The Seattle Times has the big scoop, but they miss the big irony.
Here’s the story: State legislators from Wenatchee want the state to pay off the $42 million in outstanding debt on that city’s convention center, the Greater Wenatchee Regional Events Center or Town Toyota Center. The money is due on December 1, just a few days after the special session in Olympia begins. House Ways and Means Chair Rep. Ross Hunter (D-48, Medina) told the Seattle Times he supports an idea being pushed by the state treasurer and legislators in Wenatchee to pay off the debt, which was supposed to be covered by revenues from events at the center, by tapping a state account of local sales taxes.
Here’s the irony: It’s the tunnel in reverse. Rep. Mike Armstrong (R-12, Wenatchee) who sponsored the infamous tunnel cost overruns provisions that forbid the state from picking up overruns on Seattle’s tunnel, is now queuing up the bill with his 12th Legislative District colleagues to have the state pick up the outstanding tab on the struggling convention center.
We have a call out to Armstrong. We also have a call in to Hunter.
Of course, Gov. Chris Gregoire called the session to deal with the $1.4 billion shortfall in the $32 billion budget. Gregoire has already tasked the legislature with choosing $2 billion in cuts.
The argument for the bailout is that if one city in Washington state defaults on its bonds, Wall Street is going to frown on the state as a whole and it’s going to be difficult to bond projects anywhere in the state. Moreover, the bailout money isn’t coming from the general fund, but from a reserve account of local sales tax dollars that the state collects and sends back to cities after taking a share.
The argument against the bailout is philosophical. Why should a portion of, say, Seattle’s sales tax dollars go to bail out a failed convention center in Wenatchee?
To the credit of Armstrong’s cosponsor, Rep. Cary Condotta’s (R-12, E. Wenatchee), he voted against the infamous tunnel cost overruns provision. The legislators are holding a press conference in Wenatchee today. We will report back.
Rep. Hunter says, “If this is a bail out, it’s a bail out for every city in the state.” Hunter explains (offering up that he’s “weird and reads magazines such as Bond Trader) that if Wenatchee defaults, municipal bond rates will go from .5 points to 1 [statewide] and that’s insane. We’re not going to let Wenatchee drive up interest rates for the rest of us.” Hunter’s feeling: “$42 million isn’t worth that.”
He also says Wenatchee is “not going to be happy with the terms … the interest is going to be extremely high…” [he originally used the word "exorbitant" but corrected himself] … “and we’re going to garnish their portion of sales taxes if they don’t pay.”
And Hunter adds: “We’re going to make it so onerous that they’re going to want to refinance, and if they refinance they’re going to have to raise their own taxes.”
In an open letter to Wenatchee on his blog, State Rep. Reuven Carlyle (D-36, Seattle), who has made an issue out of the fact that anti-tax red counties are net recipients of state tax dollars, says he’s still studying the legislation (though he tells PubliCola he’s worried that if the state doesn’t come to the rescue it will hurt the state’s bond rating as a whole).
He also says this:
Here’s the question I openly ponder: Your legislators voted to require a 2/3 majority rule when the King County Council wanted to tax the people of King County for emergency transit funding–and yet now I am being asked to use simple majority in Olympia to approve emergency funding for a loan for your convention center that I suspect could not pass a supermajority vote of your own county council or the communities that make up the Toyota Town Center special taxing district.
I am struggling with the philosophical inconsistency and juxtaposition of these positions.
