The Senate Democrats’ support of a raid on the state’s savings account thwarts the will of Washington voters and weakens the state operating budget’s ability to withstand a revenue drop caused by a downturn in the economy, said 26th Legislative District Sen. Jan Angel.
Angel, R-Port Orchard, opposed the Democrats’ passage of an amendment to Senate Bill 6614 by a simple majority instead of a 60-percent majority as required by the voter-approved state law creating the rainy-day fund in 2007.
“The raid on this account by the Democrats without a 60-percent ‘yes’ vote is a slap in the face of Washington voters, and it sets a dangerous precedent for future state budget decisions,” Angel said. “Voters passed a ballot measure a decade ago to create the rainy-day fund to help the state budget withstand tough times. A few years later, voters approved another measure that raised the threshold for using extraordinary revenues after the one-two punch of overspending by the Legislature and then the Great Recession forced painful spending cuts.
“The Senate Democrats today made a mockery of the rainy-day fund by doing an end-run on the 60-percent rule and effectively draining $700 million from this important fund. This is a sad day for Washington’s long-term budget health,” Angel added.
Angel said the Democrats’ ploy to raid the account will hurt Washington’s debt ratings.
“Washington has earned strong debt ratings by being fiscally responsible and maintaining strong reserves. But the raid on our rainy-day fund will send a negative message to the bond industry that Washington is willing to spend recklessly. I’m afraid this will haunt our state by weakening our bond rating, which would hurt us not only at the state government level but would trickle down to affect our local cities, counties and school districts,” said Angel, a former Kitsap County commissioner.
Angel cited State Treasurer Duane Davidson, who said it was shortsighted to see $700 million taken in a diversionary raid on the rainy-day fund.
“Our state treasurer said this proposal is a self-inflicted wound and the opposite of good fiscal management. He is urging us to not do this. We should have heeded his advice,” Angel said.
Senate Bill 6614 was passed 25-23 by the Senate Wednesday night, the next-to-last day of the 2018 legislative session.
The state’s chief economist has indicated the state will collect about $2.3 billion more than anticipated since the Legislature passed its 2017-19 state operating budget last June.
The Democrats’ proposed amendment to the bill would funnel $935 million in property tax revenues to the education legacy trust account. Redirecting the money lowers state general-fund revenues, which circumvents the law by reducing the amount of money going into the state’s rainy-day fund by more than $700 million.
Angel said Senate Democrats missed a chance to provide one-time property-tax relief to Washington property owners by using budget reserves, rather than depleting much of the state’s savings account.
“We had a golden opportunity to provide meaningful relief to property owners who experienced an increase in their property-tax bills this year by using budget reserves that are not part of the rainy-day fund. Unfortunately, the Democrats chose a less-responsible approach,” Angel said.
In 2007, about 68 percent of Washington voters approved Senate Joint Resolution 8206, which created a constitutionally protected rainy-day fund that requires the Legislature to set aside 1 percent of revenues annually for financially hard times. A majority of voters in every county approved the rainy-day fund measure.
In 2011, 66.6 percent of Washington voters approved another measure, also numbered Senate Joint Resolution 8206, which amended the state constitution by requiring the Legislature to transfer additional money to the budget stabilization account in which the state has received “extraordinary revenue growth.” Again, a majority of voters in all 39 counties approved the measure.