The state’s Economic and Revenue Forecast Council on Monday adopted a new forecast of tax collections that adds $827 million to the current biennium, reducing a projected $2.3 billion shortfall.
That’s a 1.1 percent increase. The new forecast also assumes in increase of just over $1 billion, or 1.3 percent, for the coming 2027-29 biennium.
The forecast weighs a variety of economic factors to provide a roadmap on where the state economy and tax collections are trending. In his presentation to the Economic and Revenue Forecast Council, Dave Reich, chief economist for the state, explained that the improved growth is likely due to tariff buying, changing in spending behavior, and legislation enacted last year that increased the number of services and sales subject to the retail sales tax beginning on October 1, 2025.
Reich also noted during his presentation that other economic factors to be mindful of are employment growth trends and marginal increases in inflation.
The state’s available funds to spend continue to grow, year over year, seen in the chart below.
Legislative budget writers will use the information provided in the forecast as they craft their own budget proposals for the 2026 supplemental operating budget. This follows on the budget proposal released by Gov. Ferguson in late December that proposed reductions amounting to 5.3 percent for Washington State University, among other reductions across state government. The Legislature must adopt a compromised budget prior to adjournment on March 12.