(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!
