The state of Washington is at a crossroads, with the fate of hundreds of millions of taxpayer dollars to be decided.
Last week the Economic Review Forecast Council provided good news to state lawmakers regarding its latest revenue forecast. Their forecast shows $606 million in additional revenue over the 2019-21 biennium and $536 million in additional revenue for 2021-23 biennium.
Now, a decision must be made about what to do with all that money, and there are several good solutions.
1) Make extra contributions to the Budget Stabilization Account, the state’s rainy day fund, and strengthen our ability to ride out the next recession.
2) Pay down our $11.2 billion unfunded pension liability and get our public pension funded status closer to 100%.
3) Reserve the funds, and allow the additional revenue to grow the state’s General Fund balance.
As Treasurer and a member of the ERFC Board, I want to remind legislators that this windfall of additional revenue is a one-time event that cannot be relied upon to happen again.
While the state faces a number of pressing problems, I am concerned about the Legislature’s willingness to spend down fund balances and its lack of urgency to ready the state for the next economic downturn, which could occur any time.
In recent weeks, virus fears, a flight-to-quality in bond markets, earthquakes and other destructive events have made news headlines – all reminders that preparedness and prudent management of the state’s revenue is critically important right now.
I am a constant advocate for saving for a rainy day as sensibly and transparently as possible. In fact, I brought forth a motion, noted in the January 30 ERFC Budget Outlook meeting minutes (http://bit.ly/2PrVDyk), seeking inclusion of the percentage of the total reserves to current revenues on the Budget Outlook, to give a clear picture of the size of our reserves as compared to our expected revenue. To which the Board agreed on further review.
I want legislators to consider saving and preparing. We need a better cash position in both the rainy day fund and the general fund’s ending fund balance to help us weather the next recession. We should be making our preparations now.
Duane A. Davidson
Washington State Treasurer