SAN FRANCISCO - A prominent Washington lawmaker introduced a bill this week asking voters to authorize $3 billion of new general obligation bonds to generate jobs by financing health, safety, and energy-efficiency improvements to existing school and college buildings.
Sponsor Hans Dunshee, D-Snohomish, chairman of the House Capital Budget Committee, compared his Washington Works bond program to the Depression-era efforts of the federal Works Progress Administration.
"Let's do what the WPA did, let's put people to work," Dunshee told the press Monday. "We can really do all these things in one package."
But state Treasurer Jim McIntire, a fellow Democrat, quickly issued a statement criticizing the proposal, saying it would pile too much debt onto the state government.
"Though we clearly have significant capital needs at our schools and universities, borrowed money is a limited resource that should be managed carefully," McIntire said in a statement.
The $3 billion bond proposal is simply too high, he said. "It would threaten our credit rating and would affect the rest of our investments in transportation and public infrastructure," McIntire said.
Dunshee, introducing the bill yesterday in the Capital Finance Committee, pooh-poohed concerns about the state's credit ratings, and criticized the "bond houses" of Wall Street.
"These were the folks who said a few years ago that [American International Group Inc.] was a good place to put your money, and that Lehman Brothers is a good buy," Dunshee said.
He said his bond proposal would generate 90,000 sorely-needed jobs during a recession.
"There are times you have to do things that are uncomfortable," he said. "You have to change things. You have to do things."
As it happens, Washington sold $475 million of GO bonds Tuesday in competitive sales, the results of which, McIntire said, demonstrate the value of maintaining high credit ratings. The state has underlying ratings of AA from Fitch Ratings, Aa1 from Moody's Investors Service, and AA-plus from Standard & Poor's.
The deal came in two series, including a $441.4 million Series 2009E, the largest competitive deal to reach the municipal bond market since July, according to Thomson Reuters. JPMorgan won the deal at a 4.535% true interest cost, ahead of four other bidders.
Morgan Stanley won the $38.2 million Series 2009F, backed by both fuel taxes and the state GO pledge, with a 4.559% TIC bid, ahead of three others.
"We had a very tight spread on the offers," McIntire said in a statement. "It shows that Washington holds a strong position even in a very competitive market. We did very well."
Washington has statutory and constitutional debt limits, and the state is expected to approach them with the capital budgets that are moving through the Legislature.
Voter-approved GOs, however, are not subject to those debt limits.
Dunshee said he had not yet determined if his bond proposal should be accompanied by a dedicated revenue source, though he said that some of the debt service would be paid for through savings in energy costs created by bond-financed improvements.
At a press conference Monday, he also threw out the idea of putting a "sin tax" on the ballot. But he added that he was waiting for progress on the state's operating budget before deciding if he wants to move forward with a revenue stream to pay for his bond program.
The Legislature is scheduled to adjourn April 26.