Shortfall could put cleanup and new construction on hold

The Washington State Department of Ecology has suggested that many projects to clean up contaminated sites – and redevelopment that could follow the cleanup – could be put on hold due to a shortfall in the Model Toxics Control Act (MTCA) account.

The MTCA account is funded by a 0.7 percent Hazardous Substance Tax (HST) on the wholesale value of the first possession of hazardous substances in the state; it’s mostly paid by the state’s oil refineries. Because the funding generated by the tax is influenced by both the volume of oil and the price per barrel, it is raising considerably less this year than in the previous year. The price of oil hit $104 per barrel in August 2014, and dropped to $42 per barrel in August 2015. As a result, many projects for which the Legislature appropriated money are now unfunded.

This could hit contractors in two ways: The cleanup itself could be put on hold and the new construction awaiting the cleanup would then also be postponed. For example, a new Skagit County jail project is awaiting completion of the clean-up of the old Truck City truck stop; delay in the completion of the cleanup could, in turn, impact the new construction schedule.

DOE indicates that since the May 2015 state revenue forecast, actual and projected revenue for the MTCA accounts dropped by $60 million, leaving a projected negative fund balance of about $63 billion for the 2015-2017 biennium. DOE says this revenue decline means funding is not available for the majority of new cleanup projects budgeted by the state.

To address the shortfall and to keep projects on track, DOE is asking the Legislature for $36 million in “backfill dollars,” basically issuing bonds for that amount. Others have suggested that the shortfall could be made up via cuts to other areas within DOE, although no concrete plans have been suggested yet.  AGC is currently monitoring the situation.

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