Gov. Bob Ferguson used his first State of the State address to highlight Washington’s flood response, economic strength and a wide-ranging policy agenda, including a proposed millionaire’s tax, major infrastructure investments and expanded housing and affordability programs.
Speaking before lawmakers, tribal leaders and guests at the Capitol, Ferguson opened with lighter moments — including sports references — before shifting to what he described as a defining challenge for the state: historic flooding that struck Washington in December 2025.
“Last month, history came to us in the form of historic flooding that caused tremendous damage and hardship to thousands of Washingtonians,” Ferguson said.
He said he visited communities such as Sumas, Concrete and Skykomish, where he met residents and local leaders dealing with extensive damage.
One business owner, Teresa, showed him a flooded building she plans to rebuild after stripping it down to the studs.
“The damage was devastating,” Ferguson said, adding that she remained determined to reopen.
Ferguson also referenced video that circulated widely during the floods showing a home being swept away by the Nooksack River.
He said the house belonged to Mike Khazak and Sarah Hansen, who he described as having lost their life savings.
“‘That place was our life savings. That place was everything,’” Ferguson quoted Mike as saying.
Khazak and Hansen attended the address, representing what Ferguson called the many Washingtonians who lost homes, businesses and stability during the disaster.
He praised first responders, the Washington National Guard and the U.S. Army Corps of Engineers for rescue operations and levee protection.
Ferguson said Washington State Department of Transportation crews reopened 97 roads in four weeks, including part of Highway 2, which he called a critical statewide connection.
Ferguson said local leaders told him state government was proactive during the crisis, often reaching out before help was requested.
“When the story of this historic flood is written, it will recognize that... the people and the state stepped up and faced the challenge head on,” he said.
Economy and growth
Ferguson said Washington now has the ninth-largest economy in the nation and maintains a triple-A bond rating.
He pointed to growth in aerospace manufacturing, life sciences and clean energy, including the development of what he described as the world’s first commercial fusion power plant in Skagit County.
He cited data showing Washington had the largest increase in new business applications nationwide, with a 16.2% rise while national applications declined.
He also referenced U-Haul rankings placing Washington sixth in one-way inbound moves.
“These are just a few of the reasons why the state of our state is strong,” Ferguson said.
Infrastructure priorities
Despite that growth, Ferguson said Washington faces serious infrastructure challenges.
He said 80 bridges are in poor condition and proposed more than $1 billion in bridge investments without raising taxes.
He also focused on road maintenance, noting Washington ranks first in the nation for potholes.
“The average cost for pothole-related repairs on a car is 400 bucks,” Ferguson said.
His budget proposes $164 million to pave hundreds of miles of road this summer and $756 million over the next 10 years for additional paving, calling it the largest maintenance and preservation investment in more than two decades.
Ferries were another priority.
Ferguson said Washington returned to full domestic ferry service for the first time since 2019 and reduced cancellations from 600 in summer 2024 to 191 last summer.
He warned that progress is fragile due to an aging fleet, including vessels more than 60 years old.
He proposed an additional $1 billion to build three new ferries and continue fleet replacement.
Housing and affordability
Ferguson described the housing crisis as a continuing challenge and proposed a $244 million investment — the largest supplemental housing budget in state history — to build and preserve affordable units, help first-time homebuyers and speed up construction timelines.
He also announced a one-time $200 household utility credit for 125,000 families and $33 million to expand the state’s home energy assistance program.
In early learning, Ferguson said Washington will receive up to $1 billion from the Ballmer Group to expand free early education.
He said proposed legislation would allow the state to open 10,000 additional early learning slots.
Taxes and revenue
A major portion of the address focused on tax policy.
Ferguson said Washington’s tax system places a heavier burden on lower-income families.
“Washington families whose income is in the bottom 20% pay a whopping 13.8%,” he said, compared with higher earners.
He called for a new millionaire’s tax on individuals earning more than $1 million in income in a single year, excluding assets such as home values.
Ferguson said fewer than 0.5% of Washingtonians would pay it.
He said revenue from the tax would be used to expand the Working Families Tax Credit, reduce taxes for small businesses and increase funding for K-12 education.
Under his proposal, small business owners would not pay the business-and-occupation tax until they gross more than $1 million annually.
“For example, if you own a business and currently pay about $4,000 in B&O tax, that small business owner should pay nothing,” he said.
Federal issues and public health
Ferguson sharply criticized federal immigration enforcement practices, saying masked agents detaining people from unmarked vehicles was “horrific” and “unjust.”
“I never thought I would see federal agents in masks jumping out of unmarked cars and grabbing people off our streets,” he said.
He urged lawmakers to quickly pass legislation requiring federal agents to clearly display identifying information.
He also raised concerns about changes at the Centers for Disease Control and Prevention, saying the loss of scientific experts puts public health at risk.
Ferguson said he joined other governors to form the West Coast Health Alliance to ensure health guidance remains science-based.
Government efficiency and education
Ferguson said he signed an executive order to reduce permit and licensing delays.
He cited improvements at the Department of Health and Department of Licensing, including faster processing times for behavioral health licenses, security guards and cosmetologists.
His order requires agencies that miss deadlines to refund application fees, and he urged lawmakers to pass legislation giving agencies that authority.
He closed with a push to increase FAFSA completion rates, noting that nearly half of Washington households qualify for college financial aid but must complete the federal application to receive it.
“Washingtonians are not mere bystanders to history,” Ferguson said. “With heart and spirit, we forge our destiny and make history.”