Washington Research Council senior analyst Emily Makings assesses the state budget outlook following this week’s good news revenue forecast. Makings writes,
…the revenue estimate is still well below the February forecast (on which the current state budget is based). The chart shows how the forecast has changed. Revenues from funds subject to the outlook are now expected to increase by 9.3 percent from 2017–19 to 2019–21 and by 7.9 percent from 2019–21 to 2021–23.
She includes the following graph tracking forecasts from February on.
Today’s revenue forecast includes an updated balance sheet for 2019–21. It estimates that the unrestricted ending balance will be negative $1.165 billion in 2019–21. That shortfall could be covered by the rainy day fund, which is estimated to have $1.923 billion.
But the Legislature will have to act to tap those funds. And, as we’ve noted, they would be a one-time only solution. Under the four-year balanced budget requirement, the Legislature must also consider 2021–23. My back-of-the-envelope estimate is that, with today’s forecast, the unrestricted ending balance will be about negative $3.8 billion in 2021–23. If the rainy day fund is used, there would still be a shortfall of about $1.4 billion in 2021–23.
She concludes by pointing out several factors relevant to state spending that could reduce the shortfall, including the enhanced federal Medicaid match. Read the post for details.
As reported in the Everett Herald, the state budget director recognizes that the improved forecast doesn’t solve all the state’s problems.
“This is really good news but we are not out of the woods yet,” said David Schumacher, Inslee’s budget director and a member of the council.
A more manageable situation. And, of course, still fraught with uncertainty.