Budget

In a landmark move that reflects the changing fiscal landscape of the Evergreen State, Washington lawmakers have passed a sweeping $77.8 billion two-year state budget. The budget—which now awaits Governor Bob Ferguson’s signature—aims to tackle a projected $15 billion revenue shortfall over the next four years while funding a wide array of state services including K-12 education, mental health, corrections, and housing support.

The budget process brought heated debates between progressive legislators pushing for new taxes and conservative factions advocating spending restraint. Ultimately, the result is a hybrid approach that introduces $4.3 billion in new taxes, $2.7 billion in spending cuts, and increased funding in key areas like public education and law enforcement.

A Budget Forged in Crisis
With the state facing rising costs from inflation, increased demand for public services, and commitments to newly approved programs, legislators were forced to make difficult decisions. The final agreement passed narrowly in both chambers—52-45 in the House and 28-19 in the Senate.

“It’s probably not the budget that we thought we were going to be writing a year ago,” admitted Senator June Robinson (D-Everett), chair of the Senate Ways and Means Committee. “But as we’ve grappled with the reality of the state’s fiscal situation, I believe we worked diligently to write a budget that addresses the challenges we have and continues to fund the core services that the people of Washington expect.”

Governor Ferguson, while withholding detailed comments on the revenue measures, expressed approval that the legislature reduced the amount of new taxes originally proposed. He noted his appreciation that the state’s savings account remains untouched, preserving reserves for future emergencies.

Business and Technology Take the Tax Hit
One of the most controversial elements of the budget is the $4.3 billion in new taxes—an effort largely focused on high-revenue businesses, financial institutions, and digital services. These include:

• A 0.5% surcharge on businesses with annual earnings over $250 million.

• Higher business and occupation (B&O) tax rates for wholesale and manufacturing sectors.

• Increased retail sales taxes for software development, web design, and IT training services.

• New taxation on digital advertising and nicotine products.

• Adjustments to the capital gains tax and estate tax thresholds.

• Additionally, Washingtonians will see increased state park fees, with the Discover Pass jumping from $30 to $45, and hunting and fishing licenses rising by an average of 38%.

Republicans decried the package as overly burdensome to everyday citizens. “They just took advantage of the situation to run taxes,” said Senate Minority Leader John Braun (R-Centralia). “I’m deeply concerned about the budget they came up with.”

Spending Cuts and Program Delays
In contrast to the tax hikes, lawmakers agreed to significant spending cuts totaling $2.7 billion. These cuts will most impact behavioral health services, early learning expansions, and certain programs supporting low-income residents.

One major casualty is the delay of expanded eligibility for child care and early learning subsidies. Originally scheduled to take effect by 2026, those plans are now postponed until after 2029—saving the state more than $1 billion. Washington’s early learning program for children under age three received no funding at all, though legislators signaled it could be revived in future sessions.

Other cuts include:

• Delays in expanding foundational public health services.

• Reductions in funding for behavioral health and higher education programs.

• Scaling back abortion access funding.

• Halting new long-term admissions at Rainier School, a facility for individuals with disabilities, as part of a phased closure plan.

Key Investments: Education and Public Safety
Despite austerity in some areas, the budget includes bold investments in others—especially public education and local law enforcement.

K-12 education, long a Democratic priority, will receive a major boost with $775 million allocated specifically for special education funding through 2027. Local governments will also get additional support to cover shortfalls from declining revenue tied to document recording fees—an important funding source for homelessness programs.

Another significant item is the establishment of a new juvenile rehabilitation center at Stafford Creek Corrections Center to alleviate overcrowding at the Green Hill School.

Local law enforcement agencies will benefit from $100 million in new hiring grants, an initiative closely aligned with Governor Ferguson’s public safety platform.

Legislative Highlights: New Bills Signed Into Law
In tandem with the budget’s passage, Governor Ferguson signed 26 new bills into law. These range from environmental protections to labor reform and legal modernization:

HB 1631 designates bull kelp as Washington’s official marine forest to promote restoration in Puget Sound.

SHB 1490 strengthens background checks for care providers by mandating fingerprinting and narrowing legal definitions.

SSHB 1524 builds on protections for isolated workers by expanding requirements for panic buttons and safety training.

HB 1133 tightens civil commitment standards for sexually violent predators.

HB 1156 allows volunteer firefighters access to retirement savings programs.

HB 1215 removes pregnancy-related language from health care directives to avoid misleading patients.

Several technical bills also modernize the legal code:

SHB 1205 criminalizes the distribution of forged digital likenesses.

SHB 1827 mandates educational improvements for incarcerated youth.

SHB 1281 and HB 1341 make critical legal and tax-related corrections to cannabis and service contract policies.

Bills like HB 1760, which exempts some manufactured home sellers from being classified as vehicle dealers, show an effort to reduce bureaucratic hurdles for nonprofits and affordable housing advocates.

Others, such as ESHB 1174, overhaul court interpreter rules to ensure better access for non-English speakers, while SHB 1606 seeks to restore state employees’ access to peer-reviewed academic journals—a service lost during the Great Recession.

Looking Ahead: A Budget Built for Flexibility?
Though the budget has its critics, supporters say it strikes a pragmatic balance between fiscal responsibility and progressive priorities. By preserving the state’s rainy-day fund—which is projected to hit $3 billion by 2029—the state retains flexibility for future economic turbulence.

Governor Ferguson has until May 17, 2025 to sign or veto the final bill. His decisions in the coming days could set the tone for the rest of his administration and for the state’s economic future.

As Washington moves forward, the question remains: will these measures be enough to sustain essential services while avoiding economic backlash from new tax burdens?

If Governor Ferguson signs the law, the Democrats will have passed the largest tax increase in Washington state history. One major critique is Brandi Kruse of the [un]Divided Podcast. She discusses the topic in her latest video below.