Voters this fall won’t consider a constitutional amendment to lower the lid on the state’s debt.
The Legislature’s negotiators reached a deal Tuesday that will create a lower debt limit but won’t tie lawmakers’ hands by enshrining it into the state constitution – something a bipartisan crew in the Senate wanted but Democrats who control the House rejected.
The deal doesn’t go nearly as far as senators wanted, but it goes far enough to win their support for a robust capital-construction budget – one that includes $1.1 billion in bonds.
That’s several hundred million dollars less than the previous bond proposals on the table but much more than had been contemplated by the Senate as the debt issue turned into an impasse. Senators threatened to withhold most bonds without a debt deal.
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Senate Democrats’ negotiator, Derek Kilmer of Gig Harbor, said the bonds plus $1.7 billion in cash will pay for projects in school districts, community colleges, universities and local governments – including vocational skills centers such as the one in Frederickson that will get $7 million to expand its offerings to Pierce County students.
But no list of projects was available Tuesday, so it wasn’t clear what was chopped in the process of shrinking the bond budget in a marathon bargaining session that lasted past 5 a.m.
“It’s the big jobs bill of the session – 40,000 jobs,” said House Democrats’ negotiator, Hans Dunshee of Snohomish, using what he said was a rough estimate for the number of people the projects will employ. “I wish we could do more jobs.”
In return for Kilmer and other negotiators clearing the way for a capital budget, Dunshee and the House agreed to a reduction in the debt limit – but one that lawmakers could cancel before it ever takes effect.
If they do keep their hands off, the debt limit for practical purposes would start dropping in 2016 from its current 8.75 percent of state revenues and end up at 7.75 percent in 2022.
In the meantime, a state commission will examine the debt limit and make recommendations and will have the power to block bonds if its ideas aren’t carried out.
Kilmer and other senators say it’s critical to lower debt so interest payments go down and that money can be redirected to operating expenditures including schools and health care. Interest accounts for a little more than 6 percent of the budget now and is growing; Kilmer said the new limit would bring it to “more like 51/2” percent.
House Democrats, unions and the construction industry argue that a tighter limit would do little other than cost the jobs of those who work on state-funded projects.
The bill calling for the reduced debt limit passed the Senate 40-1 Monday.
Jordan Schrader: 360-786-1826 jordan.schrader@ thenewstribune.com blog.thenewstribune.com/politics