In Our View: Rein in Credit Card

Legislators are getting serious about a sustainable debt limit

Published:

 

There’s nothing inherently wrong with debt. It’s what allows many people to buy homes, own automobiles and send their children to college. But debt is like dessert: If moderation is not exercised, all kinds of problems arise.

Washington’s state government has accumulated a per capita debt of about $2,626, which ranks seventh among states. That’s a cause for concern, and there’s no moderation seen in the fact that the state’s debt service payments increased 61 percent in one decade (1999-2009). That trend is even more troubling when compared to the 39 percent increase that same decade in spending for education, supposedly the state’s paramount duty.

Those numbers were reported in an op-ed written by state Rep. Judy Warnick, R-Moses Lake, and published in Saturday’s Yakima Herald-Republic. We agree with her recommendation that long-term solutions must be enacted by the Legislature to make the state’s debt capacity sustainable.

To their credit, legislators last year approved reducing the state’s working debt limit — gradually, through 2020 — from 8.75 percent to 7.5 percent of general state revenues. That’s a good tactic, but the overall strategy must include other steps. Warnick and others want to calculate state tax collections over a six-year period instead of the current three-year period. Reform advocates also recommend allowing for higher debt limits during times of recession. These changes would help stabilize bond capacity even through economic recessions. In fact, Warnick wrote, this would help allow “greater capacity for capital projects during economic downturns, when costs to borrow are low and work is most needed.”

Another leader in this cause is state Sen. Joe Zarelli, R-Ridgefield, who explained in a Wednesday telephone interview that “reducing the debt limit is a great idea, but it won’t be too successful as long as legislators keep moving around pots of money and mixing up the constitutional debt limit with the statutory debt limit. We also need to include the property tax in the list of revenue,” which currently is not the case. On that point, Warnick wrote that “adding the state’s portion of property taxes to the definition of state revenue will prevent the Legislature from getting around the debt limit, as has occurred too frequently in the past.” Zarelli also described the Legislature’s recurring ability to “find unique ways to circumvent limits on debt.”

Understanding the role of debt is crucial in an effective state government. Warnick acknowledged that debt allows the state to build much-needed higher education institutions, jails, local infrastructure and more. But there’s a critical need for lawmakers to stop “maxing out the credit card each biennium.” If that continues, the state’s high credit rating will be threatened.

Last year, Zarelli pointed out that the state’s per-capita debt is more than double the national median, and that “debt creep is consuming an ever-larger share of the budget and crowding out other priorities.”

This problem will not be solved overnight. Establishing a sustainable pattern of debt service payments could take even longer than creating a sustainable budget. Reform might ultimately involve an amendment to the state constitution. Also, reality tells us that many legislators are more interested in their next election than reducing the state limit by the distant year 2020.

But it’s time to start exercising moderation.