Public Works Board (PWB) officials for years have warned of a reckoning if legislators don’t stop raiding or redirecting money meant for the Public Works Assistance Account (PWAA) which is meant to provide low-interest revolving loans for local infrastructure projects. Though the 2021-23 operating budget approved last month allows a $160 million diversion from the account that was included during the previous biennia, it also removed prior bill language that allowed for a continued raiding of the account in the future.
While the raids have been put on hold, that could change with supplemental budgets. The 2021-23 operating budget states that the legislature “may appropriate moneys” from the account for activities related to economic development or the state Growth Management Act.
PWAA was created in 1985 to offer low-interest loans for cities and counties to make local infrastructure improvements to roads, water, and waste management. A separate PWB program provides grants and loans for broadband infrastructure projects. In total, the program has loaned almost $3 billion for 2,000 projects; one such recent loan was for a $1 million road repair in the city of Aberdeen.
The account is meant to be replenished by loan repayments and the solid waste tax, in addition to a 1.4 percent portion of the state real estate excise tax (REET) and 20 percent of the public utility tax revenue.
However, since its inception, the state has either taken more than $2.2 billion from the account – or diverted tax revenues meant for it – in order to plug operating budget gaps. Most of those raids have occurred since the 2011-13 biennium, with the education legacy trust account receiving the most money. Currently, the account has a $22 million balance, and is projected to have only $8.7 million by the end of the 2021-23 biennium.
The 2021-23 capital budget directs $129 million to the PWB to provide infrastructure loans – PWB had sought $169 million. Meanwhile, the new operating budget continues an appropriation from the 2019-21 biennium of $160 million from PWAA to the education legacy trust account, in addition to another $8.4 million for a Conservation Commission voluntary stewardship program and $8.1 million for the state Department of Commerce.
Despite the past raids, former PWB Chair Scott Hutsell told Lens the revolving loan program is “the greatest program in the history of Washington. But, the legislature got greedy with cash.”
His opinion of the loan program is shared by state officials and local government advocacy groups who argued this session for lawmakers to adequately fund the account and avoid future raids.
A joint Dec. 15 letter from the Association of Washington Cities (AWC) and the Washington Association of Counties (WAC) to Senate Ways and Means Chair Christine Rolfes (D-23) states that the account “has proven to be one of the most valuable tools for rural economic development, and in order to help our rural communities succeed, they must be able to access this financing. This account provides a significant reduction in the burden on the capital budget by enabling many communities to finance their own projects. Each low interest loan will revolve to sustain investment in Washington’s infrastructure.”
A January letter to Rolfes from Washington Water Utilities Council (WWUC) Chair Heather Pennington made similar remarks. “Fully funding the PWAA will boost local economies and aid in our state’s recovery. Infrastructure funding leverages investments that create jobs and fuels economic spending in local communities. The PWAA is a very valuable tool for economic development across the state as funding goes to utilities small and large, including in our rural communities. These utility infrastructure projects provide both short and long-term benefits and are a proven wise use of public funds.”
Also in favor of fully funding the loan program is State Treasurer Mike Pellicciotti. In a February letter to both Rolfes and House Capital Committee Chair Steve Tharinger (D-24), he warned that “without the necessary funding, local jurisdictions will begin seeing vital systems deteriorate, negatively impacting families in the most basic needs such as clean water and broadband access. Moreover, the longer improvements are delayed, the greater the cost to rebuild once funding is acquired, further burdening our future economic obligations.”
Hutsell said that while the account has been tapped to cover education and other state spending, a long list of local infrastructure work has waited for adequate funding.
“I could pull up a $1 billion worth of unfunded projects tomorrow,” he said.