Month: April 2025

Net increases for compensation crowd out funding for other programs

The 2025–27 operating budget, as passed by the Legislature, would increase appropriations from funds subject to the outlook (NGFO) by $5.927 billion (8.2%) over enacted 2023–25 appropriations. Of that, $4.409 billion is the maintenance level change (the cost of continuing current services, adjusted for inflation and enrollment). The remaining $1.039 billion is net new policy […]

Adopted taxes include the state’s largest tax increase (plus, how B&O rates would be impacted)

The operating budget, as passed by the Legislature, includes revenues from substantial new taxes. These taxes and the transportation revenue package would all make the list of the largest state tax increases. As I noted over the weekend, the impact of these taxes to funds subject to the outlook (NGFO) is $9.379 billion over four […]

Operating budget conference report would increase NGFO appropriations by 8.2%, and revenue package would increase revenues by $9.4 billion over four years

The conference report for the operating budget would appropriate $77.872 billion from funds subject to the outlook (NGFO) in 2025–27. That is an increase of $5.927 billion (8.2%) over enacted appropriations for 2023–25. (The 2025 supplemental would increase 2023–25 appropriations by $751.8 million.) Although the budget does assume significant savings, it doesn’t reduce spending on […]

Consumers would bear the cost of increased B&O taxes

In an editorial, the Seattle Times writes that the tax increases proposed by legislators “will in the end hit those residents they say they’re trying to help.” The Institute on Taxation and Economic Policy (ITEP) agrees. A recent ITEP post considers a business and occupation (B&O) tax proposal that would add a surcharge on income […]

0.1% of state sales tax would be shifted to the transportation budget

The Legislature has passed 2SSB 5802, which would transfer funding between the operating and transportation budgets. Effectively, these changes would help to alleviate the operating budget’s FY 2026 problem while also setting up a permanent funding stream for the transportation budget. First, the bill would transfer $225.9 million from the multimodal account (transportation budget) to […]

Increasing the assumed investment return reduces pension contributions now, but could result in future increases to contributions

The Legislature has passed ESSB 5357, which would increase the state’s assumption of investment returns that is used to determine the funded status of pension plans to 7.25%. This is a backward step in a 15-year effort to reduce the assumption so that it better reflects the level of risk. In 2010, Washington assumed 8% […]

Three major tax bills for the operating budget have been passed by the Legislature

The Legislature has passed three of the major operating budget tax bills (ESSB 5794, ESSB 5814, and ESSB 5813). The three others (SHB 2081, SHB 2077, and SHB 2049) are scheduled for executive session in the Senate Ways & Means Committee this afternoon. ESSB 5794 As adopted, ESSB 5794 would apply or increase business and […]

Are the proposed tax increases necessary to stave off massive cuts to services?

We estimate that the maintenance level (the cost of continuing current services, adjusted for enrollment and inflation) shortfall is about $8.6 billion over the outlook period (FY 2025, 2025–27, and 2027–29). The 2025–27 operating budget problem is not a revenue shortfall, it is the result of legislative spending choices over the past several years. Indeed, […]

B&O tax proposal would increase B&O revenues by 24.2% over the forecast in 2027–29

PSSB 5815 and PSHB 2081 would increase business and occupation (B&O) taxes. The bills include a temporary surcharge and permanent rate increases. According to the draft fiscal note, the proposal would increase revenues to funds subject to the outlook (NGFO) by $2.442 billion in 2025–27 and by $3.943 billion in 2027–29 (the first biennium it […]

New tax proposals would include the state’s largest tax increases

The new tax package proposed by House and Senate Democrats this week includes five proposals to increase revenue. These and two other major tax bills are scheduled for executive session in the Senate Ways & Means Committee tomorrow. All would make the list of the state’s largest tax increases. They include: The table shows the […]