OLYMPIA, Wash. — Wednesday, Democratic Governor Bob Ferguson communicated his strong disapproval of both competing budget proposals put forward by Democratic majorities in the House and Senate.
The four-year spending plans range from $77.8 billion in the House and $78.4 billion in the Senate.
The operating budget is akin to the state’s checking account. It’s the source of funding for state employee paychecks, K-12 schools, and the state portion of programs like Medicaid.
The Senate Operating Budget includes: a property tax increase for inflation and population; a 5% payroll tax on high-paying employers modeled on Seattle’s JumpStart tax; a 1% tax on intangible financial assets; and furloughs for state employees. In addition to the new tax revenue from various sources, Senate budget writers proposed a 0.5% sales tax cut, which would lower the rate from 6.5% to 6%. In order to make the budget pencil out, the Senate plan also involves a one time transfer of nearly all state reserves from the rainy day fund, to be repaid the next year with new tax revenue.
The House Operating Budget plan involves: a state and optional local property tax increase for population and inflation, capped at 3%; a B&O tax increase on companies with $250 million in taxable income; and a .8% tax on intangible financial assets. The House budget does not include furloughs, or a sales tax cut, and is based on the assumption that state revenue will grow at 4.5%, a higher rate of assumed revenue growth than the Senate plan.
“I appreciate the hard work of both the House and the Senate. There are good ideas in both budgets,” said Ferguson. “Neither budget, however, is close to one that I can sign for two key reasons. First, they each propose far too much in taxes. Second, they both rely on a wealth tax, which is novel, untested, difficult to implement, and, most importantly for purposes of adopting a sustainable budget, will face an immediate challenge in court.”
Ferguson also emphasized his unwillingness to sign a budget that requires depleting state reserves or relies on unrealistic revenue growth assumptions.
“We knew things would be rocky with the federal government, things have escalated dramatically in the last month on multiple fronts including significant budget cuts from the federal government that results in a significant challenge for us,” said Ferguson.
Each version of the Operating Budget has passed its respective chamber of origin, but neither has cleared the opposite chamber intact. With 25 days before the scheduled end of the legislative session, Ferguson told reporters that lawmakers should immediately move the budget discussions in “a significantly different direction” on both issues if they hope to finish on time.