Blog

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 […]

Operating budgets in 2023–25 and 2025–27 rely on fund transfers to an extent not seen since the Great Recession

The supplemental operating budget passed by the Legislature transfers a net of $1.663 billion from other accounts into the NGFO (funds subject to the outlook). Combined with transfers enacted in 2025, net NGFO transfers for 2025–27 total $2.292 billion. Aside from the use of rainy day funds, these transfers are made from accounts that are […]

Following the more than $1 billion shifted from the capital budget to the operating budget, tapping CCA and LEOFF 1 funds along the way

According to the Department of Ecology’s December 2025 revenue forecast, revenues from the carbon emission allowance auctions are estimated to be $832.2 million higher (over the 2023–25, 2025–27, and 2027–29 period) than expected when the 2025–27 budgets were adopted last year. Based on the current revenue forecast, the state effectively has a one-time windfall that […]

Promises for 2027–29

Under the four-year balanced budget requirement, the maintenance level (the cost of continuing current services, adjusted for inflation and enrollment) of the adopted budget must balance within expected resources for the next biennium. The 2026 supplemental operating budget that was passed by the Legislature yesterday increased net new policy spending for 2025–27 by $621.3 million. […]

Budget bill includes provisos related to fiscal sustainability

The conference report for the operating budget would widen the gap between spending and revenues that started in 2023–25. As I discussed yesterday, the income tax will not solve the problem; instead, the Legislature must limit spending. Nodding to that, the operating budget bill proposed by the conference committee includes more language about sustainability and […]

Policy changes in the operating budget conference report would increase appropriations by $621.3 million

As I wrote yesterday, the operating budget conference report would increase appropriations from funds subject to the outlook (NGFO) by $2.348 billion compared to enacted appropriations for 2025–27. That includes $1.727 billion at the maintenance level (the cost of continuing current services, adjusted for enrollment and inflation) and $621.3 million in net new policy. The […]

Conference operating budget would not balance even in the current biennium but for unusually high accounting assumptions

The conference committee’s operating budget proposal relies heavily on one-time resources, questionable accounting assumptions, and the new income tax. The proposal would increase appropriations from funds subject to the outlook (NGFO) by $2.348 billion (3.0%) over enacted 2025–27 appropriations. Revised 2025–27 appropriations would be $80.206 billion, which would be 11.4% higher than actual 2023–25 spending. […]

Paid family and medical leave rate structure changed again, but it does not improve program solvency

The Legislature has passed 2SSB 5292. If signed by Gov. Ferguson, the bill would change the paid family and medical leave (PFML) tax rate-setting formula. However, more will need to be done to address program solvency. Initially, the tax rate for the program was set at 0.4%. Beginning in 2021, the rate was set based […]