Emily Makings

The number of state employees is still growing, slowly

The Seattle Times reports, “As Washington grapples with a multibillion-dollar budget shortfall, some state agencies are starting the largest wave of layoffs since the Great Recession.” For context, Chart 1 shows total state full-time equivalent (FTE) employees over time. The budgets passed by the Legislature for 2025–27 increase FTEs compared to 2023–25, whereas FTEs decreased […]

Adopted budget outlook indicates a very thin margin for error in 2025–27

The Legislature estimated that its 2025–27 operating budget balanced in 2025–27 and over four years, leaving an unrestricted ending balance in funds subject to the outlook (NGFO) of $225 million in 2025–27 and $673 million in 2027–29. Yesterday, the Economic and Revenue Forecast Council (ERFC) adopted an official budget outlook based on the enacted 2025–27 […]

State average wage increases by 6.8%; various state benefits and the UI taxable wage base will increase correspondingly

The Employment Security Department (ESD) reports that Washington’s average annual wage was $95,160 in 2024—an increase of 6.8% over 2023. According to ESD, “The increase was driven by a 0.7% increase in employment and an 7.5% increase in total wages and salaries, which grew by nearly $23.5 billion in 2024.” The state average wage is […]

The limits of the veto power

Gov. Ferguson has acknowledged that there will be unintended consequences from the tax bills approved this year. Nevertheless, he signed the bills—but for one partial veto. Given the way the Legislature structured the tax bills, it was impossible for Gov. Ferguson to veto many of their individual provisions. Generally, the governor of Washington may veto […]

A rushed process makes for questionable tax policy

After taking action on the budget and tax bills last week, Gov. Ferguson spoke to the press. He said, The revenue that I signed will likely require adjustments in the future. These revenue bills, as you know, moved through the legislative process quickly, particularly changes to the B&O tax and sales tax on services. We […]

Gov. Ferguson’s modest operating budget vetoes are not expected to put the budget out of balance

As I noted last week, Gov. Ferguson signed all the tax bills, except for one provision. He also vetoed several provisions of the operating budget. The final fiscal impact of these changes over four years will be clear when the official budget outlook is adopted June 10. However, it appears that the budget will still […]

Governor vetoes one provision of the operating budget tax package

Today Gov. Ferguson signed the tax bills (except for one partial veto) and partially vetoed the operating budget. He vetoed the provision of ESSB 5794 that would have applied the business and occupation (B&O) tax to interest on investments or loans secured by first mortgages or deeds of trust on non-transient residential properties. This means […]

New local sales tax for criminal justice authorized

Today Gov. Ferguson signed ESHB 2015. The bill allows cities and counties to impose a sales tax for criminal justice purposes and it creates a state grant program to help fund local law enforcement hires. New Local Sales Tax Authorized Under current law, cities and counties may impose unrestricted sales and use taxes of up […]

There are many unanswered questions about the bill that would extend the sales tax to certain services

The operating budget tax package includes ESSB 5814. As passed by the Legislature, the bill would apply the sales tax and the retailing B&O tax rate to certain services: Most of these changes would not apply to sales between members of an affiliated group. The bill would also expand the definition of “tobacco products” so […]

Of the provisions in ESSB 5794, applying the B&O tax to interest on real estate loans would have the largest revenue impact

One of the major tax bills that is assumed in the operating budget is ESSB 5794, which—according to the bill—would eliminate “obsolete tax preferences.” (“Preference” is the state’s terminology for exemptions, exclusions, deductions, deferrals, credits, and preferential tax rates. Many of these are in place for important tax policy reasons.) The bill would: The budget […]