OLYMPIA -- State lawmakers on Thursday dropped their effort to help rescue a Wenatchee-area agency from default, leaving local jurisdictions to deal with overdue debt that financed a sports arena.
Sen. Linda Evans Parlette, R-Wenatchee, said the proposal simply did not have enough votes to pass. She expressed concern that the effect of the default in the Wenatchee area will make it more difficult for local governments to borrow money.
"We knew from the start that it would be an uphill battle to pass this bill, due to the complexity of the issue and the short time frame we were working under," she said.
Franklin County put up $300,000 in 2009 as a short-term investment on bond anticipation notes related to the Wenatchee project. County officials told the Herald last week that the investment was a risk and if the money can't be recovered it would drive the county's slim reserves even lower.
In hopes of mitigating fallout from the default, lawmakers had been examining the possibility of making a $42 million payment on the debt by using a cash buffer in an account for local sales taxes. Local governments would have had the option of paying back the state with an increased sales tax, and the state would have had the power to seize local taxes if the payments weren't made on time.
House lawmakers approved a version of the plan earlier this week, but many senators questioned whether the step would make the state a backstop for other bad obligations.
The Greater Wenatchee Regional Events Center Public Facilities District defaulted last week on the debt, which is tied to the 2008 construction of the Town Toyota Center in Wenatchee. A judge determined that the city can't legally issue new bonds without exceeding its debt capacity.
State finance leaders have warned that the default could have a broader impact on the rest of Washington if investors become wary of lending money to local governments.