Lawmakers seek audit of ferry system amid funding, sustainability concerns
By Sam Walker, samwalkerOBXnews.com
North Carolina lawmakers are calling for a comprehensive audit of the state’s ferry system, citing rising costs, aging infrastructure and growing concerns about long-term sustainability.
A report adopted April 2 by the Joint Legislative Transportation Oversight Committee recommends directing the Office of the State Auditor to conduct a performance audit of the Ferry Division within the N.C. Department of Transportation.
The proposed legislation may be introduced during the General Assembly’s short session, which is scheduled to begin later this month.
If approved, the bill would require a detailed review of ferry finances, operations and long-term planning, including whether routes, schedules and funding models can be adjusted to “maximize revenue and reduce costs.”
The proposed audit would examine spending practices, evaluate operations and maintenance, and explore new revenue options, with a final report due to lawmakers by Oct. 1.
Lawmakers say the findings could shape future decisions on funding, fares and service levels — and determine how North Carolina maintains one of its most critical, and most debated, transportation systems.
The recommendation follows months of scrutiny by lawmakers, who have openly questioned whether the current funding system is financially viable.
“I’ve never seen anything close to a decent business model for it,” said Sen. Bill Rabon, R-Brunswick, during committee discussion, while acknowledging the system remains essential for coastal communities.
The state ferry system, the second largest in the nation, operates eight routes and carries about 1.47 million passengers annually.
“For a lot of coastal communities, ferries aren’t a luxury — they’re their highway,” said Rep. Frank Iler, R-Brunswick.
But maintaining that “highway” is becoming increasingly expensive.
Ferry Division Director Jed Dixon told lawmakers at a hearing last fall the system is under growing strain, with aging vessels and limited maintenance capacity creating operational challenges.
“We’re at the place where the fleet is aging faster than we can service it,” Dixon said. “If we don’t get ahead of these needs now, we’ll see more breakdowns, more interruptions and higher long-term costs.”
Roughly 70% of the fleet is more than 20 years old, and the system requires more than $92 million in additional funding for operations, maintenance and capital improvements, including upgrades to the Manns Harbor Shipyard.
At the same time, lawmakers remain divided over how to pay for those needs.
The Senate budget proposal for the fiscal year that began last July includes new tolls on the Hatteras–Ocracoke and Currituck Sound ferries, and doubles existing tolls for the Ocracoke–Cedar Island and Ocracoke–Swan Quarter routes and the Ocracoke Express passenger ferry.
Senators argue tolls would generate about $6.4 million annually for vessel replacement.
The House budget contains no new tolls or increasing of current toll rates.
The General Assembly has still not passed a full budget, leaving agencies to operate with last year’s spending plan, and North Carolina state government has never gone this long without a budget.
Last fall, lawmakers passed a $7 million stopgap measure that prevented a proposed 60 percent reduction of ferry runs statewide.
That package included $3 million for maintenance and $4 million for Coast Guard-required dry dock work, including repairs to the M/V Sea Level.
Several powerful lawmakers have also questioned the level of taxpayer subsidy supporting certain routes.
“We’re subsidizing out-of-state visitors at $230 per vehicle,” said Sen. Vickie Sawyer, R-Iredell, co-chair of the Senate Transportation Appropriations Committee. “It’s not sustainable.”
Rabon echoed those concerns, pointing to the high cost of maintaining service to smaller populations.
“These numbers don’t add up, and we cannot ignore them,” he said.
And some on Ocracoke are preparing for the reality that fares will eventually be charged on the Hatteras Inlet route, and increase on the mainland runs.
A local advocacy group, the Ocracoke Access Alliance, is asking that residents, business owners and community leaders have direct involvement in the process, while protecting full-time residents with exemptions and maintaining reliable access to the island.
They have also floated a proposal of charging $10 one-way on the Hatteras-Ocracoke route, raise the Cedar Island and Swan Quarter routes to $20, and give Ocracoke residents free passes.
Meanwhile, Currituck leaders and residents have consistently pushed back on a toll being charged on the Knotts Island route.
It is the only direct connection for students who attend middle and high school on the mainland without having to travel through Virginia.
Another Outer Banks transportation issue that was discussed last month by the oversight committee was N.C. Highway 12.
State and local leaders told lawmakers last month that repeated damage to N.C. 12 highlights a costly cycle of repairs, with hundreds of road closure days and tens of millions spent on maintenance and storm recovery in recent years.
They argued the current funding system favors emergency repairs over long-term solutions, even as estimates show more than $1 billion may be needed to address vulnerable sections of the highway and modernize ferry infrastructure.
Despite those concerns, including calls for more proactive investment and changes to transportation funding priorities, any action on N.C. 12 was not included in the committee’s recommended actions for the upcoming legislative session.
