Taxes Keep Going Up. So Why Are Budget Shortfalls Getting Worse?

Governor Bob Ferguson recently warned state agencies to prepare for difficult budget decisions in the years ahead. In guidance sent to agency leaders, the administration pointed to familiar pressures: inflation has driven up costs, Washington’s population has grown significantly over the past decade, and maintaining public services is becoming more expensive.

Those factors are real. Anyone who buys groceries, pays a utility bill, or runs a business understands that costs are higher today than they were ten years ago.

But there is one number largely missing from this conversation.

State spending has grown far faster than either inflation or population growth.

Over the past decade, Washington’s population increased by roughly 14 percent. Inflation also pushed costs higher. Yet total state spending has expanded at a dramatically faster rate. Depending on the measure used, Washington’s budget has more than doubled over roughly the same period, growing from approximately $33.5 billion in the 2013-15 biennium to more than $80 billion today.

That matters because inflation and population growth can explain some spending growth. They cannot explain all of it.

If state spending increased at the same rate as population growth and inflation, state spending would be roughly $20 billion less that is actually is. The last four, two-year budgets, in fact, have approved spending levels that exceeded projected revenues.

Imagine a family whose grocery bill rose 25 percent over several years. That would be frustrating but understandable. If that same family responded by increasing its total household spending by 100 percent, however, it would be hard to argue that inflation was the primary problem.

The issue is no longer rising prices. The issue is spending choices.

Washington lawmakers have spent much of the last decade searching for new sources of revenue to support a rapidly expanding state budget. New taxes, higher taxes, expanded taxes, new fees, higher fees, and countless proposals targeting different industries, transactions, and activities have become recurring features of legislative sessions.

Last year alone, state leaders enacted the largest package of tax increases in state history. This year, additional tax and fee increases followed.

Yet despite those actions, budget warnings continue.

That should raise an obvious question: if record tax increases are still not enough to keep pace with spending growth, is the state addressing the right problem?

The governor’s budget guidance notes that agencies have already identified billions of dollars in reductions and savings over the last sixteen months. That sounds substantial until considering the context.

Many of those reductions came after spending plans had already expanded significantly beyond what taxpayers could sustainably support. If a homeowner plans a $100,000 remodel, then scales it back to $80,000, they have technically reduced spending. But they have not necessarily become more affordable.

Reducing projected growth is not the same thing as reducing spending. Canceling future expansions is not the same thing as living within existing means.

Washington now finds itself in a cycle that should concern taxpayers across the political spectrum. Spending grows rapidly. Revenue falls short. Lawmakers raise taxes. Spending grows again. Revenue falls short again. The search begins for another tax increase.

Meanwhile, families and employers are facing affordability challenges of their own. Housing costs remain high. Energy costs are rising. Everyday expenses continue to consume a larger share of household budgets.

The challenge facing Washington is not simply that inflation exists. It is not simply that more people live here than a decade ago. Those realities affect every state.

The larger question is whether state spending has grown faster than taxpayers can reasonably sustain.

That conversation is long overdue.