New supplemental budget reflects challenges of the COVID-19 economic uncertainty.

The supplemental budget agreement on its way to legislative approval today lifts state spending at a time of  rare economic uncertainty. The Seattle Times reports,

…the deal comes as lawmakers show increasing concern about the economic implications of the coronavirus outbreak, as well as what the state will need to do to curb it.

The budget deal includes using $100 million from reserve accounts for the response to the outbreak of COVID-19, the illness caused by the virus. But lawmakers acknowledge that number is a rough guess at what might be needed.

“Our hope is that we won’t have to come back for a special session, but obviously we have to be flexible, we can’t predict the future,” said House Majority Leader Pat Sullivan, D-Covington.

True enough. With the governor poised to order a five-week closure of public and private K-12 schools in King, Snohomish, and Pierce counties, cancelled March Madness, halts to virtually all major sporting events, shuttered arts and music events, and closed restaurants, the economic impact of the coronavirus remains incalculable, but clearly profound. 

The Washington Research Council reports that the agreed-upon supplemental boosts biennial spending by more than 20 percent over the previous biennium, much of it new policy spending.

In terms of the NGFO+WEIA, the conference agreement would increase spending by $975.8 million over enacted 2019–21 appropriations. Of that, $136.3 million is maintenance level (the cost of continuing current services) and $839.5 million is new policy. (New policy was $973.6 million in the Senate-passed budget and $1.020 billion in the House-passed budget.)

In the Spokesman-Review, Jim Camden reports,

The new supplemental operating budget would leave a cushion of $918 million in projected revenue unspent. That’s a significant change from a month ago, when budget proposals by the House and Senate had ending fund balances of less than $10 million. It has no new taxes.

“If the (projected) revenue is reduced, we have built in a buffer,” Senate Ways and Means Committee Chairwoman Christine Rolfes, D-Bainbridge Island, said…

The Seattle Times adds a warning from the state’s chief economist.

The travel industry sticks out as one area where business is expected to temporarily drop off,  said Stephen Lerch, executive director of the Washington State Economic and Revenue Forecast Council.

While it’s too early to know the effect on state revenues, he said, “Things certainly look less optimistic than they did a month ago.”

Yes, they do. For a lot of people.