OLYMPIA – Washington’s June revenue forecast shows a mixed picture, according to the Washington State Economic and Revenue Forecast Council. Legislation passed in the 2026 legislative session increased projected Near General Fund revenue through 2031, but weakened economic activity has reduced projected revenue to the state by nearly $1 billion since the February forecast.

Although the overall revenue is an increase relative to February, compared to assumed revenue in the enacted budget from 2026, it is a net decrease. The impact to the budget writing process for the upcoming 2027–29 biennium is lawmakers will face a greater shortfall than was shown in February, assuming the picture doesn’t improve over the next two revenue forecasts.

Biennium  Forecast revenue  Non-economic changes from Feb. forecast  Economic changes from Feb. forecast  Overall change from Feb. forecast 
2025–27 (current)  $76.24B  $1,387M  -$427M  $961M 
2027–29  $82.16B  $2,234M  -$450M  $1,784M 
2029–31  $91.74B  $5,294M  -$122M  $5,172M 
Total  $250,140  $8,914M  -$998M  $7,916M 

 

The economic slowdown results in a projected $427 million decrease in the current 2025–27 biennium, driven by lower personal income and slower employment growth. Additional economic-related declines of $450 million are expected in 2027–29 and $122 million in 2029–31.

On the positive side, the state is seeing increases in housing permits and higher-than-expected capital gains tax receipts. Because current law directs all capital gains tax revenue into the Education Legacy Trust Account to fund the operating budget, these higher receipts appear as non-economic changes rather than economic growth but do make a tangible positive difference to the budget balance in the current biennium. Full details of the forecast are available on the Forecast Council’s website.

Quotes

“The Washington state economy has been dealing with another headwind associated with the Iran war and the economic outlook is less optimistic than it was in February,” noted Dave Reich, forecast council executive director. “The state economy is expected to continue to grow, but with little employment growth and elevated inflation.”

“Revenue collections have been tracking lower since February, exacerbated by impacts of global conflicts and persistent inflation, so while this drop in the forecast was not the news we wanted, it was expected,” said K.D. Chapman-See, director of the Office of Financial Management. “This forecast combined with updated caseloads and other higher anticipated costs for the state is the warning we shared with state agencies earlier this month that we’re facing a tough budget cycle next biennium. The next two revenue forecasts – in September and November – will help continue to inform our work ahead of the rollout of Governor Ferguson’s proposed budget in December.”

Why the revenue forecast matters

The forecasts for Near General Fund revenue collections determine the resources for state services. State law requires a budget that is balanced over four years, and the Near General Fund accounts for most of that state operating budget.

A guide to the Washington state budget process can be found on the OFM website.

What’s next

The next forecast for Near General Fund revenue is scheduled for September 25, 2026. Revenue review meetings are broadcast on TVW, with scheduling details available beforehand on the ERFC website.

About the Economic and Revenue Forecast Council: The Economic and Revenue Forecast Council supports statewide goals by accurately forecasting economic activity and state tax revenue for Washington state. The ERFC is comprised of both legislative and executive members and the State Treasurer. Four times a year the organization adopts a bipartisan revenue forecast that is then used to build the state operating and transportation budgets. The ERFC is also charged with providing the state budget outlook to increase transparency and to promote state government financial stability.

About the Office of Financial Management: The Office of Financial Management provides vital information, fiscal services and policy support that the governor, Legislature and state agencies need to serve the people of Washington.

Press Contact

Hayden Mackley
Hayden.Mackley@ofm.wa.gov
(360) 638-2780