Washington state ranks sixth in nation for per capita state debt
Dori was alarmed when he found that the US Debt Clock website lists the Washington state debt at nearly $93 billion.
However, Washington Deputy Treasurer Jason Richter said that while the debt is high, it’s not that high.
“Those numbers would likely include the debt of the state, as well as all municipal governments within the state,” he said.
This means “cities, counties, schools, and other types of governmental units that have debt.”
Still, Treasurer Duane Davidson said the state debt is “a terrifically high number.”
He explained that the general obligation debt is over $20 billion, the unfunded pension liability is near $12 billion, and the school bond guarantee fund is “outside of the debt limit calculations.”
“When you add it all up, we have a lot of debt,” Davidson said.
He added that Washington is the sixth-highest in the nation when it comes to state debt per capita. According to his office’s 2018 Debt Affordability Study, “every Washingtonian would have to pay approximately $2,717 in order to fully repay the State’s [sic] outstanding debt, well over the national median of $1,006.”
“We’re not the policy center here,” Davidson said, but one of his biggest goals while in office is to spread this debt information to the public.
Among the public — indeed, even among members of the Legislature he has met — people are not aware of just how high the state debt really is.
“We’ve amassed a lot of that debt in the last decade, mostly because of extremely low interest rates that just made it so appealing for the Legislature to go there and take out that debt,” he said.
These spendthrift policies may work in prosperous economic times, but Davidson worries about what will happen during the next inevitable cyclical downturn.
“We have to look at the rainy day fund that would help us weather that next downturn in the economy, that next recession that we’d have,” he said. “We don’t know when it is going to come, we can’t predict that, but we are going to have one.”
The Government Finance Officers Association recommends two months, or about 15 percent, of the year’s operating budget for a rainy day fund, Davidson said — much higher than the current rainy day fund.
“When times are good like this, we need to, basically, do more pay-as-you-go projects” to stop incurring more debt and set aside money for the rainy day fund, he said.
“Unfortunately, one group of people of a particular political persuasion think that the solution to all of this is more taxes,” Davidson said.
To learn more about the state debt, visit the website of the Office of the Treasury.