In Olympia, legislators are patting themselves on the back after closing a $9 billion budget gap. But it’s likely that they have only deferred addressing some of the fundamental structural problems with the state’s finances for another 2 years.
Legislators also took a victory lap after “solving” the viaduct problem by creating a mechanism by which Seattle taxpayers would have to pay for cost overruns on what would be a state project—after Seattle voted down the tunnel option. But that’s a different post.
Two big ideas that didn’t make it out of the regular session had to do with the always unpopular and hard to understand subjects of debt and taxes. The state will eventually have to figure out how to make its tax system fairer and less regressive. An income tax of some kind could be part of that, but that ideal didn’t get far this year.
The other really interesting concept was offered by Rep. Hans Dunshee. His proposal would have authorized the state to borrow $3 billion to retrofit public schools. The bill was missing a lot of critical details, but underlying was a great concept that I called Green Increment Financing.
Like Tax Increment Financing, Dunshee’s bill would have allowed the state to make upgrades and improvements to infrastructure that would pay for the financing of the debt. In the case of Green Increment Financing, the money to pay back the debt would come from accumulated savings as previously inefficient buildings began to realize energy savings. The retrofitting would create new jobs, and reductions in energy use would also reduce green house gas emissions.
Like Tax Increment Financing, the hurdle with this kind of idea is two-fold. First, and probably most difficult, is the terminology which includes words like “tax,” “bonds,” “financing,” “public indebtedness,” and “increment.” Even if legislators understand this concept, debt and taxes are political dynamite.
The second problem has to do with math and forecasting. Will energy improvements actually save enough to pay back the bonds? Savings can be estimated and this kind of financing on projected savings is done locally already. So these numbers can be figured out. But getting the numbers will take time
Hopefully, Green Increment Financing will gain ground between now and the next legislative session along with a more fundamental look at how we generate revenue for public benefits.