Infrastructure funding takes a hit again, but some good news for public works contracting

The 2019 session started out optimistically for infrastructure funding. AWC and other stakeholders were hopeful that the legislature would fully fund the Public Works Trust Fund (PWTF) per an agreed formula adopted by the Legislature in 2017. Full funding for the PWTF for the biennium would have meant about $217 million in loan repayments and 2% of the state real estate excise tax (REET). In addition to this full funding, AWC sought to take infrastructure funding a step further by seeking restoration of the remaining 4.1 % of REET funds that have been diverted to the general fund for education. That diversion is set to continue until 2023, but we were asking to end the diversion now and prioritize those funds for loans for infrastructure to support housing development. We believed that the strong nexus between the REET funds and the Legislature’s focus on housing would help us succeed. Unfortunately, in the end, it didn’t work out like we had hoped.

With their own budget challenges, the Legislature again turned to the PWTF to help balance the budget. Instead of full funding and considering ending the diversions, the final budget swept additional money out of the PWTF. Thankfully, the fund wasn’t fully swept as in past years. The final capital budget includes about $80 million in the PWTF for competitive loan applications. We do want to thank the legislators who worked with us to preserve the PWTF and try to restore funding – Rep. Doglio (D–Olympia), Rep. Tharinger (D–Sequim), Rep. Peterson (D-Shoreline), Rep. DeBolt (R–Chehalis), Sen. Frockt (D–Seattle), Sen. Mullet (D–Issaquah), and Sen. Warnick (R–Moses Lake).

This session there was better news on the public work contracting front with the passage of two bills – SB 5418 and SB 5958. The first raises the bid limits for cities, which provides greater flexibility for cities to determine when they can build a project with in-house resources instead of contracting out. The second clarifies the rules for piggybacking purchasing contracting, which can be especially beneficial for smaller cities. Additionally, HB 1295 opens up the design-build process to more jurisdictions.

Finally, there was also some good news regarding prevailing wage that occurred outside of legislation. Cities had a shock last fall when prevailing wages for landscape maintenance increased dramatically after a change made in the 2018 legislative session. AWC worked with Washington Building Trades and the Department of Labor and Industries to make an emergency rule change creating a specific landscape maintenance classification. The result was lower rates and budget relief for cities that rely on outside landscape maintenance contractors.

As we look forward to 2020, we need every city to talk to their legislators about your infrastructure needs and the importance of the Public Works Trust Fund so that we can push forward with our efforts to fully fund this critical program.

City priorities – Outcomes

PRO – Passed a capital budget that funds $95 million in project loans for the Public Works Trust Fund.

CON – Continued diversions from the PWTF, including a $160 million transfer to the Education Legacy Account and $21.5 million for a new statewide broadband program.

CON – Revised statutory allocation amounts from graduated state REET in SB 5998, effectively capping the distribution amounts instead of allowing them to grow as a proportional share of the increase in REET to rebuild the PWTF.

CON – Failed to pass proposals to end revenue diversions and restore funding to the PWTF:

• HB 1680/SB 5952 to restore funding for housing infrastructure
• HB 1691 to restore funding for culverts
• SB 5788 to restore funding for both housing infrastructure and culverts

Public works bills