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Average annual wage is up 4.9%, triggering increases to various state benefits and the UI taxable wage base

According to the Employment Security Department (ESD), the state average annual wage was $99,810 in 2025. That’s an increase of 4.9% over 2024. ESD reports that earnings increased by 4.7%, but covered employment declined by 0.2%. The state average annual wage is used to calculate state unemployment insurance (UI) taxes and benefits, paid family and […]

OFM: “There will be significant budget shortfalls next biennium”

On Friday, the Office of Financial Management (OFM) sent budget instructions for 2027–29 to agencies. In the instructions, OFM director K.D. Chapman-See writes, “To be direct, there will be significant budget shortfalls next biennium in both operating and transportation budgets. I want to be clear that we do not yet know precisely how significant the […]

Could the general fund–state end FY 2026 in the red?

According to a monthly report released last week by the Office of the State Treasurer, the ending balance in the general fund–state (GFS) was -$3.419 billion at the end of March. Although ebbs and flows in the ending balance over the course of a year are normal, this is an unusually large shortfall. Typically, GFS […]

State spending has increased substantially

Andrew Villeneuve of the Northwest Progressive Institute argues that Washington’s budget “has been shrinking.” His analysis is premised on the opinion that state government should grow as fast as the economy. Additionally, the subtitle to Villeneuve’s post claims, “In relative terms — the only terms worth using for comparisons — the state budget has gotten […]

Who pays the advanced computing surcharge?

The workforce education investment account (WEIA), created in 2019 and overhauled in 2020, is a fund subject to the outlook. Revenues may be used for “higher education programs, higher education operations, higher education compensation, state-funded student aid programs, and workforce development including career connected learning.” Certain business and occupation (B&O) tax dollars fund the WEIA. […]

The budget problem and the income tax

In the Seattle Times today, Paul Roberts writes about the downward revisions to Washington’s credit outlook. The credit rating agencies cited the recent trend of spending outpacing revenues and the use of reserves to balance the budget. According to the Times, Democratic state lawmakers, who control the state budget process, say they’re more than aware […]

New brief: State and Local Spending on Housing and Homelessness Has Increased Significantly

Federal pandemic relief significantly boosted state spending on housing programs; as the federal funding has been drawn down, the state has added more funding from state sources. Similarly, even as overall spending by local governments has increased in recent years, the share dedicated to housing and homelessness services has increased. From 2014 to 2024 (adjusted […]

The income tax won’t save the day for budget writers

Washington’s budget problem took root in 2023–25, when legislators appropriated substantially more than they expected to collect in revenues. Legislators have widened the gap between spending and revenues since then (despite substantial tax increases in 2025 and 2026). Will the new income tax fix the problem on its own? Officially, the 2026 supplemental balances over […]

Moody’s and Fitch revise Washington’s credit outlook down from stable to negative

As the Seattle Times reported on Wednesday, Moody’s has changed its estimation of Washington’s credit outlook from stable to negative. Now, Fitch has followed suit. (S&P did not change its outlook this month, but in October, S&P moved Washington’s outlook down from positive to stable.) None of the three ratings agencies have reduced Washington’s credit […]

Officially, the 2026 supplemental budget balances in 2025–27; excluding unusual accounting assumptions, it does not

Yesterday the Economic and Revenue Forecast Council (ERFC) approved the official outlook based on the 2026 supplemental operating budget. Officially, the budget left an unrestricted ending balance in funds subject to the outlook (NGFO) of $277 million in 2025–27 and $653 million in 2027–29. These are larger ending balances than assumed in the estimated conference […]