Washington Faces Budget Shortfall As New Tax Plans Emerge

With less than 30 days before the Legislature comes into session in Washington state, Olympia finds itself with a potential $66 million shortfall. Add to that a certain amount of uncertainty as to what federal funds might be coming into this state, and now you have a certain added urgency to what the Legislature thinks it needs to do for next year. 

According to seattletimes.com,
‘With about a month to go before the 2026 legislative session, progressive lawmakers in Olympia rolled out a new revenue proposal Tuesday that targets Washington’s largest employers with a 5% payroll excise tax on wages above $125,000.’ 

So, what do they want to do?

Historically, Washington State has been very averse to the possibility of a state income tax. This proposal being put forward by Democrats Rep. Shaun Scott and Sen. Rebecca Saldaña, would certainly change that. Call it what you want, in essence; it's still a personal income tax; it's just being paid for by your employer, and you better believe it will be reflected in possible future wages going forward if this passes. 

There are some other proposals on the docket for the next session, which would also raise some money. One would restore the wildfire response fund by eliminating tax breaks for big banks and possibly allowing counties to levy new taxes to support services. 

Any other ideas?

Meanwhile, the Bellevue Chamber of Commerce has come out against these increases saying that only Seattle would benefit from these new taxes. 

It's probably safe to say that Opinions on these funding programs will Split across party lines. 

I hope they can figure it out. I'm not sure if it's possible, but we need a solution that will help everyone, not just one group.

New WA payroll tax plan emerges ahead of 2026 legislative session | The Seattle Times
Washington faces $66 million revenue hit in latest state forecast | The Seattle Times