Legislators, Boss pushing to reduce Narrows bridge reserve fund

The Washington State Transportation Commission will propose toll increases for the Tacoma Narrows Bridge Tuesday, and the amount will hinge on whether it wants a big reserve fund. Chances are, it will, because the fund was its idea.
In March 2010, it adopted a policy that 12.5 percent of annual bridge costs must be kept in reserve to cover revenue shortfalls and cost increases. After being pressed on the policy, it got confirmation from the state Attorney General’s Office in January that it was within it’s legal authority.
Randy Boss disagrees, claiming the reserve fund is neither necessary nor legal. That’s no surprise, considering he’s challenged nearly everything to do with the bridge for a decade. But 26th District legislators back him up.
Sen. Derek Kilmer, D-Gig Harbor, said he and Rep. Larry Seaquist, D-Gig Harbor, didn’t like the idea from the start, and told the commission so. If the bridge was built using toll revenue bonds, backed exclusively by tolls, that’d be one thing. But the bonds are paid through the state Motor Vehicle Fund, and are backed by the full faith and credit of the state.
“There has not been a risk that we’re going to default on making payments,” Kilmer said. “The notion that you would have this giant reserve, particularly at a time when folks are really hurting, just doesn’t make sense. I know a lot of families that would like to have a 12 1/2 percent reserve in their savings accounts, but that’s not the reality of this time. My hope is there’s a sensitivity to that reality.”
The Tacoma Narrows Bridge citizen advisory committee, which grudgingly accepts the reserve fund but doesn’t treat 12.5 percent as a firm number, last week recommended toll increases from $2.75 to $3.65 for electronic payment, $4 to $5 at the toll booths and $5.50 to $7 for pay by mail. Those rates would generate a reserve of about 9.3 percent.
The Transportation Commission says cash flows and expenses vary month to month, and there are times when reserve funds are needed to cover costs. Unforeseen disruptions to tolling operations or traffic volumes can stop or significantly reduce toll revenues, but debt payment obligations never go away.
“Traffic loss due to weather, a rate increase, natural disasters, or other events on the Highway 16 corridor that could hinder or stop traffic on the bridge are real threats that cannot be ignored,” said a statement from executive director Reema Griffith.
Seaquist thinks 12.5 percent is too much.
“We should slice that reserve account as thin as possible,” he said. “It is more important to keep tolls low to keep our local businesses open and our low-income citizens able to use the bridge to get to the doctor or to school or to work.”
Rep. Jan Angel, R-Port Orchard, said because of fines being dismissed and other problems from switching to a new statewide tolling system, she can’t tell how the bridge is doing financially.
“Until many of these questions are answered to the satisfaction of the CAC (citizen advisory committee), I do not believe any toll prices should be raised,” she said. “We need good data to make good decisions.”
The Legislature passed a Kilmer bill last week, deferring sales taxes on construction of the bridge for six more years and saving about $5.8 million per year in needed toll revenue. That, combined with eliminating the reserve fund, would make a toll increase for July 1, 2012, to June 30, 2013 unnecessary, Boss said. At the end of that period, there would be $3.3 million left in the bridge account.
“There’d be no reason to raise the toll,” Boss said. “We’d have $3 million left in the bank if we don’t have to hit the sufficient minimum balance, and the sufficient minimum balance is illegal.”

The way the process works, the Transportation Commission views the citizen group’s recommendation as the low point, discusses whether it’s enough, but usually accepts it or inches it up. In this case, they might bump the electronic rate from the recommended $3.65 to $3.75 and get a little closer to their 12.5 percent goal. I don’t think they’ll eliminate their reserve policy, though, and there’ll be no opportunity to testify for that at the meeting. But there will be at April public meetings in Gig Harbor and Port Orchard and a final hearing May 21.