Responsible budget transactions should carefully weigh the costs and benefits of incurring debt. However, the current public discourse around SJR 8215, which aims to limit the amount of debt the state takes on via the capital budget, is missing some important nuance.
There are some very important projects traditionally funded out of the capital budget that serve important needs of the vulnerable and homeless, namely the Housing Trust Fund. The Housing Trust Fund (HTF) allows nonprofits to build and preserve safe, healthy and affordable homes throughout Washington. These homes include multifamily rentals and homeownership opportunities, with the vast majority of people served earning less than 50 percent of the area’s median income.
The HTF is a critical tool for ensuring that our communities make progress on our plans to end homelessness. The people who live in HTF homes include people leaving domestic violence, elderly on fixed incomes, people with disabilities, farmworkers, and others who are priced out of the rental market. The HTF is a smart capital investment. For each state dollar invested in the HTF, five more are leveraged from other sources. A $60 million allocation, as proposed in the House Capital Budget, grows to $360 million to build homes that remain affordable long after the bonds are repaid. It also creates 1,500 affordable homes and 1,830 jobs in the first year alone. And our communities need both jobs and affordable housing; the state’s unemployment rate is 9.2 percent with the construction sector continuing to be one of the hardest hit.
Housing out of reach for many in Washington, The fair market rent for a two-bedroom apartment is $993. In order to afford this level of rent and utilities a household must earn $39,719 annually or $19.10 per hour; but in Washington a minimum wage worker earns an hourly wage of just $8.67.
The need is great: On any given night, there are approximately 23,000 people in Washington who are homeless and in 2010, more than 100,000 experienced homelessness. Additionally, in December 2010, the state superintendent of public instruction reported that there were more than 21,000 school children who were homeless during the last school year.
We need to invest in our households and our communities by supporting programs contained in the state operating budget — like Disability Lifeline and Temporary Assistance for Needy Families — and by prioritizing the HTF in the capital budget. And yes, by using debt to do so.
Households and corporations use debt as a tool to fund their investments because the long-term return makes it worthwhile. The HTF is exactly the kind of investment that capital dollars are well suited too; it ensures that thousands of people are housed and stabilized now, saving lives and dollars throughout the term of the payments.
The HTF is not more or less important than the safety-net programs being cut from the operating budget. But to pit the capital budget against the operating budget – and capital budget programs against operating budget programs - obscures the real problem; a lack of revenue.
We should instead be examining our collective choice to reject modest revenue options – like a small tax on candy – while maintaining tax loopholes for things like elective plastic surgery and private jets. Those choices underlie the shrinking of our operating budget and our capital budget.
Let’s not demonize capital budget allocations nor assume all projects funded by the capital budget hold the same value. Let’s instead examine how we can move Washington forward while avoiding long-term constraints that don’t address the fundamental problems we face.
Michele Thomas, director of policy and advocacy for the Washington Low Income Housing Alliance, can be reached at email@example.com.