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Political Smell Test: What I-1125 means for politicians, experts and bureaucrats

Post by Jordan Schrader / The News Tribune on Oct. 27, 2011 at 8:00 am with No Comments »
October 26, 2011 5:16 pm

WHAT THE CAMPAIGNS SAY: An ad targeting Tim Eyman‘s toll initiative says it would transfer power to politicians.

An Eastern Washington farmer tells viewers:

Tolls in Washington State are set by an independent commission made up of experts, but if Tim Eyman’s Initiative 1125 passes, it transfers that power to politicians in Olympia, making Washington the only state in the country to give them that authority. And 1125 increases bonding costs of road projects by up to 18 percent, meaning higher tolls and higher gas taxes. So more costs for us, and more power for them.

Eyman’s side hasn’t been running ads, but in his video voters guide on TVW, he has a very different description: “1125 requires, again, that fee increases be decided by elected representatives of the people, not unelected bureaucrats at state agencies.” The “unelected bureaucrats” is a longstanding Eyman line of attack and he uses it four times in the video.

In another opposition ad, former state Transportation Secretary Doug MacDonald says as he stands under a bridge: “1125 wipes out more than half a billion dollars from current transportation projects.”

But Eyman says his amendment is just keeping things the way they are or have been: “1125 simply reaffirms laws and the state Constitution’s 18th amendment, which have been protecting taxpayers for decades.”


TRANSPORTATION COMMISSION: One side calls them “bureaucrats,” the other side “experts.” Neither is truly accurate as a description for the Transportation Commission, the seven-member, governor-appointed body that sets tolls.

They are certainly unelected. Some have been bureaucrats (such as a former Lacey planner) and there are a couple whose past jobs surely could qualify them as experts in transportation (such as a former Port of Seattle director). But there’s no requirement that they have such backgrounds.

The current slate includes an economic development consultant, a retired electrician and union official, and the chairwoman of the board of directors of candymaker Brown and Haley. One is a former county commissioner, which sounds an awful lot like the “politicians” decried by I-1125 opponents.

They have help from the state Department of Transportation in making their decisions, but I-1125 supporters are off base to call them “bureaucrats at state agencies.”

It’s just as misleading is to say the initiative “transfers” power or gives “more power” to the Legislature. State lawmakers already have that power. They have chosen to delegate it to the commission. Toll rates are one political hot potato they have no interest in holding.

COSTS: While both sides are making this a fight about who sets tolls, that could all become quickly moot. The Legislature could simply re-delegate its power to the commission without changing the initiative. That’s what the attorney general’s office says it can do, and that’s what lawmakers did as recently as this winter, thwarting Eyman’s last voter-approved initiative.

So that 18 percent rise in costs may or may not come to pass, but opponents are using the correct figure, or at least the best guess of investment advisers who looked at the consequences for having lawmakers set tolls. The advisers concluded investors would want higher interest rates in exchange for the political risk of putting the decision in the Legislature’s hands.

If the cost of borrowing goes up that much, State Treasurer Jim McIntire says the state wouldn’t be able to use toll-backed bonds to pay for the new Route 520 bridge and other projects like the Alaskan Way Viaduct replacement.

Eyman is fine with that. Toll-backed bonds are a new mechanism for borrowing, and he would prefer the state continue to use an old standby: triple-backed bonds that are backed by gas taxes and the state’s credit in addition to toll revenues.

Those are less expensive. McIntire’s office estimates toll-backed bonds would sell today at an interest rate that is roughly one percentage point higher than triple-backed bonds — either a bit less than that or a bit more, depending on when they are sold. (The gap is even larger, about three percentage points, if one compares triple-backed bond rates to estimates for future toll-backed bond rates. The treasurer’s office says that’s because interest rates are expected to rise in coming years).

Eyman argues that means his initiative actually lowers costs by forcing the use of cheaper bonds. But actually, those less expensive triple-backed bonds likely can’t be issued without new gas taxes. Revenues from the existing gas tax are already devoted to projects, according to the treasurer’s office.

So opponents are correct that the initiative potentially “wipes out” a funding source for transportation projects.

In saying how much is wiped out, MacDonald is using an old number — $500 million, which was the estimated need for toll-backed bonds on 520 back when the initiative was analyzed for budget impact earlier this year. The treasurer’s office currently estimates it at roughly $250 million.

MacDonald justifies his continued use of the number by noting state officials also plan to use toll-backed bonds on other projects. He mentioned the Columbia River Crossing project, which looms in the future — but the law doesn’t yet authorize tolling there, and the ad refers to “current” projects.

A better example might be the viaduct, for which Washington is responsible for coming up with $400 million that under a preliminary plan would come from bonds. But toll-backed bonds aren’t yet authorized for the viaduct, so the governor’s budget office says the gap is “indeterminate.” But opponents can reasonably predict the gap, and it’s arguably a “current” project.

As for Eyman’s contention that the initiative “simply reaffirms” old laws, the initiative does do that in some ways. It restates current restrictions on tolling one road to fund another, for example.

But it also makes a restriction in the state constitution apply to a wider set of revenues. The constitution mandates gas taxes go to highway uses; this law would require toll revenue do the same. And it subtly changes the gas-tax restrictions, so as to ban light rail across the Interstate 90 bridge.

Eyman acknowledges the initiative would change some laws but says it merely cements what until recently has been common practice. The same is true of I-1125’s requirements that tolls be a single standard rate all day long and end when the construction project ends.


Opponents are correct that I-1125 could raise the cost of borrowing — based on a borrowing plan that is itself more expensive than the increasingly unlikely alternative. That could make borrowing more difficult, upsetting hundreds of millions of dollars worth of plans — though opponents are using an outdated number for the size of the threat.

The sound bite from supporters that this is simply a rehash of current law is misleading. It does mostly cement old practices, though, by putting the brakes on coming changes.

Both sides mischaracterize I-1125’s implications for toll-setting authority: supporters who raise the spectre of state-agency bureaucrats and opponents who portray a power grab by politicians from experts.

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