The Constitutional Provision as it Presently Exists

Article VIII, section 1, of the Washington Constitution authorizes the state to borrow money, by issuing bonds, notes, and other evidences of indebtedness, to be repaid over time with interest. That provision of the state constitution also sets a limit on the aggregate debt the state may assume. The aggregate debt contracted by the state cannot exceed an amount for which the payments of principal and interest in any fiscal year exceed nine percent of the average general state revenues for the previous three fiscal years. "General state revenues" are defined to include all money received by the state treasury from any source, with certain exceptions. Not all state debt is subject to the debt limit.

The Effect of the Proposed Amendment if Approved

The proposed amendment would not change the constitutional debt limit. It would modify the annual calculation used to determine whether the state's debt is within the constitutional limit. The amendment would require the state, in annually calculating the amount required for payment of interest on its general obligation debt, to subtract scheduled federal payments to be received each year in respect of bonds, notes, or other evidences of indebtedness. Under the constitution, the debt the state may issue is based in part on the total amount of the state's annual principal and interest payments. Therefore, subtraction of federal payments to be credited against interest on the debt could affect the amount of aggregate debt that the state may incur.