Taxing district for ferries?

OLYMPIA — Sound Transit. Community Transit. The Puget Sound Regional Ferry District.

If the idea suggested by Gov. Chris Gregoire on Thursday ever becomes reality, one more large, regional agenc

y will steer policy for getting people in the Puget Sound area from one place to the next.

It also likely would result in increased taxes to pay for boats and terminals, Gregoire said.

The expense of running the f

inancially ailing state ferry system has been a worry for years.

“We can’t Band-Aid the system any longer,” she said.

The idea for a taxing district must be approved by legislators, who convene for their 2011 session Monday. Some of them already have come out against the plan.

“There’s no question reform is needed in our ferry system, but creating another layer of government is not the way to go about it,” said state Sen. Mary Margaret Haugen, D-Camano Island.

Fares cover only about 70 percent of the ferries’ operating costs, ferry system chief David Moseley said. Lacking an adequate dedicated funding source, the state has to fill in the rest however it can. And this does not include the larger capital expenses for boat building and improvements to terminals, Moseley said.

The state is borrowing $44 million from other accounts to support the ferry system through the first half of 2013, Gregoire said.

“We can no longer bail, there’s nothing to bail from,” Gregoire said. Her proposed 2011-13 budget makes extensive cuts to other services as well.

The governor’s proposed ferry budget of roughly $440 million includes raising fares by 10 percent in the next two years, adding a surcharge for fuel, reducing the number of daily sailings and canceling a second boat for the Port Townsend-Coupeville route.

Even with these cuts, for the next 10 years, the system is projected to be $900 million in the hole — $200 million for operations and $700 million for boats and terminals.

This comes after the state has already made cuts in the system and raised fares 2.5 percent.

“We’ve done that, we’ve been there,” she said.

The taxing district idea comes from a report on the ferry system by the Passenger Vessel Association, a national trade group for operators of passenger vessels including ferries. Gregoire asked the group to review the Washington state system, which she said is the largest in the nation and fourth largest in the world.

One of the ideas considered was privatization, but this won’t work because the system would be entirely dependent on fares, and the fares would have to be so high they would discourage ridership, the governor said.

The 113-page report compares Washington with operations of five other ferry systems in the United States plus the BC Ferries system in British Columbia. The U.S. systems include the Golden Gate Ferry system in San Francisco, which is run by a transportation district.

“There’s nothing new here,” Moseley said at the press conference.

The idea for such a district to run the Washington ferries also was included in a 2009 report on how to overhaul the ferry system, he said. Around that time, ferry officials began making changes, including slashing consultant costs, reducing staff and scaling back plans for improvements to terminals.

Those changes came after the system had been plagued by questions about leadership and the safety of its fleet.

The three ferries in the Steel Electric class, built in the 1920s, were pulled from service on the Port Townsend-Keystone route in 2007 following an investigation by The Herald that found the ferries were carrying passengers despite extensive corrosion and cracking in the hulls. The vessels did not meet federal standards in place since the 1950s.

A borrowed ferry from Pierce County filled in on the route until last November when work was completed on the $80.1 million, 64-car Chetzemoka.

The state is building two more 64-car ferries, the Salish and the Kennewick. The state could have to build seven more boats by 2030 to replace others that might have to be retired, according to the 2009 report.

Gregoire’s taxing district proposal envisions an authority that covers the nine counties served by ferries, including Snohomish and Island counties. Some of the district’s leaders would be locally elected and some would be appointed by the governor.

The state would still contribute $96 million, Gregoire said — the only funds currently dedicated to the ferries.

The local district would use fares and presumably some other type of tax to cover operations and capital expenditures.

“That’s up to them,” she said.

Local elected officials and legislators were quick to attack the plan.

“To attempt to ask the voters in a narrow region of the state to assume the cost is an unfair burden,” Edmonds Mayor Mike Cooper said, noting that Edmonds already shoulders congestion-related ferry costs.

“I’m very skeptical of it,” Snohomish County Executive Aaron Reardon said. He wonders whether it will work, in terms of providing service and covering costs.

Also, “the state really seems to be passing a lot of their problems back down to local governments,” he said.

State Rep. Marko Liias, D-Edmonds, is vice chairman of the House Transportation Committee. He doesn’t like the governor’s idea.

The ferries, he said, “are a part of the state transportation system, it should be state revenue that’s supporting it.”

The state doesn’t ask local taxpayers to pay extra for fixes such as the Highway 520 floating bridge or the viaduct tunnel, Liias said.

It’s not just Democrats who oppose the plan.

“There’s no detail,” said state Rep. Norma Smith, R-Clinton. “These are marine highways, they are part of our highway system.”

Gregoire said the upside for those who would pay the higher taxes is more input and local control of the system.

“They will see the books, they will see the tradeoffs, they will see the problems. They will make the decisions,” she said.

Gregoire said she’s open to other ideas but would not accept the status quo.

She said if the state gas tax were raised 3 cents per gallon to cover ferries, it would be enough, but she doesn’t expect that to happen.

“If not this, then what?” she said.

Bill Sheets: 425-339-3439; sheets@heraldnet.com.

Ferry ridership

Route	Total riders	Total vehicles
Seattle-Bremerton	2,428,674	644,539
Seattle-Bainbridge Island	6,119,698	1,937,033
Seattle-Vashon**	78,937
Fauntleroy-Vashon	1,989,868	1,112,818
Fauntley-Southworth	858,161	499,120
Southworth-Vashon	166,018	96,166
Tahlequah-Point Defiance	625,776	360,006
Edmonds-Kingston	4,073,064	2,133,738
Mukilteo-Clinton	4,028,589	2,177,630
Port Townsend-Keystone	527,128	231,131
Anacortes-San Juan Islands	1,725,634	832,198
Anacortes-Sidney, B.C.	97,429	34,423
Interisland-Sidney, B.C.	18,734	5,492

Totals	22,737,710	10,064,294