Ferries voice relief after Senate moves to force payout of $1.3 million in subsidies
By MEGAN POINSKI
Tuesday, December 11th 2007
Inter-island ferry service is in no danger of being cut back or curtailed after the Senate approved more than $1 million in subsidies by legislative override last week, ferry companies say.
Senators placed the subsidies - $500,000 for V.I. SeaTrans, which has a franchise to run ferries between St. Thomas and St. Croix, and $530,023 for Transportation Services of St. John and Varlack Ventures, which jointly have the franchise to operate ferries between St. Thomas and St. John - in the Fiscal Year 2008 budget. Gov. John deJongh Jr. line-item vetoed the appropriations, saying that while he wanted to work to preserve good ferry service, the subsidies would knock the budget out of balance.
In early November, ferry company officials threatened to curtail the franchise route between St. Thomas and St. John citing that the law requires the government to subsidize the public transportation service for operating costs not covered by revenues from fares - an obligation that the government has not been meeting. Talks have been ongoing between ferry and executive branch officials. Talks continued on Thursday -Â hours before 11 senators voted to override deJongh's veto of the subsidies.
With the Senate override, the ferry companies are guaranteed their money. Claudette Ferron, attorney for Transportation Services of St. John and Varlack Ventures, said that this means there is no immediate threat of the companies cutting service.
"We can only work with the resources we have," Ferron said. "We thank the government for getting us past this crisis and the Senate moving to continue the funding so we can maintain service. Now, the prospect of those kinds of measures is lessened."
V.I. SeaTrans managing director Marjorie Smith said that she was pleasantly surprised by Thursday's override, and it puts the company in a good financial position for the time being.
"It gives us a sense of relief because nothing has been accruing here but debt," Smith said.
Smith said V.I. SeaTrans has been more behind the scenes than the St. Thomas-St. John franchises, but they have always needed the funds too. The company has had to contend with repairs to its boats, plus steeply rising fuel costs. V.I. SeaTrans spends $600,000 on fuel costs alone, Smith said.
Ferron said that people do not understand the ferry companies' fuel consumption - and the high costs that they have to bear. Last month, the Public Services Commission granted the V.I. Water and Power Authority a 22.3 percent increase in the Levelized Energy Adjustment Clause, which is the charge on monthly bills to recoup the utility's fuel costs. Ferron said the ferry companies are second to WAPA in their fuel consumption, but the last rate increase they were granted was in 2006.
"Fuel costs have increased 50 to 60 - or even more - percent since then," Ferron said. "Everyone is feeling the crunch."
Both Ferron and Smith said that their need for a subsidy has everything to do with maintaining a public service and nothing to do with wanting to increase profit margins.
Public Works Commissioner Darryl Smalls said that through meetings with the ferry companies and by examining financial documentation, he realized there was adequate justification for a subsidy. While he apprised the Senate of the need, he said, he did not ask them to override the governor's veto of the subsidies. The governor had a valid concern when he vetoed the appropriation, Smalls said, and a coordinated effort should have been taken to ensure that the funds were available.
Government House spokesman Jean Greaux Jr. said that with the way discussions between ferry companies and the administration were going, subsidies were likely to have been proposed for the ferry companies. However, Greaux said, the concerns the governor had with the budget staying in balance are still valid.
"That process could have been allowed to go forward," Greaux said. "We would have got to that step eventually. I don't want to say the Legislature pre-empted the governor. It is a step they took, and we will live with that."
Sen. Shawn-Michael Malone, who brought the override forward, said that senators were drafting amendments in advance of Thursday's session to give the ferry companies money. When he heard about the progress of the discussions between Smalls and the ferry companies, he decided to bring the override forward.
"We were going to do it anyway," Malone said.
Ferron said that this subsidy will not cure all of the financial issues faced by the St. Thomas-St. John franchisees, and she will continue trying to get more adequate funding from all sources possible. The responsiveness of the deJongh administration and the 27th Legislature, she said, make her hopeful that the companies will get the money realistically needed to operate.
"I hope we can continue with progress on those fronts," Ferron said.
- Contact Megan Poinski at 774-8772 ext. 304 or e-mail email@example.com.
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