As the Washington Roundtable’s Benchmarks for a Better Washington show, the condition of Washington’s infrastructure is poor compared to other states. The Everett Herald recently editorialized that the Legislature should have only two items on its agenda next year: education and transportation.

A story in Bloomberg Business Week notes that, nationally, “local governments are not making infrastructure investment a priority.”

[Larry] Summers argues that today’s low interest-rate environment makes this an ideal time to invest in infrastructure. A just-released report from Standard and Poor’s . . . explains why states are not doing this. Henry Henderson,, a director of public finance at Standard and Poor’s, says borrowing for anything, including infrastructure projects, requires states to account for future interest payments in budget projections. Even with low interest rates, that’s money they just don’t want to spend. Instead resources are going toward other services (such as schools), lowering taxes, and funding pension and health care. About 10 states are proposing tax cuts for 2015, but hardly any states are planning significant infrastructure expansion.

This is short-term thinking. Neglecting infrastructure now increases the cost of repairs in the future, both because there will be more damage and because the cost of borrowing money will probably rise. Interest rates aren’t likely to stay so low for long, and the federal government is considering restricting states’ ability to issue tax-exempt bonds. Meanwhile, competing budget pressures will probably intensify.

According to that S&P report,

While infrastructure needs in the U.S. — and worldwide -– are very high, in our view, debt issuance in the majority of U.S. states remains below average. And although we consider lower debt levels to be a credit strength, we also recognize that deteriorating infrastructure may limit a government’s economic competitiveness. This view of the connection between infrastructure and economic strength was reflected in a recent report by U.S. Treasury Department, which stated that high-quality and reliable infrastructure is essential to the U.S. economy and that failure to provide and maintain adequate infrastructure would have severe economic consequences, with fewer jobs created, hundreds of billions of dollars of time and fuel lost to traffic jams, and elevated costs of goods due to increased freight costs.

Maintaining a manageable debt level must be balanced against the serious infrastructure needs of the states. About Washington, S&P notes, “We anticipate that continuing transportation needs, including two major urban highway projects, will likely translate into continuing GO issuance in the next two to three years.”

According to the S&P report, Washington ranks 8th in total tax-supported debt, 7th in per capita tax-supported debt, 7th in tax-supported debt as a percent of personal income and 9th as a percent of gross state product. In 2013-15, debt service makes up 5.5 percent of the near general fund-state plus opportunity pathways budget.

Yesterday, however, as the Olympian reports, the state treasurer took advantage of current low interest rates and

refinanced more than $934 million in state bonds during Wednesday’s turbulent trading on Wall Street, securing low enough rates to save taxpayers about $29 million over the next 32 months.

The moves reduce debt payments from the state’s operating and transportation budgets, according to state Treasurer Jim McIntire. Over 17 years, the refinancing of $934.1 million in bonds will save $172 million, his spokesmen said.

The short-term savings include $21 million through mid-2017 in the state general fund, which is under pressure to provide more for K-12 schools, and $8 million from the transportation budget, spokesman Andrew Smith said.

Improving the state’s transportation system, including preservation and maintenance, remains an essential priority, one that will stimulate additional economic growth and development. While Washington’s debt level is relatively high among the states, as the nation’s most trade-dependent state Washington has much to gain from smart infrastructure investments. The state faces a greater risk from deteriorating infrastructure than it does from an increasing debt burden.