Article by Erik Smith. Published on Monday, April 11, 2010 EST.

Hans Dunshee Comes Up With Slightly-Smaller Plan to Rebuild State’s Schools

See these energy-efficient light bulbs? Dunshee says his plan would save energy the same way for the state’s schools, but on a much larger scale.

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, April 11.—An ambitious plan to rebuild the state’s schools is being trimmed at the last minute by its sponsor, in hopes of getting it passed in the final hours of the 2010 Legislature.

            House Capital Budget Chairman Hans Dunshee, D-Snohomish, hopes to beat opposition to his bond proposal by cutting it back a third, limiting it to schools, and tying it to a tax on bottled water that the Legislature plans to pass this year. Voters would be asked this fall to approve $505 million in bonds. To pay for it, the temporary tax on bottled water would be made permanent.

            Dunshee has been pushing the plan for two years now, but it has been stymied by concerns that it would plunge the state too deep in debt, and cause Wall Street to think twice about the state’s high bond rating. State Treasurer James McIntire raised doubts about Dunshee’s $2 billion plan last year, and about the $850 million plan Dunshee pushed this session.

            But what about a plan a quarter of the size?

            The Senate Ways and Means Committee approved Dunshee’s new plan for House Bill 2561 Sunday evening. That gives it two days to pass the Legislature before the clock runs out on the 2010 special session.

            Money would be used to fund energy-efficiency projects in the state’s schools, both K-12 schools and higher education facilities. That represents a major change from previous proposals, which also would have encompassed other public buildings. The state would oversee an evaluation process to determine where the greatest efficiencies could be realized.

            Dunshee said he sees the plan as a way to put the state’s construction industry back to work, and ultimately save money on energy costs – perhaps as much as $130 million a year. The measure would also extend the life of school buildings, he says, by reducing the incentive to replace them. And it might address concerns about “sick-building” syndrome, typically caused by ailing heating, ventilation and air-conditioning systems.

            “We have school buildings that we wouldn’t put felons in,” he said. “The kids have to wear big coats in winter, and they’re 90 degrees in the summer. Kids do not learn well in these buildings.”

            Bond Proposal is Tweaked

            Opposition, as always, comes down to cost. McIntire has not responded formally to Dunshee’s latest proposal, though Dunshee said he thinks the treasurer will buy off on the latest plan. One key difference is that it identifies a funding source – the new sales tax on bottled water that the Legislature plans to impose this year. That tax is expected to raise $32.6 million a year.

            That’s close to the amount that the Legislature would have to pay to finance the bonds – about $36 million a year over 25 years. The bottled-water tax is supposed to be temporary, lasting just three years. A little less than half of the taxes to be imposed this year are supposed to expire at that point, the idea being that the taxes will vanish just as the state’s economy comes roaring back from recession.

            Dunshee maintains that the sales-tax revenue from construction supplies will pay for the bonds the first few years.

            One key point is that the state would not be bonding against the bottled-water tax revenue. The bonds would be of the general-obligation type, meaning that they are backed by the credit and the taxpayers of the state of Washington. The state gets a better interest rate that way, Dunshee said. But if identifying a funding source is what it takes in order to pass the measure, he said he is happy to do it.

            The measure would require the state to exceed the debt limit imposed by law and the state constitution. That’s why the measure would have to go to voters this fall.

            Republicans Gulp at Interest Charges

            The measure is supported by contractors and construction unions. But Republicans balk at the idea of bonding. By charging the state’s credit card for $505 million, the ultimate tab for the state, including interest, will be $900 million. The state would be able to do more if it just set aside $36 million a year, said state Sen. Joseph Zarelli, R-Ridgefield. Republicans also point out that the state can’t launch the program through normal bond mechanisms because lawmakers have raided the state capital budget in order to bail out the state general fund. If they hadn’t done that, no special program would be necessary.

            Dunshee says the $130 million in annual energy savings is an argument for raising the money now – not to mention the boost for an industry that has been hit hard by recession.

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