More good news for budget writers in the revenue forecast, as Kriss wrote yesterday. The 2018 supplemental budget was adopted (and balanced over four years) based on the February 2018 revenue forecast. The November 2018 forecast added $1.735 billion over 2017–19 and 2019–21, and now the March 2018 forecast has added another $861 million over the same period. The chart below shows how the revenue estimates have increased. 2019–21 revenues are now estimated to be $5.565 billion higher than estimated revenues for 2017–19 at the time the 2018 supplemental was adopted.

Following adoption of the forecast, Rep. Ormsby said that the state will still need new revenues: “We have experienced revenue growth—unanticipated revenue growth—and I would just observe that that entire revenue growth that has occurred since we left town last year is all going to our McCleary solution . . . .” Other legislators have made similar comments.

The McCleary solution was fully funded in the 2018 supplemental, for the second year of the 2017–19 biennium. It’s true that because of that, the maintenance level for 2019–21 is unusually large. But that budget balanced over four years. And growing revenues since February 2018 have meant that more and more policy additions could be made without increasing taxes.

For example, the November outlook (based on the November 2018 revenue forecast) estimated that the unrestricted ending balance would be $689 million in 2019–21. With the $861 million increase in the current forecast, the Legislature has a lot more leeway for new spending. (But note that some portion of that will be considered extraordinary revenue and transferred to the rainy day fund.)

Additionally, after the forecast meeting, Sen. Rolfes noted that the McCleary funding didn’t include the full cost of school employee health benefits, and that that would need to be funded this year. The maintenance level already includes $297 million for this purpose. The governor’s budget estimated that the full amount would be about $940 million (or $646 million on top of the $297 million). Since then, the estimate of the full cost has been reduced to about $750 million, lessening the pressure on the budget still further. (And, according to Sen. Braun, overall, caseloads are $704 million lower than forecast.)

But, as Opportunity Washington notes, “The forecast acknowledges some cooling in the economy.” As we have been saying, a cautious approach to spending is warranted.