Any top economist would agree it’s questionable to hitch our state’s budget wagon to a projection that is at best inaccurate and at worst wildly flawed.
THE state Legislature is now three weeks late delivering to the governor what should have been a relatively simple supplemental budget.
Frankly, finishing a budget on time is the only official task the people of Washington expect from their elected leaders when they convene in Olympia every winter.
But gridlock and tardy budgets have become so common, they are almost expected.
And it’s our own fault.
In 2012, along with a majority of my colleagues in the Legislature, I voted for a bill that required the state to balance its budget using economic projections over four years, not just over the next two years — as had been the practice for decades.
Sounds great, right?
This was sold as a fiscally responsible approach to budgeting and a model the other 49 states were sure to follow. It allowed lawmakers who were running for office four years ago to run back to their districts and spread the good word of taxpayer accountability.
The bill to end all those wily budgeting tricks turned out to be the biggest trick of all. We remain the only state to implement the rule and, since its adoption, the Legislature has taken an average of 47 extra days to finish its work. Both sides in our current budget debate have stated publicly that the four-year rule is a central cause of delay.
Our budget writers are the only officials in the nation who must follow a flawed, abstract budgetary edict — and the state suffers as a result.
There were warning signs and, like the rest of my colleagues, I missed them.
In 2012, the state’s top economist, Arun Raha, warned, “A four-year-ahead forecast will have a far greater margin of error than a two-year-ahead forecast,” Raha told lawmakers. “It would be unwise to hang your hat on for budgeting purposes.”
Four years ago, would you have predicted paying $1.97 for a gallon of gas? Or that the median home price in Seattle would be $536,700? Or that Donald Trump would be the likely Republican presidential nominee?
The point is, world economics and associated geopolitical events are impossible to accurately predict — especially four years from now.
Any top economist would agree it’s questionable to hitch our budget wagon to a projection that is at best inaccurate and at worst wildly flawed.
The first four-year projection was made in 2013. Only now in 2016 have we learned it missed the mark by $3.1 billion.
If this rule had been in place before the Great Recession, projections would have been off by approximately $5 billion. Had we abided by a budget that missed the mark by this much, it would have required a combination of either devastating cuts or astronomical taxes to get the state back in the black.
No doubt, politicians will continue to sell the four-year rule as the best budgeting tool in a generation.
As someone who bought into the idea four years ago, I must warn: buyer beware.