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DEBT: Architects oppose Debt Reduction Act

Letter by Stan L. Bowman, Olympia on April 22, 2011 at 4:56 pm with 2 Comments »
April 25, 2011 9:52 am

Re: “Debt Reduction Act will stabilize state’s finances” (Viewpoint, 4-20), which supported SSJR 8215.

The change in the debt limit calculation from three years to 10 years of state revenues is positive. However, lowering the debt limit from 9 percent to 7 percent of state general fund revenues would have negative consequences.

SSJR 8215 would not save the state money. It would only shift spending from critical infrastructure to programs that produce lower economic returns.

A new study conducted by Hebert Research for the American Institute of Architects found that the state gets more economic bang for its buck from construction spending. Every $1 billion spent on construction creates 13,820 jobs and $723 million in wages. That is 1,000 more jobs and $55 million more in wages than if those monies were spent in the general government budget. View the study at www.aiawa.org/CapitalBudget2011.

SSJR 8215 could actually increase spending. Bonds are the most economical way to finance new buildings. Without bonds, the state would have to use more expensive options such as leasing space or 63-20 financing, which is like lease-to-own.

Proponents state that money should be spent on schools, social services and criminal justice. Yet we cannot have lower class sizes without classrooms. We cannot heal the sick without hospitals and clinics. We cannot keep criminals off the street without police stations, jails and prisons.

(Bowman is executive director of the American Institute of Architects Washington Council.)

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  1. Resident01 says:

    So, since we cannot do anything, we should just continue on, until we can no longer pay for anything. Yep. Any cut would hurt someone. Since no one will look for the corruption which eats most of our tax money up. Let’s buy another Kingdome. Why not.
    Lowering the debt limit would actually increase spending? Maybe we should burn all of the old plans and start over again.

  2. Unfortunately, the low word limit restricted the depth of my response. First, the state already limits borrowing for construction. Washington State is not like the federal government with unlimited borrowing capacity.

    Second, SSJR 8215 would increase the costs of construction for the state. Bonds are the cheapest way for the state to pay for buildings and infrastructure. Interest rates on other financing mechanisms are a quarter to a full point higher. Those higher rates are paid for directly in the operating budget.

    In the 2013-2015 budget, SSJR 8215 cutsbonds for infrastructure investment by 50% (more than a billion dollars) and gains only a 0.06% reduction in general fund spending. And, that does not reduce the budget by 0.06%, because those “savings” will be eaten up by higher interest rates on remaining projects or other programs.

    If we want to create more private sector jobs, the state must invest in its limited dollars wisely. Investing in design/construction creates more jobs, increases wages and increase tax revenues. Its a win, win, win.

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