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House Appropriations Committee reviews 2021 budget outlook

The House Appropriations Committee held a virtual work session on Nov. 30th in which Dave Johnson, a Committee Staff member from the Office of Program Research, outlined the state’s budget for Washington’s 2021 legislative session.

According to Johnson, over 90% of the proposed 2021 budget will be allocated to seven major areas:

  • Public schools (50.7%)
  • Low-income health (11.3%)
  • DD, LTC, and WSH (ESH) (10.2%)
  • Higher education (8,2%)
  • Debt services (4.5%)
  • Corrections (4.4%)
  • Children, youth, and families (3.6%)

The legislature is required to balance the 2021 budget for the current and ensuing bienniums, Johnson said. In other words, the budget is designed to account for the revenue and expenditures of the next four years.

The Four Year Balanced Budget requirement applies to the General Fund, the Education Legacy Trust Account and the Workforce Education Investment Account, taken together.

The 2021 budget is balanced for FY 23-25 (what Johnson refers to as the “Outlook biennium”) using cost estimates for maintaining current expenditures over those two years.

He explained the Budget Outlook uses several noteworthy assumptions including the use of the November revenue forecast, an annual revenue growth of 4.5% ($1.4B) for FY 23-25, and that maintenance level costs are from very preliminary staff estimates.

Johnson also highlighted some key remaining questions regarding COVID-19’s future impact on the state’s spending. Questions about what additional COVID-related costs agencies will need to pay and what the next caseload, revenue, and per capita forecasts will show still linger.

The state’s Budget Stabilization Account (BSA) serves as a “rainy day” account, Johnson said. This constitutionally-mandated account is allocated 1% of the state’s total revenue each year and occasionally given additional funds when there is a significant budget surplus.

BSA funds can be utilized if the estimated employment growth in a given fiscal year is less than 1%, he explained. In any other instances, funds can only be appropriated with a three-fifths vote from the Legislature. Funds can also be used to respond to declared disasters with a constitutional majority vote.

The budget for FY 19-21 starts at approximately $53.7B, Johnson said. These original funds go through various adjustments starting with the “carry-forward” process, which factors the impacts of this budget into the next biennium and removes one-time appropriations and reductions.

The budget then undergoes maintenance-level adjustments including caseload adjustments and per capita or formula-driven costs. Mandatory cost increases from entitlement and non-entitlement programs are factored in as well.

There are also policy-level budget decisions, he said. These include changes to the baseline budget and adding, enhancing, or eliminating programs.

Potential policy items that could affect the budget are collective bargaining agreements, vendor rate changes, changes in policy funding for programs like education and health care, and increasing or decreasing resources (redirecting revenue, eliminating taxes, etc.).

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