It’s State Treasurer Jim McIntire’s job to worry about the state’s credit rating and financial health.
And McIntire, a Democrat, has concerns about Gov. Jay Inslee’s proposed 2015-17 budget proposal, which McIntire says sweeps too much out of the state’s “rainy-day” fund.
In a letter to Inslee last week, McIntire said he opposed Inslee’s proposal to spend $538 million out of the rainy-day account — or more than half of the reserve fund.
“I strongly recommend that this constitutionally-protected reserve fund be allowed to grow from its constitutionally-required annual deposits as the economy recovers instead of spending over half of this important reserve during good economic times.”
Bond investors and ratings agencies look closely at state reserve levels — and Washington’s reserves are at about one-third the average of states with similar credit ratings, McIntire added. Allowing the fund to grow as scheduled, he wrote, “would go a long way to help in future economic downturns and ease the concerns of investors who buy the state’s bonds.”
David Schumacher, director of the state Office of Financial Management OFM), said he respects McIntire’s role as protector of the state’s bond ratings. But Schumacher said Inslee believes the spending out of the reserve fund was necessary to avoid even higher tax increases than the governor has proposed.
Even with the rainy-day spending, OFM estimates Inslee’s proposal would leave $1 billion in total reserves at the end of the 2015-17 budget cycle and $2.1 billion by the end of the 2017-19 cycle.
Inslee’s $39 billion budget plan seeks $1.4 billion in new revenue, mainly from a new capital-gains tax and carbon-pollution charge. That’s in addition to about $3 billion from expected natural growth in existing tax revenue due to the rebounding economy.
The letter also repeated McIntire’s concerns, raised in December, about the Inslee’s proposal to borrow heavily against gas-tax revenues for transportation projects.
The state’s rainy-day fund, also known as the “budget stabilization account,” was approved by voters in 2007 as a constitutional amendment. It requires 1 percent of state general-fund revenues be deposited in the fund each year. In 2011, voters approved requiring even more cash to be deposited in the fund during periods of high revenue growth.
Spending from the fund requires a three-fifths vote of the Legislature, unless the governor declares an emergency from a catastrophic event, which Inslee has not done in his budget proposal.