With the Legislature scheduled to adjourn in the next few days, Washington Research Council offers a timely critique of the House and Senate budgets.
Here's the crux:
Both the house and the senate budgets save too little and spend too much.
In the near term, the house and senate budgets leave $664 million and $766 million in GFS reserves, respectively. Other NGFS accounts are almost completely drained of reserves. At this stage of the economic cycle, a 5 percent reserve, $1,670 million, would be prudent.
The national economy has entered a period of low economic growth, and many economists worry that weakness in construction will tip it into recession. It is conventional wisdom that Washington’s economy will be stronger than that of the nation as a whole. But, of course, that was also the conventional wisdom in the summer of 2001.
Longer term, the spending commitments contained in the budget are not sustainable. Under both the house and senate budgets the NGFS deficit is $1.3 billion. A deficit like this at the peak of the economic cycle is inherently structural.
Right. Unfortunately, it's likely that the lesson will again be learned the hard way.
