Moody’s Ratings revised the State of Washington’s financial outlook from stable to negative on April 22, 2026. The agency affirmed the state’s Aaa issuer rating and assigned a Aaa rating to the state’s general obligation bonds.
The outlook revision is based on the state’s continued reliance on one-time budget solutions to support General Fund spending and a projected narrowing of budgetary reserves. The agency noted that if current budgeting approaches continue, the state will be less able to absorb unexpected revenue or expenditure shocks.
Washington State Treasurer Mike Pellicciotti stated that reliance on reserves to balance a structurally imbalanced budget could result in negative credit action. According to the Office of the Washington State Treasurer, total reserves are predicted to reach 1.4% by the end of the 2028 fiscal year. Pellicciotti has recommended the state maintain reserves equal to at least 10% of General Fund revenues.
A downgrade from Aaa to Aa1 would result in an estimated 0.1% increase in interest rates on state bond issuances. With the state issuing about $4 billion in bonds annually, this would increase annual debt costs by about $60 million.
As of the conclusion of the 2025 fiscal year, Washington had $24.1 billion in outstanding debt and other financial obligations.
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