Trump tariffs, potential cuts could muddy WA’s financial future

The Washington State Capitol in Olympia on Friday, April 21, 2023. (Amanda Snyder/CascadePBS)
Washington’s economic future is uncertain, a financial forecast released Tuesday shows. The projection from the state Economic and Revenue Forecast Council reflects lower-than-expected state tax collections over the next four years, possible federal funding cuts and the Trump administration’s proposed tariffs.
Tax collections will be up about $54 million through June of this year, according to the forecast. But in the budget cycle ending in 2027, the state can expect about $479 million less revenue than anticipated in a forecast from last November. Revenue is expected to fall another $420 million between June 2027 and 2029.
State economists blame the declining revenue on reduced consumer spending and lower income. The federal government’s actions add another layer of uncertainty, said Dave Reich, executive director of the Economic and Revenue Forecast Council. “We don’t know exactly what’s going to happen,” he told the Council Tuesday. “We’re in a changed world.”
The dip in state revenue is not surprising to state budget writers, but it won’t make their job this legislative session any easier.
Lawmakers already face as much as a $15 billion shortfall over the next four years, due to lower-than-anticipated revenue and costly new programs planned to go into effect over the next few years. Because Washington requires lawmakers to balance budgets four years out, they’ll need to find a way to close that gap.
Senate Ways and Means Chair June Robinson (D-Everett) said Tuesday’s forecast was expected. “While it doesn’t change the broader fiscal challenges we face, it reinforces the need for a balanced and sustainable approach as we finalize the 2025-27 operating budget,” she said in a statement.
In total, the revenue forecast gives lawmakers nearly $71 billion to work with when writing their budget for the next two years. Between 2027 and 2029, the state can expect about $76.4 billion in revenue.
Democratic lawmakers will release their budget proposals early next week and will have until April 27 to finalize them.
Meanwhile, Senate Republicans have already released their budget proposal, which includes no new taxes and focuses on trimming spending.
“Legislative budget writers should take heed and show restraint going forward, especially with the uncertainty about actions at the federal level that could affect our situation,” Republican budget leader Sen. Chris Gildon (R-Puyallup) said in a statement.