Blog

September revenue forecast is down, putting the current biennium in the red

Revenues for funds subject to the outlook (NGFO) are now expected to be $903 million lower over the outlook period than was forecasted in June. Compared to the June revenue forecast, the estimate for 2023–25 (which ended June 30) decreased by $13 million, to $67.124 billion. The forecast for 2025–27 decreased by $412 million, to […]

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 […]

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 […]

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 […]

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 […]

New report: Historically Large Tax Package Rushed Through at the End of Session

The 2025–27 operating budget relies on a tax package that is estimated to increase revenues to funds subject to the outlook (NGFO) by $9.0 billion over four years. It includes business and occupation (B&O) tax increases (ESHB 2081 and ESSB 5794), the expansion of the sales tax to more services (ESSB 5814), capital gains and […]

Legislature did not increase property tax growth limits, but it did allow school districts to increase their enrichment levies (if approved by voters)

When House and Senate Democrats announced a new tax package proposal on April 15, it included HB 2049. As introduced, HB 2049 would have increased the property tax growth limit for the state and local governments and increased the maximum per pupil limits for school district enrichment levies. At the time, I showed that the […]

The June revenue forecast worsens the budget outlook

The Economic and Revenue Forecast Council (ERFC) estimates that revenues from funds subject to the outlook (NGFO) will be lower than expected when the 2025–27 operating budget was adopted earlier this year. Compared to the March revenue forecast (on which the adopted 2025–27 budget is based), the forecast for the current 2023–25 biennium increased by […]

The limits of the veto power

Gov. Ferguson has acknowledged that there will be unintended consequences from the tax bills approved this year. Nevertheless, he signed the bills—but for one partial veto. Given the way the Legislature structured the tax bills, it was impossible for Gov. Ferguson to veto many of their individual provisions. Generally, the governor of Washington may veto […]