Today the Economic and Revenue Forecast Council (ERFC) adopted an official budget outlook based on Gov. Inslee’s operating budget proposal. The 2021–23 budget proposal not only balances over four years but would leave an exceptionally large unrestricted ending balance (in funds subject to the outlook) of $1.904 billion in 2023–25.

This is the largest ending balance ever estimated for the end of the four-year period. The next largest was $1.679 billion in the April 2020 outlook. The April ending balance (based on the enacted 2020 supplemental) was so large because the Legislature and the governor anticipated that the economy would continue to worsen due to the pandemic. Because of that, the Legislature deliberately left higher reserves than they otherwise would have and the governor vetoed some spending.

There is still a lot of economic uncertainty, but since the summer, the revenue forecast has continued to improve. There is no shortfall in the current budget. Nevertheless, Gov. Inslee’s proposed budget would drain the budget stabilization account (BSA, or the rainy day fund) in 2019–21, including $1.774 billion for transfer to the general fund, and increase taxes by $3.625 billion over the four-year period.

In addition to the unrestricted balance, the BSA would begin to be built back up in 2021–23 and 2023–25. Total reserves in 2023–25 (the unrestricted balance plus the BSA) are estimated to be $3.028 billion. That includes $25 million that the Legislature appropriated from the BSA in March for the “COVID-19 unemployment account.” In November, Gov. Inslee replaced that $25 million with money from the state’s share of the coronavirus relief fund (CRF). Consequently, the $25 million was returned to the BSA. (Another $97.2 million of disaster response funding that was appropriated from the BSA was also replaced by CRF dollars, but it’s not yet clear if that will be returned to the BSA or used for other purposes.)