Public works money grab helped solve budget puzzle

jordan.schrader@thenewstribune.comJuly 2, 2013 

How did the Legislature solve its budget puzzle?

Good news from economists about the state’s revenue outlook helped. So did decisions to close two tax exemptions opened or widened by court decisions. Bigger than both was federal funding through the Affordable Care Act that replaced state money.

All those were factors in how lawmakers increased education funding by nearly 12 percent in a deal that allowed them to belatedly leave Olympia on Saturday. But the largest slice of the solution, a tiny bit bigger than the bailout from Obamacare, was an infusion of money from the Public Works Assistance Account.

The account finances water, sewer and street projects by making low-interest loans, mostly to cities and utilities. Because of the Legislature’s $354 million grab, no new loans will go out this year.

That will make it harder to build projects like a new reservoir in Coulee City in Eastern Washington. The town of fewer than 600 people, despite its location on big Banks Lake, keeps its water in an ancient, leaky tank sold for scrap by the Air Force decades ago, Mayor Rick Heiberg said.

“We have not been able to issue a new connection, or a building permit as a result … for one single new house in 10 years,” Heiberg said.

The good news for local governments is that loans already promised in 2011 and 2012 will not be snatched back, even though the cash that was supposed to pay for them was moved to an education account, helping fulfill a mandate for more K-12 school funding in the state Supreme Court ruling known as McCleary.

Lawmakers agreed to borrow money to replenish the public-works account by enough to pay off the old loans, as part of a capital-construction plan Gov. Jay Inslee signed Monday.

The $3.6 billion plan also earmarks a number of infrastructure projects for grants that don’t have to be paid back.

But lawmakers set up a six-year diversion to the education fund of taxes on utilities and real-estate sales that otherwise would feed the public-works fund. So the state’s ability to make new infrastructure loans will depend on repayments from old projects.

Repayments will be enough to sustain the fund at the same rate of growth as the state budget, Senate budget chairman Andy Hill predicted.

“It’s kind of its own little bank, as repayments come in and continue to fuel it,” said Hill, a Redmond Republican.

He said water projects also have access to federal sources of funding.

Projects left high and dry by the immediate sweep of the fund will have to seek other, often more expensive financing — so Tacoma Water ratepayers may spend more on the ongoing construction of a filtration plant on the Green River, and those in Pierce County may pay more to expand a treatment plant on Chambers Creek.

Inslee, a Democrat who signed the operating budget Sunday, said Monday that transfers from the capital budget and reliance on a sunnier revenue forecast may have worked in the short term but don’t provide a sustainable way to meet budget responsibilities.

He would rather lawmakers had extended expiring taxes and reduced tax breaks. Senate leaders held fast against such moves.

Next time, Inslee said, he urges “legislators to be more responsible than they were this year by making sure we adopted permanent solutions to the McCleary challenge, not one-time temporary one-offs,” Inslee said.

Pierce County projects receiving funds

Among the Pierce County spending items in the capital budget lawmakers passed Saturday and Gov. Jay Inslee signed Monday:

 • $11.6 million for a third building at the Pierce County Skills Center that teaches vocational skills to high school students in Frederickson.

 • $23.8 million for a building to house communications technology programs at Bates Technical College’s Mohler campus.

 • $6.7 million for a National Guard readiness center, likely in Buckley.

 • $5.7 million for a setback levee to block floodwaters and improve fish habitat in Orting.

 • $6 million for security cameras and fire alarms at the women’s prison in Purdy.

 • $1 million for facilities at Ashford County Park near Mount Rainier.

 • $1.4 million to buy land next to the planned Nisqually State Park near Eatonville.

 • $1.9 million for the UW Tacoma Urban/Science Education Facility.

 • $500,000 for the renovation of People’s Pool at a community center in Tacoma’s Hilltop.

 • $3 million for a plant to clean up stormwater in Tacoma and $2.2 million for stormwater improvements in Puyallup.

 • $1.3 million for backstage improvements at Tacoma’s Pantages Theater, $2 million for the Tacoma Art Museum and $400,000 for the city’s Chinese Reconciliation Park.

Jordan Schrader: 360-786-1826 @Jordan_Schrader Staff writers Jordan Schrader and Brad Shannon

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