Grim Budget Picture from State Ferry Chief

By Lance Evans, Executive Director, Orcas Island Chamber of Commerce

The financial picture for the Washington State Ferry (WSF) system is not good, and Governor Gregoire’s budget (due today) may make matters worse.
That was the takeaway from the presentation by WSF Chief David Moseley, speaking last evening before the San Juan County Ferry Advisory Committee (FAC) at a special meeting held in the County Council hearing room in Friday Harbor.
Moseley spoke for about an hour and a half, and covered many ferry issues that affect islanders.

Washington State Ferry & Ferry Advisory Committee Public Meeting
Tuesday, December 14, 2010 (San Juan County Council hearing room)

Guest Speaker:
David Moseley: Assistant Secretary, Washington State Ferry (WSF) System
Moseley and Ray Deardorf (WSF Planning Director) participated in a public meeting, in conjunction with the San Juan County Ferry Advisory Committee (FAC) at the County Council chamber hearing room. The public was invited to attend in-person and online.

Tough Financial Times
According to Moseley, the financial situation for the state ferry system parallels the state’s tough economic picture.  The picture is worsening, and WSF is not financially sustainable.  Expenses exceed revenue (primarily gas tax dollars and fares). Over the past few years WSF has taken steps to reduce costs and find departmental efficiencies.  Administration and support costs (including positions within WSF) have been greatly trimmed.

The Real Problem
No dedicated revenue sources. Moseley distributed a handout to those at the meeting recapping savings achieved. Despite saving $28 million dollars (including staff cuts), and adding salary savings (voluntary pay reductions), the  ferry service is still not sustainable with no dedicated operating funding source.  Since 2000, the gap of dedicated revenue has been made up from other motor vehicle accounts.

What are the real expenses?
Approximately 20% of WSF expenses are in administration, maintenance, vessels, and terminals costs.  The other 80% of expenses is comprised of fuel charges (21% of the 80%) and labor costs  (79% of the 80%). Budget savings have come from the first tier of expenses (administration, maintenance, terminals, etc.)  Fuel costs are fairly fixed (and fluctuate up and down); labor costs are a constant and aren’t easily reduced due to labor agreements.

State asks for more cuts
The State Office of Financial Management (OFM) recently asked the Department of Transportation (DOT – under which WSF resides) to identify $212 million in cost reductions.  Of that amount, WSF was asked for $17 million more in cuts.  Moseley noted that additional administration cuts (losing 10 positions) and other cuts would save $3.4 million.  Service reductions would have to be the next cost.

What happens now?
Governor Gregoire will announce her budget today (Wednesday, Dec. 15), according to Moseley.  Trying to cover a state $5 billion shortfall will be felt everywhere in the state (social services, local government, education, and certainly the ferry system.)  Moseley noted that even with further reductions, the ferry system is not sustainable.  Islanders should prepare for a planned reduction in service (including inter-island ferry), and a shuffle of boats throughout the system, with lower capacity on the inter-island ferry.  The notion of a ‘dedicated source of revenue’ was mentioned many times during the meeting.  Where that revenue would come from was left unanswered.  The state legislature has not designated any capital funding following the 2011-2013 budget cycle.  Transportation plans exist, but no funding.

Some questions and comments from the audience

● Sidney ferry run.  Several people addressed the issue of the viability of ferry to Sidney, B.C.  Moseley heard from those who support it as a part of our tourism attraction, but the future was left unclear.
● Transportation equity in the state.  Several speakers reminded Moseley that our ferry system is our highway system, comparing ferry service reductions to closing lightly traveled highways in Eastern Washington.
● Bio-fuel on ferries?   Moseley indicated that trial runs didn’t work well (engines were
problematic), and that Bio-Fuel is more expensive. Moseley feels alternate fuel systems may be the answer down the line.  Natural gas would be 1/3 the cost of diesel.
● Will Unions renegotiate labor agreements?  Some bargaining units have reached agreements  with WSF; however, the top three didn’t make agreements.  WSF is hoping to achieve success with good faith bargaining.
● Can WSF find corporate sponsors?  Moseley felt there was potential in this area.  The Central Puget sound routes are involved now, and with a revenue growing, there is potential growth here.  Despite a request to do so, Moseley will not support a state ferry being ‘wrapped’ in a commercial logo (as buses often do).

Status of a reservations system
WSF feels a reservation system is good for both residents and visitors, as it will allow everyone a level of certainty, and avoid customer complaints for long waits.  Moseley noted that WSF is trailing badly in implementing a reservation system. There will be several phases of study and implementation of reservations.  The San Juan islands may see a system in place by 2015.

Final thoughts from WSF
Moseley stressed that this isn’t a route-by-route issue (and thanked those at the meeting for not pitting the San Juan runs against others).  WSF has a system-wide structural financial problem, and needs a system-wide approach to solve the problem.  We can seek improvements within the system, but need to address the issue of all ferry users.  As for what a citizen can do, he suggested writing your legislators & the governor.  Learn more about your legislators’ involvement in a ferry caucus.  Be a part of a community partnership on the ferry issue.