OLYMPIA, Wash – Washington’s budget forecast took a turn for the worse, with the latest budget forecast predicting a significant drop in revenue over the next four years.
That’s the headline from the revenue forecast, released Tuesday.
The report is put together by the Washington State Economic and Revenue Forecast Council.
The change is a big drop in projected revenue from what the legislature assumed in its budget.
“While the Legislature took steps to close the state’s budget shortfall, it’s clear that we face ongoing uncertainty in the economy and federal funding,” said K.D. Chapman-See, director of the Office of Financial Management. “That’s why, in our instructions to agencies for the supplemental budget, we’ve asked them to continue to look for efficiencies, savings or reductions in non-essential services and programs.”
In its report, linked here, the council discusses weaker than expected job growth in Washington. Experts also expect the unemployment rate in the state to grow to 4.9% in the next two years before declining again in 2029.
The most recent revenue forecast in March had that unemployment rate slightly lower at 4.7%.
The report says, “there is a significant amount of uncertainty in the forecast due to trade and federal/fiscal policy and the Middle East conflict.”
People are spending less and making fewer big purchases like homes and vehicles, which is a hit to the state coffers.
Analysts also say that while inflation has slowed, tariffs will increase prices in the near-term, which could drive inflation back up and would have an impact on state revenue.
“While this revenue forecast is disappointing, it is not surprising,” Governor Bob Ferguson said in a news release Tuesday. “We knew that things were unlikely to improve in the near term, especially in light of continued chaos from the Trump Administration — including tariffs, which have an outsized negative impact on a trade-dependent state like Washington. It is particularly discouraging given the current efforts by the Trump Administration to make draconian cuts to Medicaid, education and food benefits. If those move forward, it will mean billions of dollars in cuts impacting our most vulnerable residents. The forecast makes it abundantly clear that we as a state cannot replace all of those dollars.”
Gov Ferguson says he does not anticipate calling lawmakers back for a special session, but he said that developments from the federal government “could force me to revisit that question.”
The next revenue forecast is due in September.
Ferguson said the Office of Financial Management is already telling agencies to look for additional savings.
“This will not be easy,” Gov Ferguson said. “We already made many difficult decisions last session in order to bridge our $16 billion shortfall. Washingtonians expect us as leaders to make the tough decisions to live within our means and still deliver core services.”
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