Budget reductions FAQ
On November 8, OFM Director Pat Sullivan sent a letter to state agency directors and others, outlining that revenue forecasts, rising costs, and expanding needs require reductions for the governor to propose a balanced budget. This page includes answers to questions about those budget reductions.
1. What’s the size of the projected budget deficit and what does it include?
We currently estimate that the difference in the amount of forecasted Near General Fund revenues and the cost of maintaining existing programs, including those needed to meet our constitutional and other legal obligations is between $10 and $12 billion between now and June 2029. That’s the rest of this budget period (through June 2025), and the next two biennia — four and a half years.
State law requires the projected state near general fund operating budget to be balanced over four years, meaning that the projected cost of maintaining programs and services cannot exceed forecast revenue over that period.
2. How did we get here?
In June, OFM issued budget instructions to state agencies emphasizing that the 2025–27 biennium will see a greater number of people needing services and less revenue than previously forecasted. Accordingly, state agencies were asked to limit operating budget requests to maintain current programs, and any new funding requests were to be limited to the highest of priorities.
Since then, revenue forecasts (in June, September and November) have continued to trend down. We’ve also seen an increase in forecasted caseloads (the projected numbers of people that receive state services, such as kindergarten and child care programs), inflation, and the costs of maintaining existing programs.
As a result, OFM Director Pat Sullivan sent a letter on November 8, 2024 to state agency directors and others, asking for them to propose savings options so the governor’s budget can focus on continuing essential services and addressing caseload increases.
3. What is OFM asking agencies to do?
Director Sullivan’s letter on Nov. 8 directed state agencies to propose budget reductions, starting with pausing or delaying programs, and considering hiring or other freezes. Savings like these will help with our current budget, which runs through June 2025, and the next biennial budget (July 2025–June 2027.)
4. Who does the request apply to?
The budget savings options exercise applies to cabinet agencies (which does not include separately elected officials, the judicial and legislative branches, higher education institutions and some boards and commissions.)
However, state higher education institutions, boards and commission and separately elected officials have also been urged to undertake a similar budget savings exercise.
5. Are there hiring freezes or layoffs across state government?
We haven’t directed a statewide hiring freezes or layoffs but asked agencies to consider it. Agencies may choose to implement measures like hiring freezes or layoffs that result in immediate savings.
6. What happens next?
State agencies are submitting their budget savings options to OFM, and we are posting these to out website as we receive them:
We’re currently working on Gov. Inslee’s budget proposal, which will be released by December 20.
7. What will be the impact to Washingtonians and state employees?
State agencies are working to minimize the impact of budget reductions for the public and staff, and the governor’s budget will focus on essential investments to ensure our constitutional obligations are met. We recognize that this is a difficult time, unsettling for state employees, and a lot of good work for Washingtonians may have to wait until the budget situation improves.
8. Have the tentative 2025-27 collective bargaining agreements been determined financially feasible?
The tentative agreements negotiated with labor unions, as well as arbitration awards have been submitted to the OFM director to determine whether they are financially feasible. This determination will occur close to when the governor’s budget proposal to the Legislature is published in mid-December.
9. How does this compare with previous state budget deficits?
The last major state budget deficit was during and following the Great Recession, 2008–2013, when budget shortfalls added up to over $16 billion over that period – that would be around $23 billion in today’s dollars when adjusted for inflation.
