OLYMPIA — With the regular session scheduled to end this week, Washington state legislators are locked in a tussle over the state’s construction budget and fast-growing debt service payments.
Both chambers recently rolled out their $3 billion capital budget proposals with broad bipartisan s
upport, but now any advancement of the budget is contingent on the passage in the House of a constitutional amendment to reduce debt limit, put forth by the Senate.
The bipartisan amendment passed unanimously out of the Senate last week, and the sponsors say they won’t negotiate on the capital budget unless the House approves the amendment.
But Rep. Hans Dunshee, D-Snohomish, the chair of the House capital budget committee, isn’t completely sold on the idea of the constitutional amendment, saying that it’s “un-needed” and won’t necessarily accomplish what its sponsors want it to.
That impasse between the House and the Senate may force the capital budget to be yet another item on the special session calendar.
The amendment would shrink the state’s debt limit from 9 percent of state revenue to 7 percent over the next two years. It would also smooth out the state’s investment in construction projects by basing that 7 percent calculation on a 10-year rolling average of state revenue, rather than its current three-year rolling average.
The goal is to reduce the portion of the operating budget dedicated to repaying debt service — which has grown 61 percent in the last 10 years to $1.8 billion, or more than 6 percent of the operating budget.
That’s money that could be used to pay for K-12 education, higher education and social services, the sponsors say.
“You run into this position where, if we do nothing, debt service starts to crowd out some of our other priorities, and I think that’s a problem,” said Sen. Derek Kilmer, D-Gig Harbor. “We can’t and won’t pass a bond bill without some forward motion on efforts to address some of our long-term liabilities.”
The capital budget includes about $718 million in matching bonds for K-12 school construction projects and about $330 million for public works projects around the state. The two budgets differ on how much they allocate to higher education projects, but the number is around $600 million.
About half of the $3 billion budget proposals introduced in both the House and Senate would be paid for by bonds.
Dunshee rewrote the capital budget in a late-arriving striking amendment, linking the bill authorizing the state to issue bonds with the bill that directs what those bonds pay for. The maneuver will make it harder for opponents to vote against the bill, since it would mean rejecting construction projects in their own districts.
Kilmer and his Republican counterpart, Sen. Linda Parlette, R-Wenatchee, haven’t budged, though they do have an alternate cash-only plan that would still pay for K-12 construction projects without issuing any new bonds.
“It’s awful hard to negotiate when you’ve got a gun in your face,” Dunshee said, adding that the capital budget is often used a bargaining chip. “I’d like to work on the budget so we have a better-quality budget and we’re not doing it in the last 12 hours of session.”
If the debt limit is decreased, Dunshee argued, it could lead to the use of leases and revenue bonds, which are more expensive than general obligation bonds but are not addressed in the amendment’s proposed limit. He says the negotiations for the amendment won’t be worked out until special session, and until that happens, it won’t be worth it to run the capital budget through the House because the Senate will just bounce it back.
Dunshee needs a two-thirds supermajority vote in the House to pass the capital budget, since it involves bonds.
Blocking the capital budget is “holding the kids hostage,” Dunshee said, because several school districts around the state have already passed levies to raise money for school construction in their district and are counting on the state to pay its share.
If Kilmer and Parlette go ahead with a cash-only plan so they are able to fund the K-12 projects, they’d have to take that money away from public works and toxic cleanup, he said. Plus, Dunshee added, the capital budget as it stands represents 51,000 construction jobs for the next biennium, which are needed as the state slowly climbs out of the Great Recession.
House minority leader Rep. Richard DeBolt, R-Chehalis, said the House Republicans fully support the Senate in its push to prioritize the debt limit amendment.
“Lowering the debt limit is important, especially in light of what’s going on,” with Standard & Poor’s warning that it might downgrade the U.S.’s credit rating, DeBolt said. “We want to make sure we don’t end up in the same situation where we’re spending more than we have.”
Because the proposal would amend the state constitution, if it’s approved in the Legislature, it must be sent out for a simple majority vote of the people.
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