Proposed 2021-23 Budget and Policy Highlights

1 Proposed 2021-23 . Budget & Policy Highlights Office of Governor Jay Inslee December 2020. Table of Contents Overview: Beyond the pandemic 1. Economic and revenue outlook 8. Governor's Proposed 2021 23 Biennial Budget 10. Governor's Proposed 2021-23 Budget Balance Sheet 11. Preventing homelessness from growing worse during COVID-19 14. pandemic Budget offers support for child care providers struggling during pandemic 19. Human Services - Operating 21. Human Services - Capital 31. Education - Operating 33. Education - Capital 37. Natural Resources - Operating 41. Natural Resources - Capital 45.

2 General Government - Operating 49. General Government - Capital 52. Transportation 55. Replacing the state's outdated and at-risk core business systems 58. Employee compensation 61. Revenue 62. Results Washington 65. Beyond the pandemic Building a stronger Washington for working families and businesses The worst global pandemic in more than a century has had devastating and often disproportionate consequences for households, businesses and communities across our state. Gov. Jay Inslee's 2021 . 23 operating, capital and transportation budgets will emphasize equity in many forms as we work to defeat COVID-19, rebuild the state's economy and protect vital services.

3 When the COVID-19 virus reached Washington, state leaders and public health officials moved aggressively to slow its spread. Meanwhile, medical professionals and caregivers worked tirelessly to treat those infected by the deadly and highly contagious virus. Those actions and the many sacrifices everyone made over the past nine months undoubtedly saved many lives. Still, as of this month, more than 200,000 Washingtonians have been infected and more than 3,000 have died. Beyond the illness itself, the pandemic has inflicted pain and hardship in virtually every area of our lives. Proposed 2021-23 Budget & Policy Highlights 1.

4 Overview Job Job losses losses and and duration duration ofof post-WWII. post-WW2 recessions recessions in Washington in Washington 2% 1960 1953 1957 1981 1969 2000 2008. 1%. Percent job changes relative to peak employment month 0%. -1%. -2%. -3%. -4%. -5%. -6%. 2020. -7%. -8%. -9%. -10%. -11%. -12%. 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69. Number of months after peak employment Source: Washington Employment Security Dept. and Economic and Revenue Forecast Council Source: Washington Employment Security Dept. and Economic and Revenue Forecast Council In the first months of the pandemic, hundreds the state's economic forecasters warned us of of thousands of Washingtonians lost their jobs.

5 Significant fiscal uncertainty for the foreseeable Almost no business was left unscathed. Schools future. were closed, forcing teachers and parents to immediately shift to virtual education. The need Early efforts to control virus, provide for food and rent assistance skyrocketed as relief, minimize Budget crisis families struggled to make ends meet. Last March, soon after coronavirus cases began The pandemic's blow to the economy also spiking across the state, Inslee announced wreaked havoc on the state Budget . Almost his Stay Home, Stay Healthy order. This overnight, the state went from a near-record required Washingtonians to stay home except Budget surplus to a projected multibillion-dollar for essential activities, and it banned large shortfall.

6 The situation gradually improved gatherings and closed nonessential businesses. throughout the summer and early fall. But as of November, the state had about 217,000 fewer Over the course of the spring and summer, the jobs than in February, revenue projections governor issued numerous orders and related for the next three years remained more than guidance aimed at stopping the virus. From $ billion below pre-pandemic levels, and the start, Inslee took steps to make sure people 2 Proposed 2021-23 Budget & Policy Highlights Overview would have a place to live and food on their The governor will urge the Legislature table, such as placing a moratorium on evicting in January to quickly pass legislation renters and joining nonprofit organizations approving an additional $100 million in grants to raise money for food banks.

7 His office to assist struggling businesses and an additional worked with the Legislature to distribute more $100 million in rental assistance to help both than $ billion in federal funds to cover tenants and landlords. the fast-rising cost of response efforts and Still, the state will have a lot of work to do with provide assistance for households, workers and its response and recovery efforts, which guided businesses hardest hit by the pandemic. Inslee as he prepared his 2021 23 operating, The Inslee administration also worked from the capital and transportation budgets. The start to confront the state's pandemic-related governor's budgets will enable the state to: Budget crisis.

8 Acting decisively after the 2020. y Continue its aggressive response to legislative session, the governor used his veto the ongoing pandemic and build more pen to make Budget cuts that will save the state capacity for tackling future public health more than $440 million over three years. He crises. directed state agencies under his authority to cancel a scheduled 3% wage increase for many y Rebuild the state's economy and continue government employees and begin furloughs efforts to support households, students, for most state employees. He also placed a workers and businesses impacted by the freeze on hiring, personal service contracts and pandemic.

9 Equipment purchases (with limited exemptions). y Protect previous investments in areas The furloughs, canceled pay raises and freezes such as education, child care and early will save tens of millions of dollars in the learning, climate action, behavioral health current two-year Budget . Meanwhile, state reform, homelessness and access to employees stepped up by agreeing to new health care. collective bargaining agreements for the next two-year Budget that provide no general y Address racial and economic inequity. wage increases and call for monthly one-day furloughs for most workers.

10 Governor puts forward plans to boost response and recovery efforts The large infusion of federal coronavirus relief and other stimulus money proved vital in helping Washington mount a strong response to the pandemic and weather the initial economic storm. But some of those funds have run out and it's unclear whether the federal government will come through with more support for state and local governments. Proposed 2021-23 Budget & Policy Highlights 3. Overview The governor is putting forward a broad range opportunities to help get children back on of Budget and Policy proposals to help the track.