The Washington State Department of Transportation borrows money to construct road, bridges, and ferry vessels through the issuance of municipal and revenue bonds. Debt financing of capital projects provides the citizens of Washington to pay for the benefits received from the project over time. This allows future users, who also benefit from the project, to contribute to its construction.
In order to sell General Obligation bonds, the Legislature must enact a statute authorizing the sale of bonds for a specific purpose. This statute requires a 60% legislative majority vote or approval by the voters in a statewide referendum (e.g., Referendum 49). Before bond proceeds may be delivered, the Legislature must first appropriate expenditure authority and the Secretary of Transportation must request the sale of bonds from the State Finance Committee. Pursuant to state law, the State Finance Committee — comprised of the Governor, Lieutenant Governor and chaired by the Treasurer — authorizes and approves bond sales and financing contracts. Bond proceeds are only used for capital projects.
There are various types of bonds issued by the state:
- “Double-barrel”: State transportation Motor Vehicle Fuel Tax bonds are referred to as "double-barrel" bonds. They are general obligation bonds, meaning they are secured by motor fuel taxes as well as the full faith and credit of the state.
- “Triple Pledge”: These general obligation bonds are backed by tolls, fuel taxes, and the full faith and credit of the state. Toll revenue is expected to pay for the debt service on these bonds.
- “Toll Revenue”: These bonds are backed solely by toll revenue and debt service is paid from toll revenues.
- “Federal Highway Grant Anticipation Revenue (GARVEE) Bonds”: GARVEE bonds are issued as limited obligations of the state, payable from and secured solely by the Federal-Aid Highway funds received by the state.
Article VIII, Section 1(g) of the State Constitution exempts motor vehicle fuel tax bonds and motor vehicle license fees from the state debt limit.