Washington’s Rainy Day Fund Ranks 49th — That Matters Now More than Ever
Washington communities are once again facing the reality of severe flooding — homes damaged, roads washed out, families displaced, and local governments stretched thin. First responders, emergency management teams, public works crews, and volunteers across the state have stepped up in extraordinary ways, working long hours to protect lives and property. They deserve sincere thanks and support. We also wish Governor Bob Ferguson and state leaders well as they work with local officials on response and recovery efforts.
But moments like this also expose a hard truth: This is exactly why Washington’s budgeting decisions matter. And right now, the state is paying the price for years of misplaced priorities.
Washington’s rainy day fund, formally known as the Budget Stabilization Account (BSA), exists for emergencies — natural disasters, economic downturns, and unexpected crises. Flooding is the textbook definition of what that fund is supposed to address.
Yet in the 2021 budget, lawmakers siphoned money out of the BSA to fund unrelated and non‑essential spending. As Future 42 has previously reported, state leaders justified transfers by claiming they were temporary or harmless, even as budget warnings mounted and revenues became more volatile.
Independent analysis has shown that raiding the protected reserve account has created confusion, weakened fiscal discipline, and left Washington with far less flexibility when real emergencies hit. Instead of strengthening the state’s financial safety net during good times, lawmakers treated it as a convenient backstop for new programs and political priorities.
Source: Washington State Legislative Budget Notes, Budget Stabilization Account Biennium Beginning Balance: 2015, 2017, 2019, 2021, 2023, 2025
The chart above illustrates the problem clearly. While the enacted 2025–27 budget projects a rainy day fund balance of roughly $2 billion by the end of the biennium, that figure masks how fragile the state’s fiscal position really is.
According to Pew Charitable Trusts, the median rainy day fund for states is 12.8% of annual operating expenses. That means Washington should have around $5 billion in its fund – a number it’s never been near in recent history. In fact, in a report from Oct. 2025, Pew identified Washington as having the second-worst rainy day fund in the nation and could only fund operations for less than 13 days.
State law on this gives plenty of wiggle room for lawmakers. Washington is not required to have any minimum balance in the BSA, but are required to contribute 1% in the first year and “extra ordinary revenue” in the second year of each two-year budget.
And Governor Ferguson does not seem to be taking this seriously. According to the National Association of State Budget Officers, Ferguson’s proposed budget from earlier this year would have transferred even more money out of the rainy day fund to support new spending. In fact, his proposal projected ending fiscal year 2027 with a BSA balance of just $0.4 billion — roughly 20 percent of the $2 billion lawmakers ultimately included in the budget, which Ferguson did sign.
Although, given today’s growing budget shortfalls and renewed calls for tax hikes, it’s fair to question whether the $2 billion rainy day fund projection was ever realistic to begin with.
Washington’s overall state spending has roughly doubled in recent years, yet core government preparedness has not kept pace. The rainy day fund has too often been used to finance new, ongoing programs rather than preserved for true emergencies.
That pattern shows up clearly in climate and infrastructure spending as well. As Washington Policy Center’s Todd Myers has documented, of the $1.5 billion spent so far under the Climate Commitment Act, just 0.5 percent has gone toward addressing flooding risks — despite floods being among the most predictable and damaging climate‑related threats facing the state.
In other words, lawmakers talk about resilience and preparedness, but the money is routinely spent elsewhere. Spending on education, health care, and general expenditures have all doubled in the last ten years, numbers which dramatically exceed inflation and population growth.
Governor Ferguson is expected to release his 2026 supplemental budget proposal soon. This moment should serve as a wake‑up call.
Washington needs a budget that focuses on core government functions, protects emergency reserves, and makes responsible funding decisions — not one that continues to expand spending while leaning on tax hikes and one‑time fixes.
Natural disasters will happen. Economic downturns will come. The question is whether the state will be prepared — or whether its emergency savings will already be spoken for.
This flooding is a tragedy. It’s also a warning. The rainy day fund exists for real emergencies, not pet projects or politically convenient programs. When the rain comes, priorities are revealed — and Washington must do better next time.
Photo: Future 42