Support Senate Joint Resolution 8225 regarding the state debt limit
The Seattle Times editorial board urges voters to support SJR 8225, a Washington constitutional amendment to remove federal subsidies from the amounts counted toward the state debt limit.
SENATE Joint Resolution 8225 is not as immediately understandable as liquor privatization or as grim as the income tax. It is one of those things that never should have been on the public ballot at all, except that the law said it had to be there.
It is about the debt limit. The Seattle Times agrees with State Treasurer Jim McIntire that the measure is worth a quick and simple "yes."
Here is the story. Under a new program, Build America Bonds, the federal government pays 35 percent of the interest on taxable state bonds. It is an alternative to making the bonds federally tax-free, and for the state it is a better alternative for short- and medium-term bonds. The direct subsidy allows states to borrow more money to build roads, ferries, buildings, etc., with no extra cost to state taxpayers — not now, and not ever. From a state's point of view, it is free money.
Washington state, however, has a limit on how much interest, as a total dollar sum, it can agree to pay on its total debt. That is the constitutional debt limit, and it is a necessary thing. The formula for setting the limit, however, was written assuming that all the interest on Washington bonds would be paid by Washington state. No one imagined the federal government would volunteer to pay some of the states' interest bills.
Now it has, and other states are taking advantage of it. Washington should, too. And to do that, this state needs this small constitutional amendment. In setting the state debt limit, SJR 8225 would allow the state to count only the interest it pays, and not the interest the federal government pays.
The Times urges a "yes" vote on Nov. 2 for SJR 8225.