Dec. 5, 2011
The Washington House of Representatives today voted 56-33 to provide a $42 million bridge loan to the Wenatchee Public Facilities District to respond to a bond default. House Bill 2145 also includes provisions to ensure that the state treasury is repaid in full, with interest, for the loan. Following is the statement of Rep. Larry Springer, D-Kirkland, on House Bill 2145. Springer is Deputy Majority Floor Leader for Jobs & Economic Development in the House of Representatives, and a former mayor of Kirkland.
I support the bridge loan to Wenatchee because I care about Kirkland, Redmond and the other communities and taxpayers I represent in the 45th District. It is important to note that the loan has no effect on the state’s General Fund. The money comes from an account dedicated to cities from the sales tax collected in those cities.
Failing to respond to a municipal default in Wenatchee would create a high risk of an expensive ripple effect that would threaten bond ratings and raise the taxpayer costs of municipal bonds in communities across our entire state.
An analysis from financial experts with the City of Kirkland has shown that if the credit ratings of other communities are lowered by even a single step as a result of the Wenatchee situation, taxpayers in these communities could lose access to credit or be forced to pay hundreds of thousands of additional dollars for a typical construction bond.
As Kirkland City Manager Kurt Triplett told me this week, “Kirkland and every other municipality in Washington have a direct stake in seeing the Wenatchee situation resolved. The best way to prevent higher borrowing costs from rippling across Washington is to tackle the problem at its source.”
The people of Kirkland—and many other cities and towns I represent—have worked hard to build good credit ratings. Allowing these ratings to suffer because of the Wenatchee situation would mean transferring money from our communities to Wall Street at a time when our treasuries are already hurting because of the recession.
My vote to protect the good credit of our cities is a vote for taxpayers and for the jobs that affordable construction bonds make possible.
Others can debate who is responsible for the Wenatchee default. Today, we need leaders to fix the problem rather than the blame.