Financial Goal Setting

State and Local Budget Process

At the state and local level much of this same basic process applies. Substitute the governor or mayor for the president, and substitute the state legislature or city council for Congress. The same basic tensions among near-term spending needs, appropriations, and budget authority apply.

A vast majority of states prepare and present an annual budget. Washington State is one of a few states that prepares a biennial budget with an annual session. In other words, the states prepares and presents a budget for two years at a time and adjusts that budget at the end of the first year. Many cities, including Seattle, follow a similar model. In concept, biennial budgeting facilitates more effective long-term planning. In practice, revenue and spending estimates are often adjusted, sometimes substantially, after the end of the first year.

In January 2015 the WA legislature debated and ultimately passed a budget for the 2015-2017 biennium (i.e. two-year period). The basic steps to arrive at that budget were as follows:

• June-September 2014: State agencies prepared and submitted budget requests to the Governor. Much of that preparation process is done by the Governor's Office of Financial Management (OFM). OFM is the state's analog to the federal OMB, and this process is akin to how OMB gathers budget requests from all the executive agencies.
• December 2014: Governor Inslee proposed a budget to the state legislature immediately before the start of the 2015 legislative session.
• January-March 2015: Legislature debated and prepared its own legislative budget. Specific committees in both the House and Senate have specific responsibilities to prepare parts of the state legislative budget, including: Appropriations, Capital, Finance, and Transportation. Unlike the federal budget, the state budgeting process does not call for separate authorizing and appropriations processes. Legislative budget-writers include both authorizing and appropriations language in the same legislation.
• February 2015: The WA State Economic and Revenue Forecast Council met and determined the final revenue cap for the coming biennium. This is a key part of the budget debate. If the Council increases its expected revenues from its previous forecast, then state budget writers are able to work within a higher spending cap, and vice versa.
• March-April 2015: Legislature debated its legislative budget. Conference committees worked to resolve large differences between the House and Senate versions. A particularly contentious part of this debate was how to fund a $2 billion classroom size reduction measure that voters passed in 2014, an additional $1 billion in court-mandated spending on public education, and a multi-billion statewide transportation funding package. The Democrat-controlled House of Representatives proposed funding for many of these initiatives through a new statewide capital gains tax and an increase in gasoline taxes. The Republican-led Senate proposed diverting money from taxes on newly-legalized marijuana, in addition to cuts and re-appropriations.
• April 26, 2015: The regular 105 day legislative session ended without a passed budget bill.
• June 2015: The Economic and Revenue Forecast Council released its revised revenue estimates, which called for an additional 3-5\% growth in revenue collections. If the budget process is behind schedule, as was the case that year, the Forecast Council's revision can impact the final budget bill.
• June 1, 2015: Governor Inslee called the legislature back for a 30 day special legislative session to debate and pass a budget.
• June 15, 2015: The special session expired with no budget
• June 17, 2015: Governor Inslee called a second special legislative session.
• June 30, 2015: The second special legislative session expired without a budget; the legislature passed and Governor Inslee signed a temporary spending measure to keep government from shutting down.
• July 1, 2015: Governor Inslee called a third special legislative session.
• July 9, 2015: The legislature passed a budget.
• July 10, 2015: Governor Inslee signed a $39 billion biennial budget. This concluded the longest legislative session in state history.
• July 2015: New budget took effect.
• January-June 2016: Legislature considered and passed a supplemental budget to adjust the biennial budget for the remainder of the biennium. This process is essentially the same as the legislative budget process, but it is not as comprehensive.

Cities, counties, schools, and special districts generally follow the same basic process. In Washington State, most local governments follow a January 1 fiscal year. The mayor/executive/superintendent's staff review departments' budget proposals throughout the late summer and early fall, and the mayor/executive/superintendent proposes a budget in usually in early September. The Council/Board debates the budget and revises it throughout the late fall and early winter. At the City of Seattle those proposed changes are articulated in Green Sheets that suggest a change to the Mayor's proposed budget. State law requires a passed budget by December 2. Most local governments do not have the same executive-legislative tensions as the state and federal government, and local budget processes are rarely as formal, but the same basic processes, institutions, and incentives are at play.