This Washington
Budget Negotiations at Impasse Over State's Debt Limit
In the final days of this year's legislative session, senate Democrats are insisting the state lower the debt limit from nine to seven percent of general fund revenues—meaning debt responsibilities on the capital budget can only be seven percent of the general budget.
The senate's reasoning? More money for the operating budget. But that, of course, means less money for construction projects in the capital budget, something that doesn't sit well with Rep. Hans Dunshee (D-44, Lake Stevens), chair of the house capital budget committee.
Now the senate has pledged not to pass Dunshee's capital budget unless the house agrees to pass the senate's debt reduction legislation . That's created an impasse—one that will not likely be breached until the inevitable special session.
The legislation, sponsored by Sen. Derek Kilmer (D-26, Gig Harbor) and supported by Governor Christine Gregoire and the senate's budget leader, Sen. Ed Murray (D-43, Capitol Hill), would lower the debt limit by half-percent integrals each year starting in 2016 down to seven percent of general fund revenues. In addition, the people would have to vote on the legislation before it becomes a constitutional amendment. As Kilmer points out, debt service payments have doubled over the last ten years, from $840 million in the 1999-2011 biennium to $1.8 billion in the 2011-2013 biennium. The 2011-2013 budget is set to make about $2 billion in debt service payments.
In testimony before the house capital budget committee on Monday, Kilmer sought to frame the debt reduction issue as a choice between funding K-12 and social services in the operating budget and making debt service payments. "I am sick about some of the operating budget choices that we are making this year," Kilmer explained, adding "and yet, in just the last 10 years, debt service payments in our operating budget have roughly doubled."
"Just as we did when we passed a constitutionally protected rainy day fund, occasionally we need to constrain ourselves to foster greater sustainability. Regardless of [which party is] in charge, we generally max out the credit card," Kilmer told legislators. During his testimony, Kilmer emphasized his resolve to fund capital budget projects, but argued that the state just doesn't have the capacity to do so during the recession.
Dunshee is fighting back, telling PubliCola he won't pass the senate's debt reduction proposal. "Are we just going to stop building things now?" he countered, stressing the 51,000 construction jobs that would be created over the next biennium. He said the senate's desire to curb debt service payments to free up money for the general fund will create "unintended consequences." "When you put restrictions on the cheaper ways to get money, legislators are going to start using more expensive ways to get money," he explains, referring to less secure bonding.
Dunshee points out that the state's current debt burden doesn't put the state at risk. A report by the State Treasurer James McIntire—an advocate for lowering the debt limit—confirms that assertion. The Debt Affordability Study from January 2011 states that "despite citing the state's debt levels as a potential risk, each rating agency has recognized that fundamental strengths of the state largely mitigate the above-average debt burden."
Washington currently ranks eighth among states in terms of its debt per capita with $2,226, but greater than average net migration to the state is expected to lower the ratio in coming years, the report states.
As the special sessions looms, Sen. Murray—the former chair of the house capital budget committee, by the way, asks: "What's the point in building infrastructure if there are no programs?"
Dunshee's view is the exact opposite: "What good are well paid teachers if we dont have buildings for them to teach in?"
The senate's reasoning? More money for the operating budget. But that, of course, means less money for construction projects in the capital budget, something that doesn't sit well with Rep. Hans Dunshee (D-44, Lake Stevens), chair of the house capital budget committee.
Now the senate has pledged not to pass Dunshee's capital budget unless the house agrees to pass the senate's debt reduction legislation . That's created an impasse—one that will not likely be breached until the inevitable special session.
The legislation, sponsored by Sen. Derek Kilmer (D-26, Gig Harbor) and supported by Governor Christine Gregoire and the senate's budget leader, Sen. Ed Murray (D-43, Capitol Hill), would lower the debt limit by half-percent integrals each year starting in 2016 down to seven percent of general fund revenues. In addition, the people would have to vote on the legislation before it becomes a constitutional amendment. As Kilmer points out, debt service payments have doubled over the last ten years, from $840 million in the 1999-2011 biennium to $1.8 billion in the 2011-2013 biennium. The 2011-2013 budget is set to make about $2 billion in debt service payments.
In testimony before the house capital budget committee on Monday, Kilmer sought to frame the debt reduction issue as a choice between funding K-12 and social services in the operating budget and making debt service payments. "I am sick about some of the operating budget choices that we are making this year," Kilmer explained, adding "and yet, in just the last 10 years, debt service payments in our operating budget have roughly doubled."
"Just as we did when we passed a constitutionally protected rainy day fund, occasionally we need to constrain ourselves to foster greater sustainability. Regardless of [which party is] in charge, we generally max out the credit card," Kilmer told legislators. During his testimony, Kilmer emphasized his resolve to fund capital budget projects, but argued that the state just doesn't have the capacity to do so during the recession.
Dunshee is fighting back, telling PubliCola he won't pass the senate's debt reduction proposal. "Are we just going to stop building things now?" he countered, stressing the 51,000 construction jobs that would be created over the next biennium. He said the senate's desire to curb debt service payments to free up money for the general fund will create "unintended consequences." "When you put restrictions on the cheaper ways to get money, legislators are going to start using more expensive ways to get money," he explains, referring to less secure bonding.
Dunshee points out that the state's current debt burden doesn't put the state at risk. A report by the State Treasurer James McIntire—an advocate for lowering the debt limit—confirms that assertion. The Debt Affordability Study from January 2011 states that "despite citing the state's debt levels as a potential risk, each rating agency has recognized that fundamental strengths of the state largely mitigate the above-average debt burden."
Washington currently ranks eighth among states in terms of its debt per capita with $2,226, but greater than average net migration to the state is expected to lower the ratio in coming years, the report states.
As the special sessions looms, Sen. Murray—the former chair of the house capital budget committee, by the way, asks: "What's the point in building infrastructure if there are no programs?"
Dunshee's view is the exact opposite: "What good are well paid teachers if we dont have buildings for them to teach in?"
