Cities receive significant investments in local transportation infrastructure despite historical budget deficits

In early March of this year, the Office of Financial Management (OFM) released its quarterly transportation revenue forecast. Unlike the positive economic news for the operating and capital budgets, the transportation revenue forecast indicated continued substantial revenue losses and a slow recovery.

OFM’s revenue forecast reported dramatic losses in fuel tax revenue, public transit and ferry ridership fares, toll revenue, and rental car taxes. While state transportation revenues will take multiple years to recover, the addition of federal coronavirus assistance funds (namely the American Rescue Plan) backfilled much of the transportation budget shortfalls.

As a result, programs like the Transportation Improvement Board (TIB) and WSDOT's Safe Routes to Schools and Bicycle and Pedestrian Safety grants maintained their biennial investments, with minor reductions due to the decline in fuel tax revenue. The decline in fuel tax revenue was also realized in the tax revenue distributions to local governments, with a nearly $40 million reduction.

Further, the state transportation budget allocated nearly $1.1 billion to address fish passage barrier removal. While the funds are appropriated to address state-owned barrier correction, the budget retains proviso language to coordinate with the Fish Barrier Removal Board on a watershed approach to include local culverts. However, at this point sufficient funding for the local share of the culvert challenge has not been provided.

The dramatic budget reduction caused by the pandemic only exacerbated the need for a comprehensive transportation revenue package. Though the prospects of a sixteen-year transportation package seemed high earlier this year, the proposals came to a halt in Legislature in the final days of session. The revenue package was one element of a Grand Bargain which included a Low Carbon Fuel Standard Policy, HB 1091, and Cap-and-Invest Policy, SB 5126.

Although both carbon reduction policies passed the Legislature with transportation linkage language that delayed compliance implementation until at least a five-cent gas tax was approved for additive transportation funding, Governor Inslee issued vetoes to the linkage. Rumors continue to circulate about a possible special session later this year to pass a transportation package. AWC will continue to advocate in support of a transportation revenue package, for city transportation investments and maintenance and preservation of cities’ capital assets.