PHOENIX - The Washington state government's projected costs have increased by nearly $700 million since the legislature approved the 2015–17 budget in June, leaving the state facing a more than $400 million shortfall.
The state's Near General Fund revenue forecast has increased by $245 million due to economic changes since that time, the state Office of Financial Management announced Thursday, an increase well below projected cost increases.
OFM said that several factors are driving the cost increases, such as higher health care expenses and a record-setting fire season. New projections approved earlier this month by the state's Caseload Forecast Council also showed that the state faces growing costs in its Medicaid, K-12 education and prison systems.
Total Near General Fund collections are now projected at $37.9 billion for the current two-year budget cycle, which began July 1.
"The bottom line is our revenue collections are not growing fast enough to cover the costs of the budget we approved earlier this year," said David Schumacher, director of the OFM. "What this means, of course, is that there will be very little room for new spending in this year's supplemental budget."
Gov. Jay Inslee, a Democrat, will release his proposed 2015–17 supplemental budget in mid-December.
The budget approved in June increased education spending by adding approximately $1.3 billion of K-12 operating funding, but the state still faces more education funding challenges. A 2012 Washington Supreme Court found that the state was not meeting a constitutional obligation to fully fund basic education. In that case, McCleary v. State of Washington, the state's top court mandated $4.6 billion of new K-12 funding by 2018. The budget addressed $2.7 billion of that.
The court put in place a fine of $100,000 per day starting Aug. 13 in as a penalty for the state's failure to fund schools at the levels the court had mandated, a fine Moody's Investors Service said was insignificant to Washington and would be a positive for school credits by creating public and legal pressure to ramp up spending.
The Federal Emergency Management Agency announced in October that Washington would receive help for the fires under a program that will defray 75% of the eligible costs of the emergency response.
The OFM's State Economic and Revenue Forecast Council also on Thursday increased its forecast for the 2017–19 biennium by $25 million, so total Near General Fund collections are projected at $41.3 billion for the next biennium, which starts July 1, 2017.
