By Jim Hedrick, GSI WA State Lobbyist and Spokane Regional Advocate
The Washington State Economic and Revenue Forecast Council is required to submit a revenue report by March 20. This report informs budget writers to put the finishing touches on the budgets that are released near that date. On Monday, the revenue report forecast a slowdown in the state’s economic activity due to lower-than-expected real estate excise tax collections and personal income combined with higher interest rates. Projected state general fund revenue collections for the 2023-25 state budgets have decreased by an estimated $483 million, a 0.7% drop from the number forecast last November. Total state general fund revenues are now projected at $65.7 billion for the next two-year budget cycle, which begins July 1, 2023.
Each December, Washington’s governor releases proposed budgets, and subsequently, the legislative chambers release their own, which are based on that first budget. This year, with four weeks left in the legislative session, Senate budget writers released their budgets first. On Monday, Senate budget leaders proposed a two-year $7.9 billion capital construction budget. Proposed capital budget highlights include:
- $141 million to increase the capacity for behavioral health care, funding projects like Compass Health in Everett, the Jamestown S’Klallam Behavioral Health Center in Sequim, and the Nisqually Tribe Healing Village in Olympia.
- $650 million for a new forensic hospital at Western State Hospital, which could allow for the federal government’s recertification of the state’s largest psychiatric hospital.
- $59 million in grants for the construction of early learning facilities
- $588 million for the School Construction Assistance Program for K-12 schools
- $100 million for modernization and improvements at small district and tribal compact schools, which is three times the funding level provided for those schools in the 2021-23 capital budget.
- $1.2 billion for higher education
- $120 million for the Washington Wildlife & Recreation Program, the largest investment in the program ever.
- $625 million for housing-related investments, including a historic $400 million investment in the Housing Trust Fund, which would be the most in state history.
- Additional funding would support land acquisition for the Housing Finance Commission, transit-oriented development legislation, and grants for the Connecting Housing to Infrastructure Program.
- Notably, the proposal does not include Governor Inslee’s $4 billion housing bond.
- On Thursday afternoon, Senate budget writers then released their $69.2 billion operating budget. The two-year operating budget adds roughly $5.1 billion in new spending and does not rely on any new general taxes or fees. It leaves $3.8 billion in reserves. Highlights include:
Health Care (including behavioral health):
- $23 million for behavioral crisis, outreach, and diversion
- $84 million to increase behavioral health provider rates
- $52 million to comply with the Trueblood decision and improve the state’s competency evaluation and restoration services system while also emphasizing arrest diversion and community-based support services for people with mental illness
- $116 million to expand treatment at state-operating facilities
- $45 million to support violence reduction, increase staffing and build a new ward at the state’s psychiatric hospitals
- $20 million for a program to support immigrants who lack health care insurance
- $27 million to help stabilize the health care workforce so that Medicaid patients have adequate access to care
- $15 million for reproductive health and abortion access
- $5 million for tobacco prevention
Education and Children:
- $59 million to expand food access in schools
- $375 million to increase support for special education students
- $100 million to reimburse districts for special transportation needs
- $525 million for educator salaries and health care costs
- $25 million to pay fees for the College in the High School programs
- $22 million for health care workforce and training, including new nursing slots at EWU
- $13 million to continue support for the College Grant scholarship program
- $106 million to expand the number of ECAP early learning slots and increase provider pay
- $215 million to bolster the childcare workforce
- $49 million to help the state place more foster kids
- $16 million to help foster kids stay placed with supportive family members
Environment (Items in this section are funded with CCA proceeds):
- $218 million for carbon sequestration, on-farm greenhouse gas reduction, riparian restoration, coastal hazard assistance, and flooding reduction
- $145 million to provide utility assistance for low-income families, reduce the carbon footprint of state-own facilities, and expand access to energy audits
- $75 million to help people increase their utility efficiency through free assessments and grant programs to make weatherization upgrades and install electric heat pumps
- $126 million to help transition heavy-duty trucks to clean energy, increase air quality monitoring, implement methane capture, and support workers affected by climate change
- $96 million for large-scale solar projects, including permitting and siting efforts
- $74 million for projects that help overburdened communities and tribal communities
- $85 million for emergency housing and rental assistance
- $15 million for the housing and essential needs program
- $32 million for local government grants to support affordable housing
- $56 million to support operations in permanent supportive housing
- $10 million for child welfare housing and support services
- $8 million for children and youth experiencing homelessness
- $7 million to help open new regional law enforcement training centers
- $4.5 million to provide enhanced training for corrections officers
- $2.3 million for a new organized retail theft task force in the Attorney General’s Office
- $4.8 million to support the Washington State Patrol’s Cannabis Enforcement Team
- $5.5 million to support work release programs
- $4 million for the office of independent investigations
- $3 million to provide law enforcement with modern vehicle pursuit management technology
- $2.5 million to help the state hold negligent gun dealers accountable
- $1 million to support law enforcement recruitment and certification efforts
- $650,000 to continue the state’s efforts to address the disproportionate number of missing and murdered indigenous women and people
On Friday morning, legislative Democrats received much-anticipated news for their budgets when the Washington State Supreme Court upheld the constitutionality of the Capital Gains tax in Quinn v. State of Washington. The 2021 law applies a 7% tax to capital gains profits over $250,000 with proceeds to go to early childhood education programs. The 7 to 2 decision by the court did not delve into topics of income property or uniformity; the high court found the capital gains tax is simply an excise tax.
House operating, capital, and transportation budgets were released on Monday, March 27. The remainder of the session is a negotiation for a final deal for each budget between the two chambers.
Public Policy developments change fast. Note this is a wrap-up of the week of March 20-24. You can find prior week wrap-ups here: March 13-17, March 6-10, February 6-10, January 30-February 3, January 23-27, January 16-20, and January 9-13. Check out GSI’s 2023’s State Agenda. For more details about any of the bills in this article, visit the Washington State Legislature page to search by bill number. For more information contact Jake Mayson, Director of Public Policy.