State still deliberating on Washington State Ferries funding

Terrible. That is how State Transportation Commissioner Bob Distler sums up the current financial state of the state ferry system.

March 9, 2009 7:00 pm
The Sealth arrives at the Friday Harbor ferry terminal during a morning run in 2008. Washington State Ferries hopes to obtain $30 million in federal stimulus money for improvements to the Anacortes ferry terminal and a vessel serving the Anacortes-San Juan Islands run.
The Sealth arrives at the Friday Harbor ferry terminal during a morning run in 2008. Washington State Ferries hopes to obtain $30 million in federal stimulus money for improvements to the Anacortes ferry terminal and a vessel serving the Anacortes-San Juan Islands run.

Editor’s note: Jill Urbach of Friday Harbor stars in a locally-produced video, “A message from Citizens of San Juan County to Governor Chris Gregoire and our elected officials,” regarding the need for adequate ferry funding for the San Juans. To view the video, CLICK HERE

By Colleen Smith Armstrong
The Islands Sounder

Terrible.

That is how State Transportation Commissioner Bob Distler sums up the current financial state of the state ferry system.

Washington State Ferries is facing a $4.5 billion shortfall in the next 22 years. There is simply not enough money in the capital fund to pay for new boats and upgraded terminals to meet the demand of increased ridership.

“When the Motor Vehicle Excise Tax was repealed in 2000, the money that was left was not redistributed. State Ferries was one of the hardest agencies hit,” Distler said. “It also took a hit with fuel prices. The system has not yet recovered, despite the fare increases.”

On March 3, the state’s Joint Transportation Committee held a meeting to hear presentations by the Cedar River Group, Washington State Ferries and the State Transportation Commission.

Legislators did not make a decision on long-range funding, but during the next few weeks they will review the recommendations.

The 22-year window corresponds to the Puget Sound Regional Council’s “Destination 2030” effort, from which many of the forecast metrics for the central Puget Sound area were taken.

The most current scenario on the table assumes a fare growth of 2.5 percent each year, an average annual traffic growth of 1.5 percent, a “super” summer surcharge, and a fuel surcharge.

“The cautionary thing to me is that this scenario basically assumes very little incremental capacity,” Distler said. “It is assuming people will either walk on or travel at different times if there isn’t enough room. I think that is risky. Most travelers are not that flexible. The downside is that if ridership fails to grow, we are in even worse shape on the capital side.”

The bottom line, Distler said, is that there isn’t enough money to build new boats, which is vital to meeting the increase in ridership.

“We’ve only built three boats in the last 20 years, and the Legislature has dealt with this shortfall by delaying parts of the capital program. The problem is that vessels were built in classes and groups, so they tend to wear out in groups. We now have groups of vessels that are in need of replacement or major overhaul but there is no funding to do that.”

The Transportation Commission has looked at several options, including local funding from counties served by the ferries.

“To make the numbers work, the tax rates would have to be extremely high,” Distler said. “We think local taxes are very problematic. A ferry tax was voted down twice in Kitsap. So we looked at other ways to achieve local participation, and we recommend a modest increase in fares to achieve that.”

But Distler doesn’t think the proposed increase is enough.

“A 2.5 percent increase and no service cuts is just business as usual. I believe we can no longer do business as usual,” he said.

Distler recognizes that when prices are raised, fewer tickets are sold. But he said the overall elasticity for increases is a reasonable amount and WSF would only lose a small percentage of riders.

“So it’s still more revenue. And the ferries need to improve the revenue stream,” Distler said.

The super summer surcharge would go into effect from late June to the day after Labor Day, and would not apply to frequent user ferry tickets, only single rides.

The Transportation Commission found in its survey that occasional riders are extremely inelastic in regard to fares. The commission doesn’t believe riders’ behavior will change because of $5 or $6 added on to a fare. Yet fare increases and surcharges would not fix the funding problem in its entirety.

“I keep hearing from people they are against service cuts, higher fares and local taxes. My question is: what does that leave?” Distler said.

He would like to see the Legislature pass a statewide tax that funds ferries and other transportation projects that are in critical need of money, like county, city, and local roads and local transit.

So what changes will ferry riders see this year? Not many, Distler said. During the meeting on March 3, most agreed that a fuel and super summer surcharge were good ideas. The rest is up in the air.

“You cannot run a ferry system by building three boats in 20 years,” Distler said. “The Legislature is focused on this problem. We’re looking at a combination of service and fare adjustments; there won’t be much decided soon. But this problem won’t go away.”