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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 […]

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 […]