The Office of the State Treasurer (OST) annually produces a Debt and Credit Analysis report that includes data on state debt and makes fiscal recommendations for the Legislature. For the past several years, the recommendations have been to target reserves at 10% of revenues, keep projected debt service costs to 5%–6% of revenues, and continue to fully fund pension contributions.

This year, the report newly references the state’s four-year balanced budget requirement:

[I]f the state were to depart from its longstanding fiscal management practices, especially with respect to the statutory requirement to enact a four-year balanced budget, or if the Legislature were to take actions that weaken the state’s pension system, these recommendations would require adjustment. In particular, if decisions are made that increase risk, increase the state’s reliance on one-time budget solutions, diminish financial controls, or reduce the state’s ability to forecast budgetary imbalances, OST would expect that other safeguards, especially targeted reserve levels, would need to be strengthened to maintain Washington’s high credit ratings.

(Emphasis added.)

Indeed, as the report notes, Washington is a high debt state with low reserve levels. It has nevertheless earned strong credit ratings due to its “historically strong fiscal management and exceptional economic growth.”

These comments from OST come after Gov. Ferguson proposed a budget that would not balance over four years and that would draw down reserves. Lt. Gov. Heck made similar points on the importance of the four-year balanced budget requirement and reserves last month.