Washington Treasurer James McIntire published an open letter to lawmakers Wednesday asking them to quickly pass cuts to balance the budget for the current fiscal year.
A failure to do so could result in downgrades, leading to higher borrowing costs at a time when the state is also facing limited bonding capacity, McIntire wrote.
Gov. Chris Gregoire has proposed a supplemental budget of additional cuts for the current fiscal year, which runs through June.
“I urge that you act this month — without gimmicks or delay — to avoid ending the biennium with the state general fund in deficit for the first time in nearly three decades,” McIntire told legislators in the letter. McIntire, Gregoire, and a majority of Washington lawmakers are Democrats.
The treasurer also said that the bond finance portion of the state’s subsequent biennial budget is likely to be “dramatically smaller” than it has been.
Lower-than-normal revenue growth has kept the state’s constitutional debt limit lower than anticipated, McIntire wrote.
That just heightens the importance of maintaining Washington’s across-the-board double-A-plus level ratings, according to the treasurer.
“A credit rating downgrade now would take several years to reverse, and would increase interest costs by several hundred million dollars for bond-financed state capital and transportation budgets, and for virtually all local K-12 school district bonds, which are guaranteed by the state,” McIntire wrote.
