Debt Reduction Act would lower our debt, continue capital budget goals
May 12, 2011 · 2:27 PM
By JUDY WARNICK
For the Independent
The crash of the housing market. The average credit card debt of Americans. Election results.
They all point to one concern — rising debt, individually and collectively, in state and federal government.
Senate Joint Resolution 8215, supported by both parties in the Senate and by House Republicans, would aim to address that concern.
Washington ranks in the top 10 nationally among three different measurements of debt.
Debt per capita in Washington is $2,226, while the national median is just $936.
Just as individuals aim to improve their credit scores by reducing their credit card and loan debts, Washington can protect its bond rating by lowering its debt.
Why does this matter? Because our operating budget, facing a $5.1 billion shortfall, and the capital budget are intertwined.
People are surprised to learn that the first check written by the state out of the operating budget is the payment on the debt from the capital budget.
Between 1991 and 2001, capital budget bond spending averaged nearly $930 million per biennium. Then in 2003, spending shot up to $1.9 billion per biennium.
If the bonds had grown at just 2 percent for the last 10 years, the operating budget could have seen an additional $365 million for funding K-12 education, public safety and help for the most vulnerable — instead of toward the interest on our bonds.
In the last 10 years, we have seen a 61 percent increase in debt service payments. Higher spending on debt service payments in the operating budget increases pressure to sweep other capital budget funds to the operating budget.
In 2009-11, budget writers swept $509 million from the Public Works Assistance Account, which funds critical local infrastructure and provides work for many.
By leveling out our debt payments, we can reduce the temptation to sweep capital cash accounts to fund the operating budget.
In addition, this proposal will force us to focus on the priorities of the capital budget — construction of schools, hospitals, jails and higher education facilities.
Opponents claim the proposal will kill jobs. This is based on the assumption that every $1 million spent in the capital budget creates approximately 10 jobs.
The capital budget provides additional, construction-related work, but does not guarantee the creation of new, long-term jobs.
Opponents assume people not working on capital budget projects would otherwise be unemployed.
Even under the Debt Reduction Act, the capital budget would still put thousands of people to work.
We cannot minimize the impact a high level of debt service payments has on the state’s general fund.
The Debt Reduction Act will level out our state’s increasing debt and ensure we have future funds to address infrastructure needs and employ people in leaner years.
My caucus and the Senate are ready to pass the Debt Reduction Act, move forward with the capital budget and allow voters to have a say on this constitutional amendment.
I hope the House majority party will see fit to support this reasonable, common-sense proposal so we can reduce our debt and continue to fund our critical infrastructure needs.
Rep. Judy Warnick, R-Moses Lake, is the ranking Republican on the House Capital Budget Committee.