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Legislative recap: A little more money for construction, no policy changes

Springtime in Olympia can mean only one thing: A special session in the Legislature! 

Yes, even in an election year when many legislators (and the Governor) are chomping at the bit to hit the campaign (and fundraising) trail, we’re yet again in a special session to iron out budget matters.

In odd-numbered years the Legislature and Governor enact a two-year budget. So in even-numbered years like 2016, the Legislature and Governor only have to make tweaks, known as the supplemental budget. But even in this scenario, Senate Republicans and House Democrats aren’t yet in agreement. 

There’s not much in the supplemental operating budget proposals that impact the construction industry. The latest House proposal raises spending by $478 million, including increases for teacher salaries and paying off the cost of fighting wildfires. The House would also raise taxes by $123 million (bottled water, apply REET to foreclosures, B&O for resellers of prescription drugs, others) and transfer $466 million from the rainy day fund. The Senate increases spending by only $143 million, with $57 million in new revenue via “changes to certain television content provider taxation provisions.” A final deal is expected soon.

With a Republican-controlled Senate and a Democrat-controlled House, nothing very controversial or consequential impacting the construction industry passed this year, with the exception of some positive nuggets within the supplemental transportation and capital budgets.

HIGHLIGHTS

Supplemental Transportation Budget
Some good news here, as the enacted supplemental transportation budget provides about $97 million more for preservation and maintenance. It also includes language stating that WSDOT should “consider the preservation and rehabilitation of concrete roadway on Interstate 5 from the Canadian border to the Oregon border to be a priority within the preservation program.”

Supplemental Capital Budget
This isn’t finalized yet, but as reported in the last AGC Works, the Legislature will be providing significant boosts for school construction funding.Infrastructure:

Lots of talk about water, and the Flint, MI situation provided additional impetus to make sure that basic infrastructure is tended to. However, the only actual movement was in the wrong direction. Once again, the state budget was balanced on the backs of the Public Works Trust Fund. The supplemental budget sweeps another $16 million this year and plans for a $154 million sweep in 2017-2019, a move that could very well be the final death blow to this good program that provides low-interest loans to local governments to make a variety of infrastructure projects affordable for them.

Nevertheless, other efforts got underway. The Senate, but not the House, passed SB 5624, which establishes a new program through which the state could issue bonds to help pay for local infrastructure, with the localities repaying the debt. The practical application of this is that the state can get lower rates than small localities, so it makes local projects more affordable. To be implemented, a constitutional amendment would also have to be passed by voters clarifying that this wouldn’t impact the state’s debt ceiling. Some legislators see this as a replacement for the Public Works Trust Fund; others see it as a complement to the Trust Fund (as does AGC). At any rate, additional efforts will have to wait until next year.

Meanwhile, a new coalition of environmental groups, business groups (including AGC), labor and local governments was formed and is focused on developing a large capital package to address all three of the big water issues: drought, flooding and stormwater runoff. It is felt that putting all of these issues together would make it more likely that a single package of $3 billion or so for capital projects would pass (legislatively or via initiative). Legislators on both sides of the aisle and the mountains are interested in dealing with water issues, and in the Legislature this year even some Republicans eyed a carbon tax as a funding source. It’s important to note that no funding source has emerged as the preferred option, but the issue is gaining momentum.

Prevailing Wage
Defense was key for this issue. No helpful reforms were passed, but on the other hand the Senate killed House-passed bills opposed by AGC. HB 1231 would have set wages in collective bargaining agreements as prevailing wages. HB 2844 would have added training on prevailing wage requirements to responsible bidder criteria. Both bills passed the House largely along party lines, but died in the Senate. A third bill (SB 6654) would have extended prevailing wages to certain private projects that receive some public subsidy. It was introduced in the Senate but died there.

Workers Comp
AGC has long supported reforms of the state’s high-cost workers’ comp system, including efforts to allow greater use of structured settlements in lieu of lifetime pensions and to limit occupational-disease liability to work performed on the job. In recent years, the Senate has passed such bills only to have them die in the House. This year, the Senate didn’t even vote on them. On a more positive note, a House-passed bill (HB 2806) that would have increased costs to the system by mandating coverage of occupational diseases, no matter the source for certain workers, died in the Senate.
State Building Code Council: 

The SBCC was the subject of significant controversy in the Legislature. Various reform proposals were made. Questions involved whether or not 1) SBCC should be housed in and managed by the Department of Enterprise Services; 2) a six-year code cycle should be adopted, and 3) permit fees should be increased to fund the Council’s operations. Ultimately, the House and Senate passed different bills but none were enacted. The SBCC will likely be the focus of legislative attention in 2017.

Looking ahead:
While the 2016 legislative session was relatively sedate, the 2016 November ballot will be action-packed! Signatures are currently being gathered for an initiative by Tim Eyman (I-1421) that would roll-back transportation funding and scrap significant parts of last year’s transportation funding package. Sound Transit is working to place its $15 billion “ST3” package on the ballot. Meanwhile, there likely will be an initiative that raises the minimum wage to $13.50 and requires employers (including contractors) to provide paid sick leave. And, a carbon tax initiative (I-732) has garnered enough signatures to be placed on the ballot.

Next year’s legislative session is shaping up to be a difficult one. That’s when the Legislature will have to make hard decisions regarding education funding (as in $3-4 billion in additional education spending) as a result of the State Supreme Court’s McCleary decision. With razor-thin majorities for the Republicans on the Senate side and Democrats on the House side, power in the Legislature could go either way.

Stay tuned…

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