Governor Bob Ferguson has released a proposed two-year balanced supplemental budget totaling about $79 billion. The plan represents a 1.5 percent increase over previously enacted budgets and comes as the state faces a projected $2.3 billion shortfall tied to lower-than-expected revenue and critical agency requests.
The proposal addresses the gap through a mix of strategies, including roughly $800 million in spending reductions, $425 million in fund reallocations, and a $1 billion transfer from the state rainy day fund, which is projected to hold just over $2 billion for the 2025 to 27 biennium.
While the Governor states the budget does not rely on new taxes, it does repeal or modify several tax preferences. These changes include ending a sales tax exemption for replacement data center servers, adjusting the preferential tax rate for prescription drug wholesalers, and modifying how certain insurance-related taxes interact. Together, these changes would generate additional state revenue.
During the budget rollout, the Governor also reiterated support for a potential income-based tax on high earners, though it is not assumed in the current proposal. Analysis is ongoing, and stakeholders continue to review the potential impacts on the business community.
