State Budget Practice Report Cards and Budget Resource Guide

Strong constitutional and statutory policies governing withdrawals and replenishments for Washington’s Budget Stabilization Account earned the state a top A average for fiscal 2015 through 2019 in the reserve funds category. Washington is required to transfer 1 percent of general fund revenues to the rainy day fund at the beginning of each biennium. With five years of strong sales tax revenues, this account rose from 3.1 percent of general fund expenditures in 2015 to 7.3 percent in 2019.

The fund is also well protected from arbitrary use. Withdrawals can be made only if employment growth is weak or the governor declares an emergency that threatens public safety. Other uses require a three-fifths vote of each legislative chamber. Washington is one of twenty states that incorporate revenue volatility into rainy day fund policies. 

The state also averaged A in budget forecasting for its robust policies. The seven-member Economic and Revenue Forecast Council, which includes the state treasurer and legislators, produces a quarterly budget forecast with revenue and expenditure projections that follow best practices, extending at least three years beyond the current budget.

While Washington avoided using budget maneuvers in 2018 and 2019, its B average in the category resulted from shifting revenues and costs in 2015–17 and deferring recurring expenditures in 2016. Its C in legacy costs reflected improvements made in 2019. The state underfunded annual pension contributions from 2016 through 2018, but in 2019 it successfully met the actuarially determined amount. Washington’s pension funding ratio in fiscal 2019 was 96 percent, 25 percentage points above the total for all states. Its legacy costs grade suffered from a failure to fund other postemployment benefits (OPEB), primarily health care, on an actuarially recommended basis.

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To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2021 Volcker Alliance report, Truth and Integrity in State Budgeting: Preparing for the Storm, which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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