The Senate Operating Budget proposal for 2023-25 was released on March 23 and heard in Committee the next day. The $69.2 billion budget reflects the somewhat pessimistic budget forecast last week. Overall, it includes a number of new investments in city priorities, including housing and substance use treatment programs necessary for successful implementation of State v. Blake.

While some new criminal justice funding is available for specific programs, like co-responder programs, therapeutic court funding, and vehicle pursuit technology grants, it does not include continuation of the city criminal justice appropriation for implementation of the new laws passed in the last several years.

The reserves are projected to be $3.8 billion for 2023-25.

The capital budget proposal released on March 20 provides $400 million for the public works assistance account, allowing the sunset of the multi-year revenue diversion to education. Notably, it does not rely on the $4 billion referendum for bond authority outside of the state debt limit to fund new housing that had been included in the Governor’s budget proposal. Instead, it includes $400 million for the Housing Trust Fund. We appreciate the very significant investments the Senate was able to make within existing resources, and we continue to express the need for additional ongoing dedicated resources for affordable housing if cities are to meet the projected 500,000 affordable units the state is directing cities to plan for.

Below are some highlights for city programs. For a more complete list of impacts, see the budget matrix.

Operating budget

• Housing: $580 million investment in housing programs, including:
  • $120 million to transition those living in encampments to safer housing, requiring $105 million to be used for those living on state-rights-of-way.
  • $111 million to maintain or increase emergency housing and shelter capacity.
  • $104 million for Housing and Essential Needs (HEN) program.
  • $93 million for grants to support O&M costs of permanent supportive housing.
  • $32 million for grants to local government to maintain programs impacted by loss of document recording fees. AWC’s understanding is that this is still short of the projected downfall. If these funds are not backfilled, there will be a direct cut to local homelessness services around the state.

• Resentencing implementation of State v. Blake: $11.5 million is provided to assist municipal courts, prosecutors, and defense counsel in resentencing impacted by the Blake decision and $51.4 million to the Administrative Office of the Courts to operate a centralized statewide legal financial obligations (LFO) refund bureau. AWC has requested that the use of the $11.5 million be expanded to include expenses related to SB 5536 and Blake response.
• Implementation of amendments to drug possession related to State v. Blake (SB 5536): $55 million for substance abuse programs; $15 million for grants for therapeutic courts.
• Basic law enforcement training (BLEA): Funds 23 BLEA classes in both 2024 and 2025, with at least three classes in Spokane each year, and four additional training classes each year in two regional locations.
• Alternative co-response teams: $4 million for grants to cities to reimburse the cost of creating alternative response team programs.
• Funding for Commerce to develop a model ordinance for cities and counties to utilize for siting community based behavioral health facilities.
• State shared revenues: Fully funds shared revenues at anticipated levels.

Capital budget

• $400 million to the Public Works Assistance Account, which honors the sunset of revenue diversions to education, but continues the $114 million diversion to the Move Ahead Washington transportation package passed last year.
• $50 million for the State Broadband Office as a federal grant match for the Broadband Equity, Access, and Deployment (BEAD) state grants program.
• Significant additional investments in affordable housing construction and other housing needs:

• $400 million to the Housing Trust Fund
• $83.2 million for the Inflation Reduction Act HOMES Program
• $67 million for Housing Finance Commission Land Acquisition Program
• $50 million grants to match private investment for transit-oriented development.

One new development since the March 20 revenue forecast is the March 24 Washington State Supreme Court’s decision upholding the capital gains tax passed in 2021 as constitutional and a valid excise tax. The decision will help budget discussions move forward because the revenue forecast and the Senate budget both assumed that capital gains tax was constitutional and incorporated those revenues. The Department of Revenue began implementing the tax in February under a stay granted by the Supreme Court in January, and the tax deadline is April 18.

Watch for updates in AWC’s newsletters over the next week with the House proposed budgets scheduled for release Monday, March 27 at noon and the Senate transportation budget proposal on March 29.

Dates to remember

The Senate operating budget is scheduled for executive session in the Senate Ways & Means Committee on Monday, March 27 at 4 pm. The House proposed operating budget is scheduled to be heard in the House Appropriations Committee on Monday, March 27 at 4 pm.