Summary of Bill (Proposed Substitute): The trust is created to serve as a depository for state monies and federal transportation funds. It is authorized to manage and invest state monies to facilitate financing and construction of new and existing public infrastructure systems.

Governance. The Washington Investment Trust Commission (commission) is established as the primary governing authority of the trust. The commission is comprised of five statewide elected officials including the Governor, the lieutenant governor, the attorney general, the treasurer, and the state auditor. The commission must begin operations by July 1, 2020, and may adopt rules regarding the standards and transparency requirements of the trust. The commission may delegate duties and powers necessary to implement the trust's business to the trust president. The commission may also establish technical and advisory committees and consult with private sector experts as needed.

The Trust Transition Board (transition board) is established and is comprised of two representatives and two senators, one from each major caucus of the House of Representatives and the Senate, and seven citizen members. The citizen members are appointed by the president of the Senate and the speaker of the House, with one of the citizen members appointed as chair of the transition board. The transition board shall develop and make recommendations to the commission regarding a start-up business plan for the trust. The start-up plan must include plans and timelines for functions that are new and functions transitioning to the trust that were previously performed by another entity, initial capital requirements of the trust, and options for capitalizing the trust.

Implementation Plan. The trust is authorized to manage and invest state monies in order to facilitate financing of new and existing public infrastructure systems. By November 1, 2019, the commission must present an implementation plan and any necessary legislation to the Governor and legislative committees that (1) identifies any existing accounts in the treasury associated with state infrastructure programs that the trust recommends be transferred under its umbrella, (2) describes additional infrastructure funding that the trust recommends, and (3) demonstrates how the trust plans to maximize revenues and public benefit.

Deposits. The treasurer and local government agencies must deposit state monies and federal transportation funds into the trust in accordance with the timeframe and guidelines determined by the commission. The commission must review state accounts that are not part of the treasury and make recommendations to the Governor and the Legislature as to which accounts should be deposited in the trust. The trust may accept deposits from any public source, including federal funds.

All deposits in the trust are guaranteed by the state rather than insured by the DFI. Administrative and strategic planning expenses of the trust are funded from its earnings, subject to legislative authorization. The trust must deposit in the General Fund interest earnings that exceed required distributions and those necessary for the continued sound operation of the trust. The trust is exempt from the requirements of the Public Deposit Protection Commission.

Oversight. An Investment Trust Advisory Board (board) is created consisting of 11 members to review the trust's operations and make recommendations regarding trust management and policies. The Governor shall appoint members with experience in trust activities, with at least six members with experience in finance. Members serve a three-year term at the pleasure of the Governor.

The trust must maintain capital adequacy and other standard indicators of safety and soundness monitored by the DFI. The director of DFI must examine the trust, and the state auditor must conduct an annual audit of the trust’s accounts and financial transactions. The trust must submit quarterly reports to the commission. By December 1st of each year, the commission must make an annual report to the Legislature on the affairs of the trust.

The commission and the treasurer must jointly determine the amount of funds necessary to meet the operational needs of state government. The treasurer retains authority to manage and invest the amount of funds necessary to meet the operational needs of state government.

Municipalities and other political subdivisions are allowed to enter into cooperative ownership with the approval of the governing council or commission.

Public Disclosure and Ethics. The financial and commercial information supplied by businesses or individuals during application for loans or program services, and examination reports and information obtained by DFI from the trust, are exempt from public disclosure. The trust may not make a loan to a board member, the president, or employees. The trust is exempt from all fees and taxes levied by the state or its subdivisions.