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Lottery could soon help fund school construction
By MAIDA SULJEVIC
WNPA OLYMPIA NEWS BUREAU
OLYMPIA — The phrase "scratch and win" could soon turn into scratch, win and build if the Legislature approves using lottery revenue to fund construction within school districts.
House Bill 2792, sponsored by Representatives Hans Dunshee (D - 44th District, Everett) and Laurie Jinkins (D - 27th District, University Place), would allow the appropriation of funds from lottery revenue to fund construction projects for K-12 and higher education.
The House Committee on Capital Budget voted the measure out of committee Feb. 24 with a 6-4 vote; two members were excused. The bill must move through the House Rules Committee to gain consideration on the floor. It must also pass through Senate committee and floor debate to get to the governor's desk for final approval.
The bill would authorize the State Finance Committee, made up of the governor, lieutenant governor and state treasurer, to issue $156 million in lottery revenue-backed bonds. Bonds are basically long-term debts. The government issues a bond for a certain price and becomes indebted to the lender. The government has to pay back the loan over a period of time plus the established interest.
In the case of House Bill 2792, the bonds would be issued for 25 years, and revenue from the lottery would be deposited into a new account, the Education Construction Revenue Bond Retirement Account, created specifically for debt service payments which would amount to about $11 million annually.
The $156 million would be used to fund specific projects approved by the Legislature. One of the projects is Bremerton's Olympic College Instructional Center.
According to Bruce Riveland, vice president of administrative services at the college, the center was built in the 1960s and the building is "nearly at the end of its life."
The instructional center is the home to the college's healthcare programs, as well as its drama, visual media, art and music programs. The college has already submitted a proposal to the Legislature to replace the building, Riveland said.
"We need this building," he said.
Washington's Lottery was created by the Legislature in 1982 and its generated revenue went directly into the general fund until 2000. Voters approved Initiative 728 in 2000 allowing revenue from the lottery to be distributed to the Education Construction Account to fund construction projects for K-12 and higher education.
That revenue flow continued until the Legislature created the Opportunity Pathways Account in 2010, displacing the construction money. Sen. Jim Kastama (D - 25th District, Puyallup) sponsored the change. Money from the account is used to fund scholarships, work-study awards and grants.
In order to fill the hole left in the construction account, beginning in 2011, the Legislature directed the State Treasurer to allocate $102 million from the General Fund into the education construction account. However, because of continued budget shortfalls, the Legislature suspended transferring the money. HB 2792 would restore a funding resource for school and college construction.
Many of the community colleges in Washington would benefit if the measure were to pass. "We're supportive of it," said Laura McDowell, communications director at the state board of community and technical colleges.
McDowell believes that if the legislation passes, it would help fund some of the projects many of the community colleges.
Another major stakeholder is the Office of the Superintendent of Public Instruction (OSPI). Much of the funding being appropriated in the measure is granted to OSPI to distribute to schools.
"It's going to give schools an opportunity for improvement that they wouldn't have had otherwise," said Nathan Olson, OSPI's communications manager.
Nonetheless, there were voices of dissent during the committee session coming from the Republican members.
Rep. Judy Warnick (R - 13th District, Moses Lake) voted against the measure along with her fellow Republicans.
Warnick is concerned about losing or reducing funding for the Opportunity Pathways Account in order to finance education facilities construction. She believes the Legislature needs to find a different source of revenue for the construction projects.
"I'm not opposed," Warnick said. "I think right now what we need to focus on is the funding sources."
She said the Legislature should use general obligation bonds instead of lottery-backed revenue bonds for education construction projects.
Warnick believes the legislation will pass in the House. However, she said she would continue to work with the measure.
"My goal is to have a supplemental capital budget that we can afford," said Warnick. "Not put us deeper in dept."
According to Dunshee, general obligation bonds are paid for with general fund revenue. Such bonds are also limited by the state's constitutional debt limit. Revenue-backed bonds would be outside of the constitutional debt limit, similar to the bonds in the transportation budget, he said.
The legislation does account for the hole that would be left in the Opportunity Pathways Account if it were to pass. Lottery revenue that isn't used for lottery purposes, to pay off the debt service on the education construction bonds, or to pay the debt service on other obligations from the funding resource would be deposited in the Opportunity Pathways Account.
Also, the legislation directs the State Treasurer to deposit a one-time payment of $11 million from the Education Construction Fund into the Pathways Account for fiscal year 2014.
Dunshee believes that using lottery-backed revenue to fund education construction projects makes sense.
"I always think the lottery people said it should go to education," said Dunshee. "It's a source that you can bond against, that is a good solid source, so I thought it was a solid fit."
The representative also believes that funding education construction projects, paying for needed equipment and funding skills centers would create jobs.
"When the Republicans say, 'put it to the ballot,' that just delays everything … this happens this spring, these jobs happen this spring," said Dunshee.
According to Harris of the Washington Lottery, the Legislature determines where the funding from the lottery would go, so lottery administrators are impartial to the measure.
The measure must pass through both chambers of the Legislature by March 8, the end of the legislative session, to take effect.