Ferguson signs $9 billion in new taxes to fund state budget

OLYMPIA – Gov. Bob Ferguson signed a state operating budget on Tuesday that substantially boosts state spending and raises taxes by roughly $9 billion over the next four years.

Throughout his early months as governor, Ferguson vowed to bring a more hawkish approach to state spending. He publicly rejected a wealth tax floated by fellow Democrats and said he’d go through the budget line by line to look for savings.

But in the end, Ferguson went along with major tax increases on a wide array of businesses and wealthy individuals that Democrats, who hold wide majorities in the Legislature, approved while wrestling with a multibillion-dollar shortfall.

The $78 billion two-year budget Ferguson signed on Tuesday raises state spending by billions of dollars, funding pay raises for most state workers and maintaining social and other services.

Flanked by Democratic lawmakers at a signing event Tuesday, Ferguson defended the budget as “maintaining core services” and boosting funding by more than $1 billion for public schools. While some states have started to cut services such as cash assistance to poor families and Medicaid, Ferguson said “in Washington, we are holding the line.”

Ferguson vetoed some spending items in the operating budget – totaling about $25 million – but he did not immediately provide details of those cuts.

Republican lawmakers quickly slammed Ferguson for signing the largest tax increase in state history.

Despite Ferguson’s earlier insistence he’d come in as a reformer looking to take a more frugal approach to spending, state House Minority Leader Drew Stokesbary said in the end the governor had a “negligible” impact on the final budget deal driven by legislative Democrats.

“It was a whole lot of sound and fury, signifying nothing,” Stokesbary said in an interview. He said the new budget goes “in a very bad direction” and would bring higher costs for businesses and ordinary Washingtonians.

The final operating budget relies on a host of tax increases, including raising the business and occupation tax rates for a variety of industries, and applying an extra surcharge for corporations with more than $250 million in taxable state income.

Ferguson signed that business-tax increase bill Tuesday, along with measures adding the state sales to technology and other services, and raising the state’s new capital gains tax on wealthy investors.

The governor also signed a new levy aimed at Tesla, taxing lucrative electric vehicle credits the company has amassed as its CEO, Elon Musk, has become a chief villain for Democrats in his budget-slashing role in the Trump administration.