Emily Makings

New taxes are not necessary to close the budget shortfall

Gov. Ferguson talked with the Washington State Standard yesterday about taxes and vetoes. According to the Standard, “There are going to be increased taxes,” he said. “There was no way to cut your way out of a $16 billion shortfall. So there’s going to have to be a balance there.” As I wrote in January, […]

Budget leaves LEOFF 1 surplus on the table but signals that the money could be tapped next year

There is a surplus in the Law Enforcement Officers’ and Fire Fighters’ (LEOFF) Retirement System Plan 1. (The plan is 149% funded and is closed to new members.) There were various proposals this year to use the money. Former Gov. Inslee and the Senate Ranking Member would have transferred funds from LEOFF 1 to the […]

Washington student loan program, RIP

Back in 2022, when the state was awash in cash, the Legislature parked $150 million from funds subject to the outlook (NGFO) in the new Washington student loan account (WSLA). It was meant to be seed money for a low-interest student loan program. But the program, thin on details from the beginning, has never been […]

Higher taxes would not have prevented spending reductions

The 2025–27 operating budget passed by the Legislature would increase net appropriations by 8.2% compared to 2023–25. Every budget includes a mix of both spending increases and spending decreases, as priorities and needs change. When the legislative session started this year, legislators faced a real budget problem—they had overspent in 2023–25, so the cost of […]

A $580 million deficit is expected in the state liability account at the end of June

According to the Office of Financial Management (OFM), the Department of Enterprise Services (DES) estimates that the state liability account will have a cash deficit of $580 million at the end of the current fiscal year (June 30, 2025). Even though the Legislature knew of the problem, it did not appropriate funds in the operating […]

What happens if the governor vetoes the budget out of balance?

According to the Washington State Standard, Gov. Ferguson has been asked to veto the temporary business and occupation (B&O) tax surcharge on income over $250 million that is included in ESHB 2081. As I wrote yesterday, this provision of the bill would increase revenues to funds subject to the outlook (NGFO) by $649 million in […]

Revenue impacts of the various provisions in the B&O tax bill

As passed by the Legislature, ESHB 2081 is the state’s largest tax increase. It would make multiple changes to the business and occupation (B&O) tax: My estimates of how ESHB 2081 and ESSB 5794 (which also makes B&O tax changes) would impact B&O tax rates by industry are here. According to the fiscal note for […]

New WEIA revenues would be used to supplant other funds for higher education

In 2019, the Legislature imposed a business & occupation (B&O) tax surcharge on certain businesses to help fund higher education. Under current law, 14.3% of collections from the 1.75% B&O tax rate for businesses in the “service and other activities” category is deposited in the workforce education investment account (WEIA). Additionally, all the revenues from […]

Legislature cut $7.020 billion over five years from operating budget (but the cuts are offset by new spending on other programs)

The operating budget for 2025–27 increases appropriations from funds subject to the outlook (NGFO) by 8.2%, compared to enacted 2023–25 appropriations. Net new policy increases of $1.039 billion in 2025–27 include $3.065 billion in reductions and $4.104 billion in new spending. This represents a shift in legislative priorities, as the reductions are entirely offset by […]

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 […]