Islander Toby Holmes remembers when it cost $7 to take his car on the ferry to Seattle. Holmes, who moved off Vashon after graduating from high school, moved back three years ago to raise his family and returned to a struggling ferry system with high fares.

And though he saves by riding his bright red Ducati motorcycle to his job at a digital marketing and webcasting company in Capitol Hill, Holmes says he is growing increasingly concerned about the system’s lack of funding and worries that continued service cuts and fare increases could drive up the cost of living on Vashon and even cause some to move away.

“I think it would have a devastating effect on the Island and local businesses as well as families,” he said.

Though Gov. Chris Gregoire’s recent proposal to create a regional ferry district was declared dead on arrival, with the chair of the Senate Transportation Committee refusing to even give it a hearing, state legislators say the proposal did bring attention to the system’s funding crisis. And as the Legislature continues to tackle the most difficult budget in decades, the cash-strapped ferries have risen high on their agenda, prompting a package of bills that encourage ferry reform, and some legislators say those are just the first efforts to address the problem.

Meanwhile, many Vashon residents are holding their breath, waiting to see if service reductions still on the table become a reality and if lawmakers produce a plan to dig the ferry system out of the hole, putting an end to a decade of service reductions and fare increases.

Holmes says fares have risen at a rate highly disproportionate to his other bills and that his family now carefully plans their trips to Seattle.

“Now we think, ‘Gosh, if we’re going to go over, we better get everything done so we don’t have to go for a couple weeks.’ … We plan ahead because it costs a lot.”

According to officials at Washington State Ferries (WSF), fares for the system’s nine routes began to skyrocket in 2000, after the Legislature voted to repeal the Motor Vehicle Excise Tax.

Since then, WSF has lost about $1.2 billion in what would have been dedicated revenue from the tax, and has transferred about $30 million a year from other parts of the state’s transportation budget to keep the ferries afloat.

To make matters worse, labor, fuel and shipbuilding costs have all outpaced inflation, and beginning in 2014, a boat is scheduled to go into retirement every two years for a decade. Even as WSF has cut operating and capital costs to the tune of about $28 million a year the past few years, riders have seen fares nearly double over the last decade.

Now, without a new source of revenue, the system faces a $180 million deficit in its operating budget over the next 10 years and an $865 million shortfall in its capital program — money desperately needed to replace aging boats.

Rep. Joe Fitzgibbon (D-Burien) said the ferry caucus — an informal group of legislators from ferry dependent communities — is now looking at the ferry system from every angle and brainstorming creative solutions to cut costs. Despite reductions implemented by WSF in past years, the caucus, he said, believes inefficiencies still exist in the system.

Fitzgibbon co-sponsored a bill introduced last week that would implement performance standards for the ferry system, holding WSF managers more accountable for on-time performance, cost reductions, project timeliness and even passenger safety. If after two years the system couldn’t meet set performance criteria, middle-level management of the ferries could be contracted out.

Fitzgibbon said that while it’s possible that private management could run the ferries more efficiently, the bill, which has a companion measure in the senate, is also meant to give current managers a clear path for improvement.

“It’s certainly an incentive for management to evaluate how they’re doing and figure out how they can do better,” he said.

Another set of bills introduced last week would cut labor expenses by bringing ferry workers’ compensation and benefits in line what those of other state workers.

Rep. Mike Armstrong (R-Wenatchee), ranking member on the House Transportation Committee and co-sponsor of one of the bills, said ferry workers have long benefitted from contracts that allow overtime and benefits beyond what other state workers see.

“I can tell you there are instances we’re trying to correct,” he said. “Things like a state ferry employee that makes $70,000 making $150,000 because of the way their contract is written. … We feel it’s time to put all state employees on the same level.”

Armstrong said that while none of the bills in the recent package would serve as a long-term fixes for the ferry system, they would work to make it run as lean as possible. He believes voters want to see more responsibility in the system before they agree to bail it out.

“We will need to work on some kind of revenue project before 2015, but a big part of that is to make sure we have accountability for the existing system. This is an opportunity for us this year to make some changes.”

However, Sen. Sharon Nelson (D-Maury Island), raised concerns about the bill.

While she agrees the ferries could be run more efficiently, she said she doesn’t believe limiting ferry workers’ ability to negotiate their contracts is the right approach.

“I believe we need to find efficiencies in system, but I don’t think we should be taking over collective bargaining as a blunt instrument. … I don’t want to be in a position where a bill means we’re not able to engage everyone,” she said.

Gregoire currently plans to transfer about $40 million from the transportation budget to the ferry system, in addition to proposed service cuts, to get the ferries through the 2011-2013 biennium. However, after that the future of the system is unclear.

Marta Coursey, a spokeswoman for WSF, said both Gregoire and David Moseley, head of the ferry system, have told the Legislature that the state cannot continue to bail out the ferries without a new source of funding.

“The governor and David are saying now, we have to solve the problem now. … David, as assistant secretary of the ferry division, has put everyone on notice and said we are in dire straights and have to address this this session,” Coursey said.

Though Nelson is unsure whether permanent funding will be established this session, she said the ferry caucus is working hard to find either a short-term or long-term funding solution.

“Different people are bringing ideas to the table,” she said. “I’m hoping out of that discussion we come forward with a package that helps the ferry system.”

Meanwhile, a small group of Vashon residents headed by Kari Ulatoksi, chair of Vashon-Maury Island Community Council’s Transportation Committee, is preparing to lobby for the Island’s service in Olympia.

Their goal, Ulatoski said, is to stress to the lawmakers that proposed service cuts on Vashon — reduced hours and reduced car capacity on the Fauntleroy-Vashon-Southworth route and the elimination of two roundtrips from the Point Defiance-Tahlequah route — would hurt Vashon.

They also plan to present a petition against service cuts signed by around 8,000 state residents, about half of them from Vashon.

Recent bills, Ulatoski said, have started conversation but fail to address the biggest need: long-term funding for the system.

“I know there’s a lot going on behind the scenes. I know our legislators are working really hard on it,” Ulatoski said. “These (bills) are really good starts. … We want to hear what else is coming down the pike.”

Holmes, meanwhile, is hopeful a solution for the ferry system will be found this session, but, he said, “I am less optimistic this year than I have been in the past. It feels like the resources available to the state are stressed thinner than before.”

Holmes added that he also thought last year’s passage of I-1053, which made it impossible to increase taxes without a two-thirds majority in the Legislature, could serve as a barrier to funding the ferries.

“While I’m concerned about potential cuts in the near future, I’m also concerned about sustainable funding in the future without a capital plan,” he said.

In the meantime, Holmes will continue to ride his motorcycle onto the ferry each morning, and, like so many other Islanders, will carefully plan his trips to Seattle.

“I really hope there’s a way out of it,” he said, “We’re really stressed to the brink right now.”