Background:

Public Works Assistance Account (PWAA).

The PWAA, also known as the Public Works Trust Fund, was created in 1985 to encourage local government self-reliance in meeting public works needs and to assist in financing critical infrastructure projects.

Local governments and special purpose districts, except port and school districts, are eligible to apply to the Public Works Board (PWB) for low-interest loans made from the PWAA to finance the acquisition, construction, repair, replacement, or improvement of bridges, streets, and roads; water systems; storm and sanitary sewage systems; and solid waste facilities, including recycling. The PWB may also make loans from the PWAA for pre-construction activities, emergencies, and capital facilities planning. Monies in the PWAA may also be appropriated to provide state matching funds for the federal Safe Drinking Water and Clean Water state revolving funds.

Between 1985 and 2013, the PWAA was used to make loans totaling $2.84 billion for approximately 1,975 local government public works projects. Sewer and drinking water system projects have accounted for 79 percent of the total loan value and 75 percent of the number. Cities have sponsored nearly two-thirds of the projects in terms of both loan value and number.

PWAA Revenue Deposits, Redirections and Transfers.

Historically, the PWAA has received deposits of loan repayments and revenues from the following three taxes: (1) 6.1 percent of the Real Estate Excise Tax (REET) imposed on the sale of real property; (2) 20 percent of Public Utility Tax (PUT) revenues from water utilities and 60 percent of the PUT revenues from sewer utilities, and (3) 100 percent of the Solid Waste Collection Tax (SWCT) imposed on garbage utilities.

In recent years, the Legislature has transferred cash and redirected tax revenues from the PWAA to the State General Fund and the Education Legacy Trust Account (ELTA). For the 2013-15 biennium, the Legislature (1) transferred $277 million in PWAA loan repayments to the ELTA; (2) redirected 4.1 percent of the REET revenues into the ELTA, leaving 2 percent in the PWAA; (3) redirected the PUT revenues into the ELTA; and, (4) redirected the SWCT revenues into the State General Fund. The taxes will be redirected statutorily from the PWAA through June 30, 2019.

These transfers and redirections total an estimated $439 million in decreased revenue to the PWAA for 2013-15. As a result, the Legislature did not approve any new PWAA loan projects for this biennium. To meet projected local government draw downs on existing PWAA loan contracts during the 2013-15 biennium, the Legislature backfilled $158 million of the cash transfer with state general obligation bonds.

Education Construction Fund (ECF).

Under Initiative 601, approved by voters in 1993, the ECF was established to provide state assistance for K-12 and higher education construction projects. In 2000, Washington voters approved Initiative 728 (I-728), which redirected state lottery revenue from the State General Fund to several education funds, including the ECF, beginning July 1, 2001. From July 1, 2004, to July 1, 2009, all net lottery revenues allocated for education were deposited in the ECF. In 2010 legislation was enacted that created the Washington Opportunity Pathways Account and redirected the deposit of state lottery revenue from the ECF into the Washington Opportunity Pathways Account. The 2010 legislation also required the State Treasurer to transfer $102 million each year from the State General Fund into the ECF. Legislation enacted in 2013 removed the $102 million annual transfer requirement.