Alaska’s senior U.S. senator, Lisa Murkowski, said the Dunleavy administration has “all but ignored the opportunity to save our marine transportation system” by using federal funds for daily operations instead of long-term upgrades as intended, which is going to make requesting more such federal aid difficult.

Her remarks on Feb. 10 to Southeast Conference’s Mid-Session Summit in Juneau were followed a day later by Alaska Sen. Dan Sullivan, telling the convention of municipal and business leaders that he was grateful the Trump administration is authorizing the use of such funds for operations as well as upgrades to vessels and facilities.

The senators offered their remarks during separate live online appearances at the event.

Funding for the Alaska Marine Highway System is a particularly contentious issue at present because its $171 million budget for the current fiscal year includes $78 million from a federal rural ferry program — money which the state has not received and does not know when or if it will receive the aid.

The Trump administration didn’t open its annual grant process for those funds last fall, meaning the state might have to either cover the shortfall or make cuts.

Murkowski said “it really hurts to read a headline” like that since the state should be using its own funds for ongoing operations, rather than dipping into what’s a temporary allocation of federal funds intended for one-time projects.

“The federal funding that was built into the (2021) infrastructure law was supposed to be the lifeline,” she said. “It was supposed to be an opportunity to steady this system, to ready the ferry system for the next generation and not to cost-shift at the state level.”

The state received about $550 million in federal dollars the past three years, with about half spent to replace state dollars in the ferry system operating budget.

More than $260 million of the federal aid has gone toward paying the bill for a new ship to replace the 62-year-old Tustumena, which serves Southwest Alaska, adding crew quarters to the Tazlina, and several ferry terminal projects.

Ferry officials, lawmakers and official reports all agree the state ferry system’s decades-old vessels and terminals are badly in need of major repairs or replacement. The system has ranked at the bottom of state Infrastructure Report Cards issued in 2021 and 2025 by the American Society of Civil Engineers, with “D” grades in both reports.

Murkowski has frequently criticized Republican Gov. Mike Dunleavy since the passage of the 2021 Infrastructure Investment and Jobs Act for not using ferry funds as intended. With funding from that bill set to end this year, “I will lay blame on an administration that I feel has all but ignored the opportunity to save our marine transportation system,” she said.

“This is year five of a five-year boost,” the senator said. “It’s not a permanent entitlement. There’s no guarantee that we’re ever going to be able to renew any of it. I’m certainly going to make every effort that I can. But I have to tell you what we’ve seen at the state level is not going to make it easier for me to get that additional renewal or extension of it.”

Dunleavy has defended such use of the federal funds as proper, and noted the state is in a tight financial situation and trying to make the most efficient use of money available.

Sullivan, in his remarks, credited Murkowski with getting provisions in the infrastructure law that resulted in nearly $900 million in funding headed toward the state ferry system.

“Just as important, our delegation secured new authority to allow the Trump administration to use funds for operating costs, not just capital projects, for the ferry system in Alaska,” Sullivan added. “So that is a big deal.”

Sullivan said he’s working with Trump administration officials on the current year’s federal grant and has been told the funds “will be released within the month.” Murkowski said she has also been told the funds will eventually be released.