New report: The Transportation Budget, Transportation Revenues, and Long-Term Funding Challenges
Washington enacted a $17 billion, 16-year transportation revenue package last year, and this year the Legislature adopted a $13.616 billion transportation budget for 2023–25. Adjusted for inflation, 2023–25 appropriations are 18.8% higher than appropriations in 2021–23. Transportation budgets are mainly funded by state sources. State funds include forecasted revenues from transportation-related sources and money raised […]
New brief: Modest Operating Budget Growth in Inflationary Times
After a few years of record spending increases, the Legislature slowed the growth in the operating budget this year. As enacted, appropriations from funds subject to the outlook (NGFO) for 2023–25 are up 8.9% compared to the 2022 supplemental. New policy spending of $4.744 billion is the most of any original biennial budget going back […]
New brief: Seattle’s Payroll Expense Tax is Highly Concentrated and Shaping Up to Be a Volatile Revenue Source
The City of Seattle adopted the payroll expense tax (PET) in July 2020. The rate of the tax varies from 0.7%–2.4% depending on the total payroll expense of a business and the amount of an employee’s compensation. The PET is the city’s fourth-largest tax source, behind property, business and occupation, and retail sales taxes. In […]
New brief: The State Should Avoid Tapping Reserves While Revenues Are Growing
A potential recession is a major risk to the state revenue forecast, but Washington’s strong budget sustainability practices—including the budget stabilization account (BSA, or the rainy day fund)—will help the state through a downturn. However, in 2021, despite not facing a revenue shortfall, the Legislature swept the BSA. (Pursuant to the constitution, this required only […]
New brief: Washington’s Business Taxes Continue to Exceed National Average
Washington state’s businesses bore much of the tax burden for fiscal year 2020, delivering nearly half of state and local tax revenue. Nationally, Washington’s business taxes were the 9th highest per employee, the 32nd largest as a share of economic activity, and the 17th greatest as a share of total state and local tax revenue. […]
New brief: Cash Deficits in the Paid Family and Medical Leave Program Signal Additional Tax Increases Ahead
Washington’s paid family and medical leave (PFML) program is one of the first in the nation. PFML benefits are funded by a premium that is assessed on employee wages, up to the Social Security cap ($147,000 in 2022). From 2019 through 2021, the premium rate was 0.4%; it was increased to 0.6% this year. The […]
New brief: Historically Large Supplemental Budget Also Sets Aside Significant (But Unprotected) Reserves
With the 2022 supplemental operating budget, 2021–23 appropriations from funds subject to the outlook (NGFO) are 24.3% higher than 2019–21. That is the largest biennial increase going back at least to the early 1990s. (The average biennial spending growth was 9.1% from 1993–95 through 2019–21.) Further, this is the first time a mid-biennium supplemental budget […]
New brief: Biennial-Sized Spending in a Supplemental Year: Comparing the Senate- and House-Passed Budgets
The Senate- and House-passed supplemental operating budgets would spend almost all of the $13.8 billion surplus in funds subject to the outlook. Compared to the enacted 2021–23 biennial budget, appropriations would increase by 7.7% in the Senate-passed budget and by 10.6% in the House-passed budget. Compared to 2019–21, revised 2021–23 appropriations would increase by 23.3% […]
New brief: Minimal Losses to Local Revenues in 2020 Are Largely Offset by Additional Federal Relief
Local government taxes and revenues were largely sustained in 2020. State taxes increased by 4.2% in FY 2020 and by 11.7% in FY 2021. Meanwhile, in CY 2020, taxes grew by 5.3% in Washington’s counties and fell by 2.9% in Washington’s cities. However, from 2010 through 2017, city tax growth exceeded that of the state. […]
New brief: A Surplus of $11.249 Billion: Gov. Inslee Would Increase Spending, but a Sustainable Budget Could Include Tax Reductions
We estimate that the state surplus in funds subject to the outlook (NGFO) is now $11.249 billion over four years. On top of that, the state has one-time funds: $1.0 billion in the Washington rescue plan transition account, $1.273 billion in general federal relief funds, and about $1.2 billion in the budget stabilization account. This […]
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