Washington and Idaho legislators open their respective off-year sessions Monday in Olympia and Boise.
Budgets will be top of mind in both statehouses as a slowing economy and pending federal tax cuts from President Trump’s Big Beautiful Bill will require lawmakers to adjust and balance existing budgets.
In Olympia, Governor Bob Ferguson has introduced a supplemental budget that aims to reduce a deficit projected to be more than $2 billion. He proposes to cut $800 million in spending, pull $1 billion from the state’s reserve fund and delay the beginning of some new programs. The governor says he worries that billions in federal spending cuts for programs in Washington will further destabilize the state budget.
Ferguson says he doesn’t support Seattle Representative Shaun Scott’s “Well Washington Fund,” a payroll excise tax that would be levied against corporations with “high concentrations of employees earning above $125,000/year,” according to a House Democratic statement. He says it wouldn’t be enacted early enough to help with this year’s budget. But the governor has thrown his support behind a “millionaire’s tax,” a state income tax for incomes greater than $1 million. That would require a constitutional amendment to be approved by a 2/3 vote of the legislature and a majority vote of the people.
Republicans argue Washingtonians have rejected income tax proposals on the ballot several times. If this one is approved, they say it would only be a matter of time before the “millionaire’s tax” would become an income tax that everyone would pay.
Audits involving state money receive new attention
Also on the legislative agenda, a proposal to require outside audits of private entities that receive state money.
Republican Representative Travis Couture’s bill was introduced last March, but is receiving renewed attention amid allegations of widespread fraud in the Minnesota child care system. Couture says Washington may have similar problems.
“DCYF (Department of Children, Youth and Families) kind of has the reverse King Midas touch. Everything they touch turns to crap,” Couture said at a pre-legislative session forum on Friday.
“We have a state auditor’s audit from 2017 and then 2020 and then DCYF’s own audit of itself, its own report of child care overpayments. And yet we can’t seem to get anyone from DCYF to explain to us in the legislature what controls they put into place,” he said.
Couture’s bill never received a hearing last year.
Governor Bob Ferguson says he’s open to talking about it. But he says the agency already has an audit procedure designed to identify fraud. Furthermore, he says, any audit legislation should be applicable to all state agencies, not just those related to child care.
Congressional redistricting in Washington?
Washington has, so far, not joined the parade of other states in redrawing its congressional district maps years earlier than planned.
Perhaps that will change.
House Majority Leader Joe Fitzgibbon, a West Seattle Democrat, has introduced a state constitutional amendment that essentially says, if another state redraws its boundaries early, Washington can too.
House Speaker Laurie Jinkins says she wouldn’t have supported mid-decade redistricting before it was launched in other states. And while Fitzgibbon’s version may not be approved, she says it does have some value.
“It will be a good discussion to help voters understand that, in Washington, you can’t just do what California did or what some other states have done. We would require a constitutional amendment with a two-thirds majority vote,” she said at Friday’s legislative forum.
House Republican Leader Drew Stokesbary says the bill sends a message to voters.
“The prime sponsor of this legislation was asked over the summer if Washington would consider mid-cycle redistricting and he said it is not on the table for us. Six months later he has introduced a bill to do just that,” he said at the forum.
“So I hope the public remembers when Democrats say later this session that the income tax will only ever apply to millionaires that Democrats have not always kept their word.”
As with a state income tax, the redistricting proposal would require a constitutional amendment.
Transportation spending; Spokane freeway is safe
During Friday’s briefing with reporters, Senate Transportation Committee Chair Marko Liias said legislators are putting a new emphasis on urgent road and bridge maintenance projects.
Governor Ferguson has proposed borrowing up to $2 billion to help the state catch up on urgent road work. Liias and other legislative leaders say they would prefer the state preserve its bonding authority for long-term projects, such as bridges, that will last for decades. They say routine maintenance and preservation work should instead be paid by for gas tax money. The legislature approved a six-cent-a-gallon increase last year.
Liias says the state’s budgetary issues and that new emphasis on transportation maintenance work should not affect major highway and bridge projects. Those include Spokane’s North-South Corridor, as well as projects in Seattle and Vancouver.
“We are going to finish the job on important projects like 520, the Columbia River bridge, North Spokane Corridor. We are going to get the job done on those and the budget we passed last year puts us in a strong position to get those projects done,” Liias said.
Budget takes center stage in Boise
Idaho legislators will work to rebalance their state budget when they convene Monday for their annual session.
Governor Brad Little told reporters on Thursday that Idaho will weather the storm because it has been fiscally responsible, even when the economy was booming. He ordered state agencies earlier this year to cut their budgets by 3% when it became clear tax revenues were slowing.
He says the state also made investments in infrastructure and the education system when it had the money.
“We've increased K-12 funding by 70% since I got this job. Starting teacher pay, teacher pay, investments in literacy. As a result we've had advancements in our reading scores. Not as much as I'd like to see but we're the I love the trend. We're headed the right direction,” he said.
Little told reporters the state is also in good shape because it has the fastest growing rate for personal income in the nation and several of its industrial sectors are doing well.
“The mining industry is white-hot right now. If you go to the Kellogg area or go over to the phosphate patch or go to some of these other areas there's enormous amounts of capital that's being invested that's going to help the state on both ends,” he said.
Little acknowledges there are economic headwinds, especially in agriculture, where many farmers are receiving lower-than-usual prices for their products.
The latest forecast shows Idaho ending the fiscal year about $40 million in the red. That could balloon to at least $475 million depending on how the state conforms with federal tax changes passed by Congress last year.
House Democratic Leader Ilana Rubel said Thursday she’s not optimistic about Idaho’s economic outlook.
“We already have serious problems and fallout from the cuts we’ve already made and those cuts are going to get a lot more drastic given the severe revenue shortfalls we’re looking at,” Rubel said.
House Speaker Mike Moyle downplayed those concerns.
“The state of Idaho is in good shape. It’s going to be good. We’re all going to do well. We’ll do our best to protect education and those important budgets, but at the same time we’ll make those needed adjustments to balance the budget,” Moyle said.
While Little wants the state to fully conform to those federal tax changes, Moyle says the legislature might pick and choose to avoid a significant revenue hit.
Idaho’s legislative session will begin Monday at noon with Little’s State of the State Address.
Reporting contributed by James Dawson of Boise State Public Radio
