Blog

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 […]

A rushed process makes for questionable tax policy

After taking action on the budget and tax bills last week, Gov. Ferguson spoke to the press. He said, The revenue that I signed will likely require adjustments in the future. These revenue bills, as you know, moved through the legislative process quickly, particularly changes to the B&O tax and sales tax on services. We […]

Governor vetoes one provision of the operating budget tax package

Today Gov. Ferguson signed the tax bills (except for one partial veto) and partially vetoed the operating budget. He vetoed the provision of ESSB 5794 that would have applied the business and occupation (B&O) tax to interest on investments or loans secured by first mortgages or deeds of trust on non-transient residential properties. This means […]

New local sales tax for criminal justice authorized

Today Gov. Ferguson signed ESHB 2015. The bill allows cities and counties to impose a sales tax for criminal justice purposes and it creates a state grant program to help fund local law enforcement hires. New Local Sales Tax Authorized Under current law, cities and counties may impose unrestricted sales and use taxes of up […]

There are many unanswered questions about the bill that would extend the sales tax to certain services

The operating budget tax package includes ESSB 5814. As passed by the Legislature, the bill would apply the sales tax and the retailing B&O tax rate to certain services: Most of these changes would not apply to sales between members of an affiliated group. The bill would also expand the definition of “tobacco products” so […]

Of the provisions in ESSB 5794, applying the B&O tax to interest on real estate loans would have the largest revenue impact

One of the major tax bills that is assumed in the operating budget is ESSB 5794, which—according to the bill—would eliminate “obsolete tax preferences.” (“Preference” is the state’s terminology for exemptions, exclusions, deductions, deferrals, credits, and preferential tax rates. Many of these are in place for important tax policy reasons.) The bill would: The budget […]

New taxes are not necessary to close the budget shortfall

Gov. Ferguson talked with the Washington State Standard yesterday about taxes and vetoes. According to the Standard, “There are going to be increased taxes,” he said. “There was no way to cut your way out of a $16 billion shortfall. So there’s going to have to be a balance there.” As I wrote in January, […]

Revenue impacts of the various provisions in the B&O tax bill

As passed by the Legislature, ESHB 2081 is the state’s largest tax increase. It would make multiple changes to the business and occupation (B&O) tax: My estimates of how ESHB 2081 and ESSB 5794 (which also makes B&O tax changes) would impact B&O tax rates by industry are here. According to the fiscal note for […]

New WEIA revenues would be used to supplant other funds for higher education

In 2019, the Legislature imposed a business & occupation (B&O) tax surcharge on certain businesses to help fund higher education. Under current law, 14.3% of collections from the 1.75% B&O tax rate for businesses in the “service and other activities” category is deposited in the workforce education investment account (WEIA). Additionally, all the revenues from […]