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The Associated Press March 22, 2011, 9:08AM ET

WA House transportation budget pares ferry cuts

House lawmakers rolled out Monday their proposed 2011-2013 transportation budget, and it includes fewer service cuts and a smaller rate hike for Washington's ferry system than Gov. Chris Gregoire's earlier bid.

Totaling $8.9 billion, the House budget lays out $1.1 billion for highway maintenance, $402 million for passenger rail and $237 million for ferry terminal and vessel projects. That's up $400 million from last biennium's $8.5 billion budget.

The overall transportation budget will stay solvent through 2013, except for the Puget Sound capital construction account, which provides for ferry building. That account is already in the red for 2011, said Rep. Judy Clibborn, the chairwoman of the Transportation Committee.

State officials say the ferry system has a $180 million shortfall in its operating budget due to falling tax revenue.

The House's proposal cuts ferry services by $3.1 million, compared with Gregoire's $20 million reduction in her December budget. Clibborn, D-Mercer Island, said lawmakers were careful to target runs that were not as extensively used.

Earlier this session, Gregoire had proposed overhauling the state ferry system to a regionally operated one, in which counties that use ferries would manage it. The state would have chipped in money as well. That idea didn't receive much play in either the House or the Senate.

"The governor wanted us to not patch it through; we patched it through," Clibborn said of the overall proposal. "It sets us up for a discussion about new revenue. We'll have to have new revenue in order to make the red go away and to have new projects."

Gregoire had proposed a ferry rate hike of 10 percent. The House proposal puts it at 7.5 percent in 2011 and 2.5 percent in 2012. This year's 7.5 percent rate hike comprises the expected 2.5 percent annual increase, as well as a one-time 5 percent increase. Next year, riders will see another 2.5 percent annual increase, raising a total of $3.6 million this biennium.

Clibborn said the House proposal doesn't add an ongoing surcharge for fuel because ferry users want fares to be consistent and predictable, and not subject to the rise and fall of fuel costs.

Earlier this session, lawmakers reached a tentative agreement with ferry union leaders that would save $10 million annually. Ferry workers have yet to ratify the agreement, but legislators are confident it's moving forward.

The new contract would include a pay cut for workers, like the 3 percent cut already taken by other state employees, as well as other labor cost reductions.

Mukilteo Democratic Rep. Marko Liias, vice chairman of the Transportation Committee, called the proposal a "short-term bridge that gets us to 2013."

While ranking minority member Rep. Mike Armstrong, R-Wenatchee, said he's not thrilled about the solution, he sees it as the best option given the circumstances.

"I would say it's a no-frills, tighten-your-belt kind of budget," he said.

The budget directs $3.9 billion to continue funding 421 projects through the Nickel and Transportation Partnership packages from 2003 and 2005. Almost 300 of them are now completed or nearing completion, but that revenue will go toward paying off their bonds for the next 25 years, so the state still needs a new revenue stream, Clibborn said.

The budget announcement comes less than a week after lawmakers received a revenue forecast showing the state's deficit to be $780 million deeper than previously thought.

Transportation revenue for the next two years is also worse than expected, down $100 million from earlier projections. Most of those losses come from falling gas tax revenue as a result of greater fuel efficiency.

Armstrong said his caucus is looking very closely at gas tax alternatives for the future, as fuel efficiency increases and drivers buy less gasoline.

The proposal also provides for a study to look at how public-private partnerships might work for projects where the private sector sees a clear benefit from investing.

House lawmakers plan to save $66 million by trimming agency operational costs, reducing salaries by 3 percent, suspending cost-of-living increases for Plan 1 retirees and improving efficiency for tolling on the Tacoma Narrows Bridge.

The Senate will release its transportation budget this week as well. Lawmakers will then negotiate all proposals.

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