The Washington Research Council writes that the state budget would not be able to sustain programs were a recession to hit in the next two years.
Moody’s estimates that 23 states have enough funds in reserve to get through a moderate recession, as reported by Route Fifty today. Those 23 states include Washington.
The estimates are based on “a downturn that happens almost immediately.” But Route Fifty also reports that Moody’s “puts the highest odds for the next recession as hitting in mid-2020.” If a recession were to occur during the 2019–21 biennium, Washington’s reserves would not be enough to make up for the revenue shortfall (at least as things stand now).
WRC analyst Emily Makings presents a table that projects a recession scenario deficit of $2.2 billion after draining reserves. She concludes,
We don’t know when a recession will next occur, or how severe it will be. It is certainly good to be among the 23 states that Moody’s judges to be well-prepared. But this may give a false sense of security—we’re not sitting as pretty when you look into the next biennium.
We recommend reading the short blog post. With the education finance challenges expected to be visited upon the 2019 Legislature, a realistic appraisal of the health of the state budget is a necessary tonic.