Bill seeks to end ‘balance sheet manipulation’ for budget revenue forecasts

(The Center Square) – Washington state lawmakers have introduced a bill that would reform the way revenue for the operating budget is forecast, a move the sponsors say will help prevent another projected shortfall the Legislature is currently facing.

In 2012, the Legislature passed a law mandating that the operating budget be balanced over a four-year period, which is determined by how much revenue is forecast over the same time period. Tasked with conducting the forecasts is the state Economic and Revenue Forecast Council, which publishes regular economic and revenue reports that reveal how much money the state actually brought in during a prior forecast, and how much money they predict the state will generate in taxes in the future.

However, since it was revealed late last year that the state faced a projected operating budget deficit, some legislators have blamed in part the assumed economic growth rate, claiming that the unrealistic gains allowed the Legislature to massively increase spending beyond what the state was eventually going to bring in. While the budget shortfall estimate over the next four years has varied, Gov. Jay Inslee suggested while unveiling his final budget proposal that it might ultimately be as high as $16 billion.

Among ERFC’s members are Reps. Travis Couture, R-Allyn, and Ed Orcutt, R-Kalama, who together have sponsored House Bill 1411. The bill would restrict operating budget spending only to what has been actually projected by ERFC, which as of the latest report is 2.7% between the fiscal years 2024-2029. In comparison, the Legislature has been able to use an assumed rate of 4.5%.

In a news release, Couture argued that this “balance sheet manipulation” enabled the majority party “to create boatloads of new programs, obligating the state to pay for a bow wave of policies we never had money for in the first place.”

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The legislative proposal mirrors the rhetoric used by Gov. Bob Ferguson during his inaugural address to the Legislature, in which he said, “We should have an open and honest dialogue about how we arrived at this shortfall and what lessons we must learn. Let us work together to ensure that we correct some of the actions that brought us here.”

“The era of assuming unrealistic growth in revenue is over,” he added. “I will not sign a budget that requires unrealistic revenue growth to balance.”

HB 1411 has been referred to the House Appropriations Committee, where Couture is the ranking minority member.

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