2025 Legislative Update: Week 10

Last week focused on policy committee hearings of bills sent over from the opposite chamber. We also saw some bills start to get voted out of committee. This will continue to be the focus in the coming week as we work towards the opposite house policy cutoff where all bills must move out of those committees by April 2^nd. We will also see some bills start to be heard by the fiscal committees given there is a quick turnaround of just one week between opposite house policy cutoff and opposite house fiscal cutoff on April 8^th.

Spring Quarterly Revenue Forecast

On March 18^th, the Economic and Revenue Council (ERFC) released the spring quarterly revenue forecast. These revenue projections provide House and Senate budget writers with the fiscal landscape they must work with as they draft their respective proposed operating budgets. The 2025 session is the first year of the biennium, which means they will be putting forward proposals for the full two-year (biennial) operating budget.

The forecast of funds subject to the budget outlook for the current 2023-25 biennium is projected to increase by $54.4 million, but then is projected to decrease by $479 million for the 2025-27 biennium, and decrease by $420 million for the 2027-29 biennium. This means the state budget shortfall is projected to grow for the next two ensuing biennia. The combined change in revenue projections compared to the November 2024 forecast is a decrease of $845 million over the period of the current biennium and the next two ensuing biennia (2025-27 and 2027-29). This projected shortfall is in addition to the estimated $15 billion shortfall over the four-year outlook the legislature has already been contemplating as they have been considering legislation this session and working to prepare budget proposals.

For a deeper dive into the spring revenue forecast, see this budget memo from the Prevention Alliance.

Revenue Proposals

Senate Democrat Revenue Proposals

On Thursday, Senate Democrats introduced a package of revenue proposals designed to mitigate the effects of an all-cuts budget. The proposals, if enacted, are estimated to net roughly $17 billion in new state revenue over the next two budget cycles. The package includes five key measures:

• Financial Intangibles Tax: Imposes a tax of $10 on every $1,000 of assessed value of certain financial assets (stocks, bonds, exchange-traded funds, and mutual funds) held by individuals with more than $50 million of these assets, paid by about 4,300 wealthy individuals. It generates approximately $4 billion per year starting in fiscal year 2027.
• Removing the Cap on Employer Payroll Taxes: Imposes a 5% tax on large employers on the amount of payroll expenses above the Social Security threshold — currently $176,100 per year. This tax is limited only to companies with $7 million or more in payroll expenses— about 5,289 companies. The proposal is similar to the city of Seattle’s “JumpStart” tax and includes a full credit for businesses already paying that tax. It would raise about $2.3 billion per year once fully implemented.
• Allowing Property Tax to Grow by Population and Inflation: Would raise the property tax growth limit for the state’s common schools levy and for cities and counties, as well as special purpose districts, from the current 1% cap to the combined rate of population growth plus inflation. Local governments have the option to take a lower growth rate if they so choose. Instead of being tied to an arbitrary number, it would allow the growth limit to reflect the actual cost of providing public safety and related services. The proposal also completely exempts participants in the “Property Tax Exemption for Senior Citizens and People with Disabilities” program from paying the state property tax, giving a tax reduction for some of our most vulnerable community members.
• Repealing Ineffective & Obsolete Tax Preferences: Repeals 20 tax exemptions where the public policy objective was not met, it is unclear whether the policy objective was met, or the exemption is legally obsolete, according to nonpartisan auditors at the Joint Legislative Audit & Review Committee, including for in-state hauling, gold bullion, prescription drug wholesalers, and more. This generates just over $1 billion over the full four-year budget cycle.
• Cutting the Regressive Sales Tax: This proposal reduces this disproportionate impact on low- and middle-income households with a half-point sales tax reduction, from 6.5% to 6% – a decrease in revenue of approximately $1.3 billion per year.

House Democrat Revenue Proposal

On Friday, House Democrats introduced their package of revenue proposals. The package includes three key measures:

• Property Tax Fairness Through Financial Intangible Assets Tax – Imposes a property tax of $8 on every $1000 of assessed value on certain financial intangible assets, such as stocks, bonds, mutual funds, and index funds, with the first $50 million in assessed value exempt from the tax to best ensure tax fairness. Other exemptions include pensions, retirement accounts, and education savings accounts. The Department of Revenue estimates around 4,300 wealthy Washingtonians will pay the tax, generating approximately $2 billion per year, beginning in fiscal year 2027, which will be dedicated to the Education Legacy Trust Account to support Washington families and fund vital investments in K-12 schools.
• Increasing State and Local Flexibility to Fund Schools and Public Safety: Modifies the state and local property tax authority and adjust the school funding formula. The bill maintains the 1 percent cap on property tax growth but allows for increases based on inflation and population changes, not to exceed 3 percent. The bill also adjusts levy equalization methods to ensure equitable funding for historically underinvested areas of our state, including rural school districts, mitigating widening funding gaps between schools. The Department of Revenue estimates the change will increase funding for state investment in K-12 schools by $50 million in fiscal year 2026 and $150 million in fiscal year 2027.
• Surcharge on High-Grossing Corporations and Financial Institutions: Imposes a 1% Business & Occupation (B&O) tax surcharge on businesses with taxable income over $250 million. This surcharge only applies to the wealthiest corporations—approximately 400 businesses statewide. Small businesses and working families remain unaffected. The bill also includes an increase to the surcharge on specified financial institutions (approximately 200) with annual net income of $1 billion or more from 1.2% to 1.9%. Under this proposal, Washington will generate nearly $600 million in fiscal year 2026 and nearly $2 billion in fiscal year 2027.

  ---

Budget Rollouts

The big focus this upcoming week will be on budgets. On March 18^th the Economic and Revenue Forecast Council released the next quarterly revenue forecast. With that spring forecast now released, but writers have been putting the final touches on their respective budget proposals, which we will see released in the coming days. Here is the timing of budget releases as we know at this point:

Operating Budgets

The House and Senate budgets will both be released on Monday, March 24^th, heard in their respective fiscal committees on Tuesday, March 25^th, and exec’d out of committee on Thursday, March 27^th. We have heard the Senate is anticipated to debate and vote their operating budget off the Senate floor on Saturday, March 29^th, and the House will debate and vote their operating budget off the House floor on Monday, March 31^st.

Transportation Budgets

The House and Senate transportation budgets will also both be released on Monday, March 24^th, heard in their respective transportation committees on Tuesday, March 25^th, and exec’d out of committee on Thursday, March 27^th. We do not yet know timing for passing the transportation budget proposals off the respective chamber floors. We will keep you posted once we know more.

Capital Budgets

The House and Senate capital budgets will both be released on Monday, March 31^st. We do not yet know timing for committee hearings, executive session, or floor debate/vote.

To prepare for the release of the operating budget, you can refer to the Office of Financial Management’s Guide to the Washington State Budget Process. This is a helpful resource in understanding the operating budget including how it is created, where the funding comes from, terminology, timelines, and more.

Looking Ahead

This coming week the focus will continue to be on policy committee hearings and executive sessions as they work towards the opposite house policy cutoff. Follow where we are in the process by consulting the 2025 Session Cutoff Calendar.

Click here to watch this week’s TVW Legislative Review. Episodes are posted every day during session and are just 10 minutes long, providing highlights of the day in Olympia.

Upcoming Events Report

Labor & Commerce (Senate) – SHR 1 and Virtual J.A. Cherberg – 3/24 @ 10:30am

• E2SHB 1213 – Public Hearing – Expanding protections for workers in the state paid family and medical leave program. (Remote Testimony Available).
• SB 5786 – Public Hearing – Increasing license, permit, and endorsement fees. (Remote Testimony Available).

Housing (House) – HHR C and Virtual JLOB – 3/24 @ 1:30pm

• ESB 5313 – Exec Session – Adding to the list of provisions prohibited from rental agreements.

Local Government (Senate) – SHR 3 and Virtual JACB – 3/24 @ 1:30pm

• SHB 1576 – Exec Session – Concerning the designation of historic landmarks by cities.
• 2SHB 1183 – Exec Session – Concerning building code and development regulation reform.
• SHB 1935 – Exec Session – Concerning the definition of project permit and project permit application.

Ways & Means (Senate) – SHR 4 and Virtual JACB – 3/24 @ 4:00pm

• HB 1858 – Public Hearing – Eliminating the exemption for assignments or substitutions of previously recorded deeds of trust from the document recording fee and the covenant homeownership program assessment. (Remote Testimony Available).

Finance (House) – HHR A and Virtual JLOB – 3/25 @ 8:00am

• HB 2024 – Public Hearing – Providing housing safety, security, and protection by creating the primary residence property tax exemption. (Remote Testimony Available).
• HJR 4204 – Public Hearing – Amending the Constitution to allow for a property tax exemption for a principal place of residence. (Remote Testimony Available).

Law & Justice (Senate) – SHR 4 and Virtual JACB – 3/25 @ 8:00am

• ESHB 2015 – Public Hearing – Improving public safety funding by providing resources to local governments and state and local criminal justice agencies, and authorizing a local option tax. (Remote Testimony Available).

Labor & Commerce (Senate) – SHR 1 and Virtual J.A. Cherberg – 3/25 @ 10:30am

• ESHB 1332 – Public Hearing – Concerning transportation network companies. (Remote Testimony Available).

State Government, Tribal Affairs & Elections (Senate) – SHR 2 and Virtual J.A. Cherberg – 3/25 @ 1:30pm

• SHB 1967 – Public Hearing – Modifying bonding requirements in the design portion of design-build public works projects. (Remote Testimony Available).

Appropriations (House) – HHR A and Virtual JLOB – 3/25 @ 4:00pm

• HB 1198 – Public Hearing – Making 2025-2027 fiscal biennium operating appropriations.

Transportation (House) – HHR B and Virtual JLOB – 3/25 @ 4:00pm

• HB 1227 – Public Hearing – Making transportation appropriations for the 2025-2027 fiscal biennium. (Hearing is on the Proposed Substitute.)
• HB 2043 – Public Hearing – Concerning transportation resources. (Hearing is on the Proposed Substitute.)

Transportation (Senate) – SHR 1 and Virtual J.A. Cherberg – 3/25 @ 4:00pm

• SB 5160 – Public Hearing – Making supplemental transportation appropriations for the 2023-2025 fiscal biennium. (Hearing is on the Proposed Substitute.) (Remote Testimony Available).
• SB 5161 – Public Hearing – Making transportation appropriations for the 2025-2027 fiscal biennium. (Hearing is on the Proposed Substitute.) (Remote Testimony Available).

Ways & Means (Senate) – SHR 4 and Virtual JACB – 3/25 @ 4:00pm

• SB 5167 – Public Hearing – Making 2025-2027 fiscal biennium operating appropriations. (Hearing is on the Proposed Substitute.)

Labor & Workplace Standards (House) – HHR D and Virtual JLOB – 3/26 @ 8:00am

• SSB 5292 – Exec Session – Concerning paid family and medical leave rates.
• SSB 5528 – Exec Session – Concerning the installation of transportation electrification infrastructure.

Local Government (House) – HHR E and Virtual JLOB – 3/26 @ 8:00am

• ESSB 5611 – Public Hearing – Streamlining and clarifying local governments’ land use permitting workloads. (Remote Testimony Available).
• SSB 5374 – Public Hearing – Including tribal representation in certain transportation activities. (Remote Testimony Available).
• ESSB 5719 – Exec Session – Concerning local government hearing examiners.
• ESSB 5184 – Exec Session – Concerning minimum parking requirements.

Housing (Senate) – SHR 4 and Virtual JACB – 3/26 @ 10:30am

• EHB 1217 – Exec Session – Improving housing stability for tenants subject to the residential landlord-tenant act and the manufactured/mobile home landlord-tenant act by limiting rent and fee increases, requiring notice of rent and fee increases, limiting fees and deposits, establishing a landlord resource center and associated services, authorizing tenant lease termination, creating parity between lease types, and providing for attorney general enforcement.
• EHB 1403 – Exec Session – Simplifying condominium construction statutes.
• 3SHB 1491 – Exec Session – Promoting transit-oriented housing development.
• E2SHB 1096 – Exec Session – Increasing housing options through lot splitting.

Early Learning & Human Services (House) – HHR D and Virtual JLOB – 3/26 @ 1:30pm

• SSB 5655 – Exec Session – Concerning child care centers operated in existing buildings.

Housing (House) – HHR C and Virtual JLOB – 3/26 @ 4:00pm

• E2SSB 5148 – Exec Session – Ensuring compliance with the housing element requirements of the growth management act.
• SSB 5469 – Exec Session – Prohibiting algorithmic rent fixing and noncompete agreements in the rental housing market.
• E2SSB 5613 – Exec Session – Concerning the development of clear and objective standards, conditions, and procedures for residential development.
• ESB 5662 – Exec Session – Concerning the waiver of municipal utility connection charges for certain properties.

Environment & Energy (House) – HHR B and Virtual JLOB – 3/27 @ 8:00am

• SB 5036 – Exec Session – Strengthening Washington’s leadership and accountability on climate policy by transitioning to annual reporting of statewide emissions data.

Law & Justice (Senate) – SHR 4 and Virtual JACB – 3/27 @ 10:30am

• ESHB 2015 – Exec Session – Improving public safety funding by providing resources to local governments and state and local criminal justice agencies, and authorizing a local option tax.

Finance (House) – HHR A and Virtual JLOB – 3/27 @ 1:30pm

• ESSB 5576 – Exec Session – Providing a local government option for the funding of essential affordable housing programs.

Appropriations (House) – HHR A and Virtual JLOB – 3/27 @ 4:00pm

• HB 1198 – Exec Session – Making 2025-2027 fiscal biennium operating appropriations.

Transportation (House) – HHR B and Virtual JLOB – 3/27 @ 4:00pm

• HB 1227 – Exec Session – Making transportation appropriations for the 2025-2027 fiscal biennium.

Transportation (Senate) – SHR 1 and Virtual J.A. Cherberg – 3/27 @ 4:00pm

• SB 5160 – Exec Session – Making supplemental transportation appropriations for the 2023-2025 fiscal biennium.
• SB 5161 – Exec Session – Making transportation appropriations for the 2025-2027 fiscal biennium.

Ways & Means (Senate) – SHR 4 and Virtual JACB – 3/27 @ 4:00pm

• SB 5167 – Exec Session – Making 2025-2027 fiscal biennium operating appropriations.

Labor & Commerce (Senate) – SHR 1 and Virtual J.A. Cherberg – 3/28 @ 8:00am

• ESHB 1622 – Public Hearing – Allowing bargaining over matters related to the use of artificial intelligence. (Remote Testimony Available).
• SB 5786 – Exec Session – Increasing license, permit, and endorsement fees.
• E2SHB 1213 – Exec Session – Expanding protections for workers in the state paid family and medical leave program.

Environment, Energy & Technology (Senate) – SHR 1 and Virtual J.A. Cherberg – 3/28 @ 10:30am

• SHB 1543 – Exec Session – Increasing compliance pathways for the clean buildings performance standard.
• 2SHB 1409 – Exec Session – Concerning the clean fuels program.
• 2SHB 1975 – Exec Session – Amending the climate commitment act by adjusting auction price containment mechanisms and ceiling prices, addressing the department of ecology’s authority to amend rules to facilitate linkage with other jurisdictions, and providing for market dynamic analysis.

State Government, Tribal Affairs & Elections (Senate) – SHR 2 and Virtual J.A. Cherberg – 3/28 @ 10:30am

• HB 1934 – Exec Session – Concerning the disclosure of information pertaining to complainants, accusers, and witnesses in an employment investigation.
• SHB 1967 – Exec Session – Modifying bonding requirements in the design portion of design-build public works projects.

  ---

  Stay tuned for next week's update!