State Economist Debunks Lawmakers’ Excuses as Washington’s Budget Hole Deepens
Washington state’s budget picture is darkening by the day, and no amount of finger-pointing in Olympia can hide it. The Economic and Revenue Forecast Council (ERFC) just released another revenue update, projecting nearly $900 million less coming into state coffers over the next four years. That’s on top of what was already shaping up to be the “worst budget crisis we have ever had,” according to state officials earlier this year.
So far, Democratic lawmakers have tried to lay blame anywhere but at their own doorstep—on Donald Trump’s tariff policies, on Federal Reserve interest rates, even on inflation. But ECRF’s own Chief Economist Dave Reich made clear that these excuses don’t hold up.
While tariffs and national monetary policy get attention, Reich told the council that “so far, we really haven’t seen a lot of impact from the tariffs in terms of prices.” Inflation, too, has already cooled considerably compared to the last few years.
The problem isn’t in D.C. or Beijing. The problem is here in Olympia.
And this latest news wouldn’t be much of problem if Washington had a well-funded rainy day fund, which states have in order to adequately manage unexpected events such as natural disasters – or large revenue shortfalls like what is happening now. Instead, recent budgets passed by Democrats siphoned billions from the rainy day fund for new, now-permanent government programs.
What Washington is really suffering from is the unsustainable surge in spending state lawmakers have locked us into. Over the past decade, spending has grown at an unprecedented pace: In 2013-15, the state operated on an $80 billion budget. By 2025-27, that figure is projected to soar beyond $173 billion. For perspective, inflation since 2015 has only climbed 35.6%, and the state population has grown by just 13.8%.
Despite repeated warnings, Olympia has continued to ratchet up commitments without a plan to pay for them. That’s how we got here.
Earlier this year, legislative Democrats passed $12.5 billion in new taxes—the largest tax increase in state history. That was supposed to shore up the budget and give the state breathing room. But just months later, the ERFC is telling us it still isn’t nearly enough.
Washington is on track to run out of money by 2027, with the latest forecast showing lower revenues, weaker housing construction, and slowing economic activity.
At the start of this month, $3.6 billion in new sales taxes on services took effect. That means Washingtonians are now paying more on digital advertising, temporary staffing, and IT services. It’s a broad-based tax hike that will make life more expensive for families and small businesses already struggling with rising costs.
And it still won’t be enough to cover the hole.
Meanwhile, the Office of Financial Management is quietly asking agencies to find efficiencies and only request funding for “the most critical and emergent needs.” That’s a nice soundbite, but let’s be clear: this scramble only comes after years of ignoring warnings about overspending. Instead of tightening belts during boom years, lawmakers chose to make Washington one of the highest-taxed states in the country while still planning more.
The reality is unavoidable. Washington doesn’t have a revenue problem—it has a spending problem. Families across the state know what it’s like to adjust when times are tough. They make cuts. They live within their means. They prioritize what matters most.
Olympia could learn from that discipline. Instead, it keeps insisting on bigger government, more programs, and more taxes, leaving working Washingtonians to foot the bill.
The state’s budget mess didn’t come from tariffs, Trump, or inflation. It came from choices made right here. Choices to spend at record levels, to raise taxes at record levels, and to keep pushing new schemes instead of living within our means. Unless Olympia changes course, the next “solution” will just be another historic tax hike that hurts families and businesses while still failing to fix the underlying problem.
Washington doesn’t need more excuses. It needs leaders willing to rein in spending before the budget crisis turns into a full-blown collapse.