As Kriss wrote yesterday, the Economic and Revenue Forecast Council estimates that near general fund-state plus opportunity pathways (NGFS+) revenues for the current biennium (2015-17) will be $103.3 million higher than previously expected. Additionally, the NGFS+ revenue forecast for the 2017-19 biennium is increased by $24.7 million.

The extra expected revenue is good news for budget writers, but the official budget outlook (which was also finalized yesterday) shows a poorer budget picture in 2017-19 than previously expected. According to the new outlook, which incorporates the new revenue forecast and new maintenance level spending, the 2015-17 unrestricted ending fund balance is $357 $359 million. For 2017-19, the projected unrestricted ending fund balance is negative $474 $473 million. The ending fund balance including the budget stabilization account is $1.248 $1.250 billion in 2015-17 and $873 $875 million in 2017-19. (In the July outlook, the unrestricted ending fund balance was $343 million for 2015-17 and negative $23 million for 2017-19.)

Regarding the shortfall in the next biennium, Opportunity Washington writes,

While that’s not nothing, it’s helpful to remember that projected revenues of $41.4 billion cover 99 percent of forecast spending of $41.9 billion. The predicted shortfall is manageable, several years away, and will be re-estimated several times before legislators reach Olympia in January 2017.

Indeed. Meanwhile, the Office of Financial Management (OFM) is worried about the current biennium even though it has a projected positive ending fund balance, saying that

state costs to maintain current services and other mandatory costs for the current biennium have grown by nearly $700 million.

A number of factors are driving the cost increases, such as higher health care expenses and this year’s record-setting fire season. Meanwhile, new projections approved last week by the state’s Caseload Forecast Council mean the state faces growing costs in its Medicaid, K-12 education and prison systems.

“The bottom line is our revenue collections are not growing fast enough to cover the costs of the budget we approved earlier this year,” said David Schumacher, director of the Office of Financial Management. “What this means, of course, is that there will be very little room for new spending in this year’s supplemental budget.”

So what's included in OFM's estimate of $700 million in increased costs in this biennium?

First, supplemental maintenance level changes increase spending in 2015-17 by $368 million. This is included in the official outlook. As the outlook methodology notes, these are the costs of providing currently authorized services, adjusted for new caseload and enrollment numbers.

Second, according to OFM, fire suppression costs (not included in the outlook) will total $155 million.

Third, OFM also adds $185 million for urgent needs (also not in the outlook). This includes:

• mandatory health treatments not included in the maintenance level
• lawsuit and settlement costs
• collective bargaining agreements reached before Oct. 1
• spending for services for children and mental health patients
• spending to comply with new federal laws and regulations
• budget corrections not included in maintenance level

Thus, from OFM's perspective, there's $340 million in additional necessary costs this biennium that aren't accounted for in the outlook. The Legislature may come to a different decision about them during the supplemental budget process.

And, as Rachel La Corte of the AP writes, there are two other big budget items out there: The deadline for compliance with the McCleary decision on school funding will occur during the 2017-19 biennium, and I-1366 could end up reducing revenues by $1.6 billion this biennium, depending on how it plays out. According to La Corte, on McCleary, "State budget director David Schumacher said the costs related to that mandate are at least $3 billion."

Update: Since posting this, the ERFC has made slight changes to fiscal year 2015; as a result, the numbers in the outlook for 2015-17 and 2017-19 are also slightly changed (with no impact to the overall picture). I've changed the link above to direct to the new version, and updated the text here accordingly.