How would you fix Washington’s $15 billion budget crisis?
Department cuts? Government employee furloughs? New taxes? Cascade PBS helps you break down Olympia’s various proposals for addressing the shortfall.
If you had an estimated $15 billion budget deficit to make up for over the next four years, how would you do it? New taxes, extensive cuts, draining the state’s savings and forgoing state worker raises are all on the table in Olympia, as Washington lawmakers announce their proposals to address the coming budget shortfall over the next four years. Writing a state budget that accounts for more than $70 billion is complicated. It’s also vital to ensuring continued operations for public schools, environmental programs, child care, law enforcement, mental health services and everything in between. On Monday, legislative Democrats, who have a majority in Olympia, released their proposed budgets. Both chambers’ proposals cost about $78 billion. The Democratic plans follow former Gov. Jay Inslee’s proposal from December, Gov. Bob Ferguson’s $4 billion savings plan, and a proposal Senate Republicans released earlier in March.
The budget is legally required to be balanced through 2029, and state lawmakers have until April 27 to reach a compromise approved by both chambers and Ferguson. To learn more about how these proposals align with how you might balance the budget, take our quiz. And read on to learn more about some of the costliest proposals up for debate. New taxes Senate Democrats emphasize making the state’s tax code more progressive, so that lower-income Washingtonians pay less in taxes than the wealthy. They’re proposing a wealth tax of $10 on every $1,000 worth of stocks, bonds and funds held by people with more than $50 million in assets. This would bring in about $4 billion a year to fund public schools and special education. Senate Democrats are also proposing a 5% tax on employers with payroll costs of $7 million or more. That would bring in $2.3 billion each year to support schools, health care and public safety. The proposal also would allow the Washington state, city and county governments to increase the current 1% property tax cap to account for population growth and inflation. The additional funds would pay for public schools and community safety programs.
The proposal also includes cutting the state sales tax from 6.5% to 6%, which would cause a decline in state revenue of about $1.3 billion annually. House Democrats, like their counterparts in the Senate, are focused on taxing wealthy residents and businesses, but with a different approach. They’ve proposed a tax of $8 on every $1,000 worth of financial assets above $50 million. This would bring in about $2 billion every year to fund education. The proposal would also allow Washington state, city and county governments to increase property taxes from 1% to as much as 3%. That would increase funding for public schools by $150 million every year, starting in 2027. The proposal would also impose a 1% increase on the business and occupation tax for companies making more than $250 million and increase taxes from 1.2% to 1.9% on financial institutions with an annual net income of $1 billion or more. This would bring in $2 billion starting in 2027.
Senate Republicans’ budget proposal does not include any new taxes. Both Senate and House Republicans have been adamant that the budget can be balanced by reducing spending alone. Ferguson has not committed to any tax proposals and said new taxes should be introduced only as a last resort. Inslee included a 1% tax on individual wealth over $100 million, which would bring in $10.3 billion over the next four years. He also proposed a temporary 20% tax increase for businesses making more than $1 million annually and a 10% increase for all businesses starting 2027. Draining the rainy-day fund Starting July 1, 2026, the state’s savings account, also known as the rainy-day fund, will have $1.6 billion in it. Under state law, using that money requires a three-fifths majority in the Legislature, a margin Democrats currently hold in both chambers.
Senate Democrats propose spending that $1.6 billion and paying it back by 2027. House Democrats do not propose using the savings, citing uncertainty at the federal level as one reason to keep the fund intact. Senate Republicans’ plan would preserve the state savings. Ferguson is unsupportive of draining the fund and has called this an “unsustainable budget practice.” Inslee’s plan would use the $1.6 billion and pay it back by 2029. State employee salaries and benefits State employees and the governor’s office bargain their wages and benefits every two years. In the fall, Inslee and employee unions reached agreements on raises and benefits that would cost the state around $2.6 billion over the next two years. Lawmakers are trying to make that pencil out. Senate Democrats propose giving state employees their previously negotiated raises, but imposing 13 furlough days per employee in 2026, equivalent to about a 5% reduction in pay for the year. Wages would return to previously bargained rates starting July 1, 2027. This proposal also decreases how much the state pays into employees’ health insurance. Currently, employees pay 15% of their benefits; the portion they cover would go up to 20%.
House Democrats’ budget proposal maintains the wages and benefits state workers bargained for last fall. These include increased wages through June 2027 and maintaining the amount the state pays for employees’ health insurance. Senate Republicans propose forgoing negotiated raises and instead giving every worker a $5,000 bonus. That would cost the state $420 million. They also propose increasing how much employees pay into employee health insurance plans from 20% to 15%. Ferguson’s plan would honor employees’ collective bargaining agreements, but it proposes a once-a-month furlough day for every employee for the next two years. That would save the state about $300 million. Inslee’s budget would align with all collective bargaining agreements finalized between his office and state employees.
Pausing child care and early learning expansion All the budget proposals have one thing in common: pausing planned expansions of child care subsidies and early learning. Under the Fair Start for Kids Act, passed in 2021, more families are supposed to get access to state subsidies for child care or free early learning programs in the coming years. Starting in July, eligibility for families receiving state subsidies was supposed to expand to include those making 75% of the state median income, or about $8,190 a month for a family of four. The state’s early learning program was also set to become an entitlement in 2026. But those expansions are proving costly for the state and pausing them would save about $500 million over the next two years and more than $1 billion through 2029. A bill proposed in the legislature this session would delay this subsidy expansion until 2029 and push back the early learning entitlement until the 2030-2031 school year. It passed out of the Senate and is currently making its way through the House.
Pension plans Some of the state’s pension plans have a surplus of funds due to higher investments over the years compared to the amount paid out in benefits. Lawmakers are considering using that excess money to cover other areas of the budget. Senate Democrats would combine three state retirement plans (law enforcement and firefighters, public employees and teachers) into one system. This would save about $600 million and allow retirees in the teachers’ and public employees’ systems to receive a 3% cost-of-living adjustment every year. House Democrats would eliminate the pension plan for law enforcement and firefighters and transfer members to a new restated plan. The surplus from the original plan would then be deposited into a new savings account lawmakers could transfer into the general fund if needed. Senate Republicans propose repurposing a $2 billion surplus from the state’s pension plans to cover other areas of the budget.
Ferguson has not publicly supported any proposal related to pension funding. Inslee proposes pulling $1 billion from the pension surplus to reallocate to other parts of the budget. Other notable cuts and spending Hiring grants for cops: Providing grants to local law enforcement agencies to help with hiring has been a priority for Ferguson. He pushed for an extra $100 million every two years for this effort. Senate Republicans included this fully -funded plan in their proposal. House Democrats included $25 million every two years for these grants. Senate Democrats and Inslee did not include this in their proposal. State Parks fees: A Senate Democratic proposal would increase the cost of a Discover Pass from $30 to $35. Both Senate and House Democrats include in their budgets the extra revenue the state would get from the increase. Bonuses for teachers: Inslee proposed pausing $6,324 bonuses for teachers who receive a National Board certification, which would save the state $151 million. No other proposal includes this provision.
Shutting down a women’s prison: All proposals include a plan to close Mission Creek Corrections Center in Belfair. Opening a new juvenile rehabilitation facility: Inslee proposed opening a new 48-bed unit for juvenile offenders at Stafford Creek Corrections Center. That would cost the state about $28 million over the next two years. Both House and Senate Democrats include this in their plan. Senate Republicans propose making policy changes to the juvenile system instead of opening a new facility. Funding for crime victims: Advocates for crime victims have been pushing for more state money for services like legal advocacy, therapy and forensic exams. The Senate Democrats’ plan includes $25 million for these services starting July 1. House Democrats propose $20 million starting July 1. Closing residential habilitation centers: Lawmakers are weighing closures to facilities that care for people with developmental disabilities. Inslee and House Democrats proposed closing both Rainier School and Yakima Valley School and moving care into more community-based settings. Senate Democrats and Senate Republicans both support closing Rainier School but keeping Yakima Valley School open.
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