The Washington budget mystery: How big is the state’s deficit really?

The second line in Governor-elect Bob Ferguson’s Budget Priorities released Thursday states:

“Washington state faces a budget shortfall of at least $12 billion over the next four years. Measured in dollars, this is the largest budget deficit in state history.”

(A PDF of the budget priorities document can be seen here.)

But is it really $12 billion? It’s a number both Democrats and Republicans can’t agree on.

The 16-page Budget Priorities document outlines Ferguson’s plans, but it isn’t until Page 15 that the proposal discusses how the state entered this budget deficit and what changes are needed to prevent it from recurring.

“The budget shortfall is caused in part by policies that delayed implementation beyond the four-year outlook,” the proposal states.

An “unreasonable assumption” about revenue growth led to the budget shortfall, the document concluded.

“The Legislature has routinely relied on assuming the maximum 4.5 percent revenue growth factor allowed under the four-year balanced budget outlook law for the third and fourth years, exceeding the projections of the Economic & Revenue Forecast Council. The unreasonable assumption of 4.5 percent revenue growth for the current biennium materially contributed to our current budget shortfall. This must stop,” the proposal continues.

However, the document does not explain how the $12 billion shortfall was calculated.

More on Ferguson: The governor-elect proposes bold spending cuts, echoing what Republicans have wanted

Lawmakers can’t seem to agree on the actual Washington budget deficit figure

There is no consensus among lawmakers and bureaucrats at the Capitol on how large the deficit is.

“Pick a day of the week, pick a member you talk to, the number might be $5 billion. It might be $15 billion. Who knows? By the time we get into session, it could be $20 billion,” House Minority Leader Representative Drew Stokesbary, R-Auburn, said during the Legislative Preview session with reporters on Thursday.

Senate Republicans’ lead budget writer, Senator Chris Gildon, R-Puyallup, expressed similar frustration.

“Over the last couple of months, what I’ve heard is $4.5 to $5 billion. I’ve heard $7 to $8 billion. I’ve heard commerce come out with $10 to $12 billion, and now I’m hearing numbers as high as $15 billion,” Gildon said.

“Whenever I hear all of those numbers and that wide gap, it gives me pause,” Gildon added. “What is the size and scope of the budget hole that we’re trying to fill?”

Governor-elect Ferguson suggested an even higher figure when he announced his request on Thursday for state agencies to reduce spending by 6%.

“I’m trying to communicate to the people of the state of Washington and the state agencies that this is how we need to operate when you’re facing a $12 billion, $14 billion shortfall,” Ferguson said.

The first warning of a multi-billion-dollar shortfall came on Nov. 8, when the governor’s budget director, Pat Sullivan, sent a letter to state lawmakers and agency officials. (A PDF of the letter Sullivan wrote can be viewed here.)

“The magnitude of the operating budget deficit is between $10 and $12 billion over the four-year outlook period. This deficit is due to recent revenue forecasts being adjusted downward, along with increased caseloads and the cost of maintaining existing programs,” Sullivan wrote.

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Democrat notes Washington’s strength overall

State Rep. Timm Ormsby, D-Spokane, the lead budget writer for House Democrats, highlighted the state economy’s overall strength, noting that tax revenues continue to grow. He blamed a poor revenue forecast in February for creating the deficit.

“It was a conservative revenue estimate from the state economist last February, and it didn’t even come close to being accurate,” Ormsby said.

He noted that the state experienced 8% revenue growth annually for 10 years but is now at less than 3%, which depleted reserves and balances, contributing to the budget hole.

Ormsby added that inflation, population growth, and rising program costs also played roles in the shortfall. He has asked the Governor’s office for a detailed breakdown of the deficit.

Meanwhile, Gildon requested Senate staff to calculate the deficit independently, resulting in the lowest estimate so far.

“We reached out to nonpartisan staff and said, ‘What are we dealing with here? What’s the real number?’ And the number was $6.7 billion over the course of four years. That’s the maintenance-level deficit we’re facing. I think that’s probably the most accurate number we have,” Gildon said.

He called for a comprehensive review of the miscalculations.

“I’d like to see a line-by-line listing — Big Bird, Barney style — so everyone can understand exactly what is driving this budget deficit,” Gildon concluded.

Washington Governor Elect Bob Ferguson Budget Priorities 2025 by scoogan on Scribd

Editors’ note: This story originally was published on Friday, Jan. 10. It has been updated and republished multiple times since then.

Matt Markovich often covers the state legislature and public policy for KIRO Newsradio. You can read more of Matt’s stories here. Follow him on X, or email him here.

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