Last week KIRO Newsradio called the size of the budget shortfall a “mystery.” Indeed, there is a wide range of estimates floating around:

• The Office of Financial Management (OFM) projects a four-year shortfall of $10–$12 billion.
• The House Office of Program Research (OPR) estimates that the four-year shortfall is $6.7 billion.
• Gov. Ferguson says it is “at least $12 billion over the next four years.”
• Former Gov. Inslee said it is $16 billion.
• The Seattle Times is stating in news stories that “Washington faces a projected $12 billion to $16 billion budget deficit over the next four years.”

As I wrote last month, the size of the four-year shortfall depends on your assumptions about spending and revenues. The shortfall is the difference between forecasted resources and the projected cost of continuing current services (the maintenance level).

One difference between the estimates of the shortfall is that OFM and OPR have different estimates of the maintenance level. Another is that OFM includes the costs of the collective bargaining agreements with state employees, but OPR does not. (The cost of the CBAs is technically considered to be new policy.)

Additionally, note that OPR’s $6.7 billion estimate assumes revenue growth of 4.5% a year in the second biennium. This is consistent with statute, but the Economic and Revenue Forecast Council currently estimates that revenues will grow by 3.6% in 2028 and 3.5% in 2029. (Assuming higher revenue growth than forecasted is one of the reasons there’s a shortfall to begin with.) If OPR assumed the revenue forecast, its estimate of the four-year shortfall would be $7.7 billion.

(Note, too, that the size of the maintenance level shortfall will change with the March revenue and caseload forecasts.)

According to OFM, Inslee’s $16 billion figure is the difference between forecasted resources and all the proposed policy increases (but none of the policy reductions) in his budget proposal.

It is math like this—where the shortfall is defined as “forecasted revenues less the spending level I want”—that makes some question whether there is a shortfall at all. The Seattle Times editorial board wrote a few weeks ago that the shortfall is “invented.”

Certainly, this is not a situation like the Great Recession, when revenues for the current biennium dropped unexpectedly. That was a revenue shortfall—revenues dropped such that enacted appropriations could no longer be funded. For 2025–27, there are no enacted appropriations yet. Consequently, the upper limit of the shortfall is not a defined appropriation level but essentially whatever you want it to be.

That does not mean that legislators don’t have a problem to solve. The estimated cost of continuing current services is in fact higher than forecasted revenues in 2025–27. As in any budget, legislators will have to weigh competing requests for funding in the new biennium and balance them against expected revenues. But that will be harder this year; usually, the maintenance level at least can be funded with existing revenues.

Legislators increased appropriations by 15.8% in 2023–25 even though they expected revenues to grow by just 3.5%. This overspending in in the current biennium (the budget balance relies on one-time funding) means that legislators can’t expect to be bailed out by increasing revenue forecasts—even though revenues are expected to be $5 billion higher in 2025–27 than in 2023–25.

Indeed, although the size of the shortfall may be a bit amorphous, there is no mystery about how we got into this situation. We detailed the spending choices leading to the problem in this report.