“Last week’s announcement that Bainbridge ferry service won’t be cut this summer doesn’t mean that the funding problems caused by Initiative 695 are over. To the contrary, the Legislature’s fix was more akin to a terminally ill patient’s being hooked to life-support systems – life may be prolonged, but the underlying ailment is untreated and will prove fatal.That grim assessment came from Paul Green, chief executive officer of Washington State Ferries, who spoke Monday at the Bainbridge Island Economic Vitality Conference.The event attracted some 75 registrants to Wing Point Golf and Country Club, for discussions centered on the use of public tax dollars.It’s important to understand that before I-695, the ferry system was in deep trouble, Green told conference-goers. The average age of our boats was 31 years, and our terminals were in bad shape.The state Motor Vehicle Excise Tax, killed by voter approval of I-695, had provided almost 50 percent of the ferry system’s total budget, Green said. With an appropriation from the Legislature and by spending all its reserves, the ferry system found enough money to maintain most operations through June of 2001, including two-boat service to Bainbridge.But that leaves the system with no budget for capital improvements. We have $1 billion worth of boats, and no money to maintain them, Green said, and if a boat breaks down, it may simply have to be taken out of service.Green said Monday that privatization is not an option.You simply can’t make money operating a transit system, he said. There may be a place for the private sector in passenger-only service, for example. But I can’t imagine any private business wanting to take over the whole system.Green said any optimism for the future is purely a matter of faith, not reason.Mount Rainier, the Space Needle and the ferries are such icons. I can’t believe that the legislature won’t bite the budget bullet and save the system, he said.Alice Tawresey, chairman of the WSF’s tariff policy committee, said that higher fares not only are inevitable, but are something local ferry users should welcome.It’s in our best interests to pay a larger share of the operating costs because we gain more control over service, the Bainbridge resident said. The non-users don’t care.The committee Tawresey chairs advises the state Transportation Commission on fares. This year, the commission didn’t go through the process of considering fare adjustments because of the questions surrounding I-695. Green said that currently, fares pay about 60 percent of the ferry system’s operating costs, and none of the capital costs. He said an ultimate goal is to capture 80 percent of operating costs through the fare box. Any more would be unfeasible, he believes, because at some point, higher prices start reducing demand, and your revenue goes down.The focus of this year’s conference, presented by the Bainbridge Economic Council, was taxation and spending – the public sector’s involvement in the economy. Conference moderator Christopher Snow said the topic was chosen after I-695 demonstrated the public’s misunderstanding or distrust of the way public agencies manage tax money. And discussions about that initiative dominated the conference.As leadoff speaker, Sen. Betti Sheldon, D-Bremerton, said the proliferation and tone of citizen ballot initiatives show that the public views politicians with distrust. But she said frustration is built into the system.Legislatures are designed to be all the things the public dislikes, she said. The deliberative process – what the public calls dithering – is inefficient, messy and time-consuming.But she defended the results of that process.If I-695 had been a bill to repeal the MVET, I would have heard from all the constituents affected, she said. I would have heard from the disabled bus rider whose Sunday service was being lost. I would have heard from ferry commuters. Sheldon said that feedback would have given legislators an understanding of the tradeoffs that she believed the voters may have lacked.But island resident Richard Davis of the Washington Research Council disagreed. I think the voters understood that 695 would kill tax-equalization funds, Davis said of the payments that go to cities with disproportionately small retail bases.I think they said that ‘if fat-cat cities like Bainbridge and Mercer Island don’t want retail, that’s their business, but I’m not going to subsidize that choice with my car-tab dollars,’ Davis said.First Congressional District Rep. Jay Inslee said he believes there are three things the federal government can do to promote or at least not hinder economic growth. First, he advocated paying down the national debt. Second, he advocated measures to facilitate electronic commerce, such as a measure he worked on to provide a standard for electronic signatures.Third, he advocated smaller school classes to improve education. He said the federal government had some role to play, and cited a bill he is sponsoring that would forgive student loans in return for five years of teaching as a way of increasing the supply of educators.Mayor Dwight Sutton and city council members Michael Pollock and Christine Nasser discussed the city budget. And as usual, the discussion quickly turned to the issue of growth, a debate that will continue as the city’s comprehensive plan is reviewed.Pollock and Nasser both said growth should occur slowly, and Pollock said he would be willing to consider a lottery system for building permits similar to what has been imposed in Boulder, Colo.Economic council president Merril Robison, also a city councilman, disagreed, saying anytime you start rationing something, I’ll tell you what happens to the price.”