WA lawmakers beware: You’re reading the room wrong on taxes

The Washington Legislature convenes Monday with larger Democratic margins in both the House and Senate. With moderate lawmakers leaving their jobs, the left and lefter tilt of the state House might lead to more experimental progressive machinations.

And some Democratic leaders are interpreting state voters’ rejection of three conservative-backed state initiatives as a signal they are game for more taxes. Voters upheld three state laws with tax components: capital gains taxes, assistance with at-home care and climate investments.

In fact, in the waning days of outgoing Gov. Jay Inslee’s third term, he was peddling the Democrats’ so-called budget “shortfall” storyline. He called for some cuts but then proposed $13 billion in new taxes over four years. In other words, not just more of the same, but even more of the same.

Not so fast. Thursday, the incoming governor, Bob Ferguson, released his budget priorities, which promise a clear detour from business as usual. Ferguson has impeccable Democratic credentials, but he appears to be assuming a more pragmatic posture than the Democrats controlling the House and Senate.

Tax hikes should be a last resort, he told Times reporter Jim Brunner. Though he did not say he would veto any new taxes, he expressed skepticism about an “untested wealth tax.”

Meanwhile, Ferguson, who will be sworn in Wednesday, is floating the idea of $4.4 billion in spending reductions for the state general fund budget compared with Inslee’s plan, while proposing $800 million in new programs for the 2025-27 biennium. He won’t cut K-12 schools and signaled the state’s investment needs to increase.

Ferguson will be facing strong headwinds — or at least stubborn muscle memory — from lawmakers and their liberal constituencies who want more money and more programs.

Throughout the election season, The Times editorial board interviewed more than 150 candidates running for office. Our meetings with many Democratic incumbents and candidates reverberated with the parties’ well-honed talking point about the urgent need for new tax revenue.

When challenged with how the economy was strong and revenues were going up — though not as much as they had — many tuned out.

Now, about that invented budget shortfall: Thank Inslee and Democratic leaders, particularly in the House, who wove the fairy tale. They made a deliberate decision to ignore realistic predictions by the state’s professional economists that revenues in 2024 would go up by only 1% to 2%, or possibly decrease.

The state Senate, to its members’ credit, passed a budget that hewed to those guidelines. However, the governor supported, and the House passed, a budget that assumed the largest revenue increase allowed by law, 4.5%.

In the haggling between the two chambers and the governor’s office, the House approach prevailed along with policies and new and expanded programs that spent up to the theoretical — and wrong — revenue assumption.

How would that fly in your household? Or your business? It wouldn’t, because it’s irresponsible.

And don’t scoff at that metaphor. Ferguson suggested that’s exactly how he’s viewing the challenge before him: “I just view it as not much different than a family budget. Those choices are not always fun, but they are necessary.”

So far, Ferguson’s pushback on the tradition of spend-and-spend seems promising and grounded in reality. And, as a former three-term attorney general, he’s got the political chops to make headway.

Godspeed, Gov.-elect Ferguson.