No action on capital budget, Hirst fix

Key legislators were recently in Olympia attempting to negotiate an agreement on legislation addressing the Hirst water-rights court decision. Talks apparently broke down and no solution has been announced. The Senate leadership has insisted that a Hirst fix needs to be enacted before the $4-billion 2017-2019 capital budget will be brought to the Senate floor for a vote.

AGC supports both a Hirst fix as well as a capital budget, and has urged the Legislature to move the capital budget bill while the Hirst negotiations continue.

In a letter to all legislators, AGC and partners AIA, ACEC, Architects and Engineers Legislative Council, the Building Trades and Operating Engineers urged legislators “to continue working and find a solution that will result in enactment of the $4 billion capital budget."

The points made in their letter include:

Cost Impacts

a. Escalation  Construction goods are escalating at a rate 30% higher than general inflation. Construction labor is escalating at a rate 9.7% higher than other private sector employees. The delay means that projects in the capital budget will cost more than has been allocated, requiring either redesign or increased funding.
b. Increased Maintenance  Conditions at facilities designated for repair or rehabilitation will worsen and the cost to deal with them will increase.
c. Inefficiency  Architecture, engineering and construction firms were gearing up to have the capacity to design, bid and construct new projects. The delay forces companies to lay people off and subsequently hire new staff when the budget passes. The inefficiency translates into losses for the firms and higher costs for public owners.

Schedule Impacts
a. Accumulated Impacts  Construction is weather-dependent. Losing the summer months for site work and excavation has a significant impact. Other issues increase the effects, including fish migrations and school calendars. The accumulated impacts of a late project start could result in delays of up to year, which is another factor that increases costs.
b. Agency Layoffs  Agencies have begun the process of laying off the staff that administers their capital projects. A continuing delay in passing the capital budget will increase the impact. When the budget is passed, agencies will have to conduct a hiring and training processes to refill dozens of positions, further delaying the projects and increasing risk to the agencies.

General-Fund Impacts
a. Revenue  The operating budget depends upon sales tax from construction project. The loss of revenue will be on the order of $260 million, which is significant.

For more information, contact AGC Chief Lobbyist Jerry VanderWood, 360.352.5000.