This bill creates a new state expenditure limit that takes effect for the fiscal year beginning July 1, 2026, and prohibits the state treasurer from issuing or redeeming any check, warrant, or voucher that would cause general fund or related funds expenditures in a fiscal year to exceed that limit. A violation is treated as a violation of RCW 43.88.290 and exposes the treasurer to the penalties in RCW 43.88.300. The bill adds new sections to chapter 43.135 RCW and chapter 82.33 RCW and amends RCW 84.55.010. The state expenditure limit for a fiscal year is set equal to the previous fiscal year’s state expenditure limit increased by a percentage equal to the annual spending growth cap. The bill defines “annual median wage” and defines “annual spending growth cap” as the average of the sum of annual median wage growth for each of the prior ten fiscal years. The Economic and Revenue Forecast Council must calculate the annual spending growth cap by December 1, 2025 and each December 1 thereafter for each fiscal year of the current biennium and the ensuing biennium. For the 2026 limit, the previous fiscal year’s limit is defined using total state expenditures from the state general fund and related funds for the fiscal year beginning July 1, 2025, plus the annual spending growth cap. The bill requires the legislature to lower the state expenditure limit when costs are shifted from the general fund or related funds to another funding source or when moneys are transferred out of those funds (with specified exceptions), and requires the state budget outlook work group to increase the limit if costs and ongoing revenue are shifted into the general fund on or after January 1, 2026 unless that revenue had previously been shifted out. The Economic and Revenue Forecast Council must also calculate estimated revenues deposited in the general fund and related funds that exceeded the limit for the prior fiscal year by December 1, 2027 and annually thereafter, and an unspecified “department” must, by December 31, 2027 and annually thereafter, reduce the property tax rate under RCW 84.52.065 for the next calendar year by that calculated excess. The text supplied does not identify which department must make that property tax rate reduction, and several implementation mechanics (for example how “plus the annual spending growth cap” is applied and the detailed method for reducing the property tax rate or applying levy limit adjustments) are not specified in the extracted material.

If enacted, the state would impose a firm annual limit on growth in general fund and related fund spending beginning with the fiscal year that starts July 1, 2026, with the cap set each year by a formula tied to recent wage growth. The treasurer would be blocked from issuing payments that would exceed that limit, exposing the treasurer to penalties if payments are made anyway, and the legislature would face a stronger incentive to cut programs, shift costs to other funds, or raise new revenue to stay within the cap. The Economic and Revenue Forecast Council and the employment security department would take on new calculation duties, and if the state collects more general fund revenue than the cap allows, the law requires that the state reduce the applicable state property tax rate for the next year by the amount of the excess, which could lower property tax bills or reduce future local funding capacity. Those most affected are the state treasurer (who loses flexibility to pay claims and faces legal risk), the legislature and agencies that rely on the general fund (whose funding growth will be constrained and who may need to find alternative funding or cut services), and property taxpayers and local taxing districts (because excess state revenue would trigger a state property tax rate reduction). Important implementation details are unclear from these excerpts—specifically which agency must implement the property tax reduction and exactly how the cap and tax cut amounts are calculated and applied—so the precise impacts on particular programs and local budgets could vary.