Washington State Ferry unable to afford new Jones Act construction despite large subsidies

MarineLink.com, which is the online site for Maritime Reporter and Marine News, published on February 1, 2016, an article, “Rough Waters for Washington State Ferries,”  describing the problems being encountered by the largest ferry system in the U.S.

The Washington State Ferry (WSF) is  State-owned and operated by a division of the Washington State Department of Transportation (WSDOT) and depends heavily on State funding to underwrite its operations.   The WSF operates in the protected waters of the Puget Sound and the Straits of Georgia.

The author of the article notes that the BC Ferries in the neighboring Canadian province of British Columbia have turned to building their ferry vessels in Europe, where a vibrant ferry industry is located both for construction vessels and operation of ferry systems throughout the continent.

However, the author – perhaps without understanding its consequences — raises the Washington State Government for making the decision to build new ferry vessels in State, despite the inability of the WSF and the State to afford newbuild ferry vessels to replace their aging fleet.

The State is paying out of general funds for most new vessel and terminal construction and maintenance of existing vessels and facilities.

The author quotes E. Kosa, Chief of Staff to Assistant Secretary (of the Washington State Department of Transportation) for the Washington State Ferry, “The age of the vessels is still well over anything a private system would use. All but seven [of 24] vessels are over 30 years old.”

Key excerpts include:

Unlike the citizens of British Columbia, which pays a German shipyard to build its ferries, Washington state residents resolutely invest at home. By law, ferries are built locally and the results, overall, seem win-win. The state’s Office of Financial Management estimates that every $75 million in ferry construction generates about $90 million for the state’s economy. In-state shipbuilding provides the vessels that are at the center of the marine transportation system. On top of that, WSF employs 1,900 people.

So, while the shipbuilding end of the ferry system has been successful, the funding end has struggled. It has sometimes seemed as though taxpayers were at odds with themselves, on one hand expecting transportation but with the other hand cutting its funding. A 1999 tax repeal began years of persistent underfunding. Lean budgets have forced WSF into using decades-old boats and gave it uncertainty about buying new boats. Lack of funding meant delayed maintenance and tight staffing. And, the situation gave shipyards little year-to-year certainty about new builds and set the stage for high-profile negative publicity.

Voters may not have had long-term effects on ferries on their minds in 1999 when they repealed the Motor Vehicle Excise Tax (“car tabs”), taxes reserved for transportation and ferry operations since 1937. Ferries lost 20 percent of operating costs and 75 percent of capital funding. Hence, in the choppy wake for that questionable voter edict, WSF quickly found itself raising tolls and fees. Given higher tolls and service cutbacks, ridership sank from its peak of 27 million trips in 1999 to 22.6 million trips in 2010.

In 2007, a second blow came in the form of the overnight removal of four 80-year-old Steel Electric Class ferries. When tests showed that the hulls were dangerously corroded, transportation secretary Lynn Peterson pulled them from service that day. The ferry system ran very lean for the five years it took to replace them.

In the rush to replace those very old ferries, WSF botched building decisions for the first new replacement. WSF decided to use a preexisting ferry design from the Island Home, which runs between Martha’s Vineyard and Woods Hole, Mass. A 2013 state audit found that change orders caused the first replacement ferry, the Chetzemoka, to end up costing almost twice as much as the Island Home.

Nevertheless, the legislature funded new 144-car Olympic Class ferries built by Vigor in Seattle, with superstructure built by Nichols Brothers Boat Builders of Whidbey Island. The first, the Tokitae, was finished in 2014.

2014 proved to be a summer of horrors for WSF’s ferry chief. Staffing shortages sometimes cancelled sailings. In July, the Tacoma lost propulsion on the Bainbridge Island to Seattle run and had to be towed back to Bainbridge Island. Repairs cost $1.8 million. The 202-car Wenatchee was already out of service, making two of the state’s three largest ferries unusable. In August, Seattle’s KING-TV ran a story pointing out that the ferry system was attempting to sell never-used generators it had bought for $5.3 million in 2005 for the sum of $300,000. There are still no takers.

Ferry employees were understandably demoralized. The WSF ferry chief wanted to move on. Not finding a suitable replacement, Peterson called off the first search. At $145,000 a year, the job wasn’t tempting to many from the private sector.

But then the stranded Tacoma and the mistaken passenger count in Bremerton tugged at Lynne Griffith’s heartstrings. Griffith, a 36-year veteran of the transportation industry, said, “I saw they had serious operational issues. My goal was to come on board and stabilize the situation. That’s what I do.”

Meanwhile, on the legislative side of state government, House Transportation Chair Judy Clibborn was lobbying legislators to vote for a transportation budget that would pay for maintenance and new ferries. The 2015 legislative session, balanced between a Democratic House and a Republican Senate, went into not one but three extended sessions. By July of 2015, the parties at last agreed on a long-term transportation package that helped stabilize WSF funding, though there was still no dedicated tax revenue stream. The deal paid for a fourth Olympic class ferry; new terminals in downtown Seattle and Mukilteo, just north of Seattle, and some deferred maintenance. There is an RFP pending to convert up to six of the Issaquah Class ferries to LNG, but as yet, no funds.

WSF has a maintenance backlog of $241 million and a biennial budget that only supports half of its preservation requirements. Construction of the newest ferry will help, but won’t solve the problem of deferred maintenance.

The age of the vessels is still well over anything a private system would use. “All but seven [of 24] vessels are over 30 years old,” said Kosa. “However, we’ve built five vessels since 2010. The sixth is under construction and the seventh is in the pipeline. Building new vessels continues to be a top priority.” WSF would ideally have one relief vessel stationed in north Puget Sound, and one stationed in the south.