Voters decided this month to allow payroll taxes collected for Washington’s new long-term care program to be invested in the stock market.
But they will have to wait a while for the decision to begin paying dividends.
Nearly 58% of voters approved Senate Joint Resolution 8201 amending the state constitution to end restrictions on the types of investments that can be made with dollars flowing into the WA Cares fund.
The state constitution generally bars investing public money in the stock of private companies, limiting state and local governments to fixed-income securities like government bonds, treasury bills and certificates of deposit that are less risky but typically deliver lower rates of return. The WA Cares account has been subject to this limitation.
Once the results of the Nov. 4 election are certified, the Washington State Investment Board will be legally able to handle the program’s assets in a similar manner as it does pension and retirement funds. The WA Cares fund had a balance of $2.9 billion on Sept. 30.
Changes won’t occur immediately, members of the Long Term Services and Supports Trust Commission learned at their most recent meeting.
The state investment board will first hire a consultant to study how to incorporate public equity investments into the allocation of assets of the Long Term Services and Trust Account.
Completion of the study is expected next fall. Any recommendations for rebalancing the allocation of those assets will be considered by the board and, if approved, implemented, Assistant Senior Investment Officer Kristi Bromley told committee members.
Passage of the measure is another milestone for the long-term care program created in law in 2019.
WA Cares is funded with a 0.58% tax on the paychecks of most workers in Washington. Collections began in mid-2023. Beginning in July 2026, those who qualify can begin accessing the benefit, a lifetime amount of $36,500 — a sum that is set to rise in future years to account for inflation. A pilot program will start in January in a handful of counties.
Supporters of the measure argued investing in the stock market could lead to larger returns, helping keep payroll taxes from rising too high and the program solvent.
The state investment board uses a long-term, diversified investment strategy. There is a 7.25% return assumed on dollars invested through the state’s pension accounts, a level set by the Pension Funding Council.
Opponents argued it would be “financial roulette” and a breach of the state’s fiduciary responsibility because it would put taxpayer dollars at risk should the economy or market crash. They argued investing in municipal bonds may earn less, but it provides a broad public benefit by helping local governments carry out projects.
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