Ferry crystal ball: Taxes will be raised

  • Saturday, October 24, 2020 1:30am
  • Opinion

In May, the green eyeshade gnomes in the Governor’s Office of Financial Management slyly asked, as “an exercise,” how the ferry budget could be cut by $65 million. Riders were promptly offered blindfolds and a last cigarette as Ferries replied with massive service cuts.

Because COVID-19 reduced travel and Initiative 976 reduced the Motor Vehicles Excise Tax, transportation revenue will be down by $2 billion (or 20%) over the next two years. Dealing with that through budget cuts and/or new taxes will be the hot topic for the Legislature in January. Here’s background that may help you watch the show.

Rules of the game

A budget comes out every two years and 2021 is one of those years. All the budget numbers that are for two years. The legislature faces constraints. Paying off the bonds for projects like the Viaduct tunnel and the 520 Bridge gobbles up 68% of gas taxes. Remember the court mandate to spend $350 million (equal to the cost of two new ferries) per budget cycle replacing culverts with fish passages (recall the South and West Kingston Road projects)? And there are bridge issues. Recall the I-5 Skagit River Bridge collapse and that the I-5 Columbia River bridge is 105 years old.

Ferry funding

Ferries’ operating costs are about $523 million. Fares and related revenue such as concessions (which are low now of course) cover about 75% of that. The remaining 25% is split evenly between ferry-dedicated taxes and fees and “transfers” from gas tax accounts.

For the 2021-23 budget the state Department of Transportation has asked ferries to cut 14% of operating costs – about $72 million. Tying up lots of boats is the only way to do that.

But wait a minute.

If riders are paying 75% of the costs, why not just cut 14% of what the state pays? That would be about $14 million. That could be done with stiff, but survivable service reductions, long with overdue haircuts to management and “support.”

Why propose huge cuts?

Two reasons. First is the “Washington Monument Strategy,” per Wikipedia “a term used to describe the phenomenon of government cutting the most visible or appreciated service when faced with budget cuts.” A second possibility is that it’s quick to do on short notice. Tying up ferry boats can be done overnight while improving efficiency takes years of hard work. I think it’s the latter. As the saying goes: When you want an answer bad, you get a bad answer.

What will happen?

Ferries’ budget is only the first round of a four-inning game. WSDOT revises it, then the governor changes it, and the legislature changes it again. Since large service cuts will do real harm they will be dead on arrival at the legislature. Basic ferry service will be sustained. That said, the Sidney, Canada run is and has long been at risk. It requires a uniquely configured and expensive boat. It’s tied up now and who knows when U.S. ferry service to Canada will return? While some routes, like Kingston and Mukilteo, are almost back to full ridership, others remain very low. Full service will not likely be restored where boats are running nearly empty.

Bottom line

My crystal ball says that the most direct way out of this predicament is raising taxes. Since the shortfall is from gas tax and MVET revenue it’s logical to raise them to compensate. There are new tax schemes like carbon taxes and road use taxes. These however require new policies, rules, bureaucracy, and for a road use tax, new technology.

Hope this helps… and doesn’t spoil your Thanksgiving appetite.

Your Ferry Advisory Committee meets online the second Monday of each month at 6:30 p.m. For details email elliottmoore@comcast.net.

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