How Did the State Grow a $8.6 Billion Budget Deficit?
The Washington Research Council estimates that legislators face a gap of $8.6 billion between available resources and the cost of maintaining existing services over the next four years. The story of how this gap came to be is fascinating and largely owing to federal Covid spending.
Chart 1 shows actual and projected revenues and expenditures for state fiscal years 2015 to 2029. For revenues, the numbers are the actual amount received from FY 2015 to FY 2024 and forecasted receipts thereafter. For expenditures, the numbers are the actual amounts appropriated for fiscal years 2015 to 2025 and the cost of maintaining the programs funded in FY 2025, with adjustments for inflation and changes in the number of individuals qualifying for various entitlement programs, for fiscal years 2026 to 2029.
It is normal for state revenues to fall during recessions. However, there was no year-over-year revenue decline in the case of the recent COVID recession. Thanks to federal infusions owing to Covid, revenue actually boomed. From FY 2019 to FY 2021 inflation-adjusted per-capita revenue increased by a remarkable 12%. This is greater than the percentage growth over every other two-year period in the last 30 years!
State revenue forecasters did not predict this extraordinary boom. The February 2020 revenue forecast did not include any impacts from Covid, although forecasters acknowledged the virus to be a risk going forward. By June, forecasters had become
convinced that Covid would have a large negative impact on state revenues. As a result, they reduced the 2019–21 forecast by $4.5 billion (8.9%), the 2021–23 forecast by $4.4 billion (7.8%); and the 2023–25 forecast by $4.5 billion (7.5%).
https://www.postalley.org/2025/04/27/how-did-the-state-grow-a-8-6-billion-budget-deficit/