Transpo 2015: Gov’s bonding plan goes too far

Gov. Inslee’s transportation proposal, which relies on a his proposed cap-and-trade carbon tax system to finance new highway projects instead of gas taxes, would still leave in place the existing gas tax at current levels. It’s what he chooses to do with that existing gas tax that has many in Olympia thinking this isn’t a serious proposal.

Inslee’s proposal would further bond the current gas tax, even though the state has already bonded it beyond what some consider prudent. According to the Seattle Times:

At current rates, legislative reports predict 58 percent to 70 percent of the state’s gas-tax proceeds will go for debt from 2014 until 2030. The squeeze will tighten if new, lower forecasts of a 1 percent annual decline in vehicle miles come true.

[State Treasurer Jim] McIntire said gas taxes have become so unreliable that they’re hard to forecast for more than two quarters into the future — so there had better be a big cushion in a 25-year bond term.

“We need to have some sense of humility as far as what we’re going to count on,” he said.

Bonding the remaining capacity of the current gas tax over 25 years could be problematic. McIntire isn’t the only Democrat concerned with that plan. His worries were expressed prior to Inslee releasing his transportation plan, but House transportation chair Judy Clibborn had this to say in reaction to the administration’s bonding proposal:

I don’t think that’s sound fiscal policy. I don’t think the Treasurer will agree to that. I don’t even think there’s enough money to do the number of projects that he has [budgeted] with that money when it’s being bonded. But I think the bond market would look very askew at that because that is the money that we have been using to serve as a backstop for a failing revenue stream. If you have a failing revenue stream, you sort of need to have something in your back pocket that, if the gas tax started to be lower, you could dip into that.

According to Clibborn, moving to a transportation financing system based on cap-and-trade and further bonding the existing gas tax is problematic because cap-and-trade “has a relatively unproven revenue stream” and that passage through the Legislature would be difficult “with so many unknowables.”

She’s right. With so many unknowns and the state transportation bonding already stretched, there are a lot of risks in this plan. Building a solid project list that can be funded through proven (and constitutionally protected) gas tax dollars is the wiser course at this stage.
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.