Washington is among several states facing a budget shortfall. The costs to maintain current services and program levels for the next four years have risen approximately $12.6 billion due to inflation, higher projected caseloads in several safety net programs, expansion of popular programs like early learning, and workforce costs. Revenues have dipped lower than forecasted due to lagging home sales and collections for sales and capital gains taxes.

Agency saving options requested

On November 8, 2024, OFM directed state agencies to propose budget savings options so the governor’s budget could focus on continuing essential services and addressing caseload increases. The savings options submitted are posted online.

Savings like these will help with our current budget, which runs through June 2025, and the next biennial budget (July 2025–June 2027.)

Spending freeze in effect

On December 2, 2024, Governor Jay Inslee directed all agencies under his direction and control to freeze non-essential hiring and spending. This freeze directive remains in effect until it is rescinded by the governor. The OFM website will be updated if the governor amends or rescinds the freeze directive.

Current state of the projected shortfall and what’s next

On December 17, 2024, Governor Inslee released a balanced budget proposal that included many reductions or delayed implementation of certain programs over the next four years. It also included changes to the business and occupation tax, and a new wealth tax.

Funding for the 2025-27 collective bargaining agreements is included in Gov. Inslee’s proposal.

Next, the Legislature will consider their own spending plans. Legislative budget proposals are expected following the next revenue forecast, which is required by statute to be completed by March 20, 2025.

Incoming Governor-elect Bob Ferguson has also released his budget priorities for 2025-27, and plans to work with cabinet agencies and 4-year higher education institutions to identify further budget reductions. These are additional to those included in Gov. Inslee’s budget proposal. Governor-elect Ferguson will work with OFM and agencies to finalize details of his across-the-board reductions proposal and to provide his framework to legislative budget writers.