This bill amends RCW 43.135.025 and adds a new section to chapter 43.135 RCW to clarify and adjust how the state expenditure limit is set and enforced. It reiterates that during any fiscal year the state may not expend from the state general fund and specified related funds more than the state expenditure limit, and it prohibits the state treasurer from issuing or redeeming any check, warrant, or voucher that would cause expenditures to exceed that limit (violations are tied to RCW 43.88.290 and possible penalties in RCW 43.88.300). The state expenditure limit for any fiscal year is the prior fiscal year’s limit increased by the fiscal growth factor, where the fiscal growth factor is the three-year average of inflation (Seattle CPI) plus state population change. For computing the limit for the fiscal year beginning July 1, 2026, the bill defines the “previous fiscal year’s state expenditure limit” as total state expenditures from the state general fund and related funds (excluding federal funds) for the fiscal year beginning July 1, 2025, plus the fiscal growth factor. The bill also lists the related funds covered and names data sources and agencies involved. The bill creates or specifies procedures for a state expenditure limit committee to determine and adjust the limit, requires at least four affirmative votes for committee action, and requires an annual adjustment each November for the prior fiscal year with a two-year projection; if the committee has not acted by November 30 the state treasurer must make the adjustment or projection. The new section requires the committee to lower the state expenditure limit to reflect any shift, on or after January 1, 2025, of a program or function’s costs from the state general fund or related funds to another funding source, or any transfer of moneys from those funds to another fund or account. The bill defines a transfer to include legislative actions taken after July 1, 2025 that reduce revenues depositing into the state general fund or related funds while increasing revenues from the same source to another state or local government account. The text provided does not show the deleted definition of “general fund,” does not provide the specific calculation method or amount for how the limit must be lowered, does not include the full chapter 43.135 RCW, and does not include the text of RCW 43.88.290 or the penalty details in RCW 43.88.300.

If enacted, the measure will make it harder for the Legislature or agencies to increase overall state spending by simply moving program costs or revenue sources off the state general fund or the four named related accounts after the specified dates; when such a shift happens on or after Jan. 1, 2025 (and certain legislative revenue moves after July 1, 2025), the official state spending cap must be lowered to reflect that change, and the state treasurer is barred from issuing payments that would exceed the adjusted cap. That will likely reduce the budget “headroom” available for new or expanded programs because transfers that reassign costs or revenues to other funds can no longer be used to raise effective spending without reducing the cap, and the treasurer and the state expenditure limit committee take on new enforcement and adjustment duties with a required annual recalculation each November (or the treasurer steps in if the committee misses its deadline). The people most affected are the Legislature and state program managers who currently rely on fund transfers or revenue shifts to finance programs, because their funding choices will more directly lower the state’s allowed expenditure limit and thus constrain spending options; the state treasurer and Director of Financial Management bear more procedural responsibility and potential penalties for violations. Important implementation details are missing from the provided text — notably how exactly the limit must be reduced to “reflect the shift,” and the current definition of “general fund” — so the precise fiscal impact and how agencies must calculate adjustments are unclear.