During the Gov. Inslee’s press conference on Tuesday, there were some questions about the state budget and whether there will be a special session. Gov. Inslee said, “We’re in the clear this biennium, so there’s no reason for a special session at this moment.” By that he meant that given the improvement in the revenue forecast from June to September, the budget outlook has improved such that the estimated unrestricted ending shortfall for 2019–21 could be covered by the rainy day fund.

Of course, the Legislature must act to tap the rainy day fund. Generally, withdrawals from the rainy day fund require a three-fifths vote of the Legislature. But if employment growth is forecast to be less than 1 percent in a fiscal year or the governor has declared “a state of emergency resulting from a catastrophic event that necessitates government action to protect life or public safety,” a simple majority of the Legislature suffices. The Economic and Revenue Forecast Council estimates that employment will decline by 1.1 percent in FY 2021, so it would appear that a three-fifths vote will not be necessary.

At the press conference, David Schumacher, the director of the Office of Financial Management (OFM), added to the governor’s statement about the budget:

I think it’s important to know there’s a few things going on. One is the significant savings that we have made this summer that will show up as we close the books on the fiscal year. Two, whatever we get from the federal government, and three the use of the considerable reserves takes a 50 percent vote at times like this and not a 60 percent vote, not that I think that anybody was going to withhold the vote to balance the budget, but assuming all that we are easily in the clear this biennium and have made a good start on the next biennium where we obviously still have work to do.

Indeed, I’ve estimated that even if the rainy day fund is drained, there would still be a shortfall of about $548 million in 2021–23 (based on the September revenue forecast). That figure includes some adjustments to 2019–21 spending that were not accounted for in the enacted budget: The June caseload forecast increased estimated spending by $161 million; the governor’s savings measures are estimated to save $200 million; and the enhanced federal match for Medicaid is estimated to save the state $786 million (assuming it remains in effect through the end of FY 2021). (The shortfall estimate does not include the potential impacts from the 2021–23 collective bargaining agreements, which have not yet been approved by the Legislature. They could increase spending by $356 million.)

The Ways & Means Committee (W&M) held a work session on Tuesday to provide updates on revenues, caseloads, collective bargaining agreements, employee health benefit rates, and the unemployment insurance trust fund. I had hoped to hear some estimates of how these items will affect the budget, but unfortunately there were none. (Senators Braun and Mullet asked about these impacts, but the presenters said they would have to get back to the Committee on that, as far as possible.)

Still, the presentation from the Caseload Forecast Council (CFC) was of interest. The CFC produces three official forecasts (in February, June, and November this year). The executive director of the CFC, Elaine Deschamps, said that the June caseload forecast had included data from April and May and had assumed that things would return to normal in July. Clearly, the November forecast could be substantially different.

Generally, the actual caseload data appears to be tracking below the June forecast. When Sen. Braun asked if the CFC has an estimate of any savings compared to the June forecast, Deschamps said, “Does look like a lot of our caseloads are down, which would assume some savings, but right now we’re in the middle of the November forecast process, so I couldn’t really give you a big picture sense, and we also don’t track the dollars.” (That is typically covered by OFM or legislative staff.) W&M staff noted that the November caseload forecast will be used to develop the maintenance level for the governor’s budget proposal, and the March caseload forecast will be used to inform the Legislature’s budget.

The caseload forecast will be adopted November 10, and the next revenue forecast will be adopted November 18. Then the governor’s budget proposal will be released in December.