Washington Gov. Ferguson proposes $1 billion to buy 3 new ferries

SEATTLE — Gov. Bob Ferguson wants to spend $1 billion to buy three new state ferries and an additional $150 million to help keep the oldest boats in Washington State Ferries' fleet on the water as long as possible before those new vessels arrive.

If the proposal is approved by legislators, the state would have six hybrid-electric boats in the pipeline, nearly halfway to its goal of replacing 13 aging, diesel-powered boats before 2040.

This system has lacked sufficient investment in the last decades. We’ve under-invested in new vessels. That can only go on so long," Ferguson said in an interview. "As long as I'm governor, investments in ferries will continue to be a high priority."

Ferguson's plan, part of his supplemental budget proposal being released Friday, comes at a perilous time for the state ferry system and as state finances are strained. The ferry fleet has just 21 vessels with hundreds of millions of dollars in deferred maintenance. After signing a two-year operating budget that dealt with a gap of around $16 billion over four years, Ferguson this month warned legislators not to pursue any increases in sales or property taxes to deal with another multibillion-dollar shortfall during the 2026 legislative session beginning Jan. 12.

Ferguson said the state's transportation budget is in good health, and that the funding for new boats and preservation would come from the state's borrowing power. His budget assumes money from selling bonds would go into a newly created Preserve Washington Account, and these investments would be paid out of that account.

Details on who would build the boats, or when they're expected to be in service, remain unclear. Besides lawmakers, the state Office of Financial Management will weigh in on whether the state must open a new bidding process or if it can amend the existing contract with Florida-based Eastern Shipbuilding Group, the company Ferguson chose in July to construct the state’s new generation of electric ferries.

The new ferry money, however, wouldn't go toward the three boats in Eastern's contract, which are paid for with funds collected from the state's Climate Commitment Act, which brings in money from polluters, and from the 2023 Move Ahead Washington transportation budget.

WSF Chief Steve Nevey, who was given a more prominent role in Ferguson's Cabinet than he previously had, said the state was running at full domestic service, but barely. With 18 boats in service, the agency doesn't have enough vessels yet to sail to Sidney, British Columbia, and has just a three-boat cushion for maintenance both planned and not.

This month, for example, the 58-year-old Kaleetan suffered "catastrophic engine failure," Nevey said. The 144-car vessel will be out for all of December before returning to the San Juan Islands run.

The additional preservation money, dedicated to work over the next six years, is meant to avoid those kinds of breakdowns. It adds to the $282 million already put toward vessel maintenance, but is focused on the fleet's oldest boats: the Tillikum, built in 1959, and the Kaleetan and Yakima, both dating to 1967.

As has been the case for years, the ultimate goal is to completely electrify and modernize the fleet by 2040, a cornerstone of former Gov. Jay Inslee’s environmental legacy. Ferguson said he's "staying the course" with electrification, a $6.2 billion endeavor that includes retrofitting six diesel ferries to hybrid electric, building 16 new hybrid-electric vessels and adding charging stations to 16 terminals.

The work began with the electrification of the Wenatchee by Vigor, which was expected to take about a year and cost $50 million. Instead, the state paid Vigor $86 million and the project took nearly two years.

The delayed and costly conversion led Ferguson to put his first stamp on the ferry system.

In March, Ferguson said he was shelving the project to convert boats to electric power until sometime after the 2026 FIFA World Cup comes to the region, a move he predicted would return the fleet to prepandemic service levels of 18 boats over the summer, which it did. The contract with Vigor to convert one to two more boats has been put on hold, but not cancelled.

Since returning to the fleet, the Wenatchee has been out of service a handful of times, once for nearly a month and most recently on Tuesday after the boat's crew discovered an issue with a power pack on one of its engines. The pack was replaced, and the vessel ended up missing just three round trips before returning to service for the 10:25 a.m. sailing from Bainbridge to Seattle.

Regardless, having 18 boats sailing contributed to the system providing a projected 20 million rides this year, the first time it's reached that number since 2019.

In July, Ferguson chose Eastern Shipbuilding Group of Panama City, Fla., to construct the three new electric ferries over Nichols Brothers Boat Builders, in Freeland, on Whidbey Island, opting for a lower-cost bid over supporting Washington’s local shipbuilding industry.

Eastern’s bid estimated the first boat would cost $251.3 million, and put its total bid for three boats at $714.5 million.

Though any decision is a ways off, Nevey said that amending Eastern's contract to include three additional boats "may drive down the price" by allowing the company to hire more long-term workers and "buy all the steel at today's prices."

The first boat built by Eastern won't be delivered until 2030, at the soonest. No existing ferry will be retired until WSF gets a fourth new vessel.

That's why Ferguson wants to put more toward vessel preservation, to keep the Tillikum, Yakima and Kaleetan sailing. If a fourth boat is delivered in 2035, the Tillikum will be more than ready for retirement at 76 years old.

The need for new boats is obvious, and Ferguson said the state has "the resources in our budget to do this, adding that the transportation budget is in better shape than the operating budget's multibillion dollar hole.

Ferguson’s proposal will go to budget writers in the House and Senate. Any budget approved during the session will adjust the two-year spending plan approved earlier this year that took effect July 1.