Major funding problems for WSDOT – Current funding is proving to be inadequate for all sorts of WSDOT projects. The Legislature will have to address shortfalls in funding for certain new projects, preservation and maintenance, and the culvert-replacement program.
New projects: higher costs, fewer bidders
In a presentation to the Senate Transportation Committee, WSDOT officials discussed the Portage Bay Bridge and Roanoke Lid project along SR 520. Citing a 54% increase in roadway construction materials and services between 2020 and 2023 and other factors, WSDOT explained that the 2023 Apparent Best-Value Price Proposal came in at $1.375 billion, but the 2022 engineer’s estimate was $812 million – creating a $563-million funding need.
While no decisions have been made yet, WSDOT outlined several options, including fully funding the project and moving forward as planned; rescheduling parts of the project into the future; and canceling the project. Repackaging the project, WSDOT said, could add another $1-$1.5 billion and seven years to the project. WSDOT also said it will negotiate with the contractor to extend the proposal price validity to the end of the 2024 legislative session (March 9), to give policymakers time to consider the funding and policy options.
Meanwhile, WSDOT told the House Transportation Committee it is experiencing fewer bidders on large, complex and long-duration design-build projects – while bid prices compared to engineer’s estimates are up. (The design-bid-build bid climate appears to be normalizing, with an average of 3.5 bidders and with an average difference between engineer’s estimates and bid prices at about 1%.)
AGCW recently sent a letter to leaders of the Transportation Committees suggesting some changes to how WSDOT approaches large projects. Suggestions include breaking very large projects into smaller design-build projects, increasing stipends to defer the large costs involved in preparing a design-build proposal, and recalibrating risk sharing in design-build projects. WSDOT is working with AGCW on these ideas.
On a more macro level, transportation revenues are expected to decline over the next decade. Revenues from the gross fuel tax, the largest component of revenues, are expected to decline substantially in inflation-adjusted terms. Adjusted for inflation, fuel tax revenues in 2033 are estimated to be 12.1% below 2023. (See Washington Research Council Report.)
Preservation and maintenance – “glidepath to failure”
In its presentation to the Washington Transportation Commission, WSDOT officials said the state’s transportation system is “on a glide path to failure” for lack of funding for preservation and maintenance. WSDOT Secretary Roger Millar has identified an average annual funding shortfall of $490 million to maintain a state of good repair within the highway system.
Citing some examples of the need, WSDOT says 16 bridges need replacement, 36 more need major rehabilitation, yet only four are being replaced now. Plus, 3,490 lane miles of pavement are due for preservation, another 6,000 are past due, and 1,390 lane miles are in poor condition. Yet WSDOT is currently paving 920 lane miles per year.
WSDOT and the Governor point fingers at the Legislature for passing transportation packages that fund new projects without increasing funds for preservation and maintenance. Legislative leaders point to the Governor’s proposed transportation budgets which don’t request large increases in preservation and maintenance funding.
Culverts – bombshell revised estimate
In 2019, the state estimated that it would take $3.8 billion to comply with the court injunction to replace hundreds of culverts that are barriers to fish passage. Funds have been appropriated in recent transportation budgets to carry out the project. However, WSDOT now forecasts that the total cost will be between $7.3 billion and $ 7.8 billion – nearly double the estimate the Legislature has been working with for years.
In a presentation to the Senate Transportation Committee, WSDOT says that the current budget will fund restoring about 80% of the blocked habitat, which is a correction of more than 400 fish barriers by 2030. But an additional $3.5-$4 billion is needed to correct the remaining 100+ barriers and achieve 90% habitat restoration by 2030.
Help from Operating Budget?
Compared to the Transportation Budget, the State Operating Budget is flush with cash. The current revenue forecast for the Operating Budget is up nearly $3 billion up to the 2025-2027 biennia. AGC is advocating for transferring some funds from the Operating Budget in 2024 to provide short-term help in addressing some of the transportation needs, understanding a longer-term solution will likely have to wait. The next legislative session commencing Jan. 8, 2024, is a “short session” as the biennial budget won’t be debated.
For questions or comments, contact AGC Chief Lobbyist Jerry VanderWood.