POULSBO — Six years after losing the bulk of its capital projects funding when the motor vehicle excise tax was repealed, unpredictable increases in fuel costs have the state’s ferry system seeing red.

“The tax was the basis of our capital funding and we lost the equivalent of $100 million a year,” Washington State Ferries system budget director Bill Greene told an audience of about 30 people gathered at the Poulsbo Library Wednesday afternoon.

Greene and WSF operations manager Traci Brewer-Rogstad, who substituted for ferry director Mike Anderson, shared the spotlight at the Kitsap County League of Women Voters luncheon, which focused on transportation issues.

Even though the loss of the motor vehicle excise tax reduced its capital budget, WSF is now facing an ongoing battle with rising fuel costs, Greene said.

“We are falling short $28 million (this year) due to increases in fuel costs,” he said.

WSF’s original estimate of $58 million for fuel for the 2005-2007 biennium budget was based on estimates from March 2005. A budget amendment has already been drafted to cover the shortfall, Greene said, adding, “There’s not a lot of control we have over our fuel budget and whether it will find its way into the fare box.”

Last year, a fuel surcharge was discussed by WSF officials, but the state’s transportation committee and legislature found a way to avoid it, Greene said, noting that fuel costs have affected the system’s ability to maintain the 80 percent target set by the legislature.

“In 2004, we were close to 80 percent but now we’re down to 70 percent,” Brewer-Rogstad said.

Competition for funding from the state has grown more fierce as the ferry system now vies for cash against bridges, roads and other statewide transportation projects for funding, she said.

“It’s a battle we’ll have to continue to face each year,” she said. “We continue to compete for funds as much as we can.”

Because of the funding battles, WSF has received more federal grants than at any other time during its history, and most of those grants haven’t cost the ferry system any additional operating dollars, Brewer-Rogstad said.

Even though WSF is locked in a continuous battle for funding, plans remain to add four new boats, which should be unaffected if the gas tax is repealed by Initiative 912 in the general election, Greene said.

“Only the fifth vessel will be impacted and is directly at risk,” he said. “However, there are a lot of indirect risks that we don’t know about.”

As the gas tax nears a vote, discussion in Olympia has centered around re-prioritizing all of the affected projects.

“We have about $80 million at risk on Bainbridge Island, but most of that is in the future between 2013 and 2017,” Greene said.

Ferry terminals Port Townsend and Fauntleroy could also be affected if the gas tax is repealed, Greene said.

The Bainbridge-Seattle route carries 18,000 passengers on an average day, Brewer-Rogstad added.