Washington State Department Of Transportation – Failure Analysis

With all the media attention on the Washington State Department of Transportation (tolls, ferries, traffic, road work) recently, I wanted to dive into the actual financial figures and “try to figure out the system”.  We are all constantly hearing about the ferries losing money or the new 520 tolls starting soon.   It’s on every news channel and it’s a constant reminder of how much we’re losing and how we are going to need to generate more money to make all this work.  The question is, however, do we really need to generate more money?  Are the money problems with management or the process at which communication takes place?  It’s about time we give it a quick analysis to see what is happening. 

First, I am not claiming to know the transportation system in Washington State.  I am just looking at one official financial report (most recent I could find) and giving my honest opinion.

The report is for November 2010 and is based on approx figures.  It states for November 2010 our total revenue was 4.06 billion dollars.  From the pie chart at the top you’ll notice 49% off that revenue is from tax generated from fuel. 

49% of the Washington State Department of Transportation revenue is generated from Gas/Fuel – lets discuss this first.

I am going to jump right to the long term problem with this revenue generating business model.  As a state/country we are pushing for greener operations.  We see it everyday on the TV and new laws are being created to force companies to participate.  New electric vehicles are being manufactured and sold everyday and it appears to be a positive change.   However, this change means that the more we push for green and embrace it the less revenue we are going to have.  Less money goes to must have road repairs and that means less jobs.  I am and I hope you are for a more greener planet.  It provides less pollution and gives us more control over oil but do you see the problem here?  The faster we embrace a change for better (green) the faster revenues will drop.  If this is our biggest transportation revenue source and the Washington State Department of Transportation cannot make the budget work now – how is going to work when this revenue source drops to 25% or less?  That’s a problem and huge transportation financial gap.

Ferry Revenue

From the November 2010 report, it says we generated 301.3 million in revenue from the ferry system (good).  It also says we spent 359.2 million to support the ferry system (bad).  My math says we lost over 50 million for the month of November.  I’m disappointed the report doesn’t provide more details as to where that money was spent exactly (gas/management/repairs etc).  The public needs to know the details so change can be made to support the ferries.  It generates a good amount of money and we need to figure out where that money truly is going.

Rental Car Tax & Vehicle Sales Tax (Revenue)

The rental car tax revenue came to 43.7 million and our total vehicle sales tax revenue came to 54 million.  I didn’t expect these figures to be almost the same since when you buy a car the sales tax is usually thousands of dollars and rental car tax is under $10 dollars. 

In our next report we’ll discuss where our revenue is going.