Senate passage of transportation legislation Monday was welcome, but Washington Treasurer James McIntire advises caution as the plan for improving roads, bridges and ferries continues on its way through the Capitol.
Even $15 billion only goes so far.
Debt service on bonds sold to finance highway projects consumes 70 percent of the revenues generated by gas tax increases approved in 2003 and 2005, he notes in his 2015 Debt Affordability Study. By 2023, the share will be 90 percent, leaving little for maintenance work.
And not all the projects envisioned a decade ago have been undertaken.
Despite the tax increases, revenue has fallen short of projections because hybrid and electric vehicles are bypassing the pumps. McIntire advises legislators to bring the portion of revenues dedicated to repaying bonds down to 50-50 with the proposed 11.7 cent gas tax increase the transportation bill would roll out over three years.
His office has not yet calculated what the ratio between the new revenues would be compared with the cost of financing the $15 billion in transportation projects included on the Senate’s list. In part, that will depend on his success convincing bond buyers that Washington is not over-extended despite debt commitments that exceed the average for all states.
McIntire has been a good salesman. Since taking office in January 2009, he has refinanced $8.3 billion in bonds, reducing total interest payments by $1 billion, about 30 percent of that from the transportation budget. Constitutional limits on debt, four-year budgeting adopted two years ago, and a solid economy have helped convince buyers Washington remains a good risk.
But McIntire had other advice for lawmakers: Kick the gas tax habit. Although the financial package for the transportation plan puts a greater share of the cost on fees, its core remains the gas tax, a four-cylinder revenue generator for an eight-cylinder transportation plan.
He repeats his call for tolling Interstate 90 bridges into Seattle at rates matching those for the State Route 520 bridge, also across Lake Washington. Such a toll could produce as much revenue as a 5 cent statewide gas tax, yet it has been a non-starter in Olympia.
There is good news for Spokane in McIntire’s message. The 50-50 ratio for capital projects versus maintenance he recommends is a belated endorsement of the formula city voters approved in November.
Refinancing bonds issued in 2005 is expected to save the city enough to provide more money for the kind of maintenance that has been neglected for decades.
With the Senate’s work done, the next move is up to the House, where leaders have put education first, a flip-flop of priorities between the two legislative bodies last year. If the House transportation package includes the carbon emissions tax Gov. Jay Inslee supports in lieu of other taxes, a compromise with the Senate will be elusive.
All sides might want to listen to McIntire.