The House passed the Arena Bill Monday by a vote of 56-33, but with an amendment that split the district representatives. The amendment eliminates the ability of councils and jurisdictions to impose a sale and use tax of 0.2 percent without voter approval.  Rep. Condotta voted in favor because House Speaker Chopp said the bill wouldn’t pass without the amendment. I believe it deserves passage.

Rep. Armstrong told the Wenatchee World he voted no because the amendment “takes away the tools for the nine municipalities to correct the problem and leaves in the onerous part of the bill that allows the state to come back in January 2013 and start withholding sales tax revenues to get paid back.”

John Sattergast, from Armstrong’s office said Armstrong believed if any of the jurisdictions voted no, it could put the payback in jeopardy.

In fact the amendment gives Wenatchee and each municipality the ability to raise taxes individually after passage by the voters, contrary to the original interlocal agreement. The bill reads as follows from page 7, line 26 – 30 as amended: “The legislative authority of either the anchor jurisdiction [Wenatchee] or a related jurisdiction [the other 8 municipalities] of a distressed public facilities district as defined in section three of this act may submit an authorizing proposition to the voters and, if the proposition is approved by a majority of persons voting, impose such a sales and use tax."

That language should authorize Wenatchee to put a 0.2 sales tax increase on the ballot for Wenatchee voter approval. It’s my belief Wenatchee will make the commitments to cover the great majority if not all of the debt as specified in the bill. They’d work to gain voter approval, raise their debt limit and seek other options to step up to their commitments. Without passage, Wenatchee’s general obligation bond rating may sink even lower than its slippage to the current rating Treasurery official Wolfgang Opitz calls, “One level about junk grade.” However a voter-approved sales tax would several months longer than a tax imposed by the City council and is not a guaranteed passage.

Can the PFD, attorneys and bond counsels keep the owners of the debt patient to wait for legislative passage? The best argument in favor is bondholders have a chance for full payment within days. That’s a significant reason to be patient since they’re also drawing daily interest. The alternative is filing lawsuits for dubious expectations of full value over a much longer time.

Sen. Parlette emailed me that she is working to get passage of the amended House Bill by getting enough support to bring it to the floor of the Senate for a vote. Sen. Murray, Chair of Senate Ways and Means has misgivings about and refused a second hearing, although he graciously allowed a hearing on the original bill.

It seems to me there is some optimism for passage if she can contact the needed votes at a hectic time in the emergency session. The amended bill meets Republican objection that sales and use taxes could be increased without voter approval. The bondholders would get paid as soon as the bill is passed this week because the debt is currently in default. And the Treasurery department assures the state legislators the debt would be repaid beginning in 2013 regardless of the local actions.

  However the 2013 paybacks would divert taxes that state Democrats fear would hurt government services for low-income citizens. The task is to convince doubting Democrats that the bill gives Wenatchee the ability to cover the debt at less cost than default with its guaranteed lawsuits. Leaders I’ve talked with believe Wenatchee has the capacity to pay the debt if given the next year to succeed. Specifically Douglas County provided me a copy of its estimates that convince them Wenatchee could cover the payments required on either a 20- or 25-year bond.

Parlette should find growing support for the bill. Cities and other municipalities with public facilities districts may face higher costs. Opitz said last week’s $10 million dollar bond for the Three Rivers Convention Center sold at a higher interest rate than anticipated because of the Arena bill publicity, costing Kennewick an extra $200,000 over the life of the contract. Thad Duvall, Douglas County Auditor sits on the council that assists small municipalities in issuing pooled bonds based on the state’s bond ratings. If the state’s rating slips, they’ll all pay more interest. The Seattle Times editorial staff endorsed the bill. Groups such as the Washington State Labor Council and school districts are stepping in to support it because they fear the state’s bond rating may force them to pay extra money that could be used to support jobs in the state.