Before adjourning yesterday, the Legislature passed the supplemental operating budget. Under the conference agreement (which was not amended prior to passage), the supplemental increases 2019–21 appropriations from funds subject to the outlook plus the workforce education investment account (NGFO+WEIA) by $975.8 million. This is less than had previously been passed by each house.

On top of that, the Legislature appropriated $200.0 million from the budget stabilization account (BSA, or the rainy day fund). (This was done in EHB 2965—see my earlier post on the bill.) Neither the original Senate-passed budget nor the original House-passed budget would have made appropriations from the BSA. Including the BSA spending, the budget that passed the Legislature increases appropriations by $1.176 billion. That’s still less than the House-passed budget would have appropriated ($1.178 billion) but it’s more than the Senate-passed budget would have appropriated ($1.132 billion).

The chart below shows the spending history in terms of the NGFO+WEIA+BSA. The BSA was established in 2007. As we wrote in 2018, it has been used in each biennium except 2011–13. In many cases, BSA funds were transferred to the NGFO, so that spending shows up in the blue bars in the chart. The green bars in the chart represent direct appropriations from the BSA and transfers from the BSA to non-NGFO accounts. (Note that in 2017–19, the Legislature transferred $925.2 million from the BSA to the pension funding stabilization account. Half of that was used in lieu of general fund dollars in 2017–19 and the other half is being used in 2019–21. In the chart, the second half is included in 2019–21.)

Under the supplemental, revised 2019–21 NGFO+WEIA appropriations increase by 20.5 percent over 2017–19. Because there were substantial appropriations from the BSA in 2017–19, revised 2019–21 NGFO+WEIA+BSA appropriations also happen to increase by 20.5 percent.

The balance sheet for the 2020 supplemental operating budget conference agreement assumed that $100.0 million would be appropriated from the BSA. By increasing that to $200.0 million, the BSA ending balance would be about $1.979 billion in 2019–21 and $2.598 billion in 2021–23. Total reserves (including the unrestricted NGFO ending fund balance) would be about $2.897 billion in 2019–21 and $3.458 billion in 2021–23. The chart below shows the rainy day fund balance over time (including the impact of EHB 2965). Based on current revenue estimates, the ending fund balance would be 7.7 percent of general state revenues in 2019–21 and 9.4 percent in 2021–23. (Under the constitution, when the BSA balance reaches 10 percent of general state revenues, the amount over 10 percent may be appropriated to the education construction fund with a simple majority.)