Gov. Inslee imposes spending freeze to deal with $10B-$12B operating budget gap

Washington state Gov. Jay Inslee is calling for a freeze on hiring, services contracts, goods and equipment purchases, and travel to deal with a projected operating budget shortfall between $10 billion and $12 billion over the next four years.

The shortfall exists despite the state's record $72 billion budget.

“Effective December 2, 2024, for all agencies under my direction and control, I am directing a freeze on the following: (1) hiring not related to public safety or other non-discretionary activities as listed below, (2) execution of non-essential services contracts, (3) discretionary purchasing of goods and equipment, and (4) travel,” Inslee wrote in a directive to his executive and small cabinet agency directors.

“Exempt from the freeze is hiring to fill vacancies in critical areas,” the governor continued. “Also, services contracts, goods and equipment purchases, and travel that are necessary to continue critical services or agency operations are exempt from the freeze.”

The freeze on services contracts and purchases of goods and equipment does not apply to amounts less than $10,000.

The Washington State Office of Financial Management blames slowing revenue forecasts, rising costs and expanding need for the looming budget gap.

“This deficit is due to the recent revenue forecasts that were adjusted down and the increase in caseloads and the cost to maintain existing programs,” OFM Director Pat Sullivan said in a Nov. 8 memo.

In that memo, Sullivan goes on to “direct agencies to propose operating and transportation budget reductions, starting with pauses or delays of programs, and to identify savings options for both the 2025 supplemental budgets and 2025-27 budgets.”

Critics claim the state has been reckless with its spending.

Washington Policy Center’s Small Business Center Director Mark Harmsworth, a former state legislator, wrote in a recent blog post that “the state does not have a revenue problem, it has a spending problem. It seems the budget deficit is a state-created spending problem that the state leaders don’t want to acknowledge.”

In his directive, Inslee urged other state officials to implement similar cost-saving measures.

“I recognize the practical difficulties of implementing this directive to maintain the financial health of the state,” he said. “I call upon non-cabinet agencies, higher education institutions, boards and commissions, and other separately elected officials to impose similar restrictions within their agencies and jurisdictions.”

Inslee’s directive will remain in place indefinitely.

By Dec. 20, Inslee's office will propose a new two-year state budget.

In January, Inslee will hand control of the executive branch to Gov.-elect Bob Ferguson, who may have his own ideas regarding the state budget.

The next legislative session will convene on Jan. 13. State lawmakers in the House and Senate will later release budget proposals. This will be followed by weeks of negotiations on a final budget before the end of the 105-day session.