Washington

State Budget Practice Report Cards and Budget Resource Guide

Washington scored A averages in budget forecasting, budget maneuvers, and reserve funds for fiscal 2017 through 2019. The only state receiving more top marks was Hawaii, which averaged an A in four of five categories. 

Washington eschews the use of one-time revenues to achieve budgetary balance and has strong budget forecasting practices, with its Economic and Revenue Forecast Council updating revenue estimates four times annually. The council includes members of the legislative and executive branches, and the state treasurer. It produces long-term forecasts for revenues and expenditures that cover at least three years.

In reserve funds, Washington maintains policies that parallel best practices cited in the recent Volcker Alliance working paper, Rainy Day Fund Strategies: A Call to Action. Drawdowns from the Budget Stabilization Account are allowed only when the governor declares an emergency that threatens public safety or when state employment growth is forecast to be less than 1 percent in any fiscal year. Other uses require a vote of three-fifths of the members of each chamber of the legislature. The state constitution also requires the transfer of 1 percent of projected general revenues to the stabilization account at the beginning of each biennium.

Washington improved its legacy cost grade, which rose to a C average for the 2017–19 period from a D for 2016–18. The category covers public worker pensions and other postemployment benefits (OPEB), principally health care. Pensions were 94 percent funded in 2018, 24 percentage points above the total for all states. While statutory contributions for fiscal 2017 and 2018 fell short of actuaries’ recommendations, the annual employer contribution rates were updated in fiscal 2019 to provide slightly more than the actuarially determined contribution. But the state still lags in its annual payments for OPEB.

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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 2020 Volcker Alliance report, Truth and Integrity in State Budgeting: The Balancing Act, 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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