Legislative Updates

Dear WAA Members:

Just an “update.”

The issue of limiting the state debt limit is being considered in Olympia. The latest proposal is to lower the current gap of 9% of state revenue to 7% debt reduction, over time.

This approach will impact the state budget significantly.

Many thanks.

Mark Gjurasic

Public Affairs of Washington, LLC

mgjurasic@comcast.net

(360) 481-6000

Issue of taking on less debt keeps lawmakers in town

JORDAN SCHRADER and BRAD SHANNON | Staff writer . Published May 12, 2011

Both sides of a debate over debt are blaming the other for keeping state lawmakers in Olympia.

The question of whether to tighten restrictions on state debt continues to hold up approval of a bipartisan state construction budget. It kept roughly $1.3 billion in bonds from coming to a House vote this week.

With lawmakers’ 30-day overtime period more than half over, the debt limit is just one of the roadblocks in front of the exits. Lawmakers are also stymied by details of the more than $5 billion in cuts and transfers that need to be made in the operating budget, and what to do to rein in the cost of workers’ compensation benefits.

Republicans and sympathetic Senate Democrats are holding the budgets hostage until they get their wish list, said House Capital Budget Chairman Hans Dunshee.

“They’ve got all these ideological, external issues that they’re shoving, and they’re going to keep us here because of that,” said Dunshee, a Snohomish Democrat.

Dunshee is focused mainly on resisting the constitutional amendment to lower the state cap on debt to 7 percent of state revenue – down from 9 percent – which has opposition from the construction industry and unions but is backed by Senate Republicans, Senate Democrats and House Republicans.

“All three caucuses agree, and my understanding is the votes are there for it, too – so let’s get it done.” House GOP leader Richard DeBolt said. “If we’re going to get out of here, Hans Dunshee has to set aside his ego and start negotiating.”

They are already negotiating, say Dunshee and Sen. Derek Kilmer of Gig Harbor, the Democratic capital budget chairmen who are at odds with each other over the debt limit. Lawmakers met Wednesday to talk about a proposal Dunshee offered. They declined to give details, but Kilmer said Dunshee expressed openness to “do something that would reduce how much debt the state’s taking on over time.”

Supporters of the lower cap want to reduce a debt load they say is too high – with interest payments approaching $2 billion or 6 percent of the main budget – and crowding out spending on other priorities such as schools and health care. But construction projects paid for with the borrowed money create jobs, and the construction industry says the debt level is manageable and isn’t affecting the state’s credit. Positions have been staked out:

. The committee chaired by Dunshee hasn’t voted on the debt reduction amendment.

. Senators, Kilmer said, are willing to ditch most of this year’s proposed borrowing if it’s not tied to long-term debt reduction. They could move forward with a much smaller bond budget of a few hundred million dollars.

. House Republicans are in the minority but have leverage because a supermajority is needed to approve bonds. That allowed them to block the bond budget this week. DeBolt said they want the debt limit change done first, because it will change borrowing levels – although it largely affects future years, not the upcoming 2011-2013 budget period.

State Treasurer Jim McIntire said he thinks the standoff can be resolved. There’s a lot of room for compromise between the House and Senate positions, he said.

Still, halfway through their special session called to deal with the budget emergency, some are asking whether lawmakers are facing the possibility of double overtime.

“Right now we’re looking at it,” Dunshee said.

But Gov. Chris Gregoire said Wednesday she wouldn’t call another 30-day session without a budget agreement.

Read more: http://www.theolympian.com/2011/05/11/1648497/issue-of-taking-on-less-debt-k eeps.html#ixzz1MB6To5Nj

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