Washington’s projected tax collections have declined by more than $500 million since the Legislature approved its most recent two-year budget earlier this year. The latest report from the state’s Economic and Revenue Forecast Council shows revenue falling $412 million below expectations from June, signaling continued fiscal challenges for the state.
Lawmakers will face tough decisions when they return to Olympia in January for the 2026 legislative session. While some state leaders have indicated they may revisit revenue options, others are calling for renewed focus on spending restraint and program efficiencies. Governor Bob Ferguson said he will prioritize maintaining core services while ensuring the state’s next supplemental budget remains balanced.
The $77.8 billion operating budget supports education, health care, social services, and public safety. However, lagging sales and real estate excise taxes, a slower construction market, and weaker-than-expected job growth have contributed to declining revenues.
The next official forecast is due in mid-November and will guide lawmakers as they prepare adjustments to the state’s spending plan. Businesses and policymakers alike will be watching closely to see how the state’s economic outlook shapes fiscal and policy decisions in the coming year.
