Transportation projects paused by I-976 could restart soon as lawmakers near budget agreement

OLYMPIA – House and Senate leaders have plans to fill a $450 million hole in the state’s transportation budget created by the passage of Initiative 976, but they warn it’s a stopgap measure that won’t last past mid-2021.

They hope it will soon lead to an order by Gov. Jay Inslee to lift the seven-month “pause” on new work on some major projects, including the North Spokane Corridor, while they look for a solution to the loss of many fees and taxes connected to vehicle license tabs.

A spokeswoman for Inslee said he is also interested in lifting the pause as soon as the two chambers reach an agreement on a single spending plan.

In budgets released Tuesday in the Senate and Monday in the House, Transportation Committee leaders explained plans to move money around from various accounts and take some money set aside from major road projects that hasn’t been spent.

“Our major goal was to get past this year,” Senate Transportation Committee Chairman Steve Hobbs, D-Lake Stevens, said.

“There are bigger challenges in the next biennium,” House Transportation Committee Chairman Jake Fey, D-Tacoma, said.

The two committees have been scrambling to find money to replace taxes and fees from vehicle license tabs that voters removed last November by passing I-976. Because the initiative is being challenged in court, vehicle owners are still paying that money when they renew their tabs, but the money is being set aside to be refunded if the initiative is upheld. The state Supreme Court is expected to hear the case later this year.

After the initiative passed and was certified in December, Inslee ordered a “pause” on spending on new work for a long list of large and small transportation projects until June 30, the end of the fiscal year, to give legislators options on how to deal with the loss of state revenue from license tabs.

Critics said, however, that seven-month pause would lead to a year’s delay on some projects because of the time it would take to put them out to bid, sign contracts and start work in acceptable construction weather.

“The governor has said he’s open to lifting (the pause) as soon as they have an agreement,” Tara Lee, Inslee’s communications director, said.

Among the projects put on hold in the Spokane area are a section of the North Spokane Corridor between Sprague Avenue and the Spokane River, improvements to the interchanges on Interstate 90 from Barker Road to Harvard Road, the next phase of reconstruction to the Medical Lake interchange on I-90 and a Commute Trip Reduction office for Spokane County.

Both budget proposals rely heavily on using money from “underspends,” a term for money that is allocated for a project or program but isn’t used because of efficiencies or unforeseen delays in contracting, design or construction. That money remains in the transportation budget from year to year, and eventually is used by the time the project is finished.

The Senate budget expects to tap about half of the amount of underspends in a typical biennium based on the last six years, or about $400 million, to make sure the Transportation Department still has flexibility to adjust projects. The House would use $350 million.

Hobbs and Sen. Curtis King, of Yakima, the top Republican on the Transportation Committee, said using the underspent money from projects is a one-time fix.

“People shouldn’t say, ‘Eyman was right. You’ve got enough money, you can make this work,’ ” King said, referring to I-976 sponsor Tim Eyman.

Next year, when legislators are writing a budget for the 2021-23 biennium that begins on July 1, the gap will grow to $685 million and the state will need to come up with another $675 million to replace and restore culverts to meet a court order. Underspends won’t cover those costs.

Hobbs is working a plan he calls Forward Washington, which would increase the gasoline tax by 1 cent per year for five years and establish a Clean Fuels Program overseen by the state Department of Ecology. It passed his committee last year but stalled in the Ways and Means Committee.

Republicans have proposed taking the sales tax from new and used vehicle sales, which goes into the General Fund, and spending it on transportation projects. The change would be phased in over several years.

King called that a reasonable approach to the problem. Democratic leadership disagrees, and Hobbs was skeptical it would become law.

“If it somehow makes its way out of Ways and Means, I’ll be happy to pass it,” he said. “I don’t think it’s ever coming over.”

Fey said he wouldn’t rule that out, because he won’t rule anything out yet: “All options, from my standpoint, are on the table.”

The budget proposals also restore funding to mass transit and specialty transportation programs, ferry system projects and some Washington State Patrol programs, because that agency gets much of its money from transportation fees and taxes.