Senate Democrats propose $59.2 billion biennial budget, a 12.4% increase in spending relying on reserves & capital gains tax

Senate Democrats yesterday released their 2021-2023 biennial budget. It’s not a modest proposal, as they say themselves. From their release, 

Senate Democrats today introduced a sweeping, $59.2 billion two-year budget proposal to increase funding for vital state services, including targeted support for the state’s pandemic recovery efforts and historic investments to support Washington’s working families.

The 2021-23 operating budget proposal also leverages an additional $7 billion in one-time federal funds from the American Rescue Plan to bring relief to struggling households and help the state emerge from the pandemic with a stronger safety net and a more resilient public health system.

“This budget reflects our state’s strength, determination and will to defeat the virus, and includes the most ambitious and strategic set of investments in the history of our state,” said Sen. Christine Rolfes (D-Bainbridge Island), chair of the Senate Ways & Means Committee. “Everywhere you look in this budget, we have seized the opportunity to build a stronger, more equitable state. This is an ambitious set of priorities that will guide a sustainable recovery. It is a budget that meets the moment.”

Here are links to budget documents. The easiest to follow is the overview.

The Washington Research Council has a good summary on its blog. Here’s part of it. We’ve added the bold-face.

The Senate Ways & Means Committee chair’s operating budget proposal would appropriate $59.215 billion in 2021–23 from funds subject to the outlook (NGFO). For the 2021 supplemental to the 2019–21 operating budget, the proposal would reduce appropriations by 1.9% (mainly due to the reduced cost of continuing current services), for a revised 2019–21 appropriations level of $52.701 billion. From that revised 2019–21 level, proposed 2021–23 appropriations represent an increase of 12.4%.

The budget would balance over four years, leaving an unrestricted NGFO ending balance of $179 million in 2023–25. Along with the improved revenue forecast, the proposal would impose a capital gains tax (ESSB 5096) and it would drain the budget stabilization account (BSA, or the rainy day fund) in 2019–21. The transfer from the BSA to the general fund–state (GFS) would be $1.820 billion. (By the end of 2023–25, the BSA balance would be an estimated $1.125 billion.) (Emphasis added.)

Keep in mind that current operations could be maintained without touching reserves or imposing new taxes. Also, note that this increase comes on top of rapid spending growth since the Great Recession.

The Seattle Times reports

The new, proposed $59.2 billion state operating budget for 2021-23 doesn’t even reflect the full picture. Lawmakers are spending an additional $7 billion from the federal government’s COVID-19 relief package on programs. The federal dollars include $1.1 billion for coronavirus response, including testing, vaccine deployment and contact tracing, and $1.7 billion to help K-12 schools reopen amid the pandemic and address learning loss.

It adds an additional $495 million for rental assistance amid the pandemic, and budgets $500 million in new money to help reduce the impact of rising unemployment-insurance taxes amid the pandemic.

As the ST points out,

With unified control of the Legislature and the governor’s office, Democrats will be negotiating this year among themselves to get a final budget agreement by the scheduled end of the legislative session in late April.

House Democrats will release their budget later today.

Washington Policy Center analyst Jason Mercier writes,

The expectations were that the Senate majority’s budget would be more fiscally conservative than the House version (set to be released later today). Let’s hope that belief was wrong. The Senate majority proposes a massive 12% increase in spending that takes state appropriations to $59.2 billion (Funds Subject to Outlook) while draining total reserves to less than $1.1 billion (under 2% of spending). Total budgeted operating spending for 2021-23 under the proposal is projected to increase to $119.4 billion.

More later.