FINAL BILL REPORT

2SSB 6235

PARTIAL VETO

                                   C 284 L 88

BYSenate Committee on Ways & Means (originally sponsored by Senators Metcalf, Owen, Rasmussen and von Reichbauer; by request of Department of Ecology)

Creating the water pollution control account and authorizing financial assistance from it.

Senate Committee on Environment & Natural Resources and Committee on Ways & Means

House Committe on Environmental Affairs

Rereferred House Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

The federal government provides funding to the states and local governments on a matching basis for sewage treatment facilities and other water quality activities under the federal Clean Water Act.  In 1987, the Clean Water Act was amended to phase into federal funding for loans for such activities.  Over the next three years, states are intended to create revolving funds for loans for wastewater treatment construction, to be funded primarily through federal capitalization grants to the states. Each state must commit to match the federal payments into the revolving fund by at least 20 percent.

Federal fiscal year 1988 will continue with the existing construction grants program.  However, if the governor of a state makes a timely request, up to 75 percent of the state's allotment of federal grant funds may be placed in the revolving fund, avoiding the requirement that funds not obligated during the fiscal year be returned to the federal government.  Washington's governor has made such a timely request.

Fiscal years 1989 and 1990 are phase-in years for the revolving fund, with one-half of the federal funding authorized for construction grants, and one-half for capitalization grants to the revolving fund.  A condition of federal funding is that the revolving fund be used for loans or financial guarantees or purposes related to repayment of loans.  The allotment of the federal share for the State of Washington based upon the authorized funding under the 1987 Clean Water Act is approximately $42 million.

SUMMARY:

The legislative purpose of the 1987 Clean Water Act provides for an account to receive federal capitalization grants for financial assistance to state and local governments for water quality facilities and related activities.  The water pollution control revolving fund is created in the state treasury, to receive federal capitalization grants, state matching funds, principal and interest payments on loans from the fund, and fees and other revenues or funds.  Earnings from investments are to be credited to the revolving fund.

Moneys in the fund shall be used for loans for purposes allowed in the federal water quality law and for those purposes enumerated in this state act.  These purposes include construction of water pollution control facilities, implementation of management programs for nonpoint sources of pollution and for estuary conservation, and correction of combined sewer overflows.  The fund may also be used for refinancing related debt obligations, for financing security, guarantees or insurance, and for administration of the fund.  The fund may not be used for grants.

Loans must meet specified conditions concerning loan, interest rate, and repayment term and schedule, and dedicated sources for repayment.  The Department of Ecology (DOE) is to allocate funds in accordance with an annual project priority list, provide any required reports and enter agreements with the federal government.  Applicants for loans shall be included on the project priority list, provide for a dedicated source for loan repayment, and meet other requirements.  The department is to provide to the Legislature an annual progress report on the use of the fund.

If a public body defaults on repayment, the state may withhold additional funds and direct such funds to repayment of the defaulted indebtedness.  The department shall establish by rule the loan terms and interest rates for loans from the fund.  $5 million is appropriated for the biennium ending June 30, 1989 from the water quality account to the revolving fund account for providing the required state match for federal grants.

A legislative committee made up of two members of each caucus in the Senate and House of Representatives is created for the purpose of reviewing and approving all loans from the fund.  The list is deemed approved if action is not taken within 60 days of submittal of the proposed project list.  The distribution schedule applicable to the water quality account applies to the revolving fund unless the state would be unable to receive or fully expend all federal funds to which it would be otherwise entitled.

DOE is to transfer funds from the water quality account at intervals consistent with the deposits of federal funds.  The transfers are not to exceed the match required for each federal deposit.

Appropriation:    $5 million from the water quality account

VOTES ON FINAL PASSAGE:

      Senate    46     0

      House 94   0 (House amended)

      Senate            (Senate refused to concur)

      House             (House refused to recede)

Free Conference Committee

      House 97   0

      Senate    49     0

EFFECTIVE:March 24, 1988

Partial Veto Summary:  Section 9 is deleted, which created a legislative committee to review and approve all loans from the fund.  Section 10 is deleted, which incorporated the distribution schedule applicable to expenditures from the water quality account.  (See VETO MESSAGE)