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Vote no on pie-in-the-sky plan to lift state’s debt limit

Post by Kim Bradford on Oct. 13, 2010 at 7:11 pm with No Comments »
October 13, 2010 6:13 pm

This editorial will appear in Thursday’s print edition.

Referendum 52 bets fiscal prudence on the ability of green jobs to help revive Washington’s economy and save school districts buckets of money.
It’s a gamble voters ought not to take.

The measure would authorize the state to issue $500 million in bonds – dubbed “Hans bonds” for their architect, Democratic state Rep. Hans Dunshee – for energy efficiency upgrades at schools and other public buildings.

The arguments for the measure are fairly simple: It would help put the construction trades back to work and save public expense by reducing power needs.

If good intentions were money in the bank, R-52 might be worth passing. But there are no guarantees that this measure will deliver the promised job creation, energy savings or, most crucially, protection of the state’s finances.

Critics poke credible holes in the R-52 campaign’s claims that Hans bonds would create 30,000 jobs and save taxpayers $130 million per year in energy costs. The actual numbers could be closer to 6,000 jobs and zero savings.

And what would the state risk to achieve possibly meager improvements in economic activity and energy efficiency? Only its credit rating and ability to fund core state services.

Washington’s per capita debt load is already nearly twice the national average. Bond rating agencies have warned that if the state continues to run up its credit card, it could jeopardize its ability to borrow cheaply.

R-52 would lift Washington’s constitutional debt limit to allow the state to sell Hans bonds. Supporters say the additional debt won’t do harm to the state’s bond rating because they have a dedicated revenue source to repay it. R-52 would make permanent the temporary tax on bottled water the Legislature approved this year to balance the budget.

Problem is, that bottled water tax is also on the ballot this November. Initiative 1107 would repeal it and other temporary taxes, leaving a general fund that is already short $3 billion on the hook to make R-52’s debt payments.

And if creditors decide that Washington has indeed dug itself too deep a hole? Any savings school districts might achieve through energy retrofits would go toward the higher costs of borrowing money in a state with a worse bond rating.

R-52 offers too much risk for not enough potential reward. The News Tribune editorial board recommends a no vote.

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