Washington Gov. Bob Ferguson is urging state agencies and public colleges to tighten their belts further, even after approving a budget this spring that closed a historic shortfall with tax hikes and cuts. A June 4 memo from the Office of Financial Management directs agencies to request new funds only for “critical and emergent costs” and to look for ways to cut non-essential services, streamline operations, or reduce administrative expenses.

The warning comes as early economic indicators suggest tax revenues are already underperforming expectations. State economist David Reich told lawmakers last week that trade uncertainty, slow housing starts, and weaker consumer spending may worsen the outlook when a new revenue forecast is released June 24.

Agencies must submit supplemental budget requests by Sept. 15. Ferguson will propose a new budget in December, and the Legislature will take it up in 2026.

Although Washington retains $2 billion in reserves, projections show its operating account may run a deficit by 2028. Ferguson’s team signaled that hiring, travel, and contracting freezes imposed earlier this year will likely remain in place.