An expected $4.5 billion deficit.
An economy the state economist recently described as "off life support, but still in intensive care."
A repeal of recently enacted taxes on candy, soda pop and bottled water, and a mandate from voters not to raise taxes without two-thirds of the Legislature.
Those, and other issues, mean lawmakers are going to face some tough choices when they return to Olympia in January for the next legislative session, former state Rep. Gary Chandler of Moses Lake told the Tri-City Regional Chamber of Commerce at a luncheon Wednesday.
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And the Association of Washington Business will be closely watching the Legislature to ensure the interests of businesses aren't trampled, he said.
Chandler, now AWB's vice president of governmental affairs, said the first thing lawmakers must do is prioritize government's core responsibilities and find efficiencies that will make government leaner and meaner.
They can't rely on federal money or transferring money from one account to another to balance the budget as they did in the 2009-2011 biennium, and must tackle the problem now, he said.
"They have to stop kicking that can ahead," he said.
Part of the budget solution should include privatizing any aspects of state government that can be inexpensively and more efficiently run by the private sector, such as liquor stores or the state printer, he said.
"There are a lot of ways the state can get out of business and turn it over to the private sector," Chandler said.
The Legislature also must ease the regulatory burden on businesses so Washington can remain competitive, he said.
He noted rising rates for worker compensation and unemployment insurance as factors hurting Washington businesses.
The AWB also is concerned the Legislature may extend state unemployment benefits by an additional 13 weeks, which would draw down the unemployment trust fund and potentially cause rates to rise.
Chandler said Gov. Chris Gregoire's executive order issued Wednesday suspending new rule-making by state agencies is a step in the right direction.
"I think it is very positive her going forward with that," he said.
The order directs state agencies to suspend all noncritical rule-making through Dec. 31, 2011. There are several exemptions, including rules required by federal or state law, court order, or that are necessary to protect health and public safety.
The governor's policy office says things such as updates to solid waste disposal and recycling rules would be things considered noncritical, but others like the opening and closing of fishing season will continue.
Gregoire said in a written statement the executive order was intended to help small businesses weather the sluggish economic recovery.
"State rules are essential to protecting the health, safety, welfare and quality of life for Washingtonians," she said. "However, in these unprecedented economic times, this action will provide businesses with stability and predictability they need to help with our state's recovery. The time and effort small-business owners would put into meeting new requirements would be better spent in improving their bottom line and adding new employees. This action will also allow local governments to focus their limited resources on the most critical issues in their communities."
But the move drew fire from progressive group Fuse Washington, which called the decision "short-sighted" in a news release that raised concerns about how the suspension might affect the environment and development of clean energy in the state.
"Gov. Gregoire's executive order says that rule-making should continue when it is necessary to protect public health and safety," said Jessica Finn Coven of Climate Solutions. "We hope that rule-making to advance clean energy and green jobs will continue to move forward."
The legislative session starts Jan. 10.
The Associated Press contributed to this report.