Governor proposes $800 million in cuts as part of budget proposal

OLYMPIA – Gov. Bob Ferguson has proposed closing the state’s $2.3 billion budget shortfall through a combination of cost-cutting measures.

As he unveiled his supplemental budget, Ferguson said the proposal to close special tax exemptions for drug wholesalers and data centers, use $1 billion from the state’s rainy day fund, cut $800 million in spending and shift unspent funds across state government would put Washington state in a more stable position amid federal funding cuts while making Washington a more affordable place to live.

“In this proposed supplemental budget, I am providing a road map to the legislature,” Ferguson said during a news conference on Tuesday. “This is, of course, the first step in a conversation about how best to balance our budget.”

Ferguson made the announcement ahead of a legislative session where the state budget will once again be a main focus. Earlier this year, lawmakers closed an estimated $16 billion budget deficit through a combination of spending cuts and new and increased taxes.

Now, lawmakers will be tasked with writing a supplemental budget to fully fund the state through June 30, 2027.

The governor’s supplemental budget would be about a $1.2 billion, or 1.5%, increase over prior budgets, which Ferguson said includes $885 million in “unavoidable cost pressures.”

The governor said Tuesday he started the process with an expected deficit of $1.6 billion, which he attributed to declining revenue, increased caseloads and other “mandatory costs.” State agencies also requested an additional $2 billion in “critical” budget requests, of which he funded $700 million.

As part of his supplemental budget, last week Ferguson unveiled plans to spend $2.1 billion over the next decade for road maintenance and preservation and $244 million on housing investments across the state.

While Ferguson also expressed support Tuesday for an income tax on those with an annual income above a million dollars, his budget proposal is not reliant on those funds. Ferguson also previously said he would not balance the budget through tax increases and would instead look for additional cuts.

“Do I wish that I had lots of extra revenue to spend on programs? You better believe it,” Ferguson said. “It’s not ideal, of course. And there are decisions here that, from my standpoint, are certainly not ideal. But I’ve got to live with reality; I don’t have another choice.”

Ferguson said his team spent “many, many hours” looking at ways to make cuts, including either delaying programs or capping their eligibility. Some suggestions, he said, were ones he could support, forcing his team to look for other savings.

Among the cuts in the budget is the funding level for higher education in the state.

If approved, the budget includes a 3% funding cut for the University of Washington and Washington State University, and 1.5% cuts to regional universities and technical and community colleges.

The reduction would translate to about a $10 million cut at WSU, and a $1.4 million cut to Eastern Washington University.

While Ferguson has proposed his budget, legislators will have their say when they return to Olympia in the new year. The 60-day session is scheduled to begin on Jan. 12 and adjourn on Thursday, March 12.

By law, the legislature must adopt a balanced budget.

“I’ve already talked to leadership and said, ‘Look, this is a challenging budget.’ I’m looking forward to what they’ve got,” Ferguson said. “They’ve got a lot of experience in this, and I’m looking forward to their ideas, and they’re going to have some better ideas than I had, and some things I’m going to support or we’re going to have some disagreements on.”

Lawmakers react

Following the announcement, Democratic lawmakers said the budget proposal aligns with the state’s troubling financial outlook.

“We continue to face budget challenges as a result of our antiquated and insufficient revenue system and federal actions. Last year, House Democrats worked with our Senate colleagues to find solutions to our budget gaps,” state Rep. Timm Ormsby, D-Spokane, chair of the House Appropriations Committee, said in a statement. “Due to our tax structure and the ongoing impacts of tariffs, federal cuts from HR 1, and uncertainty in the economy, we continue to see budget gaps emerge.”

Ormsby added that as lawmakers and staff review the proposal, “finding solutions that align with Washington values will be our guiding light.”

State sen. June Robinson, D-Everett, chair of the Senate Ways and Means Committee, said the proposal is a “responsible starting point and a solid foundation” for lawmakers to work from.

“There is no question this will be a year that requires incredibly hard choices,” Robinson said. “As chair of the Senate Ways & Means Committee, my focus will be on protecting core services, minimizing harm to the most vulnerable, and ensuring our budget decisions are sustainable over the long term.

Republican lawmakers, meanwhile, are responding “cautiously” to the proposal. State sen. Chris Gildon, R-Puyallup, the Republican budget leader, said he hopes the governor maintains his commitment to not increasing taxes to solve the shortfall in the current biennium.

“Ultimately, the top priority has to be a budget our state can afford. I hope the governor sticks to his no-tax vow despite the pressure from Democrats who will use their second consecutive, self-inflicted budget shortfall as an excuse to go after a new jobs tax and a new state income tax,” Gildon said. “The bottom line is, you don’t make living in Washington more affordable by making it more expensive.”

State Sen. Nikki Torres , of Pasco, assistant budget leader, said the state’s budget cannot rely on “loopholes, midstream policy changes, or the assumption that the state can continue spending as if it has an endless line of credit while families are forced to make tough choices at home.”

“In the end, affordability means living within our means and stopping the constant cost increases that are pricing people out of Washington,” Torres said. “Olympia must stop making life more expensive for the people and job creators it depends on.”