As the Legislature continues negotiations on the state budgets, we share a few updates on the transportation budget proposals.

The Senate proposal includes SB 5161 (supported by new and existing revenue) and SB 5801 (authorizing new revenues and policies), which the Senate passed on March 29.

Before passage, the Senate amended SB 5801 in several ways, including two changes with impacts to cities and towns:

• Cities and counties may not preclude the siting of high-capacity transportation system improvements by imposing conditions or costs that are not reasonably necessary to mitigate adverse impacts directly caused by the improvements, or impose a permit process too costly or time consuming to reasonably comply.
• Beginning July 1, 2025, the population threshold for small cities and towns with state routes for which WSDOT must cover certain highway operations costs of the state routes is increased from 30,000 to 32,500.

Cities should also be aware of SB 5802 from Sens. Liias and King. The bill works in concert with the other Senate transportation budget bills, making many statutory fund transfers and revenue dedications for transportation purposes that enable the appropriations made in the other bills.

Of note, SB 5802 directs the $57 million in annual transfers from the Public Works Assistance Account to the Move Ahead Washington Account to end in FY 2026. Current law upholds the diversion through FY 2038. While this would normally be welcome news for the PWAA and local infrastructure owners, the Senate Operating budget includes a new diversion of $165 million to the general fund in FY 2026.

As the Legislature maneuvers to address the state’s budget shortfalls through various measures across all three budgets, cities must consistently communicate to legislators the need to protect funding for the PWAA and to refrain from using much-needed local capital project dollars to backfill state general fund obligations.

The House Transportation Committee approved that chamber’s proposal, HB 1227. However, upon receiving SB 5161, the House struck the Senate’s language and inserted the text of HB 1227 instead, before making further changes and passing the amended bill off the floor. The House language containing SB 5161 now goes back to the Senate.

Dates to remember

SB 5802 was voted out of the Senate Transportation Committee on Friday, April 4, and now awaits a vote on the Senate floor.

State Transportation Commission directives, project streamlining practices updated in Senate transportation budget – Contact AWC with your city input

March 31, 2025

In addition to tracking the funding appropriations for programs and projects in the transportation budgets, AWC staff have been analyzing the various non-funding policy proposals with implications for cities and towns.

The Senate transportation resources bill, SB 5801, includes a handful of changes of interest to locals.

Part V of the bill, titled Transportation Project Streamlining, introduces a range of updates to project permitting and review practices at the state and local levels. Specifically, sections 501, 503, 504 and 508 pertain to projects and infrastructure within cities

AWC seeks input from city members on the potential impacts of the proposed changes on city projects and practices. Please contact us to share your insight, concerns, and suggested solutions where possible. It would be especially helpful to know about potential fiscal implications.

SB 5801 also makes significant changes to the Washington State Transportation Commission (WSTC). The bill:

• Reduces the Commission from seven to five members, removing one seat each from the West side and East side of the state over two years.
• Removes the Commission’s mandates to:
• Coordinate state, local and regional transportation planning with cities, counties, regional transportation planning organizations, and other stakeholders;
• Issue the state’s long-term transportation plan;
• Provide a public forum for the development of transportation policy across the state
• This would mean no more local meetings across the state and no public forums that would “…elicit the public’s views on transportation services and the means of minimizing adverse social, economic, environmental, and energy impact of transportation programs;” and
• Develop policy proposals and guidance for the Governor and Legislature on key issue areas, including:
• Transportation finance
• Preservation, maintenance, and operations for the statewide system
• Transportation infrastructure needs
• Best practices for transportation agencies and programs
• Efficiencies that improve service delivery and coordination
• Improved planning and coordination among transportation agencies and providers, and
• Use of intelligent transportation systems and other technology-based solutions.

The proposed changes could have wide-ranging, long-term impacts for Washington’s transportation system by limiting the voice of locals in statewide transportation development and impairing the Legislature’s ability to anticipate and prepare for long-term challenges. Furthermore, it would fall to system owners and special interest representatives, who naturally advocate for their self-interest, to communicate to the Legislature about transportation needs, removing critical guidance on how the whole system can move ahead in a coordinated manner.

AWC encourages cities and towns to contact your legislators, along with AWC staff, and share your experiences with WSTC adding value to your community and the state.

The House transportation budgets do not reflect the Senate’s proposed changes to the WSTC.

Both the House and Senate voted their respective transportation budgets off the floor on Saturday, March 29. Negotiations among the two chambers to agree on a final state budget will now commence in earnest.

House transportation budget includes cities in proposed gas tax increase—Senate budget does not

March 26, 2025

The House and Senate released their respective transportation budget proposals earlier this week; both rely on an increase to the motor vehicle fuel tax to help close the budget shortfall, but only one includes distribution of the additional revenues to cities.

The House budget totals $15 billion in the 2025-27 biennium; the Senate budget is a little larger at $16.2 billion.

House proposals

• HB 1227 – Biennial appropriations bill
• HB 2043 – Transportation resources bill contemplating newly proposed revenues

Senate proposals

• SB 5160 – Spending bill
• SB 5161 – Biennial budget supported only by existing revenues
• SB 5801 – Transportation resources bill contemplating newly proposed revenues

New revenues

The House proposal seeks to increase the gas tax by 9 cents per gallon and to index it to inflation, beginning July 1, 2025. The current 6% statutory distribution of gas tax revenues to cities would apply, increasing the city share by $123 million over the next three biennia.

The Senate also seeks to increase the tax, by 6 cents per gallon, starting this year, with an automatic 2% annual rise to account for inflation. The Senate proposal does not apply the 6% city share to the new revenues generated by the 6-cent increase, resulting in no new gas tax revenues for cities.

Interestingly, the House’s statewide road usage charge proposal from earlier this year shape-shifted as it was incorporated into the House transportation budget. Now it would function as a flat, annual highway use fee calculated based on a car’s fuel economy, meaning more efficient vehicles would pay a higher fee. The implementation of this system would be simpler and less expensive to implement than a road usage charge.

Other proposed new revenue sources include a permanent 0.3% sales tax transfer from the general fund, a $50 increase to the electric vehicle (EV) registration fee, and a handful of smaller new and increased taxes and fees, all from the Senate side. The Transportation Improvement Board (TIB), a longtime, essential source of state funding for city transportation projects, currently receives a share of EV fee revenues. However, TIB would receive no share of the revenues from the Senate-proposed $50 increase.

On the House side, in addition to the increased gas tax and highway use fee, the budget proposes to increase the vehicle sales tax from 0.3% to 1% to generate new revenues.

Benefits to cities

House transportation budget

• Motor vehicle fuel tax statutory distribution to cities: Additional $123 million over the next three biennia from proposed 9-cent increase to the fuel tax
• Transportation Improvement Board: $310.8 million, including:
  • $3.9 million to Small City Pavement and Sidewalk Program
  • $24.6 million for Complete Streets grants
  • $9.3 in preservation funding for cities
• Safe Routes to Schools grants: $83.3 million
• Pedestrian and bicycle safety: $82 million
• Encampment response: $9.2 million to address homeless encampments on state-owned rights-of-way in coordination with, and directing funding to, local governments and social service organizations, focused on housing individuals.

Senate transportation budget

• Transportation Improvement Board: $330.8 million, including:
  • $3.9 million to Small City Pavement and Sidewalk Program
  • $24.6 million for Complete Streets grants
  • $9.3 in preservation funding for cities.
  • Additional $20 million for Complete Streets grants
• Safe Routes to Schools grants: $83.3 million
• Pedestrian and bicycle safety: $87 million
• Highway preservation in pop. centers, including city streets as state highways: $100 million
• Encampment response: $8 million to address homeless encampments on state-owned rights-of-way in coordination with local governments and social service organizations to direct people to housing and prevent future encampments.

View AWC’s full budget matrix here.

Dates to remember

Both chambers held public hearings for the transportation bills this week and plan to vote them out of committee on Thursday, March 27, allowing the budget leaders more time to negotiate the final transportation budget before sine die on April 27.