Blog

September revenue forecast is down, putting the current biennium in the red

Revenues for funds subject to the outlook (NGFO) are now expected to be $903 million lower over the outlook period than was forecasted in June. Compared to the June revenue forecast, the estimate for 2023–25 (which ended June 30) decreased by $13 million, to $67.124 billion. The forecast for 2025–27 decreased by $412 million, to […]

State liability account shortfall could grow to more than $1.3 billion by end of 2025–27

One reason the enacted 2025–27 operating budget is not sustainable is that legislators ignored the shortfall in the state liability account, even though they knew that it faced a substantial deficit at the end of June 2025. As I wrote in July, net income to the account had been negative since FY 2015, despite a […]

Tariffs and uncertainty

Last week the Office of Financial Management (OFM) released a report on the impact of tariffs on Washington state. The report provides estimates of how federal tariff policy could affect prices, jobs, state revenues, and economic growth. Meanwhile, the preliminary September economic forecast from the Economic and Revenue Forecast Council (ERFC) cites the tariffs and […]

Credit rating agencies reaffirm Washington’s ratings, while noting some good and bad budget choices

Last month, the three credit rating agencies reaffirmed Washington’s Aaa (Moody’s) and AA+ (S&P and Fitch) ratings. According to the Office of the State Treasurer, “With these ratings, Washington now exceeds the credit rating of the federal government for the first time in history.” Washington’s credit ratings impact the state budget because states with stronger […]

The new tax increases were not needed to maintain existing services

As I’ve written, the historically large tax increases that were enacted this year will effectively fund the new spending in the operating budget. The tax increases were not needed to maintain existing services. The chart below shows how the Legislature addressed the spending problem this year. First, the Legislature found $6.983 billion in savings from […]

A wealth tax would not have prevented the budget cuts this year, as earlier budget proposals illustrate

The operating budgets enacted this year include $7 billion in savings to funds subject to the outlook over the five-year outlook period. (The outlook period includes revised appropriations for the final year of 2023–25, biennial appropriations for 2025–27, and the estimated cost of continuing those appropriations into 2027–29.) The savings are more than offset by […]

Washington’s state and local taxes and spending per capita ranked 14th and 15th highest among the states in 2023

Last week, the U.S. Census Bureau released state and local fiscal data for fiscal year 2023. This data allows us to compare taxes and spending in Washington to other states. The two main ways to make these comparisons are to measure taxes and spending on a per capita basis and as a share of personal […]

New brief: With New Revenue Package, the Transportation Budget Balances Through 2027–29

To address transportation budget revenue and cost challenges, the Legislature increased transportation taxes and fees. New revenues include the first gas tax increase since 2015 and increases to the retail sales and use taxes owed on several transportation-related transactions. Additionally, beginning in 2027–29, 0.1% of state sales and use tax collections is dedicated to the […]

The impact of federal Medicaid changes on the state budget is uncertain

Recent federal legislation made changes to Medicaid, which has led to concerns about the impacts to insured populations and the state budget. Medicaid is an optional program that is funded by the state and the federal government. Some populations and benefits are mandatory, and states may add other populations and benefits with federal approval. For […]

New report: Historically Large Tax Package Rushed Through at the End of Session

The 2025–27 operating budget relies on a tax package that is estimated to increase revenues to funds subject to the outlook (NGFO) by $9.0 billion over four years. It includes business and occupation (B&O) tax increases (ESHB 2081 and ESSB 5794), the expansion of the sales tax to more services (ESSB 5814), capital gains and […]