In addition to cutting university budgets (15.5% is the latest number), the state of NC is proposing to cut ferry budgets. Both proposals are efficient if the supplier is allowed to raise prices. The Ferries are being allowed:
If the proposed transportation budget is adopted by the full General Assembly and Gov. Bev Perdue:
* DOT will be required to collect tolls on its four free ferry routes, and to raise rates on the three ferries that charge tolls now, probably starting in early 2012. The budget requires DOT to increase ferry toll revenues by $5 million during fiscal year 2011-2012, which starts in July, and by $7.5 million the next year. DOT is conducting a traffic and revenue study now, to help determine how high the new ferry tolls will be.
DOT will have to raise rates on the routes tolled now – two across the Pamlico Sound, linking Ocracoke Island to the mainland at Swan Quarter and Cedar Island (now $15 per car), and one across the Cape Fear River between Southport and Fort Fisher ($5).
And for the first time, riders also will pay on routes that now are toll-free:
- Currituck to Knotts Island across the Currituck Sound.
- Bayview to Aurora across the Pamlico River
- Cherry Branch to Minnesott Beach across the Neuse River
- Hatteras to Ocracoke Island across Hatteras Inlet
I'm not sure why these ferry rides were ever free unless there are politically important reasons to subsidize visits to these destinations. I can think of phosphate mining in Aurora and tourism at Ocracoke but I'm stumped on the other two. Anyway, a free ride is both inefficient and inequitable. Free is inefficient because passengers will catch a ride as long as the benefit of a ride is positive while the additional costs of a ride are ignored. Free is inequitable because the cost is spread among millions of people who never catch a ride.
Pricing a ferry ride is similar to the park pricing problem.
Note: NC universities are allowed to raise tuition but there is an annual cap on the amount, something like 6%.