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Legislative staff estimate that the operating budget shortfall is $4.3 billion over the outlook period

Non-partisan legislative staff estimate that the state operating budget has a shortfall of $4.3 billion over the outlook period. There should be no surprise here. As we wrote of the enacted 2025–27 budget in July, the sustainability of the 2025–27 budget is highly questionable. In addition to leaving a very small ending fund balance, the […]

Newly proposed payroll expense tax would be volatile and revenues would probably not materialize until FY 2028

The historically large tax package that was adopted earlier this year increased business taxes significantly. The adopted package did not include a payroll expense tax, though one was considered during the 2025 session (SB 5796). SB 5796 would impose a 5% tax on wages over the Social Security taxable wage base ($176,100 in 2025 and […]

Since the 2025–27 operating budget was adopted, revenues are down by $1.690 billion over the outlook period

According to the Economic and Revenue Forecast Council, revenues for funds subject to the outlook (NGFO) are estimated to be $66 million lower over the outlook period than was forecasted in September. Final revenues for 2023–25 (which ended June 30) total $67.137 billion, an increase of $13.1 million compared to the September forecast. The forecast […]

November transportation revenue forecast is lower than in September, but still higher than assumed in budget (plus, a drop in CCA auction revenue will affect transportation budget beginning in 2029–31)

Transportation revenues are now expected to total $8.135 billion in 2023–25, $8.842 billion in 2025–27, and $10.833 billion in 2027–29. Over this three-biennia period, the November transportation revenue forecast is $67.0 million less than forecasted in September, but it is still $69.0 million higher than expected in the transportation budget enacted this year. Inflation-adjusted transportation […]

Limiting new spending would be a good start

The Washington State Standard reports that Sen. June Robinson, chair of Senate Ways and Means, has told legislators not to make spending requests this year: “We don’t have money to pay for what is needed, let alone new spending that members might request.” Indeed, with the September revenue forecast, the unrestricted ending balance in funds […]

S&P Global no longer considers Washington’s credit rating outlook to be “positive”

Washington has been getting very high marks from the credit rating agencies in recent years, in part due to Washington’s constitutionally-required rainy day fund and four-year balanced budget requirement. This is important because it means Washington can sell bonds at lower interest rates, lowering the cost of borrowing and helping to limit the share of […]

Washington has the nation’s sixth least competitive taxes

According to the Tax Foundation’s 2026 State Tax Competitiveness Index, Washington’s tax climate ranks 45th overall. (In the Tax Foundation’s index, one is the best rank and 50 is the worst.) This ranking reflects state tax systems as of July 1, 2025, so it does not yet incorporate many of the tax changes made by […]

How can we evaluate budget tradeoffs if we don’t know what we’re spending on specific programs?

The solution to the budget problem this year included about $7 billion in savings items over the outlook period. The savings items include some real program reductions, but they also include shifts to other funds or user fees and general efficiency savings, for example. Given the unsustainable nature of the enacted budget and the subsequent […]

Agency budget requests would deepen the already-expected budget shortfall

It was clear from the get-go that the 2025–27 operating budget was not sustainable. Even before the state revenue forecast was revised downward in June and September, the Office of Financial Management (OFM) told agencies, “We will very likely continue to face a challenging state budget environment in the coming year.” Consequently, OFM asked them […]

OSPI submits comparatively modest request for 2026 supplemental budget

The Office of Superintendent of Public Instruction (OSPI) is requesting a $138.5 million (0.4%) increase in general fund–state (GFS) appropriations for the 2026 supplemental. (The proposal would cost $343.7 million in 2027–29.) Though modest compared to the amount of enacted GFS appropriations for K–12 in 2025–27 ($31.050 billion), the request includes some major new spending. […]