The Washington Legislature’s failure to pass a construction budget this year because of a dispute over rural water rights has thrown local governments, schools and community organizations waiting for expected money into limbo.
The budget was expected to have roughly $4 billion in construction money, including about $1 billion for K-12 school construction. But gridlock over the water policy brought the capital budget down with it. Lawmakers adjourned in July without approving a budget for construction projects.
With no cash infusion, some projects in Thurston and Pierce counties have been put on hold. Others are moving forward with creative financing packages — some of which are expected to create higher costs for taxpayers.
“This is going to have a really, really, long-term footprint for any state agency, including our school,” said Kelly Green, a spokeswoman for South Puget Sound Community College in Olympia.
On July 26, SPSCC’s Board of Trustees voted to use $980,000 of the college’s reserves to bankroll completion of a renovation of Building 28 on its main campus. It’s an unusual move, but one that college officials hope will bridge the budget gap.
“We’re hoping we’ll get that replaced when the capital budget gets passed,” Green said.
The renovation of the former library was about 60 percent complete on July 1 when “work just ground to a screeching halt,” she said.
“Every day that that job is sitting suspended, we’re facing fees from the contractor,” Green said. “They can charge us up to $13,000 a day. Every day it gets more and more expensive.”
The building — which will be used for adult basic education, English as a second language, and high school diploma programs — was supposed to be ready in time for fall quarter classes. Now, because of the delays, the building won’t be able to open until winter quarter, Green said.
In the city of Olympia, three drinking-water utility projects had about $18 million in loans tied to the capital budget.
“The most likely scenario is for the city to spend considerable dollars trying to finance interim construction funding until the state gets its act together,” Olympia city manager Steve Hall said.
The biggest project is the design and construction of the Log Cabin reservoir, which was expected to receive nearly $12 million in state funding.
In addition, the city has several park acquisition and development projects that are now delayed until a capital budget passes, Hall said.
Nearly $14 million in state assistance is at stake to complete two construction projects in the Tumwater School District, district spokeswoman Laurie Wiedenmeyer said.
District officials plan to continue forward with renovations at East Olympia Elementary School and the planning for a future renovation at Tumwater Hill Elementary School, Wiedenmeyer said. Both were part of a $136 million capital facilities bond measure voters approved in February 2014.
“We will be forced to use district capital funds earmarked for other projects to make up for the shortfall and then determine what painful reductions to future projects would be necessary if they (lawmakers) don’t remedy this in the future,” Wiedenmeyer said.
Meanwhile, in North Thurston Public Schools, a $40 million addition and remodel of North Thurston High School continues, but a modernization at Pleasant Glade Elementary School has been put on hold, said district spokeswoman Courtney Schrieve.
About $11 million in upgrades to power, safety and security systems also have been put on hold for now at The Evergreen State College in Olympia, according to college spokesman Zach Powers.
In addition, the college allocated $88,112 to pay salaries in August for employees in the facilities department whose jobs were tied to money from the state capital budget, he said.
A couple of weeks ago, the college sent layoff notices to 17 of its facilities employees. Late last month, 15 of those notifications were rescinded, Powers said.
“Two project manager positions in Evergreen’s facilities department will be reduced or temporarily eliminated because of funding gaps between the previous and pending capital budgets,” Powers said. “One will go from full time to 0.6, and the other will be temporarily eliminated because the projects that position manages are on hold between capital budgets.”
Both project managers will return to full-time once a capital budget is passed, Powers said.
About a third of the funding that will be used to stabilize the city of Tumwater’s Old Brewhouse Tower is locked up in the capital budget, according to Ann Cook, a spokeswoman for the city.
The city is expecting to pay about $1.5 million to stabilize the structure. It had requested about $506,850 through the Heritage Capital Project program, Cook said.
“Without a capital budget, the loss of funding will significantly impact the city’s ability to stabilize the Old Brewhouse Tower and prevent further damage or decay,” Cook said.
The MultiCare-Franciscan psychiatric hospital project was set to receive $3 million, too.
Community centers such as the Boys and Girls Club of South Puget Sound also expected construction money from the capital budget.
That organization is planning to expand in roughly a year to a new space on the east side of Tacoma to be built and operated by Metro Parks Tacoma. For the move, the Boys and Girls Club had secured $1.2 million in the capital budget to help pay for recreational facilities such as a gymnasium and a game room for activities like table tennis.
Mark Starnes, CEO of the South Puget Sound club, said the organization would have to try and raise private funds to cover lost cash. If the club can’t, it will have to pull money intended for programming, Starnes said.
While the organization has a branch operating out of a small church now, it can only serve about 90 children, he said. The club hopes to help roughly 200 kids per day in the new facility.
The Boys and Girls club focuses on serving low-income children and has minimal fees. Starnes said the organization already has raised millions to help pay for construction and programming, so coming up with more is not easy.
“We were really counting on that” capital budget, Starnes said. “We thought it was a done deal.”
The agreed-to capital budget at the Legislature had about $2.5 million for Metro Parks Tacoma to complete the building that will house the Boys and Girls Club. While Metro Parks still expects to finish the project on time, they will have to cover that last money, for now, with money meant for other construction projects.
At Pierce College’s Fort Steilacoom campus, a $2.5 million architectural and design study for a nearly $30 million renovation to the Cascade Building has also been blocked. The building houses the college’s dental hygiene program.
“It’s an old building and needs updated HVAC systems,” said Choi Halladay, vice president of administrative services for Pierce College. “It’s a major, major project.”
But even if the college had funds to begin the project, the state has laid off staff at its Engineering and Architectural Services, he said.
“If they’re not available, we can’t move forward,” Halladay said. “We can’t get a hold of all of those folks to bless all of our plans. It’s this domino effect.”
State lawmakers say they’re still negotiating a solution to the rural water dispute, which involves the state Supreme Court decision known as Hirst.
The court found Whatcom County didn’t adequately protect water resources when approving building permits for properties that rely on new wells.
There are now stronger requirements for counties authorizing the small wells, which has effectively halted construction for some property owners in rural areas.
Proponents of the decision say it protects the senior water rights of tribes and others. The court said numerous small wells can sap water.
Republicans who control the state Senate say the regulations are too onerous for property owners and counties. The GOP has pushed to essentially reverse the ruling while paying for water conservation projects as an alternative way to protect resources.
The majority-Democrat House offered a temporary delay to the ruling with a promise to find a compromise.
As a result of the disagreement, the Senate GOP blocked the capital budget to try and force a change to the Hirst ruling.
The two sides never reached a deal.
If they do come to an agreement, Gov. Jay Inslee has said he’d call legislators back to the Capitol to quickly pass a Hirst bill, along with a full capital budget.
In the meantime, the capital budget delay continues to wreck carefully laid construction plans.
Halladay said Pierce College will probably “miss deadlines in such a way that we will miss out on projects next summer.”
“Each day or week sort of expands, compounds the problem into months of a delay,” he said.