New taxes included in House, Senate Democrats’ plans to fix WA’s gaping budget hole

By Simone Carter for the Washington State Standard • March 25, 2025

Democratic lawmakers in both chambers of the Washington Legislature on Monday rolled out proposals to close the multi-billion-dollar hole in the state’s operating budget. While both plans include new taxes, Senate lawmakers adopted a more aggressive approach.

Before the end of this year’s 105-day legislative session, lawmakers will need to negotiate and agree on a budget, which then must be signed by Gov. Bob Ferguson. The Democratic governor has floated budget proposals that include savings of nearly $4 billion. That’s in addition to the roughly $3 billion in cuts outgoing Gov. Jay Inslee suggested in December before his term ended. Ferguson’s focus has been on finding savings before considering taxes, but he has been dubious of a Democrat-backed wealth tax. “We’re not going to tax our way out of this thing,” he said in late February.

Brionna Aho, the governor’s communications director, told McClatchy on Monday that Ferguson looks forward to teaming up with legislative leaders to create a budget that upholds core services — and that his team is reviewing the just-released budget proposals. So, what are some of the main points of Democratic lawmakers’ budget plans? Potential new taxes Last week Senate Democrats revealed a five-pronged tax package. Included in their proposals were a “financial-intangibles tax,” also known as the wealth tax, and an increase on the property tax growth limit.

In addition, they suggested removing the cap on employer payroll taxes, repealing some tax exemptions and reducing the state sales tax by half a percentage. Senate budget leaders on Monday announced a $78.5 billion operating-budget spending plan. Over four years, roughly $16 billion would get added in revenue and $6.5 billion would be cut. State Sen. June Robinson, chair of the Senate Ways and Means Committee, classified the budget-crafting process as “challenging.” “We didn’t just think about the numbers,” the Everett Democrat told reporters Monday. “Every decision that we made, we were thinking about the people who are impacted by those decisions.” House lawmakers, meanwhile, rolled out a three-tiered revenue proposal last week. Like the Senate, it would impose versions of a wealth tax and annual property-tax growth increase, plus a business and occupation tax surcharge for high-grossing corporations. On Monday afternoon, House Democrats unveiled a 2025-27 operating budget proposal of nearly $77.8 billion. House Majority Leader Joe Fitzgibbon, a West Seattle Democrat, said there’d be about $6.5 billion in reductions. The plan would reportedly raise nearly $15 billion over two budget cycles.

State Rep. Timm Ormsby, a Spokane Democrat and chair of the House Appropriations Committee, noted that the state Legislature made painful cuts during the Great Recession, including to mental health treatment and long-term care for seniors. Such reductions hurt residents struggling to make ends meet, he said, further dividing the “haves” from the “have nots.” “It left lasting damage in the form of diminished access to health care, particularly in Black and brown communities, and we aim to rectify that,” Ormsby said. “We learned from those mistakes and knew we had to make better, more sustainable decisions.” Furloughs, education, Rainy Day Fund The estimated four-year budget gap has varied from $6.6 billion to as much as $16 billion, depending on who is asked and how they calculate it. Robinson said she was working with a roughly $12 billion figure, while Fitzgibbon said the House used a range of $12 billion to $16 billion. Ferguson last month suggested mandating one-day-a-month furloughs for state employees over the next two years. Senate Democrats’ proposal features state-worker furloughs but differs from the governor’s idea. Instead of two years, their plan would only cover one year, Robinson said — configured as a 5% reduction in salary and equaling 13 working days.

Ormsby said the House’s proposal would fully fund all collective bargaining agreements and would not enact pay cuts or mandatory furloughs. However, lawmakers did find areas to carve out reductions at the agency level, he said. “We focused on those agency budgets that were underspent, meaning that they hadn’t spent down what they were appropriated in the past,” Ormsby said. “Instead of waiting until the end of the fiscal year to get it, we take it at the front end.” Proposed House administrative efficiencies include scaled-back professional development, equipment purchases, travel and service contracts, he said. Both House and Senate Democrats protected bonuses for National Board Certified teachers. The Senate Democrats’ budget would invest $750 million per year for K-12 education, with primary focuses in special education and school-operating costs. Special education would see more than $2 billion in increased funding over the next four years in the Senate Democrats’ budget. The House’s number over that time frame is a $482 million spike in special education. Lawmakers in the Senate would tap the state’s reserves, nicknamed the Rainy Day Fund, while the House would leave the emergency savings alone.

Republican response Robinson said the Senate Democrats’ plan assumes similar spending cuts to those proposed by Republicans, including in early learning and child care and the closure of Buckley’s Rainier School center for people with intellectual and developmental disabilities. “Most of the things that are in our budget are in some form in their budget as well, as we worked together to craft probably 95% of what’s in the budget,” Robinson said. State Sen. Noel Frame, vice chair of the Senate Ways and Means Committee for Finance, noted that there was some Republican support for a proposal that would delay entitlement for the Early Childhood Education and Assistance Program (ECEAP); the Senate Republican budget leader, Sen. Chris Gildon, was among the “yes” votes. State Rep. Travis Couture, the ranking Republican on the House Appropriations Committee, blasted the lower chamber’s budget proposal in a statement. He railed against a “devastating” set of suggested tax hikes. “If Democrats pass this budget without reforming the budget process,” the Allyn Republican said, “we will have continued reckless spending and increased taxes, but we will be back here once again facing the same budget woes in the future, and regular Washingtonians will pay the price.”

Senate Republican budget writers have insisted the budget can be balanced without imposing new taxes or drastic cuts. Gildon, a Puyallup Republican, took aim at his Democratic counterparts’ plan. “It’s easy to see what the majority values most — just look at all the new spending, and how more than half of the 10 largest line items are about increasing pay and benefits for public servants,” Gildon said in a statement. The Senate and House budget proposals both receive public hearings this week. Lawmakers must negotiate and approve a final budget by April 27, the last day of session.