During the gubernatorial debate last night, two budget-related points were made that I think deserve some context. (The Seattle Times has video here.)

First, Bob Ferguson said that the Climate Commitment Act (CCA) “helps fund a working families tax credit. That’s helping out working families all across the state. We need to expand the amount of money going to that working families tax credit to help Washingtonians all across the state.”

As we showed in our recent report about CCA spending, the revenues from the carbon emission allowance auctions are distributed among several accounts. One of those—the climate commitment account—may be used to implement the working families tax credit (WFTC). However, no CCA funding has been used for that purpose to date.

• For 2023-25 (as revised by the 2024 supplemental), the state has appropriated $371.0 million from the general fund–state (GFS) for WFTC remittances and $32.4 million from the GFS for WFTC administration. (For more on the WFTC, which is administered by the Department of Revenue, see here.)
• In 2023, the Legislature appropriated $895,000 from the climate commitment account for the Department of Revenue “to implement 2023 revenue legislation.” There are no further details, but the only WFTC bill that was passed in 2023 (HB 1477) was funded from the GFS.

If Ferguson is suggesting that the climate commitment account should be used for the WFTC, that would reduce the CCA funding available for the other allowable uses of the climate commitment act, but it would free up GFS funds for other uses.

Second, in response to a question about the state budget, Dave Reichert said, “We have a $4.1 billion surplus right now.” As far as I can tell, I think he might be referring to the beginning balance for funds subject to the outlook (NGFO) for 2023–25, as estimated in 2023 (see the June 2023 budget outlook). That was before the 2021–23 books were closed. As the April 2024 budget outlook shows, the actual beginning balance for 2023–25 was $5.287 billion.

However, the Legislature has earmarked most of that. The Legislature’s actions in 2023 and 2024 left an estimated unrestricted NGFO ending balance of $2.368 billion for 2023–25. But the budget must balance over four years: Maintaining the spending enacted in 2023 and 2024 in 2025–27 would leave an unrestricted ending balance for 2025–27 of just $100 million. That figure was estimated in April, before the June revenue forecast reduced expected revenues. As I showed in this post, writing the 2025–27 budget may be challenging, given the choices legislators have made in recent years and slower revenue growth.