Gov. Ferguson rejects proposed budget reliant on new ‘wealth tax’

OLYMPIA – As lawmakers grapple with a multibillion-dollar budget deficit, Gov. Bob Ferguson has broken sharply with budgets proposed by Democratic legislators, telling reporters he does not support the plans passed by the House and Senate that call for billions in new spending and revenue.

“Washington’s families must budget to the actual salaries of their family members,” Ferguson said. “The state of Washington, as long as I am governor, will do exactly that.”

Standing in the Governors’ Conference Room, Ferguson said Tuesday he remains skeptical of a new “wealth tax” on the state’s wealthiest residents each chamber used to bring in new revenue and balance the budget, saying the proposal was untested and could ultimately be thrown out in court.

“Despite that, both chambers adopted budgets that rely on an untested wealth tax,” Ferguson said. “I will not sign that.”

The comments come as the Legislature works to close an estimated $16 billion budget deficit in the weeks ahead and amid heightened uncertainty and concern about plans by the federal government to slash spending.

Washington’s grim budget outlook grew even murkier last month when an updated revenue forecast published by the Office of Financial Management showed the state will bring in $845 million less over the next four years than it previously projected.

“Those storm clouds are not on the horizon, they are on top of us right now,” Ferguson said.

In February, Ferguson unveiled a plan he said could save the state $4 billion over the next four years after former Gov. Jay Inslee proposed approximately $3 billion in cuts. On Tuesday, Ferguson noted that both budgets incorporate many of the proposals.

“Those reductions constitute significant progress in meeting our shortfall, and demonstrate to Washingtonians that we are carefully searching the budget for efficiencies and appropriate cuts that preserve our core services,” Ferguson said Tuesday.

While Ferguson said the Legislature could not adopt a budget that relies solely on cutting spending, which he said would ultimately result in cutting “core services,” the governor did not say what amount of new revenue he would support.

He did say, however, it was not the time for “major” investments into programs.

“When you have a $16 billion budget shortfall, you have to stop digging,” Ferguson said.

The governor also outlined his budget priorities, which include refraining from tapping into the rainy day fund, basing the budget on “realistic revenue projections,” minimizing new investments, incorporating previously identified spending cuts and nonreliance on a new wealth tax, which he said had a “real possibility of being overturned by the courts.”

“We must take a balanced approach that prepares our state for an extremely challenging situation with the federal government and our economy,” Ferguson said.

The state government, Ferguson said, is heavily reliant on money from the federal government, amounting to 28% of the state’s revenue.

“We can, and we must, prepare for even greater cuts from the federal government,” Ferguson said. “We need to accept that we are in unprecedented times with the federal government, that is intent on making significant cuts, no matter the resulting harm to Americans.”

According to Ferguson, Washington receives approximately $34 billion for Medicaid, $2.5 billion for education, $1 billion for child welfare, $600 million for disaster response, $304 million for unemployment insurance and $864 million for temporary assistance during a two-year budget cycle.

“We cannot predict with certainty what is going to happen with our federal funding, but we can be sure there will be chaos, with more cuts to come, with little or no warning,” Ferguson said.

Washington’s economy could also be hit hard by a potential tariff war, with the governor noting the state is among those “most dependent” on international trade.

“A trade war will hit Washington hard,” he said.

Following the governor’s news conference, Sen. Chris Gildon, R-Puyallup, the Senate Republican budget leader, said in a statement that Ferguson was “absolutely right to say the budgets from the Senate and House Democrats propose ‘far too much’ in new taxes.”

“Tens of thousands of people have told us as much in the course of opposing the Senate Democrats’ record-breaking $21 billion tax package. We’re glad the governor seems to be hearing them as well,” Gildon said.

Gildon added that Republicans “remain ready to help deliver a budget that meets the needs of students, families and employers.”

Sen. June Robinson, D-Everett, chair of the Ways and Means Committee, said in a statement that she appreciated “the governor providing more clarity today on his vision for the operating budget and his commitment to a balanced approach – one that includes both new revenue and responsible, targeted reductions.”

“This aligns with the thoughtful, forward-looking mindset that’s guided our process from the start,” Robinson said. “I’m confident we will continue working together to deliver a final budget that meets the needs of Washingtonians and puts our state on a strong financial footing for the future.”

Washington’s legislative session is scheduled to end April 27.