H-1368              _______________________________________________

                                                   HOUSE BILL NO. 1945

                        _______________________________________________

State of Washington                               51st Legislature                              1989 Regular Session

By Representatives Nelson, Schoon, Braddock, Betrozoff, Jacobsen and Bristow

Read first time 2/10/89 and referred to Committee on Capital Facilities & Financing.

AN ACT Relating to state debt management; and adding new sections to chapter 39.42 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.     The legislature finds that:

          (1) State debt has increased over the past ten years, not only the absolute dollar value but also per capita debt and the percent of total income.

          (2) The new federal tax codes greatly reduce the advantage to the state of issuing debt by placing restrictions on investment earnings, arbitrage, and the use of state debt.

          (3) Growing debt payments are increasingly consuming a larger share of the state's scarce revenues, thus reducing the state's ability to provide needed state services.

          (4) Many projects financed by state debt have a useful life span shorter than the length of the debt payment making such financing arrangements fiscally unsound.

          (5) Paying for projects as they are completed without relying on state debt is a sound fiscal practice.

NEW SECTION. Sec. 2.     The purpose of sections 1 through 3 of this act is to establish a debt management program intended to serve as a guide to reduce the amount of state debt.  Beginning with the 1991-93 biennium, the state finance committee shall reduce the amount of state general obligation debt issued by one-tenth from the level of the 1989-91 biennium.  Each biennium thereafter, the amount of new general obligation debt issued shall be reduced by one-tenth of the 1989-91 biennial amount until the level of state general obligation debt issuance is zero.

NEW SECTION. Sec. 3.     On or before September 1st of each even numbered year, the state treasurer shall notify the office of financial management and the legislature of the amount of state general obligation debt issued or to be issued during the biennium in which the report is prepared.  The state treasurer's report shall serve as the base for the ten percent general obligation debt reduction management program.

NEW SECTION. Sec. 4.     Sections 1 through 3 of this act are each added to chapter 39.42 RCW.