Washington Treasurer Manages State Bond Sales. Now He Wants Less

(Bloomberg) -- Washington saddles its residents with the sixth-largest debt burden per capita among U.S. states. Treasurer Duane Davidson wants to lower that.

Davidson is examining the calculations that go into establishing the state's debt limit, which determines how much in new bonds can be sold. "We should be making more conservative calculations," he said. If the review results in more conservative calculations, that would mean Washington would have less capacity to borrow.

"If we just ebb the tide and start to decrease the overall debt by any amount, it would be a positive," Davidson said in a phone interview.

Under Washington's constitution, payments of principal and interest can't exceed a certain percentage of the mean of general state revenue for the six immediately preceding fiscal years. For fiscal 2018, that means the state's remaining debt capacity is $3.9 billion.

The review of the calculations should take another few months, he said. Davidson also plans to lobby legislators to sell fewer bonds and to pay for capital projects out of already available funds.

The state's debt burden equates to $2,542 per resident, well above the state average of $1,394, according to S&P Global Ratings.

That sixth-place ranking needs to change, Davidson said, and "we'll be preaching that message hard."

To contact the reporter on this story: Romy Varghese in San Francisco at rvarghese8@bloomberg.net.

To contact the editors responsible for this story: James Crombie at jcrombie8@bloomberg.net, Michael B. Marois, William Selway

©2018 Bloomberg L.P.