Crisis gives legislature 3 big chances to create jobs

There are three changes to the state constitution that could help build job opportunities just when we need it the most. Business, environmentalists, and labor all could support the amendments.

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Washington State Capitol

There are three changes to the state constitution that could help build job opportunities just when we need it the most. Business, environmentalists, and labor all could support the amendments.

Much has been made about the seismic shift that happened in the most recent election. If you take much of the coverage at face value, even while Washington re-elected Patty Murray, the state's progressives are in for at least two years of hibernation.

I've never really like the term "progressive," but taken at its face value it essentially means people in favor of progress. I think with almost 10 percent unemployment and a still stumbling economy, we're all progressives now. Are there ideas that business, labor, and environmentalists can agree on? How about amending the Washington State constitution to free up public credit, allow local governments to use Tax Increment Financing (TIF), and allow funds generated from taxing cars and gasoline to pay for transit.

The first question that may be crossing your mind is, "What is he talking about?" And if you know what each of these proposals actually does you are almost certain to be saying, “That's never going to happen." So first let me explain the three ideas for changing the constitution, the document that functions as the state’s operating system, and then why I think next legislative session is an ideal time for three erstwhile enemies to come together to make them happen.

The first idea is to change Article VIII, section 7 of the constitution, which prevents local government from loaning — with some narrow exceptions — "its money, or credit to or in aid of any individual, association, company or corporation." This prohibition came about in Washington and Oregon because, prior to statehood, some local governments had loaned their credit, essentially co-signing for big loans, to railroads, who promised big returns in exchange for backing up their huge capital expenses. Instead, the railroads went broke, leaving local governments without a railroad but with a huge bill to pay.

More than a century later local governments can't stoke local economic development by lowering the cost of capital expenditures for a business that wants to locate in the state or for homeowners who want to make energy efficiencies in their home. Oregon fixed this problem in their constitution 30 years ago. Washington needs to do the same to support economic development and energy efficiency in commercial and residential buildings, among other things.

The second idea would be to allow local government the ability to sell bonds to make large scale infrastructure improvements to support compact urban development. Tax Increment Financing (TIF) is something that every other state in the union has, with the exception of Arizona. It allows the repayment of the debt with increased tax assessments that come when new development improves the value of the underlying property.

A city would sell bonds, build roads, drainage, parks, and other infrastructure in an otherwise undeveloped area. When housing and new commercial development get developed in that area the value of the property goes up incrementally, and that incremental increase gets used to pay for the bonds used to pay for the new development. Currently the this practice is severely limited in Washington because the incremental increase in the state portion of the property tax can’t be used for debt service because it would conflict with the constitutional requirement that those funds be used only for education.

The third idea — repealing the 18th amendment of the Washington constitution — was articulated in Crosscut recently by Jordan Royer. Currently, the constitution doesn't allow taxes collected from licensing cars and the sale of gasoline to be used for anything other than highway use. Loosening this constraint would allow those funds to be spent on other purposes other than highway widening, for example, and instead be put toward the further development of light rail in the region and local and regional bus service, and improvements to bike and pedestrian infrastructure. If the state is truly going to reduce vehicle miles traveled (VMT), should it really be investing all of its transportation money only in highways? Diversifying the portfolio of projects those funds would give the state more flexibility to invest in transportation alternatives and transit oriented development.

Business and labor can get behind each of these because the changes would create immediate jobs and build huge opportunities to increase the state's competitiveness for much-needed jobs for the future. Environmentalists have been pushing for years for more support for compact communities and transit oriented development, which would be far easier to accomplish if local government could use its credit and debt capacity to support infrastructure and amenities for new growth. And cities and counties could back lots of small loans to homeowners and small business owners who want to make money-saving energy efficiency upgrades to their homes and buildings but can't because of the high capital costs. Those efficiencies can also create jobs in the energy service sector while also reducing energy use and associated carbon dioxide emissions.

But here's the reason why it makes a lot of sense to do this now: the state is broke. The legislature is in an all-cuts mode. There is no money to spend on new initiatives; stimulus money is running out; and existing economic development and social service programs are facing big cuts.

The state has no choice in these times but to give local government and itself more flexibility. The prohibitions on the use of public credit and on tax increment financing tie local governments' hands, preventing innovative financing for large scale economic development that creates sustainable jobs. Limiting car-related taxes and fees to highway projects also limits the state's ability to target the money toward more sustainable solutions that encourage livable, walkable communities.

That's the constitutional trifecta that can and should bind together three of the state's leading lobbies. It won’t be easy. But the constitution has been amended more than 100 times — about one amendment per year since the document was ratified — and there isn't any reason to think that it can't be done again in the name of jobs and sustainability.

You might be thinking “even if these get the two-thirds vote of the legislature, the voters will never support these big changes.” If we don’t get them in the front of the legislature, we'll never know what the voters think. And starting now with the discussion and the debate of the implications in the legislature of these changes will go a long way toward educating the public on why these measures would give their local governments more flexibility to address local problems.


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