A guide to understanding the Washington state budget • Washington State Standard

It’s confusing, it’s convoluted, and it’s your taxpayer dollars. It’s budget season in Olympia. 

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Over the next few months, legislators will go over the state’s finances. They’ll see how much money they expect to come in and how much they can plan to spend through July 1, 2027. It’s an every-other-year process that occurs during a 105-day legislative session. 

The process kicks off this week with Gov. Jay Inslee rolling out his budget proposal, which lawmakers will use to start their conversations over state spending.

Ever wondered how the process unfolds from there? Or what’s in the budget? The Standard’s broken it down for you. 

What is the budget? 

Well, it’s actually three. Every two years, legislators must write an operating, a transportation and a capital budget to fund government operations and authorize state agencies’ spending. 

The operating budget is the big one. It pays for schools, human services, government operations and anything else lawmakers decide needs money over the next two years. The current two-year budget includes $69.8 billion of spending. 

The transportation budget is where money for roads, bridges, pedestrian walkways, bike lanes and public transportation goes. The current transportation budget is about $14.6 billion.

The capital budget is the smallest but perhaps the most important to local communities, funding construction of public buildings, parks, housing and other infrastructure. It now checks in at around $10 billion.  

When are state budgets written? 

Work on the three budgets starts long before lawmakers give them final approval, which usually happens in April but can drag into May or June if there’s a special session.

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Every fall, state agencies submit requests to the Office of Financial Management, the governor’s budgeting team. Their requests include funding for things they’re legally obligated to pay for in the next two years and some new ideas.

The governor takes those requests and writes a budget proposal that he presents to the Legislature in December. His budget is based on revenue forecasts that state economic leaders present to lawmakers every quarter. Those forecasts attempt to predict how much money the state will have to work with. 

After the session kicks off in January, lawmakers have hearings on the governor’s proposals before beginning to write their own. Their budget writers don’t start finalizing their spending plans until March when the state Revenue Forecast Council gives them their final outlook – or how much they’ll actually be able to spend.

Shortly after the forecast, each chamber releases a budget proposal with their priorities. Lawmakers then have about a month to work out differences and come up with a final compromise, which has to be approved by both chambers and the governor. 

The following year, lawmakers convene for a short, 60-day session where they can amend their spending plans in what’s called a supplemental budget. That budget makes corrections to the original two-year plan to account for things like school enrollment changes, rising or falling public assistance caseloads and updates in expected revenue.

Where does the money come from? 

The short answer: you, the taxpayer. The long answer: a bunch of different places. In the operating budget, most money comes from revenue the state gets through taxes on sales, property, or businesses. Those funds make up what’s called the General Fund, over which lawmakers have the most discretion. 

On top of that, the state gets funding from the federal government and other private sources that must be dedicated to specific uses. Those funds made up another $64.1 billion in this two-year cycle. This funding often doesn’t get as much attention from lawmakers during the budget process because they have little say in where it goes.

In the capital budget, most of the funding comes from state bonds – borrowed money that the state uses to pay for bigger projects. Think of them like a mortgage or loan. Other sources of funding in this budget include revenues generated from the state’s trust lands, public works loans, and higher education accounts. There is also some federal funding. 

The transportation budget is similar in how it uses bonds to pay for projects, but much of its funding comes from the state gas tax or the air pollution allowance auctions that take place under the Climate Commitment Act. Funding from the climate law is also dispersed throughout the other two budgets. 

Where does the money go? 

That’s the fun part!

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For any discretionary spending, lawmakers get to decide where to put it, and they’ll likely spend the next few months fighting over where they think it should go.

In the operating budget, the majority of money goes toward K-12 schools. The second highest share is for human services — things like child care subsidies, long-term care providers, food assistance, mental health support and services for those with developmental disabilities. The next big bucket is for Washington’s four-year colleges and universities and two-year community and technical colleges. Then, there’s the “general government” category, which includes funding for emergency management, tax collection, and housing and economic development programs.

The rest is split amongst a host of agencies and pays for everything else, like law enforcement officers, firefighters, legislative operations, other elected officials’ offices, administering unemployment insurance, and arts and historical preservation.

In the capital budget, most funding is passed out through grants to local governments or organizations for their construction projects. There’s also funding for preservation of existing state and higher education buildings and dollars for new state-owned facilities. 

The majority of the transportation budget goes to the Department of Transportation, which administers new projects on state highways, fixes roads and bridges, and runs the ferry system. That budget also includes money for the Washington State Patrol and the Department of Licensing.

What about balancing accounts and savings? 

The state does have a savings account, known as reserves. After all is said and done, lawmakers try to keep some money in this account just in case. It comes in handy if the state doesn’t end up collecting as much money as it originally planned or if there’s an unpredictable event like a recession or a pandemic. 

By law, the state’s budget must be balanced over the next four years. That means, lawmakers can’t plan to spend more than what they’re expecting to get. The idea is to force lawmakers to look ahead and ensure that they won’t come back in two years and face a giant budget hole…

…but didn’t I hear there was a giant hole in the budget?

Yes, you did. 

Lawmakers’ revenue predictions versus the amount they are promising to spend under current law aren’t lining up. This has resulted in a gap of around $10 billion to $12 billion for the operating budget over the next four years. The transportation budget is also facing a shortfall.

You can read more about that problem here.