The Office of Financial Management (OFM – the gov’s budget office) just released their 4-year budget outlook. This will be the basis for our new 4-year balanced budget requirement.
You can see the spreadsheet here.
It shows a “shortfall” of about half a billion dollars ($496 million) by the end of the next biennium, in 2015. This assumes no ending fund balance (not realistic) and full implementation of many laws that mandate additional spending in the future (also not realistic.) When we finished the current budget I thought this number would be around $100-$250 million, but we’re discovering new changes in assumptions as we do a more detailed look at future costs.
Any document looking this far out into the future is difficult to do and is based on a set of assumptions. This particular set are created by an amazing process of consensus between the Governor’s office and the non-partisan staff of the House and Senate. Eventually the forecast council will take a vote to formally adopt it so that it’s not a staff product, but one approved by elected folks. I don’t expect much contention about the assumptions – they’re pretty reasonable and they point out the difficulty in projects like this. You can read the basic ones on the back of the spreadsheet, and a more detailed look at future caseloads can be found at http://www.cfc.wa.gov/.
The biggest variable is the revenue forecast, which has proven really fickle over the last 4 years. Small changes in percentage growth lead to wild swings in revenue.
We’ll use this as the basic planning document as we devise a way to comply with the McCleary decision from the Supreme Court. I’ll continue to post on these issues.