Treasurer warns state will go broke if lawmakers don't act
Washington state government is in danger of running out of money if the Legislature fails to act quickly, state Treasurer Jim McIntire says.
Seattle Times Olympia bureau
OLYMPIA — Washington state government is in danger of running out of money if the Legislature fails to act quickly, state Treasurer Jim McIntire says.
"With no improvement in the state's overall cash position, the entire state treasury could be depleted as soon as September 2010," McIntire said in a letter sent to the governor and legislative leaders last month.
Simply put, the state is spending more money than it's taking in through tax collections because of the recession. "If they [lawmakers] don't act, we could be in some real trouble," McIntire said in an interview this week.
Democratic Gov. Chris Gregoire on Wednesday said McIntire's concerns are "based on the understanding that nothing happens this legislative session." The governor said the budget she's proposing would take care of the problem.
McIntire, a Democrat, said he's confident lawmakers will act in time to cut costs and possibly raise revenue through taxes to avoid running out of money. He just wants to make sure people understand the severity of the problem.
If the Legislature gets bogged down and is unable to reach an agreement before the state runs out of money, McIntire could borrow money short-term to pay the bills. But getting to that point would hurt Washington's bond rating.
A lower bond rating likely would drive up the interest rates the state gets when it borrows money, which could end up costing taxpayers hundreds of millions of dollars over the long run.
The Legislature, which starts its session Monday, has to close a projected $2.6 billion shortfall in the current two-year budget, which runs through June 2011.
The state treasury probably needs a $500 million infusion by September to "avoid entering into that zone where we run out of money," McIntire said.
McIntire said that, as far as he knows, the state never has faced a situation like this. Back in 1982, the state did borrow money short-term to pay some bills, but the financial problems weren't as severe as today's, he said.
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