OLYMPIA — Gov. Jay Inslee proposed Wednesday that state spending over the next two years prioritize “pressing needs” such as housing, including an ambitious effort to quickly build thousands of new units that would require approval from Washington voters.

The governor’s proposed budget, released Wednesday, would have the state spend $70 billion over the two-year period starting July 2023. That figure represents a roughly 12% proposed increase in spending from the current 2021-23 budget.

In addition to housing, the budget proposal reflects policy areas that Inslee, who is entering the last half of his third term, will be prioritizing, from the environment to public safety, as lawmakers head into the 2023 legislative session.

State lawmakers, who convene in Olympia on Jan. 9, will write and pass the budget, which then requires the governor’s signature. Democrats control the House and Senate.

Inslee’s proposal comes as Washington continues to grapple with the economic fallout from the COVID-19 pandemic. Inslee described the economic context as creating a “mixed bag of good and bad fiscal news” where job losses have been recovered, but inflation is stressing consumers and driving up the costs of state government.

Federal relief funding from the pandemic is tapering off. The governor hasn’t proposed any new tax increases.


But the budget does reflect two new sources of money passed by lawmakers in 2021: a capital gains tax and revenues raised by a cap-and-invest program to curb greenhouse-gas emissions.

The capital gains tax faces a legal challenge and the Washington Supreme Court will hear oral arguments on that case in January.

Amid growing homelessness and the high costs of both renting and owning a home in Washington, Inslee is proposing the state raise $4 billion by issuing bonds outside the state’s debt limit to build thousands of new housing units over the next few years.

That move would require approval from legislators and voters. The state constitution limits the amount of state debt, but allows the state to contract debt not subject to that limit through the referendum process.

Inslee is proposing the money be spent on projects such as emergency supportive housing for unhoused people, affordable housing units and helping low-income first-time homebuyers with down payments and closing costs.

“Our traditional systems for funding housing take an incremental approach, but if there was ever a time we need to buck those systems, it’s now,” Inslee said in his budget address. “Homelessness and housing shortages are burdening every community in Washington. We can’t wait decades to build, we need housing now or the numbers of people sliding into homelessness will grow.”


Inslee also wants to shore up the state’s ability to care for Washingtonians with behavioral health needs, including money for state-run care, community-based and youth services.

His budget also outlines spending he said will boost early childhood education, protect the Washington salmon population, and build five new hybrid-electric ferries and convert three to hybrid-electric.

Sen. Christine Rolfes, D-Bainbridge Island, who chairs the Senate Ways and Means Committee, described Inslee’s budget proposal as a “solid road map that identifies and prioritizes the top needs of our state.”

Rolfes said lawmakers would “look at all of the governor’s priorities closely as the Legislature works together to craft a balanced budget that will improve lives across our state.”

Sen. Lynda Wilson, of Vancouver, the budget leader for Senate Republicans, criticized the Democratic governor’s proposal Wednesday, saying, “the governor wants to spend just about every tax dollar available.”

“The governor’s support for behavioral health is appropriate, at least on the surface, but that will do nothing in the short term to deal with the record number of murders and fatal drug overdoses in our state, or help hire law-enforcement officers to fight crime in our communities,” Wilson said in a statement Wednesday. “And while I’m sure he views his climate agenda as being important for future generations, I’m worried more about helping today’s children recover from the learning loss that is due largely to his closing classrooms for so long.”

Inslee’s budget proposal also includes funds for two new regional police training campuses.