AWC Priority Issue:
Local Infrastructure Financing Tool (SB 5115)

The bill is scheduled for hearing on January 24 at 3:30 pm in the Senate Economic Development, Trade and Management Committee. AWC will have a panel testifying in support of the bill. We will also seek expansion of the competitive portion. Most importantly, the bill:

Increases the competitive portion from $2.5 million to $5.0 million;
Repeals the one per county prohibition on using this authority;
Eliminates an assessed value per square foot requirement; and
Provides several technical changes that will make the authority more flexible.

Creating and Funding the Freight Congestion Relief Account (SB 5207)

This bill would create and fund the Freight Congestion Relief Account for the purpose of improving freight rail systems and state highways used as freight corridors by imposing a fee on the processing of shipping containers. As the bill title indicates, a $50 fee would be collected on twenty-foot equivalent container units. This is estimated to generate $360 to $400 million a biennium. By comparison, a penny of gas tax generates approximately $36 million per year.

Expenditures from the account are to be used to provide congestion relief through the improvement of freight rail systems and state highways that function as freight corridors. Representatives of shippers and ports have raised concerns about this proposal, but have stated to the committee chair, Sen. Mary Margaret Haugen (D-Camano Island), that they are willing to work with the committee on pursuing alternative revenues. AWC will testify on the bill, seeking clarification to include city streets as part of the freight corridor definition.

Increasing State Indebtedness Limits for Transportation Projects (SJR 8211)

This bill will allow the state to issue bonds for up to 40 years on transportation structures instead of the current restriction of 30 years. This will allow the state to have more flexibility in funding bridges and, consequently, free up revenue for other transportation projects.

Modifying the Administration of Fuel Taxes (SB 5272)

Last year, the U.S. District Court for the Western District of Washington held that the state cannot impose vehicle fuel taxes on tribal lands (in this case, the Squaxin and Swinomish Tribes). This had two-fold implications: 1) tribes could choose not to charge for fuel at the same rate as the private sector and potentially lead to less state gasoline sales and gas tax revenues, and 2) the proposed remedy would affect distributors that lend terms of credit to their customers.

Last year’s proposed legislation, which was nearly identical to SB 5272, failed. Absent a legislative remedy, the Governor entered into an agreement that resulted in the two tribes imposing a tribal equivalent of the state gas tax, retaining 75% of the proceeds for tribal transportation purposes and remitting the remaining 25% to the state.

SB 5272 is likely to be a "work in progress." AWC’s position post-court ruling is:

A solution is vital to ensure certainty in a revenue stream that funds legislatively-designated and voter-affirmed projects.
Any "remedy" must include consideration to local governments. Our concern is that any proposed compact does not reallocate the local share of the state gas tax.

Creating a Surcharge on Vehicle Liability Insurance Policies (SB 5147)

This bill will place a $2 surcharge per insured motor vehicle to pay for emphasis patrols in high-accident county road corridors. AWC will testify with concerns, maintaining that cities have high accident corridors, too.

Promoting Innovation Partnership Zones (HB 1091/SB 5090)

These bills would require the director of the Department of Community, Trade and Economic Development (CTED) to designate innovation partnership zones. Development of innovation partnership zones is a strategy to promote research-based firms and industries in specific areas of Washington State that become globally-recognized as hubs of innovation and expertise. Their creation would be based on specific criteria.

Additional sales and use tax would be imposed to finance public facilities serving innovation partnership zones. HB 1091 is scheduled for public hearing on January 24 at 8:00 am in the House Community & Economic Development & Trade Committee. SB 5090 will be heard in the Senate Economic Development, Trade & Management Committee on January 24 at 3:30 pm. AWC will support these proposals.

AWC Priority Issue:
Dedicating Existing Revenue to Infrastructure Funding (HB 1361)

The Washington Association of Realtors is the promoter of this bill. The bill redirects part of the state Real Estate Excise Tax (REET) for a variety of state recreational programs and also directs funding to the Public Works Trust Fund (PWTF).

AWC will support the concept of funding the recreational programs, but will focus on the proposed PWTF funding component. The new PWTF revenue would be targeted for street improvements. However, accessing this additional funding has numerous new requirements, and would probably not achieve the bill’s intent.

AWC is working cooperatively with other associations to address the need for local infrastructure funding with a different proposal. Beginning in 2009, this new proposal would:

Eliminate the $50 million diversion from the Public Works Trust Fund; and
Modify provisions of the Community Economic Revitalization Board to provide ongoing funding at the level identified this biennium ($20 million) and re-establish a funding source for public infrastructure investments identified with high wage jobs and private investments ($30 million).

The bill would also include provisions to harmonize the 1^st and 2nd Quarter REET.

HB 1361 will be heard in the House Local Government Committee at 8 am on Thursday, January 25.

Recommending Authorization for Projects by the Public Works Board (HB 1025/SB 5006)

The House version of this bill has already passed out of the Capital Budget Committee. The legislation would provide $71 million in loans to nineteen projects. Eleven of the projects are for cities, representing approximately $36.6 million of the proposed list.

Increasing Non-construction Loan Limits for Project Financing through the Public Works Board (HB 1068/SB 5005)

Many jurisdictions use portions of their construction loans to pay for non-construction activities, such as planning and pre-construction, to get ready for construction. This means some of the construction phase takes place at the end of the loan agreement, and requires jurisdictions to request loan extensions.

This type of financing strategy slows down the expenditure of funds, limits the amount of funding available for construction loans, and increases the amount requested for reappropriation. To help remedy this, the bill would increase the non-construction loan limits from 15% to 25% of the biennial capital budget appropriation to the Public Works Board. The House version of this bill will be heard on January 25 at 8:00 am in the House Capital Budget Committee.

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AWC Priority Issue: Local Infrastructure Financing Tool (SB 5115)