This was originally posted to: Guemes Island Ferry Committee

Response To Ferry Fare Revenue Target Report

April 21, 2020

Skagit County Public Works
Attn: Ferry Division
1800 Continental Place
Mount Vernon, WA 98273

Re: Draft 2020 Ferry Fare Revenue Target Report

Dear Public Works and Ferry Division:

Thank you for the opportunity to comment on the Draft 2020 Ferry Fare Revenue Target Report.  There are five subjects that we believe deserve further attention.

1.  The proposed 15 percent proposed fare increase has been applied to the current total fares, which includes the surcharge. The 15 percent increase should be calculated on the base rate, excluding the surcharge. By applying the 15 percent increase to the surcharge the proposal in effect raises the surcharge from $2.00 to $2.30. We think the increase should be calculated on the base rate.

2.  The WSDOT deficit reimbursement is the smallest in dollar amount since 2009 and the lowest by percentage of total expenses since at least 2005.  It is 6.6% for 2019 as compared to a ten-year average of over 15.9%.  Moreover, this year’s shrinkage is roughly the same as the revenue shortfall for 2019.  We would like to know why the WSDOT contribution is so much reduced and whether this is a condition that is expected to continue.

3.  The Report is useful in underscoring the importance of having a clear understanding of how expenditures are categorized as either Capital or Operations & Maintenance because the calculation of shortfall in fare box revenue is a direct function of the O&M expenses.  We appreciate that this annual Report, at page 6, begins to discuss this matter.

The discussion brings into focus a few questions, for example:

*  The Report refers to an expenditure classified as capital, the ferry winch replacement project.  Is that to say this was the only capital expense in 2019?  Or is this just an example?

*  Is there no expense associated with the haulout and drydocking that is classified as capital?

*  Two consultants have recommended work they described as necessary to extend the life of the vessel.  For example Elliott Bay Design Group listed as life extending improvements replacing engine foundations, updating navigation electronics, and refurbishing piping systems.  Since “substantially extending the life of the vessel” is the description of capital at WAC 136-400-030, it seems again that the distinction between capital and O&M needs clarification.

Again, we appreciate the Report’s progress in addressing this important distinction, and we are anxious to discuss this with you.

4.  Over the past ten years passenger and vehicle traffic on the ferry has remained fairly steady or has in fact declined a bit.  At the same time, expenses and fares have risen significantly, even when adjusted for inflation.  So we are delivering the same service at increased expense and ticket price.  This should be examined in the Report so we can collectively understand our situation as regards fare increases like that proposed in the Report.

To aid this discussion and inform future work, O&M expenses should be broken down, if possible, into Operations and Maintenance separately.  This would help identify where cost increases are coming from and what might be appropriate responses.

5.  Another positive feature of the Report is its inclusion of Appendix D, Ferry Division Expenditures.  This information begins to enable readers of the Report to track categories of expenditures over time. This is of interest since the expenditures topped $3M for the first time in 2019.

The Ferry Committee has noted in past years that there are at least two ways to address revenue shortfalls – fare increases or cost reductions – and that the yearly Reports seem to focus only on the first, without a discussion of cost control efforts.  Without that information it is very difficult for us to explain to ferry patrons why a 15% fare increase is unavoidable.  We would like to know with some specificity which expense categories are driving the increase.  It is difficult to acquiesce in the proposed fare increase without this information.

Thank you again for this opportunity to comment.  We look forward to working with you on these and other matters.  We understand the challenges of communication in the present situation and are willing to work to meet electronically if that is necessary.

Very truly yours,
Guemes Island Ferry Committee