SENATE BILL REPORT

SB 5592

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Background: The new Tacoma Narrows Bridge opened to traffic on July 16, 2007 as a toll bridge. The bridge cost $735 million to complete and was funded by selling general obligation bonds that were backed first by the motor vehicle account and the full faith and credit of the state of Washington. Since March 17, 2010, the Washington State Transportation Commission's (WSTC) policy has been to maintain an established Sufficient Minimum Balance (SMB) of 12.5 percent in the Tacoma Narrows Bridge Toll Account that ensures that revenues exceed expenditures by 12.5 percent. The WSTC established the SMB to cover revenue shortfalls and legitimate cost increases in the event that the Tacoma Narrows Bridge was damaged or shut down for more than ten days.

In 2012, the $2,336,457 in Tacoma Narrows Bridge Toll Account funds spent on oversight and administrative costs accounted for 4 percent of all expenditures. Oversight and administrative costs do not include debt service, toll operator contracts, maintenance and preservation, or adjudication.

Summary of Bill (Proposed Substitute): The proposed substitute limits the percentage of expenditures directed towards management costs to 2 percent of all expenditures. The tolling authority, namely WSTC, must maintain a sufficient minimum fund balance of approximately 6 percent by the end of each biennium. The fund balance may periodically exceed 6 percent as cash flow fluctuates. If the fund balance exceeds 6 percent, none of the excess may be used for management costs.

Civil penalties deposited into the Tacoma Narrows Bridge Toll Account in excess of the amounts necessary to support the toll adjudication process are first allocated toward repayment of operating loans and reserve payments provided by the Motor Vehicle Account in 2007.

Staff Summary of Public Testimony: PRO: Primary concern is that the need to have robust reserves is not about the Department of Transportation (WSDOT). It is about future projects. Gig Harbor residents are being asked to buy down the rates of future toll payers in other parts of the state. Residents want to keep tolls as low as possible – the increases have been tough on low-income families and transit riders. It is beneficial to keep tolls where they are at, and not to increase tolls. Both Gig Harbor and Port Orchard rely on tourist income. Higher tolls mean less tourists.

CON: Moody’s said the median cash on hand is 600 days. An SMB of 12.5 percent is 45 days. An SMB of 6 percent is 21 days. WSDOT has a $10 million deductible for insurance. Reducing the balance would impact WSDOT's ability to deal with an emergency. WSDOT is working hard to reduce costs. The cost of administration has gone down every year. WSDOT prefers that the Legislature reviews a comparative study later this year. WSTC believes that this will increase the cost of borrowing money for future toll revenue.

Persons Testifying: PRO: Derek Young, Briahna Taylor, City of Gig Harbor.

CON: Craig Stone, WSDOT; Dan O'Neal, WSTC.