A Nov. 8 memo from Inslee’s budget director cited rising costs, increasing demand for public services and lower-than-expected tax collections for a projected operating budget shortfall between $10 billion and $12 billion over the next four years.
Cuts are needed to balance the spending plan Inslee will release next month for the 2025-27 biennium.
“The Governor’s operating budget will prioritize continuing essential programs and addressing caseload increases, while not expanding existing programs and services,” Pat Sullivan, director of the Office of Financial Management, wrote in the memo.
Transportation budget projections also have trended down for several forecasts creating a situation where revenues are not covering current commitments, Sullivan said.
Sullivan directed cabinet agencies to submit cost-saving options, like hiring freezes and pausing or delaying programs, by Friday, Nov. 15. And he urged presidents of higher education institutions and separately elected officials to undertake a similar exercise.
At least two agencies — Department of Social and Health Services and Department of Transportation — imposed hiring freezes, with exceptions for some essential posts.
Sullivan warned of “tough fiscal choices ahead” following release of the September revenue forecast but declined then to quantify the amount of the projected deficit.
Another forecast is coming out next week. That will give Inslee a final piece of information for the budget proposal he will release in December. It will serve as a template for lawmakers and Gov.-elect Bob Ferguson when they write spending plans in the 2025 session.
It’s going to be a challenge, said Sen. June Robinson, D-Everett, chair of the Senate Ways and Means Committee and the chamber’s lead budget writer.
“They are not overstating it,” she said of the projected deficit amount. “Because of the magnitude, we’re going to need to look at a range of options.”
Asked if the “options” included spending cuts and new revenue, she said yes.
The current two-year operating budget is about $72 billion.
The deficit spans the next two budget cycles. It represents the difference between the anticipated costs of current and promised services and programs and the projected amount of revenue that will come in to pay for them. Put another way, state agencies need $10 billion to $12 billion in additional funding to maintain current programs and services.
