By Jim Hedrick, GSI WA State Lobbyist and Spokane Regional Advocate
There is just one month left of the 2025 regular legislative session, and the deadline for bills to be voted out of policy committees is Wednesday, April 2. After this date, there is a very tight six-day turnaround for bills that have an impact on the state budget to be voted out of fiscal committees. This brief window of time means that lawmakers will have to act quickly to ensure that bills with fiscal implications, but are not necessary to implement the budget (NTIB), receive the necessary attention before they can move forward in the legislative process.
Speaker Emeritus Frank Chopp Passes Away
The legislative community was shocked this week by the news that former Representative, Speaker Emeritus Frank Chopp (D-Seattle) died on Saturday at the age of 71. Chopp was elected to the Legislature in 1994, a year when his Democratic Party suffered significant losses, dropping from a near supermajority in the House to a 62-36 minority.
In 1997, he became House Minority Leader and when the House was evenly split between Democrats and Republicans in 1999, he served as co-speaker from 1999-2002 alongside Republican Clyde Ballard of East Wenatchee.
Democrats regained control of the chamber after winning a special election in Snohomish County in 2001, and Chopp was elected House Speaker in 2002. He held the position until stepping down in 2019, stating that he wanted to “focus more energy on the issues that matter most and are priorities for the caucus.”
Chopp is generally regarded by members of both parties as a giant in Washington politics and is credited with leading the effort to create the Housing Trust Fund, the Homes Program, Covenant Homeownership Program, and Apple Health for Children. His trifecta of strategic, political, and public policy skills is considered the best ever in Olympia.
Senate and House Democrat Operating Budgets Released
Washington’s House and Senate Democrats released their biennial operating budget proposals on Monday. Both budgets (HB11998/SB5167) hinge on significant new tax revenue from tax increases, spending reductions, fund transfers from accounts that serve specific programs with alternative revenue sources, the repeal of existing tax exemptions, and tuition increases at the state’s higher education institutions.
In the Senate, Democrats propose balancing the next two-year budget by delaying expansions to early learning and childcare programs, implementing furloughs for state workers, and depleting state reserves to boost funding for public schools, particularly special education.
Specifically, Senate Democrats include a temporary 5% pay cut for state employees, equating to about 13 unpaid furlough days. It also proposes increasing the employee share of health benefits to 20% starting in the 2027–29 budget. There is a withdrawal of $1.6 billion from the state’s emergency reserves, leaving just $95 million by mid-2026. The Senate Democrats budget proposal is $78.5 billion in total spending, including $1.6 billion in new spending, primarily for education and state worker contracts known as collective bargaining agreements (CBAs). The Senate makes over $3 billion in budget cuts over the next biennium and $6.5 billion over the next four years.
House Democrats, meanwhile, avoid furloughs by tapping into savings. Like the Senate, they delay the expansion of early learning and childcare programs but allocate approximately $1 billion less in new funding for special education and public-school operations. The House Democrat budget proposal, House Bill 1198, spends a total of $77.8 billion with about $920 million in new policy spending.
Taxes and Revenue
As for taxes, new revenue over the next four years totals $20 billion in the Senate revenue plan and $13 billion in the House revenue plan. It is clear the Democrats are targeting profitable businesses and high wage earners in the name of making the state tax system “less regressive.”
The House and Senate Democrats somewhat align on a new Wealth Tax (HB2046/SB5797) that will place a 1% tax upon the assessed value of certain financial intangible assets, such as stocks, bonds, mutual funds, and index funds. SB 5797 applies to the entire amount while HB 2046 would exempt the first $50 million in assessed value from the tax. This is a significant nuance as SB 5797 is estimated to generate $12 billion over four years while HB 2046 generates half that amount at $6 billion. The new Wealth Tax would capture about 4,300 taxpayers.
The biggest difference in approach between the House and Senate Democrat revenue packages is how they treat big business. If there is any wiggle room for the business lobby to maneuver, it’s being able to assess and choose which one of these proposals serves them best. The House proposes a permanent 1% Business & Occupation (B&O) tax surcharge on businesses with taxable income over $250 million (HB 2045) while the Senate package contains a new 5% employer paid payroll tax (SB 5796) on annual individual compensation above $167,100 and the employer must have $7 million or more in annual payroll. SB 5796 affects about 5,300 businesses. The House package also proposes an increase to the B&O tax surcharge on specified financial institutions with annual net income of $1 billion or more from 1.2% to 1.9%. The House B&O tax proposal is estimated to generate $6.6 billion over four years, while the Senate payroll tax generates $6.9 billion.
Both the House and Senate revenue proposals contain legislation (HB2049/SB5798) to modify the state and local (city, county, junior taxing districts) property tax levy lid, allowing property tax collections to grow with population and inflation based on the consumer price index (CPI). The house allows the levy lid to grow up to a 3% cap while the Senate removes the levy lid entirely. Estimated state revenue for HB 2049 is $500 million over the next four years; SB 5798 generates over $775 million in the same time frame.
The Senate proposes to repeal nearly 20 tax exemptions and deductions (SB 5794), including agriculture, transportation, health care, international commerce, energy, and non-profits. Estimated revenue over four years is about $1 billion. It also updates the tax credit for businesses creating new jobs.
In the name of ending regressivity, the Senate Democrats offer SB 5795, lowering the state sales tax rate from 6.5% to 6%. This shiny object would reduce state revenue by $1.3 billion per year.
Both the House and Senate marked up their budget bills in committee on Thursday. The Senate is scheduled to pass their operating budget bill (SB5167) with a Senate floor vote on Saturday and the House will strike (amend in whole) their bill onto SB 5167 and pass it back to the House and place the bill in dispute. This process allows a conference committee and budget negotiations to begin.
Transportation Budgets Released
Transportation budget writers have introduced competing transportation budget proposals, each aiming to address the state’s infrastructure needs through different funding mechanisms. Both proposals aim to address a projected $1 billion budget shortfall over the next two years, with the Senate’s plan highlighting the necessity of the gas tax increase to prevent project delays and workforce reductions in sectors like ferries and State Patrol. These differences underscore the Legislature’s ongoing debate over the most effective and equitable methods to fund Washington’s transportation infrastructure in this time of higher efficiency vehicles.
The Senate Transportation budget proposal (SB5161) allocates $6.2 billion for operating costs and $10 billion for capital projects funded by a 6-cent per gallon gas tax increase, raising the state gas tax to 55.4 cents (excluding the federal rate). This increase is projected to generate $1.5 billion over six years. For a paradigm change, the Senate would include for the first time a transfer of 0.3% of the state sales tax from the operating budget to transportation, adding $800 million annually starting in the 2027-2029 biennium. Using general fund state money for transportation has been avoided for decades by more liberal Democrats who want the state’s general fund money to pay solely for K-12 education, health care, and human services; not wanting the extra competition of transportation needs to cannibalize general fund money. This general fund strategy is favored by Senate Republicans as long-time Transportation committee member Senator Curtis King (R-Yakima) has wanted to use the sale tax revenue generated by motor vehicle sales for years. The development is the Senate Transportation budget is being touted as a “bi-partisan” budget even before anyone has voted on it.
House Democrats propose in their budget (HB 1227) to allocate $6.1 billion for operating expenses and $8.9 billion for capital costs. The House proposes a larger 9-cent per gallon gas tax increase, expected to yield $1.8 billion over six years. However, the House does not incorporate the sales tax transfer strategy found in the Senate proposal. Generally, the House has less spending and delays more projects than the Senate proposal.
The Week Ahead
The legislature will wrap up policy committee work on Wednesday, then the come-up-quick fiscal committee cutoff a week from Tuesday on April 8. The full House will take up its budget proposal on the floor Monday. Capital budget proposals from both the House and Senate will be released on Monday, with committee hearings on Tuesday. The Senate tax package will be heard in the Ways & Means committee on Monday and the Senate Capital Budget on Tuesday.
About the Author
Jim Hedrick is GSI’s State Lobbyist and Owner of H2 Government Relations. Jim has advocated on behalf of our community for more than 20 years and has 25 years of experience in the Washington State legislative and public policy venue as a fiscal analyst, legislative advocate, and political advisor to the Governor, state agency directors, and legislative officials.
About this Blog
As part of GSI’s year-round work with our community to advance policies that support the success of local businesses, we’re active in Washington State’s current legislative session – tracking bills, advocating on behalf of our community, planning our annual trip to Olympia, communicating our State Agenda, and working with our lobbyist, our Regional Advocacy Committee, and our elected officials, to advance priorities that support local businesses and enhance our community. Learn more about what we do to create a greater voice for the future of our region and view this year’s State Agenda.
