We all deserve to live in a state with robustly funded services – like schools, health care, and programs for people with disabilities – that give everyone the opportunity to lead a good life. That requires a state budget that has ample funding. But yet again, our state is facing a budget shortfall. And after a disappointing governor’s budget proposal in December in which he relied on large-scale cuts and budget maneuvers, the House and Senate’s proposed supplemental budgets seem to do more of the same, with a few small improvements.

Both budgets show slight increases to the 2025-2027 biennium operating budget from Governor Ferguson’s proposal, which would help protect funding for some critical programs. Unfortunately, however, the House and Senate refrain from enacting near-term progressive revenue options – which they could do by asking the ultra-wealthy and corporations to pay their share in taxes. Instead they make many broad cuts to state agencies and critical public services such as health care and K-12 education.

How they’re balancing the budget at a glance:

The House proposes a supplemental budget of $79.9 billion and the Senate of over $80.1 billion. By and large, the House and Senate versions get to a balanced supplemental budget by:

• Drawing down funds from the Budget Stabilization Account (Rainy Day Fund): The House proposal includes a $880 million transfer to the 2025-27 budget from the Rainy Day Fund (building in an anticipated “pay back plan” into the fund in the 2027-2029 biennium with House Bill 2034); whereas the Senate includes a $750 million transfer. As we’ve noted previously, use of the Rainy Day Fund must be a last resort for balancing the budget. And given that there are other solutions – namely progressive revenue – our state is not in a last-resort situation.
• Relying on budget transfers (rather than new revenue) to address federal cuts: Lawmakers are tasked with making up for cuts to key programs and services across health insurance, food assistance, and housing security due to federal funding cuts from the Congress’s harmful H.R.1 bill. They propose spending $48 million in the House and $52 million in the Senate to adjust to H.R. 1 requirements. However, in doing so, they are effectively diverting that money away from other key parts of Washington’s budget that serve community needs.
• Small tax code changes for the current budget, paired with plans for future monumental tax code changes: It’s good that lawmakers are proposing to end a few outdated tax breaks, including sales and use tax exemptions for data centers; a preferential business and occupation (B&O) tax rate for prescription drug warehousing and reselling; and a B&O tax exemption loophole related to the insurance premium tax. Further, it is great news for the long-term health of our state budget that the House and Senate proposals include funding to implement Senate Bill (SB) 6346, the Millionaires Tax. However, if this bill passes, the tax would not be implemented until 2029, so revenue from the Millionaires Tax is not one of the tools being used to help balance this year’s budget.

What they are cutting at a glance

Disappointingly, lawmakers are relying overwhelmingly on cutting funding for key programs to balance the budget. Once again, the largest proposed cuts are to early learning and child-care programs as well as to health and human services in both the House and Senate budgets. A snapshot of the cuts to critical programs is below.

Child care:

• Cuts to Working Connections Child Care (WCCC) – $113 million (House) and $168 million (Senate): Both versions propose changing WCCC payments from a prospective, enrollment-based policy to an attendance policy that would reduce payments to child-care providers based on a child’s number of absences in a month. This harms child-care providers, who cannot increase enrollment to offset these unpredictable absences. Lawmakers also propose eliminating the enhanced WCCC subsidy rate that providers receive in Clark, Benton, Walla Walla, and Whitman counties, compared to their standard regional rate.
• Cuts to the Transition to Kindergarten program – $19 million (House) and $30 million (Senate): The House eliminates around 1,800 slots (roughly 25% of total slots), while the Senate limits eligibility to 185% of the federal poverty level (effectively eliminating around 50% of total slots) from the Transition to Kindergarten program. This program has been successful in closing opportunity gaps for children starting kindergarten in Washington.

K-12 education:

• Cuts to Local Effort Assistance (LEA) programs – $25 million (House) and $59 million (Senate): They propose removing the scheduled increase in payments to school districts that receive LEA payments, which would reduce payments from $250 to $150 per student. LEA payments support school districts in areas with low property values and high property tax rates.
• Cuts to school bus funding – $21 million (House and Senate): Both plans reduce annual payments to school districts to replace aging school buses.
• Cuts to Running Start – $14 million (House and Senate): They propose reducing the Running Start credit enrollment cap per student from 1.4 to 1.2 full-time equivalency credits, meaning that 11th and 12th graders in the program would lose tuition funding for around 10 college credits per school year.

Health and human services:

• Cuts to supports for people with disabilities – $17 million (House and Senate): Both plans cut the family support program and employment and day program for adults with developmental disabilities.
• Cuts to assisted living – $21 million (House): The House includes a one-year delay in updating payments to assisted living facilities to match increased current costs.
• Cuts to nursing homes – $10 million (Senate): The Senate plan phases out the low-wage equity add-on, inflation add-on, and minimum wage add-on in updating payments to nursing homes to match increased current costs.
• Cuts to Apple Health coverage – $9 million (House): The House proposes eliminating Apple Health coverage for most physical, occupational, and speech therapies for adults.

Immigration justice:

• Cuts to Apple Health Expansion (AHE) – $33 million (House) and $45 million (Senate): Both plans cut this expansion program by changing the service delivery model to a Fee-for-Service program. AHE provides health care for immigrants who are otherwise ineligible for federal health care assistance.

Criminal legal system:

• Cuts to alternatives to arrest and incarceration – $1.4 million (House): The House version cuts multiple programs that help cities and counties provide alternatives to arrest and incarceration. Specifically, Alternative Response teams, Alternatives to Arrest and Jail, and Law Enforcement Assisted Diversion would lose funding.
• Cuts to reentry medical services – $7 million (House and Senate): They propose reducing funding for reentry medical services through the Medicaid Transformation Project. This program supports people who’ve been incarcerated or in juvenile rehabilitation centers as they transition back into their communities.

What they are funding at a glance

There is some good news in the budget proposals, with the House and Senate funding important programs to meet agency and service needs. While this is heartening, it would be much better if new progressive revenue options sustained the budget, so lawmakers didn’t have to use unnecessary funding maneuvers. A snapshot of some key investments (and one investment misstep) are below.

Immigration justice:

• Funding for the Washington Migrant and Asylum Seeker Support program – $25 million (House and Senate): They include funding for the Washington Migrant and Asylum Seeker Support program (WA Mass), which provides newly arrived migrants and asylees with vital programs that support their basic needs, including housing assistance and connection to legal services.

Direct cash:

• Transferring funding to the Working Families Tax Credit (WFTC) from the Climate Commitment Account (CCA) – $330 million (House): The House proposes diverting money from a program that fights the climate crisis to expand a tax credit that benefits working families. While it’s great that lawmakers want to fully fund the WFTC, this isn’t the right approach. They should protect environmental programs by passing more progressive revenue this year to increase the general fund and support programs like the WFTC.
• Funding youth in foster care – $613,000 (Senate): This would end the practice of withholding Social Security benefits (such as the Supplemental Security Income program and the Retirement, Survivors, and Disability Insurance program) from youth in Washington state Extended Foster Care program. It ensures that young people in Extended Foster Care can keep the money that is rightfully theirs and helps them to have greater financial stability as they navigate adulthood.

Criminal legal system:

• Funding for the Statewide Reentry Legal Aid project – $750,000 (House) and $250,000 (Senate): The proposals would support individuals leaving incarceration with vacating convictions, clearing criminal records, and terminating legal financial obligations (LFOs).
• Funding for survivors of crime – $19 million (House and Senate): House and Senate plans increase funding for Crime Victim Advocacy services statewide.
• Funding State v. Blake resentencing support – $1.5 million (House): The House proposes critically needed resentencing support related to the state Supreme Court’s decision that the state’s drug possession law was unconstitutional. This funding would help ensure people’s criminal records are adjusted and that any payments and debts from legal financial obligations would be refunded or forgiven.

Also, there is a misaligned increase in funding for the Department of Corrections – $88 million in the House proposal and $66 million in the Senate’s. A significant portion of this funding would be used to increase the number of beds – more than 300 by the House and more than 150 by the Senate – at the Monroe Correctional Complex. Supporting the growth of the prison industrial complex is not a good use of the state’s funds at any time, but especially when we are facing a budget shortfall.

Missed opportunities for much-needed progressive tax reforms

We know that the harmful federal and state budget cuts we’re seeing will impact those who already face historical barriers to economic security. If we want a more equitable system where everyone in Washington can achieve their fullest potential, legislators should prioritize bold, new ways to fix our tax code in the short term. The Millionaires Tax is a crucial part of improving our upside-down tax structure, and lawmakers must pass this historic legislation, which would take effect in 2029.

In the meantime, it is disappointing that lawmakers are not pursuing a high earners payroll tax on employers or the wealth tax, both of which could reduce cuts and overall reliance on the Rainy Day Fund. By not enacting these two revenue options, estimated to bring in approximately $3 billion to $6 billion a year over the next few years, lawmakers are leaving much-needed revenue on the table in a state where the ultra-wealthy get a special deal in the tax code at the expense of everyone else.

By delaying action on passing these near-term progressive taxes, legislators are delaying the work needed to ensure our state has the tools to balance the budget more equitably and sustainably – and to prevent such egregious cuts – in the coming years.

It is also a mistake for both chambers to propose repealing (Senate Bill 6347) the reforms they made to the estate tax in the 2025 legislative session. This repeal would cost the state approximately $45 million annually at a time when more funding is needed.

What the budget needs moving forward

It’s good that the House and Senate proposals aren’t as harmful to people throughout our state as the governor’s proposal. We urge lawmakers to maintain funding for the needed investments in their final budget and pass the revenue tools that close tax breaks.

However, continued reliance on cuts and budget maneuvers due to our broken tax code aren’t sustainable solutions, especially given how much wealth there is in our state. It would be game-changing to have revenue from the Millionaires Tax infused into the state budget as of 2029. During the intervening time, the legislature should return to the 2027 legislative session ready to be more bold in establishing new revenue in the budget.

Note: This blog post been updated from a previous version with correct data about proposed cuts to Working Connections Child Care.