OLYMPIA — Washington Senate and House budget leaders say they are weighing several options as they prepare for a "major pivot" after Gov. Bob Ferguson announced Tuesday that neither version of the operating budget proposals by Democratic lawmakers are close to ones he would sign.
At the heart of the debate: a wealth tax sought by both House and Senate Democrats.
They estimate the new tax would pull in about $2 billion to $4 billion a year, starting in 2027, to help shore up the estimated $16 billion shortfall in the state’s operating budget over the next four years. The wealth tax is one of several options — lawmakers are also debating 5% payroll for the state's largest companies and changes to the current 1% property tax cap — being considered as Democrats say cuts alone will not fill the budget gap.
In an interview with The Seattle Times on Wednesday, Sen. June Robinson, D-Everett, chair of the Senate Ways and Means Committee, said that while she wasn’t shocked by Ferguson’s stance on the wealth tax, she was “disappointed” that the two chambers will have to rework proposals she says “reflect the values” of both caucuses.
The House and Senate will have to “make a major pivot,” she said with the “wealth tax being almost completely removed from possibility.”
“We're committed to working together between the House and Senate and in cooperation with the governor to find a path forward that will get us a budget and out of here on time by April 27,” she said.
The Legislature must pass a balanced operating budget by then, along with a transportation and capital budgets, if lawmakers want to avoid being called back for a special session.
Other tax options on the table
While Ferguson is opposed to a broad wealth tax, he said he is not ruling out a relatively smaller tax on wealth that could be used as a test to see whether it would uphold in court. Robinson said Democrats are now considering “a very narrow, very small wealth tax,” although she added that it would not be a “significant source of revenue for the budget.”
Robinson noted Ferguson did not take any other revenue sources proposed by Senate Democrats off the table Tuesday and said that she expects some direction from Ferguson’s office in the coming days.
Rep. April Berg, D-Mill Creek, chair of the House Finance Committee, said she appreciated getting further clarity from the governor.
“It’s clear we have work to do in negotiating a compromise that leads to a budget and revenue package that works for Washington families,” Berg said in a statement. “I’ll be talking to the House Democratic Caucus members about the governor’s perspective and how to ensure our values are represented in the final budget.”
Senate Republicans said Tuesday they were appreciative of Ferguson's stance on the budget, but criticized him for not pushing back against other tax proposals, like the push to adjust the 1% cap on property taxes.
Sen. Nikki Torres, R-Pasco, said Ferguson brought clarity to the budget conversation “at just the right time,” and that she was glad the governor wanted to protect the state’s rainy day reserves Senate Democrats want to drain in 2026.
“Although his opposition to the so-called ‘wealth tax’ is based more on constitutional concerns than the job-related concerns Republicans have, that’s enough for today,” Torres said.
Big businesses balk
Others outside the Legislature have also chimed in.
A coalition of Washington's biggest businesses, including Microsoft, Amazon and Costco, is pressuring lawmakers to back off of major tax increases, including the proposed payroll tax on high-wage earners, warning such moves would harm the state's economic competitiveness.
"We appreciate your public service and the difficult problems that you are grappling to address. But if approved, these proposals would result in the largest tax increases in state history, perpetuating a dangerous trend of unsustainable spending growth," the businesses wrote in a letter this week to Ferguson and legislative leaders.
Even without billions in tax increases proposed by Democrats, the state's revenue is expected to rise by 6.8% over the next two years, the letter noted.
While the companies said they want to maintain and grow their presence in the state, they raised the specter of relocating jobs elsewhere, saying for example "it is 30 percent less expensive to employ a software engineer in Vancouver BC than in the Puget Sound."
After Seattle passed its JumpStart payroll tax, the letter said, thousands of jobs shifted from Seattle to Bellevue. Extending that statewide, as Democrats have proposed, "will prompt a similar response at the state level, with new and existing jobs moving to more business friendly states.
The letter was signed by leaders of the Bellevue Chamber, the Association of Washington Business, Washington Roundtable and the Seattle Metropolitan Chamber of Commerce, as well as 60 individual companies, ranging from the biggest tech companies to T-Mobile, Alaska Air, the Seattle Mariners and Weyerhaeuser.
Speaker of the House Laurie Jinkins, D-Tacoma, argued Wednesday that the 1% B&O tax on businesses with taxable income over $250 million a year proposed by House Democrats would only apply to the state’s highest earners, and that the ones who signed on to the letter, although she had not read it yet, were “not small businesses.”
She also said it was "interesting" that Weyerhaeuser signed onto the letter considering the company previously met with her and told her it would never leave Washington.
“It would be kind of shocking to all of a sudden hear them threaten that they're going to leave or something like that, over a B&O rate,” Jinkins said.
Jinkins said lawmakers and Ferguson are all in agreement that an all-cuts budget could be devastating for Washingtonians.
“There will be tax increases — it's figuring out this kind of balance and making sure that we're able to minimize any harm when it comes to regular, everyday Washingtonians," she said.
While Democratic budget writers are considering their options, progressive Democrats were swift in their criticism of Ferguson's Tuesday remarks.
“Are the people ready to ask him how he plans to keep schools open?” Rep. My-Linh Thai, D-Bellevue questioned Tuesday on social media platform Bluesky, writing Ferguson "threatened" to veto a budget based on the proposed progressive revenue package.
In a post on the social media platform X, Rep. Shaun Scott, D-Seattle, said Washingtonians who voted for Ferguson are “wondering why they're getting Republican budgeting priorities.”
“The cuts Trump is making differ little from those proposed by Ferguson,” he said. “If we don’t stand our ground on revenue, everyday Washingtonians will suffer.”
(0) comments
Comments are now closed on this article.
Comments can only be made on article within the first 3 days of publication.