The State Treasurer's Office (STO) testified last week on HB 2968 (Using rainy day funds for K-12 classes) and warned lawmakers not to use the state's constitutionally protected reserve account for this purpose (STO testimony at 13:40). According to the bill report for HB 2968: 

• Declares legislative intent to provide $1 billion in fiscal years 2016-2025 to help finance school facilities that support state-funded, all-day kindergarten and kindergarten through third grade class size reduction by appropriating half of the 1 percent of general state revenues transferred annually to the Budget Stabilization Account to the Education Construction Fund.
   
• Appropriates $186.6 million from the Budget Stabilization Account to the Education Construction Fund during the 2015-17 biennium.

In 2007, voters approved a constitutional amendment creating the protected rainy day account (BSA). The new constitutional account requires a supermajority vote of lawmakers (3/5) to access the protected funds unless there is a declared emergency or economic growth of less than 1%. In 2011, voters adopted a new constitutional amendment to strengthen the BSA's protections. These constitutional supermajority protections for the BSA were adopted because in prior years lawmakers kept raiding the state's emergency reserve account for non-emergencies. 

Proponents of HB 2968 believe that building new class rooms warrants accessing the rainy day account. 

The State Treasurer's Office, however, warns against doing this (the following is from a STO email): 

• We agree that additional state resources will be needed to help pay for school construction, BUT we have concerns about spending down the constitutionally protected budget stabilization account for this purpose.
   
• Having a strong, stable reserve will help stabilize our operating budget should the economy slow down...this is why Washington put its reserve in the constitution and requires a supermajority vote to spend it unless there's an economic downturn or natural disaster. We've already chosen to use this reserve to pay for last year's fires, and a similar proposal is in front of the legislature this year. The budget stabilization account is a savings account that the state can draw on to buffer against sharp cuts in the operating budget in the future.
   
• Credit rating agencies and bond buyers watch state budget reserves very closely. Establishing the constitutional budget stabilization account earned Washington a rating upgrade in 2008 so stepping away from this discipline can cost us. For example, Massachusetts (with a debt profile similar to ours) was recently moved from "stable" to "negative" outlook by rating agencies for spending their reserves...  Increases to the state's borrowing costs will hit everything we do, so actions that cause rating financing costs to go up should be avoided.

HB 2968 is currently on the House floor for a possible vote. Approving the transfers from the BSA for school class room construction will require a 3/5 vote should lawmakers decide to ignore the advice of the State Treasurer.