Today the Economic and Revenue Forecast Council approved a four-year outlook based on Gov. Inslee’s proposed 2019–21 operating budget. The outlook shows that the governor’s proposal would balance over four years. It also provides more detail about what his various revenue and spending proposals would look like in 2021–23. (The methodology document is here.)

Gov. Inslee’s tax package (including a capital gains tax and an increase to the business and occupation tax rate for services) would increase revenues by $3.676 billion in 2019–21 and $5.322 billion in 2021–23.

On spending, the maintenance level (the cost of continuing current services) is estimated to be $51.077 billion in 2019–21 and $54.855 billion in 2021–23. The governor’s policy proposals would increase spending for 2019–21 by $3.557 billion. Continuing those policies into 2021–23 would increase spending by $4.849 billion. This means that if the governor’s proposal is enacted (which is unlikely), the projected cost of continuing 2019–21 services in 2021–23 would be about $60 billion. (And that doesn’t include new policies that will be proposed in a few years for the 2021–23 budget.)

At maintenance level, K–12 spending is expected to continue to be a significant driver in 2021–23. Another item to watch for during the Legislature’s budget negotiations this session is pension funding. As part of the 2017–19 budget, the Legislature transferred $925.2 million from the budget stabilization account (the rainy day fund) to the pension funding stabilization account. The money was to be used to cover the employer contributions to public employee retirement plans in lieu of the general fund for 2017–19 and 2019–21. The outlook shows that funding this from the general fund for 2021–23 will require $463 million.

At the policy level, several of the governor’s proposals jump in cost in 2021–23. For example:

• Increased staffing of nurses, social workers, psychologists and guidance counselors in elementary and middle schools would increase spending by $156 million in 2019–21 and $311 million in 2021–23.

• The new special education funding structure would increase spending by $94 million in 2019–21 and $195 million in 2021–23.

• School employee health benefits would increase spending by $646 million in 2019–21 and $781 million in 2021–23.

• Guaranteed access to the Washington College Promise Scholarship (formerly the state need grant) would increase spending by $103 million in 2019–21 and $218 million in 2021–23.

• Debt service on bonds assumed in the governor’s proposed capital budget would increase operating spending by $50 million in 2019–21 and $403 million in 2021–23.

• Collective bargaining agreements with state employees (and extending them to non-represented staff) would increase spending by $465 million in 2019–21 and $577 million in 2021–23.

Altogether, under the governor’s proposal, the unrestricted ending fund balance would be $526 million in 2019–21 and $559 million in 2021–23. Including the rainy day fund, total reserves would be $2.744 billion in 2019–21 and $3.495 billion in 2021–23.