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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 […]

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 […]