Blog

Income tax bill is by far the largest tax increase in the modern era

The multiple tax bills adopted by the Legislature last year collectively represented the largest tax increase going back over 30 years. For this analysis, I reviewed fiscal notes and legislative budget notes. Digital legislative and fiscal records are spotty prior to the 2000s, but some information is available online going back to the early 1990s. […]

Washington’s fiscal situation prompts vetoes of just $800,000 from the operating budget

The 2026 supplemental operating budget, as passed by the Legislature, increases appropriations from funds subject to the outlook (NGFO) by $2.348 billion. Revised NGFO appropriations for 2025–27 are $80.206 billion. As we’ve shown, appropriations for the biennium exceed revenues by $4.9 billion. The budget balanced due to the use of one-time funds and unusual accounting […]

State will retain about 70% of annual income tax revenues

Gov. Ferguson has signed ESSB 6346, which imposes an income tax. The bill additionally reduces some sales taxes and some business and occupation (B&O) taxes and expands eligibility for the Working Families Tax Credit (WFTC). (I wrote about the details of the final bill last week.) The fiscal note for the enacted bill estimates that […]

New brief: Band-Aid Budget Redux

The Legislature has passed a supplemental operating budget that would increase 2025–27 appropriations from funds subject to the outlook (NGFO) by $2.348 billion (3.0%) compared to the enacted 2025–27 biennial budget. Revised 2025–27 appropriations would be $80.206 billion, which is 11.4% higher than actual 2023–25 spending. Since the biennial budget was adopted last year, the […]

New funding for wildfires and WEIA

Interest on loans that are primarily secured by first mortgages or trust deeds on non-transient residential properties is currently subject to the service and other activities B&O tax rate if the loan originator is located in more than 10 states (RCW 82.04.29005). Otherwise, such interest is deducted from B&O tax. SHB 2089, which has been […]

Baseball stats and tax policy

This Opening Day seems like a pertinent time to discuss tax policy, as the Legislature made a major tax change that could impact Washington’s tax structure’s Wins Above Replacement. Although taxes are not the only reason businesses and individuals choose to locate in a state, they are a factor. Some tax structures are more competitive […]

Supplemental transportation budget would use bonds to fund new highway preservation spending

The 2025–27 biennial transportation budget balanced thanks to a revenue package that included an increase to the gas tax and increased sales taxes on transportation-related transactions. The tax and fee increases were expected to increase revenues by $1.885 billion through 2027–29. These funds were used mainly to shore up existing projects. Nevertheless, the biennial budget […]

Key provisions in the income tax bill as passed by the Legislature

The 2026 supplemental operating budget, as passed by the Legislature, assumes that the income tax bill (ESSB 6346) would reduce revenues to funds subject to the outlook (NGFO) by $55.4 million in 2025–27 and increase NGFO revenues by $2.292 billion in 2027–29. (The governor has not yet signed either the operating budget or the income […]

Legislature books substantial cost savings from changes to child care funding policies (and a brief history of funding for the Fair Start for Kids Act)

The largest spending reduction in the 2026 supplemental operating budget is related to SHB 2689, which would make various changes to Working Connections Child Care (WCCC) and child care subsidy payment policy. (Neither SHB 2689 nor the supplemental operating budget have yet been signed by the governor.) Under current law, families are eligible for WCCC […]

Revenue reduction from estate tax bill now estimated to be smaller than assumed in the budget

Several of the major tax bills passed by the Legislature this year were changed at the end of session in ways that could affect revenues. (For example: ESSB 6346, ESB 6228, EHB 2487, and ESB 6347.) For each of these bills, the supplemental operating budget assumes the revenues in the fiscal note available at the […]