Washington Democratic leaders unveil state budget plans amid escalating costs

OLYMPIA – Democratic budget writers in the House and Senate introduced their spending plan Sunday afternoon as lawmakers seek to maintain state services while contending with federal funding cuts and increased costs.

Republicans criticized the plans for taking money out of state reserves, dipping into a state pension plan and for increasing the budget rather than making cuts.

Gov. Bob Ferguson’s plan called on the state to close a multibillion-dollar budget deficit by ending tax exemptions for drug wholesalers and data centers, tapping $1 billion from the rainy day fund, cutting $800 million in spending, and shifting unspent funds across state government.

Both House and Senate plans adopted Ferguson’s plans for closing the tax exemptions. They also would roll back the state’s top estate tax rate from 35% to 20%.

State Rep. Timm Ormsby, D-Spokane, who chairs the House Appropriations Committee, said Sunday the governor’s plan included “nonviable cuts” to state services and data errors “to the tune of $400 million” through June 2029 in the state Healthcare Authority.

Ormsby did not specify the cuts that lawmakers did not consider.

“So our problem statement was a few hundred million more than what the governor solved for us,” Ormsby said. “So we had to go about it a completely different way.”

State lawmakers received positive news last week when an updated revenue forecast showed the state now projects to bring in an additional $827 million through June 2027 than was anticipated in November. The increase, Ormsby said, provided “a little bit of relief” that “basically paid for maintenance level increases and those nonviable options and errors.”

Both legislative plans called for increased spending in the current biennium, which runs through June 2027.

“With harm reduction as our overall goal, our focus was on food, health, shelter and continuity of government,” Ormsby said.

The House plan calls for an uptick in spending from $77.9 billion to $79.9 billion through June 2027, while the Senate plan calls for an increase of $2.3 billion.

Budget writers say the increased state spending boils down to inflation and increased use of state services, rather than policy decisions.

“And then you add rising caseloads for things that we have promised Washingtonians like Washington College Grant, Working Connections Childcare, Medicaid, all of those are seeing increased costs,” said state Sen. June Robinson, D-Everett, chair of the Senate Ways and Means Committee.

Ormsby said Sunday the budget proposed by Democrats in the House includes “actual reductions.”

A bigger budget is needed in part to settle lawsuits alleging misconduct by state agencies, Robinson said. In the face of increasing jury awards and settlements, lawmakers are considering new rules meant to reduce the costs of lawsuits to state and local governments.

Both Democratic proposals released Sunday call on the state to tap the budget stabilization account – otherwise known as the rainy day fund.

The plan introduced by Senate budget writers would transfer $750 million from the account, while the House plan would use $880 million from the account.

Robinson said Sunday tapping into the fund isn’t a decision lawmakers take lightly.

The plans introduced by House and Senate Democrats are scheduled for committee hearings on Monday and could be voted out of committee on Wednesday. House Majority Leader Joe Fitzgibbon, D-Seattle, said Sunday he expects the Senate proposal will be voted on by the chamber on Friday, with the House passing its version Saturday.

House and Senate negotiators will negotiate to reach a budget both chambers can pass before the Legislature adjourns on March 12.

“We will get it done. Invariably, we do,” Ormsby said. “It’s always a challenge to reconcile two completely different sets of architecture into one. That will be a challenge, we’ll just end up having to hear each other and make mutual decisions. We will get there.”

Republicans react

Following the introduction of the budgets, state Rep. Travis Couture, R-Allyn, the ranking Republican on the House Appropriations Committee, said Democratic lawmakers opted to balance the budget through increased revenue rather than meaningful cuts.

“In the middle of another predictable multi-billion-dollar deficit, Democrats chose to spend more than Washington was projected to bring in and grow government by another $2 billion,” Couture said in a statement. “They drained the Rainy-Day Fund, launched an unconstitutional income tax, and raided a pension system – all to avoid making hard decisions.”

The House of Representatives has approved legislation that would transfer money from a state pension plan for first responders. Democrats say the plan is overfunded.

The state Senate last week passed a bill creating a 10% income tax on families with incomes of $1 million or more. If that becomes law, it wouldn’t generate money for the state until 2029.

Couture added that the House budget would leave the state with one of the smallest reserve funds in the country and relies on “risky, one-time gimmicks like sweeping dedicated accounts” that would not fix the state’s long -term budget outlook.

“These are the same budget tricks that erased a multi-billion-dollar surplus and turned it into runaway deficits,” Couture said.