Manageable, or Unchartered Territory?
In the 2025 Legislative Session, lawmakers must close a $10 billion -$12 billion budget gap between spending promises and available tax revenue.
As they address the challenge, it’s natural to wonder: Is this budget situation manageable, or are we in unchartered territory?
The budget shortfall during the Great Recession
Washington’s last gap between outgoing spending and incoming revenue was created by a decline in tax revenue caused by the Great Recession.1
The Great Recession was an economic event outside state lawmakers’ control that caused tax revenues to crater in every state in the nation.2
Over the course of three biennia during the Great Recession, revenues in Washington dropped by a total of $12.6 billion.3
Washington’s last gap between outgoing spending and incoming revenue was created by a decline in tax revenue caused by the Great Recession.1
The Great Recession was an economic event outside state lawmakers’ control that caused tax revenues to crater in every state in the nation.2
Over the course of three biennia during the Great Recession, revenues in Washington dropped by a total of $12.6 billion.3
The budget shortfall today
Today, Washington is not in a recession and revenues have not declined.4
While revenues have slowed from historically high rates to a more typical rate of growth, they are still forecasted to grow by 7.5% in each of the next two biennia.5
Estimated spending in 2025-27 is about 10% higher than forecasted revenues. Estimated spending in 2027–29 is about 7% higher than forecasted revenues.6
Today, Washington is not in a recession and revenues have not declined.4
While revenues have slowed from historically high rates to a more typical rate of growth, they are still forecasted to grow by 7.5% in each of the next two biennia.5
Estimated spending in 2025-27 is about 10% higher than forecasted revenues. Estimated spending in 2027–29 is about 7% higher than forecasted revenues.6
Comparing the Great Recession’s budget shortfall to today’s
Washington’s budget gap during the Great Recession was twice as large as the current budget gap in real dollars in a budget half as large. The resulting budget gap between 2009 and 2013 added up to $23 billion in today’s dollars.7
This gap accounted for approximately 25% of the budget. The current 8% budget gap represents one-third of that share.8
The Legislature closed the Great Recession-driven revenue shortfall through spending reductions.9
Washington’s budget gap during the Great Recession was twice as large as the current budget gap in real dollars in a budget half as large. The resulting budget gap between 2009 and 2013 added up to $23 billion in today’s dollars.7
This gap accounted for approximately 25% of the budget. The current 8% budget gap represents one-third of that share.8
The Legislature closed the Great Recession-driven revenue shortfall through spending reductions.9
Manageable, or unchartered territory?
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https://researchcouncil.org/wp-content/uploads/GreatRecessionLessons.pdf
https://www.brookings.edu/articles/state-and-local-budgets-and-the-great-recession/
https://researchcouncil.org/wp-content/uploads/GreatRecessionLessons.pdf
https://erfc.wa.gov/sites/default/files/public/documents/publications/nov24pub.pdf
https://erfc.wa.gov/sites/default/files/public/documents/publications/nov24pub.pdf
https://researchcouncil.org/wp-content/uploads/AnatomyofaShortfall.pdf
https://www.kuow.org/stories/democrats-in-olympia-plan-for-massive-budget-gap
https://researchcouncil.org/wp-content/uploads/GreatRecessionLessons.pdf