Washington State Legislative Update 

Week of Feb 23-28, 2026

The opposite house policy cutoff passed this week, shifting the Legislature’s focus to the next major committee deadline, opposite house fiscal cutoff. Any legislation with budget implications must clear this step by tomorrow, Monday, March 2, or it will be considered dead for the session unless deemed necessary to implement the budget (NTIB). Also happening this week, budget writers in both the Washington State House and Senate unveiled their respective budget proposals, marking a critical step as the legislature moves into the final weeks of the 2026 session. The releases set the stage for intense negotiations over funding priorities, as well as decisions that will shape state programs and services in the coming fiscal year.

A few highlights include:

  • Rep. Michelle (Caldier) Valdez a six term Republican lawmaker from LD-26 announced she will not seek reelection in 2026.
  • HB 2242 passed both chambers and is on its way to the Governor. This bill ensures vaccine coverage in the state follows science-based recommendations issued at the state level rather than by federal guidance that was recently reshaped by Health Secretary Robert F. Kennedy Jr., who removed vaccine experts from across the country from the Advisory Committee on Immunization Practices (ACIP). The legislation requires insurers to cover immunizations recommended by Washington’s health authorities and aligns the state with guidance developed through the West Coast Health Alliance, which Washington formed with neighboring states after federal changes. The law is intended to preserve no-cost preventive care access and keep vaccine policy grounded in expert consensus despite shifting federal recommendations.
  • Sen. Dhingra’s attempt to curb soaring legal payouts by Washington state and local governments, SB 6239, stalled in a House Committee despite bipartisan Senate support. Because of grave concerns about mounting costs, the bill aimed to reduce expenses by resolving more claims outside traditional court proceedings, but faced strong opposition from trial lawyers and survivor advocates who argued it would hinder access to justice. House leadership, including Laurie Jinkins, said the measure isn’t ready to move forward, though discussions may continue for future sessions as governments confront hundreds of millions in annual payouts and growing budget pressure.

Operating Budgets

 The operating budget plans (HB 2289 and SB 5998) total approximately $79.2–$79.3 billion, an increase from the enacted biennial budget of about $77.8 billion. Both proposals assume passage of the Millionaire’s Tax. Both proposals include targeted reductions for state agencies and higher education, as well as shifts in one-time funding sources, with differing approaches to the use of climate-related revenues. Each budget relies on a withdrawal of more than $700 million from the state’s Budget Stabilization Account (rainy day fund) to help balance spending. Budget writers cite inflation, increased caseloads, and other near-term cost pressures as justification for drawing on reserves. A major driver of new spending is the sharp increase in tort liability legal judgments and settlement costs against state agencies. The Senate proposal sets aside roughly $1 billion for these obligations, while the House allocates about $400 million, one of the most significant differences between the two plans. Another major difference is how each Chamber funds the Working Families Tax Credit. Both the Governor ($569 M) and the House ($330 M) use CCA revenue and the Senate relies on other sources of general fund revenue. The House also plans to replace the CCA funds using surplus money from a pension account for police and firefighters, another controversial proposal (HB 2034). Republican lawmakers have criticized the proposals for increasing overall spending and relying on reserves and other one-time resources rather than structural budget solutions.

On Friday, SB 5998 passed the Senate chamber, 30-19 along partisan lines. On Saturday the House passed SB 5998 52-42 with 5 people excused and Democrats Rule Shavers, Timmons and Walen joining Republicans in voting nay. Operating budget writers will enter conference first part of Week 8.

Additional Reading: Given that estimated shortfall, how do the Senate and House operating budget proposals balance the budget? Emily Makings of the Washington Research Council provides her estimate of the size of the current shortfall, and how the Senate and House would close it.

Transportation Budgets

 While the supplemental transportation plans share many policy priorities, they differ in scale, financing strategy, and their balance between near-term investment and long-term debt management. Both offer solutions that are keeping the ERFC forecast in mind – the forecast released earlier in February 2026 is decreased by $101 million for the 25-27 period compared to November of 2025; the 27-29 period is decreased by $86 million.

The bipartisan Senate proposal (SB 6005) would add approximately $1.5 billion in new investments, financed largely through a $2 billion bond package (SB 6225). The plan focuses on accelerating highway and bridge preservation, improving Washington State Ferries reliability and terminal infrastructure, advancing safety improvements on high-risk corridors, supporting climate and electric vehicle infrastructure, and repairing storm and flood damage. Senate leaders describe the approach as a way to address urgent maintenance needs and move projects forward more quickly without raising new taxes.

The House Democrat proposal (HB 2306) totals about $16.5 billion and reflects a more cautious fiscal approach amid declining gas tax revenues, rising construction costs, and growing long-term obligations. It includes funding for highway and bridge preservation, ferry operations and capital timelines, targeted pedestrian and bicycle safety projects, and multimodal investments such as youth rail access and mobility programs during major construction. The proposal also plans for major future costs, including fish passage barrier removal, while relying primarily on existing bond capacity rather than authorizing significant new debt.

Despite these differences, both proposals emphasize maintenance over expansion, invest in ferry system reliability, support safety improvements, and maintain funding for climate and multimodal programs. Negotiations are expected to focus on the appropriate level of new bonding, the pace of preservation work, and how best to balance immediate infrastructure needs with long-term fiscal sustainability.

On Friday, SB 6005 passed the Senate chamber unanimously and on Saturday the House passed also passed SB 6005 unanimously. Transportation budget writers will enter into conference first part of Week 8.

Capital Budgets

Both proposals build on the $7.5 billion 2025–27 capital budget adopted last year and emphasize job creation, housing, and community infrastructure. Key differences center on overall spending levels, Climate Commitment Act allocations, and the balance between expanded housing and climate investments versus the Senate’s emphasis on resilience and core infrastructure.

The House proposal (HB 2295) takes a more expansionary approach, with a strong emphasis on housing and Climate Commitment Act investments. It includes $221 million for housing and homelessness, bringing total biennial housing investments to nearly $1 billion, as well as $284 million for clean energy and decarbonization. Additional funding supports habitat restoration, salmon recovery, energy efficiency, community climate grants, and $78 million for K–12 school construction. The plan also funds a range of local and state facility needs, including flood response, tribal resilience, and improvements at Western State Hospital and Department of Corrections facilities.

The Senate proposal (SB 6003) reflects a smaller infrastructure strategy. It includes $150 million for affordable housing, $93.6 million for school construction, and major investments in disaster response and water systems, including $50 million for flood recovery and preparedness and $20 million for irrigation, fish passage, and water conservation. Senate leaders also direct Climate Commitment Act resources toward focused initiatives such as a $50 million clean energy revolving loan program (Washington Builds), agricultural methane reduction, environmental cleanup, and $38.6 million for tribal clean energy and climate resilience.

On Friday, SB 6003 passed the Senate chamber unanimously. The House is expected to consider SB 6003 on Monday and conference will commence 1-2 days after floor passage.

 Millionaire’s Tax

 The proposed Millionaire’s Tax (SB 6346) was heard again this week in the House Finance Committee. A total of 284 individuals signed in to testify, and 129,687 people registered positions through the Legislature’s online system, with roughly 90% opposed.

However, supporters of the measure have raised concerns about the accuracy of those figures. The coalition Invest in Washington Now alleges that approximately 37,000 “con” sign-ins may have been duplicate or fraudulent. Some submissions reportedly used the names of public officials such as former Congressman Derek Kilmer (D) and organizational leaders such as Larry Delaney (WEA) and Adam Glickman (SEIU 775) without their consent. Supporters have asked the Washington State Attorney General Nick Brown and House Clerk Bernard Dean to investigate, arguing the inflated numbers could misrepresent public sentiment. Indeed, the entire situation could throw sign-ins into question. In response, House Finance Committee Chair Rep. April (D-44) issued this statement:

“Public comments and feedback to proposed policy is a critical aspect of our work in the Legislature. It allows us to more easily hear from constituents who may not be able to participate in the legislative process in-person. It’s become clear, however, that the system is easy to manipulate. Following reports of impersonation from concerned stakeholders who had their information misused to sign in against SB 6346, initial investigation into the committee sign in reports have shown potentially tens of thousands of instances of fraudulent or duplicate data. Investigations into the full extent of the manipulation are ongoing through the Chief Clerk’s Office, as are plans to make system improvements to prevent this sort of abuse in the future. In addition, the Washington State Attorney General’s Office has been informed of the situation and alerted to the need for possible investigation. To those who participated in the manipulation of the public comment system, I want to be clear: your efforts have not benefited your cause and have in fact done damage to the democratic process and called into question every sign in on this bill.”

 On Friday, the House Finance Committee moved SB 6346 out of committee on a 9-6 vote with Rep. Walen voting no with the Republicans. The bill moved with a striker and multiple amendments to the striker including:

  • Provides a deduction from Washington base income for 90 percent of Washington allocated gambling losses incurred in the current taxable year with exceptions.
  • Provides an exclusion for income earned by a nonresident participating as a keynote speaker, panelist, or moderator at a convention or trade show with requirements.
  • Changes the revenue distribution to the Local Government Public Defense Funding Stabilization Account (Account) to $150,000,000 per fiscal year.
  • Adds first-class city pension proceeds to types of pension income subject to this act.
  • Revises changes made in 2024 to certain sales and use taxes and business and occupation taxes. These changes are subject to a severability clause. The changes include:
    • Changing the sales tax on services on “live presentations” to exclude before and after school care provided in-person and onsite by elementary schools and presentations given by nonprofits.
    • Creating a retail sales and use tax exemption for all new service taxes created in ESSB 5814 (2025) for K-12 schools, school districts, and educational service districts.
    • Exempting any Washington taxable income attributable to wholesale sales of food and food ingredients sold by wholesalers to retailers not under common ownership from the business and occupation tax 0.5 percent surcharge implemented in ESHB 2081 (2025).
  • Provides retail sales and use tax exemptions for diapers.
  • Clarifies the treatment of income received by members of federally recognized Indian tribes secured by treaty, Executive Order, or an Act of Congress.
  • Creates an advisory group to assist the DOR in implementing the income tax program and requires reports by the DOR to the Legislature in 2026 and 2027.
  • Removes the early expiration of the business and occupation surcharge
  • Changes the repeal date of the changes to the tax on certain retail sales on services, excluding advertising services, enacted in ESHB 5814 (2025) from January 1, 2030 to January 1, 2029.

Gov. Ferguson said the House committee’s revised “millionaires’ tax” proposal still falls short of what he wants, warning that it “has a long way to go” and that lawmakers are running out of time to fix it. While he supports the general idea of the tax, his main criticism is that the bill does not direct a large enough share of the revenue toward tax relief for families and small businesses, which he has consistently demanded. Overall, his response signals openness to the policy but clear dissatisfaction with this version’s balance between raising revenue and providing direct taxpayer relief.

This bill had passed the Senate chamber on February 16th, 27-22 with Democrats Cortes, Hansen, and Krishnadasan voting with the Republicans. It is unclear when the full House chamber will consider a floor vote but expect this vote to have an impact on the fate of dozens of bills due to the floor time that will be dedicated to its consideration and passage.

Important Dates:

  • March 2 – Fiscal Committee Cutoff – Opposite House
  • March 6 – Floor Cutoff
  • March 12 – Sine Die

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Brynn Brady

Ceiba Consulting, Inc.

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