Last year, the Legislature transferred $1.820 billion from the budget stabilization account (BSA, or the rainy day fund) to the general fund–state (GFS). Then, the Legislature transferred $1.0 billion from the GFS to a new Washington rescue plan transition account (WRPTA).

On Saturday, the House rejected an amendment to the supplemental operating budget that would have transferred $1 billion from the WRPTA back to the BSA.

In urging a no vote, Rep. Ormsby said that last year’s transfer of funds from the BSA “followed the letter and the intent of the legislation that created the budget stabilization account, which was during those uncertain economic times, it could be utilized. . . . Let’s not tie our hands during these uncertain times.”

Although Rep. Ormsby is correct that last year’s sweep of the BSA followed the letter of the constitution (see Art. 7, Sec. 12, which was approved by voters in 2007), I do not agree that it followed the constitution’s intent. The constitution deliberately makes it harder to use the BSA under normal circumstances, unless three-fifths of the Legislature agree. However, the constitution recognizes that there will be emergencies in which it may be beneficial to have access to the money with just a simple majority. For example, if employment growth is less than 1%, money “may be withdrawn and appropriated from the budget stabilization account” by just a simple majority vote. (This was how the Legislature was able to drain the BSA last year.)

But in this case, most of the money was not appropriated because there was not an immediate emergency need. Instead, $1 billion was transferred to the WRPTA so that it could easily be accessed at some later time. As we wrote last year, this set a bad precedent.

Further, despite the fact that the constitution ties the Legislature’s hands in use of the BSA, the BSA has been used in every biennium except 2011–13 and the current biennium (at least so far).

The table below shows how the funds have been used. Five of the times that the BSA was successfully tapped required a three-fifths vote. It is not impossible to get supermajority approval for use of the BSA.

I wrote on Friday about the low level of reserves in both the House and Senate budgets. Both the House and Senate would make the constitutionally-required transfers of 1% of general state revenues to the BSA. Aside from that, the Senate would save a bit more than the House, but it would do so mainly by increasing the balance of the WRPTA—not the BSA.

The National Association of State Budget Officers has historical data on rainy day funds in every state. The chart below uses their historical data for the BSA (and its predecessor reserve funds), plus more recent actuals and the estimated balance under the House-passed budget. The chart shows the BSA balance as a share of general state revenues. (Under the constitution, when the BSA balance reaches 10% of general state revenues, the excess may be used for school construction with a simple majority vote.) In the House-passed budget, the BSA balance is estimated to be about 4.0% of GSR in 2025. It would be about 9.7% if the $1.8 billion had not been swept last year and it would be about 7.1% if the $1 billion in the WRPTA were transferred back this year.

The state would be in a much better position to address a future downturn if those funds were protected in the BSA.