Gov. Bob Ferguson: federal withholdings, tariffs and legal fights threaten Washington budget

At a Seattle University event, Washington Gov. Bob Ferguson said actions from the federal government — from tariff announcements to withheld public-health funds — are creating a new set of fiscal threats that could deepen the state’s roughly $16,000,000,000 budget shortfall.

“Just a few days ago, they announced they’re withholding $160,000,000 in funds for public health in Washington state,” Ferguson said, calling the amount “a hole in our budget.” He added that roughly 28% of Washington’s budget comes from federal sources and that 60–70% of the state’s Medicaid dollars are funded federally, underscoring the state’s exposure to federal decisions.

Ferguson described litigation as a primary tool governors and attorneys general can use to defend state programs. Drawing on his experience as Washington’s attorney general, he said his office filed numerous suits against the prior administration and secured rulings in many cases. “A court order, so far, and we hope this holds true, does have the ultimate impact in a sense,” he said, describing courts as a venue that can level the playing field.

At the same time, Ferguson said litigation takes time and that state reserves matter while legal challenges proceed. “Having reserve funds is able to backfill for a period of time, while litigation is taking place, to see if you can stop something from happening,” he said, arguing the state should not drain rainy-day funds and that he would not sign a budget that did so.

On tariffs and broader economic effects, Ferguson said Washington’s trade-dependent economy — including farmers and other sectors — faces risk from tariff moves. He told the audience the state is balancing legal strategies, policy responses and budget planning to protect services.

When asked whether the state could backfill large federal cuts, Ferguson said Washington cannot replace every federal dollar but can prioritize keeping funding on hand to avoid sudden layoffs and to bridge operations while courts consider challenges. “It’s not necessarily even trying to backfill all of it, but part of it may be we're backfilling long enough for the AG's team to go to court and possibly get another victory,” he said.

Ferguson also criticized proposals to drain reserves, saying those funds are important for credit ratings and emergency response — for example, if FEMA assistance were delayed after a natural disaster.

The governor said his administration is coordinating with Washington’s federal delegation and the state attorney general’s office; he said the AG is challenging at least some of the recent federal funding cuts. Ferguson did not present a specific revenue plan onstage and said budget details were being worked out in the ongoing legislative session that concludes at the end of the month.

The event concluded with Ferguson urging fiscal discipline while using legal and policy tools to defend state programs.