HB 2448
In CommitteeHouse
State expenditure limit
Reinstating a state expenditure limit to promote sustainable budgets and create permanent tax relief for all Washingtonians.
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 permanent cap on state general fund and related fund spending, starting in fiscal year 2027, based on prior-year spending adjusted for inflation and population growth. It requires excess revenues to be deposited into a dedicated tax relief account and prohibits spending above the limit unless overridden by a supermajority for a declared emergency.
- Establishes a state expenditure limit starting in fiscal year 2027, based on prior-year spending adjusted for inflation and population growth (the 'fiscal growth factor').
- Requires the state treasurer to prevent any general fund or related fund expenditures that exceed the limit, with violations treated as breaches of existing budget laws.
- Mandates annual adjustments to the expenditure limit by the Economic and Revenue Forecast Council, including projections for the next four fiscal years.
- Creates a new 'tax relief account' that receives excess revenues above the cap each year, which the legislature may use only for broad-based tax reductions.
- Allows the expenditure limit to be exceeded only during a declared emergency (limited to natural disasters) with a two-thirds legislative supermajority and governor’s signature, for up to 24 months.
- Requires the expenditure limit to be reduced if program costs are shifted out of the general fund (e.g., to local governments or other funds), and increased if costs are shifted into it.
Who is affected
- State agencies — State agencies must operate within the new expenditure cap and adjust budget requests accordingly; may face constraints on program growth or new spending unless exempted.
- State treasurer and state treasury staff — The state treasurer must ensure no checks or payments cause general fund spending to exceed the limit, and may be held legally liable for violations.
- Economic and Revenue Forecast Council — The Economic and Revenue Forecast Council gains new responsibility to calculate and adjust the expenditure limit annually and project future limits, requiring close coordination with revenue and population data.
- Washington residents and businesses — Washington residents may benefit from tax refunds or reductions if state revenues exceed the cap, as excess funds are directed to a dedicated tax relief account.
- Governor and state legislators — The governor and legislature must propose budgets that comply with the cap, and any emergency spending overrides require a two-thirds legislative supermajority.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Excess revenues above the cap are directed to a dedicated 'tax relief account' for broad-based tax reductions. While the account is constitutionally dedicated to tax cuts, the bill’s structure ensures that recurring revenue surpluses — not one-time windfalls — fund relief, potentially delivering recurring refunds or rate reductions to Washingtonians. Given Washington’s regressive tax structure, even modest broad-based tax relief (e.g., property tax credits, sales tax reductions) disproportionately benefits low- and middle-income households who spend a larger share of income on taxed goods and services.
FinancialPeopleRef: Sec. 8(1)The bill establishes a permanent, formula-based cap on general fund and related fund spending starting FY 2027, tied to inflation + population growth. This creates long-term budget predictability and may reduce cyclical budget shortfalls during downturns by constraining spending growth during booms. While not eliminating deficits, the cap may improve fiscal discipline and reduce the need for reactive spending cuts or one-time spending, benefiting households that rely on stable public services.
FinancialPeopleRef: Sec. 1(1), Sec. 1(3)The tax relief account can only be used for 'broadly based' tax reductions, which — by statutory intent and historical precedent — would likely include measures like expanding the Working Family Tax Credit, reducing property tax levies, or lowering the state sales tax rate. Such measures directly reduce cost-of-living burdens for working families and retirees on fixed incomes, especially in high-cost areas like Seattle-Tacoma. The requirement for 'broadly based' relief excludes targeted corporate subsidies or high-income tax cuts, aligning the benefit with everyday Washingtonians.
FinancialPeopleRef: Sec. 8(2)The bill requires the expenditure limit to be reduced when state program costs are shifted to local governments (e.g., via legislative action that moves funding from general fund to local accounts). This creates a disincentive for the legislature to pass unfunded mandates on cities and counties, potentially improving intergovernmental equity and reducing local property tax pressure — though the magnitude depends on how strictly the council enforces cost-shifting adjustments.
Local GovernmentRef: Sec. 2(1), Sec. 2(2)The bill allows the expenditure limit to be exceeded during a declared natural disaster emergency with a two-thirds legislative supermajority and governor’s signature, providing a legal pathway for emergency response without bypassing fiscal safeguards entirely. This balances fiscal discipline with flexibility for genuine emergencies, though the 24-month limit and narrow definition (natural disasters only) may constrain responses to non-natural crises (e.g., cyberattacks, public health emergencies).
Public SafetyRef: Sec. 3
Potential Concerns (5)
The bill requires the expenditure limit to be adjusted downward when state program costs are shifted to local governments (e.g., via unfunded mandates), potentially increasing fiscal pressure on counties, cities, and school districts that lack broad tax authority. While the bill explicitly accounts for such shifts (Sec. 2), the net effect is to constrain state flexibility in managing intergovernmental cost allocations, which could lead to underfunded local services if cost-shifting occurs without corresponding revenue adjustments.
Local GovernmentRef: Sec. 1(3), Sec. 4(a)The bill imposes legal liability on the state treasurer for violations of the expenditure cap (Sec. 1(2)), and explicitly prohibits exceeding the cap except in narrowly defined natural disaster emergencies (Sec. 3). This creates operational risk if unforeseen emergencies (e.g., pandemic, cyberattack, wildfire) occur outside the narrow statutory definition — potentially delaying or limiting state response capacity. While the emergency override exists, its 24-month cap and narrow scope (natural disasters only) may not accommodate evolving crises.
Public SafetyRef: Sec. 1(2), Sec. 5The bill allows the expenditure limit to be adjusted upward or downward when federal or local program costs are transferred to the state, but does not specify how such transfers are verified or enforced. This introduces administrative complexity and potential disputes over cost attribution, especially for programs with shared federal-state-local responsibilities (e.g., behavioral health, emergency management), increasing compliance burden on the Economic and Revenue Forecast Council and state agencies.
Public SafetyRef: Sec. 2(4)The bill’s fiscal growth factor — defined as the sum of inflation and population change — is likely to understate actual cost growth for many state services (e.g., healthcare, education, corrections), where per-capita costs rise faster than population. This structural underadjustment may lead to chronic underfunding of core services over time, forcing agencies to cut programs or delay maintenance, especially in high-demand areas like mental health and developmental disabilities.
FinancialRef: Sec. 1(4), Sec. 4(a)The bill’s enforcement mechanism — making expenditure limit violations a breach of RCW 43.88.290 and subjecting the state treasurer to penalties — creates legal uncertainty for agencies attempting to comply with both statutory mandates (e.g., court-ordered service levels) and the cap. This may lead to defensive budgeting, where agencies delay or scale back legally required services to avoid potential liability, disproportionately affecting vulnerable populations relying on state programs.
Local GovernmentRef: Sec. 1(2), Sec. 5
Who Is Most Affected
State agencies (e.g., DSHS, ESD, DOC) face constrained budget growth tied to inflation + population, which may lag actual service cost increases — especially in healthcare, corrections, and behavioral health. This could lead to staffing shortages, program cuts, or delayed infrastructure maintenance, reducing service quality for vulnerable populations.
The state treasurer gains new legal responsibility to prevent overspending, with potential liability for violations. While this strengthens fiscal accountability, it also increases operational risk: if agencies exceed their allotments, the treasurer must block payments, potentially disrupting critical services (e.g., Medicaid payments, school funding).
The Economic and Revenue Forecast Council gains significant new authority to calculate and adjust the expenditure limit annually, including four-year projections. This enhances fiscal transparency but also increases political pressure, as the council’s decisions directly constrain legislative and executive budget authority. The council’s technical independence may improve forecasting accuracy but reduce policy flexibility.
Most Washington residents benefit from the tax relief account’s requirement for broadly based tax reductions — likely including property tax credits, sales tax reductions, or expanded EITC — which disproportionately help low- and middle-income households. However, if chronic underfunding leads to degraded public services (e.g., roads, schools, mental health), quality-of-life declines may offset tax savings.
The governor and legislature must propose budgets within the cap, with emergency overrides requiring a two-thirds supermajority. This reduces discretionary budget authority but increases bipartisan negotiation needs. Over time, it may encourage more fiscally conservative policies, potentially limiting investments in long-term priorities like climate resilience or housing.