For the first time since the Great Recession¹, the state of Washington is spending more than it’s collecting in taxes. This multi-billion gap represents 8% of the overall budget.

Unlike during the Great Recession, Washington is not in a recession: The economy is booming.²

So how is there a budget shortfall? Because of a budget crisis? Or budgeting choices?

Some notable decision points from the last four years:

Rainy Day Fund withdrawal and federal fund allocation

• In 2021, state government withdrew the $2 billion of reserves it had in the Rainy Day Fund.³
• There was no budget gap at the time.⁴
• State government allocated almost $16 billion in federal relief funding.⁵

Record revenue growth plus large spending increases

• In the 2021-23 budget, revenues grew at record rates to record levels.⁶
• By 2022, state government had an almost $14 billion revenue surplus, the highest in history.⁷
• With that surplus, the state added $10.5 billion in spending, an increase of more than 20%.⁸
• This was the largest spending increase going back to the 1990s.⁹

Revenues grow not as fast plus large spending increases

• In the next two-year budget cycle, the state economist projected tax revenues would grow by 3.5%.¹⁰
• State government added nearly $10 billion, growing spending by another 16%.¹¹
• Several billions of this new spending were added as recently as last spring.¹²
• Since 2021, state revenues have grown by a record 25%, while state spending has grown by nearly 40%.¹³

Budget crisis, or budget choices?