By The Staff of The Chronicle

In an announcement last Monday, Washington State Treasurer Mike Pellicciotti said his office would refinance $1.4 billion in public debt to take advantage of low interest rates.

In his statement, Pellicciotti said the expected savings from the refinancing would total $86 million.

The announcement came less than two weeks after several credit rating agencies gave the state high credit ratings.

Pellicciotti commended the Legislature for adopting his office’s recommendations, saying, “The Legislature has made the responsible decision to implement the key recommendations presented by my office, which has helped the state maintain its strong ratings. credit and will help get the best possible interest rates in our next. to sell.”

In a letter to lawmakers in late April, Pellicciotti said credit rating agencies had cited the legislature’s budget decisions as a key element in determining their ratings, particularly the decision to increase the government’s budget reserves. ‘State.

In his letter, the Treasurer quoted the credit rating agency as saying, “Washington’s credit profile is characterized by strong budget management practices, including strong forecasting, a history of budget adjustments based on changes strong forecasts and a demonstrated commitment to rebuilding reserves after drawdowns during an economic downturn.

The treasurer also alluded to the realities of rising interest rates as the economy strengthens after the pandemic.

“While strong fiscal management practices and the government’s impressive ratings are a critical part of this refinancing, relative to bonds sold in the historic low interest rate environment of a year ago, savings from this transaction should be more moderate,” Pellicciotti said, adding, “My talented team has forecast interest rates to rise as the economy rebounds from the pandemic — the bottom line is that this sale reduces future debt service costs and saves taxpayers a lot of money.

Regarding the allocation of the funds saved, Pellicciotti said that about one-third of the funds will go to transportation projects while two-thirds will go to the state government’s general fund, the main beneficiaries of which are public schools and public schools. social services.