Water access/capital budget battle highlights dubious practice of financing employees with state debt
Today Sen. Jim Honeyford, the lead Senate Republican for the state’s capital budget plan, introduced a measure to ban the use of proceeds from the sale of state bonds to pay for the salaries, benefits, or other compensation of state employees.
“As the capital budget lead for the last several years, I was aware that the practice was occasionally taking place,” said Honeyford, R-Sunnyside. “But it is alarming the extent to which we are paying for salaries with state debt.”
According to the Legislative Evaluation and Accountability Program (LEAP) Committee, for the last 10 years (2008-2017), an average of 326 full-time state employees (FTEs) per year have been funded from bond proceeds appropriated in the capital budget; the compensation (salaries and benefits) for the 10 years totals $264 million.
“Bonds represent an IOU or loan that must be paid back over a long period of time,” Honeyford explained. “Similar to the way a family may take out a mortgage for the purchase of a home, state bonds are intended to pay for large-scale projects, such as university facilities, K-12 school construction and major transportation improvements.
“Using state debt to pay for employee salaries is like taking out a mortgage to pay for your gas and oil change. It makes no long-term fiscal sense and the practice needs to end.”
This year Senate Republicans refused to move forward with final passage of a capital budget, after months of negotiations ended with House Democrats refusing to vote on any solution to address the issue of water rights and rural development in response to the Supreme Court ruling known as the Hirst decision.
The impasse put a spotlight on the issue of state employees whose salaries are funded, in part or wholly, by capital budget state bonds, or bonds authorized under other various state laws. The State Parks Department was the first to issue layoff notices, with 15 notices going out in September. The University of Washington claimed it had 125 employees whose salaries are funded through the capital budget. In testimony before the House Capital Budget Committee on Nov. 17, Melissa Palmer of the Office of Program Research stated that up to 488 positions could potentially be reduced, as a result of the impasse.
“We value our state employees and we have to make sure – that as a rule – we are paying for their salaries out of the main state operating budget,” said Honeyford. “That is where we pay for our two-year operating costs associated with providing government services, not by putting it on a credit card that will cost taxpayers more in the long run.”
Senate Bill 5999 would amend several areas of state law to specify that “no proceeds from the sale of state bonds may be expended for salary, benefits, or other compensation of employees of the state of Washington.”
Specifically, the bill would add the above language to the following accounts or authorizations:
- State Building Construction Account;
- Outdoor Recreation Account;
- Habitat Conservation Account;
- Riparian Protection Account;
- Farmlands Preservation Account;
- Columbia River Basin Water Supply Development Account;
- Columbia River Basin Taxable Bond Water Supply Development Account;
- Early Learning Facilities Development Account and the Early Learning Facilities Revolving Account;
- RCW 79A.15.030, relating to administration of the Washington Wildlife and Recreation Program by the Recreation and Conservation Office; and
- RCW 28B.142.010, relating to authority for the University of Washington and Washington State University to incur debt with non-state-appropriated accounts.