Last week, Gov. Inslee signed the 2023 supplemental and 2023–25 operating budgets. He vetoed several provisions. Altogether, it appears that his vetoes increase appropriations from funds subject to the outlook (NGFO) by a net of $14.9 million.

In the 2023–25 budget, the governor vetoed $1.6 million in NGFO appropriations and $5.1 million in assumed NGFO savings, for a net increase in spending of $3.4 million.

Notably:

• The Legislature had appropriated $200,000 from the NGFO for “a work group to examine allowable expenses in human service provider contracts.” Gov. Inslee vetoed it “because the funding in this proviso expires before the report is due and an inadequate amount was provided to complete this work.”
• The Legislature had appropriated $200,000 from the NGFO for a new housing supply and affordability task force, which I wrote about here. Gov. Inslee vetoed the legislative task force because of insufficient funding and because it was to be staffed from the Department of Commerce instead of the Legislature.
• The Legislature assumed savings of $5.1 million from the NGFO from reducing state office (as less space is needed given remote work options). The governor vetoed this because it “refers to outdated data for leases that have already been renewed.”
• The Legislature appropriated $1.5 million from the performance audits of government account for a special education performance audit, as required by ESHB 1436. Gov. Inslee vetoed the audit provision in ESHB 1436 and so he also vetoed its funding.

In the 2023 supplemental, he vetoed $11.5 million in assumed NGFO savings.

First, the State Auditor’s Office, as part of the 2021 statewide single audit, found that the Department of Corrections “did not have adequate internal controls over and did not comply with requirements to ensure it used State and Local Fiscal Recovery Funds for allowable purposes and for costs incurred within the period of performance.” (See finding 2021-017.) The auditor questioned $17.4 million in costs.

As passed by the Legislature, the 2023 supplemental budget specified that $17.4 million from the NGFO be used to resolve the auditor’s finding. However, as the governor’s veto message notes, “the Legislature did not provide additional funding. The department does not anticipate having this much available in its base budget at the end of the fiscal year.” Meanwhile, the supplemental as passed by the Legislature had reduced appropriations by $8.4 million for the Department of Corrections (this was a maintenance level change due to lower caseloads). Gov. Inslee vetoed the $8.4 million reduction “to provide the agency with the funding it needs to close the fiscal year.”

Second, the governor vetoed a supplemental requirement that state agencies reduce their office space. This veto reinstates $3.0 million in NGFO spending.

Finally, the 2021–23 budget had appropriated $93.1 million from the elementary and secondary school emergency relief (ESSER) fund for the Office of Superintendent of Public Instruction to provide learning recovery grants to districts. This amount must be spent on learning loss, per federal requirements. As passed by the Legislature, the 2023 supplemental repealed the $93.1 million and reappropriated it in 2023–25 “to reflect projected expenditure levels and deadlines for federal obligation of funds.” The governor vetoed this change because “a portion of this funding is within closed fiscal years and can no longer have changes in appropriation.”