Washington’s latest state revenue forecast shows modestly higher tax collections, but lawmakers are still facing significant budget challenges heading into the 2027 legislative session.
The Economic and Revenue Forecast Council’s September forecast projects tax receipts will be $22 million higher for the current two-year budget and $430 million higher for the 2027-29 budget cycle than estimates released in June. The increases are not enough to eliminate a projected shortfall in the 2028 fiscal year or address a multibillion-dollar gap expected in the following budget cycle.
The forecast also projects substantially higher revenue from a new tax on high-income earners. The 9.9% tax on individual and household wage income above $1 million was approved by lawmakers and signed into law by Gov. Bob Ferguson in March. It is scheduled to take effect Jan. 1, 2028, with payments beginning the following year.
The state’s chief economist now projects the tax could generate $3.5 billion during the 2027-29 biennium and $9.4 billion during the 2029-31 biennium. Those estimates are higher than previous projections, but the tax faces legal challenges and could be repealed by voters. Initiative 645, which would repeal the tax, is on the November ballot.
State officials and lawmakers continue to debate how to address the projected budget gaps. Some have pointed to spending reductions, while others have emphasized the potential loss of revenue if the new tax is repealed.
Washington’s economy is currently projected to generate $76.3 billion in revenue during the current budget cycle and $82.6 billion during the 2027-29 biennium.
The next revenue forecast is expected in November and will inform the governor’s budget proposal, which is scheduled for release in December. Lawmakers will begin the 105-day legislative session in January.
