Washington State Treasurer favors special session to address budget deficit.

State Treasurer Duane Davidson believes a special session of the Legislature is the way to address the state’s cash deficit and multi-billion revenue shortfall, according to The Lens. He also provides some important context on the budget deficit. 

According to the state Office of Financial Management (OFM), the state is projected to run a cash deficit of $277 million in August and continue to have deficits each month through the rest of the 2021 fiscal year.

However, that doesn’t mean the state is running out of money soon. State Treasurer Duane Davidson wrote in an email that the despite the cash flow imbalance “we will be able to cover ongoing financial expenses/obligations. The State Treasury as a whole is adequately funded and in the black.”

But he added that when certain accounts in the State Treasury go into the red, money from other accounts are used to cover it. So in effect, the state is borrowing money to cover the operating account, which in turn must pay interest to those funds “until it gets out of the hole. Interest is paid monthly until the account returns to black. The longer this takes, the more interest is paid.”

Washington Research Council senior analyst Emily Makings reviewed the state’s experience with such loans in the 1980s in a blog post yesterday. 

Lens reporter TJ Martinell writes,

As the state delays action, Davidson says the cost to taxpayers will rise. “The longer the state waits to address the current cash deficit and revenue shortfall, the more expensive it will be.”

Right. Yet, the House Minority Leader tells Martinell there’s still no sign that a special session is in the cards.

However, House Minority Leader J.T. Wilcox (R-2) wrote in a tweet that “at this point it doesn’t look like there will even be a #waleg work session…,” and a July 30 draft committee schedule for September shows no meetings for the House Appropriations Committee…

He added that “we do have a sizeable rainy day fund, and it would be nice if that could be used over multiple years. However, with no response by the governor or a special session, 100 percent will be consumed in the current biennium.”

…Wilcox said: “By failing to address this, they’re making the problem much larger. The people that will pay a price…will be hurt far, far worse than what would happen if we addressed it now.”

The math is straightforward. The longer lawmakers wait to make cuts, the deeper the cuts will be, as the Washington Research Council has made clear.