More budget woes for WA. Revenue forecast down $720M through 2029
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- Washington projects $720M less in tax revenue through 2029 than budgeted
- Fuel tax hike, legislation help lift transportation revenue by $6.8B
- Lawmakers brace for September forecast amid federal cuts, tariff risks
Not exactly ideal, but also not surprising. That’s how Gov. Bob Ferguson and Washington budget writers described the latest state revenue forecast.
The Washington State Economic and Revenue Forecast Council discussed the less-than-great news at a meeting the afternoon of June 24. Over the next four years, revenue is projected to be roughly $720 million less than what state lawmakers had accounted for in the final budget they passed this spring.
Ferguson noted in a June 24 statement that he doesn’t expect to call legislators back to Olympia for a special session — for now. That could all change when the next revenue forecast arrives in September, and depending on what comes at the state from Washington, D.C.
The governor has asked state agencies to identify more savings as he gets ready to draft his first supplemental budget.
It won’t be easy, he said.
“We already made many difficult decisions last session in order to bridge our $16 billion shortfall,” Ferguson said. “Washingtonians expect us as leaders to make the tough decisions to live within our means and still deliver core services.”
Meeting materials published June 24 explained that revenues “are up significantly due to legislative changes but partially offset by economic changes.”
Some Democrats cast the June 24 news as better than expected.
“Cautiously optimistic is how I would say today’s forecast went,” state Rep. April Berg, chair of the House Finance Committee, told McClatchy in a call on June 24.
State Sen. June Robinson of Everett, the Senate Democrats’ budget leader, said the forecast wasn’t as bad as she thought it might be.
“It’s not surprising, I guess,” she said. “I think we were all expecting revenue to be down for a lot of reasons, mostly things out of our control happening at the federal level.”
Tariffs announced by the administration of President Donald Trump are taking a toll. Dave Reich, the state’s chief economist, cited the uncertainty such federal moves impose on trade-dependent Washington, as well as the recent surge of conflict in the Middle East.
Much of the state’s latest revenue growth can be chalked up to people trying to avoid the tariffs, Reich said at the June 24 meeting.
“We’ve seen strong auto sales, retail in general has been quite strong, but we don’t expect that to continue,” Reich said, adding: “So it’s good for us now, but worse for us later.”
In his June 24 statement, Ferguson underscored the Trump tariffs and “continued chaos” from the federal level; he also cited the administration’s efforts to slash funding for education, Medicaid and food benefits. If those cuts stick, the state won’t be able to backfill all those billions of dollars.
Ferguson said he might need to revisit the special-session question depending on what the federal government does.
June 25 brought more forecast news — this time for the state’s transportation revenue. Collections through 2029 rose by some $6.8 billion from the forecast from March, according to estimates from the Washington State Transportation Economic and Revenue Forecast Council.
New legislation played a factor in that bump, including a 6-cent spike in the state’s fuel tax starting on July 1.
Republicans raise alarm about WA revenue
Republicans seized the opportunity to criticize their counterparts for what they view as budget mismanagement.
State Rep. Travis Couture, an Allyn Republican, argues that the real problem with the state’s beleaguered budget lies in Olympia, not the other Washington.
Although revenue is on the rise, it’s not climbing fast enough to keep pace with the state’s “spending binge,” Couture said in a statement. The way the House Republican budget leader sees it, slower real estate and sales-tax growth should have given his colleagues pause; instead they charged ahead with the biggest budget in state history with “no cushion.”
In a phone interview, Couture explained that the end-fund balance for the 2025-27 biennium is $2 million. That, he said, is next to nothing. “You might as well even consider it in the red.”
“I predicted this multiple times,” Couture said. “If we don’t fix the systemic rot in our budgeting system and have some actual reforms, we will continue to be back in this place all the time — and here we are.”
Sen. Chris Gildon of Puyallup, the Senate Republican budget leader, said in a post-forecast statement that there could be “big trouble ahead.” He said that even after new taxes take effect — Democrats passed more than $12 billion in state and local tax increases over four years — a $331 million shortfall is projected for the 2027-29 budget cycle.
Washington will close out the next fiscal cycle with about $2 billion in its “rainy day” emergency fund, however. Berg said although the ending-fund balance is being drawn down, it’s also partly why the state saves for rainy days.
She noted that Washington is the only state in the union that must come up with a four-year budget outlook. Trying to budget that far in advance means looking 16 quarterly revenue forecasts out from the starting point.
“There’s a reason why we’re kind of an outlier,” Berg said. “No other states joined us in that mission to look at four years out.”
The 2025-27 biennium starts July 1. The next revenue forecast is slated for Sept. 23.
This story was originally published June 26, 2025 at 5:00 AM.
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