Washington state is once again expected to face a budget deficit going into legislative session.
The Washington State Economic and Revenue Forecast Council’s September 2025 revenue forecast projects that state revenue will decrease by $903 million over the next four years from the June forecast. Washington uses a four-year projection because the budget must be balanced over that period.
For the current two-year state budget (2025-27), revenue estimates have declined by $412 million since June, bringing the total projected revenue decrease to more than $500 million.
The decline in revenue is largely attributed to lagging sales and real estate excise taxes, tariffs and trade controls, inflation, and a weaker-than-expected labor market.
As a reminder, during the 2025 legislative session, Washington faced a $12 to $16 billion budget shortfall. In response, the state approved $9 billion in new revenue and reduced spending. Among the cuts was a 1.5% across-the-board reduction to UW’s base funding and a decrease to the state’s share of UW’s “fund split,” which is the mix of state funding and tuition that supports employee compensation and central services.
The 2026 legislative session begins January 12, during which the state’s supplemental budgets will be decided. Washington operates on a two-year budget cycle, with biennial budgets passed in odd-numbered years (2025) and supplemental budgets decided in even-numbered years (2026). Supplemental budgets are intended to adjust or make corrections to the biennial budgets passed during the previous session. Before the final 2026 supplemental budgets are determined, the state will receive two more revenue forecasts—one in November and another in February—that will help guide budget decisions.
Given the challenging fiscal outlook for 2026, the UW did not submit any new operating budget requests and will instead focus its 2026 advocacy efforts on mitigating potential budget cuts. The UW submitted its budget priorities to the state earlier this month, as required by law. The University’s 2026 legislative agenda will be released later this Fall.
For questions about the state’s fiscal outlook or UW’s legislative priorities, please contact Morgan Hickel at mhickel@uw.edu.