Washington State Prepares for Major Budget Cuts Amid Revenue Decline

Washington state is preparing for a significant budget shortfall, estimated between $10 billion and $12 billion, which could lead to spending cuts and possibly new taxes in the coming years.

State officials have been tracking this issue for months, noting declining revenue and rising costs in areas like early learning and housing. The situation has been worsened by the expiration of federal pandemic relief funds, creating what Finance Director Pat Sullivan calls a “perfect storm.” Additionally, state revenue is about $1 billion below expectations.

To address the gap, state agencies are already identifying potential cost-saving measures. Lawmakers are expected to make further cuts during the legislative session in January, according to Senator June Robinson, the Senate Democrats’ budget leader. She emphasized the need to examine agency recommendations for reductions.

While the Legislature has not specified which programs might face cuts, education, behavioral health, and affordable housing are considered top priorities. These areas are particularly critical as many school districts are already struggling with budget challenges.

Governor Jay Inslee is legally required to release a budget proposal next month that excludes new revenue, meaning it will focus solely on cuts. However, he is expected to present an alternative plan that combines spending cuts with tax increases, particularly targeting wealthier individuals. These proposals will guide lawmakers as they develop the state’s next two-year budget.

Republicans oppose new taxes, advocating for spending reductions instead. Meanwhile, incoming Governor Bob Ferguson will take over the budget process in January.

His transition team recently began work, with a spokesperson stating that Ferguson will outline his budget priorities at a later date.

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