This story was originally published on mynorthwest.com.
With a multibillion-dollar budget shortfall looming, Washington lawmakers are set to return to the Capitol for the 2026 legislative session on Monday, facing high-stakes decisions on spending cuts, a proposed tax on millionaires, transportation funding, and how aggressively the state should push back against federal policies.
Those fault lines were on display over the weekend during a pre-session legislative preview held about 72 hours before lawmakers are scheduled to convene. The event featured panels with transportation and budget committee chairs, legislative leaders from all four caucuses, and Governor Bob Ferguson.
Budget crisis takes center stage
State leaders agree that Washington is facing a multibillion-dollar budget gap. Ferguson’s proposed supplemental budget includes about $800 million in cuts, nearly $1 billion drawn from the state’s rainy-day fund, and the redirection of Climate Commitment Act revenue.
Republicans sharply criticized the proposal, accusing Democrats of continued overspending even as revenues remain high.
“We’ve never had more revenue in the state of Washington than we do right at this very moment, and it does continue to grow,” said Representative Travis Couture. “The growth has slowed, but we grew. The governor’s budget grows spending by over a billion dollars.”
Republicans labeled the budget approach “wholly unserious,” arguing it fails to balance over the four-year outlook while continuing to expand state spending.
Millionaire’s tax proposal draws fire
Ferguson is also proposing a new 10% tax on annual earnings above $1 million, which he estimates would generate about $3.5 billion per year. The governor said a “significant portion” of the revenue would be returned to Washingtonians through tax relief, including expanded Working Families Tax Credit rebates and exemptions for small businesses.
“I talked about the Working Families Tax Credit, which is a rebate, obviously, to many thousands of Washingtonians… small business owners, right, the backbone of our economy, there has to be a specific exemption,” Ferguson said. “I think most Washingtonians, and I think most millionaires, will support that.”
Republicans unanimously opposed the proposal, warning it would open the door to a broader income tax.
“We should never call this a millionaire tax again because we know where this is headed,” said Senator Chris Gildon. “We should call it a first slice of the pie tax because this is just the first slice of the pie—it is going to expand to everyone eventually.”
Transportation: Agreement on need, not on funding
Transportation committee leaders from both parties agreed that the state has underinvested in road preservation and bridge maintenance. About 10% of Washington’s bridges are more than 80 years old, and damage from December storms has added urgency, even as federal reimbursement is expected to cover much of the cost.
Democrats highlighted the economic benefits of infrastructure spending.
“So, one of the things we can do to create jobs in the short term is more highway preservation,” said Senator Marko Liias. “You know, economists tell us that every billion dollars in highway maintenance and preservation is, you know, between 10 and 20,000 jobs. So, the economy right now in Washington could use this.”
Republicans opposed bonding to pay for routine maintenance.
“I could give you an easy answer, and that would be no… raising money to pay for maintenance and preservation by bonding, as someone said… all the things that you do with maintenance and preservation will be used up and gone by the time we pay off the bonds,” said Senator Curtis King.
Democrats urged caution as costs continue to rise.
“We’ve been in cost escalations. Things are costing a lot more. We’re into territory that is new for us,” said Representative Jake Fey. “And, so I think caution, the yellow light, which hasn’t come on yet, I think has to be considered.”
Climate Commitment Act under scrutiny
The Climate Commitment Act, which requires businesses to purchase quarterly carbon allowances to reduce emissions, remains one of the most divisive issues heading into the session. Republicans argue it has raised gas prices and functions as another tax, while Democrats say the program is critical to addressing climate and public health impacts.
“I don’t think that fixing infrastructure that was damaged because of climate change is the most appropriate use for these funds when we can invest to get in front of it,” Liias said. “We’ve got to figure out a way to make sure the kids in our elementary schools near airports or near the port aren’t breathing dirty air.”
Republicans said spending from the program should be more closely scrutinized.
“You’re going to hear me all session long – the use of Climate Commitment Act,” said Representative Andrew Barkis. “The people of Washington state would agree with us that we needed to start putting some of those existing resources before we further the responsibility and a debt load for the people of Washington State.”
The debate follows the state’s recent acknowledgment that it published incorrect emissions-reduction figures, overstating reductions by more than 9,000%.
Federal policy fights and affordability
Democratic leaders said they plan to focus on protecting Washington residents from what they described as hostile federal policies, including potential changes to Medicaid and SNAP benefits, immigration enforcement, and tariffs.
“We are going to do everything that we can to protect people in our state from a really malevolent, hostile federal government,” said Senator Jamie Pedersen. “We see attacks on immigrants, really weaponization of the military and the National Guard to oppress people all over the country.”
Republicans countered that Washington’s affordability crisis is driven by state policy choices, not federal actions, pointing to the state’s high cost of living.
“Tariffs don’t explain why Washington has the second-highest gas price of any state in the country,” said Representative Drew Stokesbary. “Tariffs don’t explain why Washington has the fourth-highest grocery prices… Washington is uniquely expensive compared to nearly every other state. This is not a result of federal policies.”
Initiatives headed for the ballot
Two “Let’s Go Washington” initiatives — one dealing with parental rights in schools and another involving girls’ sports — have qualified for legislative consideration. Democratic leaders said neither chamber plans to hold hearings, which would send both measures directly to the November ballot unless lawmakers intervene.
One initiative seeks to overturn a recent law signed by Ferguson that critics say reduces parental notification and access to information in schools. The other would require a doctor to assign genders to youth athletes during physicals to prevent male athletes from competing against females.
If lawmakers decline to act, voters will decide the measures this fall — adding another layer of political tension to an already compressed and contentious 2026 session.