On Monday, Gov. Inslee directed agencies to freeze hiring, services contracts, goods and equipment purchases, and travel. This is in response to the budget deficit that is projected for 2025–27. Such a directive is the standard first response to a deficit—Gov. Inslee made a similar directive in May 2020 and Gov. Gregoire did the same in 2008.

The Office of Financial Management (OFM) does not have an estimate of how much this freeze could save. The freeze in 2020 saved about $33 million. There is not an expected shortfall in the current biennium (2023–25). However, any savings realized this year will increase the unrestricted ending fund balance and become part of the beginning balance for 2025–27.

As I wrote last month, OFM has asked agencies to propose possible operating budget reductions. Many agencies have responded. Ideas include reducing travel, using other funds in lieu of the general fund–state, and delaying programs. Unfortunately, some agencies provided ideas but not the associated savings amounts (see, for example, the Health Care Authority). Of the agencies that provided savings amounts, it looks like the total amount of potential savings proposed is $155 million in 2023–25, $435 million in 2025–27, and $218 million in 2027–29. The governor won’t necessarily propose any of these ideas in his budget.

OFM is estimating that the four-year shortfall is $10–$12 billion. Our estimate, based on publicly available information, is that the shortfall is about $5 billion in 2025–27 and $7.4 billion at the end of the outlook period. (This includes the maintenance level spending requests from agencies, the cost of the collective bargaining agreements, and the November revenue forecast.)

Our posts about agency budget requests are here, and our report on the legislative spending choices that led to the estimated shortfall is here.