Heidi Groover has a story in the Seattle Times today that considers what might happen with the state budget if I-976 is approved. (I-976 would reduce vehicle fees and revoke local governments’ authority to levy certain transportation fees and taxes.)

The initiative would significantly reduce state and local funding for transportation. As we wrote in our policy brief on the initiative, if it passes, “instead of working to solve our state’s transportation challenges, lawmakers would spend the next several years debating which projects to cut and trimming financial plans.”

Groover reports that there are differences of opinion in the Legislature about how to potentially go about that:

“I would probably just do at first a straight across [cut],” said Sen. Steve Hobbs, D-Lake Stevens, who chairs the Senate Transportation Committee. “Then, Hunger Games-style, the agencies or departments would have to defend what they’ve got.”

Hobbs would prioritize safety and maintenance of existing roads and bridges as well as funding for the Washington State Patrol, he said. New projects would likely be delayed or put “on hold indefinitely.”

Republicans are less apocalyptic, pointing to higher-than-expected tax collections in recent years and proposals to redirect money like sales taxes toward transportation purposes.

Additionally, Groover notes that Tim Eyman (the initiative’s sponsor) “has often touted a ‘$3.5 billion surplus’ in the state’s coffers that could backfill the cuts.” As Groover writes, that includes the state’s rainy day fund (the budget stabilization account, or BSA).

Total reserves in the state operating budget at the end of the 2017–19 biennium were $3.532 billion—$1.622 billion was in the BSA and $1.910 billion was the unrestricted ending fund balance. For the current biennium (2019–21), total reserves are estimated to be $3.128 billion—$2.177 billion in the BSA and $951.6 million unrestricted. Those unrestricted dollars are carried over as the beginning balance for the next biennium—they help to balance the operating budget over four years.

The Legislature writes separate operating, transportation, and capital budgets. If the initiative passes, using the total reserves in the operating budget for transportation seems unlikely, due to the cascading impacts it would cause. To get at the reserves in the BSA, a three-fifths vote would be required. Given the potential for a recession in the coming years, legislators may be loath to tap the BSA for this purpose. Meanwhile, using the unrestricted balance could mean throwing the 2019–21 operating budget out of balance over four years, which could mean operating spending cuts or increased taxes.

Groover writes,

Spending from the rainy-day fund or operating budget “is forcing recessionary policies and recessionary cuts at a time when the state is not facing a recession,” said budget writer Sen. Christine Rolfes, D-Bainbridge Island, “and will put us in much weaker place when we actually have a national recession.”