Earlier this week we published two reports on the upcoming 2025–27 operating budget. In the first, we estimated that the state is facing a $5.1 billion shortfall for the biennium. That estimate incorporates the current revenue forecast, carry-forward level spending (the biennialized cost of enacted appropriations, calculated by the Office of Financial Management [OFM]), estimated maintenance level spending (the cost of continuing current services, adjusted for enrollment and inflation), and the estimated cost of collective bargaining agreements with state and non-state employees (estimated by OFM).

Our second report shows that the projected shortfall is the result of legislative spending choices over the past several years.

As we wrote in the first report, our estimate of a $5.1 billion shortfall is preliminary. There are two more revenue forecasts and two more caseload forecasts before the Legislature enacts the 2025–27 budget—a lot could change. Our maintenance level estimates are particularly likely to change. They are based on our review of the agency budget requests that have been submitted, which are not yet final and which are inconsistent as to how they incorporate estimated caseloads. The maintenance level will be refined over the budget process by OFM, agencies, and the Legislature.

The Center Square asked OFM about our shortfall estimate. OFM responded,

not all state agencies have submitted their budget requests to OFM yet, so we don’t know what the final amount of the requests will be. When we look at the maintenance-level requests from agencies that have come in, we see some different totals than what the Washington Research Council have, and that could be because of the timing of when the data was obtained.

We agree with OFM that the calculation of the maintenance level is not yet final. As noted above and in our report, our maintenance level estimate is incomplete. That said, it does represent what agencies had publicly reported for their maintenance levels at the time we were collecting data.

OFM also said,

we’re still evaluating what out of those requests should be considered maintenance level. We look at whether the specific agency proposals are really an additional cost of keeping a program as it is (maintenance level), or if it’s an expansion of that program (policy level.)  We also scrutinize the numbers carefully to ensure they’re correct. With every budget cycle OFM receives more requests than are ultimately funded in the governor’s proposal or in the final enacted budget.

Again, we agree with OFM. The governor should critically evaluate maintenance level requests to ensure that they aren’t actually program expansions. New policy items receive more scrutiny during the budget process than programs that are included in the maintenance level.

Finally, note that OFM didn’t take issue with our overall shortfall estimate. Last week, the director of OFM, Pat Sullivan, spoke to the Washington Senior Citizens’ Foundation Conference. He said, “We’re expecting a budget deficit between around $5–$7 billion over the four-year period that we need to budget for.”