Washington Democrat gov implements largest tax hike in state history

The newly enacted $77.9 billion state operating budget for 2025–27 reflects an 8.2 percent increase in spending from the current budget cycle despite Democratic claims of a massive $16 billion budget shortfall. It includes six significant tax hikes: increases to the sales tax, property taxes, gas tax, and business and occupation (B&O) tax, alongside fees on services ranging from childcare to fishing licenses.

Ferguson, who just two months earlier denounced new taxes that would hit working families, spent 90 minutes at a press conference explaining his decision to approve the tax-laden budget. “I said, hey, we're not going to be able to tax our way out of this. It became equally clear early on in the process that we're not going to cut our way out of it,” he said, emphasizing the need to protect core services.

Though Ferguson had initially proposed $4 billion in cuts, he ended up only cutting $25 million after a rebellion from members of his party.

Despite acknowledging the burden the new taxes may impose, Ferguson defended the budget as a necessary compromise. “No one's excited about increasing the gas tax, I can assure you,” he said, referring to the 6-cent-per-gallon hike included in the package.

Republicans, who had proposed a balanced alternative budget without any tax increases or cuts to core services, slammed the Governor's actions.

“Governor Ferguson told his own party to rein in the tax hikes and shift course. That turned out to be all talk,” said House Republican Budget Leader Rep. Travis Couture. “Today, he gave the green light to a budget that taxes the joy out of Washington, attacks job creators, and worsens our affordability crisis.”

Senate Republican Leader John Braun added, “On his first day in office, Governor Ferguson spoke of fiscal responsibility, yet today he’s supporting the largest tax increase in state history.”

Over the next four years, the tax increases are expected to raise $9.3 billion in state-level taxes and $2.9 billion in local taxes for a total of $12.2 billion. By the fourth year, the tax burden is estimated to cost the average family of four up to $2,000 annually.

Tax hikes also include:

• $5.6 billion from increased B&O taxes on businesses
• $2.6 billion from expanded sales taxes on goods and services, including housing and healthcare
• $1.6 billion from property-tax increases
• $637 million from expanded income and capital gains taxes
• $385 million from new taxes on storage units and other services
• $281 million from a new tax on certain electric vehicle manufacturers, dubbed the “Tesla Tax”

Additionally, fees for services across the board are increasing, including child care copays that are doubling, nursing home per-bed fees will triple, hunting/fishing license fees will rise 38 percent, Discover Pass fees will jump 50 percent, and liquor license fees will also increase.

While tax hikes dominate the headlines, several key programs are being cut or underfunded, including in K-12 Education where funding will be eliminated for underperforming schools, The Tiffany Hill Act, meant to aid domestic violence victims, was defunded, dental reimbursements for low-income individuals will be reduced; postpartum coverage will be slashed; hospital payments for public employee patients are to be lowered.

Republican Senator Chris Gildon noted the contradiction: “They say a budget reflects priorities. The Democrat majority, and now the governor, have chosen to support a budget that cuts funding for behavioral health, public health, and higher education — despite the largest set of tax increases our state has ever seen.”

Senate Republican Leader John Braun said, “On his first day in office, Governor Ferguson spoke of fiscal responsibility, yet today he’s supporting the largest tax increase in state history. That’s disappointing. The majority Democrats who don’t believe government can ever have enough money were unhappy with him back then; they must be elated now.”

Sen. Nikki Torres, assistant Republican budget leader, said, "The governor’s actions have fallen short of his words. In January, he said our state was unaffordable; by approving both the budget and tax increases today, he is making Washington even more unaffordable."

“Governor Ferguson warned his fellow Democrats about using gimmicks to balance the budget, but they did it anyway, and he didn’t veto it,” she continued. “He said he would support a ‘reasonable amount of progressive revenue,’ but signed off on a tax package that is much worse. Only one tax qualifies as progressive, and the biggest of the taxes will increase the cost of virtually everything Washingtonians buy, including food, housing, healthcare, prescription drugs… even TV streaming."

Torres noted, “The governor said protecting working families from higher taxes was ‘the most important thing.’ This budget and the tax bills do the opposite. He should have vetoed the whole thing and called us back to Olympia to try again. Republicans had a better way.”