Gov. Ferguson promotes tax plan, push for roadway improvements during State of the State

OLYMPIA – Gov. Bob Ferguson called on lawmakers to “get back to basics” and make historic investments, urging legislators during his first State of the State address to use the next 58 days to improve the state’s transportation system and establish an income tax on millionaires.

“Let’s give inspiration to future generations that we took up the challenge and provided a foundation for success. Washingtonians are not mere bystanders to history,” Ferguson said. “We are bold and, with heart and spirit, we forge our destiny and make history.”

The speech, delivered annually before a joint session of the state Legislature, presented an opportunity for Ferguson to address lawmakers and make his pitch for many of the plans he had proposed in recent months. Among his priorities are establishing an income tax on those who make more than a million dollars a year and investing billions into the state’s aging roadways.

As he walked to the lectern, Ferguson also stopped to hug state Supreme Court Justice Colleen Melody, the newest member of the bench, who assumed the role at the start of the year. A native of Spokane and graduate of Ferris High School, Ferguson appointed Melody to the bench late last year. Melody will formally take the oath of office during a ceremony next week in the Temple of Justice.

As he began to speak of the challenges the state faces, Ferguson acknowledged the historic flooding that affected much of Western Washington last month, saying he saw the “heart and spirit” of Washingtonians as he toured the damage in Sumas and Concrete.

“When the story of this historic flood is written, it will recognize that when history paid us an unexpected visit in December of 2025, the people and this state stepped up and faced the challenge head-on,” Ferguson said. “It’s that heart and spirit of our people that allows me to report today that the state of our state remains strong.”

Ferguson cited strong economic factors, including an AAA bond rating, a leading role in the space industry and medical research, a 16.2% increase in requests to establish new businesses and an influx of people moving to the state.

“These are just a few of the reasons why the state of our state is strong. But I am clear-eyed about the areas where we must do better,” Ferguson said. “And my first proposed budget is laser-focused on those improvements.”

Among the issues Ferguson wants lawmakers to address is the state’s infrastructure, which Ferguson said is “in dire need of investment.”

“You know it. I know it,” Ferguson said. “And, trust me on this, the people of our state know it.”

Last month, Ferguson proposed spending $2.1 billion over the next decade for road maintenance and preservation. If adopted, the plan includes spending $164 million on paving projects in the summer of 2026, with an additional $756 million allocated over the next decade for such projects.

“These critical investments are good for jobs, good for our economy, and will keep Washington moving,” Ferguson said Tuesday. “In short, my proposal constitutes the largest investment in maintenance and preservation in over two decades.”

The proposal includes $1.1 billion for bridge preservation and $160 million for other projects. Additionally, Ferguson proposed spending an additional billion dollars on three new ferry boats to relieve stress on the system and improve service.

Last year, the Legislature approved a transportation budget that raises billions for infrastructure improvements through a 6-cent increase to the gas tax and higher car registration fees for electric vehicles and hybrids. The plan shifted 0.3% of the state’s sales tax, about $800 million a year, to the transportation budget.

Ferguson said Friday his proposal does not call for an additional tax increase and would be funded with existing revenue and by borrowing through the sale of bonds .

Ferguson used the speech as an opportunity to push his plan to overhaul the state’s tax system.

While few specifics on what Ferguson has dubbed a “millionaires tax” have been released, Ferguson said last month that he would support a 9.9% tax rate on yearly income, not assets, above $1 million. At the earliest, the tax likely would not be implemented until 2029, and could bring in around $3 billion a year.

The proposal, Ferguson said Tuesday, would be “truly historic.”

Money from the tax, Ferguson said, would be used to expand the Working Families Tax Credit, decrease business taxes on small businesses, and increase funding in K-12 education.

“So let’s seize this opportunity, this session, to make our tax system more fair,” Ferguson said.

Ferguson touted the West Coast Health Alliance, a compact between California, Oregon, Hawaii and Washington to coordinate public health guidelines that differ from the Centers for Disease Control and Prevention, which he said will ensure “Washingtonians will continue to receive responsible recommendations from health experts who rely on, you guessed it, science.”

While Democratic lawmakers stood to applaud the governor several times during the speech, a year after his inaugural address drew broad praise across the aisle Republican lawmakers offered a more muted response this time around.

“When he took office last year, he looked like he wanted to be a Democrat Dan Evans that Washingtonians remember for generations,” House Minority Leader Rep. Drew Stokesbary, R-Auburn, said following the speech. “And now he looks like a governor desperate to shore up his support before he is primaried in 2028.”

While Ferguson has repeatedly expressed confidence his income tax on millionaires would pass this year, Republican legislators indicated Tuesday that if it does, it would be along party lines.

“What I can say for sure is Republicans will oppose it,” Senate Minority Leader John Braun, R-Centralia, said. “Because we know, as Sen. MacEwen said, that this may start at higher income levels, but there’s no question that this ultimately gets trickled down to every single person in the state of Washington.”

Braun also contended that the governor’s plan to fund infrastructure “may be in worse shape than the operating budget.”

“We’ve said this for many years that we’re going to have to rethink how we fund that,” Braun said. “Long term, we need to move more of the operating revenue to transportation to have a long -term, stable source. It’s what many states do.”

Gov. Bob Ferguson, center, is greeted as he enters the House Chamber to deliver the State of the State address to a joint session of lawmakers Tuesday in Olympia.