Restoring public infrastructure funding

Restoring public infrastructure funding
State lawmakers have proposed legislation related to the state’s Public Works Program that offers low-interest loans to local governments for infrastructure projects. Photo:

There are currently more than $800 million worth of local public infrastructure projects ready to move forward but lack funding that might otherwise come from the state Public Works Program’s revolving loan account. State lawmakers have proposed several bills to help restore that account while adding the state treasurer to the board that oversees the loans.

HB 1285 introduced by Capital Budget Vice Chair Beth Doglio (D-22) would add the state treasurer or an appointee to the Public Works Board, which currently has nine members. Meanwhile, Doglio has also sponsored HB 1680, which would among other things end the redirection of real estate excise tax (REET) revenue meant for the public works trust into the Education Legacy Trust Account in fiscal year 2019 instead of 2020.

That same bill would also prioritize REET revenue deposited into the account for local infrastructure projects that allow for greater housing development. Its companion bill is SB 5952, sponsored by Sen. Liz Lovelett (D-40).

Created in the 1980s, the Public Works Program offers local governments low-interest rate loans to pay for infrastructure projects that include wastewater system upgrades, fish barrier removals and sewer main replacements. Preceding the Feb. 25 public hearings on the bills in the Capital Budget Committee was a presentation by Public Works Chair Scott Hutsell that emphasized the importance of making these loans available to local governments. “There is not a single facet of Washington that’s not impacted by the health of its infrastructure. Water sanitation and transportation are integral to every aspect of the state.

“The demand of infrastructure financing has not diminished over the past 34 years. In fact, increased growth has increased the need for infrastructure statewide. This is not just new construction but the maintenance and rehabilitating of existing systems.”

However, since 2013 the Legislature has drained the account of $1.2 billion, according to Hutsell. Roughly 97 percent of the redirected funds went to the Education Legacy Trust and the state operating budget. As a result, the program has been forced to use bonding to provide money for new projects that in the long-term adds to the overall costs. At the same time, the governor’s budget proposal would continue the account raids.

Hutsell warned legislators at a Feb. 19 work session of the Senate Ways and Means Committee that the “destabilization” of the account has led to “reliance on higher interest rates, deferral of system maintenance or replace (and) higher risk of system failure. While not as visible as some state priorities, infrastructure health affects every facet of Washington.”

At the same time, he added that it can recover if allowed to do so.

As the program suffers from low funds, some state lawmakers are looking at the idea of a public bank to fund public infrastructure, instead. However, Hutsell argued that the loan program “is a user-friendly, consistent and affordable tool for financing infrastructure in the state.” State Treasurer Duane Davidson has voiced opposition to a state bank and called for restoring the public works trust.

Speaking in support of HB 1285, Hutsell said that “the treasurer’s vast experience in banking and investment, accounting and debt management will be an invaluable asset.”

Also under consideration at the public hearing was HB 1441 introduced by Chair Steve Tharinger (D-24) at the request of the Housing Finance Commission. The proposal would create a new program within the commission to fund local infrastructure using bonds. The commission currently works with the state Department of Commerce to provide financing for qualified first-time homeowners and low-income households.

HB 1441, HB 1285 and HB 1680 are all scheduled for executive action on Feb. 27.


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