With WA billions in the hole in the coming years, some Democrats are weighing a wealth tax
Democrats expand power in WA state legislature
As lawmakers head back to Olympia for 2025, the projection is that Washington will be short billions of dollars to operate in the coming years. Some lawmakers say the government needs to be smarter about how they spend taxpayer dollars, while others say more taxes could be the answer.
OLYMPIA, Wash. - In contrast to Congress, the balance of power shifted more in favor of the Democrats in Washington state after the November election.
"For the first time since 1944, they elected all Democrats to every single statewide office in the state," Senator Jamie Pedersen said.
That grip extending to the state legislature where both the House and Senate added a Democrat each clinching a 60% majority in both chambers. The makeup allows them to push bills more easily and hypothetically pass budget items without Republican approval.
"Could they flat out ignore us the whole time, absolutely they could do that…I don’t see them doing that," Representative Chris Corry said.
The hope of bipartisanship is high for the upcoming session, but they are facing a financial cliffhanger going into 2025. Governor Inslee is about to depart office with a warning that the state will see a $10 to $12 billion deficit in the operating budget over the next four years. This week, Inslee issued a hiring freeze on non-essential positions and curbed spending.
"Unfortunately, it might be closer to $14 (billion) in the operating budget over the next four years and additionally $8 billion of shortfall in the transportation budget that we are going to wrestle with so it’s a significant problem," Pedersen said.
Pedersen, an 18-year veteran, representing Seattle, is now the senate majority leader.
"I suspect we will need additional revenue so we will have a balanced approach," Pedersen said.
WA Gov. Inslee imposes hiring, spending freeze amid budget deficit
Washington Governor Jay Inslee says he is implementing a hiring and spending freeze as the state faces a "significant operating budget deficit."
For many Democrats, additional revenue means potentially more taxes.
"Taxing that wealth for people who have above, you know, say $50 million or more," Pedersen said.
The idea of a wealth tax isn’t new. Last year a Senate version of one bill had 19 senators sponsoring it. It’s also something similar to what Kamala Harris reportedly supported during the campaign trail.
"We have a complete exemption of intangible property like stocks and bonds from the property tax so that is something worth considering," Pedersen said.
Rep. Chris Corry of Yakima, first elected to office in 2019, is calling the measure an insane idea.
He says taxing stocks every year that fluctuates in value makes no sense. Corry believes taxing unrealized gains, items before they are even sold, would drive innovators and investors out of Washington in the long term.
But Pedersen is convinced there is a clear appetite by Washingtonians to tax the ultra-rich.
He points to voters refusing to support Initiative 2109 which would have killed the 7% capital gains tax in our state.
WA voters reject Initiative 2109, hanging on to capital gains tax
With this vote, the 7% excise tax will remain on the books.
"Supported additional taxes to pay for more robust services," Pedersen said.
Pedersen says lawmakers will be scrubbing every line in the budget for potential cuts, but he is strongly weighing tax options.
Corry says the solution is to cut and spend taxpayer dollars more wisely while passing high priority agendas. Both parties agree on some priorities, including funding schools, lowering housing costs and hiring more officers.
Both sides say they look forward to working with a new governor this January.
Corry says Bob Ferguson’s campaign promises to spend millions more to hire more officers and to use diesel ferries to combat long wait times for passengers were something Republicans tried to pass in previous years.
"You want to talk about a group text when those things came out as policy proposals from Bob Ferguson, we were like hey look, those are our ideas so part of that is going to be working with the new governor holding his feet to the fire on those campaign promises he made because a lot of them we agree with," Corry said.
Ferguson vows to minimize bureaucracy if elected WA governor
Bob Ferguson says he's putting a focus on public safety, abortion rights, and fixing the state's ferry system.
The legislative session starts January 13.
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