A number of folks have inquired about the budgetary outlook for the 2013–15 biennium under the supplemental budget passed last week by the legislature. The Office of Financial Management, I have been told, will prepare a 2015–15 outlook after Governor Gregoire completes her actions on bills passed in the session. Until the formal OFM outlook is available, one can glean the outlines from two comments made by Governor Gregoire at her post-session “Media Availability” last Thursday (April 12).

The TVW video of Gov. Gregoire’s media availability is available here.

The first of these comments appeared in a discussion of the accounting change allowing the “float” on sales taxes collected by the state for local governments to bolster general fund–state reserves:

I can’t tell you [precisely] because things change by the minute, by the hour — but at one point in terms of looking out for four years we were off by a total 17 million dollars. Now that’s probably 48 hours old so I’m not sure that’s still exactly right. But in a 30 to 32 billion dollar budget, going out four years, being off 17 million is nothing short of excellent. In my opinion. (22:35–23:10)

I take this to mean that a baseline budget for 2013–15 that carries forward the programs funded in 2011–13 budget would result in negative general fund–state ending balance of $17 million, plus or minus.

The Governor’s second comment identifies a significant spending obligation for 2013–15 that is not included in the carry-forward baseline: responding to the state Supreme Court’s decision in the McCleary school funding case. When asked “what didn’t get done that needs to get done?” Gregoire responded:

While we didn’t cut K through 12, we didn’t put more money into K through 12 [as called for by the] the McCleary decision…. Everybody knows that…. The estimate, frankly, for 2013–15 to address what was put in place legislatively [HB 2776, enacted in 2010] and what’s called for by the McCleary case is … about a billion dollars. (23:25–24:15)

I have assembled this 2011–13, 2013–15 balance sheet based on the supplemental budget passed by the legislature, the current revenue forecasts for the two biennia, the fiscal notes for revenue bills passed by the legislature and the two Gregoire comments.

Including a response to the McCleary decision, the 2013 legislature is projected to face a shortfall of at least $1 billion when it meets to write the next biennial budget. (With a prudent $700 million reserve in the general fund, the shortfall would be $1.7 billion.) Admittedly, this is a rough calculation. We will have a better handle on the problem when OFM releases its outlook.