October 24, 2024
By: TJ Martinell
(The Center Square) - A newly released brief published by a Washington-based think tank claims the state operating budget will have a $5.1 billion shortfall for the upcoming 2025-2027 biennium driven by new state spending.
However, the state agency tasked with helping write the governor’s budget proposal says the final figure could be different depending on next month’s revenue forecasts.
In its Oct. 21 brief, the Washington Research Council claims that “the cost of maintaining current services in the upcoming 2025–27 operating budget is expected to be higher than currently-forecasted revenues for funds subject to the outlook.”
Using figures based on the State Economic Forecast Council’s latest revenue forecast from last month, they estimate the budget ending balance could be negative $5.120 billion, with just $2.977 billion in the budget stabilization account also known as the rainy day fund.
However, the WRC notes that “these are preliminary estimates, and there are two more revenue forecasts and two more caseload forecasts before the Legislature enacts the 2025–27 budget. These forecasts could considerably change the revenues and maintenance level spending in our estimated outlook.”
Washington state’s operating budget is constrained by a four-year balanced budget requirement in which spending through state accounts cannot exceed state revenue forecasts put out by ERFC, which it does on a quarterly basis.
While there are several initiatives on the November ballot that could repeal several state revenue sources such as the Climate Commitment Act and the excise tax on income derived from the sale of capital gains, WRC asserts that the estimated shortfall is “the result of choices made by the Legislature. In short, the state increased spending even as it knew revenues would come in more slowly. Further, the Legislature used reserves to increase general spending; as a result, remaining reserves are expected to be insufficient to cover the shortfall.”
The state Office of Financial Management helps the Governor’s Office with handling other state agency budget requests before releasing an operating budget request to the Legislature. Following the September ERFC revenue forecast, OFM Director Pat Sullivan, a former state representative, warned in a statement that "we will face significant challenges in meeting all our obligations in our next budget. There are some tough fiscal choices ahead.”
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