The conference report for the operating budget would widen the gap between spending and revenues that started in 2023–25. As I discussed yesterday, the income tax will not solve the problem; instead, the Legislature must limit spending.

Nodding to that, the operating budget bill proposed by the conference committee includes more language about sustainability and costs than has been normal in recent years. This is promising, though it would have been more meaningful if the Legislature had refrained from increasing net new policy spending this year.

First, Sec. 907 of the bill would establish a Joint Legislative-Executive Committee on Budget Transparency and Fiscal Sustainability. It would review budget practices, cost drivers, performance management practices, and public reporting tools. Reports would be due Dec. 1, 2026, and Dec. 1, 2027.

Meanwhile, the bill (sections 925 and 926) would amend the four-year balanced budget statute to specify that in 2025–27, the budget must balance in the second biennium using forecasted revenues. In other words, the budget cannot assume at least 4.5% annual revenue growth. The budget states, “It is the intent of the legislature to continue this policy in the 2027–2029 and 2029–2031 fiscal biennia.” We identified the practice of assuming the phantom revenues allowed by the 4.5% assumption as one of the causes of the budget shortfall.

Other provisions of the budget bill that would review costs and accountability include:

• Sec. 103(6) would require the Joint Legislative Audit and Review Committee to “review auditing, accountability, and risk management practices across Washington’s state agencies.”
• Sec. 232(27) would require a report on the current state of the paid family and medical leave program. (I wrote about this in more detail here.)
• Sec. 135(6) would convene a committee to recommend “changes to the current system and processes for claims against the state, or against its officers, employees, or volunteers, acting in such capacity, for damages arising out of tortious conduct.” This would include “Reviewing and providing recommendations to mitigate future public costs through policy or other changes that would prevent or reduce harm or injury to claimants before it occurs.”
• Sec. 602(44) would require the state board for community and technical colleges to make recommendations “that may reduce redundancy and expenses that do not directly correlate to student success.”
• For the state program that provides health care regardless of immigration status, the budget would require a report that makes recommendations on how it “can achieve savings through a reduction in services or benefits to allow for an increase in enrollment capacity” (Sec. 211(52)(h), for example).
• Sec. 211(78) would require the Health Care Authority to address the recommendations in an Oct. 2024 audit regarding concurrent Medicaid enrollment.
• Sec. 212(5) would require a study of “options to improve the affordability of retiree health care coverage for pre-medicare-eligible public employees.”
• Sec. 214(89) would establish a task force to review behavioral health services offered through various programs “with the goal of improving system-wide efficiencies, data driven outcomes, and cost effectiveness.”