On the playground of life, Washington State Treasurer James L. McIntire is not the kid that would light fireworks under the principal, or jump off the highest wrungs of the monkey bars. But he’s the definitely the kid you’d leave your milk money with. In the real world, McIntire has built a reputation of being very conservative when it comes to the state’s creditworthiness with bond rating agencies — earning a AA+ rating, just short of the perfect AAA.
He dryly describes the slightly less than perfect rating as the “Persian rug effect,” referring to the practice in some cultures of purposely putting an imperfection in a rug to demonstrate that one “is not God.”
It is hard not to admire and trust McIntire, which is a trait one should have if one is state treasurer. However, McIntire might also consider, now that he has a strong foundation and reputation with lenders, indulging in some riskier behavior — setting a few fireworks alight now and then.
McIntire recently visited with Crosscut writers and editors. I have some experience with the treasurer dating back to my work in favor of state Rep. Hans Dunshee’s last run at a jobs bill in 2010. That was an effort, rejected by voters, to boost the states credit limit to fund massive retrofits for public schools. McIntire was pulled in as a supporter only after a revenue source was attached to the bonds in the form of a bottled water tax that would have been extended beyond its sunset.
McIntire, a former legislator himself, sees his role as treasurer as a “restraint” on the legislature. Legislators, he says, are often “shortsighted” when considering raising debt limits for wins today, missing the high costs of borrowing tomorrow. McIntire says the state is taking on debt at unprecedented levels, borrowing $2.5 billion dollars each year, a level that puts the states credit rating at risk, raising the costs for borrowing money.
But there is an inherent contradiction that I often pointed out when writing about the treasurer's stand on Dunshee’s efforts: how can the state simultaneously receive the highest praise from rating agencies yet also be perilously close to getting a “negative outlook"? The truth is that the gigantic bursts of borrowing have been for highway construction, funded mostly through revenue bonds backed by increased gas taxes and tolls.
That’s hardly the kind of reckless borrowing that would bother creditors. Or is it? McIntire tries to have it both ways pointing to our solid rating but also to the big borrowing increases. The truth is that most of our large borrowing is for projects that are building big highways, hardly a sustainable path to follow when projections show people are driving less. There are sustainable ways to use debt, but building highway debt isn’t one of them, and it’s unfair for McIntire to point to that borrowing to argue against borrowing for job creating energy retrofits Dunshee was pushing in 2010, and is again in 2012. Borrowing backed by gas taxes and tolls is what’s driving borrowing up, not big public works programs targeted at job creation.
McIntire should embrace borrowing for jobs that will create future revenue. And how about taking a look at loosening the state’s limits on the lending of its credit to benefit private entities? A limited peeling back of the constitution’s limits could help lower the cost of public infrastructure — roads, sidewalks, drainage, and even affordable housing — by reducing the cost to finance those benefits.
Sure there are risks, but along with potential downsides to lending credit, there are big upsides. By allowing local governments to back bonds issued for infrastructure, then allowing private developers to pay back those bonds at the lower cost, we could make those improvements more affordable. The bonds would be paid back with private dollars, but the interest rate would be bargain basement since it would public-issued debt.
There is no such thing as a reckless daredevil. Even Evel Knievel carefully planned his stunts. If there is a team I am willing to trust taking some well-calculated (as opposed to unwise ones) risks with the state’s credit to create jobs, support the development of vibrant neighborhoods, and protect the environment, it’s Dunshee and Washington state Treasurer Jim McIntire.