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State revenue projection for 2019–21 lowered by nearly $4.5 billion

June 17, 2020

Communications - Ralph Thomas

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Ralph Thomas, OFM Communications Director

OLYMPIA – Washington’s projected Near General Fund revenue collections for the 2019–21 state budget have decreased by nearly $4.5 billion, according to estimates released today by the Washington State Economic and Revenue Forecast Council.

“Forecasting right now is clouded by uncertainty around federal interventions, global pandemic trends and how quickly the economy responds if COVID19 wanes,” said Steve Lerch, forecast council executive director. “This update is our best attempt at capturing the decline in revenue sources using the best data we can assemble.”

Total Near General Fund revenues are now projected at about $47.8 billion for the current two-year state budget cycle, which began July 1, 2019. The dramatic decline in projected revenues would leave the state with a net $1.4 billion shortfall — including reserves — at the end of biennium.

The council also reduced the Near General Fund forecast for the next biennium (2021–23) by more than $4.3 billion. The council projects Near General Fund revenues will total about $51.3 billion for the next biennium, which begins July 1, 2021.

Anticipating the sharp revenue decline, Gov. Jay Inslee today directed agencies under his authority to cancel scheduled pay raises for many of the state’s highest-paid employees and to begin regular furloughs for most state employees. He urged higher education institutions, the Legislature, courts and separately elected officials to adopt similar measures.

Last month, the governor directed cabinet agencies to freeze hiring, personal services contracts and equipment purchases. Meanwhile, the Office of Financial Management directed agencies to identify options to reduce fiscal year 2021 spending by about 15%.

“We are taking steps now to reduce spending,” said OFM Director David Schumacher. “But we know we have enormous fiscal challenges ahead of us over the next few years.”