Facing Sunday deadline, lawmakers continue work to adopt Washington budget

OLYMPIA – Like watching the winter snow slowly melt off of the peaks of Mt. Rainier in the spring sun, legislators continue their work to adopt a budget, even if the progress is hard to discern with the naked eye.

As the 2025 legislative session comes to a close, addressing the state’s multibillion-dollar budget deficit remains the top priority for state lawmakers.

So far, the Senate passed three revenue bills, including a bill Democrats say would “modernize” the state’s sales tax and bring in a projected $2.9 billion over the next two years and $4.7 billion over four years. The sales tax would be expanded to cover software development and other information technology services. The state’s tobacco tax would also be extended to cover nicotine pouches, such as Zyn.

A proposal to raise the capital gains tax on assets over $1 million and bring in approximately $282 million over the next two years and $561 million over four years also found support among Senate Democrats. The Senate also adopted a bill to repeal tax exemptions where the “public policy objective was not met,” including with the international Business and Occupation tax credit and the dentistry prepayment insurance premiums tax exemption, or where the exemption is “legally obsolete.”

Following their public hearings on Monday, each proposal received a “do pass” recommendation from the House Finance Committee on Tuesday.

Meanwhile, revenue proposals that have passed the House include amending the state’s business and occupation tax by increasing the B&O tax on manufacturing, retailing and wholesale businesses and on taxpayers with state income above $250 million, and raising the per-student limit on school enrichment levels. The bills, which passed Tuesday evening, each received a hearing in the Senate Ways and Means Committee on Wednesday and could be voted out of the committee on Friday.

While an array of revenue proposals continues to work its way through the legislature, it remains unclear how much revenue Gov. Bob Ferguson will support.

Ferguson – who has publicly rejected a wealth tax and called the plan to raise $12 billion in new taxes “too costly” – has not tipped his hand on what he would support in a new budget, though he has rejected adopting a cuts-only budget.

Following a bill signing Tuesday, Ferguson said he remains “optimistic” the legislature will adjourn on time.

“Of course, if it takes an extra day or two, I’m not overly worried about that,” Ferguson said. “But I think a lot of progress is being made.”

The governor declined to discuss unresolved legislation, including a proposal to cap yearly rent increases that has also progressed this session.

While he previously ruled out a wealth tax, Ferguson has largely avoided saying which tax proposals he could support, or at what amount, and has kept his discussions with Democratic leadership and budget writers private.

“I’ve got nothing more to say on the revenue,” Ferguson said. “I think that they’re working hard, and I appreciate their hard work.”

The most important thing, Ferguson said, is “a budget that meets our needs and balances out revenue and some savings.”

Sen. Marcus Riccelli, D-Spokane, was equally optimistic about the legislature completing its work on time.

“There’s a lot of things to be worked out here in the closing days,” Riccelli said. “This place works in that scenario, where the pressure helps us move to action.”

Riccelli said he believes a lot of the “key agreements” are in place.

A member of the Senate Ways and Means Committee, Riccelli said each of the revenue proposals “still have to go through the process.”

“Everybody gets to have a touch on it, that’s how the process works, both chambers,” Riccelli said.

Senate Minority Leader John Braun, R-Centralia, meanwhile, estimated Wednesday that there’s a 50/50 chance the legislature needs a special session to complete its work.

“Depending on where they land, the governor has been pretty clear that he is not comfortable with the level of spending they’ve put forward,” Braun said.

“My best guess is that it’s going to run to the end, and it’s going to land in the governor’s lap, and whatever they have planned and haven’t shared with all of us yet, and the governor’s going to have to decide if he thinks that’s right for the state of Washington.

“That’s what’s going to drive a special session at this point.”

House Minority Leader Drew Stokesbary, R-Auburn, was also critical of the Democrats’ budgeting process, which has long frustrated Republicans .

“Democrats have engaged in the most reckless taxing spree one could possibly imagine, and I mean that both substantively and procedurally,” Stokesbary said. “Substantively, they are taxing the jobs out of Washington.”

Procedurally, Stokesbary said, Democrats have engaged in the “worst way imaginable” to draft tax policy.

“Tax policy should be well thought out, it should be fair, uniform, predictable, treat taxpayers evenly, allow businesses to plan,” Stokesbary said. “That is not what is happening.”

Stokesbary said rank-and-file legislators in both parties have yet to see what’s in the budget, which “definitely means the public hasn’t seen what’s in the budget.”

“Which is a big problem,” Stokesbary said.