Category: State Budget

At a press conference yesterday, Gov. Bob Ferguson responded to the recently released operating budget proposals from both the House and Senate. He stated from the outset that neither proposal is one he could sign, citing an overreliance on new taxes—particularly a proposed wealth tax.

While the proposals include several new revenue streams aimed to addressing the state’s multibillion-dollar budget shortfall, Ferguson singled out the wealth tax as problematic. He described it as “novel, untested, difficult to implement, and most importantly for purposes of adopting a sustainable budget, will face immediate challenges in court.” His remarks effectively remove a broad wealth tax from consideration for inclusion in the state’s final 2025-27 operating budget.

Washington’s budget process begins with the House and Senate releasing separate proposals. Lawmakers then work together to reconcile the differences and craft a compromise budget. Once approved in both chambers, the compromise budget is sent to the Governor, who can sign it, veto it entirely, or issue partial vetoes. During his press conference, Ferguson emphasized that the legislature will need to pivot in order to secure his signature.

Despite his concerns, Ferguson expressed appreciation for elements of both budgets, specifically praising the inclusion of additional savings and reductions. He acknowledged the hard work of the House and Senate budget writers and noted that productive budget conversations are ongoing.

The legislature will continue working toward a final compromise budget, which must be approved by both the House and Senate by the end of the legislative session on April 27.

Questions?

The UW Office of State Relations is in Olympia every day throughout session. For questions about the legislative process or the UW’s advocacy efforts, please contact Morgan Hickel at mhickel@uw.edu.

Yesterday, the House and Senate unveiled their bipartisan capital budget proposals, which include full funding for the UW’s top priority: the construction and modernization of chemical sciences facilities in Seattle. Updating current facilities, originally built in 1937 and 1957, will help meet student demand, increase degree production, better support cutting-edge research, and foster innovation.

In addition, the House proposal includes funding for decarbonization efforts on the Seattle campus. The UW has developed a comprehensive five-part strategy to guide campus decarbonization and is ready to begin implementing it. This funding will also help the UW work toward meeting the targets set forth in the state’s Climate Commitment Act and Clean Building Performance Standards. While the funding provided does not cover the entire request, it allows the UW to begin work. The Senate proposal, however, does not include this appropriation, so the UW Office for State Relations is advocating for its inclusion in the final compromise budget.

Overall, both budget proposals are positive for the UW. The House and Senate will now work together on the compromise budget, which must pass both chambers by the end of session on April 27.

For a more in-depth overview of the capital budget proposals, see UW Finance, Planning & Budgeting’s briefs page. Details about the operating budget proposals can be found here.

Questions?

The UW Office of State Relations is in Olympia advocating on behalf of the University. For questions about the capital budget proposals or the legislative process, please contact Morgan Hickel at mhickel@uw.edu.

The Senate and House released their proposed operating budgets for the 2025-27 biennium on Monday. The state is facing a budget deficit of $12-16 billion over the next four years, caused by lagging revenue collections and increasing caseloads for state agencies and programs. To address this shortfall, both budgets use a mix of cuts and new revenue.

Both chambers propose spending reductions for the upcoming 2025-27 biennium. For the UW, the Senate proposal includes a 1% across-the-board cut, while the House calls for a 2% reduction. Additionally, both proposals reverse progress made on the University’s “fund split,” which refers to the blend of state and tuition dollars used to fund state employee compensation and central services. The proposals would reduce the state’s share of the split from 60% to 42%.

Taken together, these cuts and the reduction to the “fund split” leave the UW with insufficient funds for the employee contracts and cost-of-living adjustments authorized. The UW Office of State Relations has communicated this concern to budget writers and is urging them to preserve the University’s current fund split and to minimize across-the-board cuts.

It’s also worth noting that none of the UW’s legislative priorities were funded in either budget proposal.

To balance the budget, the Senate and House also rely on new revenue sources.

The Senate is considering five revenue measures:

• Financial Intangibles Tax: Imposes a tax on financial assets such as stocks and bonds at a rate of $10 on every $1,000 of assessed value for individuals with more than $50 million of these assets. Generates approximately $4 billion per year starting in fiscal year 2027.
• Employer Payroll Tax: Adds a 5% tax on payroll expenses above the Social Security threshold for companies with $7 million or more in payroll expenses. The proposal echoes Seattle’s “JumpStart” tax and would raise nearly $2.3 billion per year when fully implemented.
• Property Tax: Raises the current 1% cap on property taxes and allows the tax to grow based on population and inflation. Local governments have the option to take a lower growth rate. Generates about $779 million over the next four years.
• Tax Exemptions: Repeals 20 tax exemptions currently in law. Generates over $1 billion in the next four years.
• Sales Tax: Reduces the sales tax by half a percentage point from 6.5% to 6.0%.

In addition, the Senate budget includes a provision granting higher education institutions increased tuition authority to help offset the across-the-board cuts or cover additional state employee compensation costs.

The House proposal includes the following three:

• Property Tax on Intangible Assets: Imposes a property tax of $8 on every $1,000 of assessed value on certain financial intangible assets, such as stocks and bonds, with the first $50 million in assessed value exempt from the tax. Generates approximately $2 million per year beginning in fiscal year 2027.
• Business Taxes: Imposes a 1% Business & Occupation (B&O) tax surcharge on businesses with taxable income over $250 million. Also, increases the surcharge from 1.2% to 1.9% on specific financial institutions with annual net income of $1 billion or more. Generates nearly $600 million in fiscal year 2026 and $2 billion in fiscal year 2027.
• Property Tax: Maintains the 1% cap on property tax growth but allows for increases based on inflation and population changes, not to exceed 3%. The proposal also adjusts the levy equalization methods. Generates about $50 million in fiscal year 2026 and $150 million in fiscal year 2027.

The Senate and House will now collaborate to craft the final 2025-27 operating budget, which must pass both chambers and be sent to the Governor’s desk by the final day of session, April 27.

The 2025-27 capital budget proposals will be unveiled on Monday.

For a more in-depth review of the budget proposals, see the UW Finance, Planning & Budgeting’s briefs website.

Questions?

The UW Office of State Relations is working diligently in Olympia to preserve critical funding for the University, where possible, in this challenging budget environment. For questions about the budget proposals or legislative process, please contact Morgan Hickel at mhickel@uw.edu.

Washington state lawmakers develop three budgets each biennium: operating, capital, and transportation.

Yesterday, the House and Senate released their respective 2025–27 transportation budget proposals, along with accompanying plans to raise dedicated transportation revenue to address ongoing budget shortfalls. Like the operating budget, the transportation budget is facing significant challenges this biennium

While the UW is not deeply engaged on the transportation budget, this year the University requested accelerated funding for improvements to the Burke-Gilman Trail on or near the Seattle campus. If additional revenue is available, the House budget proposal accelerates $9.4 million in 2025-27 and $6.6 million in 2027-29 for access, safety, and efficiency improvements along this vital corridor. The Senate budget does not accelerate this funding, but its inclusion in the House proposal means it will be part of the final budget negotiations.

Both chambers are weighing new revenue sources to fund infrastructure investments, like the Burke-Gilman trail, and close the budget deficit. Each proposal includes an increase to the gas tax, although at varying levels. The House proposal also explores a new highway use fee based on vehicle fuel efficiency and a vehicle sales tax increase. Meanwhile, the Senate proposal includes higher electric vehicle fees, a new tax on luxury vehicles, and a fee on large-scale event venues.

The operating and capital budget proposals are expected in the coming days.

Questions?

The UW Office of State Relations is advocating on behalf of the University in Olympia. For questions about the budget proposals or legislative process, please contact Morgan Hickel at mhickel@uw.edu.

The Washington State Economic and Revenue Forecast Council released the state’s first quarterly revenue forecast for 2025 yesterday, showing a decrease of $845 million in revenue collections over the next four years compared to the November 2024 forecast. By law, the state must maintain a balanced four-year budget, which is why projections are through 2029.

The forecast projects a $479 million decrease in revenue collections for the 2025-27 biennium compared to November, and a $420 million decline for the 2027-29 biennium. The drop in revenue is largely attributed to lower sales tax and business and occupation tax collections, as well as reduced interest income for the state. Property tax collections have also slowed. However, capital gains and estate taxes are performing better than anticipated.

Next week, the House and Senate are expected to release their draft operating budget proposals, using this forecast to inform any final adjustments. Washington state is facing a sizeable budget deficit due to slowed revenue collections and rising caseloads for state programs and agencies. As a result, the final operating budget, which both chambers will negotiate after introducing their proposals, is expected to include a combination of spending cuts and revenue options to close the gap. The legislative session is scheduled to adjourn on April 27.

For a more detailed overview of the forecast, visit the UW Finance, Planning & Budgeting blog in the coming days.

Governor-elect Bob Ferguson, who will be sworn into office on Jan. 15, has unveiled his operating budget priorities for the 2025-27 biennium. While he does not provide a in-depth budget proposal, this release offers an overview of his fiscal approach. Ferguson’s priorities come after outgoing Governor Jay Inslee presented his budget proposals in mid-December.

Washington state faces a projected budget deficit of $10-12 billion over the next four years, prompting both Ferguson and Inslee to seek solutions. However, they took different approaches, particularly regarding new revenue. Inslee’s proposal focuses on a mix of spending reductions, delayed investments, and new revenue sources, including a wealth tax and increases to the business and occupation tax.

In contrast, Governor-elect Ferguson’s priorities favor operational efficiency and targeted budget reductions. He proposes a 6% reduction for most state agencies and a 3% reduction for four-year higher education institutions. His approach notably avoids new taxes, emphasizing that new revenue should only be considered as a last resort. However, like Inslee, Ferguson proposes delaying investments where possible, such as for new programs that have yet to be implemented. These measures are expected to save $4.4 billion, in addition to the roughly $3 billion in one-time savings and delayed investments outlined in Inslee’s recommendations.

Ferguson’s proposal does avoid cuts to basic education, the community and technical colleges, and public safety agencies, including the Washington Department of Corrections, Washington State Patrol, and the Criminal Justice Training Program. Pass-through entitlements, like the Washington College Grant, would also remain unaffected by budget reductions.

Additionally, Ferguson has identified four priority areas for $800 million in new investments: public safety, housing, the ferry system, and affordability.

The Washington State Legislature will use Inslee and Ferguson’s proposals as a starting point for 2025-27 budget negotiations. After the legislature passes their final budgets, they will go to Ferguson for his consideration and signature.

The 2025 legislative session begins this upcoming Monday, Jan. 13. For updates on the UW’s advocacy efforts, visit the News & Updates section of this website.

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.

The June state revenue forecast published yesterday projects revenue collections for the 2023-25 budget will decrease by $477 million from the February forecast bringing the total projected budget to $66.5 billion. The forecast also estimates revenue for the 2025-27 budget will decrease by $189 million with the total budget for the biennium at $71.5 billion. The 2025-27 budget cycle begins July 1, 2025 and ends on June 30, 2027. The Washington State Legislature is required by law to enact an operating budget that is balanced over four years, which is why the state revenue forecasts have a four-year outlook.

The decrease in revenue is largely attributed to lower receipts of the capital gains tax, personal income, and home construction. Notably, capital gains tax collections are down $324 million from the February forecast and sales tax collections are down $224 million. Additionally, the forecast shows that Seattle-area inflation continues to outpace the national average.

On the flip side, real estate excise taxes (REET) and property taxes came in higher than expected. The revenue dedicated to the Workforce Education Investment Account, which funds many higher education priorities, also increased slightly.

The Governor and State Legislature use the February, June, September, and November state revenue forecasts to inform their budget proposals and this most recent forecast is likely to cause some worry given the downward trajectory of collections. The state has $2.4 billion in reserves so the reduction in revenue will not have any drastic impact on current state operations and services, but state officials will be watching to see if the downward trajectory becomes a trend.

In September, state agencies, including the University of Washington, must submit their 2025-27 budget requests to the Office of Financial Management for consideration for inclusion in Gov. Jay Inslee’s budget proposals to the legislature. With the next revenue forecast scheduled for Sept. 27, agencies will only have the February and June forecasts to inform their decisions and priorities. However, both the September and November forecasts will be released before Gov. Inslee unveils his budget proposals in December.

For more information about the June revenue forecast, click here. Visit the Washington State Economic and Revenue Forecast Council website to view past publications.

Alongside UW Finance, Planning & Budgeting, the Office of State Relations will hold a 2024 legislative session debrief and 2025-27 state budget request process Q&A on Friday, April 5 from 11:00am-12:00pm via Zoom.

Highlights from this session will be shared, as well as a brief review of the final supplemental operating and capital budgets. A preview of what was included in the compromise budgets for the UW can be found here. Additionally, a good portion of the meeting will be dedicated to sharing information about how the UW’s 2025 legislative agenda will be formed and how to engage in the process.

To provide some background, Washington has a two-year budget cycle, with the biennial operating, capital, and transportations budget determined during the long 105-day legislative sessions held in odd-numbered years (e.g., 2025). The supplemental budget, negotiated during short legislative sessions held in even-numbered years (e.g., 2026), makes modest adjustments to the biennial budgets already in effect.

Before a biennial session, the UW President and Provost lead a process to establish the University’s legislative agenda with ideas and input from the campus community. The legislative agenda is finalized by September when it is submitted, as required by law, as decision packages to the state.

For the Zoom meeting link, please contact Morgan Hickel at mhickel@uw.edu. Due to the limited time available, questions are encouraged to be submitted beforehand to Morgan so they can be addressed in remarks.