JULIE LANE PHOTO | South Ferry president Cliff Clark said a rate hike is the last thing his company wants to be asking for.

The Suffolk County Budget Review Office is recommending that the legislature approve South Ferry’s request for rate increases averaging 12.2 percent. In a report released Monday, the BRO called the requested rate hike — South Ferry’s first since 2008 —  “reasonable, especially given rising costs for fuel, personnel and health insurance expenses, attrition in ridership and the need for capital improvements to the vessels and landings.”

The BRO asked that a proposed passenger surcharge, from which Islanders would be exempt, be totally dedicated to capital improvements and South Ferry President Cliff Clark agreed. In response to a request from the town’s Ferry Advisory Committee, Mr. Clark also said Monday at a Town Hall forum on the rate request that he’s amending the original proposal to waive the surcharge for passengers of people with worker commuter passes.

“Without rate relief,” the BRO found, “and assuming that the critical portions of the capital plan move forward, operating losses may be expected to continue in 2012, with greater annual losses in 2013 and beyond, even without continuing volatility in fuel prices.”

About a dozen people attended the public forum, held by the town’s Ferry Advisory Committee on Monday night, including four South Ferry representatives; Julie Ben-Susan and Cathy Driscoll from North Ferry; BRO Senior Legislative Analyst Craig Freas; and County Legislator Ed Romaine. South Ferry reported an operating loss in 2011 of $167,589. The company also had a loss the year before.

Casual travelers and commercial truckers continue to subsidize the rates Islanders pay, Supervisor Jim Dougherty noted at the meeting.

The supervisor, speaking the next day at the Town Board work session, said the BRO’s report had given “a very solid endorsement of residential discounts.” He has complained in the past that the BRO, under a previous leader and staff, used to argue that special resident rates were unfair to non-residents. Now the BRO agrees “they are essential” to Islanders, he said.

He praised South Ferry for having provided “audited financials” for the past two years, which he said “sets an irreversible precedent going forward.” The supervisor wrangled with North Ferry last year when it refused to open its books for inspection.

Mr. Dougherty said Tuesday that South Ferry had  met “all but one of the Ferry Advisory Committee’s six recommendations” for modifications to its rate request. They included maintaining the no-charge for passengers policy for commuters as well as residents.

“There’s nothing that we like less than to be here doing this,” Mr. Clark said Monday night about asking the county for rate increases. In response to a question from resident Chip Edwards about why rates are different on North and South ferries, Mr. Clark said both are independent private companies and can’t “collude” on rates.

Mr. Edwards asked why can’t the state’s MTA tax imposed in 2009 be used to subsidize ferry fares.

The Metropolitan Transit Authority is a public entity while the ferry services aren’t, Mr. Clark said. Mr. Freas added that questions about the MTA tax, which was rolled back in December 2011, on about 300,000 small businesses and self-employed New Yorkers, is an issue for state legislators, not the county.

Ferry Advisory Committee member John Needham wanted to know if the rate increases were granted would they mean an equivalent increase in profits for the company.

Hardly, Mr. Clark said. South Ferry has a balloon payment on its fleet mortgage that comes due in 2019. Money not needed to cover increased operating costs would go toward paying down the principal so that a major rate increase won’t be needed to meet the higher payments. The mortgage was renegotiated last year to reduce the company’s monthly costs, Mr. Clark said.

Bill Clark noted that he and his brother were raised by Depression-era parents who “deplored debt.” That attitude has guided their approach to financing the ferry service, he said.

As for implementing a paperless ticketing system — something Mr. Clark has talked about for years to increase efficiency on the deck — he said the software is in place but the hardware isn’t. In the meantime, ferry users will have to continue to buy tickets either onboard or at the ferry office.

The Suffolk County Legislature had a hearing on the rate increase in Hauppauge Tuesday and kept it open, to be continued in Riverhead on June 19, Legislator Ed Romaine said. He anticipated that a vote will be held about an hour after the June 19 hearing.

He noted that legislators can ask questions about the rate proposal but can’t alter it.

He joined Mr. Clark in requesting that any questions or suggested changes in the proposal be submitted to him or Mr. Clark as they would have to be submitted to the County Legislature by 1 p.m. on June 13, the last time that the proposal could be amended prior to a vote.

At Monday night’s meeting, Mr. Romaine said he was impressed by South Ferry’s capital plan. “If you don’t reinvest, that’s when bad things happen,” Mr. Romaine said.

Selected South Ferry proposed rate changes

• The non-resident charge for cars, vans and 4-wheeled pickup trucks under 21 feet would go from $12 to $14 one-way and from $15 to $17 round-trip.

• Shelter Island residents, who pay $52 for a 10-round-trip book, would pay $60 and non-residents would pay $98, up from $85.

• A book of one-way non-resident tickets would cost $57, up from $50, while non-residents would pay $80, up from $70.

• Off-Island workers would pay $25, up from $22, for a five-day commuter ticket; the six-day ticket would rise from $26 to $30 and the seven-day ticket would cost $36, up from $31.

• Residents or workers with commuter passes would not be charged for passengers. Non-residents would be charged $1 each way for passengers, the same fee paid by walk-on passengers.

• Riders of two-wheeled motorized vehicles would continue to be charged $7 for a one-way trip but the round-trip would go up from $8 to $9.

• Bicyclists would continue to pay $4 one-way and $6 for round-trip.