KENNEWICK --Washington State Treasurer Jim McIntire doesn't believe the state is in any immediate danger of losing its AA+ credit rating, which was reaffirmed by Wall Street last month.
But McIntire told members of the Washington State Transit Association in Kennewick on Monday that he would like to see the Legislature look at the state's mounting debt and form a sustainable strategy for future borrowing.
"I'm doing this as a prelude to ask the question, 'How do we do a better job of planning for capital investments to get our economy growing,' " McIntire said. "Getting the Legislature to think about how we use debt is an important part of the process."
Unlike the federal government, the state doesn't borrow money to pay for operating expenses, but only for capital and transportation projects that can't be paid for with cash, McIntire said.
But the Legislature has a tendency to "spend to the credit card limit," and he thinks that is a policy lawmakers should rethink.
"In the best of all worlds, we would keep a high debt limit ... and not spend up to it," he said. "That's hard to do with the Legislature."
Because of the formula for how the state's debt ceiling is calculated as a percentage of revenues, spending to the limit during prosperous years ends up leaving little or no wiggle room for funding building projects during lean years.
That happened this year when lawmakers arrived for the 2011 legislative session and found that stunted revenue growth coupled with capital spending over the last couple of biennia had left them just $118 million in debt capacity for the 2011-13 capital budget.
A last-minute deal was struck to raise the state's debt ceiling by more than $1 billion, but the Legislature also created a bipartisan Debt Commission to look at the state's debt and whether the way the debt ceiling is calculated should be changed, McIntire said.
He said that he would like to see the debt ceiling formula changed so that it's more stable compared to the current formula that tends to put the state on a "roller coaster."
He noted that in 2010, Moody's estimated Washington's net tax-supported debt at
$14.8 billion, compared to a national median of $4.2 billion. Washington ranked eighth in net tax-supported debt per capita.
Standard & Poor's rated Washington a little differently, putting the state's net tax-supported debt at $13.8 billion, compared to a national median of $3.6 billion. S&P ranked the state seventh in net tax-supported debt per capita.
State debt payments are about 6 percent of general fund expenditures, compared to a national average of 3 percent, McIntire said. He would like to see that brought down to 5 percent.
McIntire said he has been able to save the state about $750 million by getting better competitive rates for its bonds, and using the Build America bonds federal subsidy program included in President Obama's stimulus package.
And that lets the state invest more into building projects while costs are low during recession.
"So there is some rationale for doing this kind of spending," he said.
-- Michelle Dupler: 582-1543; mdupler@tricityherald.com
Similar stories:
Lawmakers mull revenue bond to pay for construction projects
Lawmakers mull revenue bond to pay for construction projects
OLYMPIA -- With jobless rates hovering near 9 percent in the Evergreen State, a few Washington lawmakers are zeroing in on a way to fire up the regional economy.
Their idea is a new way to pay for government construction projects. Sen. Derek Kilmer said the concept is simple: Issue revenue bonds, just like the state does now to pay for state highway and bridge projects with gas taxes.
But this construction package would rely on the state's toxics taxes, public works trust funds and perhaps other streams of money that roll into the state's capital budget.
Washington state budget debate to begin
Washington state budget debate to begin
Talking about a $2 billion deficit in Washington can seem unreal -- it's a number almost too big for the average person to imagine, but one that might have very real consequences for thousands of Tri-Citians.
And it's the number that will be the focus of lawmakers' discussion and debate as the Legislature convenes in a 30-day special session Monday to tackle that deficit before it ordinarily would meet to write a supplemental budget starting in January.
The actual shortfall between projected revenue and the biennial budget as written is about $1.4 billion, but Gov. Chris Gregoire is asking lawmakers to cut enough to leave $600 million in reserves.
Washington state budget debate to begin
Washington state budget debate to begin
Talking about a $2 billion deficit in Washington can seem unreal -- it's a number almost too big for the average person to imagine, but one that might have very real consequences for thousands of Tri-Citians.
And it's the number that will be the focus of lawmakers' discussion and debate as the Legislature convenes in a 30-day special session Monday to tackle that deficit before it ordinarily would meet to write a supplemental budget starting in January.
The actual shortfall between projected revenue and the biennial budget as written is about $1.4 billion, but Gov. Chris Gregoire is asking lawmakers to cut enough to leave $600 million in reserves.
$1B Washington public works package could put 25,000 to work
$1B Washington public works package could put 25,000 to work
OLYMPIA -- State lawmakers say talks continue on a more than $1 billion public works package that potentially could put 25,000 people to work, many starting in the summer construction season just months away.
A top Republican met last week with Senate Majority Leader Lisa Brown, D-Spokane, and said later that the GOP is interested in the concept -- though still not committed to any specifics.
"We are still at the table to see what is going to come forward," Senate Republican Leader Mike Hewitt of Walla Walla said Friday. "I liked the approach we talked about ... more than any other approach so far.''
Job growth, reform key to state budget
Job growth, reform key to state budget
In less than two weeks, legislators will be back in Olympia, once again trying to address the state’s budget crisis — a gap between revenue and planned spending that already is in the neighborhood of $2 billion.
Undoubtedly, some of my colleagues will want this discussion to revolve solely around spending cuts, while others will be obsessed with the question of whether to send a tax measure to voters. I reject both these approaches. The key to solving our state’s fiscal woes is not new job-crushing taxes or draconian cuts to public safety and support for our most vulnerable citizens; it’s a combination of job growth, spending prioritization and reforms that will increase state government efficiency.
We need to talk about reforms before we talk about revenue, and there are several “sacred cows” which have yet to be considered for real reform. Here are some examples:
Print
Email Story
