Published: Thursday, February 16, 2012
In our view / Legislature
No to credit-card budgeting
Some welcome news in Olympia could make the budget-balancing process about a third less daunting. And, we hope, a bit more responsible.
Demand for state services in the current budget has dropped by about $340 million, and today's updated revenue forecast is expected to be slightly improved -- leaving lawmakers with about $1 billion to cut rather than $1.5 billion.
Difficult choices will still have to be made, but the new, lower target for cuts ought to put to rest a dangerous idea that's been making the rounds: filling the general-fund gap by borrowing against future revenue streams.
Issuing "revenue bonds," which would give the state a lump sum to be paid off with future income from the state's tobacco settlement, the lottery or other sources, would extend the current budget problem to future generations.
It's irresponsible for that reason alone, but could also result in a lower credit rating and higher borrowing costs. That would mean fewer job-producing construction projects, and less to spend on needed services in the future.
In a letter this month to the governor and legislative leaders, state Treasurer Jim McIntire warned against implementing "credit negatives" that could trigger a downgrade in the state's strong credit rating and increase interest costs. He specifically cited "Measures that securitize future revenues to provide one-time cash for the operating budget ..."
"Why send scarce taxpayer funds to Wall Street that could stay here to create jobs instead?" McIntire asked rhetorically.
Maybe the idea was going nowhere anyway -- lots of ideas that get floated in Olympia sink quickly -- but it was pushed hard last week at the state labor council's political-endorsement convention. House Majority Leader Pat Sullivan, D-Covington, appeared to back it in remarks to union members.
It may have been a reaction to polling that suggests voters aren't in a mood to approve the governor's idea of a temporary half-penny sales tax hike to take the edge off painful cuts. If legislators find out today that they have $500 million less to slash, they'll have saved as much for the rest of the current budget as the tax increase would have raised.
With a new budget target in hand, lawmakers understand the size of the task they face. It's time for them to get down to the final business of balancing expenditures and revenues for the remainder of this budget cycle -- without putting even more pressure on future ones.
Demand for state services in the current budget has dropped by about $340 million, and today's updated revenue forecast is expected to be slightly improved -- leaving lawmakers with about $1 billion to cut rather than $1.5 billion.
Difficult choices will still have to be made, but the new, lower target for cuts ought to put to rest a dangerous idea that's been making the rounds: filling the general-fund gap by borrowing against future revenue streams.
Issuing "revenue bonds," which would give the state a lump sum to be paid off with future income from the state's tobacco settlement, the lottery or other sources, would extend the current budget problem to future generations.
It's irresponsible for that reason alone, but could also result in a lower credit rating and higher borrowing costs. That would mean fewer job-producing construction projects, and less to spend on needed services in the future.
In a letter this month to the governor and legislative leaders, state Treasurer Jim McIntire warned against implementing "credit negatives" that could trigger a downgrade in the state's strong credit rating and increase interest costs. He specifically cited "Measures that securitize future revenues to provide one-time cash for the operating budget ..."
"Why send scarce taxpayer funds to Wall Street that could stay here to create jobs instead?" McIntire asked rhetorically.
Maybe the idea was going nowhere anyway -- lots of ideas that get floated in Olympia sink quickly -- but it was pushed hard last week at the state labor council's political-endorsement convention. House Majority Leader Pat Sullivan, D-Covington, appeared to back it in remarks to union members.
It may have been a reaction to polling that suggests voters aren't in a mood to approve the governor's idea of a temporary half-penny sales tax hike to take the edge off painful cuts. If legislators find out today that they have $500 million less to slash, they'll have saved as much for the rest of the current budget as the tax increase would have raised.
With a new budget target in hand, lawmakers understand the size of the task they face. It's time for them to get down to the final business of balancing expenditures and revenues for the remainder of this budget cycle -- without putting even more pressure on future ones.
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