By Ryan Packer

Governor Jay Inslee is pushing back on a budget proposed by the Washington state senate that he says fails to adequately invest in housing. The senate’s capital budget, released this week, would allocate $625 million to affordable housing, with $400 million going to the state’s housing trust fund, which provides financing to preserve and build housing for low-income residents across the state.

The governor’s budget, released in December, went much bigger on housing expenditures by proposing a ballot measure to increase the state’s bonding capacity, issuing another $4 billion in debt to fund more than 17,000 subsidized housing units, including nearly 5,000 in the next two years.

But that idea fell flat for many lawmakers, who said it could raise the cost of state borrowing in other areas. Inslee’s plan would raise the percentage of state spending on debt above the 5 percent recommended by state treasurer Mike Pellicciotti, potentially risking the state’s credit rating.

“The Senate’s capital budget proposal would take us backwards on housing,” Inslee said in a statement after the senate released its budget. “It’s less than what we approved last biennium. In the middle of a housing crisis, less is unacceptable. We need to go big, so people can go home.”

Senator Mark Mullet (D-5, Issaquah), the capital budget lead on the senate’s ways and means committee, has said it would be fiscally irresponsible to increase the state’s bond limit. “To borrow $4 billion above the state’s constitutional debt limit right now, we would need to spend nearly $2.4 billion in additional interest payments going into the future,” Mullet wrote in an op-ed in the Seattle Times. “Yes, $2.4 billion in interest payments! That’s a lot of money! That’s billions of dollars spent on interest payments to our lenders instead of priorities like education, health care and, yes, affordable housing construction.”

Inslee argues that slowing down on investments in housing would push the state further away from making progress on homelessness. “This work is not free. Building tiny home villages is not free,” Inslee said during a visit this week to an encampment on state-owned property in South Park, where residents were removed last week. “This is an issue that you can’t nickel and dime. Baby steps won’t cut it. The Legislature cannot just do half measures this year.”

Democrats in the Senate, who have touted their proposed investments in the housing trust fund as “historic,” are pushing back.

“I was really disappointed to see both the specific content of what the governor said, and the tone of how he said it, because I didn’t think that was in any way collaborative or productive,” Senate Majority Leader Andy Billig (D-3, Spokane) told PubliCola at a media availability last week. “We all have the same goal, which is to build more housing, to have a home for everyone. … We hope the governor will be collaborative and be part of the team to bring home the final proposal in the end.”

Billig disputed Inslee’s claim that state spending on housing would decrease under the senate budget plan. But that dispute seems to hinge mostly on how federal dollars, which the state can’t control, factor into the overall state budget. Out of the $415 million in total housing investments in the state’s 2022 budget, $350 million was one-time federal grants, not state funding.

Democratic senate leaders in the senate also say Inslee is making an apples-to-oranges comparison by comparing the full 2021-2022 biennial budget, which the legislature added onto in 2022, to the first year of the 2023-2024 budget.

“Taken together, we believe these numbers show that it would be misleading to claim that our 2023 Senate budget proposal reduces our state’s commitment to addressing our affordable housing challenge,” Alex Bond, a spokesperson for the Senate Democratic Caucus, said.

Inslee has described investments in affordable housing as one leg of the Democratic legislative strategy this session, along with bills to increase the supply of market-rate housing and provide new protections for renters. Most of the market-rate housing bills are moving forward, including House Bill 1110, a centerpiece bill that would require cities to allow more density in most of their single-family zones; that bill cleared the Senate housing committee last week.

Bills to beef up renter protections didn’t fare as well. Legislation that would cap annual rent increases at 7 percent, or require six months’ notice of rent hikes greater than 5 percent, both failed to advance before legislative deadlines this year.

This week, the House will release its counterproposal to the Senate budget. Inslee seems unlikely to give up on his bond proposal, setting up a rare intra-party fight over housing and homelessness.

ryan@publicola.com