Democrats plan to raid state savings account and risk destroying bond rating

In a year in which the state will likely exceed budgeted revenues by more than $2.3 billion, the Senate Democrat majority is planning to spend every dollar of excess revenue on growing government, and raid the state’s savings account set aside for emergencies.

Because Republicans oppose the scheme, Sen. Steve O’Ban, R- University Place, stated that the Democrats’ plan to pass their proposed amendment to Senate Bill 6614 by a simple majority, in violation of the state constitution that requires a 60 percent vote to draw down from the savings account, also known as the ‘Rainy Day Fund.’

“Democrats are spending every dime of extraordinary revenue, including revenue the voters expect to be saved for emergencies and inevitable downturns in the economy. If the legislature won’t save money when we are flush with it, clearly they will not hesitate to raise taxes to meet future shortfalls,” said O’Ban.

“This proposal from the Senate majority puts our bond rating in jeopardy because it violates our constitutional requirement of a 60-percent majority vote and sends a message to the bond industry that the state will recklessly spend in violation of the law.”

The Democrats’ proposed amendment to the bill would funnel $935 million in property tax revenues to the education legacy trust account. Redirecting the funds lowers general fund revenues, which circumvents the law by reducing the amount of money going into the ‘Rainy Day Fund’ by more than $700 million.

A series of projections from the state’s chief economist indicate the state will take in $2.3 billion more than was anticipated when the Legislature approved its 2017-19 state operating budget in June 2017. The budget grew 14 percent from the previous spending plan largely due to K-12 education funding increases. While $1.6 billion of those funds would be unrestricted, under current law and constitutional restrictions $700 million has to be deposited in the constitutionally protected Budget Stabilization Account (BSA).

“Voters wisely instructed the Legislature by approving Senate Joint Resolution that they wanted a higher threshold for using these extraordinary revenues after seeing the significant problems and dramatic cuts that came as a result of overspending ahead of the Great Recession,” said O’Ban.

Voters in every county approved Senate Joint Resolution 8206 in 2011 to protect extraordinary revenue during times of strong economic growth. Using the money requires a 60 percent vote in the Legislature.