The Seattle Times ran a nice editorial yesterday on the state’s fiscal problems. According to the paper, state Treasurer Pellicciotti

sees two distinct paths lawmakers could soon take that will determine the course of the state’s financial health for years to come.

The first is to continue funding a budget that lacks the tax revenues to support it, drawing on dwindling reserves that endanger the state’s ability to borrow money.

The second is to end such fiscal recklessness. Replenish state reserves that now total the lowest level among any state in the U.S. Stop shuffling one-time money between government accounts to make it appear the state has more money for ongoing programs.

The editorial discusses the negative fiscal effects of a potential credit downgrade and of spending down cash balances. Additionally, it notes, “Even if the state’s new income tax on millionaires is upheld by both voters and the state’s supreme court, those new revenues won’t support the state budget until 2029. Lawmakers must exercise restraint and bring the state’s finances back into balance in the meantime.”

Indeed, the income tax cannot solve the problem on its own. Spending growth will need to be constrained in 2027–29. As I showed here, given the September revenue forecast, if spending growth is limited to 3% in 2027–29, that would bring spending back in line with revenues, and spending could then grow by 14% (with the revenue forecast) in 2029–31.

Spending growth of 3% would mean that $2.390 billion more could be appropriated, compared to 2025–27. The outlook for the 2026 budget assumed that the cost of continuing 2025–27 appropriations would increase by $2.274 billion in 2027–29. However, that did not include the collective bargaining agreements with state and non-state employees, which are estimated to cost $589 million in 2027–29, or the additional liability account premiums (and backfill), which could cost roughly $993 million. To fund these items, the Legislature would need to cut spending on existing programs. (Meanwhile, agency requests for 2027–29 proposed new policy of more than $3.5 billion for the biennium.)