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Dear Friends and Neighbors,
There are just three weeks left in the 2025 legislative session, but several major hurdles still need to be to be cleared before the final gavel is scheduled to drop on April 27. Our primary task to complete is passing the state’s three budgets.
According to forecasts, we are facing a huge shortfall in funding for the operating budget this year, which means there are many cuts across the board that affect so many important programs and services. Click on the image below to see how we got into this predicament.
However, the majority party’s budget proposals also include more new spending that exceeds our current revenue. To do this, the House and Senate recently released comprehensive new tax proposals to help fund both the operating and transportation budgets, which will impact every Washingtonian. Below are the four largest proposals with the greatest impact:
- House Bill 2045 would impose a new Business and Occupation (B&O) tax surcharge on large businesses and financial institutions, which would negatively impact approximately 400 businesses statewide.
- House Bill 2046 would create a new tax on unrealized capital gains for individuals, such as stocks, bonds, mutual funds, and index funds with an assessed value over $50 million.
- House Bill 2049 would increase property taxes by lifting the annual growth cap from 1% up to 3% based on inflation and population changes.
- Senate Bill 5796 would establish a new payroll tax for employers with annual payroll expenses exceeding $7 million.
In the House on Monday, we debated the Senate budget proposal for six and a half hours, and Republicans offered 24 amendments to improve the bill. However, the majority passed Senate Bill 5167 with just one of those amendments included.
Gorge Commission Defunded
As I mentioned, the proposed budgets also included numerous cutbacks, including the defunding of the Gorge Commission. I am working on restoring this funding, but it might be an uphill battle. I have met with the governor’s office, and I plan to submit a letter to our appropriator. I’m also working on drafting a proviso to secure the funding.
However, I want to express caution, as state lawmakers are trying to cut everywhere that makes sense and some places that might not. Even school districts in the 17th, which are already facing huge deficits, will see more cuts.
This is a really tough budget year. We are seeing cuts in all our major services across the board. I understand people are upset about the Gorge Commission being defunded, but that is the situation we find ourselves in due to the state’s current deficit.
These cuts will affect all of us. Of course, we would like to be able to fund everything, but these are the kinds of tough decisions we face. There is still much work to be done, and the debate is far from over.
Governor Says “No” to Current Budgets
On Tuesday, Gov. Bob Ferguson held a news conference regarding the operating budget passed by the Legislature. Click here to watch his press conference.
The governor said these budgets rely too heavily on taxes, especially the wealth tax. He said relying on a legally untested and difficult-to-implement wealth tax to fund essential services is not a good idea. Ferguson made it clear he needs to see these five things included for him to sign a budget:
- Must protect every penny of our rainy-day fund/BSA.
- Must base budget on realistic revenue projections – not the 4.5% allowed by law.
- Must minimize new investments.
- Must demonstrate billions in efficiencies and savings.
- Can’t rely on taxes that could be overturned in court.
According to a report in The Center Square, Ferguson is willing to work with lawmakers from both sides of the aisle and will consider all input, including the Senate Republicans’ proposal for a no-new-taxes budget. He said, “We cannot adopt a budget with anywhere near the level of taxes currently proposed by the House and Senate.”
That means there is a lot of work to be done and many negotiations still to come. I will keep you posted.
House Passes Transportation Budget
Meanwhile, on Wednesday, with a mixed vote, the House passed Senate Bill 5161, the 2025-27 transportation budget, but amended it with the House version (House Bill 2043). In addition to the new taxes in the operating budget, the transportation budget includes more than $4 billion in new taxes and fees, including these five items:
- 9-cent fuel tax increase, raising the current 49.4-cent tax starting July 1, 2025, with annual adjustments for inflation.
- 12-cent diesel, propane, and biodiesel tax increase beginning July 1, 2025, followed by another 3-cent increase on July 1, 2027.
- Increased vehicle registration fees that would add $4.50 in new registration fees, a $10 weight fee, and $31.44 in a new highway user fee (HUF), totaling $124.19 for a passenger car.
- A $4 increase per tire on the existing $1 replacement tire fee.
- New vehicle sales tax increases.
Click here for more details about all the new transportation taxes and fees. As with the operating budget, there is a lot of negotiation to go before this bill reaches the governor’s desk, so I expect more changes to come. I will keep you posted.
Update on My Legislation
Lastly, I would like to provide you with a brief update on my legislation. All four of my bills that passed the House have been approved by their respective Senate committees and now wait for a vote by the full Senate. Below is a quick description of each bill.
House Bill 1602 would allow alcohol producers, including breweries, to sub out their kitchen space to individuals or entities better suited for running the food service side. Click here for more.
House Bill 1609 would promote the efficient administration of state education agencies by allowing the Office of the Superintendent of Public Instruction to use a designee on the Board of Natural Resources, allowing the superintendent more time to supervise the administration of school policies and procedures. Click here for more.
House Bill 1698 would clarify that all persons selling and serving alcohol for on-premises consumption at a licensed facility need to obtain an alcohol server permit and eliminate special liquor permits. Click here for more.
House Bill 1731 would allow museums to notify museum item owners that they have unclaimed property in more modern ways such as email, phone, or text. Click here for more.
Thank You, and Keep Reaching Out
Thank you for your support and input, and please continue contacting me. It’s an honor to serve you.
Sincerely,
Kevin Waters
