WA budget forecast: Revenue up, expenses up more

OLYMPIA — Washington legislators will have a bit more money in the coming fiscal years than they expected when they adjourned in March, but not enough to cover the projected costs of current programs.

Increases in the number of school children, Medicaid recipients, along with a proposed raise for state employees, will help drive the cost of current state programs up by about $2.65 billion in 2015-17. And that’s before increased spending for court-ordered improvements to public schools, which could be between $1 billion and $2 billion, and smaller class sizes mandated by a voter initiative.

Continued recovery from the recession, which includes lower unemployment plus stronger collections for sales taxes and real estate excise taxes will give the state about $2.9 billion more in revenue in that period than in 2013-15.

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The Legislature sets budgets for two years and four years into the future based on projections of what it will take in and what it will have to pay out.

State economic forecasters said Wednesday Washington taxes and other revenues will total about $34 billion for the 2013-15 budget period — about $115 million more than they thought in September — and $36.9 billion for the 2015-17 budget period — about $273 million more than they thought two months ago.

The state is also expected to have about  11,000 more students in public schools by 2015 and 36,500 more Medicaid recipients. It also expects to have more children in foster care and more criminals under community supervision. Tentative contracts with the state employees’ unions, which would cost some $500 million if both union and non-union workers got cost-of-living raises for the first time in seven years.

Initiative 1351, which voters approved this month, could cost an estimated $4.7 billion over the next four years.

Using the revenue and expenses figures, Gov. Jay Inslee will propose a two-year budget in December, and the Legislature will start writing spending plans when it returns in January.

House Appropriations Committee Chairman Ross Hunter, D-Medina, said he didn’t see how the state could get by without at least some sort of tax increase. Senate Ways and Means Committee Chairman Andy Hill, R-Redmond, said a tax increase should be a last resort. That resulted in a sort of colloquy between the two which strained the metaphor of state budgets as a tube of toothpaste.

Hill said he’s the kind of guy who likes to squeeze the toothpaste tube, then cut it open and scrape everything out of it before buying a new one.

Hunter countered:  “I think we’ve squeezed the tube pretty dry.”

Which prompted Hill to say he’s heard that one before: “For the last four years I’ve heard that tube of toothpaste has been squeezed all it could… It’s the same old song”

Both indicated the Legislature could look at repealing I-1351, but that would be difficult. To change an initiative in the first two years after it passes requires a two-thirds majority. “It’s hard to get two-thirds of the Legislature to agree on when we should take a lunch break,” Hunter said.