Taxes, furloughs, funding for cops: WA Democrats tee up budget negotiations

Democrats in the Washington Legislature have laid their plans to close the state’s historic budget gap.

On Monday, budget leaders for both the Senate and House Democrats unveiled their full budget proposals, which include a combination of new cuts, taxes, and spending. Though there is some overlap between both plans, there are clear differences for lawmakers to sort out in the coming weeks.

Officials estimate the state budget gap to be between $10-15 billion. The budget-writing process is under the control of Democrats, who have majorities in the Legislature and hold the governor’s office. Democrats must balance the budget before the summer, when the new fiscal year begins.

As of Monday evening, Gov. Bob Ferguson had not commented on the proposals directly. Ferguson, a Democrat, has said previously that new taxes should be a “last resort” to tackle the deficit.

Republicans are critical of their Legislative colleagues' plans, saying Democrats haven’t justified new taxes and that cuts to child care and financial aid programs will hurt working people.

The basics

Democrats in both chambers favor boosting state spending to around the same level.

The House proposal would increase spending to $77.8 billion by the end of 2027. It features a funding boost for special education, as well as increases for child care provider pay, and housing and food security programs at the local level.

The Senate proposal is slightly larger and would up spending to $78.5 billion by the end of 2027 — about a $6.5 billion increase from current spending levels. Most of that increase would go toward maintaining existing programs as costs to provide state services go up. The Senate proposal also features about $1.6B in new policy-related spending over the next two years, mainly for schools, specifically special education.

Senate Democrats’ budget lead, June Robinson (Everett), said her caucus’s proposal tackled the budget deficit by tackling half of it with cuts and the other half with new revenue.

A significant share of the spending cuts from each chamber’s proposals come from delays or elimination of programs and services in child care and early learning, higher education, and health – in addition to broad reductions for state agencies proposed by the governor.

Both chambers also assume billions of dollars in new revenue over the next several years from their respective wealth, business, and property tax proposals — but most of that revenue wouldn’t be available until after 2026, since implementation of the proposed taxes would take time.

Where they’ll negotiate

Although the budget plans are similar in many ways, the specifics will evolve as lawmakers negotiate the final deal — and there are some clear differences between the two chambers’ approach.

A critical sticking point: State workers’ pay.

The Senate proposal would include a one-year pay cut for state workers — amounting to 13 furlough days — to help address a tight budget picture in the 2026 fiscal year. The Senate plan would see workers return to their collectively bargained raises after that.

Gov. Ferguson has said he supports limited furloughs for state workers.

The House plan, meanwhile, does not include furloughs or cuts to state worker pay.

“We cannot balance the budget on their backs – everything we have fought to maintain is supported by their work,” said House budget chair Timm Ormsby, of Spokane.

The House and Senate are also at odds over whether to dip into the state’s so-called “rainy day” fund.

The Senate plan would pull most of the $1.25 billion from the Budget Stabilization Account to help cover costs temporarily, leaving $92 million in reserves for one year before replenishing the fund in 2027. The House plan would not use that fund to cover its spending. The state Treasurer has warned lawmakers against draining state reserves, even temporarily, in light of the turmoil at the federal level.

Plans for hiring more cops is another area of disagreement among Democrats.

Senate lawmakers didn’t include any funding in their budget for local grants to hire law enforcement, while House Democrats’ plan would feature $25 million for local law enforcement grants over the next two years.

Gov. Bob Ferguson said during his inaugural speech he wouldn’t sign a budget without $100 million in law enforcement grants included. It’s unclear if the amount in the House plan will be enough to win him over, or if lawmakers will add more funding through the negotiating process.

Changes to the state’s tax code will also be another key area of negotiations, though leaders in both chambers have said there is widespread agreement in how they’re approaching the issue.

Both the House and Senate proposed new taxes on the state’s wealthiest residents and companies, as well as changes to how local governments collect property taxes. But lawmakers will have to reconcile the specifics of their proposals since they include some different details — and while the Senate has proposed reducing the state’s sales tax rate, the House proposal doesn’t change sales taxes.

It also remains unclear which tax proposals, if any, the governor would support. Ferguson has said taxes should be a “last resort” to tackle the budget crunch.

The governor’s communications director, Brionna Aho, said in an email: “The governor is looking forward to working with legislative leaders to craft a balanced budget that preserves core services. Our team is in the process of reviewing the budget proposals released today.”

The two chambers’ proposals also include some reductions in higher education spending, but the Senate plan would allow colleges and universities to pursue larger tuition increases in 2027.

What's next?

The House and Senate will each approve their budget bills in the coming days, and then go to what’s called a “conference committee” that meets behind closed doors to wrangle the specifics.

Once lawmakers come to an agreement on both tax and spending changes in the coming weeks, they’ll unveil the final budget plan and bring it up for a final vote. They’ll then send it to the governor, who can sign or veto the proposals.

If all goes smoothly, lawmakers will strike a deal and send it to the governor before they’re scheduled to adjourn for the year on April 27.

If they don’t succeed, they’ll have to come back for a special session.