The governor is required by statute to propose a budget that balances within existing revenues (RCW 43.88.030). This is called the “current law” or “Book 1” budget. The statute allows the governor to also propose a budget that uses “revenue sources derived from proposed changes in existing statutes.” This is called the “new law” or “Book 2” budget. The budget documents must be submitted to the Legislature (RCW 43.88.060).

When the governor doesn’t propose increasing taxes, there is only one budget proposal. For the 2026 supplemental, Gov. Ferguson proposes increasing the B&O tax rate for prescription drug resellers, applying the sales tax to data center equipment, and changing an insurance premiums tax exemption. This means that a Book 1 budget is required. (For my previous posts on Gov. Ferguson’s budget proposals, see here.)

When governors propose increasing taxes, they naturally prefer their Book 2 budgets and choose to promote them. However, the Book 1 budget has always been made available to the public by the Office of Financial Management (OFM). For example, the Book 1 budget submitted by then-Gov. Inslee in December 2024 (for 2025–27) is available here (at the links labeled “Current Law”).

This time around, although the Book 1 budget was submitted to the Legislature, OFM chose not to publish Gov. Ferguson’s Book 1 budget or make it available to the public by request. I obtained a copy from another source. It is largely the same as the Book 2 budget, with differences in just 25 policy items.

The governor’s Book 1 proposal would increase 2025–27 appropriations from funds subject to the outlook by $896.4 million (1.2%). That change includes $1.244 billion at the maintenance level (the cost of continuing current services, adjusted for caseloads and inflation) and net policy level reductions of $262.8 million. (For comparison, the Book 2 proposal includes $85.1 million in net policy level reductions.)

Appropriations in the Book 1 proposal would be $177.6 million lower than in the Book 2 proposal, but they would still be higher than enacted appropriations for 2025–27. Additionally, the net $262.8 million in policy reductions is comprised of $1.151 billion in new spending and $1.414 billion in reductions.

Major differences between Book 1 and Book 2 include:

• Book 2 would appropriate $71.0 million restore savings assumed in the biennial budget from Health Care Authority (HCA) program integrity activities that were apparently “already captured in the agency’s base budget.” Book 1 would not backfill this funding; presumably the agency would have to find the savings somewhere.
• Book 2 would provide $30.0 million for an electronic health record technology solution for the Department of Social and Health Services and the Department of Corrections. Book 1 would not.
• Book 2 would appropriate $26.5 million for close custody bed capacity at Monroe Correctional Complex. Book 1 would appropriate $9.0 million for this purpose.
• Book 2 would appropriate $18.4 million across the Department of Social and Health Services and HCA to “address the impacts of federal changes to Medicaid eligibility tied to immigration status.” Specifically, Book 2 would add “500 noncitizen services slots for clients currently receiving long-term care and developmental disability services.” Book 1 would not fund these slots.

The governor’s Book 1 proposal would be one way to balance the budget in the current biennium without increasing taxes, but it would not be the only way. Neither the Book 2 nor the Book 1 budget proposal would balance over four years.