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    The state budget faces significant challenges over the next two years. While the economy and revenue collections are rebounding, growth remains slow and far below historic trends. Revenue is expected to grow by over $2.5 billion but new spending needs including funding basic education, cost of living increases, and other priorities exceed that amount by around $1.9 billion. Finding budget solutions will be difficult as one-time measures used in the past are not available and over two-thirds of the budget is locked into mandatory programs and constitutional requirements. Meeting statutory education funding obligations alone will require $5.7 billion over the next four years.

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    2015 Washington Legislative Budget Information

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    The state budget faces significant challenges over the next two years. While the economy and revenue collections are rebounding, growth remains slow and far below historic trends. Revenue is expected to grow by over $2.5 billion but new spending needs including funding basic education, cost of living increases, and other priorities exceed that amount by around $1.9 billion. Finding budget solutions will be difficult as one-time measures used in the past are not available and over two-thirds of the budget is locked into mandatory programs and constitutional requirements. Meeting statutory education funding obligations alone will require $5.7 billion over the next four years.

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    © All Rights Reserved
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    22 views15 pages

    2015 Washington Legislative Budget Information

    Uploaded by

    Spokane City Council
    The state budget faces significant challenges over the next two years. While the economy and revenue collections are rebounding, growth remains slow and far below historic trends. Revenue is expected to grow by over $2.5 billion but new spending needs including funding basic education, cost of living increases, and other priorities exceed that amount by around $1.9 billion. Finding budget solutions will be difficult as one-time measures used in the past are not available and over two-thirds of the budget is locked into mandatory programs and constitutional requirements. Meeting statutory education funding obligations alone will require $5.7 billion over the next four years.

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    of 15

    STATE BUDGET UPDATE

    More Big Challenges Ahead


    November 2014

    Washingtons economy is rebounding


    but at a very slow pace

    It took more than 5 years to recover all the jobs lost


    during the Great Recession
    Job losses and duration of Post WWII recessions in Washington

    State revenue collections are also


    rebounding, but at a much slower pace
    than after previous recessions

    State revenue remains well below


    historic growth trend
    $25,000

    $20,000

    Total Near General Fund


    assuming 4.5% growth

    $15,000

    Total Near
    General Fund
    $10,000

    Forecast
    $5,000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    Looking ahead to the 201517 budget


    It could be more challenging than the
    201315 budget

    Why will the 201517 budget be so difficult?


    We solved 201315 budget shortfall largely by relying on solutions not available
    again. For example, we:
    Redirected $387 million in capital budget including $277 million from the Public
    Works Assistance Account to cover operating expenses.
    Captured $351 million in savings by expanding Medicaid under the Affordable Care
    Act.
    Raised $272 million by temporarily extending the hospital safety net assessment.

    The budget includes new revenue $159 million from the estate tax (Bracken)
    fix and $99 million in telecom reform savings.

    The June 2013 forecasts also helped


    $230 million in additional revenue
    and $229 million in caseload savings.
    Even after all that, we once again needed to
    suspend teacher COLAs, and did not provide state
    employee pay raises
    And still we fell short of our $1.5 billion target for
    meeting our basic education obligation
    8

    State revenue collections are expected


    to grow by more than $2.5 billion ...
    Whats the problem?

    Preliminary 201517 Operating Budget Outlook


    Near General Fund (GF-State, Education Legacy Trust Account, Opportunity Pathways Account)
    Projected Additional Revenue
    $2.8B

    $750M
    $2.45B

    Projected Additional Spending Needs


    Maintenance & Carry Forward
    Estimated $1.9B

    I-732/K-12
    salaries
    $400M

    Bargaining
    $583M

    Highest
    Priority
    Policy
    Needs
    $500M

    McCleary
    $1.2B

    I-1351
    $2B

    Pension costs Debt service State employee health care


    $275M
    $200M
    $190M

    10

    About 2/3 of the budget is protected by


    constitutional and federal requirements . . .
    So we must look to the other 1/3 for savings
    Other
    6.5%
    Higher
    Education
    9.2%
    Mandatory Services
    8%

    Corrections
    5%

    Unprotected
    Other Human
    Services 13%

    Mandatory
    Medicaid 10.2%
    Debt Service/ Pensions
    5.9%
    K-12 Basic Education
    42.3%

    Protected

    11

    Some perspective on the


    structural problem we face in Washington

    12

    Meeting our statutory education obligations


    $5.7 billion needed over next 2 biennia
    Estimated cost to continue
    phasing in HB 2776 (McCleary)

    $2 billion

    Projected cost of Initiative 732


    (teacher COLAs)

    $1.7 billion

    Projected cost of enrollment


    and other mandatory increases

    $1.3 billion

    $760 million

    FY 2016

    FY 2017

    FY 2018

    FY 2019

    13

    Revenue collections are at historically low levels


    when compared to overall economy
    7.5%

    General Fund-State revenue as percentage of Washington personal income

    7.0%
    6.5%
    6.0%
    5.5%
    5.0%
    4.5%
    4.0%
    3.5%
    1983

    Projected

    In 1990, GF-S revenue equaled about 7% of total


    personal income.
    If the same were true today, we would have about
    $15 billion in additional revenue for the current biennium.

    1987

    1991

    1995

    1999

    2003

    2007

    2011

    2015

    2019

    Fiscal Year
    Washington State Economic and Revenue Forecast Council, October 2014

    Alaska

    $50
    Wisconsin
    California
    Hawaii

    Source: Bureau of Economic Analysis and Census Bureau


    U.S. Department of Commerce
    South Dakota

    Tennessee

    Alabama

    Missouri

    Oklahoma

    Virginia

    Florida

    South Carolina

    Georgia

    New Hampshire

    Idaho

    Texas

    Arizona

    Louisiana

    Montana

    WASHINGTON

    Utah

    Mississippi

    North Carolina

    $130

    Oregon

    Colorado

    Maryland

    Nevada

    Kentucky

    Arkansas

    Indiana

    New Mexico

    Michigan

    Kansas

    Massachusetts

    Nebraska

    Pennsylvania

    Ohio

    Iowa

    Illinois

    Delaware

    Rhode Island

    $150

    Connecticut

    $190

    West Virginia

    $210

    Minnesota

    New Jersey

    Maine

    Vermont

    Wyoming

    New York

    North Dakota

    In 1995, Washington ranked 11th in state and local tax


    collections By 2011, we ranked 35th

    $230

    State and Local Tax Collections Per $1,000 Personal Income


    Fiscal Year 2011

    $170

    U.S. Average = $108.31


    Washington $98.95

    $110

    $90

    $70

    15

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