An Easier Way to Understand the Complexities of State Debt

Capitol dome

OLYMPIA, WA – There is an easier way to understand the complexities of state debt with the Office of the State Treasurer’s recently published Debt Affordability Study Digest.

“I want people to know exactly how much the State relies on debt”

Each year State Treasurer Duane Davidson and his Debt Management Team publish a comprehensive Debt Affordability Study that provides an in-depth overview of the State’s debt and other financial obligations, its credit ratings, and Washington debt metrics relative to other states. The digest is a double-sided handout that highlights the findings of the study.

“I want people to know exactly how much the State relies on debt to pay for its capital and transportation projects,” said Treasurer Davidson.

Since the Great Recession, bond proceeds have funded a more significant portion of the State’s capital budgets. From Fiscal Year 1997 to Fiscal Year 2007, bond proceeds accounted for 47% for capital budget funding sources.  In the 2017-19 biennium, bond proceeds account for approximately 68% of appropriations, the highest portion in the last 30 years.

“We’re one of the highest debt per capita states in the nation”

Washington ranks among the top ten most leveraged states across the country, according to credit rating agencies’ analysis of all 50 states.

“We’re one of the highest debt per capita states in the nation,” said Treasurer Davidson. “It’s important people understand that issuing more and more debt every legislative session is not sustainable in the long-term.”

Treasurer Davidson has advocated for reducing the State’s use of debt on many occasions, and is a proponent for increasing the use of a Pay-Go approach to funding capital projects. Pay-Go, which stands for “pay-as-you-go,” uses funds that are currently available instead of borrowing more money to finance projects.

“This presents an opportunity to strengthen the State’s credit by emphasizing Pay-Go project financing”

“Washington enjoys a robust economy and strong revenue collections. This presents an opportunity to strengthen the State’s credit by emphasizing Pay-Go project financing, protecting our general fund and rainy day fund balances, and improving the funding status of our pension system,” Treasurer Davidson wrote in the full report.