Bloomberg News

Washington Treasurer Sees Boeing as Indicator: Five Questions

January 09, 2014

James McIntire, a 60-year-old Democrat, is in his second term as treasurer of Washington, whose bonds are beating the broader municipal market.

Securities from Washington issuers fell 1.8 percent in 2013, compared with the market’s 2.6 percent drop, according to Standard & Poor’s index data.

Washington has approved $8.7 billion in tax breaks for Boeing Co. (BA:US), which considered moving production of its new 777X jetliner out of state unless it receives labor concessions. The company’s largest union on Jan. 3 agreed to freeze pensions starting in 2016 in exchange for maintaining production. Loss of that work would have been a “credit negative” for the state and the region, according to Moody’s Investors Service. The rating company ranks the state Aa1, second-highest, with a stable outlook. Washington plans bond sales totaling $774 million this month, according to McIntire.

The following is condensed from recent interviews:

Q: What does the Boeing decision mean for Washington and its bond offerings?

A: While Boeing’s decision to produce the 777X in Washington is a credit positive, it is not likely to affect our cost of capital or our credit in the market. It’s just another good indicator of our strong economy and Washington as a great place for business growth.

Q: The Greater Wenatchee Regional Events Center Public Facilities District, which financed an events venue and ice-hockey arena, defaulted in 2011 on notes issued in 2008. It was the first municipal issuer fined for misleading investors. Should there be something in place to prevent that from happening again?

A: Washington is a strong local-autonomy state. I would rather have a treasurer’s office and a legislature that’s willing to intervene and willing to step up than have a specific mechanism in place. It’s a delicate balance when you’re trying to set up that kind of a mechanism. You want to make sure that it’s going to be something that really works. We’re still in discussions with the legislature about what an appropriate mechanism would look like. But there’s not a hue and cry for identifying potential cases of default.

Q: What was the impact of the Wenatchee default on other issuers?

A: In terms of other issuers of similar type -- public facilities districts in the state -- we think it was probably a 25 to 50 basis point impact on a couple of other financings. Those are real dollars. It doesn’t sound like a lot statewide, but it’s real dollars for a small district.

Q: You worked for Hubert Humphrey on energy policy and employment issues while he was a Democratic U.S. senator in 1977. What did you learn from him?

A: Humphrey was a master at driving strong arguments and mustering a very strong offense. He was also very good at closing the door and finding a place to compromise. He used to say that compromise is the mother’s milk of politics. He also used to talk about how the best social program is a job. He had a pro-growth, big-picture view of the role of government.

Q: Some citizens say their state legislators don’t really do anything. You served five terms as a legislator. What useful lessons or skills did you learn?

A: You have to build relationships with people. They have to be able to trust you and understand what you’re trying to do. It’s also very important that when you need to disagree with people, to be very careful about how you go about that. You need to be able to do that respectfully, and to let people know that you’re going to disagree with them and why, so that when you take them on publicly, they don’t feel blindsided. You’re much more likely to retain some kind of relationship that you can use and for negotiating a compromise.

Please click here to suggest a public official you would like to see in Five Questions.

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

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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