Gov. Jay Inslee yesterday proposed a supplemental budget that increase state spending this biennium to $62 billion. The governor acknowledges his proposal is a departure from the typical short-session approach to modifying the budget adopted in the first year of the biennium.
“Some would say a supplemental budget year ought to make for a quiet few months in Olympia, but no one has that luxury with the number of urgent concerns facing our state. We must act now on issues that the pandemic highlighted and further compounded,” Inslee said. “It may be a short session, but we have a long list of things to accomplish together.”
His budget announcement leads with these priorities.
Gov. Jay Inslee’s 2022 supplemental budget proposes significant funding to reduce poverty, increase housing and resources for homeless individuals, expand K-12 learning supports, invest in clean transportation and green economy, decarbonize buildings, and protect salmon habitat.
The Washington Research Council’s initial take on the budget calls it a 5.1% spending increase and notes the double-digit biennial increase.
The enacted 2021–23 operating budget appropriated $59.067 billion from funds subject to the outlook (NGFO). Today Gov. Inslee proposed a supplemental budget that would appropriate $62.107 billion for the biennium, an increase of 5.1% over the enacted budget. Compared to 2019–21, this level of appropriations would represent an increase of 18.2%.
Under the governor’s proposal, maintenance level changes (the cost of continuing current services, adjusted for inflation and enrollment) would reduce appropriations by $1.145 billion and new policies would increase appropriations by $4.185 billion.
The WRC points out proposed changes in budget reserves.
On top of the regular 1% transfer from the general fund–state to the budget stabilization account (BSA, or the rainy day fund), the proposal would transfer an additional $600 million. (While this is a good thing, note that $1.8 billion was needlessly transferred out of the BSA earlier this year.) The BSA ending balance would be $1.197 billion under the governor’s proposal, for total reserves of $2.513 billion.
More details in the WRC post.
The Seattle Times reports,
Washington Gov. Jay Inslee unveiled a new supplemental state budget Thursday that puts billions of dollars in new spending into pandemic response, homelessness, climate change, transportation projects, state employee raises and other items.
Inslee’s $61.8 billion supplemental proposal expands upon the roughly $59 billion two-year spending plan approved by lawmakers and the governor this spring.
The 2022 spending plan proposes neither any new taxes nor any tax cuts. But it adds billions in new spending from stronger-than-expected tax collections, remaining federal COVID-19 relief dollars and savings found in the current budget.
The ST reports some initial reactions.
“At a time when the state is overwhelmed with cash, it is disappointing, though not surprising, to see that the governor’s budget proposal does not include any tax relief for the families who have struggled through the pandemic and who are now experiencing the highest rate of inflation since 1982,” Rep. Drew Stokesbary, R-Auburn, said in a statement.
“Instead, the governor wants to spend our entire surplus on growing state government even more,” Stokesbary added.
In a statement, Rep. Timm Ormsby, D-Spokane, and chief House Democratic budget writer, praised Inslee’s plan saying “we appreciate his proposals for ensuring public health is funded and struggling families have access to housing, food, and heating programs that keep them from homelessness.”
GOP lawmakers have called instead for tax relief, especially as prices for gas and other goods have increased due to inflation.
Sen. Lynda Wilson, Republican lead on Ways and Means also released a statement. It begins,
“In the past four years the governor has backed almost two dozen tax increases that will take billions from Washington taxpayers. Those include the new income tax he proposed and endorsed while the people of our state were struggling with the pandemic, and the new payroll tax that is just a couple weeks away. The state treasury is on track to be billions of dollars ahead, yet the governor doesn’t have the heart to propose significant, direct tax relief for a single resident of our state. It’s as though he has no respect for the taxpayers. That’s inexcusable.”
Association of Washington Business president Kris Johnson said in his statement on the budget,
This remains a challenging and uncertain time for Washington employers and their employees. Businesses that were starting to recover from the initial pandemic downturn now face spiking inflation, supply chain disruptions, unprecedented labor shortages and the emergence of a new variant that threatens to undermine the recovery. All of this comes after several years of tax increases and costly new regulations imposed by lawmakers.
“By contrast, the state’s financial picture has steadily improved throughout the last year, fueled by a combination of growing tax revenue and billions of dollars in federal Covid relief funds. Washington, like many other states, is awash in cash. That’s why we’re disappointed the governor is not proposing to use more of the state’s extraordinary surplus to lower costs for employers and families or make direct investment in job creation. The state has yet to fully recover from the pandemic downturn and remains approximately 110,000 jobs below the start of the pandemic.”
The statement continues and concludes,
“As legislators prepare for another legislative session amid an ongoing pandemic, we hope they will make smart choices with this historic surplus, bring an end to the years of tax increases and champion the economy.
“We understand the governor’s proposed budget and policy agenda is a starting point and we look forward to working with the governor and lawmakers to meet the enormous challenges ahead.”
As Johnson says, the December budget rollouts from the governor are starting points. There will be more analysis of the governor’s budget in the next several weeks.
We would again emphasize that the Washington Research Council has published a policy brief that provides a good template for evaluating the various budget proposals we’ll be seeing, beginning with yesterdays release. It’s called: How Should the State Spend Its Substantial Surplus?