Washington state Representative Hans Dunshee has proposed a $3 billion issue to finance a massive overhaul of school buildings in Washington State.  According to press reports, the legislation—ambitiously called the “Washington Works Act”—would create 90,000 jobs in Washington by employing people to implement capital projects to make “safety, health, and energy efficient improvements to public facilities in all public K-12 school districts, community and technical colleges, state universities, regional universities, [and] The Evergreen State College.”

Proponents of the legislation hail it as a green version of the Works Progress Administration, the massive New Deal job-creation effort.   Others, like the State Treasurer, have come out against the legislation, saying it would damage the states credit rating by massively increasing the states debt load.

I’m not going to step into the controversy over the bill’s specifics; I just don’t know enough to have an informed opinion. Still, there are two underlying ideas in the bill that are worth a very sympathetic hearing.

First, investing in energy efficiency can boost the economy and climate protection simultaneously reducing greenhouse gas emissions and saving the public money over the long haul. Contrast that with federal stimulus spending—a significant chunk of which is being spent on new highway construction and road wideningWe’ve found that expanding urban highways will simply increase emissions that contribute to climate change—precisely the wrong direction. But investing in efficiency would reduce the public’s energy bills, and also our impact on the climate.  And that’s a win both for the economy and for our efforts to reduce greenhouse gas emissions.

Second, Dunshee’s bill embodies a smart idea about financing energy efficiency:  pay for an efficiency upgrade with a loan (in this case, bonds), and pay back the loan using the savings on energy.  You could call it “green-increment financing,” and it’s a great way to make energy-efficiency upgrades pay for themselves over the long haul.

Again, this is no endorsement of Dunshee’s bill, and its unclear as to whether the legislation, as written, would actually let the state use energy savings to pay back the money it borrows.  But as it makes its way through the legislature, Washington’s lawmakers would be wise to keep the idea of green-increment financing alive.

Read Green Schools, Smart Financing 2.