It may be the dullest measure on the ballot, but Senate Joint Resolution 8225 deserves a close look by Washington voters.
It’s a constitutional amendment about bonded debt and interest rates, and it’s generating little discussion – all the elements that could lead to a resounding “no” from uncertain voters. But that would be a mistake.
In fact, SJR 8225 would enable the state to get more out of its borrowing capacity without compromising its fiscal responsibility, thanks to a federal reimbursement mechanism known as Build America Bonds.
Under the Constitution, the state can’t tie up more than 9 percent of its annual revenues paying off the bonds it issues for capital projects such as college buildings, parks and acquiring open space. That invaluable discipline protects taxpayers from overusing the equivalent of the state credit card.
But under the American Recovery and Reinvestment Act of 2009, the federal government will reimburse 35 percent of the interest payable on Build America Bonds. In essence, it makes taxable state bonds more competitive with low-interest tax-exempt bonds.
That allows states to take advantage of construction bids that have been kept low by the moribund economy. Build America Bonds were designed to create jobs and accelerate capital projects by subsidizing states’ interest expenses.
Not everyone agrees it’s as sound a program for the federal government as for the states, and the program will expire at the end of this year if Congress doesn’t renew it. If the program does die, SJR 8225 does no harm; if it lives on, Washington wants to be in position to take advantage.
Put simply, the constitutional amendment declares that interest paid by the federal government on the state’s behalf does not count against the 9 percent debt service ceiling.
The Legislature took the matter up at the request of state Treasurer James McIntire. The Senate approved it without a dissenting vote – even fiscal watchdog Sen. Joe Zarelli, R-Ridgefield, was for it – and the House passed it by a comfortable 69-27 margin.
SJR 8225 is a reasonable step to bring the state Constitution into line with national economic recovery strategies. Moreover, it would make it cheaper for the state to secure infrastructure it needs to provide in any event.
Zesty it’s not, but the measure is worthy of a confident “yes” vote.