HOUSE BILL REPORT

HB 1037

BYRepresentatives Walk, Patrick, Todd, Fisher, Sanders, Gallagher, Ferguson and Miller

Revising motor vehicle related taxes.

House Committe on Transportation

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (18)

      Signed by Representatives Walk, Chair; Baugher, Vice Chair; Betrozoff, Cantwell, Dellwo, Fisch, Fisher, Gallagher, Heavey, Meyers, Patrick, Schmidt, Spanel, Sutherland, Todd, Vekich, K. Wilson and S. Wilson.

Minority Report:  Do not pass.  (12)

      Signed by Representatives Brough, Cooper, Day, Doty, Hankins, Haugen, Kremen, Prince, C. Smith, D. Sommers, J. Williams and Zellinsky.

House Staff:Gene Schlatter (786-7316)

AS REPORTED BY COMMITTEE ON TRANSPORTATION APRIL 6, 1987

BACKGROUND:

Under current law revenue shortfalls have been identified by cities, counties and the Washington State Department of Transportation for streets, roads and highways.  Additionally, projected shortfalls for the Washington State Patrol and marine (Ferry System) operating budget will adversely impact these agencies' ability to provide current levels of services for the 1987-89 biennium.

Current sources of revenues include:  1) State Patrol Highway Account--MVF:  Motor vehicle registration fees--$15.60 of the $23.00 for new registrations or the $19.00 renewal fee.  2) Puget Sound Ferry Operations Account--MVF:  Ferry fares and miscellaneous revenues; 27.3 percent of the motor vehicle registration fees not distributed to the Washington State Patrol; and 3.21 percent of the 17-cent motor vehicle fuel tax.  3) Highway Safety Fund:  Primarily from driver license fees.  The HSF receives $10.20 of the four-year driver's license fee while the balance of $3.80 goes to the General Fund.

SUMMARY:

SUBSTITUTE BILL:  Section 1 states legislative intent.

Section 2 increases the motor vehicle fuel tax rate by five cents per gallon, from 18 to 23 cents per gallon.  The Motor Vehicle Fund "revenue limit" is eliminated.  (The limit was established in 1977 in conjunction with the variable gas tax rate.)

Section 3 reserves revenues from the five-cents-per-gallon fuel tax rate increase for the allocations specified in Section 4 of the bill.

Section 4 specifies the allocations of the revenues generated by the five-cents-per-gallon increase in the motor vehicle fuel tax.  Revenues will be allocated as follows.  1) Through FY 1991 1/3 cent is allocated to the Rural Arterial Program.  2) Through FY 1991 1 1/2 cents are allocated to the Transportation Improvement Account in the Motor Vehicle Fund (a new account).  3) Through FY 1991 1 1/2 cents are deposited in the Motor Vehicle Fund for expenditures for state highways purposes.  4) 1 2/3 cents are deposited in the Local Interest State Transportation Account in the Motor Vehicle Fund (a new Account) for "local interest state transportation projects" that are proposed by the Transportation Commission and approved by the Legislature.

Section 5 creates the Transportation Improvement Board (successor to the present Urban Arterial Board), composed of six county representatives, six city representatives, and three Department of Transportation (DOT) representatives.  Appointment of city and county members is by the governor, from a list of two nominees for each position submitted by the Washington Association of Counties and Association of Washington Cities, respectively.  Members serve four-year terms (staggered), with initial appointments to be made by July 1, 1987.

Section 6 provides for board allocation of funds in the Transportation Improvement Account by June 30 each year as follows:  1) 87 percent for counties, cities over 5,000 population, and transportation benefit districts for county, city and multi-agency arterial improvement projects.  Projects must be:  a) consistent with state, regional and local transportation plans, b) necessitated by existing or reasonably foreseeable congestion attributable to economic development or growth, and c) partially funded by local government and/or private contributions.  2) 13 percent for cities under 5,000 population, to be allocated as determined by the board.

Section 7 provides procedures for payment of funds to cities and counties for approved projects.

Sections 8 and 9 require reports from the board to the Legislative Transportation Committee by January 15, 1988, and annually beginning July 1, 1988.

Section 10 requires the Transportation Commission, by November 1 each year, to submit to the governor and the House and Senate Transportation committees a prioritized list of projects recommended for funding from the Local Interest State Transportation Account.  Conditions regarding projects included on the initial list, and information specific to each project, are imposed.

Section 11 permits the legislature to remove projects from the list recommended by the commission but not otherwise change the list.

Section 12 increases the rate of the motor vehicle excise tax (MVET) by .2 percent (from the current rate of 2.2 percent to 2.4 percent), effective January 1988.

Section 13 exempts the .2 percent MVET increase from the seven percent surcharge.

Section 14 earmarks one-half of the revenues from the .2 percent MVET increase to the Puget Sound Ferry Operations Account in the Motor Vehicle Fund, and one-half to the State Patrol Highway Account in the Motor Vehicle Fund.

Section 15 eliminates the allocation of MVET revenues for payments of bonds issued in 1963 for school construction.  (All of the bonds have been retired and thus this allocation is no longer required.)

Section 16 repeals obsolete language regarding unappropriated Ferry System revenues.  (All revenues are now appropriated.)

Sections 17 and 18 extend the deductions of revenues from city and county gas tax shares to fund city and county shares of joint state, city and county studies (e.g., Road Jurisdiction Study) through the 1987-1989 biennium.  The percentage deducted is increased from 24/100 percent to 33/100 percent.

Sections 19 through 49 change statutory references to the Urban Arterial Board to the Transportation Improvement Board which will now administer the Urban Arterial Trust Account as well as the new Transportation Improvement Account.  (Section 37 makes other changes to avoid possible double amendment to RCW 47.26.190.)

Section 50 repeals obsolete sections dealing with the Urban Arterial Board (UAB).

Sections 51 and 52 specify that all statutory references to the Urban Arterial Board mean the Transportation Improvement Board, and transfer all pending UAB business to the new board.

Section 53 is a severability clause.

Section 54 adds sections 10 and 11 as a new chapter in Title 47 RCW.

Section 55 is an emergency clause, providing an effective date of July 1, 1987.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The fuel tax increase is reduced from seven cents per gallon to five cents per gallon, and the distribution thereof is changed.  The motor vehicle excise tax (MVET) increased is reduced from .3 percent to .2 percent, and the distribution thereof is changed.  The combined Marine Account is eliminated, retaining the current Puget Sound Ferry Operations Account and the Puget Sound Capital Construction Account.  Guidelines are added for the Transportation Improvement Board and the Transportation Commission in administering the two new programs.

Fiscal Note:      Not Requested.

Effective Date:The bill contains an emergency clause and takes effect on July 1, 1987.

House Committee ‑ Testified For:    Annette McGee, County Road Administration Board; Jerry Weed, Snohomish County Public Works; Bob Roegner, Mayor of Auburn; George Benson, Seattle City Council; Larry Richmond, Mayor of Cheweleh; Larry Cavanaugh, Mayor of Fircrest; Morrie Dawkins, Bremerton City Council; Ben Dysart, Ferry Riders Coalition; Ernie Conrad, Ferry Riders Coalition; Marty Sangster, Washington Trucking Association; Jeanne Jackson, Governor's Committee on Disabled and Washington Neurological Alliance; Fred Keller, "Finish 520" Task Force; Nancy McCormick, Overlake Transportation Task Force; Walt Green, Redmond citizen; Steve Stedlinsen, Redmond businessman; James Fricke, Pacific Northwest Transportation Industries; Steve Callendar, Snohomish County Committee for Improved Transportation; Jim Durand, Honeywell and SCCIT; Ian MacGowan, American Electronics Association; Linda Weaver, Upland Industries Corporation; Nancy Mathews, Renton City Council; Bill Denney, Covington Community Council; Elmira Forner, South King County Roads Task Force; Roy Moore, Sea-Tac Task Force; Randy Lewis, Tacoma-Pierce County Chamber of Commerce; Curt Smelser, Puget Sound Council of Governments; Roland Dewhurst, Associated General Contractors; Bob Brunke, Woodworth Company; Joe Daniels, Federation of Professional Technical Engineers; Bob Dilger, State Building Trades Council; Duke Schaub, Washington Highway Users Federation.

House Committee - Testified Against:      Doug True, Gull Oil Company; Jahn Hartnett, Broadway Truck Service; Anders Tronsen, People for Fair Taxes; Marty Sangster, Washington Trucking Association; Paul W. Locke, citizen.

House Committee - Testimony For:    The fuel tax increase is needed, now, in order to begin addressing the growing shortfall necessary to meet identified needs for state highways, county and city arterials, and small city streets.  A good transportation system is essential for economic development and the creation of new jobs we all desire.  The proposal will target new revenues to the most urgent construction needs at the state and local levels, allowing existing revenues to be used to maintain and preserve the existing transportation network.  The "pay-as-you-go" philosophy will avoid the high cost of bond financing traditionally used for state highway construction, and will provide flexibility to future Legislatures to reallocate funds to meet changing circumstances.  The new highway construction dollars will generate approximately $20 million in state General Fund revenue in the 1987-89 biennium, and support over 4,200 jobs in the construction industry and another 5,000 in the general economy.

The MVET increase will avert shortfalls for 1987-89 for current level programs of $20 million for the state Ferry System, and $22 million for the Washington State Patrol.

House Committee - Testimony Against:      The fuel tax increase is too high a burden to be borne by a single industry, particularly in border areas.  The MVET increase places an unfair burden on the trucking industry, since it is imposed regardless of profitability.