OLYMPIA — The state of Washington spends a lot of money.
And state legislators, who are meeting in Olympia right now, get to decide where that money goes. Last spring, they agreed to spend about $69.8 billion to run the operations of state government for the next two years.
With that kind of money, you could make the movie “Oppenheimer” nearly 700 times. (Or, 481 “Barbies.”) And that doesn’t even include what the state spends on transportation or construction projects.
In the past week, legislators have unveiled their initial proposals on how to update the budget. You can think of the ongoing short session, which ends March 7, as the halfway mark in the state’s two-year budget cycle.
Here are just a handful of issues swirling around the budget this year.
1. Trying to catch up with inflation, demand for services
Although the amount of money that the state is bringing in has increased, inflation and a greater demand for government services are driving up costs, budget writers say.
“The new investments that we’ve been able to make in this budget are relatively modest,” said Sen. June Robinson, D-Everett, about the Senate’s proposed operations budget, especially compared to recent budgets where the state had an influx of federal funds because of the pandemic.
More people are using public services like Medicaid, K-12 schools and higher education than predicted. And demand for the state’s food assistance program is “way up,” she said.
Legislators are also passing bills to create new policies that would cost additional money.
The House has proposed $1.1 billion in additional spending tied to new policies, while the Senate has proposed about $730 million in spending on new policies, in each of their operating budgets. (Lawmakers propose separate budgets each for transportation and construction costs.)
2. Opioid settlement could mean more money to fight fentanyl
In January, Washington Attorney General Bob Ferguson announced that drugmaker Johnson & Johnson would be paying the state $149.5 million for its role in the opioid crisis. At the time, Ferguson’s office said it had recovered more than $1.2 billion to address the crisis.
As Washington contends with high fatalities from fentanyl, lawmakers are looking at ways to use that money for public health campaigns and other interventions.
The Senate’s proposal would put funds toward a pilot program where cities would get money to deploy medical teams to people living on the street, including those in active addiction.
And settlement funds could also help pay for new programs like a public awareness campaign to education people about fentanyl, which Sen. Lynda Wilson, R-Vancouver, is currently proposing.
3. A transportation budget crunch
The cost of building and maintaining the state’s transportation system — roads, bridges and the like — is rising. Coming into session, legislators faced a big funding gap on some major projects and an up-to-$4 billion price tag for fixing additional fish passages required under a court order.
The House and Senate differ on their transportation budget proposals, each roughly $14 billion, which were released this week.
One example is when and how they would replace the aging 520 bridges across Portage Bay in Seattle. Right now, the project is estimated to cost $700 million more than expected.
House Transportation Committee Chair Jake Fey, D-Tacoma, said that — owing to rising costs of the project — the chamber’s proposed budget prioritized building the north bridge, which was “vital to creating a seismically resilient crossing,” and would push the construction of the south bridge and the Roanoke lid project out to future years.
Sen. Marko Liias, D-Edmonds, chair of the Senate Transportation Committee, said delaying parts of the project would cost more money in the long run. The Senate proposal would reduce the funding gap by adding more tolling and deferring sales tax payments.
“We kind of are stuck between a rock and a hard place,” Liias said. “And so our budget, because people have been living in a construction zone for over a decade, finishes the project.”
4. Special education spending could increase
There’s also a difference between what the Senate and House have proposed when it comes to funding for special education.
Right now, the state’s funding formula for special education limits funding to a maximum of 15% of full-time enrollment in a school district. Legislation last year raised it to 15% from 13.5%.
Both chambers have proposed increasing funding, but by different amounts. The House has proposed raising that cap to 17.25% through House Bill 2180, while the Senate has proposed a lower increase that would set the maximum at 15.6%.
The Senate will consider the House bill, which advanced out of a Senate education committee on Wednesday, and the two chambers will negotiate, Robinson said.
5. Initiatives could decrease future state revenues
Down the line, some general uncertainty around the budget looms due to a slate of voter-backed initiatives up for consideration later this year. Two of them could substantially cut the amount of future money the state brings in if voters pass them in November.
Initiative 2117 would repeal the state’s carbon market, launched in 2023 and created by the 2021 Climate Commitment Act. In its first year, carbon auctions brought about $1.8 billion into the state. Proceeds from the auctions go toward a wide range of climate-related projects, like developing public transit and sequestering carbon on state trust lands.
The act pays for about 9% of the state’s overall transportation budget, and if repealed, legislators would have to consider how to balance the budget and pay for the state’s infrastructure needs in the 2025 legislative session, Liias said in an interview.
For example, the act pays for a couple of new ferries. The state’s ferry fleet is aging and the state needs five new boats, he said.
“If that funding goes away, we’re still going to have to buy those boats,” Liias said. “We’re going to have to find that money somewhere.”
Sen. Curtis King, R-Yakima, the ranking Republican on the Senate Transportation Committee, said that if the act were repealed, it would have an impact, but “the impact upon our roads and bridges and highways, I think, is less than it would be to maybe our transit and our active transportation” like bike paths and pedestrian infrastructure.
Initiative 2109 would repeal the state’s new capital gains tax. If passed, the state could expect to collect about $1 billion less in that tax per year.
Each year $500 million in revenues from the tax go to a state education account spanning early learning, K-12 and higher education. Any capital gains tax revenues above $500 million go toward building and repairing schools.
The state must fund basic K-12 education, so a repeal in November would mean that legislators would target early learning and higher education programs, as well as nonbasic spending on K-12, to trim spending of proceeds from the tax, said Rep. Steve Bergquist, D-Renton.
