HB 2055
In CommitteeHouse
State revenue limit
Establishing a state revenue limit and directing excess revenues be deposited in the budget stabilization account.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill establishes a legal cap on how much revenue the state can collect and spend each year, based on inflation and population growth, and requires excess revenues to go into a rainy-day fund. It also adjusts the cap downward if state programs shift funding to other accounts.
- Establishes a state revenue limit that grows each year based on the fiscal growth factor, defined as the average of inflation and population change over the prior three fiscal years.
- Creates a state revenue limit committee (with 6 members from key legislative and financial leadership roles) to annually adjust the cap based on actual revenues and project limits for the next two years.
- Requires excess revenues—those above the revenue limit—to be transferred to the budget stabilization account by June 30 of each fiscal year.
- Mandates that if state programs or funding are shifted out of the state general fund (e.g., to local governments or other accounts), the revenue limit must be lowered to reflect that change.
- Sets a formula for calculating the revenue limit for fiscal year 2026 using 2025 actual revenues (excluding federal funds) plus the fiscal growth factor.
Who is affected
- State government (including legislature, governor, and state agencies) — State government operations and budget planning will be constrained by a new legal cap on how much revenue the state can collect and spend each year, requiring adjustments when programs shift funding sources.
- Local governments (counties, cities, school districts, etc.) — Local governments may see changes in funding if state programs shift costs to them or if revenue transfers reduce what would otherwise go to local governments.
- Washington residents — Residents may benefit from a larger rainy-day fund if revenues exceed the cap, but could face limits on state spending growth over time.
- State financial officers (e.g., State Treasurer, Department of Financial Management) — The state treasurer and financial management staff will have new responsibilities to calculate and transfer funds based on the new revenue cap rules.
Pro/Con Analysis
Stronger case for concerns
Potential Benefits (3)
Excess revenues above the cap are directed into the Budget Stabilization Account (rainy-day fund), increasing fiscal resilience during downturns—benefiting all residents by reducing the likelihood of severe service cuts during recessions.
FinancialLean peopleRef: Sec. 3(3)By anchoring revenue growth to inflation and population, the bill may reduce volatile budget swings, providing more predictable state fiscal conditions that could support long-term business planning and investment climate—though evidence for direct employment effects is limited.
Business & EmploymentLean peopleRef: Sec. 1(5)(a)The State Revenue Limit Committee includes legislative and financial leadership, adding transparency and procedural rigor to budget forecasting—potentially improving coordination between state and local budget planning.
Local GovernmentRef: Sec. 1(4), Sec. 1(3)
Potential Concerns (5)
The bill caps state revenue growth to inflation + population change, which historically has lagged behind the real cost of delivering public safety services (e.g., corrections, emergency response, crime prevention), potentially leading to underfunding of critical law enforcement and crisis response capabilities over time.
Public SafetyRef: Sec. 1(2), (5)(a)The requirement to lower the revenue limit when state programs shift costs to local governments (e.g., shifting education or health program funding to counties or school districts) may strain local budgets without corresponding revenue authority, forcing cuts to local services or increased local taxes.
Local GovernmentRef: Sec. 1(5)(a), Sec. 2By tying revenue growth to inflation + population change—both historically below the actual cost drivers in K–12 and higher education—the bill may constrain per-pupil funding growth, disproportionately affecting high-need districts that rely heavily on state funding to meet equity mandates.
EducationPeopleRef: Sec. 1(5)(a), Sec. 1(2)Medicaid (Apple Health) and other health programs may face funding pressure as the cap does not account for health cost inflation or demographic shifts (e.g., aging population), potentially reducing provider reimbursement rates or eligibility expansion capacity.
HealthcareLean peopleRef: Sec. 1(5)(a), Sec. 1(2)State housing assistance programs—including rental assistance, homelessness prevention, and affordable housing construction—may be constrained if their cost growth exceeds the fiscal growth factor, limiting the state’s ability to respond to housing crises.
HousingRef: Sec. 1(5)(a), Sec. 1(2)
Who Is Most Affected
State government faces constrained budget flexibility, especially in high-growth areas like health care and education. While it gains predictability, it may be forced to make difficult trade-offs between statutory obligations and fiscal limits.
Local governments may absorb cost shifts from the state without corresponding revenue authority, increasing pressure on property taxes or local service delivery. However, more stable state budgets may reduce sudden funding disruptions.
Residents benefit from a larger rainy-day fund during economic downturns, but may face declining quality or availability of public services over time—especially in education, health care, and housing—if cost growth outpaces the cap.
State financial officers gain new procedural responsibilities but also gain clarity in revenue forecasting and transfer mechanics. The bill does not significantly change their operational workload beyond initial implementation.
Low- and middle-income households are most vulnerable to service reductions in education, health care, and housing—areas where cost growth exceeds inflation + population. High-income households may be less affected due to greater access to private alternatives.