A “deficit myth”?

Yesterday, Senator Andy Hill, chair of the Ways and Means Committee, released a 2015 budget preview. He writes,

There is a myth, propagated by the Governor and others, that Washington faces a massive budget deficit, meaning that the state has insufficient revenues to continue existing services. This myth began in the summer with a Governor-initiated exercise asking agencies to propose 15% budget cuts, continued in the fall with a presentation around the state by the Governor’s budget director, and was repeated during the Governor’s December budget release.

The presentation that David Schumacher of the Office of Financial Management gave to many groups is here. (See page 10 in particular.) It’s pretty clear from the OFM presentation that they recognize that the state will in fact have sufficient revenues to continue existing services. What OFM has been saying is that if you also add in the costs of increased salaries, responding to the Supreme Court’s McCleary decision, and making other policy enhancements, you end up in the red pretty quickly. And that’s before adding $2 billion to implement I-1351.

These are all policy choices that the Legislature will have to hash out as part of the budget process. Sen. Hill’s preview shows how the Legislature could continue to increase funding for education without increasing taxes. He argues:

  1. “Washington can afford to continue all existing services, including increased caseloads and related costs, plus fund required enhancements that emerged since enactment of the previous budget.”
  2. “After continuing current services, the state is projected to have enough revenues to fully finance the next statutorily required McCleary enhancement, plus a salary increase for K-12 staff.”
  3.  “Further policy enhancements, with the exception of I-1351, are not required by law and, if pursued, need to be evaluated and prioritized with existing expenditures.”

Sen. Hill specifies some policy enhancements that the Legislature will consider: I-1351, collective bargaining agreements, elements of the McCleary decision that are not required to be funded until the 2017-19 biennium, and mental health.

We wrote about the budget choices facing the Legislature in this policy brief. As Kriss has noted, in November the Economic and Revenue Forecast Council increased the revenue forecasts for both 2013-15 and 2015-17. Altogether,

Looking at the budget problem facing the legislators who will write a budget for the 2015–17 biennium, the good news in today’s revenue forecast ($388.1 million on a NGFS+ basis) roughly offsets the $380 million of bad news in last week’s caseload forecast.