As part of the November revenue forecast, the ERFC updated the 2019–21 balance sheet. With the increase in the revenue forecast since September and a higher level of reversions (appropriations not spent), the unrestricted ending balance for 2019–21 is now estimated to be negative $152 million. That can easily be covered by the rainy day fund (the budget stabilization account, or BSA), which is expected to have $1.943 billion. Total reserves for the biennium are expected to be $1.791 billion.

There will not be an official outlook that incorporates the new revenue forecast. I have updated my estimates of the outlook for 2021–23 given this new information. Table 1 shows the ERFC balance sheet for 2019–21, and my estimate of the outlook for 2021–23. My estimate is based on the June unofficial outlook from the Office of Program Research, updated to account for the new revenue forecast and new reversion estimate (with no other spending adjustments). Under this scenario, total reserves over four years are negative $12 million.

In September, 2019–21 reversions were expected to total $420 million. Now, 2019–21 reversions are expected to total $772 million. According to the Office of Financial Management, the additional $352 million in unspent appropriations incorporates some of the governor’s savings measures and some use of federal funds. (Of the $772 million in reversions, $540 million actually occurred in FY 2020 and $233 million are expected in FY 2021.)

Table 2 adjusts the outlook to incorporate the November caseload forecast and other estimated budget savings. Previously, I had incorporated an estimate of the governor’s savings measures ($200 million in 2019–21) and an estimate of how much the state would save due to the enhanced federal Medicaid match ($786 million if in effect through FY 2021). Some amount of these savings is now accounted for in the reversions figure. (I have adjusted my estimate accordingly.) In this scenario, assuming the Legislature taps the rainy day fund, total reserves in 2021–23 are $1.149 billion.

Gov. Inslee will propose a 2019–21 supplemental budget and a 2021–23 biennial budget next month, based on this new revenue forecast. All in all, the state budget situation is looking pretty good—especially compared to what we feared earlier this year. Based on what we know now, even in the worst-case scenario (Table 1 above), the Legislature is looking at a budget shortfall of just $12 million over four years. Add in the November caseload forecast and some other anticipated savings and we’re in the black—without increasing taxes.