WA supplemental budget proposals advance through committees

OLYMPIA — Democrats’ supplemental operating budget proposals passed out of their fiscal committees Wednesday as they finalize adjustments to the 2025-27 budget passed last year.  

Both chambers unveiled their proposals over the weekend, revealing a $1.5 billion spending increase while attempting to close another multibillion-dollar budget deficit in the current budget cycle. The Senate proposed a $79.4 billion budget while the House proposed a $79.9 billion budget outlining spending priorities, transfers in accounts, new revenue sources, including a tax on millionaires, and how much is left in reserves.  

“This has been an extremely challenging budget to write,” Senate chief budget writer Sen. June Robinson, D-Everett, said in a press conference Monday.  

According to Robinson, the proposal accounts for slow revenue growth, funding changes occurring at the federal level, an increased demand for public services, and inflation.  

Where is the money going?  

The Senate proposed $3.7 billion in maintenance increases and about $2.3 billion in new policy-level spending, while the House is looking at $1.2 billion in the main operating budget and $4.8 billion across all funding sources.   

The biggest expenditure from both caucuses goes toward lawsuit payouts, many of which are related to the child welfare system and the state’s Department of Children, Youth, and Families. The Senate proposed $1 billion from the Self-Insurance Liability Account while the House allocated $400 million to cover the costs. Budget makers say, however, they will revisit the issue for more funding in future budgets.

Other spending is geared toward federal changes in public programs impacted by the “Big Beautiful Bill,” also known as H.R. 1. The Senate outlined spending $190 million for continued health care and safety-net programs for lawful noncitizen residents in Washington. They also allocated about $300 million to implement the new work requirements for both Medicaid and food assistance programs.  

To offset the spending, the Senate expects to save $2.4 billion by reducing spending for child care and education programs, including the Working Connections Child Care and the Transition to Kindergarten program. The House also plans to reduce spending by $2.4 billion over the next four years.  

The House proposed 3% across-the-board cuts to state government agencies with over 100 full-time employees, and each chamber proposes sweeping cuts to higher education, including for the University of Washington and Washington State University.  

How is money moving?  

Both proposals assume the passage of a new 9.9% tax aimed at those earning $1 million or more annually, with revenue expected to come in by 2029. The money is intended to offer tax relief for small businesses and to working families through the Working Families Tax Credit program. The Senate and House project about $2 billion to $2.3 billion to come into the general fund along with other revenue from the potential reduction or removal of tax exemptions on data center equipment and on prescription drug warehousing and reselling.  

However, lawmakers also plan to reduce tax revenue by almost $500 million by reversing the state’s estate tax passed last year and the expanded school sales tax exemptions.  

Overall, the Senate plans to see an increase in revenue by $2.9 billion with the income tax accounting for 80% of the funds. 

They also plan on a series of account transfers to help balance the budget for the next biennium, including from the state’s rainy day fund. The Senate plans to draw $750 million from the rainy day account while the House plans to pull $880 million, which will later be replenished from pension funds for law enforcement and firefighters. The House outlined sending $330 million from the Climate Change Account to help cover tax rebates for the Working Families Tax Credit program, which will also be backfilled by the pension dollars.  

The Senate does not include plans to use proceeds from the state’s carbon auction.  

Other transfers include $880 million from the Budget Stabilization Account, $75 million from the Public Works Assistance Account, and $395 million in excess capital gains by the House. The Senate includes $395 million from adjustment in the capital gains tax and $375 million from Public Works toward the general fund.  

What’s left?  

Under the Senate Chair’s proposed budget, the 2027-29 budget outlook is projected to be $1 billion in the general fund and $3 billion in total reserves. The House projects $566 million in the general fund outlook and $3.3 billion in total reserves.

Republican response 

Republicans from both chambers slammed the proposals. Sen. Chris Gildon, R-Puyallup, ranking member of the Senate Ways and Means Committee, called it “structurally unsound” and “a house of cards that's built on a shaky foundation of one-time money and hope.”  

Rep. Travis Couture, R-Allyn, said that Democrats have a “spending addiction,” condemning the use of the income tax and raiding one-time dollars from both the pension and rainy day funds.  

“These are the same budget gimmicks that got us running on multibillion-dollar deficits in the first place,” Couture said.  

During the Senate bill’s executive session all but one amendment proposed by Republicans was rejected, including those offered by Sen. Judy Warnick, R-Moses Lake, that would increase funding for agritourism and for grants for range rider activities. The House’s version also faced a similar fate with numerous Republican-backed proposal changes failing to receive a majority vote.  

The only amendments adopted by both chambers were efforts to increase funding and levy support for the Transition to Kindergarten programs that initially received significant cuts.   

House Republicans expressed frustration during the bill’s executive sessions, arguing for more inclusion in budget policy decisions by the majority.  

“I'd say that the totality of Republican ideas reflected in this budget is minuscule,” Rep. John Penner, R-Orting, said in a closing comment. 

Both supplemental budgets will enter their chambers over the weekend for a floor vote. The session adjourns March 12.