Calling it an irresponsible gimmick that threatens Washington’s future budget stability, 7th District Sen. Shelly Short criticized Senate Democrats for approving legislation that would raid the state’s savings account that is set aside for budget emergencies.
Short, R-Addy, said the Democrats’ passage of an amendment to Senate Bill 6614 to get around the need to obtain a 60-percent majority would brush aside voters’ wishes by violating the intent and spirit of voter-approved state budget protections to put extraordinary revenue into the state savings account called the rainy-day fund.
Using money from this fund generally requires a 60-percent “yes” vote by the Legislature.
SB 6614 was passed 25-23 Wednesday night, on the next-to-last day of the 2018 legislative session.
“The Senate Democrats’ proposal not only is absolutely reckless and incredibly irresponsible, it also ignores the will of a strong majority of Washington voters who created the rainy-day fund more than a decade ago and strengthened it a few years later,” said Short. She said the Democrats’ plan could put the state’s bond rating in jeopardy by unnecessarily shrinking the emergency account even though the state’s economy is generating an unexpectedly high level of tax revenue.
“Over the years, Washington has earned strong marks from debt-rating agencies thanks to a record of being fiscally responsible and maintaining strong reserves,” Short added. “The Democrats’ move to raid the state’s savings account sends a bad message to the bond industry that Washington is willing to spend recklessly instead of saving responsibly. This could come back to haunt us by weakening our bond rating, which would hurt not only our state but also our local cities, counties and school districts.”
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 rewrite of 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.
“A strong, healthy rainy-day fund helps in time of disaster or emergency and protects important state services from deep cuts in bad economic times like we have endured in the past, and most recently in 2008. Our state has experienced economic peaks and valleys that cause the state’s revenue collections to rise and fall. That’s why it’s so important to build and maintain a cushion when – not if, but when – the next downturn hits Washington,” Short said.
Short said the Democrats’ plan also would cause future extra revenue that would go into the rainy-day fund to be diverted elsewhere.
“Moving future excess revenue away from this account is a dangerous move that could leave our state budget vulnerable in case of an economic downturn,” Short said.
Short said she wishes Senate Democrats had offered to provide one-time property-tax relief to Washington property owners without raiding the state’s savings account.
“We had a rare opportunity to provide meaningful relief to property owners who experienced a spike in their property-tax bills this year without using part of the rainy-day fund. It’s too bad the Democrats chose a more reckless direction,” Short 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.