Following weeks of questions about how the new executive might respond to legislative Democrats’ approved tax increases, Gov. Bob Ferguson on Tuesday signed a two-year almost $78 billion spending plan with new taxes and program cuts.
The plan, approved last month by the Legislature, includes $4 billion in new taxes on businesses, wealthy residents and some services; about $3 billion in cuts; and more than $7 billion in new spending on education, wage increases for state employees and long-term care.
After months of push-back on Democrats’ tax proposals, Ferguson signed off on what he called “a balanced approach.” In the end, he made only minor changes, vetoing about $25 million more in spending and promising to look more closely at approved taxes before the next legislative session begins in January 2026.
“I understand very clearly that this will be a challenging budget for Washingtonians,” Ferguson said. “But I believe it’s a balanced approach that sets us up on a trajectory for a more sustainable future.”
Lawmakers came into the legislative session this year with a nearly $16 billion budget shortfall to fill over the next four years. Democrats’ initial funding plans relied on a suite of hefty new taxes, including a tax on the wealthiest residents, which Ferguson quickly nixed.
Despite his reservations, Ferguson ultimately approved $4 billion in taxes, including on businesses, financial assets and technology services. The budget also includes new fees on state parks’ passes, hunting and fishing licenses, and liquor permits.
Ferguson did veto one tax increase, choosing to keep a tax exemption for interest collected by community banks, which he said is important to keeping housing affordable.
The governor said he will be having more conversations with his team, lawmakers and the business community on the taxes to make sure there aren’t “unintended impacts.”
He said he may want to make changes to the budget in the next legislative session in January, which could upend the revenue lawmakers relied on when balancing the current spending plan. If that happens, lawmakers may need to make deeper cuts next year during a supplemental budget process, Ferguson said.
Already, the budget includes $2.7 billion in cuts to higher education, health care and the Department of Children, Youth and Families.
On Tuesday, Ferguson vetoed another $25 million in spending. Programs that support counseling and case management for teens, language services for low-income Afghan women and girls, supports for Spanish speakers accessing HIV treatment, stipends for sexual assault nurse examiner training and outdoor recreation access for underrepresented communities were all among the cuts.
Ferguson said he plans to look more closely at the approved spending cuts over the next few months in preparation for the next legislative session and his supplemental budget proposal, due in December.
The governor’s approval of the budget was welcome news to Democratic budget leaders but was met with harsh criticism from their Republican counterparts.
"Ultimately, the governor folded to his party and signed off on an irresponsible and unsustainable plan,” said House Republican Budget Leader Rep. Travis Couture, R-Allyn. “Washington taxpayers will pay the price."