Democratic leader says revenue forecast a "mixed bag" as Republicans call for reined in spending

OLYMPIA - The lead Democratic budget writer in the state Senate said Friday that it was "way too early" to know whether state lawmakers would propose tax increases to close what is expected to be another budget deficit of multiple billion dollars looming next year.

State Sen. June Robinson, D-Everett, chair of the Senate Ways and Means Committee, said Friday that the latest state revenue forecast, which showed that a downturn in economic activity has contributed to a nearly $1 billion decrease in projected state revenue through fiscal year 2031, had positive and negative signs.

"We obviously have some very positive revenue with the capital gains tax for the short term, which, again, will help in the short term," Robinson said. "But it doesn't solve longer-term budget shortfalls. And if you took that out, the forecast is generally a mixed bag."

However, Robinson did not make the same pledge as Gov. Bob Ferguson, who said Thursday he would introduce a budget that does not include tax increases.

"I've been pretty clear that in the budget I'll be proposing, that I won't be proposing new taxes," Ferguson said as he unveiled members of his newly established Development Council on Thursday. "I'm having individual conversations with legislators, and I'm communicating that as well, that my expectation is in this session we're not raising taxes."

The governor was noncommittal about whether he would sign a budget passed by the Legislature that includes tax increases. The challenging budget cycle will likely be the third in a row, after state lawmakers plugged budget holes of multiple billion dollars in the 2025 and 2026 sessions.

While it's not clear how big of a deficit state lawmakers will need to address, Ferguson said Thursday it will be "in all likelihood, a multibillion-dollar shortfall."

Although the state's budget outlook could improve over the next six months before the legislative session begins in January, the lower-than-initially-projected state revenue adds to the deficit lawmakers will need to address.

K.D. Chapman-See, director of the Office of Financial Management, said in a statement Friday that projected revenues have tracked lower since February in part because of the Iran war and inflation.

"This forecast, combined with updated caseloads and other higher anticipated costs for the state, is the warning we shared with state agencies earlier this month that we're facing a tough budget cycle next biennium," Chapman-See said.

In a memo to state agencies earlier this month, Chapman-See said lawmakers will again need to account for "significant budget shortfalls."

Chapman-See directed state agencies to submit budgets that only include "mandatory increases" that don't expand existing programs and services, pause the phase-in of most new programs and not to propose new programs.

According to the memo, Ferguson also directed agencies to review programs created or expanded after Jan. 1, 2019, and examine "areas where Washington provides particularly high levels of service relative to other states" for savings.

Ferguson said Thursday he was "closely scrutinizing" state programs that have either been created or expanded since 2019.

Republican lawmakers, however, continue to blast what they say is overspending by Democrats in the state Capitol.

"I look at this coming year the same as I've looked at past years. Our problem with our budget is legislatively created, and it needs to be legislatively fixed," state Rep. Ed Orcutt, R-Kalama, said Friday. "And we need to get spending under control."

Sen. Chris Gildon, R-Puyallup, the Republican budget lead in the Senate, said in a statement Friday that the "situation is still bleak, and it's all due to the majority's chronic overspending."

"The state economy is not going to suddenly catch fire and bail Olympia out," Gildon said.

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