(The Center Square) – Washington’s total state and local debt is $143 billion at the end of 2023, the most recent year for which complete data is available, the 10th highest in the nation. That’s according to a new report from the libertarian Reason Foundation think tank.
That translates into $18,500 per person, making it the 14th highest per capita debt in the country.
Reason Foundation’s Financial Transparency Project aims to make government financial data more accessible to the public by analyzing and presenting information on state and local spending.
The Evergreen State faces a projected $2 billion funding gap in the 2026 supplemental budget due to slowing revenue growth combined with rapidly rising costs for state programs. That means state spending is expected to outpace tax collections over the next two budget cycles, which will require legislators to make some difficult decisions next year.
One of the report’s authors pointed out that it’s not all bad news when it comes to Washington’s financial situation.
“Unlike most states, Washington’s pension funds are fully funded, so unfunded public employee retirement benefits aren’t a drag on its balance sheet,” Mariana Trujillo, managing director of government finance at Reason Foundation, emailed The Center Square.
On the other hand, borrowing is a problem, according to Trujillo.
“What burdens its fiscal position are high levels of other long-term debt, particularly from borrowing,” she said. “Washington’s state and local governments have $8,030 per capita in bonds, loans, and notes, well above the national average of $6,063.”
Trujillo continued: “For taxpayers, this is concerning because Washington’s strong economy and relatively high revenues should translate into balanced budgets and sustainable spending. Instead, state and local governments continue to accumulate debt faster than they pay it down.”
While more recent forecasts indicate a significant slowdown and even a decline in projected revenue, Washington has seen strong overall revenue growth in recent years.
State spending is also a factor.
Earlier this year, an investigative report by The Center Square revealed a 116% increase in state spending over the last decade, a rate that far outpaces both inflation and population growth.
Majority party Democrats have hinted at using a mix of new taxes, targeted spending reductions, and revenue from new programs to manage projected shortfalls and fund existing and new initiatives.
Gov. Bob Ferguson will release a formal budget proposal in December, which will kickstart the legislative process for the upcoming 60-day session.
Trujillo has some advice for lawmakers.
“As the state faces a projected budget gap, policymakers may be tempted to raise taxes or take on even more debt,” she said, “when they should instead focus on controlling spending, finding efficiencies, and developing a credible plan to accelerate payments on existing obligations.”
