Legislature adopts final supplemental budgets

Things have rapidly changed for the state’s budget outlook.

Back in February the Legislature had great news – a strong revenue forecast. The forecast projected that the state had more than $600 million in additional revenue to use, combined with lower-than-expected expenditures from reduced caseload projections. Given all that, it seemed like the Legislature was poised to invest more funds in many areas of the state’s budget. However, in the past week the economic news has changed significantly as the negative impacts of the coronavirus disease (COVID-19) have emerged.

While the revenue forecast in February was very positive, even back then the state’s economist was cautioning about a possible slowdown and raising flags about the potential for the coronavirus to create an impact. The next revenue forecast will be out on March 20. We will be watching to see what changes with that update.

The final supplemental operating budget still adds $1 billion in new spending and brings the biennial operating budget total to $53.4 billion for the biennium.

The final budgets (operating, capital, and transportation) have some good news in them for programs important to cities, but also represent a constriction of what we had expected for spending in some areas. It is clear that the Legislature scaled back some in preparation of the possibility for a weakening economy. They are leaving $3 billion in total reserves by the end of the biennium as a buffer.

Additionally, they earmarked $200 million from the Rainy Day Fund (actually called the Budget Stabilization Account) for COVID-19 response.

Review AWC’s budget matrix with a summary of the significant areas impacting cities. Below are some of the highlights from the three budgets:

Operating supplemental budget, SB 6168:

• The final budget maintains state shared revenue distributions. The House had proposed an increase in cannabis revenue sharing, but that was not included in the final budget.
• The CJTC received an increase of $1.04 million for two additional BLEA classes in 2020 and 2021. Three classes each year must be held in Spokane.
• The WSP received $8.9 million to establish a centralized system for firearm background checks.
• There’s a cost-of-living increase for PERS 1 retirees that will result in increased pension costs for cities.
• An additional $160 million is included for housing and homelessness response including $60 million in grants for local shelter capacity.
• $50 million is appropriated for a new Climate Resiliency Account.
• Additional funding is provided in the Department of Natural Resources emergency response budget to address COVID-19. $200 million in state funding will be made available through HB 2965.
• WASPC received $2 million to administer the sexual assault kit initiative project created under RCW 36.28A.430.

Capital supplemental budget, SB 6248:

• The budget incudes a proviso requiring the development of a comprehensive statewide culvert remediation plan that prioritizes barrier correction on a watershed basis.
• There is no additional funding for the Public Works Trust Fund.
• An additional $10 million is included for the CERB program.
• An additional $26.2 million increase in Commerce competitive grants is appropriated for expanding community-based behavioral health services.

Transportation supplemental budget, HB 2322:

• General city priorities remain largely intact in the budget and all the projects on the Governor’s pre-session pause list are expected to begin once the budget is signed.
• The budget balances due to one-time savings in agencies, projected underspending, and certain programmatic and grant pauses.
• However, the Transportation Improvement Board (TIB) experienced a $4.6 million reduction due to historical underspending and agency savings, and their Complete Streets grant program is reduced by $4.4 million.
• The Freight Mobility Strategic Investment Board’s (FMSIB) supplemental allocations is reduced by $14.9 million, including $7.5 million reduction in capital spending authority and $7.4 million reduction due to legislative project adjustments.