Friday Legislative Report - Final 2022 Session Wrap-Up

FROM EXECUTIVE DIRECTOR, JAMES THOMPSON

Although there were many predictions about what the main issues of the 2022 Legislative Session might be—police reform, long-term care insurance, the housing crisis—the most important ended up being money, rather than policy. Indeed, the Democratic majorities in both chambers used record-setting tax collections to fund record-setting spending; their priorities outlined in broad strokes by the supplemental operating budget and the transportation budget, which funded things like housing and homelessness, mental health programs, tackling climate change, schools, and state employee salaries.

For public port districts, the 2022 Session represents historic funding levels for ports—with new money from everything from removing derelict vessels, port infrastructure projects, Core CERB, and broadband. We also ensured MTCA projects would no longer be delayed waiting on permits. Your WPPA advocacy team worked hard this Session to ensure your interests were represented—read on to find out how each of our priorities fared, and more detail about specific bills.

OPERATING BUDGET

Approximately a year ago, the Washington State Legislature passed a two-year state operating budget of $59B, amid economic and health insecurities caused by the lingering COVID-19 pandemic. Since then, the Economic & Revenue Forecast Council has produced four quarterly updates, all of which have consistently increased the revenue outlook for the general fund. All told, the increase in revenue to the state’s general fund is estimated to be about $5B.

This Legislature passed a supplemental operating budget for the remainder of the biennium, of $64B, making significant investments in housing support, healthcare, wages and most notably for ports, a $2B transfer into the transportation budget, which, unlike the general fund, has been steadily losing revenue during the pandemic (see WPPA Transportation blog for more details).

For ports, this supplemental operating budget funded a few programs that WPPA and individual ports were supporting:

· Local Government Records Grant Program received an allocation of $505,000 to fund another round of grants for public records management at local governments.

· Regional Manufacturing Grants – the Department of Commerce received $2.5 million to be used for pre-development planning grants for local governments seeking to develop large manufacturing sites.

· Maritime High School – A $1M grant is provided to support a new maritime high school within the Highline School District, with the goal of creating a pathway to maritime careers.

· Department of Commerce is provided $250,000 to develop cooperative strategies between Washington and the nation of Finland. Transformation of zero-emission transportation including port safety and efficiency is specifically included in the effort which will be led by the Maritime Blue accelerator.

TRADE, TRANSPORTATION & INFRASTRUCTURE

Move Ahead Washington transportation package has passed

The 16-year, $16.9B Move Ahead WA transportation package passed the legislature Thursday afternoon in an unusually partisan, near party-line vote. The package has limited new sustaining revenue (70 percent of the package is funded with one-time revenue), relying heavily on transfer from the general fund and anticipated receipts generated through the Climate Commitment Act. As a result, many projects, including regional priorities, were not included. The package is described as a geographically inequitable proposal negotiated in large part within the majority party—it also does not have a defined aging plan, meaning that most projects receiving funding have no defined time when that funding will be made available. Project sponsors will have more work to do to secure funding that fits existing construction schedules. For more details on what’s included visit the Manifest blog: https://www.washingtonports.org/blog/2022/3/9/transportation-budget-including-move-ahead-washington-set-to-be-approved

Trucker Safety & Truck Parking Access

Despite having a focus on supply chain disruptions, a shortage of truck drivers and access to ample and safe parking, the legislature passed only two bills and provided $2.5M in funding for workforce development for the industry during the legislative session. HB1706 requires marine terminal operators and/or ports to provide sufficient restroom facilities for truck drivers that are accessing terminals to pick up or deliver cargo. HB1655, which addresses reliable access of state-managed safety rest areas, also passed the legislature. Access to safety rest areas has become unreliable during the pandemic as WSDOT has responded to a worker shortage and safety concerns at facilities. Despite the completion of the Truck Parking Action Plan in 2021 and the passage of Move Ahead WA, no meaningful new funding has been earmarked to expand the access to truck parking during this legislative session.

Hydrogen & Renewable Fuels Development

SB5910 passed the legislature on the last day of session. The bill will increase incentives and enable pathways for the adoption of the use of green electrolytic hydrogen as a transportation fuel. Among other things, the bill establishes the Office of Renewable Fuels and will provide $2M in funding for Washington to compete for federal funding designed to create and establish clean hydrogen hubs within the state. The Infrastructure Investment & Jobs Act provides $8B in funding to establish four hubs nationwide.

Growth Management Act

It was a mixed session for advancing reforms of the state’s Growth Management Act (GMA). A bill passed that provided for a longer period before comprehensive plan updates (HB1241). HB1717 provides more clarity on the participation of tribal governments during the GMA process, which also passed the legislature. But sweeping legislation to tie salmon recovery more directly into GMA planning (HB1117) by requiring public sector projects produce net ecological gains for salmon did not pass. The state’s operating budget did provide funding for additional work to study and recommend how to best implement net ecological gain into land use planning and permitting. Also, HB1099, which would have more closely tied greenhouse gas reduction goals to GMA ran out of time on the house floor Thursday night and was subsequently not passed.

Snake River Dams

The compromise operating budget included $350,000 for the Governor to conduct a study of alternative infrastructure necessary to support the removal of the four lower Snake River dams. WPPA testified in opposition to the study recognizing that the Governor has already begun the work and it is expected to be completed in July. WPPA and our members have already interacted with the consultant-led effort and will continue to provide information and advocacy to the process.

Broadband

The State of Washington reaffirmed its commitment to capital investment in broadband this session by funding the grant and loan programs at the State Broadband Office ($50M), Public Works Board ($25M), and the Community Economic Development Board ($25M). This is good news for ports.

A smaller, but important, broadband funding source was created this session under the leadership of Representative Mia Gregerson. A confederation of groups concerned with digital equity and bringing broadband to underserved areas throughout Washington rallied together to pass HB1723. The bill creates resources aimed at improving the access and affordability of broadband, including establishing a $5M Digital Equity Planning Grant Program available to local governments, institutions of higher education, and workforce development councils to fund digital equity planning.

Senator Lisa Wellman, a perennial supporter of broadband, passed SB5715, which revises the definition of broadband service to increase service speeds. This new definition of broadband service sets the minimum standard for transmission speeds at 100 Mbps download and 20 Mbps upload. This change is good news for Washingtonians and ports building infrastructure because it will direct state dollars to current generation technologies in glass fiber, which speeds the replacement of antiquated copper systems.

HB1673 improves ports’ access to Public Works Board funds for broadband passed with significant support this Session. It directs the Public Works Board to create a pre-application process for its broadband infrastructure loans and grants program. This modest change to the PWB process is designed lessen restrictions created by the Boards’ current project objection process.

ENVIRONMENT

Governor Inslee’s Decarbonization Bills

As previously reported, four bills were introduced, at the request of Governor Inslee, aimed at decarbonizing the building sector. Of the four, only one made it across the finish line during the 2022 Legislative Session. Reducing greenhouse gas emissions in buildings: SB5722, sponsored by Sen. Joe Nguyen (D-Seattle), will create new tiers of performance standards for buildings between 20,000-49,999 square feet and tasks the Department of Commerce with adopting rules starting in 2030 to implement the program. As originally introduced, the bill faced significant opposition from stakeholders, including the Association of Washington Business (AWB) and National Association for Industrial and Office Parks (NAIOP). Both AWB and NAIOP shifted their positions to “other” on the final version of the bill, noting extensive collaboration and improvements made to the bill despite some remaining concerns.

The following bills did not advance this year:

• Strengthening energy codes: HB1770

• Clear authority for publicly-owned electric utilities to engage in targeted electrification/fuel switching: HB1767

• Modifying the regulation of gas companies to achieve reductions in greenhouse gas emissions: HB1766

Emissions Intensive Trade Exposed (EITE) legislation

HB 1682, introduced as Department of Ecology request legislation, would establish a compliance pathway for Emissions Intensive Trade Exposed (EITE) businesses as required by the Climate Commitment Act, failed to pass during the 2022 Legislative Session. This bill was considered Necessary to Implement the Budget and was discussed until the final days of session. Stakeholders, Legislators, and the Department of Ecology plan to meet during the interim to continue negotiating a framework that keeps EITE businesses in Washington, protecting jobs and economic activity, which is of significant interest to ports.

Energy Facility Site Evaluation Council (EFSEC)

HB1812, sponsored by Rep. Joe Fitzgibbon (D-West Seattle), will expand the eligibility of projects that are able to opt-in to the EFSEC siting process to include clean energy product manufacturing, storage facilities, renewable natural gas facilities, and renewable hydrogen facilities. The bill, established EFSEC as independent from the UTC, creates a process for notifying and consulting with federally recognized tribes, and overall aims to streamline the process. The bill will now proceed to the Governor to be signed into law. Click here to read a final summary of the bill.

Tax Deferrals for Clean Technology Manufacturing, Clean Alternative Fuels Production, and Renewable Energy Storage

HB1988, sponsored by Rep. Sharon Shewmake (D-Bellingham), will create a tax deferral on investments over $2M in new, renovated, or expanded buildings that support clean related industries and purchases or upgrades of certain equipment and machinery. Additionally, if certain labor standards are met, the bill includes provisions for a reduced payment of the state portion of the sales tax. The bill will now proceed to the Governor to be signed into law. Click here to read a final summary of the bill.

Kelp & Eelgrass Conservation Planning

SB5619 by Senator Lovelett requires the Department of Natural Resources to establish a kelp and eelgrass conservation plan to conserve and restore at least 10,000 acres by 2040. Among other things, the Department must involve impacted communities and collaborate with partners such as ports. DNR must submit the plan to the legislature by 2023 and provide updated information each even-numbered year after that. The bill has passed the legislature and now proceeds to the Governor’s desk for signature. WPPA supported this proposal.

PORT GOVERNANCE AND OPERATIONS

Aerial Imaging

HB1629 regarding aerial imaging technology has passed the legislature and has been transmitted to the Governor’s office for review and signature. This bill calls for the Department of Commerce to conduct a study regarding the use of aerial imaging technology by state agencies, local governments, and tribes. The study must include an estimate of expenditures for aerial image acquisition and the economies of scale to coordinate the procurement of aerial imagery. WPPA supported this study bill.

ECONOMIC DEVELOPMENT

.09 Rural Tax Credit

HB1333 would have extended the .09 rural tax credit program until 2054. While ports, counties and economic development agencies pressed on legislators until the final hours to keep this bill moving, it stalled in the Senate Rules Committee and died. Legislators indicated they want more information on how much is collected statewide in this fund and what the funds are used for—the good news is a proviso was included in the supplemental Operating Budget that the Washington State Auditor’s Office must provide a publicly accessible searchable system on its website containing project and expenditure information, and the total amount of revenue collected by county per year. This searchable system will apply to reports filed in 2022 and thereafter, which should address the remaining concerns expressed by legislators, to assist in getting the extension passed next session.

SSB5898 has passed the Legislature and is on its way to the Governor for his review and signature. This bill by Senator Hawkins expands the eligible uses of the .09 tax credit program to include workforce housing. The bill stems from a request of local constituents, the Chamber, cities and others in the Leavenworth and Chelan areas. WPPA opposed the bill and continued to communicate concerns to legislators to the final vote.

Data Centers

HB1846 by Representative Berg has passed the legislature and is on to the Governor’s office for review and signature. This bill extends the rural data center tax preference until 2036 for eligible computer data centers located in rural counties. Qualifying businesses may use the exemption for refurbishment of existing eligible data centers. There are income requirements, building standards and workforce or project labor agreement provisions as well as equipment and installation exemptions in this bill.

Warehouse Tax Exemption

HSB5901 creates a manufacturing and research tax incentive program and expands the current warehouse tax exemption to include smaller warehouses in counties with less than 650,000 population. The warehouse tax exemption expires on July 1, 2032. The bill passed the legislature in the waning hours of the session and is now on its way to the Governor’s office for signature. WPPA supported this bill.