Blog

State liability account problems escalating quickly

As I’ve written, the operating budget did not include a backfill for the state liability account, even though the Legislature knew that the account could end the 2023–25 biennium with a shortfall of up to $580 million. We’ve identified this as one of the choices the Legislature made that contribute to the unsustainability of the […]

New brief: The Band-Aid Budget: $9 Billion in New Taxes and $7 Billion in Savings, But No Lasting Solutions

Despite an estimated four-year $8.6 billion maintenance level shortfall—the difference between the cost to continue current services into the next biennium and expected resources—the Legislature increased appropriations from funds subject to the outlook (NGFO) for 2025–27 by a net of $5.913 billion. NGFO appropriations for the upcoming 2025–27 biennium total $77.858 billion, an increase of […]

Happy Fiscal New Year!

Today is the first day of fiscal year 2026 and the first day of the 2025–27 biennium. Unfortunately, the Legislature did not set the year up for success. First, as we’ve shown, the Legislature’s spending choices over the past several years led to a four-year $8.6 billion maintenance level shortfall (the difference between the cost […]

Better news in the transportation revenue forecast

The Transportation Economic and Revenue Forecast Council now estimates that transportation revenues will be higher than assumed in the enacted 2025–27 transportation budget. (By contrast, revenues from funds subject to the outlook are expected to be lower than assumed in the 2025–27 operating budget.) Economic changes in the transportation revenue forecast are estimated to increase […]

The June revenue forecast worsens the budget outlook

The Economic and Revenue Forecast Council (ERFC) estimates that revenues from funds subject to the outlook (NGFO) will be lower than expected when the 2025–27 operating budget was adopted earlier this year. Compared to the March revenue forecast (on which the adopted 2025–27 budget is based), the forecast for the current 2023–25 biennium increased by […]

The number of state employees is still growing, slowly

The Seattle Times reports, “As Washington grapples with a multibillion-dollar budget shortfall, some state agencies are starting the largest wave of layoffs since the Great Recession.” For context, Chart 1 shows total state full-time equivalent (FTE) employees over time. The budgets passed by the Legislature for 2025–27 increase FTEs compared to 2023–25, whereas FTEs decreased […]

Adopted budget outlook indicates a very thin margin for error in 2025–27

The Legislature estimated that its 2025–27 operating budget balanced in 2025–27 and over four years, leaving an unrestricted ending balance in funds subject to the outlook (NGFO) of $225 million in 2025–27 and $673 million in 2027–29. Yesterday, the Economic and Revenue Forecast Council (ERFC) adopted an official budget outlook based on the enacted 2025–27 […]

The limits of the veto power

Gov. Ferguson has acknowledged that there will be unintended consequences from the tax bills approved this year. Nevertheless, he signed the bills—but for one partial veto. Given the way the Legislature structured the tax bills, it was impossible for Gov. Ferguson to veto many of their individual provisions. Generally, the governor of Washington may veto […]

A rushed process makes for questionable tax policy

After taking action on the budget and tax bills last week, Gov. Ferguson spoke to the press. He said, The revenue that I signed will likely require adjustments in the future. These revenue bills, as you know, moved through the legislative process quickly, particularly changes to the B&O tax and sales tax on services. We […]

Gov. Ferguson’s modest operating budget vetoes are not expected to put the budget out of balance

As I noted last week, Gov. Ferguson signed all the tax bills, except for one provision. He also vetoed several provisions of the operating budget. The final fiscal impact of these changes over four years will be clear when the official budget outlook is adopted June 10. However, it appears that the budget will still […]