Budget outlook released for 2013-15

November 14, 2012

When the Legislature adopted the state's first balanced budget requirement last session (SB 6636) it also required a standardized 4 year budget outlook to be published. Today's revenue forecast saw the release of the first official 4 year budget outlook required under SB 6636.

As noted by the Office of Financial Management (OFM):

Washington faces a projected $900 million state budget shortfall for the 2013–15 biennium and an even larger shortfall of nearly $1.1 billion for the following biennium (2015–17), according to a four-year outlook released today by the Washington State Economic and Revenue Forecast Council.

First for the good news. Here is the assumed revenue growth (dollars in millions):

  • 2011-13: $31,278
  • 2013-15: $32,756
  • 2015-17: $35,821

This means revenue is projected to grow by $1.5 billion for 2013-15 and $3.1 billion for 2015-17.

Focusing on just 2013-15, how does a $1.5 billion increase in revenue lead to a $900 million shortfall?

Spending is projected to increase from $31.083 million in 2011-13 to $33.793 million in 2013-15. This excludes any spending for the McCleary K-12 ruling.

Looking at the $900 million shortfall problem statement, there are several compensation related components:

  • $166 million to restore K-12 salary reduction
  • $171 million to restore 3% salary reduction for state employees
  • $362 million for K-12 pay increases under I-732
  • $37 million for new a step increase for state employees
  • $20 million for state employee and K-12 health care ratios
  • $14 million for paid family leave

These compensation related decisions account for about $770 million of the $900 million problem statement.

It will be interesting to see what, if any, impact today's revenue forecast and projected budget outlook has on OFM's determination of the financial feasibility of the recent Collective Bargaining Agreements.