According to Pew, “states had collectively amassed their largest fiscal cushion on record by the start of the current budget year.” Washington’s rainy day fund balance stands out poorly in Pew’s analysis. To compare the reserve levels of the states, Pew calculates the days’ worth of general fund spending that is held in reserves for each state. When looking at just the rainy day fund, Washington ranks dead last in fiscal year 2021 (and is the only state with a negative balance). But including the general fund ending balance and the rainy day fund, Washington ranks 44th.

However, it’s not quite as bad as all that. First, the 2021 figures used by Pew are preliminary. In Washington’s case, general fund spending for 2021 ended up being lower than the Pew report assumes, and the rainy day fund ended up having a positive ending balance of $19 million. With those changes, Washington’s rainy day fund (the budget stabilization account, or BSA) would cover 0.28 days of general fund spending. (Not good, but better than Illinois!)

Moreover, Pew does not include the $1 billion held in the Washington rescue plan transition account (WRPTA). In 2021, the Legislature drained the BSA, despite the fact that there was not a budget shortfall. Legislators transferred $1.820 billion from the BSA (its expected balance at the time) to the general fund–state (GFS). Then they transferred $1.0 billion from the GFS to the new WRPTA. Unlike the BSA, the WRPTA is not restricted by the constitution, so it will be easier for legislators to access the money in the account. As we’ve written, the best place to keep reserves is the BSA.

Under the 2022 supplemental budget and outlook, the state continues to make the constitutionally-required deposits to the BSA. Additionally, the supplemental transfers $1.1 billion to the WRPTA for 2021–23 and the outlook assumes that another $500 million will be transferred to the WRPTA in 2023–25. The table below shows the state’s actual and expected reserves for FY 2020–2025. As we wrote of the 2022 supplemental, “Going forward, legislators must be judicious in their use of the unrestricted reserves to ensure that enough remains in the account to help maintain this new, high level of spending in the event of an economic downturn.”