‘A perfect storm’: Inside Washington’s massive budget gap

Washington state officials are bracing for a multibillion-dollar budget gap that will likely trigger a series of cuts – and possibly new taxes – over the next several years.

Officials have only recently started talking about the size of the anticipated gap, to the tune of $10-12 billion. But the deficit isn’t a total surprise to state leaders, who have been monitoring a decline in revenue, and ballooning costs for state services, for months.

A “perfect storm” of factors coalesced at once, including rising costs in early learning and housing, as well as expiring federal pandemic funds, according to Pat Sullivan, Washington’s current finance director.

In addition, the state’s revenue is about a billion dollars short of its projected target, Sullivan said this week at a public meeting about the budget.

State agencies are already scouring their departments for places to save some cash, and lawmakers will likely look to make cuts during the upcoming legislative session, according to Senate Democrats’ budget lead, June Robinson.

“We’re going to need to look at where the agencies identify places that could take reductions,” Robinson, a senator from Everett, said.

The Legislature will convene in January to start crafting the state’s next two-year budget. Leaders haven’t offered specific details on how they’ll try to tackle it yet, but some say they’re interested in creating or raising some taxes for wealthier people in addition to cuts.

Republicans, meanwhile, don’t want to see any new taxes, and say the legislature should focus on reducing spending.

Lawmakers have so far not named any specific programs or services that could be on the chopping block. But top Democrats have said funding for education, behavioral health, and affordable housing are all high-priority areas, as many school districts grapple with budget crises of their own.

Gov. Jay Inslee (D) is required by law to release a budget proposal early next month that does not include any new revenue – meaning he will propose a “cuts only” budget. But budget leaders say the governor may offer a second proposal that includes a combination of tax increases and spending cuts. Those proposals will serve as a starting point for lawmakers working on the budget next year.

But incoming governor Bob Ferguson (D) will ultimately be the one overseeing the process after he takes office in early January. Ferguson’s transition team met for the first time Friday, and a spokesperson said via text that the governor-elect will share his budget priorities “at a later date.”