2021 Session – General Legislative Recap: Week of March 26, 2021

Friday was the 75^th day of the 105-day session.

Friday, March 26 was the cutoff for bills to move from the Opposite House in the Policy Committees.  The next cutoff is for the Opposite House Fiscal Committee, which is on Friday, April 2, the cutoff for bills to pass out of the Opposite House is on Sunday, April 11 and finally the last day of session is on Sunday, April 25.

Below is a summary of what occurred this week for your general update.

Transportation and Capital Budgets Released This Week

This week we saw the Democrat majorities in the House and Senate release their proposed Capital and Transportation Budgets.  Both chambers have created fairly different budgets using varying methods of strategy for both the Transportation and Capital Budgets.

The capital budget pays for the acquisition and maintenance of state buildings, public schools, higher education facilities, prisons, public lands, parks, and other capital facilities.  It often includes reappropriations for projects funded in a prior biennium but not fully completed within that timeframe.  About half of the capital budget is financed by state-issued bonds.  The debt service on the bonds is paid primarily by the operating budget.  Debt service is limited by the State Constitution to no more than 9% of general state revenues.  The remainder of the capital budget is financed from dedicated accounts, trust revenue, and other state funding sources.

The Transportation Budget pays for transportation operating and capital costs, such as maintaining, preserving, and improving the highway system; operating ferries; motor vehicle registration; and enforcing traffic laws on the state highway system.  The primary sources of funding for transportation budgets have historically been motor vehicle fuel taxes, bonds, federal funds, license permits/fees, and ferry fares.  A “transportation package” with clearly laid out revenue sources and proposed projects has not been officially released but there are rumors we will see one next week. 

Transportation Budget – House Proposal

House Proposal

The House Chair's proposals for the second supplemental transportation budget for the 2019-21 biennium and the new transportation budget for the 2021-23 fiscal biennium provide spending authority of $9.447 billion and $10.933 billion, respectively.  The budgets reflect a number of new legislative and governor priorities, as well as the need to address the fiscal realities relating to the COVID-19 pandemic and the continuation of previous legislative budgets. 

The House Chair's proposal for the second supplemental transportation budget for the 2019-21 biennium addresses delayed spending and a few emergent priorities.  Delays in project and program activity have reduced the need for expenditure authority by $1.2 billion; overall appropriations have been reduced accordingly.  The Chair's proposal provides $260,000 for the Wahkiakum county ferry, the MV Oscar B, to assist the county with the operating and maintenance deficit. 

The development for the House Chair's proposal for the biennial budget for the 2021-23 biennium includes a couple of new and emerging areas of emphasis.  One of the themes is in the area of diversity Office of Program Research 2 and equity. In the DOT Office of Equal Opportunity, $6 million is provided for efforts to increase diversity in the transportation construction workforce through the pre-apprenticeship support services (PASS) program and assistance to minority and women-owned businesses to perform work in the highway construction industry.  $1.2 million is provided for a pilot program to provide grants to clean alternative fuel car sharing programs that provide clean alternative fuel vehicle use opportunities to underserved communities and low- to moderate-income members of the workforce not readily served by transit or located in transportation corridors with emissions that exceed federal or state emissions standards.  The Chair's proposal continues funding authority for REAL ID implementation-related public outreach activities focused on underserved and harder to reach populations. 

Senate Proposal

The 2021 Chair's Proposed Second Supplemental Transportation Budget includes just over $9 billion in appropriation authority, a decrease of almost $1.3 billion from the 2020 enacted supplemental budget. This significant decrease is a combination of approximately $1.2 billion reappropriated from the 2019-21 to the 2021-23 biennium for delayed capital project activity, and reduced spending, mainly attributable to the Covid-19 pandemic. Other adjustments are made to accommodate unexpected needs and opportunities.

The Chair's proposed 2021-23 Biennial Transportation Budget provides $11.7 billion in appropriation authority. Policy highlights include directing The Joint Transportation Committee is directed to conduct studies on: WSDOT's role in broadband service expansion efforts; The formation of a bi-state bridge authority for the Hood River Bridge; and new options for payment of vehicle fees and taxes. 

It includes $5.8 billion for capital programs, an increase of 4% from the enacted 2019-21 supplemental budget spending levels. This increase is attributable to a number of projects delayed from 2019-21 into the 2021-23 biennium and also hitting the peak of spending in the planned 2015 Connecting Washington transportation investment plan. 

House Proposal

2021-23 New Appropriations Proposed Substitute House Bill 1080 (PSHB 1080) appropriates a total of $5.68 billion for the 2021-23 fiscal biennium. Of this amount, $3.55 billion is financed with general obligation bonds. The remaining $2.14 billion consists of $589 million in federal stimulus funds, $273 million in Model Toxic Control Accounts, $236 million in alternative financing authorizations, and $1.04 billion in other funds. Approximately $176 million in bond capacity is reserved for a supplemental capital budget. 

Budget Highlights:

• Housing and Homelessness $176 Million
• $20 million to preserve aging affordable housing units to continue to serve low-income residents;
• $50 million is for rapid capital housing acquisition to provide competitive financial assistance for the purchase of real property for quick conversion into homeless or emergency shelters, permanent supportive housing, or transitional housing for low-income people;
• $35 million is for grants to local governments and public utility districts to assist in the cost of utility improvements or connections to new affordable housing projects;
• $10 million is to preserve multi-family housing that is at risk of losing affordability. 

• Local and Community Projects ($176.6 million)

• $30.1 million funds 21 social service and multi-purpose community center projects under the Building Communities Fund program;
• An additional $94 million is provided to the Commerce to make grants to local governments and nonprofit organizations statewide for 150 community-based projects. 

• Clean Energy, Energy Efficiency, Weatherization, and Rehabilitation ($103.6 million)

• $13 million is provided for grants for public agencies to improve building performance, reduce operating costs, and greenhouse gas emissions;
• $4.9 million is provided for a housing rehabilitation loan program. 

• State Facilities ($142.8 million)

• $79.4 million is provided for design and construction of the Irving R. Newhouse building replacement, as well as design for the Joel M. Pritchard building;
• $7.7 million of alternative financing is authorized for the Washington State Patrol to construct a new Washington State Fire Training Academy Burn Building. 

• Public School Construction ($969.9 million)

• A total of $781.7 is appropriated for 2021-23 K–12 School Construction Assistance Program (SCAP) grants from the following sources: $755.1 million from state general obligation bonds and $26.6 million from the Common School Construction Account (CSCA). The CSCA receives revenue from timber sales, leases and other earnings from state trust lands. 

Senate Proposal

Proposed Substitute Senate Bill (PSSB) 5083 makes appropriations of $3.928 billion in bond proceeds for the 2021-23 biennium and the 2019 supplemental budget of the 2019-21 biennium; this amount requires the passage of a new bond authorization bill, PSSB 5084. In addition, PSSB 5083 authorizes alternative financing for seven projects including four community and technical college projects, a library-archives building for the Secretary of State and a nursing facility replacement at the Fircrest School residential habilitation center. PSSB 5083 makes total appropriations in the 2021-23 biennium of $6.234 billion. $50.8 million in bond capacity remains for a 2022 supplemental capital budget. 

Budget Highlights: 

• Housing ($315 million)

• $90 million for rapid housing acquisition
• $10 million for increased housing inventory
• $5 million for Landlord Mitigation
• $5 million for Rural Rehabilitation Loans 

• Local Government Infrastructure ($668 million)

• Statewide Broadband Office: $440 million, including $390 million federal stimulus funding and $50 million in state bond proceeds to expand broadband to rural and unserved areas of the state;
• Public Works Board: $150 million, including $110 million from the Public Works Assistance Account and $40 million from the Statewide Broadband Account are provided for grants and loans by the Public Works Board;
• $35 million is provided for grants and loans awarded by the Community Economic Revitalization Board. 

• Local and Community Projects ($209 million) 

• Clean Energy, Energy Retrofits, and Weatherization ($65 million)

• $10 million is provided for the Energy Retrofits for Public Buildings 

• Legislative Campus Modernization ($79 million) 

• Coronavirus Capital Projects Pool ($189 million)

• $189 million of the American Recovery Plan Act is provided for eligible capital projects to mitigate the fiscal effects stemming from the public health emergency with respect to COVID19. 

• Behavioral Health ($406 million)

• $8 million for crisis stabilization facilities in King County;
• $20 million for four specific projects to increase civil commitment, enhanced behavioral health services, and other community capacity.