How Our State Budget Works

State agencies are responsible for developing budget estimates and submitting budget proposals to the Governor. Once the budget is enacted by the Legislature and approved by the Governor, agencies implement approved policies and programs within the budgetary limits imposed by legislation. Under Washington’s budget and accounting statutes, individual agency directors are accountable for carrying out the legal intent of appropriations.

The Governor recommends a budget to the Legislature consistent with executive policy priorities. Appropriation bills, like other legislation, are subject to gubernatorial veto authority and may be rejected in part or in their entirety within a defined number of days after legislative passage. After a budget is enacted, the Governor’s general administrative duties include monitoring agency expenditures and helping to implement legislative policy directives.

The Office of Financial Management (OFM) coordinates the submittal of agency budget requests and prepares the Governor’s budget recommendation to the Legislature. Budget staff from OFM work closely with state agencies to explain and justify planned expenditures. Analysts evaluate all budget requests for consistency with executive policy priorities and to ensure that proposed expenditures match fiscal constraints. OFM is also responsible for maintaining the state’s central accounting system and developing certain population and demographic forecasts.

Through appropriations bills, the Washington State Legislature mandates the amount of money each state agency can spend and, in varying degrees of detail, directs agencies where and how to spend it. Washington’s bicameral Legislature consists of 49 members in the Senate and 98 members in the House of Representatives. Specific fiscal committees have primary responsibility for preparation of the legislative budget. These include the Appropriations, Capital Budget and Transportation committees in the House; and the Ways & Means and Transportation committees in the Senate.

The House and Senate employ staff analysts to review and evaluate the state budget and to prepare appropriation bills. As with other legislation, if the two houses cannot agree on a budget or revenue proposal to implement the budget, a conference committee of legislators may be convened to reconcile the differences.

Beginning with the 2013–15 biennium, the Legislature must enact a budget that leaves a positive ending fund balance in the General Fund-State (GF-S) and related funds.

The Economic and Revenue Forecast Council (ERFC) is composed of representatives from both the legislative and executive branches. Each fiscal quarter, the council adopts an official forecast of GF-S revenues for the current and (at some point) the ensuing biennia. These forecasts, together with any reserves left over from previous biennia, determine the financial resources available to support estimated expenditures. Beginning in 2012, the ERFC also became responsible for overseeing preparation of GF-S expenditure outlooks for future biennia. With the technical assistance of a State Budget Outlook Work Group composed of legislative and executive staff, expenditure outlooks are published in January (for the Governor’s budget proposal) and within 30 days of enactment of the operating budget.

The Caseload Forecast Council (CFC) was created by the 1997 Legislature and began operations in the 1997–99 biennium. The council consists of two members appointed by the Governor and four appointed by the legislative political caucuses. The council prepares official caseload forecasts for state entitlement programs, including public schools, long-term care, medical assistance, foster care, adoption support, adult and juvenile offender institutions and others.

The State Expenditure Limit Committee is composed of legislators and representatives of the governor and attorney general. This committee was established in 2000 to determine the state general fund expenditure limit created by Initiative 601. The Legislature temporarily suspended the state expenditure limit through the beginning of the 2019-21 Biennium. As of July 1, 2020, new legislation repealed the state expenditure limit, dissolved the State Expenditure Limit Committee, and transferred responsibility to calculate the fiscal growth factor to the ERFC.