Democratic lawmakers unveil budget proposals; call on higher taxes for wealthy and companies

OLYMPIA – Democratic lawmakers unveiled their budget plans Monday morning, as the legislature looks to balance preserving key public services while addressing Washington’s multibillion-dollar budget deficit.

Both plans call on the state to address the shortfall through a mix of cuts and new revenue, while Republicans continue to insist a balanced budget is possible without raising taxes.

While neither Democratic proposal is likely to be fully implemented, the budget plans serve as bargaining positions for negotiators as both chambers work to adopt a budget by April 27.

Following the release, Rep. Timm Ormsby, D-Spokane, who chairs the House Appropriations Committee, tied the state’s budget challenges to “impacts from the federal government” that include potential tariffs and continued inflation.

“We took these challenges on head-first, working every day with the people of Washington first in our mind,” Ormsby said in a statement. “Our guiding principle was to protect investments that keep people healthy and to reduce harm wherever possible. This budget is a testament to that approach.”

The plans come after Senate Republicans unveiled a budget they say shows the state can adopt a balanced budget without imposing new taxes, by pausing previously passed spending that has not taken effect and forgoing previously negotiated collective bargaining agreements with state workers. The Republicans’ plan instead offers state workers a $5,000 bonus paid over two years.

“The Senate Democrats claim their budget makes ‘tough choices,’ but the reality is, the tough choices are going to fall on the parents and college kids and families who will lose out because of the majority’s misguided priorities,” Sen. Chris Gildon, R-Puyallup, said in a statement Monday.

Senate Minority Leader John Braun, R-Centralia, said the Senate’s plan “does exactly what we expected – it raises taxes and overspends.

“Their plan adds $12.1 billion in new policy spending despite Washington already facing a multibillion-dollar budget shortfall,” Braun said. “Instead of living within existing revenue, Democrats are pursuing unsustainable spending, leaving the state vulnerable. As the saying goes, ‘If you find yourself in a hole, stop digging.”

Senate proposal

While the size of the state’s deficit fluctuates depending on who you ask on a given day, Sen. June Robinson, D-Everett, chair of the Senate Ways and Means Committee, said she estimated it at roughly $12 billion over four years as she crafted their budget proposal.

The chamber’s budget writers unveiled a two-year, $78.5 billion operating budget on Monday, up from $72.4 billion between 2023 and 2025. The plan calls for $6.5 billion in cuts over the next four years and $16 billion in new revenue. Under the plan, revenue would increase in the second biennium, with the plan projecting $6.2 billion in additional revenue between fiscal years 2025 and 2027 and $9.8 billion between 2027 and 2029.

“Crafting this budget required tough choices, thoughtful conversations, and a strong commitment to the people of Washington,” Robinson said in a statement. “An all-cuts approach was never on the table – not when it meant turning our backs on schools, health care, and the basic services people depend on. This budget is a choice to lead responsibly – to face the reality in front of us and respond with solutions that are not just balanced and sustainable, but worthy of the people we serve.”

Under the plan, the legislature would use $1.6 billion from the state’s rainy day fund in fiscal year 2026, which would be repaid the following year. The fund would be further replenished in future years, with $7.6 billion in reserves by the end of fiscal year 2029.

“It does go low but quickly builds back to a very strong point,” Robinson said.

The plan would fund the collective bargaining agreements previously negotiated with state workers, though it calls on state workers to take 13 unpaid days off in fiscal year 2026, the equivalent of a 5% pay cut. While Gov. Bob Ferguson previously proposed a monthly furlough of one day for state employees for two years, the Senate Democrats’ plan would only be in effect for one year.

The budget would also invest $750 million per year into K-12 education, with most of the funds going toward school operating costs and special education. The plan would also not impact the bonuses that National Board Certified Teachers at K-12 schools receive.

Lawmakers in the chamber offered a preview of their plan to address the deficit last week as they proposed taxing Washington’s wealthiest residents through what they called a “financial intangibles tax,” allowing property tax increases to be set by inflation and population growth and removing the cap on employer payroll taxes. The plan also calls on the state to reduce the sales tax by half a percent, which Democrats argue would help make the tax code less regressive.

“People are going to see real, concrete benefits from the investments we’re proposing today – keeping schools open, providing special education services for students, food assistance for needy families, support for those with developmental disabilities and so much more,” Sen. Noel Frame, D-Seattle, said in a statement.

The Senate Ways and Means Committee will hold a hearing on the proposal Tuesday at 4 p.m., and could pass it out of committee Thursday.

House of Representatives proposal

While there is similarity in the two plans, budget writers in the House of Representatives took a slightly different approach as they crafted their plan. The budget calls on the state to spend $77 billion through the operating budget between 2025 and 2027.

House Democrats have proposed a Financial Intangible Assets Tax of $8 on every $1,000 of assessed value on certain financial intangible assets, with the first $50 million exempt from the tax. Rep. April Berg, D-Mill Creek, said the tax would apply to around 4,300 residents and could raise $2 billion a year.

Under the plan, House Democrats would not tap into the state’s rainy day fund. The budget would also not cut the state’s sales tax.

House Democrats instead proposed a 1% B&O tax on businesses with income over $250 million, which Berg estimated would apply to around 400 businesses. The budget would also increase surcharge on specified financial institutions with a yearly income of $1 billion or more from 1.2% to 1.9%, which Berg said would bring in $600 million in fiscal year 2026 and $2 billion in fiscal year 2027.

“This revenue package provides greater local fiscal flexibility, and asks the wealthiest Washingtonians to contribute more equitably to the programs and services our communities need and on which working families rely,” Berg said.

The proposal would fully fund the state workers’ collective bargaining agreements and would not implement furloughs or cut pay. According to Ormsby, the plan would reduce travel, professional development, equipment and service contracts.

National Board Certified teachers would also retain their bonuses under the plan.

The House Ways and Means Committee will hold a hearing on the proposal Tuesday at 4 p.m., and could pass it out of committee Thursday.