Blog

The fiscal consequences of spending more than the state collects in revenues

The Seattle Times ran a nice editorial yesterday on the state’s fiscal problems. According to the paper, state Treasurer Pellicciotti sees two distinct paths lawmakers could soon take that will determine the course of the state’s financial health for years to come. The first is to continue funding a budget that lacks the tax revenues […]

New brief: A Margin Tax Would Make Washington’s Tax Structure Only Marginally More Competitive

A draft bill is being circulated that would replace Washington’s business and occupation (B&O) tax with a margin tax. Like the B&O tax, a margin tax is a type of gross receipts tax. Unlike the B&O tax, the draft margin tax would allow the taxpayer to deduct the greater of (a) 30% of the taxpayer’s […]

WEIA revenues continuing to supplant other funds for higher education

The workforce education investment account (WEIA) is a fund subject to the outlook, and revenues in the account are dedicated to higher education and workforce development. Revenues come from the advanced computing surcharge and a portion of other business and occupation taxes on service and other activities. Originally, expenditures from the account were required “to […]

More on income taxes and migration

There is a proposal in Vermont to impose an income tax surcharge on incomes over $250,000. In a post about the proposal, Robert McClelland, an economist with the Urban-Brookings Tax Policy Center, writes, “recent research suggests taxpayers may be more mobile in response to higher taxes than was previously thought. High-income taxpayers with a lot […]

Paid family and medical leave tax rate will increase to 1.2% in 2027

The paid family and medical leave (PFML) tax rate will increase from 1.13% to 1.2% beginning Jan. 1, 2027. By statute, responsibility for the premiums is split between employers and employees. In 2026, employers are statutorily responsible for 28.57% of the premium; in 2027, they will be responsible for 29.3%. (Employers may choose to cover […]

Advanced computing surcharge revenue forecast increased

The advanced computing surcharge is imposed on “select advanced computing businesses” to help fund the workforce education investment account (WEIA). The surcharge is on top of other business and occupation (B&O) taxes. As part of ESHB 2081 (adopted in 2025), the surcharge rate increased from 1.22% to 7.5%, effective Jan. 1, 2026. At the same […]

Revenues for 2025–27 and 2027–29 are still lower than expected when 2026 budget was adopted, but income tax revenue estimates are increased going forward

Revenues to funds subject to the outlook (NGFO) are now forecasted to total $76.258 billion in 2025–27, $82.594 billion in 2027–29, and $94.121 billion in 2029–31. Compared to the June forecast, revenues are now estimated to be $22 million higher in 2025–27, $430 million higher in 2027–29, and $2.382 billion higher in 2029–31. The increases […]

Would I-645 “blow a $13 billion hole in the state budget”?

This week I saw an internet ad from the No on I-645 campaign that claims, “If passed, I-645 would blow a $13 billion hole in the state budget.” This is inaccurate and reflects a misunderstanding of our state budget. First, where is the “$13 billion” figure coming from? There’s no source listed, but a TV […]

New brief: I-645: Repealing the State Individual Income Tax

A 9.9% tax will be imposed on Washington income over $1 million beginning Jan. 1, 2028. Initiative 645 would repeal the income tax and prohibit any state or local taxes on individual income. I-645 would reduce revenues for funds subject to the outlook (NGFO) by $3.108 billion in 2027–29 and by $8.324 billion in 2029–31. […]

Dept. of Revenue requests an 11.4% spending increase (not including the expansion of the Working Families Tax Credit program)

The Department of Revenue (DOR) is requesting $1.087 billion in general fund–state (GFS) appropriations for 2027–29, which would be an increase of $111.0 million (11.4%) over 2025–27 appropriations. Of that increase, $20.8 million is at the carry-forward level. This includes $10.2 million for implementation of the state income tax. The budget request does not include […]