Today, Governor Jay Inslee released his operating, capital, and transportation budget proposals for the 2025-27 biennium. These proposals come as Washington state faces a projected budget shortfall of $10 to $12 billion over the next four years, caused by declining revenue, rising inflation, higher costs for state services, increased program caseloads, and growing workforce costs. The state’s budgets must balance over four years.
To address this shortfall, Gov. Inslee’s proposals include a combination of expenditure reductions and new revenue sources. The governor has proposed cutting or delaying approximately $2 billion in expenditures, which includes freezing nonessential hiring, contracts, and travel, as well as shifting surplus funds from state pension accounts. Additionally, he has introduced two new revenue sources. The first is a 1% Wealth Tax on Washington residents with global wealth exceeding $100 million, which is expected to generate $10.3 billion over the next four years. The second is a business and occupation (B&O) tax increase for businesses in the “services and other activities” category with annual revenues over $1 million, projected to raise $2.6 billion.
Governor Inslee emphasized during his press conference that the goal of his budget proposals is to preserve state services without taking steps backward.
For the UW, the operating budget proposal made only minor adjustments to existing state appropriations, including a 0.1% reduction in funding totaling about $720,000. Compensation adjustments for 2025-27 were authorized for collective bargaining agreements (CBAs) with represented staff and non-represented faculty and staff. However, the UW’s request for 100% state funding of compensation and benefits was not met. Additionally, none of the UW’s policy requests, including funding for high-demand degrees and student support services at all three campuses, were funded.
The operating budget proposal did include $182 million to maintain the Washington College Grant.
In the capital budget proposal, the construction and modernization of chemical sciences facilities in Seattle was fully funded. However, the majority of Seattle’s decarbonization projects were not funded due to a decrease in available funds from the Climate Commitment Account (CCA). Two energy renewal projects did receive appropriations from the State Bond Account.
Gov. Inslee’s budget proposal marks the beginning of the state’s budget process. The 2025-27 state operating, capital, and transportation budgets will be decided during the upcoming legislative session, starting on Jan. 13. The UW Office of State Relations will be in Olympia advocating to preserve UW investments in the budgets and advance the University’s priorities. For the latest session updates, visit the News & Updates section of this website.