Washington State Legislative Update 

Week of January 12 – 16, 2026

Welcome to the first week of the 2026 Washington State Legislative Session. Lawmakers have returned to Olympia for a fast-moving 60-day short session shaped by several powerful forces: a sharpened progressive edge following the 2025 special elections, a deeply challenging budget environment, and the early shadow of the 2026 election cycle. Together, these dynamics create an atmosphere of urgency, narrow timelines, and heightened political stakes. As fiscal pressures intensify and policy priorities collide, legislators will face difficult tradeoffs and high-stakes negotiations that will define the remainder of the biennium and set the tone for the year ahead.

2025 Election Outcomes

Progressive Democrats scored significant victories in the November special elections, defeating both business-aligned Democrats and a Republican in several high-profile, closely watched races. These outcomes have modestly confirmed the ideological balance within the Democratic caucus and may influence internal dynamics as lawmakers confront a looming fiscal challenge. The most expensive contest – nearly $4 million – played out in the 26th Legislative District, one of Washington’s true swing districts. There, appointed Senator Deb Krishnadasan prevailed over Rep. Michelle Valdez (formerly Caldier) (R-26), a well-known and dedicated campaigner. While Krishnadasan’s win confirms Democrats’ hold on the Senate, Valdez will return to her House seat this session, preserving her role in the Legislature. In the 33rd District, appointed progressive Democrat Edwin Obras narrowly defeated Burien Mayor Kevin Schilling, a business-oriented Democrat, with the race not decided until the third day of ballot counting. And in the 48th District, appointed Senator Vandana Slatter (D-48) defeated moderate Democrat Amy Walen. Walen, like Valdez, will return to her House seat, maintaining continuity in the lower chamber. And finally, appointed Senator Victoria Hunt (D-5) beat former Republican representative Chad Magendanz in the race to fill the seat left by the passing of Senator Bill Ramos (D-5) last session. Taken together, these results suggest growing momentum for the progressive wing of the Democratic Party, perhaps as a reaction to the federal political environment. Democrats lead in Washington’s Senate, House, Governor’s mansion, and all state-wide offices, but whether these wins will embolden Democratic leadership to pass a substantial revenue package to address the state’s budget shortfall remains an open and closely watched question as the session gets underway.

Supplemental Budget

Both the House and Senate received a sobering, firsthand look this week at the depth of the state’s fiscal challenges as committees heard Governor Ferguson’s proposed operating, capital, and transportation budgets. Washington law requires the Governor to submit a balanced budget, measured over a four-year outlook, meaning that projected expenditures may not exceed anticipated revenues across that period.

Against that backdrop, Governor Ferguson’s proposed budget seeks to close a roughly $2.3 billion shortfall by combining spending reductions with major one-time fixes. His plan would tap about $1 billion from the state’s rainy-day fund and redirect hundreds of millions of dollars from Climate Commitment Act revenues – money originally intended for climate and clean-energy programs – to support general budget needs and programs like the Working Families Tax Credit. The proposal also includes nearly $800 million in agency cuts. While Ferguson has framed the plan as a balanced approach to a difficult fiscal situation, critics warn that relying on reserves and diverting climate dollars to cover ongoing expenses is a risky strategy that could undermine long-term investments and leave the state more vulnerable in future budget cycles.

In late fall, Senate Ways & Means Chair June Robinson (D-38) issued a firm warning to her Senate colleagues: she would not entertain any new provisos in this year’s budget. Meanwhile, members of the House have reportedly been asked to identify their top budget priorities to safeguard.

Language for the so-called “millionaires tax” for which Governor Ferguson has indicated support has not yet arrived, but already, revenue proposals are part of the biennium’s conversation, including:

• HB 2100 (Scott, D-43) – creates a payroll tax on 5% of salaries above $125,000 for companies that gross more than $5 million, had employee wages more than $7 million in the previous year and have more than 20 employees.
• SB 5796 (Saldaña, D-37) – creates a payroll tax of 5% on salaries of $189,371 or more against the portion of salary above the Social Security wage limit for employers with more than $7 million in payroll expenses.
• HB 1320 (Street, D-37) – increases taxes 10-12% on certain businesses.
• HB 1560 (Reed, D-36) – creates a new tax on health care entities based on the salaries of their executives.
• HB 1785 (Doglio, D-22) – imposes a surcharge on certain companies based on the salaries of their executives.
• HB 2098 (Reed, D-36) – eliminates the $75 million cap on the advanced computing surcharge, increasing the tax on tech companies.
• HB 1921 (Fey-D, 27) – establishes a road usage charge.
• HB 1334 (Pollet, D-36) – raises the property tax growth limit
• HB 1870 (Zahn, D-41) – allows counties to impose a new property tax
• HB 2116 (Bergquist, D-11) – increases schools’ local levy property tax ability by raising the cap on the max value a home can be taxed for school purposes.
• HB 1840 (Peterson, D-21) – allows counties to impose a local real estate excise tax.
• HB 2027 (Berg, D-44) – imposes a new real estate transfer tax of up to 3% on the sale of certain homes.
• HB 1702 (Wylie, D-49) – allows counties to impose an additional 3% tax on utilities.
• HB 1517 (Gregerson, D-33) – adds an additional tax on the sale of cell phones, smart watches, and other devices.
• HB 1581 (Macri, D-43) – increases taxes on wired, wireless, VolP lines, and prepaid wireless services.
• HB 2046 (Berg, D-44) – capital gains.
• HB 1607 (Stonier, D-49) – adds a 10-cent per-beverage container tax.
• SB 5576 (Lovelett, D-40) – imposes a new sales tax on Airbnb, VRBO, and other short-term rentals homes.
• HB 2079 (Davis, D-32) – increases taxes on wine, cider, and locally brewed beer.
• HB 2068 (Reeves, D-30) – increases taxes on cigarettes and vape products, and increases the license fees for retailers who sell cigarettes and vape products.
• HB 2971 (Davis, D-32) – taxes owners of online dating applications.
• HB 1386 (Thai, D-41) – imposes an 11% sales tax on firearms and ammunition.
• HB 2442 (Berg, D-44) – allows counties and cities to impose additional excise taxes on real estate sales (up to 0.25%), Expands existing authority for counties and cities to impose up to a 0.5% REET dedicated to affordable housing projects. New authority for counties to impose utility excise taxes (up to 3%) on utility businesses in unincorporated areas. Enables cities/counties to adopt a local sales/use tax (0.01%) specifically to fund services such as child care, perinatal support, youth services, workforce supports, shelter/rental help, and transportation for clients. Modifies existing local sales/use tax authority for housing needs, with priorities for affordable housing, behavioral health facilities, and related support services.
• SB 6093 (Saldaña, D-37) – creates a new state excise tax on large companies’ payroll expenses above a high-wage threshold in order to fund state services that may be adversely impacted by recent federal budget changes.
• SB 6129 (Robinson, D-38) – sets a tax at 90 % of the taxable sales price on most nicotine products. Imposes an additional 10 % tax on flavored nicotine products.

However, even if these proposed revenue strategies are enacted, they will not generate funds quickly enough to cover Washington’s immediate financial obligations, leaving the state in a precarious short-term fiscal position. During the previous legislative session, lawmakers already implemented $8 billion in budget cuts – a scale that required significant sacrifice. Any additional reductions will likely be even more difficult. The challenge before the Legislature is not only balancing the budget over the long term but also managing a crisis that demands difficult choices now.

Potentially complicating those choices is the fact that all 98 seats in the Washington State House of Representatives will be up for election in 2026, since state representatives serve two‑year terms, and approximately half of the 49 seats in the Washington State Senate – where senators serve four‑year staggered terms – will also be on the ballot that year. These concurrent legislative races could heighten political pressures and strategic considerations for candidates and voters alike. Already, Senator Sharon Shewmake (D-42) of Bellingham has announced she will not seek reelection in what is one of Washington’s true swing districts. Additionally, Senator Saldaña (D-37) will not run again. Instead she is pursuing a race for a role on the King County Council.

Important Dates:

• February 4 – Policy Committee Cutoff – House of Origin
• February 9 – Fiscal Committee Cutoff – House of Origin
• February 17 – Floor Cutoff
• February 25 – Policy Committee Cutoff – Opposite House
• March2 – Fiscal Committee Cutoff – Opposite House
• March 6 – Floor Cutoff
• March 12 – Sine Die

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Brynn Brady

Ceiba Consulting, Inc.