Governor Ferguson says he will not sign budgets reliant on a wealth tax, urges protection of rainy day fund

Governor Ferguson outlined priorities for the state operating budget and warned that a new revenue forecast increased the projected shortfall by about $1 billion, bringing the total to roughly $16,000,000,000 over the next four years.

"This is a 5 alarm fire, and I intend to treat it that way," Governor Ferguson said, arguing the state must take a balanced approach that protects core services while preparing for additional federal funding cuts.

Ferguson listed five conditions he needs satisfied before he will sign a budget: protect the budget stabilization account (the "BSA" or rainy day fund); base spending on realistic revenue projections rather than the statutory 4.5% growth assumption; minimize new investments; include billions in efficiencies and savings while preserving core services such as public safety and K–12 education; and avoid relying on revenue sources that could be overturned in court.

The governor said federal dollars make up about 28% of the state budget (approximately $43 billion per biennium) and that recent federal actions — including an abrupt cancellation of $160,000,000 in public health funding — increase the state's fiscal vulnerability. He cited Medicaid, education, child welfare and disaster response among programs that depend heavily on federal support.

Ferguson repeated his skepticism about proposed wealth taxes, calling them "novel, untested, difficult to implement" and warning of an "immediate challenge in court" if budgets depend on such a tax. He cited chamber estimates in the transcript — "12,000,000,000 in the senate, 7,000,000,000 in the house" — and said explicitly, "I will not sign that." He underscored concerns about implementation, noting the Department of Revenue has observed other jurisdictions repeal wealth taxes because of administrative costs, evasion and low revenues.

At the same time, Ferguson acknowledged the state tax system is regressive and said he supports revenue changes that are defensible in court, pointing to his prior support for Washington's capital‑gains tax and legal defenses he described from his prior public service. He said he is open to conversations about a much smaller, testable wealth‑tax proposal "nowhere near $100,000,000 a year" (a figure he offered as an example of a scale that could be tested in court), but that he had made no commitment.

On specific line items, Ferguson said his office will send a formal "concerns" letter to the House and Senate within about 24–48 hours after further review. He also confirmed that funding for a Department of Labor and Industries IT upgrade — originally requested near $40,000,000 and reduced in OFM to about $17,900,000 in the chamber proposals — will be included after a data error and omission were corrected.

Reporters asked about payroll taxes, property tax caps, furlough proposals and homelessness. Ferguson declined to negotiate specific revenue proposals in the press conference but said his office is having detailed conversations with legislative leaders on both sides and has meetings scheduled, including with named legislators. On homelessness and potential HUD cuts, he said protecting reserves and budgeting conservatively are ways to prepare and that investments must continue to help people who are unhoused.

On wildfire funding, when asked about a proposed $80,000,000 reduction to preserve reserves, Ferguson said he had discussed the reductions with Dave Updegrove and that the proposed adjustments had been designed not to impair firefighting work, while acknowledging details were still being finalized.

Ferguson closed by reiterating that a balanced approach is achievable and that the next few weeks will be critical as negotiations continue between his office and legislative leaders.

Next steps: Ferguson said his team will finalize and send a concerns letter to the chambers in roughly 24–48 hours and will continue meetings with legislative leaders to resolve differences before the session ends.