A new limit on state debt is on the coming ballot: Engrossed Senate Joint Resolution 8221. This state constitutional amendment would make the debt limit looser during recessions but tighter in the long run. State Treasurer Jim McIntire says the change makes sense. He’s right.
The proposal came out of the Commission on State Debt, which was created by the Legislature in 2010. Lawmakers voted for the measure 37-7 in the Senate and 91-7 in the House.
The measure is a reaction to the increase in public borrowing, which has made Washington a relatively high borrower among the states. While this is not yet a crisis, the trend is a problem. Of the state’s $31 billion two-year general-fund budget, almost $2 billion now goes to servicing debt. Under ESJR 8221, that figure will grow, but not quite as fast as it could under the current rule.
The existing limit is that payments on certain kinds of debt cannot be more than 9 percent of the average of general state revenues over the previous three years. The proposed limit, beginning July 2014, is 8.5 percent of the average over the previous six years, falling in 2016 to 8.25 percent, and in 2034 to 8 percent.
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The proposal also adds state property taxes to “general state revenues.”
ESJR 8221 is a step toward a better policy. Voters should support it.