Washington’s already strained budget took another hit in the most recent state revenue forecast, released Tuesday.
Over the next four years, the state’s tax collections are expected to be $721 million less than forecast in March. That loss means more cuts are likely for Washington’s state agencies.
Lawmakers are starting the next two-year budget cycle, which begins next week, with about $400 million more than they expected in March. But by June 2027, collections are projected to be about $490 million less than what was expected in March and could fall another $638 million through June 2029.
Dave Reich, executive director of the Economic and Revenue Forecast Council, said slowdowns in employment and personal income growth, along with reduced residential construction, are expected to lead to fewer sales and business tax collections in the next four years.
Impacts from proposed federal funding cuts, tariffs and the conflict in the Middle East are adding to the uncertainty in Washington’s financial future, Reich said.
“While this revenue forecast is disappointing, it is not surprising,” Gov. Bob Ferguson said in a statement. “We knew that things were unlikely to improve in the near term, especially in light of continued chaos from the Trump Administration.”
The dip in revenue follows a legislative session that was fraught with budget woes. Lawmakers faced an estimated $15 billion hole in the state budget over the next four years. They filled that with about $9 billion in new taxes on wealthy residents and businesses and about $6 billion in cuts to government services.
Lawmakers will likely have another tough session of budgeting ahead of them.
Two more quarterly revenue forecasts will be released before the next planned legislative session in January. As of Tuesday, Ferguson said he does not anticipate the need to call lawmakers back into a special session before January, but that could change depending on the next state revenue forecast in September and any impacts from federal funding cuts.
Ferguson has already indicated that more cuts will likely be necessary next legislative session, and he encouraged state agencies to look for ways to limit their spending even more.
