Nov 212010

Rich Frye has an interesting paper posted on the Ferry Forum web site  that raises good questions about the County’s wisdom in continuing to raise ferry rates. The County should pay close attention to what he has to say. His is an argument based on elasticity and a sound one from that economic perspective. I personally expect to try and reduce my trips across Hale’s Passage. I was trying to do that before the rates increased just because  there are real costs every time you get in your car and start driving. But I wonder if all the consequences that Rich suggests could happen will come to pass? And, I wonder if we can blame the county for the economic problems we will inevitably face in the coming years.

Here’s his list of the social and economic impacts of proposed fare increases
 Many residents will leave the island.
 Daily commuting will become increasingly unfeasible.
 Rental properties will be increasingly vacant, posing new financial burdens on owners.
 Lower and middle income families will leave the island.
 School enrollment will drop.
 Island businesses, always at the margin, will lose customers.
 Island workers will lose jobs.
 Islanders will spend less money in the county economy.
 Property values will drop, reducing island tax revenue for the County.
 Total fare revenues will decline substantially after an initial rise.

I argued in an earlier post that we already have a significant cost for driving to Bellingham in a private auto. The amount is disputable ( I guessed approximately $36) but the fact that it is a significant cost is indisputable.

The way we operate in this country (and county) is to decide where we want to go and when we want to go there, then get in our personal vehicle, very often by ourselves, and drive there. Damn the cost. This is true as much on Lummi Island as anywhere. Driving in Seattle, for example, the commuter lane (which requires only 2 people in a car) is virtually empty.
We don’t give much thought to combining trips, sharing rides or eliminating unnecessary trips. We mostly don’t think at all about riding the bus. Of course, when you get off the ferry at Gooseberry Point you are a long way from anywhere you really want to be and don’t have any good options, given the poor bus schedule, other than private auto. Unfortunately, the majority of the people on the island, according to PLIC, want to get off at Gooseberry and for the next 50 years.

Rather than look at the ferry rate cost from the viewpoint of elasticity, why not consider how sustainable in the long term taking private autos via Gooseberry Point will be? Again, what additional problems will we have to deal with if gas double or triples, becomes less available, or the parking lot at Gooseberry disappears?

We spent a lot of time worrying that the Lummis wouldn’t let us land at Gooseberry. Now we are worked up about the cost of landing at Gooseberry and there is speculation at to dire consequences. I sure don’t know what would happen but let me take the list that Rich Frye proposed and mess with it a bit:

 “Many residents will leave the island.” (People come and go for lots of reasons. There’s always a lot of movement on and off the island. In the midst of all the turmoil a few people have bought property here and made decisions to build. I doubt there would be a mass exodus based on a ferry rate increase. Mostly people will be pissed off that they have less discretionary income. Unfortunately, homeowners have less mobility than renters. It’s hard to sell property right now because the real estate market is continuing its sharp decline).

 “Daily commuting will become increasingly unfeasible.” (If the rate increase is that onerous, perhaps commuters will work out car pooling arrangements. I’ve car pooled before on a 30 mile commute and it certainly has its minuses but it does save money. Anyone who still has a decent job in this economy will try and find a way to get to work).

 “Rental properties will be increasingly vacant, posing new financial burdens on owners.” (The general economic situation will  result in lower rental rates. Long term I’m going to guess there will be more people renting. As a landlord, I’ve had to lower rates to keep tenants. Perhaps this could be a good thing for renters. Property owners should get ready for less rental income with or without a ferry rate increase. We’re all going to be facing financial burdens we haven’t thought of yet).

 “Lower and middle income families will leave the island.” (Lower and middle income just about covers the entire island population. People make adjustments. If island living is important they will figure out a way to stay. There are lots of costs that could go up. Others might go down. This is where we get into the discussion of resilience).

 “School enrollment will drop.” (Historically, I believe it’s gone up and down. It’s even gone up in years that ferry rates have gone up).

 “Island businesses, always at the margin, will lose customers.” (Island businesses have been affected and will be affected more by the general economy because the few businesses we have rely on tourism. There’s definitely been a lull. Things may not improve. Then again, Islanders may decide it makes sense to spend more money with island businesses than to go to town for fun. People who live in the local area may decide it’s better and cheaper to vacation locally).

 “Island workers will lose jobs.” (I don’t have the figures but I’m guessing that we probably have more workers involved in construction than anything else. Construction is down because the economy is down. Housing is down. Saw some ready mix trucks on the ferry last week, but activity is way off because of the general economy. The economy will have a greater affect on island jobs than ferry rates. Now that Canada is facing a slump all of Whatcom County will be affected).

 “Islanders will spend less money in the county economy.” (Hard one to evaluate. We might spend more per trip and end up spending just as much as we do now).

 “Property values will drop, reducing island tax revenue for the County.” (Property values are dropping like a rock the ferry notwithstanding. Organizing an island wide reassessment would be a good project for PLIC once the ferry thing is resolved).

 “Total fare revenues will decline substantially after an initial rise.”(I agree).

Do I think the County is on the right track with ferry rates? Well, there’s politics involved here. And, of course, the Lummis have the upper hand. But, more important, we’ve never had the discussion about what the best, long term, most sustainable solution is for transportation to and from the island.

Gunar Andersen who has made a couple comments to this blog (which weren’t very clear) is very clear in this comment on the Ferry Forum and elaborates his position nicely with some excellent thoughts on the subject of community sustainability.

I like the following piece from the November issue of Working Waterfront-Inter-Island News, the newspaper of the Island Institute that serves the Maine islands. It’s in the “Cranberry Report” from the Cranberry Islands written by Barbara Fernhald:

“In the Town of Cranberry Isles, any commute to the mainland begins and ends with a boat ride. I daresay all of us who live on the islands do so because it is just where we want to be. We like living here. We accept the daily awareness of water separating us from mainland activities. We choose the quiet the beauty and the close-knit community. But the choice comes with the price we pay for lifestyle with the limitations of the passenger ferry schedule. This is not such an issue in the summertime when two ferry companies with expanded schedules serve the island communities. In July and August travel by public transportation can be easily achieved between the hours of 8 AM and 6 PM allowing time to spend the day in Bar Harbor…before catching the last boat home. A number of people keep small outboards in the water until the weather changes, and travel between islands and the mainland is almost convenient.”

The writer goes on to explain the schedule, the fees and the adjustments island residents make during the seasons as schedules change.

The Maine Island are struggling with sustainability with blows to their lobster industry and working waterfronts. But they seem to be far ahead of us in the area of adaptability and resilience. I continue to enjoy reading about islands that seem to thrive and survive even without a car ferry. Life goes on.


  2 Responses to “Sustainable Economics”

  1. Even big Whidbey Island with 40k population has ferry issues. Fares are constantly increasing. Cuts in service at night. Tourists don’t come if the crossing is too difficult. The scale is far different: The Whidbey ferry carries a million passengers a year. And there is Deception Pass Bridge at the north end (It’s 70 years old, however). What we do having going for us is the locus of the county seat, a Naval Air Base, and lots of squeaking wheels.

  2. Some of my thoughts on the topics you raised:

    The data is from 2000, but according to census data the percentage of employed people on the Island who work in construction is only about 10%. I’d guess it’s probably less now with recent economic factors. By far the largest group, over 50% of those employed, are in professional and management occupations. Here are the figures:

    Brad at the Islander thinks that a lot of single males have already left the Island. They used to be a significant part of his business, but they just aren’t there anymore. They may have accounted for some of the construction employees, and probably accounted for some rentals as well.

    It’s important to keep in mind that the majority of the proposed rate increases has nothing to do with the Lummi Indians. The increase in County costs accounts for more than half of the proposed increases. Much of the County increase is due, in my opinion, to accounting changes. Things not previously considered operating expenses are being lumped into the total now, especially things previously considered capital expenses.

    Islanders will spend less money in the County economy (if you mean businesses) because they will be spending more TO the County government via higher ferry fares.

    I agree that people won’t be leaving the Island in large numbers (assuming renters who wanted to have already left) for the simple reason that they are homeowners. As you noted, it is already very difficult to sell homes so people can afford to leave. There are people already in that position before the rate increases.

    That’s the reason I think it is critical to keep the differential between passenger and vehicle/driver fares. If I own a home and I have a family and I can’t afford to make the trips to town I need to, what are my options? Rates have increased extremely quickly at the same time the housing market was falling apart. If people are suddenly not able to afford even the passenger rates, some may face financial ruin, such as foreclosure, producing exactly the effects on property values that Rich predicted.

    I think the drop in school enrollment will be more than the typical ups and downs, primarily because families will be hit the hardest by the proposed fare increases.

    It just seems foolish to me for the County to raise rates to protect the Road Fund in a way that ultimately causes a greater loss in property taxes to the General Fund.

    The limited hours of the Maine island would definitely hit our Island very hard. For one thing, employees at the hospital (and there are quite a few here) have to make a shift that starts before 8am (I think it’s 7am, but I don’t remember for sure. Might be 7:30am). Many others have 8am start times. That means our ferry needs to start running by 6am. Also, keeping small boats in the water year round isn’t feasible here because we have no protected small boat harbor.

    Which brings up my final point: in comparing us to other Islands, we must always ask about two things–1) what transportation infrastructure does the other island have (such as boat harbor, flexible docking structures so that passenger and vehicle ferries can land in the same day, landing strip for small planes, etc.); and 2) what goods and services are available on the island (for instance, can the island generate its own electricity, if necessary? are groceries, banking, medical services, etc. available? does the island have any significant employers, such as a fish processing plant?)?

    Without including those two factors, it’s difficult to make a meaningful comparison of transportation services.

    In most cases, for our island, I agree with Rich’s assessment.

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