HOUSE BILL REPORT
SB 5898
As Passed House:
March 8, 2022
Title: An act relating to the use of vehicle-related fees to fulfill certain state general obligation bonds.
Brief Description: Concerning the use of vehicle-related fees to fulfill certain state general obligation bonds.
Sponsors: Senators Liias, King and Salda?a; by request of State Treasurer.
Brief History:
Committee Activity:
Transportation: 2/23/22, 2/25/22 [DP].
Floor Activity:
Passed House: 3/8/22, 73-24.
Brief Summary of Bill
  • Supplements existing highway bond authorizations with an additional pledge of vehicle-related fees, for future bond issuances. 
HOUSE COMMITTEE ON TRANSPORTATION
Majority Report: Do pass.Signed by 19 members:Representatives Fey, Chair; Wylie, 1st Vice Chair; Bronoske, 2nd Vice Chair; Ramos, 2nd Vice Chair; Barkis, Ranking Minority Member; Volz, Assistant Ranking Minority Member; Berry, Chapman, Donaghy, Duerr, Entenman, Hackney, Paul, Ramel, Riccelli, Slatter, Taylor, Valdez and Wicks.
Minority Report: Do not pass.Signed by 6 members:Representatives Eslick, Assistant Ranking Minority Member; Dent, McCaslin, Orcutt, Sutherland and Walsh.
Minority Report: Without recommendation.Signed by 3 members:Representatives Goehner, Griffey and Klicker.
Staff: David Munnecke (786-7315).
Background:

Transportation Bonds. 

Bonds are often issued to fund transportation capital projects that have a long-term expected life span.  Transportation bonds are typically general obligation bonds and pledge the full faith and credit of the state, but also first pledge the Motor Vehicle Fuel Tax (MVFT).  Pledging the MVFT, and vehicle-related fees, allows transportation bonds to be excluded from the state debt limit, so long as there are sufficient MVFT and vehicle-related fees to cover the outstanding debt.

Legislation accompanying the last three MVFT increases, in 2003, 2005, and 2015, provided authority to bond the proceeds of the MVFT.  Of these three bond issuances, only the more recent 2015 "Connecting Washington" bond authorization pledges both the MVFT and vehicle-related fees.  The 2019 general obligation bond authorization for Interstate 405 and Puget Sound Gateway pledges tolls, the MVFT, and vehicle-related fees.

Washington typically issues 25-year bonds.  Bonding authority must be authorized by 60 percent of the Legislature and the proceeds from the sale of the bonds must be appropriated for eligible transportation projects.

Refinancing Bonds. 

Periodically the Office of the State Treasurer (OST) will refinance past bond issuances to take advantage of better market conditions.  This is also known as refunding bonds.

Vehicle-related fees are defined in the two bond authorizations that pledge them as vehicle-related fees imposed by law that constitute license fees for motor vehicles to be used for highway purposes.  An interagency work group convened in 2016 by the OST reviewed license fees for motor vehicles imposed under law to determine which would be pledged to bonds in addition to the MVFT.  These fees are listed in the transportation revenue forecast, which is updated four times a year. 
Summary of Bill:

The intent of the Legislature is stated to be to supplement existing highway bond authorizations with an additional pledge of vehicle-related fees. 

Ten general obligation bond authorizations that have remaining unissued amounts and currently pledge the MVFT are amended to also pledge vehicle-related fees when new bonds are issued. 

Bond authorizations covered under this bill include the 2003 and 2005 authorizations that accompanied MVFT increases, State Route 520 bonds, Special Category C bonds, and other past authorizations.

"Vehicle-related fees" are defined for the purpose of this bill as fees imposed that constitute license fees for motor vehicles required to be used for highway purposes.

The additional pledge of vehicle-related fees will only apply to bonds, including refinanced bonds, issued after the effective date of the bill.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.
Staff Summary of Public Testimony:

(In support) This bill provides a technical fix to help the state effectively manage state debt.

 

There is currently over $6 billion in outstanding transportation-related debt, with another $2 billion unissued.  This bill would modernize previous debt issuances, and issue no new debt or add any additional costs.

 

This bill will also help with changes that are expected in the transportation space.

 

(Opposed) None.
Persons Testifying: Jason Richter, Office of the State Treasurer.
Persons Signed In To Testify But Not Testifying: None.