The Constitutional Provision as it Presently Exists

Article VII, section 12 of the Washington Constitution requires a budget stabilization account to be maintained in the state treasury. By the end of each fiscal year (June 30 of each year), the legislature must transfer to the budget stabilization account an amount equal to one percent of the general state revenues for that fiscal year. The legislature may approve the transfer of additional amounts. "General state revenues" means all state revenues that are not derived from a state undertaking or dedicated to a particular purpose, as set forth in article VIII, section 1 of the Washington Constitution.

Article VII, section 12 also authorizes the legislature to withdraw money from the budget stabilization account. The legislature may do so by majority vote in two situations: (1) during a fiscal year in which the governor declares a state of emergency in response to a catastrophic event that requires government action to protect life or public safety; or (2) in a fiscal year for which the forecasted state employment growth is estimated to be less than one percent. In addition, at any time the balance in the budget stabilization account exceeds ten percent of estimated general state revenues for that fiscal year, the legislature by majority vote may transfer the amount in excess of ten percent to the education construction fund. Otherwise, a three-fifths vote of the legislature is required to withdraw or transfer money from the budget stabilization account. All relevant estimates of employment and revenue are made by the state economic and revenue forecast council.

The Effect of the Proposed Amendment, if Approved

The proposed amendment to article VII, section 12 would require additional revenue to be transferred to the budget stabilization account in any fiscal biennium in which there has been "extraordinary revenue growth," with certain limitations. "Extraordinary revenue growth" is defined by reference to a baseline consisting of the average biennial percentage growth in general state revenues over the preceding five biennia. Any growth in general state revenue that is more than one-third greater than the baseline is defined as "extraordinary revenue growth." In determining whether "extraordinary revenue growth" has occurred, historical general state revenues must be adjusted to reflect statutory changes to revenue dedication.

The legislature would be required to transfer three-fourths of that "extraordinary revenue growth" to the budget stabilization account, subject to two limitations. First, no transfer of "extraordinary revenue growth" is required where annual average state employment growth during the preceding fiscal biennium averaged less than one percent per fiscal year. Second, no transfer of "extraordinary revenue growth" is required unless the transfer would exceed the amount already transferred to the budget stabilization account during the fiscal biennium, under present law. The deadline for transferring the additional revenue would be the end of each fiscal biennium (June 30 in odd-numbered years).

No change would be made to the legislature's authority to withdraw money from the budget stabilization account.