State plans to spend $8 million to replace steel on Matanuska

The state now plans to spend an estimated $8 million to replace wasted steel on the ferry Matanuska. If the repairs can be completed in time, the ship could be available by late summer or early fall if it is needed to fill in on Southeast routes.

The work at the Vigor shipyard in Ketchikan had not started as of March 28, although the Alaska Marine Highway System’s timeline presented to legislators that day showed the Matanuska work was to have started in March.

A much larger, $37.5 million project of safety and environmental upgrades to the 60-year-old ship is tentatively scheduled for 2025, pending federal funding and legislative appropriation.

“I think there needs to be a discussion, are we going to upgrade the Matanuska to last a few more years,” said Sitka Sen. Bert Stedman at a March 28 hearing on the ferry system budget.

“We’re the appropriators, and we might have a different position” than ferry system management, said Stedman, chair of the Senate Finance subcommittee looking at the Alaska Department of Transportation budget for the next year.

Stedman has been a frequent critic of ferry management decisions. The department has sold or scrapped four ferries in the past five years.

The Matanuska, the second-largest ship in the fleet, has been out of service since November. It was pulled off its run for an annual winter overhaul and then its stay at the shipyard was extended when workers discovered large amounts of deteriorated steel that needed to be replaced, along with asbestos and other problems that require costly rebuilds.

The Marine Highway System’s plan is to repair the steel on the Matanuska to get the ship operational, Katherine Keith, Department of Transportation deputy commissioner, told the Senate subcommittee.

The fleet’s third-largest ship, the Kennicott, is being held out of service this summer due to lack of crew to staff the vessel, leaving the Columbia as the only ship capable of serving the heavy-traffic summer route between Bellingham, Washington, and Southeast Alaska.

The Kennicott had been on the draft summer schedule until early March, when state officials admitted there were not enough workers to operate the ship. The ferry system has been battling crew shortages for more than two years, with only limited success in hiring new employees even with spending money on a recruitment contractor, advertising and consultant reports.

Keith did not answer when the committee asked her how many employees had been hired after referral by the recruitment contractor over the past year.

“We’re big boys, just tell us,” Stedman responded. “We know it’s a mess.”

The ferry system hired just four of 250 applicants referred by the contractor in 2022, according to a consultant’s report, though the state has gone back through the applications and offered jobs to more than a dozen and with more hires pending, officials said last month.

Even if the state could hire enough crew, the Kennicott is booked for almost $2 million in overhaul and maintenance work in August and September and would be unavailable those months.

Though the run to and from Bellingham costs more to operate than it takes in from passenger and vehicle fares, it has been the closest to breakeven of any of the fleet’s routes over the past decade, according to statistics presented to the senators.

The state received a windfall of federal aid for the ferries under the Infrastructure Investment and Jobs Act of 2022, with almost $285 million coming to Alaska in the first round of grants this year in the five-year program. The money is directed toward upgrades to the aging vessels, money to help pay for a new ferry, dock repairs, additional service to small communities and even a proposed electric-powered ferry for short runs.

“Our plan is to apply for the maximum amount of federal funds,” Dom Pannone, administrative services director at the Department of Transportation, told the subcommittee.

“There are a number of grant opportunities we are pursuing,” Keith said.

Though much of the federal money is directed to ship construction and repair work, the governor’s budget proposes to use some of the aid to replace state spending in the ferry system budget. Stedman and other legislators have questioned that approach, talking about using the extra funds to improve service rather than save state dollars.

The House and Senate are working on the budget for the fiscal year that starts July 1, with a May 17 adjournment deadline.


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