Governor Ferguson Warns Washington Faces “Dire” Budget Situation, Pledges No New Taxes
Favour Bitrus
June 10, 2026
Picture Credit: Governor Bob Ferguson
Washington Governor Bob Ferguson is warning state agencies to prepare for significant spending cuts as his administration begins crafting the next biennial budget, describing the state’s fiscal outlook as dire while ruling out new taxes as a solution to the shortfall.
Ferguson made his first public comments on the budget challenge days after the Office of Financial Management directed state agencies to begin planning for the 2027 to 2029 budget cycle. The guidance instructed departments to avoid requesting new programs and to identify potential spending reductions as leaders confront what officials described as substantial fiscal pressure.
“We’re facing a challenging budget situation,” Ferguson said. “It’s not business as usual. We’ve really got to change the trajectory of our budget so it’s sustainable going forward.” The governor pointed to the fiscal situation he inherited when taking office. “A year and a half ago, I inherited a $16 billion budget shortfall. There’s no easy way out of that, and we’re still seeing the effects.”
Office of Financial Management Director K.D. Chapman-See told agencies that projected revenue growth is not expected to keep pace with spending pressures driven by inflation, population growth, rising service demand, uncertainty around federal funding, and court-mandated obligations. Ferguson said he worked closely with Chapman-See on the guidance and wanted agencies to begin their planning now, even though updated revenue forecasts will not be available for several months. “If we’re asking agencies to do some deep thinking and carefully consider how to balance this out, they need advance warning,” he said.
On the question of new taxes, the governor was unequivocal. “I won’t be proposing new taxes,” Ferguson said. He framed the upcoming budget as his first genuine opportunity to set the state on a more sustainable financial path. “As governor, I don’t want to be going through this every year. This is my first chance to propose a full budget, and I intend to make sure it’s responsible, preserves our AAA bond rating, and protects core services. But there are going to be some tough decisions.”
Ferguson also pushed back on the narrative that recent budgets relied exclusively on tax increases to close gaps, saying significant spending cuts were also approved. “We cut billions from the budget. That does not get reported very often, but we cut billions from that budget that never gets mentioned.”
The warnings have drawn immediate criticism from Republicans. State Senator Chris Gildon, the Senate Republican budget leader, said majority Democrats had been warned about the unsustainability of recent spending levels and ignored those warnings. “Republicans repeatedly warned the majority party that their new budget was like a house of cards built on a shaky foundation,” Gildon said. “We showed proof that more reckless overspending would lead to a massive deficit. They wouldn’t listen.” Gildon noted that billions in new taxes approved earlier this year were justified as necessary to stabilize the budget, yet the state is again facing a projected shortfall.
Gildon also cited comments from former Governor Christine Gregoire, whom Ferguson describes as a mentor, stated that she believed Washington has a spending problem rather than a revenue problem.
Asked about the newly approved tax on high-income earners and what would happen if it is overturned by voters or the courts, Ferguson said the state is not currently relying on that revenue and would have time to adjust if the measure does not survive. “If it gets overturned, we deal with that reality,” he said.
Protecting Washington’s AAA bond rating emerged as a recurring priority in Ferguson’s comments. State Treasurer Mike Pellicciotti, a fellow Democrat, has warned lawmakers across the past two budget cycles that dwindling reserves are putting that rating at risk. Ferguson acknowledged the concern directly. “Preserving that AAA bond rating is critical. That’s a priority for me.”
State agencies are expected to submit budget proposals and spending reduction options to the Office of Financial Management this autumn. Ferguson’s administration will use those submissions alongside updated revenue forecasts to develop the proposed 2027 to 2029 operating budget.
