Washington’s budget forecast bleak in the wake of COVID-19

Washington State Capitol
Copyright 4 News Now
Copyright 4 News Now

OLYMPIA, Wash – The coronavirus will have a lasting impact on the state of Washington, with a $1.4 billion dollar shortfall by the end of 2021.

The Washington State Economic and Revenue Forecast Council released the projections Wednesday morning, the same day Governor Inslee announced pay cuts and furloughs for most state employees.

“Forecasting right now is clouded by uncertainty around federal interventions, global pandemic trends and how quickly the economy responds if COVID-19 wanes,” said Steve Lerch, forecast council executive director. “This update is our best attempt at capturing the decline in revenue sources using the best data we can assemble.”

A slide in Wednesday’s presentation also stressed “the level of uncertainty in the baseline forecast is substantial.”

The full revenue forecast includes factors like Washington’s steep rise in unemployment during the pandemic; a decline of 12,800 aerospace jobs between March and September; and $893 million less in revenue than expected from things like property taxes, many of which were deferred during the height of the crisis.

One bright spot in the economic forecast: cannabis revenue spiked at the height of the pandemic and the state is seeing growth in the amount of excise tax and license fees collected.


State agencies, institutions of higher education and public schools have already been preparing for a 15% reduction in funding from the state. Just this week, the Community Colleges of Spokane announced it expects $11 million less from the state and, coupled with a steep decline in enrollment, will make cuts to staff as well.

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Gov. Inslee directed state agencies to cancel scheduled pay raises for many state employees; he also ordered furloughs most state employees. The governor has already directed cabinet agencies to put hiring freezes into effect and put a hold on equipment purchases.

“We are taking steps now to reduce spending,” OFM Director David Schumacher said. “But we know we have enormous fiscal challenges ahead of us over the next few years.”

Spokane Public Schools has been working on budget projections without certainty from the state. State funds make up 81% of the school district’s budget.

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You can read the full economic forecast at this link.