WASHINGTON STATE 2025 LEGISLATIVE SESSION WRAP-UP

The Washington State Legislature adjourned on April 27, 2025, at 6:30 p.m. after 105 days in session. In the final week, the Legislature passed the 2025–2027 operating, capital, and transportation budgets, all of which may be subject to vetoes by the governor.

Key Points:

• Budget Focus:
  The session primarily focused on addressing a $16 billion budget shortfall.
  • Initial Democratic proposals sought $21 billion in new taxes over four years.
  • After pushback from Governor Ferguson, a revised $12 billion proposal was also deemed too high.
  • The final compromise landed at about $9 billion in new taxes over four years.
  • The governor has not yet publicly supported or opposed the final operating budget.
• Final Operating Budget Highlights:
  • Total Appropriations: ~$78 billion for 2025–2027 — an 2% increase over the previous biennium.
  • No new payroll tax on large businesses and no full wealth tax, although a scaled-back version was included to test legal challenges.
  • Increases pay for state employees without requiring furloughs.
  • Provides $100 million for local police hiring and retention (a key governor priority).
  • Leaves the rainy-day fund intact, addressing concerns about maintaining reserves.
• Major Tax Changes:
  • Business & Occupation (B&O) Tax: Increased rates across industries + new surcharge for businesses with >$250 million in WA income (ESHB 1981).
  • Sales Tax Expansion: Broader application to services (ESSB 5814).
  • Capital Gains and Estate Tax: Both increased (ESHB 5813).
  • Repeal of Certain Tax Preferences: (ESSB 5794).
  • Tesla-Specific Tax: Targeted measure (SHB 2077).
  • State Fee Increases:
    • Discover Pass: 50% increase
    • Hunting & Fishing Licenses: 38% increase
    • Liquor Licenses: 50% increase
  • Bill Activity:
    Over 400 bills were passed during the session’s final week.
    The governor now has 20 days to sign, veto, or partially veto bills passed in the last five days of session.