SENATE BILL REPORT

SB 5742

As Reported by Senate Committee On:

Transportation, February 24, 2011

Title: An act relating to the administration and distribution of Washington state ferry system revenue.

Brief Description: Concerning the administration and distribution of Washington state ferry system revenue.

Sponsors: Senators Haugen, Ranker and Shin.

Brief History:

Committee Activity: Transportation: 2/17/11, 2/24/11 [DPS].

Majority Report: That Substitute Senate Bill No. 5742 be substituted therefor, and the substitute bill do pass.

Signed by Senators Haugen, Chair; White, Vice Chair; King, Ranking Minority Member; Fain, Assistant Ranking Minority Member; Delvin, Eide, Hill, Hobbs, Litzow, Nelson, Prentice, Ranker, Sheldon, Shin and Swecker.

Staff: Janice Baumgardt (786-7319)

Background: The Transportation Commission (Commission) adopts Washington State Ferries' (WSF) fares and pricing policies by rule.

In general, fuel used for purposes other than for the propulsion of a motor vehicle on public highways is not subject to the state motor vehicle fuel tax or special fuel tax. However, such fuel is subject to the state retails sales and use tax. Fuel used for urban passenger transportation systems and fuel used for passenger-only-ferry services are exempt from the state retail and use tax as well.

Washington State Department of Transportation's public works projects estimated to cost $2 million or more must require the contractor to have a minimum of 15 percent of the work performed by apprentices.

The Marine Employees Commission (MEC) is the agency that processes grievances for the WSF unions and provides arbitration services. In grievance arbitration, the employee organization determines whether the issue will be resolved through arbitration.

Summary of Bill: The bill as referred to committee not considered.

Summary of Bill (Recommended Substitute): The Capital Vessel Replacement Account (CVRA) is created. The Commission must impose a $0.25 surcharge on every ferry fare sold; the proceeds of which are deposited into the CVRA. Expenditures from the CVRA must be by appropriation and may only be for the construction or purchase of ferry vessels.

Effective July 1, 2013, fuel purchased for WSF vessels are exempt from the state retail and use tax.

WSF public works projects estimated to cost $5 million or more must require the contractor to have a minimum of 15 percent of the work performed by apprentices.

All functions of the MEC are transferred to the Public Employment Relations Committee (PERC) and MEC is abolished.

EFFECT OF CHANGES MADE BY TRANSPORTATION COMMITTEE (Recommended Substitute as Passed Committee): Increasing the cost estimate threshold by which public works projects require an apprenticeship program is added.

Language transferring MEC responsibilities to PERC and abolishing MEC is added.

Appropriation: None.

Fiscal Note: Available.

[OFM requested ten-year cost projection pursuant to I-960.]

Committee/Commission/Task Force Created: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony on Proposed Substitute as Heard in Committee: PRO: This is one of the three pieces of legislation (funding, management, and labor reforms) needed to get WSF on the right track, and is a down payment on the capital needs. The tax exemption on WSF fuel is long time coming and will help reduce operating costs.

Persons Testifying: PRO: Dave Hoogerwerf, Walt Elliott, Executive Council, Ferry Advisory Committees; David Moseley, WSF.