OLYMPIA — Gov. Jay Inslee recently released his balanced budget proposal, aiming to preserve essential programs and services that support Washington families and businesses. The plan prioritizes public safety, education, housing, behavioral health, and early learning, even as the state faces an anticipated budget shortfall.
Rising costs, driven by inflation, increased caseloads in safety net programs, and workforce expenses, have led to a projected $12.6 billion increase in maintaining current program levels over the next four years. Revenue collections also dipped below forecasts due to declining home sales and lower-than-expected capital gains and sales tax collections.
“Washington has one of the strongest economies in the nation, and we’ve made great strides in recent years. But we must act to protect this progress for working families and ensure the state’s economic well-being,” Inslee said.
Proposed Investments and Priorities
Inslee’s 2025–2027 budget proposal minimizes cuts to critical areas, including education, housing, and behavioral health, while introducing revenue measures to close the funding gap. Key highlights include:
• Housing: $905 million to add 5,000 affordable housing units, fund homelessness services, and prevent evictions and foreclosures.
• Behavioral Health: $719 million to expand access to mental health and substance use treatment and recovery programs.
• K-12 Education: $1.3 billion to address rising costs for technology, supplies, maintenance, and educator compensation.
• Child Care and Early Learning: $510 million to boost provider subsidy rates under the Working Connections Child Care program and $48 million for Early Childhood Education and Assistance Program (ECEAP) rate increases.
• Public Safety: $7 million for 60 additional state law enforcement officers, $13 million for speed camera deployment to reduce work zone fatalities, and $33 million to open a new juvenile rehabilitation center.
• Higher Education and Workforce Training: $182 million to maintain the Washington College Grant, the nation’s most generous financial aid program, and $6 million to support Career Connect Washington initiatives.
• Clean Energy Transition: $982 million in Climate Commitment Act funds for electric school buses, hybrid-electric ferries, youth transit programs, and energy-efficient home improvements.
Proposed Cuts and Revenue Measures
To balance the budget, Inslee proposes $2 billion in reductions or delayed program implementations over four years. Notable cuts include:
• Closing the Mission Creek Corrections Center for Women due to declining demand for lower-security prison beds.
• Shuttering two residential habilitation centers and assisting residents’ transition to community-based care.
• Closing three reentry centers where service demand is reportedly low.
Inslee also outlined new revenue proposals, including a wealth tax and changes to the business and occupation (B&O) tax.
• The wealth tax would impose a modest 1% tax on residents with worldwide wealth exceeding $100 million, affecting approximately 3,400 of Washington’s wealthiest individuals. Over four years, the tax is expected to generate $10.3 billion.
• B&O tax changes would impact roughly 20,000 businesses with annual incomes exceeding $1 million in the “service and other activities” category, such as law and accounting firms. Beginning in October 2026, the tax rate would increase from 1.75% to 2.1%. By January 2027, all B&O tax rates would see a 10% increase, though some small businesses would remain unaffected due to credits and exemptions.
Inslee emphasized the need for a fairer tax system to sustain vital programs, arguing that Washington’s wealthiest residents currently pay less, proportionally, than middle-class families.
“At a time of increasing income inequality, a 1% wealth tax paid by the wealthiest few is the fairest way to protect the state’s progress,” Inslee said. “The middle class is increasingly fractured as fewer people hold more wealth and more families try to make every dollar stretch further.”
Avoiding Repeat of Past Budget Cuts
Inslee also drew comparisons to the aftermath of the Great Recession, when previous state budget cuts totaled over $11 billion. Those reductions, while necessary at the time, created gaps in mental health, education, and health care systems that took nearly a decade to address.
“Rolling back our work in areas like mental health, housing, and education is not something we can afford,” Inslee said. “This budget keeps us moving forward and puts working families first.”
Inslee pointed to ongoing challenges, such as funding special education and mental health services for students, supporting newly opened behavioral health facilities, and maintaining programs like the Washington College Grant, which helps low-income students access higher education.
The governor also noted the state’s significant progress on housing and homelessness, including a 40% reduction in youth homelessness and successful programs like Apple Health and Homes, which connects adults with disabilities to housing and support services.
Other notable investments include:
• Cost-of-living adjustments for state employees (3% in 2025 and 2% in 2026).
• Sustained funding for ferry service improvements and fish barrier removal projects to meet legal obligations.
• Increased funding for bike and pedestrian infrastructure through the Climate Commitment Act.
Inslee’s proposal now heads to the Legislature, where lawmakers will debate spending priorities and revenue measures. The governor stressed the importance of sustaining investments that ensure Washington families and businesses continue to thrive.
“Our strong economy and quality of life didn’t happen by accident,” Inslee said. “It’s because Washington has never been afraid to invest in its people, and that’s exactly what this budget does.”
