Moody’s estimates that 23 states have enough funds in reserve to get through a moderate recession, as reported by Route Fifty today. Those 23 states include Washington.

The estimates are based on “a downturn that happens almost immediately.” But Route Fifty also reports that Moody’s “puts the highest odds for the next recession as hitting in mid-2020.” If a recession were to occur during the 2019–21 biennium, Washington’s reserves would not be enough to make up for the revenue shortfall (at least as things stand now).

The first two columns in the table below show the official budget outlook adopted by the Economic and Revenue Forecast Council (ERFC) in April. It is based on the 2018 supplemental budget as signed by the governor and the February revenue forecast. The supplemental balanced over four years but left an unrestricted ending balance of just $88 million in the second biennium. (The appropriations level for 2019–21 is based on carrying forward 2017–19 appropriations.)

The third column presents a potential recession scenario, based on the ERFC’s pessimistic alternative revenue forecast for 2019–21. (I used the February forecast for this to be consistent with the outlook; using the June revenue forecast reduces the shortfall by less than $1 billion—the story is the same.) Under this scenario, the unrestricted ending balance in 2019–21 would drop to negative $3.9 billion.

We don’t know when a recession will next occur, or how severe it will be. It is certainly good to be among the 23 states that Moody’s judges to be well-prepared. But this may give a false sense of security—we’re not sitting as pretty when you look into the next biennium.