BILL REQ. #: S-3121.6
State of Washington | 62nd Legislature | 2011 1st Special Session |
READ FIRST TIME 05/24/11.
AN ACT Relating to limitations on state debt; adding a new section to chapter 39.42 RCW; creating new sections; and making an appropriation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1 The legislature intends to examine the
various kinds of debt incurred by Washington state and the limitations
that control the amount and use of debt. To assist in this
examination, the legislature seeks the assistance and recommendations
of a commission on state debt.
NEW SECTION. Sec. 2 (1) The commission on state debt is created.
The commission shall include the following members: The state
treasurer, who shall chair the commission; the director of the office
of financial management; one member each from the two largest caucuses
of the senate, appointed by the president of the senate; one member
each from the two largest caucuses of the house of representatives,
appointed by the speaker of the house of representatives; six
independent members, three appointed by the state treasurer in
consultation with the state finance committee and three appointed by
the governor in consultation with the state finance committee. These
six independent members must not have a financial interest in debt-financed state expenditures and shall include appointees with
experience in public or private finance, local government, or related
academic or legal backgrounds. The members of the commission shall
serve without additional compensation, but shall be reimbursed in
accordance with RCW 44.04.120 for attending meetings of the commission.
Staffing for the commission shall be provided by the state treasurer's
office, the office of financial management, and legislative capital
budget staff.
(2) The commission shall examine the following:
(a) Trends in the use of all kinds of state obligations including
general obligation bonds; revenue bonds and other debt that supports
the transportation budget; financing contracts; lease purchase
agreements; and other forms of obligations including long-term
liabilities such as pension liabilities and long-term leases. The
examination of trends must also examine the impact of debt service
payments on operating budget expenditures.
(b) Major uses of state debt, the debt service expenditures
associated with those major uses, and a comparison of the debt service
expenditures and other operating budget expenditures that addresses
similar policy objectives as the major uses of debt.
(c) Existing limitations and policies on the use of various kinds
of debt and how those policies and limitations compare with other
states with similar or higher credit ratings. The comparisons will
include an examination of relative debt burden and the relationship
between state debt and debt incurred by local governments in the
comparison states.
(3) The commission must recommend improvements in state debt
policies and limitations, including possible amendments to state
constitutional debt limitations that will accomplish the following:
(a) Stabilizes the capacity to incur new debt in support of
sustainable and predictable capital budgets;
(b) Reduces the growth in debt service payments to an appropriate
level that no longer exceeds the long-term growth in the general fund
expenditures;
(c) Maintain and enhance the state's credit rating.
(4) The commission must consult affected stakeholders.
(5) The commission must report its findings and recommendations to
the state finance committee and the appropriate committees of the
legislature by December 1, 2011.
NEW SECTION. Sec. 3 A new section is added to chapter 39.42 RCW
to read as follows:
The state finance committee must recommend a working debt limit for
purposes of budget development for various purpose capital bond
appropriations. Nothing in this section shall in any manner affect the
validity of indebtedness incurred in compliance with the provisions of
Article VIII, section 1 of the state Constitution. The working debt
limit must be updated periodically following forecasts of the economic
and revenue forecast council. The governor and legislature must
develop capital bond budgets within the most recent recommended working
debt limit. The working debt limit must be lower than the state
constitutional debt limit in order to reserve capacity under the
constitutional limit for emergencies and economic uncertainties. In
order to begin to accomplish the objectives of stabilizing debt
capacity and reducing the debt service burden on the operating budget,
the state finance committee must recommend working debt limits of eight
and one-half percent from July 1, 2015, to and including June 30, 2017;
eight and one-quarter percent from July 1, 2017, to and including June
30, 2019; eight percent from July 1, 2019, to and including June 30,
2021; seven and three-quarters percent from July 1, 2021, and
thereafter. The state finance committee may recommend modified working
debt limits in response to extraordinary economic conditions. The
state finance committee is authorized to reduce or delay the issuance
of bonds if an issuance would result in exceeding the recommended
working debt limit.
NEW SECTION. Sec. 4 The sum not to exceed one hundred fifty
thousand dollars, or as much thereof as may be necessary, is
appropriated for the fiscal year ending June 30, 2012, from the state
treasurer's service fund to the office of the state treasurer for the
purpose of this act.