“As the argument heats up in Olympia over ferry fares, those closest to the issue are sounding warnings that fares are only one part of the funding crisis facing the ferry system.The unaddressed part of the puzzle is capital funding – repairs, replacements and maintenance. And the lack of capital funding can stop the ferry system dead in the water.The system has lost 75 percent of its capital budget, which pays for repairs and maintenance. With all the various Coast Guard rules, I don’t see how the system could operate for even a year without that money, said Alice Tawresey, Bainbridge resident and chair of the ferry system’s Tariff Policy Committee.The crisis was brought about by elimination of the value-based Motor Vehicle Excise Tax, which was repealed first by voter passage of Initiative 695 in 1999 then by legislative repeal of the tax in 2000. The MVET would have provided almost $100 million per year for construction, repair and maintenance – more than three-quarters of that budget – and roughly $30 million a year for operations – some 20 percent of that budget.Part of the answer, at least on the operations side, will be substantial fare increases. Tawresey’s committee recommended an immediate 20 percent increase in fares, followed by additional increases sufficient to recover 80 percent of ferry operating costs from fares within six years.Under that proposal, a passenger-only round-trip fare between Bainbridge and Seattle would increase from the current $3.70 to $4.50 immediately, while care-and-driver fares would go from $6.50 to $8 each way. The Tariff Policy Committee has been told to go public with its recommendations, which it will do in a series of hearings. The Bainbridge fare hearing is slated for 4-7 p.m. Feb. 28 at the Winslow terminal.Rep. Beverly Woods, (R-Poulsbo), says those proposed increases are unnecessarily high. According to Woods, some $26 million in repair and maintenance costs that should be in the capital budget appear in the operational budget.If you put those costs in the capital budget, we’d be at 80 percent fare-box recovery right now, she said.Her math is a bit off, according to Washington State Ferry System spokesperson Pat Patterson, who said the annual operational budget is a little over $140 million. But the more important question, Patterson said, is where does Rep. Woods say the repair and maintenance costs should come from?While the Legislature does not set the fares, it must pass legislation to enable the fare increases being discussed. Under the voter-passed spending caps of Initiative 601, fares can rise only as fast as the level of inflation — 2.7 percent this year — without legislative approval.To permit the kind of increases Tawresey’s committee has recommended, the legislature is considering a bill that would permanently exempt ferry fares from the 601 spending limits. All six witnesses at a Wednesday hearing on that bill testified favorably, not because they welcome fare increases, but because they do not believe there is a choice.Woods said she is not in any hurry to exempt fares from the spending limitations.We need to determine what is the responsibility of the State of Washington, and then the state has to step up to the plate and make good on it, she said. Then we should look at fare increases, and not put the whole burden on the back of the commuters.As those comments illustrate, the debate over fare increases is, in reality, an argument over what proportion of the total ferry system cost should be borne by the users, and what proportion by the state – that is, by the taxpayers in general. Left unresolved is the issue of where the state will come up with the money to pay its share, whatever that may be.And nobody is in any hurry to touch that issue – not Gov. Gary Locke, nor the Legislature.Gov. Locke’s budget recommends continuing the $20 million annual general-fund appropriation enacted last year as a stop-gap funding measure. That appropriation restores the majority of the MVET money that had been dedicated to ferry operations, but does not address the capital-cost problem.The governor’s Blue Ribbon Transportation Committee recommended a statewide package of transportation improvements, and suggested a number of possible revenue sources tied generally to transportation use, including a higher gasoline tax, removing the sales-tax exemption for gasoline, and imposing a weight-based fee on vehicles.Under Gov. Locke’s budget proposal, ferry capital costs would come from those new revenue sources. But neither the governor nor the legislature has identified specific revenue sources, and the governor says whatever source is selected should be presented to the voters for approval.We’ll have to look at all the options and think outside the box, Woods said. I’m not prepared today to say what funding sources we should look at.Rep. Phil Rockefeller, (D-Bainbridge Island) questioned whether ferry riders should volunteer to pay higher fares without some assurance that the legislature will address the system’s capital needs. He is therefore reluctant to immediately approve lifting the spending limitation.I would be very unhappy if we made it possible for much higher fares to be charged, then the system had to shut down anyway on July 1 because there was no capital budget, he said.Tawresey says the problem must be addressed immediately.Arguing about what costs should go into what category is rearranging deck chairs on the Titanic, she said. The ferry system is very fragile. If we don’t come up with the money through fares or taxes, we won’t have a system. “