Blog

The perils of rushing tax policy: A legal challenge to ESSB 5814 and interim guidance for taxpayers

ESSB 5814, which was part of this year’s historically large tax package, will expand the sales tax to more services beginning Oct. 1. We described the bill in detail in our report on the tax package. Our report also discussed the many unintended administrative, legal, and policy ramifications the tax bills—particularly ESSB 5814—could have. For […]

Average workers’ compensation rates could increase by 4.9% in 2026

The Department of Labor & Industries (L&I) proposes increasing the average workers’ compensation rate by 4.9% for 2026. Under the proposal, rates would increase for 293 of 327 risk classes. Average rates have increased every year since 2020; however, the adopted rates have been lower than the break-even rate since 2019. In other words, L&I […]

State liability account shortfall could grow to more than $1.3 billion by end of 2025–27

One reason the enacted 2025–27 operating budget is not sustainable is that legislators ignored the shortfall in the state liability account, even though they knew that it faced a substantial deficit at the end of June 2025. As I wrote in July, net income to the account had been negative since FY 2015, despite a […]

Tariffs and uncertainty

Last week the Office of Financial Management (OFM) released a report on the impact of tariffs on Washington state. The report provides estimates of how federal tariff policy could affect prices, jobs, state revenues, and economic growth. Meanwhile, the preliminary September economic forecast from the Economic and Revenue Forecast Council (ERFC) cites the tariffs and […]

State Supreme Court: Job applicants can sue businesses that don’t post salary ranges in job postings, even if they aren’t applying in good faith

The Washington Equal Pay and Opportunities Act (EPOA) requires businesses with at least 15 employees to include the wage scale and salary range for a position in all job postings. Under the statute, “A job applicant or employee may bring a civil action against an employer for a violation of this section. A prevailing job […]

Credit rating agencies reaffirm Washington’s ratings, while noting some good and bad budget choices

Last month, the three credit rating agencies reaffirmed Washington’s Aaa (Moody’s) and AA+ (S&P and Fitch) ratings. According to the Office of the State Treasurer, “With these ratings, Washington now exceeds the credit rating of the federal government for the first time in history.” Washington’s credit ratings impact the state budget because states with stronger […]

The new tax increases were not needed to maintain existing services

As I’ve written, the historically large tax increases that were enacted this year will effectively fund the new spending in the operating budget. The tax increases were not needed to maintain existing services. The chart below shows how the Legislature addressed the spending problem this year. First, the Legislature found $6.983 billion in savings from […]

A wealth tax would not have prevented the budget cuts this year, as earlier budget proposals illustrate

The operating budgets enacted this year include $7 billion in savings to funds subject to the outlook over the five-year outlook period. (The outlook period includes revised appropriations for the final year of 2023–25, biennial appropriations for 2025–27, and the estimated cost of continuing those appropriations into 2027–29.) The savings are more than offset by […]

Proposed B&O tax increases in Seattle would narrow the tax base, increase revenue volatility, and encourage businesses to move jobs out of the city

In November, Seattle voters will decide if city business and occupation (B&O) tax rates should be increased. The proposed rate increases would be on top of statewide B&O tax increases that were adopted by the Legislature this year and several other business tax increases adopted recently by Seattle. Currently, Seattle’s B&O tax rates are 0.222% […]

Washington’s state and local taxes and spending per capita ranked 14th and 15th highest among the states in 2023

Last week, the U.S. Census Bureau released state and local fiscal data for fiscal year 2023. This data allows us to compare taxes and spending in Washington to other states. The two main ways to make these comparisons are to measure taxes and spending on a per capita basis and as a share of personal […]