State Labor Council and Associated General Contractors Push Bonding Plan – What Happens Next Time Someone Wants to Use MTCA Money?

Jeff Johnson, president of the Washington State Labor Council (far left) and Rick Slunaker of the Associated General Contractors (tan jacket, center), are flanked by supporters of the bonding plan at Wednesday's news conference. 

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, Jan. 26.—Talk of a billion-dollar jobs plan is finally getting serious at the statehouse, as a quiet two-month lobbying effort by the state Labor Council and the Associated General Contractors is starting to take the form of a fleshed-out proposal.

            Democrats in the House and Senate are readying lists of public construction projects that might be financed by bonding against specific tax-revenue streams. As many as 15,000 jobs might be created in the short term.

It’s an idea that wouldn’t butt up against the state’s debt limit, but still causes many to fret about the big interest payments the state would have to make for decades to come. And because it would lock up a big chunk of the money that is generated by a environmental cleanup tax on oil refiners and other sellers of “hazardous substances,” some wonder what might happen the next time the green lobby identifies a big new spending priority. Might mean higher taxes down the road.

That’s the essence of the debate that is just beginning. Think of it as a minute on the lips, forever on the hips.

It’s just that it’s dinnertime and there are plenty of hungry people at the table. You don’t often see labor and AGC agreeing on anything, but at a news conference Wednesday they declared the bond plan their top priority of the year. A little credit-card financing is worth the extra cost, if it pulls the economy out of the doldrums, said Rick Slunaker, government affairs director for the influential construction organization.

“If you want to fix the economy, fix construction,” he said.

            Details a Bit Fuzzy

There isn’t a lot of specificity about the plan – key details are still to be determined, like exactly how much money would come from which pot of revenue. And advocates still are hoping to expand the plan beyond the billion-dollar mark. Labor and AGC started knocking on doors at the statehouse last month with a $2 billion goal in mind. For that reason, there aren’t any figures yet to show how much the state would have to pay big Wall Street banks in interest payments over the next 25 to 30 years.

But the general concept is clear enough. The state would issue bonds against at least two of the big revenue streams that are generated by specific taxes. One would be the state Public Works Trust Fund account; the other would be the fund generated by the Model Toxics Control Act. Those funds and others collect hundreds of millions of dollars every year, ostensibly for public-works purposes. When those funds work as intended, they pay as they go – meaning there's no bonding involved and every dollar pays for projects, not for interest charges. But since 2009 the Legislature has regularly raided them in order to bail out the ailing state budget.

By bonding against that money, the Legislature would essentially would be locking it up and preventing future raids. But there is a rather delicate political question involved. What happens the next time someone wants the money?

It’s not just a rhetorical matter – over the last three years, the Legislature has plucked $250 million from the MTCA account, for example, at the same time that environmental interests have pushed a plan that would spend billions of dollars of MTCA money to finance stormwater improvement projects, primarily in the Puget Sound area. The result? A proposal for an enormous tax increase that eventually would have translated into higher prices at the gas pump.

It didn’t happen. But if that money isn’t available the next time someone comes up with another enormous spending plan, the same big fight will begin again, says Dave Fisher, spokesman for the Western States Petroleum Association. “If you issue bonds backed by the MTCA revenue, and a big percentage of that MTCA revenue is dedicated to debt service in the future, then all of the sudden you compromise your ability to continue doing the kind of programs you have. Our concern is that it will create pressure to raise taxes.”

            Coalition Backs Proposal

It’s clear there’s plenty of oomph behind the bonding effort. With the governor’s $3.7 billion transportation proposal in deep trouble, the bond plan may be the only big job-creating proposal of the session with a chance of passage. Labor is backing it with all its might.

 “We are told that unemployment will stay between 8 and 9 percent for the next several years,” explained Jeff Johnson, president of the state labor council, flanked at the news conference by union reps and unemployed construction workers. “We don’t have to let that happen. We can actually bend that curve down and get people back to work and open up some of the trades and other sectors of the economy.

“If we prioritize the type of building and repairing, the types of infrastructure needs that we have, we can strengthen our whole economy. We need to take advantage of the low construction costs that exist right now. And this package can strengthen our operating budget as well, by bringing revenue in [in sales taxes and business and occupations taxes.] 

“There is some urgency about this bill, and many of the folks in this room have been working on this bill, or versions of it since last summer. It is an emergency, because we don’t want to miss any of the construction season. We want to get people back to work as quickly as possible.”

Johnson said a $1 billion investment would create about 7,500 construction jobs directly, and the spending would create another 7,500 jobs throughout the economy.

            Something for Everybody

There’s another element, too, that is likely to lend support to the effort. Unlike a smaller-scale bonding proposal for school retrofitting that failed at the ballot in 2010, this one aims to bring interests across the state to the fore. State Rep. Hans Dunshee, D-Snohomish, and Sen. Derek Kilmer, D-Gig Harbor, have been preparing lists of projects that might be funded by a billion-dollar construction effort. On the House list, for example, environmental groups get $179 million for stormwater and other projects, Spokane gets $35 million for a medical school, Pierce County gets $5 million for a K-12 skills center – and so on.

Slunaker said that’s part of the strategy. “One of the things we insisted on when we started having these conversations with legislators is that it couldn’t be a redo of last year’s proposal. Whether you agreed or disagreed, it was very focused. It was a lot of money for one activity. These proposals that we are talking about now, there is simply no comparison. They are broadly distributed among vertical and flat construction projects, everything from water, sewer and stormwater, on-the-ground activities, to vertical construction for K-12 schools, for higher ed and a variety of others.

“…We said we are not going to stick our necks out and stuff like that unless it has got something in there for everybody.”

            Serious Consideration

Exactly how it will fare in the Legislature is anyone’s guess, but there are indications of support. House Speaker Frank Chopp touted the idea in his opening-day speech to kick off the session. Dunshee released a statement with his project list Wednesday: “I appreciate how everyone is working together – business and labor, the House and Senate, Republicans and Democrats – to create jobs. It is an urgent need, with 30 percent of construction workers unemployed on the west side and 60 percent east of the mountains. There rightly is a sense of urgency.”

For now, Republicans haven’t taken a stand. Sen. Linda Evans Parlette, R-Wenatchee, is part of the negotiations: “There are no agreements, but I have a seat at the table,” she says. And Senate Minority Leader Mike Hewitt, R-Walla Walla, says his party is leery of proposals to bond against the MTCA fund.