Ferries face $40 million shortfall
June 12, 2008 · Updated 10:29 AM
Going into the upcoming legislative session, Kitsap lawmakers can be expected to grapple with a dwindling economy, a state budget filled with holes and regional transportation woes.
Chief among those troubles is a projected $40 million gap about 12 percent in the Washington State Ferries $322 million operating fund.
Right out of the box, well be looking at that hole to fill in the ferry budget, said Sen. Betti Sheldon, D-Bremerton. Going back to Olympia in January is not so appealing to me right now.
The budget shortfalls can be explained two ways, according to Office of Financial Management deputy director Wolfgang Opitz.
During the last legislative session, $30 million earmarked for the WSF overall operating budget was funded by a bill that passed the senate but not the house.
While the senate approved spending down surplus funds in a closed state pension plan for retired law-enforcement officers and firefighters to balance the budget, the house never agreed to such a plan.
The remaining gap, which currently hovers around $10 million, represents the ferry fare revenue shortfalls anticipated for the biennium.
State officials figured earlier in the year WSF would garner roughly $227 million in user fees for the budget cycle, but that projection changed in November, dropping to $217 million.
Kitsap legislators and county commissioners heard the news at a recent legislative conference sponsored by the Washington Association of Counties.
They got worried.
Obviously were concerned, but we also expect our Kitsap legislators to work with the governor to continue funding Washington State ferries, since they are part of the state highway system, said county Commissioner Chris Endresen. But its going to be tough with the state budget experiencing shortfalls.
WSF interim director Terry McCarthy confirmed the marine division of the state Department of Transportation isnt seeing as much growth in fares as previously anticipated.
By the same token, our expected expenditures are about to go down by $11.5 million, he said. Thats mainly because gas prices are going down.
Meanwhile, McCarthy said WSF is operating currently as if the funding for the agency is in place, as prescribed by last sessions ferry funding bill.
Its true we have legislative financial issues to be dealt with this next session, but were not in a panic mode, said McCarthy.
Sen. Bob Oke, R-Port Orchard, was briefed with numbers indicating the forecast revenue shortfalls for ferries should be mitigated by dropping fuel prices.
But were still looking at a $30 million hole at least, said Oke. If we can get it fixed next session, great. But if not, there will be major cuts to service.
Thats what has lawmakers particularly worried.
Sheldon says shes worried passenger-only ferries are a particularly vulnerable target.
Passenger-only-ferry service is expensive and it doesnt bring in the same ratio of revenue (as car ferries), said Sheldon. For Kitsap County, passenger-only ferries are always teetering on the edge. I dont want to see it eliminated.
Legislators, WSF officials and other ferry advocates say they plan to work together next year to craft a stable operating fund for the ferry system.
WSF officials and forecasters are still examining why the agency has experienced an overall drop-off in ferry passengers and a corresponding drop in projected revenues.
Shortly after ferry fares increased by an average of 20 percent in the Central Sound region this last summer, ridership dropped by about 2 percent systemwide. More specifically, that drop occured between June and Sept. 10 2001, according to forecasters.
In the weeks following the Sept. 11 attacks on the East Coast, when no one was traveling at all, ridership dropped systemwide by 10 percent.
Now, ridership is back up, but there is still an overall drop of about 4.8 percent, according to information collected from October to Nov. 15.
Officials are trying to figure out exactly why the numbers are still low and what future implications could be. In all likelihood, the dropoff could be directly related to a combination of factors increased ferry fares, a dwindling economy, Boeing layoffs and the terrorist attacks.
Even with reduced ridership systemwide, WSF is still better off revenue-wise than the agency was at the same time last year.
Although revenues arent coming in at expected levels, WSF forecasters say revenues have increased by a little over 14.2 percent compared to the same time last year just not as high as expected.
In one study period from June through October of 2000 WSF collected more than $47 million in fare revenue. From June through October of 2001, WSF has collected nearly $53.8 million in fare revenue.