In the final weeks of the 2025 legislative session, we described how lawmakers had a choice between two diverging paths for Washington as they finalized the state budget. Lawmakers could choose the smart path: addressing the $12 billion to $16 billion budget shortfall with progressive revenue that ensures corporations and the ultra-wealthy pay their share to fund the things our communities most need – thus avoiding harmful budget cuts and making our state tax code more equitable and sustainable in the long term. Or lawmakers could choose to repeat the mistakes of the past with massive budget cuts, worsening the affordability crisis for working families, maintaining a tax code that favors those with wealth and power, and further tilting an uneven economy that harms both people and small businesses.
In the end, the governor and legislators chose an uneven path that prioritized big corporations over everyday people. Although it is good news that they prevented across-the-board budget cuts and protected funding for some critical public services, they nevertheless made mostly piecemeal changes and failed to enact bold and needed fixes to our tax code and budget.
Now that the biennial state budget has gone into effect, we’ve got a snapshot of how the decisions made during this legislative session, including revenue bills, budget cuts, and budget investments, will impact our communities – both in good ways and bad.
Note: In this blog, we focus on the state operating budget, and specifically the Near General Fund-Outlook. Unless specified otherwise, budget and revenue figures cover the 4-year period of the 2025-2027 and 2027-2029 biennial budgets.
The budget reflects missed opportunities to enact progressive revenue
At the start of session, lawmakers took a cue from voters – who overwhelmingly supported progressive revenue in November’s elections – by introducing key progressive tax proposals. These proposals would have generated billions in much-needed tax revenue that could minimize or eliminate budget cuts to critical public programs we all rely on and begin improving our second-worst-in-the-country tax code.
In March, House Democrats proposed legislation to generate around $15 billion in revenue, while Senate Democrats proposed around $17 billion. These smart and commonsense proposals largely focused on ensuring the ultra-wealthy and corporations pay their share in our state tax code. They included a financial intangibles tax on extreme Wall Street wealth and a high-earner payroll tax on employers, similar to Seattle’s successful ‘Jumpstart’ payroll expense tax.
In response, corporate lobbyists and other special interests launched a massive pressure campaign to ensure billionaires and hugely profitable corporations keep getting a special deal in the tax code. And they were mostly successful. The final revenue deal still left our state with more than a $7 billion budget deficit and over-relied on regressive and inequitable taxes that will disproportionately impact working people. The following graphic provides details on which revenue proposals did and did not end up in the final budget – as well as showing whether they are progressive, regressive, or some combination of the two.
In addition to failing to enact truly progressive revenue, lawmakers also increased a variety of fees paid for by working families, many of whom already struggle with the cost of living. This includes the following:
- Discover Pass fees to access state parks and other public recreation lands are increasing by 50% from $30 to $45 annually.
- Ferry fares will increase by 3% twice over the next year, with additional increases to the summer season surcharge, vessel replacement surcharge, and credit card fees.
- Marriage licenses will have an additional $100 fee, more than doubling prices from the current range of $36 to $72.
- Hunting and fishing licenses are increasing by 38%.
In addition, it’s important to note that the transportation budget also includes increases to the state gas tax. The tax will increase by 6 cents per gallon, with additional 2% increases annually.
AN UPDATE ON TRIBAL RETAIL SALES COMPACTS
Lawmakers took some small steps to address calls from tribal nations to adjust current state-tribal retail taxes compacts. This past session, they increased the share of state sales and use tax revenues that tribal nations can qualify for – starting in fiscal year 2028. Lawmakers and the Department of Revenue must meaningfully engage with and follow the lead of tribal nations in their continued calls to address the issues with compacts. These compacts can impose on or erode the sovereignty of tribal nations by holding tribes to certain state-determined requirements in order to receive retail tax revenues generated on their own land.
Cuts to the budget will be felt now and for years to come
Public services like early learning, public transportation, parks, and wildfire prevention make a difference in the lives of people throughout our state. These services require funding that keeps up with inflation and the needs of a growing population. However, the final budget includes more than $7 billion in program cuts, reductions, and delays that are already starting to cause irreparable harm. What makes this even worse is that our state never fully recovered from the Great Recession, when lawmakers chose to cut over $10 billion from the operating budget and left Washington communities reeling from the harmful health and economic impacts. As Washington’s population and wealth has grown over the past 20 years, state tax revenues to fund the budget have not kept up when adjusted for economic growth. Now, this year’s budget cuts will set us back for decades more (and this isn’t even to mention the added harm of federal cuts, which we will address in an upcoming blog post).
The lion’s share of cuts lawmakers made are to education – from early learning through college – as well as health care programs and other human services. Early learning and child care programs for low-income families in particular faced the largest dollar amounts in cuts, combining for over $1 billion in cuts. These cuts primarily impact people who already face the greatest systemic barriers to opportunity (and are the same populations already most targeted by federal budget cuts).
The following graphic provides a snapshot of some of the cuts included in the final budget. It’s worth noting that the snapshot doesn’t include information about general administrative reductions that were made under a misguided guise of “efficiency” or “savings,” though. With a few exceptions, state agencies were directed to identify budget reductions of at least 6%. While the specific impact of these administrative reductions are still unclear or being determined by state agencies, “the largest wave of layoffs since the Great Recession” in state government has already begun.
Additionally, the cuts reflected in the budget don’t tell the full story. Changes that are not technically budget cuts, but that still have a harmful ripple effect, include:
- Ongoing underfunding – For example, the Washington Office of Superintendent of Public Instruction maintains that Washington state “currently underfunds K-12 education by around $4 billion per year,” or $8 billion per biennium.
- Critical budget requests by agencies that are denied – For the 2025-2027 biennium, the agency request budget totaled $83 billion, a funding gap of $5.1 billion from the enacted budget of $77.9 billion.
- Proposed funding that lawmakers dropped in the final enacted budget – For example, the House and Senate proposed budgets for this biennium both wisely included $5 million for civil legal aid organizations that assist people affected by the State v. Blake court decision on unconstitutional drug convictions. However, the enacted final budget did not include any funding.
Snapshot: Cuts to early childhood services
Lawmakers made the deepest cuts in early childhood education, despite voters’ overwhelming support in last November’s elections to protect the progressive capital gains tax that helps fund affordable early learning and child care. (We described the devastating human and economic impacts of these cuts on communities across Washington in an earlier blog post).
Washington should be a state in which all kids have access to programs that give them an opportunity to meet their fullest potential. And at this time in particular, when the Washington State Department of Children, Youth, and Families (DCYF) is reporting an increase in deaths and near-deaths of children involved in welfare cases, lawmakers in our state should be at the very least maintaining funding for programs that support kids and families. Washington’s families and children – especially those in communities of color, rural areas, and with middle and low incomes – cannot afford to keep waiting for the state to adequately invest in early childhood services. The following graphic details some of the cuts made to programs that support young children.
Snapshot: Cuts to criminal legal system funding
Lawmakers also made a mix of cuts to criminal–legal–related programs. While the criminal legal system should not be the structure through which people with low incomes can access and receive social services, cuts to programs such as mental and behavioral health services, diversion programs, and intervention programs will cause harm to individuals impacted by the carceral system as well as their loved ones and all our communities. The following graphic details some of the cuts made to programs that support people who are incarcerated, that help with community re-entry, and that seek to increase accountability within the criminal legal system.
A NOTE ABOUT POLICING, CRIMINAL LEGAL SYSTEM POLICY, AND PUBLIC SAFETY:
With the intent to improve public safety, Governor Ferguson promised to spend $100 million on hiring more police officers in his gubernatorial campaign, and lawmakers passed that funding in the final budget. Further, the police hiring bill lawmakers passed includes the option for cities and counties to add a 0.1% sales tax without voter approval for criminal justice expenses (which King County now has). This is a regressive tax that will hurt those with the lowest incomes – putting people into more financially precarious situations – without guaranteeing that their lives are “more safe” because spending more money on police doesn’t prevent crime (as research from California has shown). Greater public safety is created by community investments that increase people’s access to affordable health care, housing, and transportation; quality public education; and employment that pays livable wages.
The good news: Some important programs remained in the budget
The revenue that lawmakers did pass avoided an all-cuts budget, which is certainly good news. This led to some important wins for communities, workers, and kids. They include the fact that the budget:
- Protects the Apple Health Expansion program that provides access to health care regardless of citizenship status (and currently covers 13,000 immigrants).
- Funds state employee collective bargaining agreements instead of requiring the furlough days included in budgets proposed by Governor Ferguson and the Senate.
- Increases K-12 special education funding in part by removing an arbitrary cap on the percentage of students in a school district that can receive special education funding.
And even though the initial proposals by Senate and House Democrats did not make it into the final budget, it is noteworthy that these legislators did propose such bold and meaningful progressive revenue packages as solutions to the budget crisis. Further, it was good to at least see momentum during the legislative session around funding for the following programs that should be priorities for lawmakers moving forward:
- Age expansion for the Working Families Tax Credit to give a cash boost to 18- to 24-year-old adults working on very low incomes.
- Washington Future Fund pilot, a baby bonds program to disrupt the cycle of poverty and reduce racial wealth inequities.
- Eliminating court fees and fee debt for people who qualify as indigent and cannot afford to pay.
Where do we go from here?
Again, it’s good news that lawmakers rejected an all-cuts approach to the budget deficit they faced this session. But there is still much work to be done to shore up funding in our state budget – especially considering the threats coming down from the Trump Administration and the fallout from Congressional Republicans’ megabill (stay tuned for our analysis on the impacts of that bill soon).
So it’s a bad precedent that the governor is already calling for more cuts to state agencies even after this budget has been enacted. It is not a good way to move toward the 2026 legislative session. What lawmakers must be doing ahead of next session is looking at every possible option for progressive revenue that sustainably funds the programs that make our lives better and that ensures corporations and the ultra-wealthy pay their share in taxes.
