(Photo Courtesy: Erica Hallock)

During the legislative interim, Start Early Washington releases periodic updates about the latest activities in Olympia.

Most Recent Revenue Forecast Shows Additional Drop in State Revenues

On September 23, the State Economist released the latest state revenue forecast. The forecast projects revenues will be down $903M from the June forecast for the 2025-27 and 2027-2029 biennia. Specifically, the forecast shows reduced receipts of $412M for the 2025-27 biennium and $477M for the 2027-29 biennium, with additional “spare change.”

Looking back, the June revenue forecast showed a drop in revenue of $720M from the budget passed by the Legislature and signed by the Governor. These two forecasts combined leave budget writers with at least $1.62B in less revenue over the four-year budget outlook.

Primary reasons for the drop in projected revenue include:

• Slowing national and state economies.
• Imposition of tariffs bringing increased prices and impacting consumer activity.
• Federal actions creating overall uncertainty.
• A slowing construction sector (see September 25, 2025 Spokesman Review article).

The biggest drop in revenue in our state is a result of reduced sales tax receipts and real estate excise taxes.

It is important to note this forecast does not account for impacts associated with federal passage of H.R. 1 (impacting programs such as Medicaid and SNAP); mandatory caseload adjustments; rising costs related to the state’s liability settlements and judgments and other increasing expenses. There is growing concern that given this widening budget gap, lawmakers will be forced to make untenable budget cuts in the 2026 legislative session.

The Washington State Standard has an article recapping the forecast and reactions from lead budget writers.

The next revenue forecast will be released in November along with an updated caseload forecast. This information will inform Governor Ferguson’s proposed supplemental budget which will be released mid-December.

State Agencies Tracking “People” and Budgetary Impacts of Federal Action

As noted above, federal action has significantly affected our state’s fiscal situation, largely due to tariffs and H.R. 1 which will have significant impacts on foundational programs like Medicaid and SNAP.

In recent weeks, the Governor’s Office of Financial Management (OFM) released two analyses to describe potential impacts to the state. The first relates to federal tariff actions. As the most trade-dependent state in the country, the tariff impacts are significant, with OFM projecting they could cost Washington state $2.2B over the next four years along with the loss of 31,900 jobs.

Additionally, OFM produced a tracker (which they plan to update monthly) to demonstrate H.R. 1’s impacts on people and the state budget. Given that the Federal Administration has yet to release many of the bill’s implementation details, some of the impacts are currently unknown, but are expected to be significant, nonetheless.

The Supplemental Nutrition Assistance Program (SNAP) is the first program to be impacted, with the extension of work requirements to previously excluded populations including former foster youth and those with dependent children. H.R. 1 also imposes eligibility limits based on citizenship and residency status starting in this state fiscal year. This shift impacts an estimated 33,000 individuals.

On October 16, the Senate Ways and Means Committee will hold a work session at 10:00 a.m. that looks at the federal changes and state implications of H.R. 1 as it relates to Medicaid and food assistance programs. The work session can be watched on TVW.org live or later via TVW’s media archives section.

State Agencies Submit “Decision Packages” for Consideration in Governor Ferguson’s First Solo Budget

(Photo Courtesy: Department of Children, Youth, and Families)

Earlier this month, state agencies submitted requests for inclusion in Governor Ferguson’s first solo budget. These requests are called “Decision Packages” and can be found at abr.ofm.wa.gov.

Due to the state’s fiscal situation, the Governor’s Office of Financial Management (OFM) directed state agencies to limit budget requests to mission-critical items. In short, now is not the time for new ideas.

In the world of early learning, the following Department of Children, Youth and Families Decision Packages relate to Working Connections Child Care:

1.  Working Connections Child Care Caseload Adjustment – $32.35M State General-Fund (2025-27 biennium)

• ESSB 5752 assumed budget savings beginning July 2025 due to an adjustment made to the 12-month authorization policy. Prior to the passage of ESSB 5752, 12-month authorization began when a family’s care was expected to begin. ESSB 5752 changed the policy so 12-month authorization begins when a family is determined eligible.
• This policy change was intended to generate budget savings, but these savings cannot start to accrue until July 2026 without negatively impacting families’ current 12-month eligibility.
• This technical Decision Package requests $16.8M in State Fiscal Year 2026 and $15.6M in State Fiscal Year 2027 in increased funding to offset these assumed savings.

2.  Working Connections Child Care Information Technology Eligibility Impacts – $15.55M State General-Fund (State Fiscal Year 2027) and $29.38M State General-Fund (State Fiscal Year 2028)

• This Decision Package would fund Information Technology needs to implement the portion of ESSB 5752 that altered how 12-month authorization for Working Connections Child Care is calculated.
• This Decision Package requests funding to account for the additional time it will take for the Department of Social and Health Services, which administers the Information Technology system for Working Connections Child Care, to update the “barcode” system to reflect the new policy.
• DCYF expects it will now take until March 2027 to implement the Information Technology change needed to support the new 12-month authorization calculation, delaying implementation of assumed budget savings.
• This funding request is intended to offset assumed savings.

3.  Working Connections Child Care Backfill Funding – $9.38M State General-Fund (State Fiscal Year 2026)

• DCYF requests $9.38M State General Fund to replace one-time federal Child Care and Development Funding (CCDF) that was used during State Fiscal Year 2025.
• DCYF used these CCDF funds (which were planned for use in State Fiscal Year 2026) to cover higher than anticipated caseload costs for Working Connections Child Care.
• Actual Working Connections Child Care caseload in State Fiscal Year 2025 exceeded the February 2025 caseload projections as well as the appropriated level. In short, more families accessed Working Connections Child Care than projected and budgeted.

4.  Mandatory Caseload Adjustment – Placeholder

• As is common practice among state agencies, DCYF submitted this “placeholder” in advance of the November caseload forecast. It will be updated to reflect changes in caseloads such as Working Connections Child Care, the Early Childhood Education and Assistance Program (ECEAP) and Early Support for Infants and Toddlers (ESIT).

Next Steps

Two meetings await that will provide key information about “inputs” (revenue) and required “outputs” (mandatory caseloads). November 18th is the next meeting of the state’s Revenue Forecast Council. November 12th is the next meeting of the state’s Caseload Forecast Council. The Caseload Forecast Council provides information on updated caseload projections – the outputs where the state must spend money. This includes information about our projected caseloads for programs like K-12, prisons, Medicaid, etc. These two forecasts will inform Governor Ferguson’s budget.

Over the next couple of months, OFM staff will review Decision Packages and following the November 18th Revenue Forecast, they will work with Governor Ferguson and his team to finalize his proposed Supplemental Budget that will be released mid-December. At that point, we will know which of these Decision Packages are included in Governor Ferguson’s proposed budget. From there, focus will turn to the Legislature.

State’s Self-Insurance Liability Account Underwater

I don’t typically review the Department of Enterprise Services’ Decision Packages, but I did review one related to the state’s “Self-Insurance Liability Account,” or SILA. This account has been garnering a great deal of attention of late, with a September 24th Washington State Standard article and a June 4th Senate Law and Justice Committee work session on tort liability.

You may be asking why I am writing about this in a newsletter about early learning. There are a few reasons, including the ballooning impact to the state budget along with DCYF’s role.

The Self-Insurance Liability Account was established to cover costs related to the state’s liability settlements and judgments, insurance premiums and legal defense fees. Each biennium, a third-party actuarial report estimates expenses from claims, judgments and settlements. The most recent actuarial report from June 2024 estimated the state’s liability for outstanding tort liability stood at $2.5B.

Much of the state’s exposure comes from its child welfare and corrections systems and, as a result, the two state agencies most impacted are DCYF and the Department of Corrections. In recent years, the statute of limitations was lifted, allowing victims of abuse to pursue judgments and settlements. This has led to a growth in cases filed and subsequent payments via judgments and settlements. This summer, a former Spokane woman was awarded a $42 million judgment for sexual abuse she endured as a child. A Spokane jury found the Department of Corrections negligent in supervising the perpetrator of the abuse (the child’s stepfather) and DCYF’s predecessor negligent in investigating allegations of abuse.

The SILA had a negative cash balance of ($570M) at the end of State Fiscal Year 2025. Additionally, there is an ongoing need for funding to support the growth in expenses to ensure the account remains solvent.

In addition to the $570M needed to make the account whole for the fiscal year we just concluded, roughly $1.3B is needed for the remainder of the 2025-27 biennium and anywhere from $2.1B – $3.3B in additional funding is estimated to be needed for the 2027-29 biennium.

I expect this issue to be a major focus during the 2026 legislative session.

Finally, Some Good News!

The Department of Commerce is distributing up to $55 million for construction projects that will serve new children and/or maintain existing capacity through Working Connections Child Care (WCCC) and/or the Early Childhood Education and Assistance Program (ECEAP). The process to apply for expansion grants and maintenance grants is a single application this year. Apply online through Zoom Grants before October 31 at 5:00pm.

Early Learning Facilities (ELF) Grants are more accessible with these recent program changes championed by ELF Group advocates in 2024 and 2025:

• Matching funds are no longer required for applicants experiencing financial hardship.
• Award caps have been eliminated.
• Early Childhood Education and Assistance Program (ECEAP) conversion from part-day to full-day slots is clarified as a qualifying expansion.

Application Assistance is available through the Imagine Institute. Applicants can contact the Imagine Institute at 206-492-5249 for support in their preferred language, including:

• Understanding grant requirements and eligibility.
• One-on-one technical assistance with applications.
• Assistance in gathering resources.
• Reviewing and providing feedback on grant narratives or proposals.
• Offering guidance to help providers understand and align with project goals.
• Sharing examples to illustrate strong alignment, not for replication.

Please continue to follow Start Early’s Notes from Olympia to stay up to date on the latest news out of Olympia on the budget and policy fronts.

(Photo Courtesy: Carol M. Highsmith Archive, Library of Congress)

Details and Impacts of New Federal Law Will Take Time to Figure Out

Notes readers are likely well aware of significant federal legislation that passed and was signed into law during the 4th of July week. We are still in the place of having more questions than answers, but it is clear the new law will dramatically impact Washington children and families with sweeping changes to Medicaid and SNAP, among other provisions.

Because the bill was being amended up to nearly the final vote, many details are still being unearthed. It is going to take some time to first figure out what the bill does before it can be determined to the degree to which it will impact Washingtonians (and our state budget).

One thing we do know is that the 2025-27 biennial budget did not account for this new federal law and as discussed below in the section on the state’s revenue forecast, our state is not currently in the fiscal position to fully backfill this loss in federal funding to SNAP or Medicaid.

Governor Ferguson is on the record saying that – as of now – he is not looking to call the Legislature back for a special session prior to January 2026, but that could change based on future revenue forecasts or other developments coming out of Washington D.C.

In short, stay tuned. Much more to come.

June State Revenue Forecast

On a quarterly basis, the Washington State Economic and Revenue Forecast Council meets to receive a forecast of the state’s revenue outlook from the state’s economist, Dave Reich. These revenue forecasts are designed to “promote state government financial stability by producing an accurate forecast of economic activity and General Fund revenue for the Legislature and the Governor to be used as the basis of the state budget.”

In many ways, the June and September forecasts are “temperature checks.” The March forecast informs the Legislature as they finalize their budgets, and the November forecast informs the Governor as they finalize their proposed budget.

The state’s economist job is a challenging one – especially now – because the economist is modeling with a great deal of uncertainty, particularly from the federal level. Questions surrounding the imposition of tariffs and international conflict(s) all make accurate forecasting risky. Additionally, state revenue collections continue to be slow.

The most recent revenue forecast was on June 24, 2025, prior to the enactment of the “Big Beautiful Bill.” With the information the state economist had at that point in time, funds subject to the budget outlook were projected to decrease by $720 million over the four-year outlook from the revenue amount contained in the budget passed in April and signed into law in May.

Much of the projected revenue decline is in the 2027-29 biennium ($638 million). Higher than expected revenues for the 2023-25 biennium of $407 million helped offset the projected drop in funds for the 2025-27 biennium ($490 million).

It is also important to note that the budget outlook for the 2025-27 biennium adopted by the State Economic and Revenue Forecast Council on June 10, 2025 (before the most recent revenue forecast) assumes an ending balance of $590 million in State Fiscal Year 2026 and just $80 million in State Fiscal Year 2027. The ending balance dips into the negative in State Fiscal Year 2028 at ($56 million). This is all to say the state budget was running on thin margins – before the June forecast and the enactment of the “Big Beautiful Bill.”

State Caseload Forecast

In contrast to the revenue forecasts which focus on state resources, state caseload forecasts center on expected enrollment and participation in state entitlement programs such as K-12 education, prisons and Medicaid (the budget’s big cost drivers).

The June 11th Caseload Forecast provided expected caseloads, updated to reflect significant changes in statute made during the 2025 legislative session. Caseload changes in early learning include:

Working Connections Child Care. While ESSB 5752 of 2025 made significant revisions to the Fair Start for Kids Act, the Working Connections Child Care caseload is still projected to grow, but slower than the previously anticipated rate. This is largely due to delaying eligibility expansion from 60 percent of State Median Income to 75 percent of State Median Income.

ECEAP. The projected drop in caseload for ECEAP is largely due to the provision in ESSB 5752 that delayed ECEAP entitlement until the 2030-31 school year. The caseload forecast documents note that the funded capacity for the 2025-26 school year more closely reflects actual enrollment for the 2024-25 school year.

Transition to Kindergarten. Transition to Kindergarten (TTK) is another program where legislative changes dramatically altered the forecast. ESB 5769 changed TTK enrollment policy, providing that TTK enrollment levels would be set in the budget. The 2025-27 biennial budget froze TTK funding at the 2024-25 school year level, reducing the caseload forecast from February.

Final State Budget Action

Looking for a recap of the 2025 legislative session? Here’s a summary to spark that memory!

Governor Bob Ferguson’s May 20th action on the budgets and final policy bills sent to his desk marked the official end of the 2025 legislative session. By all accounts, this was an extremely challenging year with a staggering state revenue shortfall; a new Governor and a slew of new legislators to become acquainted with; and a number of tragic deaths that struck the legislative community.

In the end, the Legislature was able to close the state’s $16 billion four-year budget gap by enacting a budget that included a mixture of new revenue, as well as delays, reductions and cuts to existing services and programs.

For early learning, the state’s fiscal crisis necessitated delays to anticipated Fair Start for Kids Act expansions, including:

• Delay of expansion of eligibility for Working Connections Child Care to 75% of State Median Income to July 1, 2029;
• Delay of the ECEAP entitlement to the 2030-31 school year; and
• A one-year delay for the child care center rate increases for children in Working Connections Child Care (pushing the rate increase start to July 1, 2026, rather than the expected date of July 1, 2025).

Other budget savings legislators found in the early learning space came from increases in family co-payments for Working Connections Child Care; elimination of funding for the Early ECEAP of program (with maintenance of the program protected); and reduction in funding for program supports such as the Child Care Complex Needs Fund, Infant Early Childhood Mental Health Consultation and the Dual Language Rate Enhancement.

Despite the difficult budget environment, the adopted budgets did include new investments in early learning, including:

• Nearly $100 million in Capital funding for the Early Learning Facilities Fund, including $51 million for competitive grants, $9 million for minor renovation grants and $3 million for the new Emergency Fund created by newly passed HB 1314 (Callan and Abbarno).
• $383.7 million to fund the Collective Bargaining Agreement for Family Child Care providers which includes funding to increase the reimbursement rate for Working Connections Child Care to the 85th percentile of the 2024 Market Rate Survey beginning July 1, 2025.
• ECEAP providers will see a $13.9 million investment to support a 5% rate increase for full-day slots and a nearly $4 million investment for 250 full-day slots.

Looking for more detailed information? Check out Start Early Washington’s Policy and Advocacy Resources Page. There you can find:

Final Analysis of Early Learning Items in the 2025-27 Budgets

2025 Early Learning Facilities Fund Legislative Review

Final Early Learning Bill Tracker

(Photo Courtesy: Northwest News Network)

That’s a Wrap!

After a lot of guessing about how our first term Governor would react to the Legislature’s proposed response to the state’s roughly $16 billion four-year budget deficit, Governor Ferguson answered those questions when he signed the Operating, Capital and Transportation budgets along with a slew of bills expected to generate more than $9 billion in new revenue on Tuesday, May 20.

Despite intense pressure from industries and sectors directly impacted by the new revenues to exercise the executive power of the veto pen, he ultimately signed all of the revenue bills. He did, however, issue a partial veto on ESSB 5794. This partial veto maintains a tax preference for community banks on loans for residential property. His rationale for doing this was that it could harm housing affordability efforts.

During his press conference following the conclusion of marathon bill signings, Governor Ferguson shared he vetoed a total of $25 million in spending proposed by legislators in the Operating budget. You can read the veto letter for the Operating budget here and the veto letter for the Capital budget here. The phrasing “the state’s significant fiscal challenges and funding cuts from the federal government” was used throughout the letter as reasoning for vetoes.

In the area of early learning, the Governor made only one veto. He eliminated $300,000 in funding for a proposed mental health child care pilot in Spokane. Start Early Washington updated its budget analysis to reflect this veto.

During Governor Ferguson’s press conference (which starts at minute 34 on this TVW link), the Governor said he will keep a close eye on impacts of implementation of this new revenue, and he may suggest tweaks in 2026. Of course, the Legislature would need to agree to any changes.

The Governor also previewed a similarly challenging 2026 given looming federal cuts and a dismal state revenue outlook. He repeatedly talked about how the fiscal outlook will impact preparation of his first Supplemental budget and signaled we may see him propose additional spending reductions next year.

As always, the Washington State Standard did an excellent job covering the story.

Final Bill Status

In the end, Governor Ferguson signed 422 policy bills in addition to the revenue bills and budgets. Check out Start Early’s bill tracker for a final status update.

What to Expect from Start Early

We are grateful it is interim, but we know the work is not done! We are closely following the work at the federal level. As I am finishing this quick update, the U.S. House of Representatives has just passed legislation that would have massive impacts on Washington families and our state’s budget. While we will not be publishing Notes from Olympia on a weekly basis until the Legislature returns in 2026, be on the lookout for periodic updates throughout interim.

Thank you for reading!

Budget Analysis

The Legislature adjourned “Sine Die” at 6:31 p.m. on Sunday, April 27, 2025 after passing the Operating, Capital and Transportation budgets as well as the supporting revenue bills. An audible sigh of relief was likely heard statewide.

Start Early Budget Summary. Start Early Washington has completed its initial review of the Operating and Capital budgets for early learning related items. This analysis is available on the Policy Resources section of the Start Early website and will be updated as we gather additional information.

The $77.98 billion biennial budget relies on nearly $9 billion in new revenue and almost $6 billion in reduced spending over four years to bridge the budget gap. The compromise budget does not include previously proposed state employee furloughs and does fund the proposed Collective Bargaining agreements.

The Washington State Standard ran a good summary of the operating budget agreement on Sunday evening.

The official Washington State Fiscal Information webpage contains detailed information for the final Operating and Capital budgets.

The Operating Budget passed by a 28-19 vote (with one member excused) in the Senate and a 52-45 vote (with one member excused) in the House. The Capital Budget passed unanimously in both chambers.

The budgets (including the Transportation Budget) move to Governor Ferguson for his consideration. Note the Governor does have “line-item” veto authority. In a statement, Governor Ferguson expressed appreciation for the Legislature concluding on time and stated he would be reviewing the budgets in detail prior to taking action.

DCYF Budget Webinar. DCYF will hold an End-of-Legislative Session Update Webinar on Wednesday, May 14, see additional details below and at the bottom of the Government Affairs page.

May 14, 2025
End-of-Legislative Session Update Webinar
9 a.m. to 10 a.m.

Join Here
Access Code: 811 0874 6597
Passcode: YU@81d
Call in Number: 253 215 8782
Passcode: 910002

In Memoriam
State Senator Bill Ramos

(Photo Courtesy: Washington State Democratic Caucus)

We are saddened to share that Senator Bill Ramos of the 5th Legislative District passed away on Saturday, April 19 while on a trail run with his beloved dog Sadie.

Senator Ramos was elected to the State Senate in 2024 following six years of service in the House of Representatives. Ramos served as the Vice Chair of the Senate Transportation Committee.

Senator Ramos was a beloved member of the Legislature who will be deeply missed. We join his colleague in extending our condolences to his wife, King County Councilmember Sarah Perry, and their children.

Note to Reader

The operating, capital and transportation budget releases (and subsequent legislative votes) will hopefully occur following the publication of this scheduled Notes from Olympia. Should this occur, our plan is to release a summary of the budget details and final weekend activity in an abbreviated Notes from Olympia early next week. Keep your eyes out for another email that includes a recap of all of the final Sine Die action!

Trivia!

The Capitol Gift Shop holds an annual contest for customers to select their preferred design for a “Sine Die” t-shirt that is available for purchase.

Which of these two designs won this year’s contest?

(Photo Courtesy: Erica Hallock)

Highlights of the Week

Will session end on time??

That is a very, very good question. As of this publication deadline, it is unclear whether the Legislature will conclude its core business – enacting a balanced, biennial budget – by the scheduled 11:59 p.m. Sine Die on Sunday, April 27. As noted above, we will release a supplemental Notes from Olympia early next week summarizing the weekend’s activity that will either recap budget details or layout next steps for a special session. Stay tuned…

Fair Start for Kids Act Restructure Bill Amended – Again – and Passes House

On April 23, the House adopted a striking amendment to ESSB 5752 (C. Wilson) prior to passing the bill by an 87-10 vote. This is the bill that restructures the Fair Start for Kids Act and other early learning programs to achieve budget savings.

Because the bill has undergone substantial changes throughout the legislative process, we thought it would be helpful to summarize the main components of the latest version of the bill as passed by the House on April 23.

Changes to ECEAP

• Moves entitlement date to the 2030-31 school year.
• Removes categorial eligibility for members of assistance units eligible for or receiving basic food benefits under the federal SNAP program or state food assistance.
• Removes categorial eligibility for children eligible for Part C of the federal Individual with Disabilities Education Act.

Programs Moved to Subject to Appropriation

• Early ECEAP (and subject to space availability)
• Trauma informed care provider supports, outside of Collective Bargaining Agreements
• Dual Language provider supports, outside of Collective Bargaining Agreements
• Infant Early Childhood Mental Health Consultation

Working Connections Child Care Eligibility and Payments

• Moves income eligibility expansion to 75% of the State Median Income to July 1, 2029 and to 85% of the State Median Income by July 1, 2031, Subject to Appropriation.
• Directs DCYF to adopt a rule that requires prospective payments to child care providers who accept child care subsidies to occur when child care is expected to begin.
• Also directs DCYF to adopt a rule that prohibits child care providers who accept subsidies from claiming a prospective payment when a child has not attended at least one day within the authorization period in the previous month.
• Strikes language from existing statute that 12-month authorization for care starts on the date care is expected to begin. Impact of this change is to start 12-month authorization at eligibility determination.
• Repeals eligibility expansion for children of child care employees and participants in apprenticeships.

Cost of Quality/Market Rate Survey

• Directs DCYF to conduct both a cost of quality and market rate survey by June 1st of each even-numbered year and share information with relevant legislative committees.

School-Age Child Care Pilot Program

• Authorizes DCYF pilot program for a school district and metropolitan park district for a school-age child care program.

Working Connections Child Care Co-Payment Rates

Maintains the current co-payment structure until October 1, 2026:

Co-payment structure effective October 1, 2026:

Note that the current and proposed “traunches” do not evenly align, so use care when making year-to-year comparisons.

Potential Conflict with Federal Requirements

• Contains a provision providing that if any part of the bill is found to be in conflict with federal requirements, the conflicting part of the bill is inoperative, but only to the extent of the conflict.

The bill now returns to the Senate for concurrence with House amendments. As of this writing, this process has not yet occurred.

Update on Revenue Bills

As reported in the April 18 edition of Notes from Olympia, Senate and House Democrats released a revised revenue package last week that, paired with reductions, aim to close the state’s estimated $16 billion four-year budget gap.

Over the past week, these revenue bills have made their way through the typical bill process, albeit in an expedited manner. Demonstrating that when the Legislature puts their mind to something, they can act swiftly.

Since introduction, bill details have shifted with some industries’ successful efforts in removing their sector from various revenue proposals. As a result, the expected revenue the overall package would generate was reduced as the week went on. This means we can expect to see increased cuts and reductions to offset this reduced anticipated revenue when the final budget is released.

Following is an update on the status of the key revenue bills. You will see that some of the vehicles are House bills, while others are Senate vehicles.

ESHB 2049 (Bergquist)

• This bill may have seen the largest shift when Representative Bergquist offered an amendment that removed a proposal to repeal a limit on property tax growth. The bill now increases the maximum per-pupil limit for school enrichment levies gradually over several years.
• ESHB 2049 narrowly passed the House 50-48 in a late Monday night/early Tuesday morning floor season. It received a public hearing in Senate Ways and Means on Wednesday, April 23 and is scheduled for executive session on April 25 and a Senate floor vote shortly thereafter. (To my point about swift action).

ESHB 2081 (Fitzgibbon)

• This bill makes several changes to the Business & Occupations (B&O) tax rate. During the course of the past week, a number of changes were made to the bill, exempting various industries and occupations from increased taxes.
• ESHB 2081 also narrowly passed the House 50-48 in the late Monday night/early Tuesday morning floor season. It, too, received a public hearing in Senate Ways and Means on Wednesday, April 23 and is scheduled for executive session on April 25 and a Senate floor vote shortly thereafter.

ESSB 5794 (Salomon)

• This bill seeks to repeal a number of tax preferences on the books. This is one of the bills that has seen changes as sectors have worked to reinstate their tax exemption(s).
• ESSB 5794 passed the Senate 26-22 on April 19 and passed the House on a 53-45 vote on April 23. It now returns to the Senate for Concurrence with the House amendments prior to going to the Governor’s desk for his consideration.

ESSB 5813 (C. Wilson)

• This bill increases the current capital gains and estate taxes with funding dedicated to the Education Legacy Trust Account.
• ESSB 5813 passed the Senate on a 27-21 vote on April 19 and passed the House on a 53-43 vote on April 23. It now returns to the Senate for Concurrence with the House amendments prior to going to the Governor’s desk for his consideration.

ESSB 5814 (Frame)

• This bill extends sales and use tax to a number of services and, you guessed it, a number of services were removed from the imposition of taxation as the week went on, including the proposed additional cigarette tax.
• Notably, the controversial proposal for certain businesses to “pre-pay” July 2027 sales tax in June 2027 (to catch the revenue in the 2025-27 biennium) was removed from the bill on the House Floor. This removal reduces the amount of revenue the bill is expected to generate.
• This bill also passed the Senate on Saturday, April 19 (on a 27-22 vote) and was approved by the House on a 50-47 vote during the House’s late Monday night Floor session. It, too, now returns to the Senate for concurrence with the House amendments prior to going to the Governor for his consideration.

Calling back to the theme of “swift,” the status for each of these bills could change by the time this newsletter hits your inbox. Check the legislative website for the latest status on bills and amendments during this fast-changing stage in the process.

Taking Care of Business…

In the hours when legislators were not engaged in revenue hearings or floor debates on revenue bills, they were busy “concurring” with amendments made to bills in the opposite chambers. As a refresh about this “Concurrence” process, check out the April 18 edition of Notes from Olympia.

To get the latest status update on bills, check out Start Early’s bill tracker. We will release a final tracker after Governor Ferguson concludes his action on bills.

The Tivoli Fountain on a Warm Spring Day

(Photo Courtesy: Erica Hallock)

Trivia!

Prior to the Legislature moving to annual legislative sessions in 1980, bi-annual sessions ran for how many days?

Highlights of the Week

Revamped Revenue Approach on the Table

After Governor Ferguson conveyed his unwillingness to support a “wealth tax” to help close the state budget gap at an April 1st press conference, legislative budget writers went back to the drawing board. This week they unveiled a revised revenue package that is estimated to raise $12 billion over four years. As a reminder, the state’s four-year budget gap is an estimated $16 billion.

This Washington State Standard article summarizes this revised legislative approach.

While a number of revenue bills are in play, five primary pieces currently make up the revised Senate and House revenue packages. They include:

• SB 5812 (Wellman)/HB 2049 (Bergquist) K-12 Education Funding/Property Tax
  • These companion bills increase the revenue growth limit for state and local property taxes to fund K-12 education
• SB 5813 (C. Wilson)/HB 2082 (Street) Increase Funding to the Education Legacy Trust Account/Capital Gains & Estate Tax Increases
  • Adds an additional 2.9% excise tax on capital gains in excess of $1M
  • Increases the top tier rates on estate tax by 35% and increases the exclusion amount for the estate tax to $3M
• SB 5815 (Saldana)/HB 2081 (Fitzgibbon) Increase Business & Occupations (B&O) Tax
  • Increases tax rate for several Business & Occupations (B&O) Tax Surcharges
  • Includes an increase of the B&O rate for child care from .484% to .5% effective January 1, 2035
  • Imposes surcharge on high grossing businesses and financial institutions
  • Places a .5% tax on Washington taxable income over $250M. Takes effect January 2026 and expires December 31, 2030
• SB 5814 (Frame)/HB 2083 (Stonier) Extend Retails Sales and Use Taxes to Certain Services/One-Time Pre-Payment of Sales Tax Collections
  • Extends retail sales and use tax to certain services
  • Makes certain nicotine products subject to the other tobacco products tax
  • Establishes one-time pre-payment of state sales tax collections for businesses with $3M or more in taxable retail sales during calendar year 2026. Pre-payment in June 2027 for July 2027 taxes. Effect is to pull ~$800M in sales tax revenue into the 2025-27 biennium
• SB 5794 (Salomon)/HB 2084 (Ramel) Repeal or Modification of Certain Tax Preferences
  • These bills repeal, modify or clarify a number of tax exemptions to raise additional revenue

The Senate Ways and Means Committee held a public hearing on most of its revenue bills on Wednesday, April 16, and is scheduled to take executive action on Friday, April 18. The House Finance Committee is scheduled to hold both public hearings and executive sessions on Friday, April 18.

All of these revenue bills are “Necessary to Implement the Budget,” and, therefore, not subject to legislative timelines, but still need to go through all of the normal channels and be approved by both bodies.

On April 17, Governor Ferguson issued his response to the revenue package. Of note, he expressed concern that the Legislature’s approach continues to rely on too high a level of new revenue. The statement did not include a specific target revenue figure, and the reader could infer he prefers further cuts rather than the proposed level of revenue.

Specifically, he stated:

“At a time of great economic uncertainty and assaults by the Trump Administration on core state services for working families, raising $12 billion in taxes is unsustainable, too risky and fails to adequately prepare Washington state for the crisis that looms ahead.

That said, the Legislature has made progress on key issues in its updated revenue proposals. Legislators are working hard and putting in long hours. They have moved away from their reliance on an untested wealth tax and made progress on addressing our regressive tax system.

We will continue to work together to produce a budget that supports a strong economy, and the people of Washington.”

“It’s the Final Cutoff”

As a nod to the Blue Origin “space trip” this week, I wrote this title line while singing Europe’s “The Final Countdown” in my head. I will forever be a child of the 1980s – best music, no question.

Wednesday, April 16 at 5:00 p.m. was the final cutoff with the deadline for bills to pass out of the opposite chamber. In other words, House bills had to be passed by the Senate and Senate bills passed by the House. Bills “Necessary to Implement the Budget” are not subject to these cutoff deadlines.

Per the usual pattern this session, the House had a number of late night/early morning workdays, while the latest the Senate worked was, maybe, 7:00 p.m. one day.

Check out Start Early’s Bill Tracker to get the latest bill statuses.

Process Check-In

1. What Happens After a bill has passed both the House and the Senate?

The answer depends on whether the bill was amended in the opposite chamber.

If a bill was not amended in the opposite chamber, the bill is sent to the Governor for his consideration after receiving signatures of the President of the Senate and Speaker of the House.

If the bill was amended in the opposite chamber, it must return to the originating chamber for a process called “Concurrence” where the originating body is asked to agree to the amendments made in the opposite chamber. For example, if a House bill is amended in the Senate, it must return to the House so the House can concur with the Senate amendments. If concurrence occurs, the bill makes its way to the Governor’s desk. Much of the focus of these final days of session will be spent in this process of Concurrence.

2. What Happens when the House of Origin Does Not Concur with the Opposite Chamber’s Amendments?

If the original chamber does not agree with the amendments made in the other body, it can request that the opposite chamber withdraw – or recede – their amendments.

If the opposite chamber refuses to recede, a conference committee including representatives from each chamber may be formed. This conference committee works to resolve differences and ultimately produce a conference committee report outlining this resolution. Both the Senate and House must adopt the conference committee report for the bill to pass (in other words, it is an up or down vote). If the conference committee does not come to an agreement or if one of the chambers does not agree with the conference report, the bill fails. Because conference committees take time and energy in the waning days of session, creation of conference committees are not taken lightly.

Revenue Collections Update

On April 14, the state’s Economic and Revenue Forecast Council released an Economic and Revenue Update. Of note, major General Fund-State (GF-S) revenue collections for the March 11 – April 10, 2025, collection period came in $76.7 million (3.8%) lower than forecasted. A large part of this comes from real estate excise tax (REET) collections which came in $17.4 million (14.7%) lower than forecasted.

Spring arrives on the Capitol Campus

(Photo Courtesy: Erica Hallock)

Trivia!

What event on Saturday, September 9, 1928, caused massive damage to the Old Capitol Building in Downtown Olympia?

Highlights of the Week

Early Learning Facilities Bill Signed Into Law!

On Monday, April 7, Governor Bob Ferguson signed HB 1314 (Callan/Abbarno) into law. The Senate companion bill was sponsored by Senators Trudeau and Torres.

The bill makes four primary changes to the Early Learning Facilities (ELF) Fund:

1. Establishes an emergency grant program for projects necessitated by unforeseen circumstances (such as burst pipes).
2. Eases the burden on financially constrained providers by moderating matching fund requirements.
3. Makes Tribal Compact Schools eligible for the ELF Public School Districts Program.
4. Clarifies that projects supporting the conversion of ECEAP slots to full day and/or extended day are eligible for ELF Fund programs.

The law goes into effect July 27, 2025.

Opposite Fiscal Committee Cutoff Deadline – Back to Floor Action

Final Stretch! Fiscal committee action concluded on Tuesday, April 8 with the deadline for fiscal committees to act on bills from the opposite body. On Wednesday, activity shifted back to the Legislative Building for what feels like endless Floor sessions in advance of the April 16 “Opposite House Cutoff.” At the same time legislators are deliberating the final lists of bills, budget writers are negotiating budget details.

Given the hours spent standing on unforgiving marble floors, I, for one, am glad fashionable tennis shoes are considered acceptable footwear.

Bill Updates

Bill to Modify Fair Start for Kids Act Advances

The House Appropriations Committee took executive action on ESSB 5752 (C. Wilson) on its final day of committee work, April 8. This bill looks to modify aspects of the Fair Start for Kids Act to achieve cost savings given the state’s budget constraints. See the March 28 Notes from Olympia for further background on the bill’s details.

Prior to executive action, the Appropriations Committee adopted further amendments that serve to further align the bill with the House’s approach to child care in its proposed budget.

Specifically, the amendments:

1. Reinstate current law requiring a household’s 12-month Working Connections Child Care authorization begin on the date care is expected to start by removing provisions directing DCYF to adopt rules requiring prospective payments and prohibiting prospective payments for a child who has not attended within the previous month.
2. Modify the school-age pilot project contained in the bill.

The bill now moves to House Rules.

Bill to Modify Child Care Qualifications Passes Senate

On April 8, the Senate passed E2SHB 1648 (Dent) by a unanimous vote. Among other provisions, this bill extends the timeline for childcare providers to meet certain staff qualification requirements from August 1, 2026, to at least August 1, 2030.

See Start Early’s March 28 Notes from Olympia for a description of the bill’s components.

Because the bill was amended in the Senate, it needs to return to the House for concurrence in House amendments.

Transition to Kindergarten Pause Advances to House Rules

On Tuesday, April 8, the House Appropriations Committee took executive action on ESB 5769 (Wellman). This bill would limit Transition to Kindergarten (TTK) enrollment to the level appropriated in the operating budget. (Note both the Senate and House proposed budgets effectively pause TTK enrollment at 2024-25 school year levels).

The bill also requires the Office of the Superintendent of Public Instruction to work with the Department of Children, Youth and Families to develop recommendations to phase-in TTK enrollment that takes into consideration other early learning programs, including ECEAP, and also limits annual growth to no more than five percent.

The bill calls for the recommendations to consider the following for TTK expansion:

1. Communities with the highest percentage of unmet needs;
2. Child care supply and demand;
3. School districts, charter schools, and state-tribal education compact schools with the highest percentages of students qualifying for free and reduced-price lunch;
4. School districts, charter schools, and state-tribal education compact schools with the highest percentages of students with disabilities; and
5. School districts, charter schools, and state-tribal education compact schools with the lowest kindergarten readiness results on the Washington kindergarten inventory of developing skills.

Amendments adopted in the House Appropriations Committee make two changes to the underlying bill:

1. For the 2025-26 and 2026-27 school years, directs OSPI to prioritize TTK programs that operated during the 2024-25 school year.
2. Changes the due date for the OSPI/DCYF recommendations from December 1, 2027, to December 1, 2026.

The bill now moves to the House Rules Committee.

Check out Start Early’s Bill Tracker for the latest on early learning related bills.

Senate and House Capital Budget Negotiations Commence

On Friday, April 4, the House Capital Budget Committee passed its Capital Budget, SHB 1216 (Tharinger). On Saturday, April 5, the Senate passed its Capital Budget, SSB 5195 (Trudeau) with all Senators present voting in favor. In contrast to the Operating Budget, the Capital Budget is definitely a more bi-partisan affair with budget leads in the Senate touting how the budget serves “One Washington” and giving public nods of appreciation to their counterparts from the other sides of the aisle.

At the House Capital Budget Committee meeting, Chair Tharinger reported the House would not take up the Capital Budget until negotiations are complete. At that time, the compromise will be considered as a striking amendment by the House before it is sent to the Senate.

As a reminder, Start Early developed a document comparing the Senate and House Operating and House budget proposals. It has been updated to reflect the latest Capital and Operating budget action to date.

Gorgeous cherry blossoms fill the Capitol Campus

(Photo Courtesy: Erica Hallock)

Trivia!

1. What type of tree is the “Sine Die” tree?
2. Where is the “Sine Die” tree located on the Capitol Campus?

Highlights of the Week

Senate and House Capital Budgets Released

On March 31, the Senate and House released their respective proposed Capital Budgets, PSSB 5195 (Trudeau) and PSHB 1216 (Tharinger). Below is a summary of key Early Learning Facility (ELF) investments:

The Senate is expected to vote on its Capital Budget on Saturday, April 5 and the House sometime in the following days. After these actions, a conference committee will work to resolve differences and propose a final Capital Budget for both chambers’ consideration.

Potential New Revenue Updates

On Monday, March 31, the Senate Ways and Means Committee held a marathon public hearing on their proposed revenue package and the House Finance Committee did the same on Thursday, April 3. See the March 28 Notes from Olympia for details on the revenue proposals.

In the end, thousands of Washingtonians registered their positions on the 8 revenue bills introduced between the two chambers and hundreds of people testified. In some cases, the same people testified (with the same talking points) on multiple bills. As of this writing, these bills have not been scheduled for executive session.

The morning after the Senate public hearing, Governor Ferguson held a press conference to share his perspective about the Senate and House progress on the operating budget to date. The Washington State Standard has a great recap of the press conference.

Key takeaways from Governor Ferguson’s press conference:

1. Governor Ferguson remains opposed to the inclusion of the “wealth tax” (called the “Financial Intangible Tax”) in the final budget as a way to close the budget gap. The House biennial budget assumes this tax would raise $2.4 billion and the Senate biennial budget assumes it would raise $4.2 billion. The primary reason for the Governor’s opposition to this tax is because he believes it is untested and would not withstand a legal challenge.
2. Governor Ferguson argues both budgets are too reliant on new taxes and additional spending reductions are needed. In short, he said he cannot sign either budget in their current form.

Governor Ferguson cited five components necessary for his approval of a final budget:

1. Protection of the Rainy Day Fund.
2. Basing the budget on realistic revenue projections.
3. Minimizing new investments.
4. Identifying additional new savings and efficiencies.
5. Not relying on a new revenue source with a high likelihood of being overturned by the courts (e.g. the wealth tax).

Governor Ferguson continues to be in discussion and negotiations with legislative leaders and did remain open to other revenue sources, but did not identify which options he supports.

Operating Budget Progress

Over the past week, the Senate and House both approved their budget proposals, with a few amendments ultimately adopted. The process now moves behind closed doors as negotiators work to resolve differences between the two approaches. The “math problem” was made more challenging by Governor Ferguson’s statements this week about revenue and limitations on new expenditures. As you can imagine, anxiety is high on the campus.

Start Early Washington has updated our budget comparison document to reflect Capital Budget details; amendments adopted in committee and on the floor, and to correct errors. Changes are highlighted in yellow, and we will continue to update the document as the process continues.

Bill Updates

Policy Committee Cutoff Reached – On to Fiscal Cutoff!

Tuesday, April 2 marked opposite chamber policy committee cutoff. Because so many bills did not advance this year due to the state’s fiscal situation, our email in-boxes filled with notices of policy committee cancelations as they concluded their work early.

Focus quickly shifted to the April 8 opposite chamber fiscal committee cutoff. While both the Senate Ways and Means and House Appropriations Committees have scheduled Saturday committee meetings, these meetings will be less grueling than the previous pre-cutoff Saturday session due to the lighter bill load. This will give budget writers time to work on budget negotiations.

Check out Start Early’s Bill Tracker for the latest on early learning related bills.

Bill to Change Fair Start for Kids Act Amended in House

On March 28, the House Early Learning and Human Services Committee took executive action on ESSB 5752 (C. Wilson). This bill would make substantial statutory changes to the Fair Start for Kids Act, resulting in significant budget savings reflected in the proposed Senate budget. See the March 28 Notes from Olympia for details on the bill.

The House policy committee approved a striking amendment that made three substantive changes to the underlying bill:

1. Removed the proposed Senate changes to the Working Connections co-payment system. This means the bill now maintains the current co-pay structure.
2. Reinstated eligibility for Working Connections Child Care for people in the first year of a state registered apprenticeship.
3. Required DCYF to work with a school and park district in a specific city on a pilot to increase access to a school-age child care program.

The committee rejected a proposed amendment that would have reinstated eligibility for Working Connections Child Care for children of child care providers, citing budget concerns.

The bill is scheduled for a public hearing in the House Appropriations Committee on Saturday, April 5.

Early Learning Facilities Bill Delivered to Governor Ferguson

Last week we shared that HB 1314 (Callan/Abbarno) had passed both the Senate and House and was on its way to the Governor’s desk for signature. This week the bill received the requisite signatures by the President of the Senate and the Speaker of the House, and was delivered to Governor Ferguson on Wednesday, April 2.

Because the bill was delivered more than five days before the Legislature adjourns, Governor Ferguson has five days to act on the bill. While Sundays are not counted, Saturdays are.

In Memoriam
Speaker Frank Chopp, Washington State House of Representatives Longest Serving Speaker of the House
1943-2025

(Photo Courtesy: Seattle Times)

Trivia!

Washington state’s longest-serving Secretary of State Ralph Munro passed away March 20 at the age of 81. Munro hosted a popular, long-running series on TVW. What is the title of this series?

Highlights of the Week

Budgets Released

On March 24, the Senate and House released their respective proposed Operating Budgets, PSSB 5167 (Robinson) and PSHB 1198 (Ormsby). On Tuesday, March 25, Start Early Washington released a comparison of the two bodies’ budgetary approaches to early learning. A few notes:

• The chart has been updated in places since its initial release on Tuesday to include a correction. The link on our Policy Resources page includes the latest version.
• The numbers presented include two years of funding for the 2025-27 biennium. If you would like further detail, please reach out.
• The base of the table is Maintenance Level funding, so any reductions are cost savings achieved from reductions from Maintenance Level and new investments are those above what was included in Maintenance Level.
• While funding for early learning and child care does include reductions, many of these are cost avoidance achieved through delayed implementation of upcoming milestones in the Fair Start for Kids Act. Pending legislation (ESSB 5752/HB 1489) would delay these Fair Start provisions.

Budget Highlights

The Senate’s $78.5 billion 2025-27 biennial budget is predicated upon $3 billion in cuts/reductions and $6.2 billion in new revenue in the upcoming biennium. The budget would tap $1.6 billion from the state’s Rainy Day Fund in State Fiscal Year 2026, with a pledge to pay the funds back in the following fiscal year. The budget includes plans to leave a $7.6 billion reserve at the end of state fiscal year 2029.

The Senate budget proposes state employee furloughs of 13 unpaid days for one year (the equivalent of a 5 percent pay cut). The Senate budget invests more than the House in education (particularly in special education) and does not include the $100 million in new funding for law enforcement that is a priority of Governor Ferguson.

The House’s $77.8 billion 2025-27 biennial budget would leave a total ending fund balance of $3.2 billion. Its budget is predicated upon $5.2 billion in new revenue. The House budget does include new funding for law enforcement and while it includes new funding for education, it includes less than the Senate. The House budget does not include salary reductions or require furlough days for state employees.

Budget Approaches to Early Learning

• Areas of Alignment. The two bodies appear to be in alignment on the major cost drivers – delaying expanded eligibility for ECEAP and Working Connections Child Care; pausing additional Transition to Kindergarten enrollment while preserving current enrollment; and delaying by one year Working Connections Child Care rate increases to the 85th percentile of the 2024 Market Rate Survey (MRS).
• Senate invests more in ECEAP. By frontloading a 10% rate increase in year one, the Senate invests ~$10 million more in ECEAP rates and invests substantially more dollars in ECEAP slot expansion.
• Senate budget reflects ESSB 5752 approach. As expected, the Senate budget reflects the ESSB 5752 approach and includes more specific budget reductions, particularly in Working Connections Child Care “auxiliary” programs, than the House. Of interest, of the $6.5 billion in savings in the Senate budget, the largest line-item comes from ESSB 5752 at 14% of the Senate budget’s total savings.
• Fair Start for Kids Act questions dominated press conferences. In various media availabilities over the past week, the large percentage of budget savings coming from early learning was repeatedly noted by the press, and multiple reporters asked questions about the delay to the Fair Start for Kids Act. Legislators from Majority Leader Pedersen to Ways and Means Chair Robinson to House Finance Chair Berg emphasized both the Senate and House are honoring the Legislature’s commitment with the passage of capital gains by dedicating more than $500 million to early learning, but the budget situation did necessitate delaying the Fair Start for Kids Act provisions. Majority Leader Pedersen said the Fair Start for Kids Act showed the demand for services far exceeded what was projected, leading to costs the budget could not accommodate in this environment.

Check out The Washington State Standard coverage of the budget unveilings.

House Democrats Release Revenue Package; Senate Revenue Proposals Set for Hearings

Shortly after we went to “print” last week, House Democrats released their proposed revenue package. Projected to raise over $13 billion over four years (about $4 billion less than the Senate’s), the package contains three components:

1. Financial Intangible Tax. The Senate has a similar proposal but is structured differently. The House proposal is expected to bring in $2 billion per year, beginning in fiscal year 2027 and would be dedicated to the Education Legacy Trust Account.
2. Property Tax Growth Increase. Focused on increasing funding for public safety and public education, this proposal would allow an increase in annual property tax growth from the current 1% cap to the combined rate of population growth plus inflation, not to exceed 3%.
3. Business and Occupations Tax Surcharge. This proposal would impose a 1% Business & Occupation (B&O) tax surcharge on businesses with taxable income over $250 million. The bill also includes an increase to the surcharge on specified financial institutions (approximately 200) with annual net income of $1 billion or more from 1.2% to 1.9%. Under this proposal, Washington would generate nearly $600 million in fiscal year 2026 and nearly $2 billion in fiscal year 2027.

What’s Next for the Budget and Revenue Bills?

The Senate Ways and Means and House Appropriations Committees held public hearings at the same time on their budget proposals, 4:00 p.m. on Tuesday, March 25. Advocates had 60 seconds to provide quick feedback on what was – and what was not – included in the budget proposals.

Both fiscal committees are expected to vote out their budget proposals Thursday night. Lobbyists have been buzzing about whether amendments will be accepted prior to the committee votes. As of this writing, proposed Senate amendments are posted and most of the amendments proposed by Democrats are technical. We will see how many are adopted. Of course, those amendments that cost money will add to the budget challenges.

The Senate is expected to work this Saturday, March 29, to approve their budget. Again, there is the question of whether they will take amendments. The House is expected to take up its budget on Monday, March 31.

Week 12 will kick off with the Senate Ways and Means Committee holding a public hearing on the primary bills that are a part of their revenue package:

1. SB 5797 (Frame) – Enacting a tax on stocks, bonds, and other financial intangible assets with revenue dedicated to public schools.
2. SB 5796 (Saldaña) – Enacting an excise tax on large employers on the amount of payroll expenses above the social security wage threshold with revenue dedicated toward public schools, health care, and other programs that “protect the safety and wellbeing of the public and provide basic needs assistance for seniors and those with developmental disabilities.”
3. SB 5798 (Pedersen) – Concerning property tax growth limit increase with funding dedicated to public schools as well as cities and counties.
4. SB 5794 (Salomon) – Eliminating certain tax preferences, with funding dedicated to public schools, health care and social services.
5. SB 5795 (Krishnadasan)- Reducing the state sales and use tax rate.

This hearing is scheduled to start at 4:00 p.m. and I’m guessing the Senate Ways and Means Committee members may be in for a long night! As of this writing, the House revenue bills have not been scheduled for a hearing.

These revenue bills are key to budget negotiations because the ultimate revenue number is necessary to know the level of cuts/reductions needed to get to a balanced budget. Of course, budget writers and legislative leadership must ensure they have the votes to pass these revenue bills along with the budget – and also that the Governor will approve them. A lot of negotiation to come!

Bill Updates – Policy Committee Cutoff is Next Week

As a reminder, the policy committee cutoff for bills in the opposite chamber is coming up next week on April 2 and fiscal committees will have a few busy days of work before their April 8 cutoff deadline. Start Early Washington updates our bill tracker each Thursday with the latest information on bills we are following.

Early Learning Facilities Bill Off to Governor Ferguson!

On March 25, the Senate passed HB 1314 (Callan/Abbarno) on a 49-0 vote. Because this bill was not amended in the opposite chamber (the Senate), it does not have to return to the House for Concurrence and will be delivered to the Governor, hopefully for signature.

A priority of the Early Learning Facilities Coalition, HB 1314 seeks to make improvements to the Early Learning Facilities (ELF) Fund. Specifically, HB 1314 would:

• Make Tribal Compact Schools eligible for the ELF public school district program.
• Subject to appropriation, establish an Emergency Grant program for projects that are necessary because of natural disasters or another health or safety threat resulting from unforeseen circumstances.
• Clarify that projects supporting the conversation of ECEAP slots to full day and/or extended day are eligible for ELF Fund grants.
• Remove the level of matching funds as a criterion for selecting projects and make other clarifying changes to matching requirements.

What’s Next for this Bill?

According to Governor Ferguson’s webpage:

“Before the governor signs a bill, it must first be signed in open session in both the Senate and House. Once the house speaker and senate president sign the bill, it’s delivered to the governor’s office. This process can take several days following the passage of a bill by the Legislature.

Bills that are delivered to the governor more than five days before the Legislature adjourns have five days to be acted on. Bills that are delivered fewer than five days before the Legislature adjourns have 20 days to be acted on by the governor.”

It appears HB 1314 will be considered a “five-day” bill and we will report on developments.

Senate Bill to Delay Fair Start for Kids Act Heard in House Policy Committee

On Tuesday, March 25, the House Early Learning and Human Services Committee heard ESSB 5752 (C. Wilson) which would modify aspects of the Fair Start for Kids Act. As noted in the budget section above, the Senate budget proposal reflects savings associated with the statutory changes brought by this bill. Its updated Fiscal Note, showing cost savings of $1.1 billion, was also released on March 24. You can check out our February 28 and March 14 Notes from Olympia to get a recap of the bill’s components.

At the public hearing, early learning advocates registered their concerns with the numerous delays included in the legislation (public hearing on the bill starts at minute 31).

ESSB 5752 is scheduled for Executive Session on Friday, March 28.

Bills to Pause Transition to Kindergarten Continue to Move in Both Chambers

On Monday, March 24, the House Appropriations Committee heard PSHB 2012 (Bergquist) which would limit Transition to Kindergarten enrollment for each school district, charter public school, or state-tribal compact school to its 2024-25 school year enrollment, beginning in the 2025-26 school year. This approach is reflected in the House budget, leading to more than $70 million in biennial savings.

On Wednesday, March 26, the Senate passed another Transition to Kindergarten bill, SB 5769 (Wellman), on a 45-4 vote. Prior to passage, an amendment was adopted that limited funding to the amount included in the state budget, rather than tied to funding for a school year. This approach is also reflected in the Senate budget, creating more than $70 million in biennial savings.

Additionally, the Senate also adopted amendments that:

• Reestablish Transition to Kindergarten as a forecasted program.
• Direct OSPI and DCYF to develop a recommended plan for phasing in the TTK program. The plan must include a phased-in approach for expansion that does not exceed five percent growth in statewide annual average fulltime enrolled students each year.
• Require OSPI to submit a report by December 1, 2027, outlining the plan and recommendations for phasing in future TTK programs beginning with communities with the highest need.

Bill to Modify Child Care Provider Qualifications Receives Further Refining

On March 27, the Senate Early Learning and K-12 Education Committee took executive action on E2SHB 1648 (Dent) related to child care provider qualifications.

At the executive session, the Committee adopted a striking amendment that made the following changes to the bill. (Remember that a striking amendment removes the content of the underlying bill and replaces it with entirely new content).

• Provides that nothing prohibits DCYF from adopting rules that provide timelines beyond August 1, 2028, to allow providers additional time to meet staff qualification requirements based on their date of licensure, hire, or promotion, which can be no more than five years.
• Revises requirements for experience-based competency to include the following:
  (a) Requires DCYF to allow licensed child care providers until August 1, 2028, to demonstrate experience-based competency as an alternative to an early childhood education certificate;
  (b) Specifies that providers must have been employed without a break in service since August 1, 2021, as of the effective date of this section or a cumulative five years of employment and have completed and maintained compliance with all health and safety and child care or school-age care basics training for this option; and
  (c) Provides that nothing prohibits DCYF from establishing more restrictive requirements for providers serving the Early Childhood Education and Assistance Program.

An amendment to the striking amendment maintained the August 1, 2030 the deadline in the underlying bill to comply with child care licensing rules that require early childhood education initial or short certificates, complete the community-based training pathway, or demonstrate experience-based competency. (The striker had proposed moving the deadline up to August 1, 2028).

The bill now moves to the Senate Ways and Means Committee.

Budget Analysis

On March 24, the Senate and House released their respective proposed Operating Budgets, PSSB 5167 (Robinson) and PSHB 1198 (Ormsby).

We have included our initial comparison analysis of both budgets. A few notes:

• These are very complicated and complex budget documents, so it is likely we may have misread some details. Feel free to bring questions to our attention and we will include updates and corrections in an upcoming Notes from Olympia.
• The numbers presented include two years of funding for the 2025-27 biennium. If you would like further detail, please reach out.
• The base of the table is Maintenance Level funding, so any reductions are cost savings achieved from reductions from Maintenance Level and new investments are those above what was included in Maintenance Level.
• While funding for early learning and child care does include reductions, many of these are cost avoidance achieved through delayed implementation of upcoming milestones in the Fair Start for Kids Act. Pending legislation (ESSB 5752/HB 1489) would delay these Fair Start provisions.

Budget Highlights

The Senate’s $78.5 billion 2025-27 biennial budget is predicated upon $3 billion in cuts/reductions and $6.2 billion in new revenue in the upcoming biennium. The budget would tap $1.6 billion from the state’s Rainy Day Fund in State Fiscal Year 2026, with a pledge to pay the funds back in the following fiscal year. The budget includes plans to leave a $7.6 billion reserve at the end of state fiscal year 2029.

The Senate budget proposes state employee furloughs of 13 unpaid days for one year (the equivalent of a 5 percent pay cut). Their budget invests more than the House in education (particularly in special education) and does not include the $100 million in new funding for law enforcement that is a priority of Governor Ferguson.

The House’s $77.8 billion 2025-27 biennial budget would leave a total ending fund balance of $3.2 billion. Its budget is predicated upon $5.2 billion in new revenue. The House budget does include new funding for law enforcement and while it includes new funding for education, it includes less than the Senate. The House budget does not include salary reductions or require furlough days for state employees.

Quick Thoughts on Budget Approaches to Early Learning

• Areas of Alignment. The two bodies appear to be in alignment on the major cost drivers – delaying expanded eligibility for ECEAP and Working Connections Child Care; pausing additional Transition to Kindergarten enrollment while preserving current enrollment; and delaying by one year Working Connections Child Care rate increases to the 85th percentile of the 2024 Market Rate Survey (MRS).
• Senate invests more in ECEAP. By frontloading a 10% rate increase in year one, the Senate invests ~$10M more in ECEAP rates and invests substantially more dollars in ECEAP slots.
• Senate budget reflects ESSB 5752 approach. As expected, the Senate budget reflects the ESSB 5752 approach and includes more specific budget reductions, particularly in Working Connections Child Care “auxiliary” programs, than the House.

There is ample room for conversation and negotiation!

Check out Friday’s Notes from Olympia for a more thorough review of the budget approaches and The Washington State Standard coverage of the budget unveilings.

And a personal note of thanks to fiscal and agency staff and lobbying colleagues for helping build this document in a short timeframe. Any errors are mine.