“In terms of local impacts, there’s more here, for sure,” Ross said. “We’re the end of the road (so) we’re going to have the highest impact as far as tourism goes.”
Ross said the report would be helpful for the borough as it makes its case for ferry funding. “It allows us to go forward with our pleas for how important the Alaska Marine Highway is for tourism and our residents. We’re working on a solid statement from Haines to take to the (state) government, especially as they re-open the discussion of Juneau access.”
Innkeeper and longtime resident Norm Smith said the local return on investment of ferry spending in Haines is at least double McDowell’s 250 percent. He said his entire inn is booked in May for a single wedding. “If that ferry is canceled, I’d lose $3,000 or $4,000,” Smith said, calling ferry service the town’s “lifeblood.”
Smith said it’s obvious to him that ferry service is critical to residents statewide. “People go down south to buy a car. They don’t want to drive it all the way here from California. They put their car on the ferry.”
Ferry travelers will buy a room, dinner, gas, groceries and souvenirs here, Smith said. “The dollars just start going ka-ching.”
Smith said the ferry system should start raising fares, at least to $50 for passengers to Juneau. “If you think people are going to fly if they raise ferry fares to $50, that’s not going to happen,” Smith said.
Shelly Wright, executive director of Southeast Conference, also said the study likely underestimates the value of the ferry system. “There are businesses that exist because of the ferry system. For a lot of the smaller communities, that’s their commerce, the marine highway.”
Wright’s group is working on a partnership with the state to create a strategic plan for the ferry system. The system too often is managed on the whim of different administrations, she said.
The conference will be putting together a steering committee of water transportation experts who will solicit public input on a strategic plan, Wright said. “We’re still waiting to see if the state will do that with us.”
“The legislature should have a plan and something they can look at to say, ‘This is what the future holds,’” Wright said. “We want to give them tools to make the system stable and economic.”
The conference is looking at a private-public partnership for ferry management, Wright said, but hasn’t publicly identified a new management model, such as a ferry authority. “We don’t want to say one (model) over the other right now. We’re being kind of careful about that.”