WA just released the latest revenue forecast. Here’s what the numbers mean
Tax collections in Washington are expected to drop, continuing a trend present in previous quarterly revenue forecasts this year.
Projected revenue collections through 2029 fell by some $66 million from the last forecast in September, per estimates released Nov. 18 by the state Economic and Revenue Forecast Council (ERFC).
Such shifts are mostly because of lower projections of employment and housing permits, the council revealed. Yet they were offset by a bump in forecasted state payments from the Tobacco Master Settlement Agreement.
Chief Economist Dave Reich said in a statement that slower personal income growth also contributed.
“However, stronger recent actuals and other factors mean revenues are forecast to be very slightly higher in the current biennium,” he noted.
The news comes just weeks before the start of the 2026 legislative session, which is anticipated to again be dominated by tough budget choices, including possible new taxes and spending cuts.
Projected receipts for the state’s 2025-27 budget are hovering around $74.5 billion, which climbed some $105 million from the last forecast in September. That translates to collections by the end of the current biennium being pegged at $390 million less than when Gov. Bob Ferguson signed the budget in May.
The following biennium, 2027-29, is a bit stickier. Revenue is expected to be about $79.4 billion, or some $185 million lower than September projections.
“Obviously, that’s a lot of money, but in terms of percentage terms of the overall state budget, those are relatively small percentage changes,” Reich said at the Nov. 18 council meeting.
He added that when the state closed the books on the 2023-25 biennium, “we were up about $13 million from where we thought we’d be in September.”
In September, the council found that revenue collections through 2029 had plummeted by about $903 million since June’s forecast. That was largely due to weaker taxable sales projected for construction and retail, reduced estimated real estate excise tax collections and lower state agency revenues.
In June, revenue was projected to be roughly $720 million less over a few years than what state lawmakers had assumed in the budget. In March, collections over the four-year timeframe were estimated to have declined by $845 million from the prior November’s forecast.
Reich said at Tuesday’s ERFC meeting that the U.S. economic forecast is somewhat more robust than what the council thought in September, citing lower inflation and higher output.
In Washington, overall employment has seen a 0.3% spike year-to-date through September, he said. Recent layoff announcements appear to be coming in at elevated levels, so 2026 likely won’t witness employment growth, he said, and the state is also projected to see quite-slow growth when it comes to housing permits.
K.D. Chapman-See, director of the Office of Financial Management, classified the latest forecast as a fairly minor change to expected collections, particularly amid wider-ranging economic uncertainty.
“We’re still seeing rising caseloads and higher costs to maintain services at current levels and are responding to those as we help develop Governor Ferguson’s supplemental budget proposal,” Chapman-See said in a statement.
Ferguson is working on devising his proposal for the 2026 supplemental budget, which will drop next month.
He said in a Nov. 18 statement that budget challenges continue for the state, something that this latest forecast doesn’t alter. And while the projections weren’t as gruesome as some had feared, he said they don’t change the weight of the problem his team is facing while developing his first budget.
“This budget will involve many difficult decisions,” Ferguson said, adding that it will still invest in key areas while preserving core services.
The next revenue forecast will be completed by Feb. 20. Reich said he anticipates that the council will be faced with impacts from federal tariffs, among other challenges.
State Rep. Travis Couture, House Republican budget lead, said this year’s final revenue forecast paints a not-so-rosy economic picture. In his view, Washington does not have a revenue problem: It has a spending problem.
“Last session’s $9 billion tax increase didn’t solve anything; it just hurt families, small businesses, and the people who need us the most,” the Allyn Republican said in a statement Wednesday. “Now we’re heading into 2026 with even more budget problems, and some in the majority are already eyeing new taxes, including an income tax.”
This story was originally published November 18, 2025 at 2:54 PM.
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