PORT OF SEATTLE 
MEMORANDUM 

COMMISSION AGENDA  POLICY AND STAFF BRIEFING 

Item No.       6d
Date of Meeting   January 6, 2009
DATE:   December 31, 2008
TO:     Tay Yoshitani, Chief Executive Officer
FROM:   Kurt Beckett, Director External Affairs and
Clare Gallagher Manager State Government Relations

SUBJECT: Federal and State Legislative Update

BACKGROUND
FEDERAL ACTIVITY  EXECUTIVE AND CONGRESSIONAL 
Transition
Congress convenes on January 6th with hearings on the financial markets and implementation of
the Troubled Asset Relief Program. The following week the Senate will hold confirmation
hearings on Dr. Steven Chu for Secretary of Energy and Senator Ken Salazar for Secretary of the
Interior. Other Cabinet level hearings are expected to be scheduled that week or shortly
thereafter. Former EPA Administrator Carol Browner is already installed as Energy Czar and is
not subject to confirmation, allowing the new Administration an early focus on energy issues.
Other key nominees include:
Secretary of Transportation -- former United States Congressman Ray LaHood
United States Trade Representative -- former Dallas Mayor Ron Kirk
Secretary of Commerce  New Mexico Governor Bill Richardson
Secretary of Department of Homeland Security  Arizona Governor Janet Napolitano
Fiscal Year (FY) 2009 Bills & Economic Stimulus Package Update
Expected timeline for Fiscal Year 2009 appropriation bills and economic recovery package:
While the Fiscal Year 2009 (FY09) appropriations bills are completed, House and Senate
action on the FY09 omnibus may occur after the economic recovery legislation is
considered and passed out of Congress.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer
December 31, 2008
Page 2 of 8

The new Administration and Congressional leaders continue to want to move the
stimulus package as early as possible, with passage in Congress the week of January 12th,
to deliver the bill to the new President for signature as close to January 20th as possible.
Republican leadership has recently raised concerns on moving this quickly and may try to
slow this schedule.
Economic Stimulus Package: The stated goal from the incoming Administration is to save or
create three million jobs in the bill and the expected price tag continues to hover in the $800 -
$850 billion range. It is not yet known whether the House or Senate will support that amount.
The Obama Administration's short-term goal is to create jobs as quickly as possible, but also to
invest in areas that will produce long-term benefits to the economy. Principles for the package
are the following:
Five areas of focus:
Energy
Infrastructure
Education
Health Care
Protecting the Most Vulnerable
Items that get underway quickly
Items that constitute sound national policy
Completion of legislation as close to January 20th as possible
No federal earmarks (though Members are requesting funding for their regions 
some specifically pushing for extra funds for areas hard hit by plant closings and
unusually high unemployment).
Close scrutiny and monitoring of the money provided.
State and City Requests: Governors and mayors are seeking flexible funding provided
directly to states and cities. It is still not known how funding will flow to states, cities,
and localities or how much discretion they will be granted. The Governors requested
$176 billion for the states ($136 billion for infrastructure projects and $40 billion for state
Medicaid health programs). The Conference of Mayors requested $96.6 billion for
infrastructure projects in 10 sector areas, including:
Community Development Block Grants for Infrastructure
Energy Block Grant for Infrastructure and Green Jobs
Transit Equipment and Infrastructure
City Streets/Metro Roads Infrastructure
Airport Technology and Infrastructure
Amtrak Infrastructure
Water and Wastewater Infrastructure
School Modernization
Public Housing Modernization
Public Safety Jobs and Technology

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer
December 31, 2008
Page 3 of 8

Port of Seattle Economic Recovery Activities to Date
The Port has actively engaged the Washington delegation and key administration officials on
three issues within the economic recovery packages currently being implemented or considered.
These issues are infrastructure, taxable municipal bonds and alternative minimum tax issues
affecting airport and seaport private activity bonds.
Infrastructure: The Port has partnered with Washington State Department of Transportation, the
City of Seattle, the City of Kent, and the Ports of Everett, Tacoma and Vancouver in submitting
joint letters advocating for funding of critical infrastructure projects that are ready to go, and tie
directly into improving our competitiveness of the seaport. Port of Seattle top projects include
the Spokane Street Spokane Street Viaduct, the East Marginal Way Grade Separation, the
Mercer Corridor Project and the S. 228th Street Grade Separation Phase 3 near Kent.
Taxable Municipal Bonds: The taxable municipal credit markets have been in turmoil since
summer of 2008 and, as a result, the Port has not been able to acquire long-term funding to
continue the Rental Car Facility (RCF) project to completion. In order to move forward with the
RCF for the long-term, there must be a loosening in the credit market and as a part of reaching
that larger goal, there is a push to try and facilitate access to credit markets through the stimulus
bill.
The government may be able to affect that in several ways including but not limited to:
A direct loan for 3-5 years, that would be repaid when the credit markets loosened up and
the Port could issue long-term revenue bonds; or
Federal loan guarantee (bond insurance) that would enhance the Port's ability to enter the
long-term revenue bond market in the near-term.
There has also been discussion about moving a fix through the Senate Finance Committee in a
pension corrections bill but it remains unclear if that has any traction.
Private Activity Bonds: Most tax-exempt "municipal bonds" are issued for general
governmental purposes and are exempt from all federal income tax. However, a subset of
municipal bonds is categorized as private activity by the IRS because the proceeds benefit a
private entity such as an airline or real estate developer. These include bonds that fund much of
airports, docks, housing authorities and industrial development authorities. These bonds differ
from governmental purpose bonds in several ways. Most specifically, they are subject to the
Alternative Minimum Tax (AMT) if the investor is subject to AMT and there is no allowance for
an issuer to refund the debt in advance of its call date. This subset of municipal bonds is
relatively small compared to the entire municipal market.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer
December 31, 2008
Page 4 of 8

Due to the possible AMT tax penalty to investors and the smaller, less liquid market, issuers of
AMT bonds have always paid a higher interest rate than for governmental/non-AMT bonds.
While the spread has varied, it has generally been in the range of 15-30 basis points. Earlier this
year AMT spreads rose to 120-150 basis points; the reduced volume from the change in status of
housing authority bonds means spreads are unlikely to narrow to their historical range. At these
spreads, the advantage of tax-exemption is greatly reduced. In addition, since the market
collapse that began on September 15, no AMT bonds have been sold and AMT issuers have
continued to delay their sales.
Due to the nature of the airport and seaport business enterprises, much of the Port's debt is in the
form of private activity (AMT) bonds. Based on the Port's 2008 budget, we forecast the need to
issue $1.5 billion in new debt over the next five years, much of it in the form of AMT bonds. If
access to AMT issuance is limited or the rates are significantly higher, that will affect the Port's
ability to invest in infrastructure projects that are critical to the transportation system and
regional economy. The airport operates on a cost recovery basis with the airlines; already
suffering from higher costs and reduced demand, they will be further strained by higher cost
airport debt. The alternative is to cancel or postpone projects, resulting in job reductions and less
efficient airport operations.
The Port of Seattle, along with national airport and port associations, is advocating that airport
and seaport private activity bonds should be treated as housing bonds are under current law-- the
interest is not subject to the AMT, but there is no advance refunding granted as in pure
governmental bonds.

Other Major Legislation in 2009 Affecting the Port of Seattle
Reauthorization of the Federal Surface Transportation Program: The 2005 "Safe, Accountable,
Flexible, Efficient Transportation Equity Act-A Legacy for Users" (SAFETEA-LU), approved
by Congress and signed by the President in August 2005, authorized $286.5 billion in federal
investment for the highway, public transportation and highway safety programs from fiscal years
(FY) 2004-09. The law expires on September 30, 2009.
The House will likely move first and it is unclear what effect the economic recovery package
will have on the size of the reauthorization, but Congress will move forward. The stimulus will
have no earmarks so the surface reauthorization bill will give Congress the ability to earmark for
specific projects. The Senate will take longer and likely work with the Administration to come
up with a package. There will be some tension within Congress and in the Administration
regarding earmarks and still unclear how it will get resolved. Conventional wisdom will likely
see this bill's actual passage slide into 2010.
The Port will make a significant effort on infrastructure investments that positively impact the
competitiveness of our container business; this effort will build on the existing US Department of

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer
December 31, 2008
Page 5 of 8

Transportation Borders and Corridors Program and is commonly referred to as a "Freight Title,"
in the upcoming reauthorization. The specific project priorities are reflected in both our
economic recovery infrastructure requests and the ongoing joint transportation agenda with the
Port of Tacoma. Alternative funding mechanisms will likely pose an additional series of policy
questions for the Commission and staff as this legislation moves forward.
Federal Aviation Administration (FAA) Reauthorization: It's likely the House will move
legislation shortly after Congress convenes, updating the existing bill. The Senate is likely to
take more time and coordinate with the new Administration. Existing FAA authority expires
March 31, 2009, which is likely to be extended three to six months to work out issues and
accommodate Senate action.
In partnership with the City of Burien, Sea-Tac Airport will continue to push for the inclusion of
a pilot program in the FAA reauthorization bill to enable the redevelopment of land surrounding
the Airport.  The pilot program encourages airports to integrate the redevelopment of land
acquired through the Part 150 program with that of nearby non-airport properties which local
jurisdictions have also slated for conversion or redevelopment. The pilot program also allows
related airport redevelopment activities to be eligible costs incurred under the Part 150 program.
In addition, we continue to work with other interested airport properties to allow for airports to
be able to enact an increase in the passenger facility charge. Finally, Sea-Tac will continue as a
leader in the aviation community on issues related to development of the Next Generation Air
Transportation System as well as Green House Gas reduction activities.
Water Resources Development Act Re-Authorization (WRDA - US Army Corps of Engineers
Re-Authorization): WRDA will also be reauthorized in 2009 with the House again taking the
lead. Passage of the FAA bill through the House and surface transportation reauthorization will
likely push WRDA consideration back to mid-year 2009 at the earliest. Extending or making
permanent Section 214, which allows for outside support of Army Corps' permit processing, will
continue to be a Port of Seattle priority. In addition, we are pursuing ways to address the Harbor
Maintenance Tax to make its application more equitable return on the Port and its customers'
contributions to this fund.
Department of Homeland Security (DHS)  Airport/Seaport Security: There will be significant
turnover at DHS with the new Administration which will require additional engagement of these
new staff members. The Senate will begin working on the reauthorization of SAFE Port and will
likely look at tweaking Joint Operational Centers, Automated Targeting System, Container
Security Initiative, CTPAT and likely 100% container screening again. There will also likely be
a push to award port security grants based on risk assessments.
Through DHS, and possibly within the SAFE Port reauthorization, the Port of Seattle will
promote the use of port security grants for Operations & Maintenance of equipment, which is

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer
December 31, 2008
Page 6 of 8

authorized but has not been funded in recent grant rounds. Also, given the economic downturn
there is concern that local matches will not be feasible and we will explore an ability to have that
match reduced or waived. Lastly, upcoming implementation deadlines for Transportation
Worker Identification Cards (TWIC) may require additional agency engagement with both DHS
and the US Coast Guard.
Energy Policy Legislation: The first of several comprehensive energy policy packages will be
introduced in the first quarter of 2009 with the goal of passing final legislation out of Congress
before year's end. Challenging topics to be addressed in one or more bills will be renewable
portfolio (electricity) standard, grid efficiency, carbon capture and storage, renewable fuel
standard and energy efficiency. The last two topics are ones we will be particularly monitoring
to look for incentives the Port and its tenants could use. Cap and trade will also be a part of
energy discussions in 2009 but conventional wisdom is that the issue is too controversial to come
to resolution before 2010, especially in light of the economic downturn.
STATE LEGISLATIVE SESSION 
The state legislative session will convene on Monday, January 12, 2009. There are 17 new
House members and three new Senators. New King County legislators include Representatives
Tina Orwell (33rd), Reuven Carlyle (36th), Marcie Maxwell (41st), Scott White (46th) and Senator
Fred Jarrett (41st).

State Budget
The overwhelming focus of the 2009 session will be the biennial budget and the need to bridge a
$5.7 billion gap between existing commitments and forecasted revenue. The governor avoided
any tax increases in her budget and instead is proposing across-the-board spending cuts, funding
shifts, a transfer from the state's rainy-day fund and an assumption of $1 billion in new federal
stimulus money. A more accurate revenue forecast, predicted to show even lower state revenues,
is expected mid-March and may force legislators to seek even further program cuts, elimination
of tax breaks or perhaps increased taxation. Lay-offs of state workers are fully expected, as
many as 2,500 over the biennium, and the heavy reliance on new federal stimulus money is of
concern to legislative leaders. The budget proposal relies on $1 billion in stimulus funds from the
federal government for programs to assist the unemployed, assistance in social service areas that
have been hardest hit by the recession, as well as infrastructure projects that are ready to go.

Transportation Funding and Stimulus Spending
Transportation funding, which last year had $3.4 billion approved for highway improvements for
the 2009-2011 biennium, lost $800 million in the current proposal. Revenues are already

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer
December 31, 2008
Page 7 of 8

declining due to lower gas tax revenues but this is a separate issue from the shortfall in general
fund forecasts. The completion timeline for most transportation construction projects is pushed
further into the future, meaning less short-term funding and greater possibility that some projects
will be dropped from the funding list altogether. Hardest hit is the state's ferry system, where
service cuts provide the most savings.
The Governor's goal for stimulus infrastructure spending is to get new construction jobs created
within 90 days. As noted above, the Port has already communicated to both state and federal
officeholders a targeted list of transportation projects which are ready to receive stimulus funds
and begin construction. Partnering with both other cities and other ports in those
communications allows the Port to highlight for federal and state leaders our role in strategic
national infrastructure by virtue of our trade activity as a gateway airport and seaport. Our goal
for stimulus spending is to emphasize that investment in the Port of Seattle benefits areas across
the state of Washington and serves markets across the United States.
At this point, it is unclear at the federal level how stimulus spending will be distributed, but it
will certainly flow to the state governments, with perhaps use of current funding formulas split
between state and local governments for some of the program areas. Regardless, a key initiative
for our state government relations activity will be continued emphasis on the jobs creation and
economic recovery  both short term and long term  of Port infrastructure and freight mobility
projects. We will be working with state and congressional leaders to use our position in national
infrastructure investment to maximize the economic stimulus appropriation to the state.
Unfortunately, the issue of instituting a container box tax may arise again this session, since the
overall budget available to fund transportation projects is so constrained. The freight investment
study commissioned by the Legislature showed very clearly last year that significant diversion
would occur if a fee were levied  and that major 'freight corridor' projects like State Route 509
and State Route 167 actually provide greater mobility benefits to passenger vehicles than
commercial vehicles. A national box tax continues to be mentioned as a possible freight funding
mechanism, and will likely be considered during the federal transportation reauthorization bill.
We will be monitoring it and other options, especially as it relates to competitiveness at gateway
ports and for dedicated use to freight mobility projects of significance.
The ports and our maritime partners remain strongly opposed to a state box tax, but as the
Commission's joint study sessions with the Port of Tacoma show, the major container ports are
aware of the state's funding constraints and understand the need to discuss and evaluate other
possible funding options for transportation infrastructure. As mentioned earlier, the Ports of
Seattle and Tacoma have co-signed on recent stimulus spending requests for targeted freight
mobility projects to support the movement of domestic and international trade and the jobs
generation that all trade and construction activity drives.

COMMISSION AGENDA 
T. Yoshitani, Chief Executive Officer
December 31, 2008
Page 8 of 8

With the recent announcement by the three agencies regarding more study on Alaskan Way
viaduct replacement and to defer the end-of-year decision timeframe to January, we will continue
to provide updates on this important issue.

Other Legislative Activity
Despite the budget challenge facing the Legislature, there are still areas of great interest we will
be managing during the session. Some bright areas are the Governor's continued focus on
container ports, with new language and funding proposed to insert a new planning element into
comprehensive planning in Seattle and Tacoma to accommodate freight corridors in those cities.
Another is work on Washington State's small business size standard, likely legislation that the
Port's Office of Social Responsibility is assisting with. We are also following possible
legislation regarding local regulation of town cars, renewable energy credit programs and the
Governor's proposed climate change policies, including the role of regulating truck emissions as
part of the Clean Ports Plan. At this time, the number of pre-filed bills is fairly small. More
specific updates on legislation before the House and Senate will be provided in future
communications.
With regard to areas affecting ports, two areas of concern are 1) the shift of $75 million from the
local Model Toxics Control Act (MTCA) account to the state general fund; and 2) transportation
funding, including continued discussion of a container box tax. The MTCA revenues are keyed
to the barrel price of oil, and the account has seen a surge in collections in the past year or so due
to the high per-barrel costs. However, the fund is used by local governments, including ports, for
toxic cleanup efforts, and a recent survey done by the state confirms that many areas across the
state are relying on MTCA funds for ongoing or planned projects, including millions of dollars
for many Port of Seattle cleanup sites.  The Governor's proposed budget, while providing a
lower level of funds for the Puget Sound Partnership initiatives, does include significant
allocations for Puget Sound cleanup, including for work with storm water run-off, toxics
prevention and climate change strategies. As funding moves between cleanup efforts and
broader Partnership programs, we will continue to monitor the effects on Port programs and
activities, and our opportunities to support these environmental initiatives.