State Treasurer Duane A. Davidson warns state lawmakers that the ongoing budget showdown has consequences. In a Seattle Times op-ed Davidson writes,
Unfortunately, our state’s reputation and credit rating are being put at risk as the budget stalemate continues in Olympia.
The potential downside is substantial. Here’s how he says it works.
State credit ratings are assigned by the major rating agencies. If our rating is downgraded it increases the interest rate we pay on new debt. Since 2012, Washington has borrowed (or refinanced) between $2.2 billion and $4 billion annually, so any change in interest rate can be very significant. Our state’s high credit rating is determined by several weighted factors — one of which is prudent governance. This is one factor over which the Legislature has considerable control.
If the Legislature fails to pass an operating budget before the start of the new fiscal year on July 1, it will be the first time in our state’s history this has happened. The clock is running out on the Legislature’s second special session and a third special session seems imminent.
If the Legislature and Gov. Jay Inslee do not approve a biennial budget by Wednesday, thousands of state employees will begin receiving layoff notices. State agencies, including my office, are currently in the process of making contingency plans for operations in the event of a government shutdown.
If this were to happen, our highly regarded reputation for sound fiscal management could be significantly harmed, potentially triggering higher costs for financing roads, bridges, schools and other projects.
Consider Davidson’s sound counsel another good reason for lawmakers to get the job done before the clock runs down. He notes they face a tough challenge, and advises,
The task before them is more difficult than most imagine and I do not claim to have all the answers. But I do know this — the solution will require listening, appreciating other points of view and genuine compromise.
Makes sense. And it sure beats ending up like this.