A state revenue forecast released Wednesday gives Democratic budget writers in the House and Senate a little more money to spend than anticipated.
Washington’s economy is projected to generate $67 billion for the two-year budget cycle that began July 1, up $122 million from the last forecast in November. Overall, collections are now up $1.3 billion since lawmakers adopted the budget in the 2023 session.
The forecast provides the final piece of data each chamber needs to complete a supplemental operating budget proposal, making adjustments to the two-year plan now in place.
Senate Democrats will release their proposed capital budget Thursday and operating budget Sunday. House Democrats are expected to put their spending plans out next week.
“We will use this information to make final adjustments,” said Sen. June Robinson, D-Everett, at a meeting of the Economic and Revenue Forecast Council. Robinson is chair of the Senate Ways and Means Committee and the chamber’s lead budget writer.
Rep. Timm Ormsby, D-Spokane, who chairs the House Appropriations Committee, said, “I would characterize this forecast as a modest improvement to a strong economy.”
Neither offered any details of their respective spending plans.
Sen. Lynda Wilson, R-Vancouver, the lead Republican on the Senate budget-writing panel, said the continuing uptick in revenue collections is good but Democrats need to be cautious in their spending choices.
She urged them to show how priorities will be paid for if initiatives to repeal the capital gains tax and the Climate Commitment Act are passed by voters in November.
The capital gains tax generated $896 million for state coffers in 2023. By law, the first $500 million from the capital gains excise tax each fiscal year is deposited in the Education Legacy Trust Account, a source of dollars for public schools, early childhood education and child care. Wednesday’s forecast assumes the excise tax will not be repealed and those dollars will be available in future years.
The Climate Commitment Act generated $1.8 billion from the auction of pollution credits through the state’s carbon pricing program known as cap-and trade. Those dollars are kept separate from regular tax collections and not part of the revenue forecast but still flow to parts of the budget that lawmakers are now working to update.
“We want to just make sure that’s considered,” Wilson said of her call for contingency spending plans.
Washington’s operating budget covers most day-to-day government activities, the capital budget goes to construction projects, including for K-12 schools. There is also a budget for transportation.
In December, Gov. Jay Inslee put forth blueprints to supplement spending in each of those budgets.
Using tax collections and robust proceeds from the sale of pollution allowances, he proposed roughly $2 billion in additional state spending in the remaining months of the budget cycle. He devoted the largest sums to increasing behavioral health services, reducing homelessness, and combating climate change.
“Our revenue situation looks to be in good shape, and it’s clear we have the resources to address many of the needs that were targeted in the governor’s budget two months ago,” said Office of Financial Management Director David Schumacher in a statement.
Once the Senate and House each approve their respective proposals, legislative budget writers will work to reconcile differences and reach agreement on a final bill before the session ends March 7.
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