OLYMPIA – House Democrats released their 2025-2027 operating budget today, which protects crucial services and programs at current funding levels while making responsible reductions and freezes to planned spending along with new funds identified in last week’s revenue proposal. Under the House Democratic proposal, some efficiencies and delays in programs allow for no funding changes to teacher salaries, rate increases for existing childcare providers, and maintained food assistance for seniors, families in need, and students.
“We left Olympia last March with a balanced budget, but due to impacts from the federal government such as tariffs, a possible trade war, continued inflation, and greater need for state services caused by federal cuts, we’re facing new challenges,” said Rep. Timm Ormsby (D-Spokane), chair of the House Appropriations Committee. “We took these challenges on head-first, working every day with the people of Washington first in our mind. Our guiding principle was to protect investments that keep people healthy and to reduce harm wherever possible. This budget is a testament to that approach.”
The state budget deficit is a result of decreasing revenue growth, increasing inflation, growing need for state services, and an outdated and unfair tax system that relies on sales taxes – so when consumer spending goes down, funding for services is reduced.
“Democrats remember the lessons from the Great Recession, when the Legislature slashed the budget to address deficits, and we took those lessons to heart. We cannot simply cut our way out of a budget deficit. That works when you’re balancing a spreadsheet, but it does not work for Washington families,” said Rep. Mia Gregerson (D-SeaTac), vice chair of the Appropriations Committee. “We took a deliberate and careful approach to identify where we could make reductions but also remembering that behind every line item are potentially tens of thousands of people.”
Under the proposed budget, many programs and services are held at their current funding levels. In some cases, programs are delayed, such as elements of the Fair Start for Kids Act. Working Connections Child Care eligibility expansion was set to increase to 75% of the state median income this year, but is now delayed until 2029. Other expansions and ECEAP entitlement are also delayed until 2030, resulting in $734 million in savings over the next four years.
Assistance for housing and food programs are maintained and receive ongoing funding because these investments are dire and lifesaving. $117 million in new funding is allocated to local governments to keep shelter beds online. Ongoing funding of $93 million will ensure that emergency food assistance programs stay at pandemic-era levels. House Democrats also continue to fund the Senior Nutrition Program, which provides site-based pantries and home-delivered meals for more than 13,000 seniors.
“Failing to fund our critical food, housing, homelessness, and tenant protection programs would result in suffering, hunger, and death,” said Rep. Nicole Macri (D-Seattle), vice chair of the Appropriations Committee. “We know that people rely on these programs and that the need is great. We can’t turn our backs on seniors, kids, low-income families, workers, and communities. People have to know that government is there to help when they need it and that is what we are doing.”
House Bill 2015, which funds public safety programs through local revenue authority and state grants through the Criminal Justice Training Commission, is one new addition funded in the proposed budget with $50 million in new dollars.
“All Washingtonians should be able to count on quality K-12 schools and 2-year and 4-year colleges for themselves and their children. All Washingtonians should be able to count on a safety net that takes care of those who are in need and that we may some day rely on for ourselves or our loved ones. A healthy business climate requires that these public services be in place and that they be effective. This also requires that we pay for these services, and we are proposing to invest in public services by asking the wealthiest people and businesses in Washington pay their fair share,” said Majority Leader Rep. Joe Fitzgibbon (D-West Seattle).
New revenue is necessary to address the remaining shortfall. House Democrats have long pushed to improve Washington’s outdated tax code which underperforms for working and middle-class Washingtonians and increases income inequality. The revenue proposal put forward by House Democrats seeks to better align the tax code to reflect Washington’s 21st century economy, rapid growth, and expanding needs, and relieve economic pressures on lower- and middle-income families. The package includes a Financial Intangible Assets Tax (FIT) to bring equity to property taxation, legislation to modify the state and local property tax authority and adjust the school funding formula.
The FIT imposes a property tax of $8 on every $1000 of assessed value on certain financial intangible assets, such as stocks, bonds, mutual funds, and index funds, with the first $50 million in assessed value exempt from the tax. Allowing adjustment of the one percent cap on property tax growth, based on inflation and population, not to exceed three percent, better ensures state funding for K-12 education and local flexibility to fund public safety and build strong, safe communities. Finally, the one percent Business & Occupation (B&O) tax surcharge on businesses with taxable income over $250 million and increase to the surcharge on specified financial institutions with annual net income of $1 billion or more from 1.2% to 1.9%, will help ensure Washington’s biggest businesses contribute to protecting Washingtonians from harmful cuts to education, public safety, and the safety net and investing in critical public services that keep people healthy and support a more stable and sustainable financial future for the state.
“Essential services are disproportionately funded by working families, while the ultra-wealthy benefit the most and pay the least under our regressive tax system,” said Rep. April Berg (D-Mill Creek) Chair of the House Finance Committee. “The gaps between working families and the gains by the wealthiest in our state have resulted in not enough funding for our schools, a safety net that is at risk every time revenue collection drops or costs go up, and average Washington residents struggling to make ends meet. By leading with Democratic values, tax fairness, and equity, we put together a package that will continue our state down the path to a system where every Washingtonian can succeed.”
Under the proposal, the Budget Stabilization Account funds remain in place for future use. Total reserves after four years are 14.7%. The 2025-2027 operating budget total spending (near general fund-outlook) is under $77.8 billion.
2025-2027 Budget Highlights
LONG TERM CARE AND DEVELOPMENTAL DISABILITIES
- Consumer-Directed Employment, Agency Parity & Adult Family Home Agreement: $833 Million
- Funds Nursing home rates, delays rebase, and transitions clients to community settings: $20 Million
- Residential Habilitation Center Closures & Transitions to Community Settings: ($77 Million)
BEHAVIORAL HEALTH AND SUBSTANCE USE DISORDER
- Funds Non-native substance use disorder services at Tribal Facilities: $128 Million
- Funds Phase 4 of the Trueblood Settlement: $72 Million
- Reduces funding for facility and bed delays & utilization: ($309 Million)
HEALTH CARE AND PUBLIC HEALTH
- Continues funding for the Apple Health for Immigrants program
- Protects funding for the Cascade Care Savings Program: $84 Million
- Medicaid MCO Physical Health Rates reduced by 1%: ($82 Million)
- Dental Rates Reduced by 50% from recent increases: ($68 Million)
CHILDREN, YOUTH AND FAMILIES
- Increase Child Care Family Home Rates: $375 Million
- Delay Child Care Center Parity 1-year: ($140 Million)
- Delay WCCC Income Expansion: ($394 Million)
- Delay ECEAP Entitlement: ($327 Million)
- ECEAP Rate Increase: $54 Million
- ESIT Multiplier Increase: $31 Million
- JRA Capacity & Security: $85 Million
K-12 EDUCATION
- No changes to teacher’s National Board Bonuses
- Funds school meals and summer EBT for kids: $45 Million
- Funds Special Education and Local Effort Assistance: $1.1 Billion
- Transition to Kindergarten capped at 2024-25 levels: ($200 Million)
- Eliminates all OSPI grants and pass-through programs: ($276 Million)
HIGHER EDUCATION AND WORKFORCE DEVELOPMENT
- No Tuition increases
- Maximum Washington College Grant awards funded at 60% median family income: $22 Million
- UW Hospital Support: $10 Million
- WSU Native Scholarship Program: $2.2 Million
- Reduces institutional support by 2% for the four-years and 0.5% for the CTC’s: ($121 Million)
- Ramps down Evergreen State College per pupil funding to align with other institutions: ($33 Million)
- Career Connected Learning Reduction: ($60 Million)
HOMELESSNESS & HOUSING
- Local Government Housing Backfill: $118 Million
- Youth Homelessness Diversion Funding: $6 Million
- Tenant Right to Counsel Program: $6 Million
HUMAN SERVICES AND POVERTY REDUCTION
- Funds Food Security & Assistance: $133 Million
- Immigrant, Refugee, and New Arrival Supports: $40 Million
- Community Reinvestment Program: $50 Million
- Delay ABD Recoveries Elimination: ($118 Million)
- Delay 100% Child Support Pass-Through: ($49 Million)
CLIMATE, CLEAN ENERGY & NATURAL RESOURCES
- Wildfire Response, Suppression, and Recovery: $50 Million
- Invasive Species Prevention: $11 Million
- Reduce Hatchery Operations: ($9.2 Million)
PUBLIC SAFETY, LEGAL AID AND CORRECTIONS
- Local Law Enforcement Grants: $50 Million
- DOC Custody Staff Support: $53 Million
- Mission Creek Corrections Center for Women Closure: ($35 Million)
- Reentry Center Closures: ($34 Million)
- Reentry Center Conversions: $26 Million
- Crime Victims Support: $29 Million
- Simple Possession Advocacy & Representation Program: $16 Million
- Basic Law Enforcement Academy Local Cost Shift: ($18 Million)
STATE GOVERNMENT
- Funds Collective Bargaining Agreements for State and Higher Education Employees: $1.9 Billion
- No furloughs for state employees
- No health care premium changes
NOTE: Dollar amounts are the 4-year outlook numbers (fiscal years 26 – 29)
For more information:
House Democratic Caucus 2025-2027 operating budget proposal news conference available on TVW here.
Budget details from the House Office of Program Research available at fiscal.wa.gov.
Public Hearing on the House budget proposal in the Appropriations Committee (Tuesday, March 25, 4PM) available on TVW here.
Revenue proposal press release here.