Funding for operating, maintaining, preserving, and improving Washington’s highways and ferry system comes from motor vehicle fuel taxes, licenses, permits, and fees, tolling, ferry fares, federal and local funds, and bonding. Financial plans are developed by the Office of Financial Management and the Legislature to identify and manage the different sources of funds and their intended best use.
Bond debt financing is often used to finance the Department’s capital projects. Using bond debt financing requires that a portion of the state fuel taxes and other revenues to be set aside to pay debt service on these long-term borrowings. In 2003 and in 2005 two large transportation investment packages were enacted, referred to as the 2003 Nickel Package and the 2005 Transportation Partnership Package. These funding packages included increases to the fuel tax to pay for a list of specific projects. Both packages were debt financed, meaning the revenue raised would be primarily used to pay the debt on the bonds sold to finance the projects. The Office of Financial Management monitors the current debt, plans future bond sales and projects future debt payments. The Office of the State Treasurer issues an annual debt affordability study that describes the level of the debt assumed by the department. That study can be found here.