Washington’s June revenue forecast deepens the projected shortfall for the next two-year budget
Washington’s June 26 revenue forecast reduced projected economic revenue by nearly $1 billion compared with the February forecast, adding to the expected shortfall facing lawmakers as they prepare the state’s 2027–29 budget.
The Washington Office of Financial Management described the forecast as a mixed picture. Its updated projections do not set a final budget or establish reductions, tax changes or program decisions. But the outlook gives state agencies, the governor and the Legislature less projected economic revenue than was anticipated in February.
Projected declines affect both budget periods
For the current 2025–27 biennium, the June forecast projects a $427 million economic-related decline from the February outlook.
For the following 2027–29 biennium, projected economic revenue is down $450 million from February. That figure is an economic-related change, not the same measurement as the forecast’s $1.784 billion overall change for 2027–29.
The larger $1.784 billion figure reflects the overall change from the February forecast after non-economic adjustments. Keeping the figures separate matters because they describe different parts of the forecast rather than two estimates of the same economic-revenue decline.
OFM said lawmakers will face a greater shortfall in the 2027–29 budget cycle unless the outlook improves over the next two forecasts. The shortfall remains projected, rather than a final enacted deficit, because revenue and caseload updates can change the figures before budget decisions are completed.
Agency requests are the next known step
The next major deadline in the budget process is September 14, 2026. State agencies must submit their 2027–29 biennial budget requests to OFM by that date.
Those agency requests are inputs to the governor’s budget proposals. The June forecast will therefore help shape the financial assumptions available as agencies prepare requests and as the governor develops proposals for the coming biennium.
Lawmakers ultimately will decide the budget through the legislative process. The forecast itself does not determine how the state will respond to lower projected revenue, and it does not identify final cuts to particular agencies or public programs.
The forecast also does not settle whether any final budget response would involve spending changes, revenue changes or another approach. Those decisions have not been made in the materials released with the June forecast.
Transportation outlook is also lower
Transportation finances are under separate pressure. OFM has highlighted a projected $166 million reduction in transportation revenue through 2029.
That transportation projection is separate from the economic-revenue changes in the June forecast for the state budget. It does not establish final reductions to specific transportation projects or services.
For now, the June forecast provides a lower projected-revenue baseline than the one available in February. The next two forecasts may improve or worsen that outlook, while agencies move toward the September deadline and state budget writers prepare for the 2027–29 cycle.
Sources
- June revenue forecast shows mixed picture, adds to expected shortfall in coming budget cycle, Washington Office of Financial Management
- Agency budget requests, Washington Office of Financial Management
- Office of Financial Management home page, Washington Office of Financial Management