State budget outlook tightens as advocates press for progressive revenue and warn of initiatives that could shift costs

Pat Sullivan, the governor's recently appointed director of the Office of Financial Management, told Senior Lobby attendees that Washington faces a difficult fiscal picture heading into the 2025 legislative session: revenue forecasts have weakened by about $700 million since June, caseloads and workforce costs are rising, and spending commitments enacted in recent years are ramping up. Sullivan said the state could face an operating shortfall on the order of $5'$7 billion over the four-year budget window if revenue does not improve.

Sullivan outlined the budget structure: about 65'70% of the state's budget is protected by constitutional or federal requirements (K—2 and Medicaid), leaving 30'35% in more flexible areas. On the capital side, he said bond resources are pressured by aging infrastructure and court-driven obligations such as culvert remediation.

Speaking after Sullivan, Carolyn Brotherton of the Economic Opportunity Institute argued Washington's tax code is regressive and presented three progressive revenue options for the next legislature: a state wealth tax (a 1% levy on very large financial wealth above a high exemption), reforms to the real estate excise tax to create a permanent affordable-housing fund, and closing an employer payroll-tax loophole on earnings above $168,000. Brotherton said three ballot initiatives being promoted this year (listed in her presentation) would roll back the WA Cares contribution structure, repeal the capital gains tax and rescind the Climate Commitment Act, and she urged a "no" vote on those measures.

Both presenters stressed that the combination of reduced revenue and mandatory spending growth will force hard choices in the next session and that protecting investments in education, behavioral health and elder services will require finding sustainable revenue sources or making politically difficult tradeoffs.