AGC Fights to Restore Public Works Trust Fund

“As the construction industry goes so goes our state budget.”

That sentence was delivered by Gov. Gregoire during the State of the State address. She added: “Jobs are the way out of the recession especially in one of the hardest hit areas — the construction sector. Through the capital and transportation budgets and the Public Works Trust Fund we can start shovel-ready projects modernize our infrastructure and put almost 40000 people to work.”

AGC is working hard to convince the Legislature to share the Governor’s insight and provide adequate funding to address infrastructure needs and to spur private development. AGC is moving on several fronts and this article takes a look at the Public Works Trust Fund (PWFT).

AGC helped create the PWTF in 1985 to provide low-interest loans and technical assistance to local governments for public works projects – many that could not otherwise be financed and built by small communities themselves. The PWTF is a particular focus this year because the Legislature gutted the fund in the last biennial budget taking nearly all of the funds and transferring them to the operating budget to shrink the deficit.

Many are concerned that should the Legislature do that again it would mean a total of four years without funding for local projects and a possible death knell for the fund. That would be a major loss for the state as the PWTF has provided more than 2000 loans totaling more than $2.2 billion since its inception. According to an economic analysis conducted by the University of Washington for AGC that $2.2 billion investment has generated an additional $4 billion in economic activity. Plus the PWTF supports many local stormwater and sewer projects necessary to meet the state’s Puget Sound clean-up goals.

The Governor proposed $386 million for the PWTF within her Capital Budget proposal maintaining overall the current level of investment which is one-third smaller than the 2007-2009 Capital Budget. AGC is working to hold onto the PWTF funding throughout the budget process but the temptation for the Legislature to reduce it or zero it out altogether will be significant as the state faces a $4.6 billion shortfall in the 2011-2013 biennial budget. Many legislators have expressed their support for PWTF funding including three who penned this Seattle Times opinion piece.

Some background on the PWTF: Its core mission is to help local governments—mainly cities counties PUDs and water and sewer districts—pay for basic infrastructure projects: water and wastewater systems; streets roads and bridges; and solid-waste and recycling projects. The PWTF which is administered by the Public Works Board seeks to require and encourage better capital facilities planning by local governments as part of receiving financial help from the state and reward good infrastructure management by giving extra credit to applicants demonstrating good management practices.

In addition to loan repayments—at interest rates ranging from 0.25 to 2 percent per year—the trust fund receives revenue from four state tax sources related to the types of infrastructure aided by the fund: 6.1 percent of the revenue from the real estate excise tax 20 percent of the revenue from the water utility excise tax 60 percent of sewerage collection tax revenues and all the revenue from the state tax on solid waste service. About half of the PWTF’s account comes from the loan repayments about half from the dedicated taxes.

The $386 million in loans proposed by the Governor supports $1.8 billion in projects generating $3.5 billion in added economic activity and supporting more than 28000 jobs. The beauty of it is that it’s already paid for – all AGC asks is that the Legislature not steal the money!

For more information contact AGC’s Government Affairs Director Rick Slunaker 360-352-5000.