In addition to Governor Inslee’s proposed wealth tax and B&O surcharge revenue measures (more on that below), legislators have been exploring potential revenue streams independently. Shortly before the holidays, an internal email outlining revenue ideas for the 2025 legislative session, intended for Democratic senators, was inadvertently shared with Republican senators as well.

The Washington State Standard provides detailed coverage of this email and Democrat discussions. Below are some of the tax proposals currently under discussion:

1. Payroll Tax – Modeled after Seattle’s Jumpstart payroll tax, this proposal would levy a tax on employers based on employee compensation exceeding the Social Security threshold (currently $168,000) at 6.2%. Companies with $8 million or more in Washington payroll would be subject to the tax.
2. Wealth Tax – A 1% "property tax" on financial intangible assets exceeding $50 million for Washington residents, with alternative versions proposing a $250 million threshold.
3. B&O Surcharge Tax – An additional 1% B&O surcharge for taxpayers with Washington taxable income over $500 million, applied on a marginal basis (only on income above $500 million).
4. Delivery Fee Tax – A proposed $0.30 fee on deliveries for purchases over $50, with an exemption for groceries. Revenue would fund transportation costs for cities and the state.
5. Property Tax – A levy lid lift to increase the growth limit for regular property tax levies from 1% to a maximum of 3% for both state and local tax districts.
6. Real Estate Excise Tax – A new 1% real estate excise tax on property sales valued over

$3.025 million.

With these proposals and ongoing discussions, the 2025 legislative session promises to be eventful, with significant debates and decisions shaping the state’s fiscal future.

Problems ahead with the Transportation Budget

While the operating budget challenges continue to lead in headlines, transportation leaders have been sounding the alarm for several years that revenues continue to not meet rising costs of the Washington state transportation system. Washington’s transportation budget relies heavily on gas tax revenue. As vehicles become increasingly fuel-efficient and the adoption of electric vehicles accelerates, gas tax revenues have begun to decline, creating a significant funding challenge for the state. This trend is putting the long-term sustainability of the transportation budget in jeopardy, as traditional revenue sources fail to keep pace with infrastructure needs. With major projects and court-mandated obligations – such as salmon passage improvements which are already straining the budget – transportation leaders are under pressure to explore alternative funding mechanisms, such as road usage charges and other transportation related fees, to address the growing gap. Current shortfalls are estimated to be $8 billion over 10 years.

Bills Introductions - Prefilled Bills

In December, Washington state lawmakers began prefiling bills in preparation for the 2025

legislative session. Although these bills will not be formally introduced until the session begins, they are assigned numbers and serve as a starting point for discussions on upcoming legislation. Click here to view prefilled bills for 2025.

Committee Schedules

From the very first day of the 2025 legislative session, lawmakers will dive into their work with opening day ceremonies and committee hearings. Use the links below to access committee

schedules, agendas, and session calendars to stay informed about the pace and key milestones of the session:

• Click here to view committee schedules, agendas, and session calendars
• 2025 House Session Planner
• 2025 Senate Session Planner

Cutoff Deadlines

The legislative process has key deadlines (“cutoffs”) that bills need to meet to remain under consideration for the year. Prior to the first cutoff, the focus of legislators will be introducing bills, holding public hearings, and voting on bills to move them out of committee and forward in the process. For 2025, the first cutoff deadline will be Friday, February 21 (day 40), where all policy bills must be voted out by their respective policy committees to remain alive. Compared to a short session, the first cutoff was on day 21, leaving more time for policy bills to advance. The 2025 Legislative Cutoff Deadlines are as follows:

Committee & Caucus Reorganization

After the election and before the start of session, all four caucuses in the Legislature (House Democrats, House Republicans, Senate Democrats, Senate Republicans) meet to discuss and elect leadership positions, reevaluate committee structures, and select committee chairs and full committee memberships. This year, due to the number of retirements and new members, several changes have occurred. Notably, Senator Jamie Pedersen (D – Seattle) has been chosen as the new Senate Majority Leader. He replaces Senator Andy Billig (D – Spokane) who retired from the Senate at the end of his term. Click here to view the full roster of House Leadership and Senate Leadership. Please click here for a list of all legislators and committee assignments.

House Committees

House Committees

Assignments as of 1/9/25 and are anticipated to be final.

Senate Committees

Assignments as of 1/9/25 and are anticipated to be final.

Governor Inslee’s 2025-2027 Proposed Budgets

Each year before the legislative session begins, the Governor presents a budget proposal for the legislature's consideration. This proposal outlines a spending plan, highlights key priorities, and often shapes the initial focus of the session. For the 2025 session, outgoing Governor Jay Inslee delivered his final Operating, Capital, and Transportation budget proposals on December 17. Recognizing his departure, Governor Inslee described his proposal as “a starting point,” acknowledging that Governor-elect Ferguson will bring his own budget priorities, which have now been released (more on that below).

Addressing the Budget Shortfall

A primary focus of Governor Inslee’s budget proposals was addressing a projected revenue shortfall to maintain current programs and spending. Notably, he projected budget shortfall of $10–$16 billion over the next four years, noting that earlier estimates of $10–$12 billion did not account for the 32 recently negotiated collective bargaining agreements, which are expected to cost an additional $2–$3 billion. In a preemptive move, Governor Inslee released a hiring freeze directive in early December across his agencies along with a request to halt the start on new programs. Despite the current budget shortfall, Governor Inslee’s 2025-27 operating budget proposal spends nearly $79.5 billion – a 10.4% increase totaling $7.5 billion more in spending compared to the current 2023-25 budget.

Proposed Funding Sources

To finance the increased spending, the Governor’s budget includes several measures, including

fund transfers, utilizing the rainy-day fund, and the following tax increases:

• Wealth Tax: A 1% tax on worldwide wealth exceeding $100 million, estimated to affect 3,400 Washingtonians and generate $10.3 billion over four years.
• B&O Tax Surcharge: A temporary 20% surcharge on the services B&O tax rate for businesses earning more than $1 million annually from October 2025 to December 2026. Starting January 2027, all B&O tax rates would increase by 10%, generating $1.045 billion in 2025–27 and $1.58 billion in 2027–29.

Governor Inslee’s Priority Spending Areas

Governor Inslee identified the following priority areas in his December 17 media release:

• Housing & homelessness services - $905 million
• Behavioral health - $719 million
• K-12 - $1.3 billion
• Childcare & early learning - $558 million
• Public safety - $56.5 million
• College & Career training - $188 million
• Clean energy transitions - $982 million

Budget Cuts & Notable Omissions

Governor Inslee’s proposed budget also includes cuts, delays, and reductions in services creating reductions of nearly $2 billion over the next 4 years. These reductions include the elimination of 924 full- time state employee positions. Notably, the following budget items were anticipated, but left out of his proposal:

• Superintendent of Public Instruction Chris Reykdal had requested additional funding for special education, school transportation, and staff salary increases ($3 billion over 2 years).
• Bonuses granted to National Board certification ($151 million)
• Closure of the Women’s Prison, Mission Creek Corrections Center for Women ($15.3 million)