Gov.-elect Bob Ferguson, speaks to reporters on Jan. 9, 2025 in Olympia. (Bill Lucia/Washington State Standard)
Washington Gov.-elect Bob Ferguson released his blueprint Thursday for chopping billions in state spending while investing millions in education and public safety in his first term — without the aid of new taxes.
Ferguson, who takes office next week, outlined how he will seek $4 billion in cuts across most state agencies and four-year universities, and direct $800 million in new spending for free school lunches, police officer hiring, child care access, and affordable housing.
His plan, which will go to legislative budget writers, spreads anticipated cuts over four years to chip away at a projected budget shortfall in that period around $12 billion. While Democratic legislative leaders say new or higher taxes will likely be needed to close the remainder of the gap, Ferguson isn’t ready to go there, yet.
“We are not going to tax our way out of this,” he told reporters Thursday at the legislative session preview hosted by Allied Daily Newspapers, the Washington Newspaper Association and the Washington State Association of Broadcasters.
Ferguson, making his first appearance in front of reporters since winning the election in November, said he will not consider increasing revenue until exhausting efforts to curb spending.
Democratic Gov. Jay Inslee called for a new tax on the state’s wealthiest residents and a higher tax on businesses in the proposed 2025-27 budget he issued in December. That document will also be part of the conversation among lawmakers and Ferguson in the 2025 session.
Ferguson said Thursday he is skeptical that a new and untested “wealth tax” — envisioned as a 1% tax on an individual’s wealth above $100 million — can be relied on to balance the budget.
Senate Majority Leader Jamie Pedersen told reporters earlier in the event Thursday that “the incoming governor has an interesting idea about expanding” the business tax paid by large corporations in Washington. Pedersen described it as being similar to a surcharge imposed by the state on large banks since 2020.
Senate Democrats are looking at a proposal to add a 1% surcharge on a business’s taxable income above $500 million. It could raise around $2 billion a year from 140 companies, according to information compiled by the caucus.
Late Thursday, a Ferguson spokesperson declined to respond directly to Pedersen’s comment, saying only that the governor-elect’s budget document “speaks for itself.”
Budget basics
Washington operates on a two-year budget. The current one ends June 30, 2025 and it’s balanced. The next budget is not. Nor the one after that. That’s the multi-billion dollar challenge for lawmakers and Ferguson to sort out in the 105-day legislative session that begins Monday.
There’s a big gap between what the state is collecting in taxes and what it needs to pay for its commitments in education, human services, health care, prisons and other day-to-day government operations.
In early November, Inslee pegged the shortfall between $10 billion and $12 billion through the next two budgets. It could be closer to $15 billion when the tab for new public employee contracts is added in.
Those figures represent the difference between the anticipated cost of state services and the money expected to be available to pay for them through mid-2029.
In his proposal, Inslee included around $2 billion in cuts and savings. He suggests, for example, closing a minimum-security women’s prison and pausing bonuses that teachers receive if they’ve gotten certification from the National Board for Professional Teaching Standards.
He also called for delaying the expansion of access to child care and early learning programs for low-income families planned under the 2021 Fair Start for Kids Act. Those delays would save the state around $275 million in the 2025-27 budget.
And in early December, Inslee ordered state agencies to freeze “most non-discretionary and non-essential” hiring, service contracts, purchasing and travel to slow spending.
Ferguson approach
Ferguson said the $4 billion in savings he seeks “are separate from, or in addition to” those in Inslee’s proposal.
He said he wants to achieve a 6% cut in spending by state agencies and 3% reduction by four-year universities. In the 16-page document detailing his plan, he suggests curbing management staff, limiting equipment purchases and reducing travel. He’d also like to stop producing some legislatively-required reports.
Ferguson does not reduce funding for the Washington State Patrol, the state Department of Corrections, and the Criminal Justice Training Commission. As promised on the campaign trail, he wants $100 million in each of the next two budgets to help local law enforcement agencies fill their ranks.
Ferguson criticized the level of K-12 spending in Inslee’s proposed budget as “unacceptable” and vowed to make sure it is higher in his plan.
Toward that end, he endorsed spending $240 million to provide free school lunches for Washington’s roughly 1.1 million students.
Late Thursday, Washington’s Paramount Duty, which advocates for increased spending for public schools, said Ferguson’s plan “will fail our students.”
“The governor-elect needs to go back to the drawing board,” Robert Cruickshank, the group’s president, said in a statement. “School districts across the state face serious budget woes that will lead to cuts that will harm students, eliminate programs, lay off teachers, and even close schools. Yet Ferguson doesn’t propose even a single dime to solve those problems.”
Ferguson said he’ll offer more insights on his budget and policy priorities in his inaugural address Jan. 15