Taxes Keep Going Up. So Why Are Budget Shortfalls Getting Worse?
Every year, Washington residents hear a familiar message from Olympia.
The state faces another difficult budget cycle.
Lawmakers warn of difficult choices.
Agencies are asked to prepare for reductions.
And taxpayers are told that rising costs are putting increasing pressure on state government.
This year is no different.
Governor Bob Ferguson recently directed state agencies to prepare for leaner budgets in the years ahead, citing higher operating costs, inflation, and Washington’s growing population as major drivers of future budget challenges.
Those explanations aren’t wrong.
Inflation has increased the cost of everything from road construction to employee salaries. Washington has added hundreds of thousands of residents over the past decade, creating legitimate demand for additional public services.
But those two factors don’t fully explain where the state’s finances stand today.
To understand why, it’s worth looking at the numbers.
A Budget That Has Grown at Historic Levels
During the 2013–15 biennium, Washington’s total operating budget was approximately $33.5 billion.
Today, state spending exceeds $80 billion for the current biennium.
That’s an increase of well over 100 percent in just over a decade.
Over roughly the same period, Washington’s population grew by about 14 percent, according to the U.S. Census Bureau.
Inflation has certainly increased costs as well. But even after accounting for inflation and population growth, the state’s spending trajectory has risen much faster than either measure alone would suggest.
Economists often evaluate government growth against these two benchmarks because they represent the primary external factors affecting public budgets:
More residents generally require more services.
Inflation makes delivering those services more expensive.
When spending consistently outpaces both, policymakers must ask a different question:
Is the challenge revenue—or spending?
The Structural Gap
Washington’s recent budgets reveal another important trend.
The state’s last four biennial budgets authorized spending levels that exceeded projected ongoing revenues at the time they were adopted.
That doesn’t necessarily mean the state was in immediate financial trouble. Governments routinely use reserves, one-time resources, and revised revenue forecasts to balance budgets.
But it does mean lawmakers approved spending commitments that depended on future revenue growth to remain sustainable.
When revenue forecasts soften or economic growth slows, those commitments become harder to maintain.
That’s the dynamic Washington is experiencing today.
More Revenue, Same Conversation
Over the past several years, lawmakers have approved numerous tax and fee increases while identifying new revenue sources to support the state’s expanding budget.
Last year alone, the Legislature enacted the largest package of state tax increases in Washington history.
This year, additional tax and fee increases followed.
Yet despite those actions, state leaders are once again warning about future budget pressures.
That naturally raises an important question:
If tax collections continue to grow, why do budget shortfalls continue to emerge?
The answer may lie less in how much government collects than in how quickly spending commitments have expanded.
Reducing Growth Isn’t the Same as Reducing Spending
Governor Ferguson’s office has emphasized that agencies have already identified billions of dollars in reductions and savings over the past sixteen months.
Those efforts matter.
But context matters too.
Much of what is described as “cuts” involves reducing planned spending growth rather than shrinking the overall size of government.
Consider a homeowner planning a $100,000 renovation.
If rising costs force them to scale the project back to $80,000, they’ve reduced planned spending.
But they’re still spending far more than if they had chosen a $40,000 renovation from the outset.
The distinction is important.
Reducing future growth is not the same thing as reducing current spending.
The Affordability Equation
The state’s fiscal challenges are unfolding at the same time Washington families are confronting their own.
Housing costs remain among the highest in the nation.
Fuel prices consistently rank near the top nationally.
Utility bills have climbed.
Insurance premiums are increasing.
Everyday necessities consume a larger share of household income than they did just a few years ago.
When government asks taxpayers to shoulder additional costs, those requests don’t occur in isolation.
They become part of a broader affordability picture that many residents are already struggling to manage.
A Different Conversation
None of this suggests Washington shouldn’t invest in transportation, education, public safety, or other essential services.
The question is how those investments should be prioritized—and whether spending growth can continue indefinitely.
Before asking taxpayers to support additional revenue measures, policymakers should first answer several basic questions:
Which programs are producing measurable results?
Which spending increases have achieved their intended outcomes?
Which commitments are sustainable over the long term?
How should limited public resources be prioritized?
Those are not partisan questions.
They are management questions.
And they deserve clear answers.