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Abstract: 

Washington State is often called two states in one. Western Washington is a high-tech economy with deep blue progressive politics. Central and eastern Washington are home to many agriculture and manufacturing hubs, and their politics trend traditional pro-business conservative. COVID-19 hit the state’s sales-tax-centric revenue portfolio especially hard. In spring 2020, the state revenue forecasters projected a 15% to 20% general fund deficit over the next two biennial budgets. Washington State’s fiscal response was filtered through its political divide, and the result was gridlock that produced a “wait and see” strategy. The governor enacted a nominal spending and hiring freeze, but at the moment, the state has no clear strategy to address that shortfall. It could afford to pursue that strategy because it entered the crisis with a booming economy, strong reserves, and a AAA credit rating.

Keywords: Washington State, COVID-19, rainy day fund, state budget, cutback management

Affiliations:  1: University of Washington; 2: University of Chicago.