Last week, the Washington State Economic and Revenue Forecast Council (ERFC) estimated a $4.5 billion decrease to Near General Fund revenue collections for the remainder of the state budget period ending June 30, 2021. The decrease in projected revenues would leave the state with a net $1.4 billion shortfall at the end of biennium, even if all reserves were used. The Council also forecast a reduction in revenues for the 2021-2023 biennium of more than $4.3 billion. This is an unprecedented decline.
The shortfall has significant implications for the state budget. Governor Inslee has already vetoed some spending in the SFY 2021 budget passed by the legislature and instituted cost cutting measures. The Office of Financial Management (OFM) directed agencies to identify options to reduce fiscal year 2021 spending by about 15%. These cuts alone, however, will not make up for the expected shortfall. Because some areas such as K-12 education have state constitutional protection, much of the cuts will likely fall on health care programs and higher education. Legislators will have a difficult task during a special session likely to be scheduled for August, as well as the regular 2021 legislative session starting next January. More information is on the OFM web site. (Andrew Busz, email@example.com)