Alaska is expected to receive an amount of $285 million by the Federal government in order to modernize the state’s ferry fleet as well as enhance services. The project is part of the bipartisan transportation infrastructure bill that was approved in 2021.
To actually use the cash the state must make money available. This is a difficult task in the state facing an unsustainable deficit due to declining oil revenues.
The state is using an accounting trick to convert federal money into new ones.
Katherine Keith is the deputy commissioner of The state’s Department of Transportation. She informed that the State’s Marine Highway Operations Board earlier this month that federal grants could inject some vitality in the Marine Highway System.
“Modernize the vessels we have, start making plans for new constructions as well as the construction of new ones,” Keith said. “And after that, we will invest in certain ferry terminal facilities to ensure that we are closer to running all vessels as well as all docks, and finally, supplying an investment in the Marine Highway System of some operating funds.”
However, the grants aren’t entirely cash-free. Each grant needs a contribution by the state, which is between 25 to 50 percent.
Board member of Ferry Wanetta Ayers said she was concerned that the state would not prioritize match funds.
“The truth is that we’re currently in a deficit budget in certain situations,” Ayers said. “And this puts stress on the funds available for match.”
Ferry boosters may have an argument to be skeptical during the first year of his term as governor, Gov. Mike Dunleavy cut millions from the budget for the ferry system, and the sale of three state-owned ferries.
In a budget amendment made this month, the administration of Dunleavy offered solutions. Department of Transportation Commissioner Ryan Anderson believes that the state will require more than 50 million dollars in match funds to this year’s ferry grant. Anderson has an idea of how to obtain it.
“To fulfill this need the state proposes to utilize a new federal aid highway which allows the state to utilize existing federal funds to acquire the federal funds that are being created,” Anderson said.
The transformation of old federal funds into plenty of new federal currency. This isn’t alchemy. It’s accounting.
The real secret is in the”toll match credits” or “toll match credit.”
Consider your situation in this manner: The Marine Highway System is part of the national highway system. When you think of Ferry tickets being tolls it’s not just a road It’s a toll route. These tolls are at least partially spent on maintaining the ferry fleet as well as the terminals.
Toll match credits permit maintenance expenditures be counted towards the state’s share that is matched.
The federal grants are broken down as follows: $68.4 million towards a hybrid diesel-electric solution for the vessel Tustumena. The project is in the process of being completed. It also has $8.6 million for the design of an entirely new mainliner for Southeast. A further $163.7 million could be used to construct the construction of a new electric ferry and also improvements to the dock infrastructure as well as modernizing existing vessels.
The package worth $285 million includes close to $45 million in operating funds.
