Washington lawmakers explain budget process and flag mid‑cycle shortfall risk

A panel of state lawmakers on a business‑hosted program outlined how Washington's biennial budget is assembled and warned that rising maintenance‑level costs and forecast uncertainty could produce a mid‑cycle shortfall by fiscal 2028.

Senator Chris Gildon, who led the session's explanation of the legislative budget cycle, said the governor submits a proposed budget each December and the legislature must reconcile House and Senate versions before sending a single balanced plan to the governor. "The operating budget has increased by about 120% over the last 10 years," Gildon said, adding that much of that growth is maintenance‑level spending such as inflation adjustments, caseload increases and contract costs.

The panel stressed that maintenance‑level items are often automatic drivers of higher future costs. Representative Steve Bergquist described how unanticipated caseload changes — for example, tens of thousands more K‑12 students — can add hundreds of millions in obligations, while costs from contracts and tort liability can compound quickly.

Representative Ed Orcutt, who serves on the state's forecast council, described the system of four revenue forecasts per year and cautioned that policy changes can make comparisons across forecasts misleading. "In fiscal year 2028, we're projecting that we're gonna have a negative balance at the end of the fiscal year," Orcutt warned, estimating the shortfall at "between $800,000,000 negative and $1,200,000,000 negative." He said the budget outlook must balance over four years, so a mid‑cycle deficit is a material planning challenge.

Gildon proposed several structural reforms intended to restrain spending growth and improve transparency: require honest accounting without off‑cycle gimmicks, avoid funding ongoing expenses with one‑time dollars, enact periodic 0‑based reviews of agency programs, and consider tying growth in state spending to a consumer price index. "We need honest math and no budget gimmicks," he said.

The senators and representatives also pointed to several concrete targets for savings or policy review. Gildon cited a state audit that found roughly 130,000 people concurrently enrolled in Medicaid in more than one state, calling that a taxpayer inefficiency to be addressed. He also contrasted Department of Corrections costs (about $60,000 per person per year) with juvenile rehabilitation costs (about $260,000 per person per year) and said the legislature should consider whether placement and program rules create avoidable fiscal pressure.

Lawmakers repeatedly framed tax policy as a set of tradeoffs. Senator Noelle Frayne emphasized that tax design includes principles such as stability, transparency and vertical equity, and described her caucus's work to assess which revenue tools are politically and technically viable. Representative Orcutt urged caution about further tax increases and defended the 1% property tax cap enacted after litigation in the mid‑2000s.

The panel did not take votes or recommend a specific omnibus bill. They said follow‑up work is already underway through implementation workgroups and a new legislative budget sustainability joint select committee. Organizers said a session report will be produced summarizing the day's discussion.

The panel concluded with a question‑and‑answer period and no formal actions were adopted.