SEATTLE — The Legislature averted a partial government shutdown last week by passing a two-year operating budget. But $4 billion in new construction projects and money for a few hundred state jobs still hang in the balance while the capital budget has been held up by a dispute over water rights.

Senate Republicans say they won’t pass a capital budget without legislation aimed at overturning a recent state Supreme Court known as the Hirst decision. That ruling effectively limited the use of new domestic wells in certain rural areas when it harms senior water rights.

“We’re holding it right now,” Republican Sen. Jim Honeyford, chair of the capital budget, said Thursday. He said the court decision has stopped home construction in rural areas and it’s important to get that on track. “This was our leverage point and that’s why we’re using it.”

The Democratic-controlled House approved a $4.2 billion capital budget on a strong bipartisan 92-1 vote early Saturday. But the Republican-controlled Senate adjourned without taking action.

That means about $4 billion in new money for local water and sewer projects, school construction, mental health facilities and other construction across the state remains in limbo.

Senate Democratic Leader Sharon Nelson in floor debate Saturday called the decision not to pass the capital budget “a major disservice” to residents.

“All 39 counties need water from exempt wells. And that is as critical as any infrastructure in a capital budget,” Senate Majority Leader Mark Schoesler said Saturday.

“To try to leverage a capital budget bill on a really complex legal policy bill is not appropriate,” Democratic Rep. Steve Tharinger, who chairs the House Budget Committee, said Wednesday.

In October, the state Supreme Court ruled that Whatcom County failed to protect water resources by allowing new wells to reduce flow in streams for fish and other uses. The court said counties must ensure, independently of the state, that water is physically and legally available before they issue building permits in certain areas.

In the wake of that ruling, some counties temporarily halted certain rural development, while others changed criteria for obtaining building permits.

Lawmakers have proposed various bills in response, but there has been little agreement so far.

The Senate four times passed a bill aimed at reversing key elements of the Hirst decision. The House didn’t act on it.

Frustrated property owners told lawmakers they spent thousands of dollars to prepare building lots only to discover they now can’t get a building permit. County officials say they don’t have the resources to do hydrological studies that would be required under the ruling.

Several tribes across the state have urged Gov. Jay Inslee to oppose efforts to overturn the court decision and reject proposals that don’t protect tribal treaty rights. They say the ruling correctly requires local governments to plan ahead so new water withdrawals don’t harm those with senior water rights, including tribes, municipalities and farmers.

“For every well that’s dug, that takes away water from the creeks and rivers that feed the fish,” said John Weymer, a Puyallup Tribe spokesman.

Republican Sen. Judy Warnick said her bill offers a needed fix for rural landowners and doesn’t take away from senior water rights.

“I believe there’s still enough momentum to do this,” she said Monday. Warnick said she was skeptical of a House proposal that would effectively delay the court decision by 18 months and questioned whether it was constitutional.

Tharinger thinks the best solution forward is a bill he is co-sponsoring. His bill would provide temporary relief by allowing property owners to obtain building permits in certain areas through 2018. It would also create a legislative task force to work on long-term solutions.

Water is a complex issue that can’t be fixed in days, he said. “It takes time and we need to figure out a pathway.”

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Associated Press writer Rachel La Corte in Olympia contributed.