Washington’s new budget is set. The governor signed it into law Tuesday, making only minor changes and avoiding a special session for lawmakers.
Gov. Bob Ferguson, a Democrat, left the roughly $78 billion budget plan largely intact, including billions in spending cuts and tax hikes on businesses and services. The governor also signed off on a gas tax increase to support the state’s struggling transportation budget.
“Am I excited about those revenues? Of course not, but we have to balance a budget that preserves core services,” Ferguson said, adding that deeper cuts weren't feasible. Republicans had hoped their proposals to make more cuts to spending would resonate with the governor, who emphasized a cuts-first approach to the budget and held multiple private meetings with GOP leaders throughout the session.
The governor also said he plans to closely watch for any “unintended consequences” of the new tax changes before he proposes adjustments to the budget ahead of next year’s legislative session.
Republican leaders who had praised the governor’s approach to the budget throughout this year’s legislative session were quick to condemn his signing of the various tax and fee increases, calling the governor’s approval “surprising.”
“On his first day in office Governor Ferguson spoke of fiscal responsibility, yet today he’s supporting the largest tax increase in state history,” Senate Minority Leader John Braun (R-Centralia) said in a statement. “That’s disappointing.”
When it came to taxes, the governor vetoed one change aimed at community banks. He chose to leave in place a sales tax exemption for interest collected by community banks on residential home loans, saying that specific exemption is critical to housing affordability and that removing the exemption would drive up the cost of home loans.
In addition to the cuts already approved by lawmakers, the governor also used his veto authority to cut another $25 million in spending out of the final budget plan. He slashed funding that would have helped people whose first language isn’t English access public services, and funding to help Spanish-speakers access HIV treatment. He also vetoed funding for programs aimed at providing housing and mental health supports for teens, stipends for nurses training to become sexual assault examiners, and services to help people with disabilities live independently.
The action comes weeks after lawmakers closed out a difficult legislative session that saw lawmakers grappling with a multibillion-dollar budget gap, hotly debated policy changes, and a slate of personal tragedies. Part of that difficulty stemmed from Democratic lawmakers being seemingly at odds with the governor about how to approach the budget.
In the early stages of budget writing this year, the governor publicly slammed a proposal to create a new wealth tax in the state, despite widespread interest among legislative Democrats. After lawmakers ditched their wealth tax budget plan, Ferguson later criticized the amount lawmakers sought to increase taxes, calling that plan “unsustainable” under federal funding cuts being made or sought by the Trump Administration.
The final budget includes a suite of tax hikes, as well as a mix of spending boosts in some policy areas and billions in spending cuts.
In addition to $100 million in new spending for local governments to hire law enforcement, more funding is coming to schools to help pay for special education, and most state employees will receive their collectively bargained pay increases.
The largest revenue boost for the state will come from higher taxes on businesses and the application of the sales tax on services that were previously exempt, like temporary staffing, digital services and security. The governor also recently signed off on a series of other tax and fee changes – like raising the price of the Discover Pass, which grants access to state parks, as well as higher fees for fishing and hunting licenses.
The state’s transportation budget – which is separate from the main operating budget that funds core programs and services – also includes a one-time, six-cent increase to the state’s gas tax, with automatic increases in future years. The transportation budget also includes higher taxes and fees for vehicle sales and rentals, as well as new tolling authority on State Route 520 between Seattle and Redmond.
State spending cuts, meanwhile, are expected to hit child care, higher education, and health the hardest, in addition to broad administrative reductions at most state agencies. Some of the cuts delay previously planned expansion of state services and spending.
The cuts also include the closure of several state-run facilities, including a women’s prison and a handful of prison reentry centers. A residential center for people with disabilities will also close by mid-2027.
