State budget proposals unfortunately sweep the PWAA but include funding for local public safety and housing priorities.
It is going to be another busy week of new bills and hearings focused on state budgets and revenue. The Senate and House operating budget proposals (HB 1198, SB 5167) passed out of their respective committees on March 27 with minor amendments. The Senate passed its proposal off the floor on March 29. The capital budget proposals are next up and set for release on March 31.
The Senate revenue package to help bridge the budget gap is also up for hearing on March 31, and the House revenue package will be heard on April 3. Both hearings include AWC’s legislative priority for a property tax cap fix via SB 5798 and HB 2049.
Take time to continue communicating key messages on the budget with your legislators as the bills move out of committees, and watch for updates on the capital budget proposals on March 31:
- PWAA: Oppose proposed additional sweeps of the Public Works Assistance Account (PWAA) which provides crucial funding for city infrastructure.
- Public safety: Support additional funding for public safety including law enforcement recruitment and retention and continued alternative response program funding.
- Housing: Support significant investments in homelessness response, affordable housing, and behavioral health.
- Public defense: Support additional funding for city grants for public defense services.
- Municipal Research Services Center (MRSC): Fully fund MRSC’s operations to ensure technical assistance for local government.
Read our comparison of provisions impacting cities and the following resources for more details on city impacts, a side-by-side comparison, and a quick reference on preferred provisions:
Dates to remember
SB 5794, SB 5795, SB 5796, SB 5797, and SB 5798 are scheduled for a hearing in the Senate Ways & Means Committee at 4 pm on Monday, March 31.
HB 1216 is scheduled for a hearing in the House Capital Budget Committee at 8 am Tuesday, April 1.
SB 5195 is scheduled for a hearing in the Senate Ways & Means Committee at 4 pm on Tuesday, April 1.
HB 2045, HB 2046, and HB 2049 are scheduled for a hearing in the House Finance Committee at 8 am on Thursday, April 3.
Senate & House operating budget proposals include good and bad news for cities
March 26, 2025
State budget proposals unfortunately sweep the PWAA but include funding for local public safety and housing priorities.
March 24 was a busy day of budget releases by the Senate and House. Proposals were released in quick succession, with some differing ideas on how to fund the state’s 2025-27 biennial budget that starts on July 1.
The Senate Democrats operating budget proposal is $78.5 billion, and the House Democrats operating budget is $77.8 billion. Both balance the budget gap with a combination of savings, new revenues, use of the rainy-day reserves, and delays of planned program expansions. The Senate budget also includes a proposal for state employees to take a monthly furlough day.
The transportation budgets are covered in more detail in this article. The capital budgets will be released the week of March 31.
Watch AWC’s testimony and take time now to communicate these key messages on the budget with your legislators:
- Oppose proposed additional sweeps of the Public Works Assistance Account which provides crucial funding for city infrastructure.
- Support additional funding for public safety including law enforcement recruitment and retention and continued alternative response program funding.
- Support for significant investments in homelessness response, affordable housing, and behavioral health.
- Support for additional funding for city grants for public defense services.
AWC testimony in fiscal committees:
Read our comparison of provisions impacting cities and the following resources for more details on city impacts, a side-by-side comparison, and a quick reference on preferred provisions:
Senate operating budget
Public Works Assistance Account: Sweeps $165 million 2026. Plans to repay it in 2027.
Affordable Housing & Homelessness: Continues significant investments in housing including:
- $200 million for covenant homeownership program.
- $130.6 million for HEN program.
- $111 million for grants for local governments and nonprofit organizations for homeless housing programs and services.
- $90 million to transition those living in encampments to safer housing.
- $77.7 million for grants to local governments to maintain programs impacted by loss of document recording fees.
- $62 million for grants to support O&M costs of permanent supportive housing.
- $23.6 million for emergency housing and rental assistance for unhoused individuals.
- $27.5 million for homeless families, youth prevention, and diversion.
GMA planning grants: $38.2 million for updating comprehensive plans and development regulations to comply with the Growth Management Act. Cuts $8.7 million in grants for GMA climate and salmon recovery planning.
Public safety funding: Funding for 23 BLEA courses per year down from the 26 currently funded. And reinstates the 25% cost share for cities and counties.
Public defense funding: $900,000 for ongoing grants and an additional $2 million for city grant funding.
Simple possession/Blake: Instead of separate appropriation, combines simple possession (SPAR) grants with existing $8.6 million to the Office of Public Defense to assist cities and counties with public defense services related to Blake.
Alternative response funding: $4 million for city alternative response team programs grants.
House operating budget
Public Works Assistance Account: Sweeps $288 million in 2026.
Affordable Housing & Homelessness: Significant new funding including:
- $200 million for covenant homeownership program.
- $137 million for HEN program.
- $117.6 million for grants to local governments to maintain programs impacted by loss of document recording fees.
- $111 million for grants for local governments and nonprofit organizations for homeless housing programs and services.
- $90 million to transition those living in encampments to safer housing.
- $62 million for grants to support O&M costs of permanent supportive housing.
- $26.4 million for homeless families, youth prevention and diversion.
- $22.5 million for emergency housing and rental assistance for unhoused individuals.
Public safety funding: Funding for 23 BLEA courses per year. $25 million for training and retention grants (HB 2015).
GMA planning grants: $42.2 million. Cuts $2 million for GMA planning grants.
Simple possession/Blake: $7.8 million to the Office of Public Defense to assist cities and counties with simple possession public defense services related to State v. Blake, in addition to $8.6 million Blake funding.
Alternative response funding: $4 million for city alternative response team programs grants.
Senate transportation budget
Transportation Improvement Board: $310.8 million, including:
- $3.9 million to Small City Pavement and Sidewalk Program.
- $24.6 million for Complete Streets grants.
- $9.3 in preservation funding for cities.
Additional $20 million for Complete Streets grants.
Safe routes to schools grants: $83.3 million.
Highway preservation in pop. centers, including city streets as state highways: $100 million
Encampment response: $8 million to address homeless encampments on state-owned rights-of-way in coordination with local governments and social service organizations to direct people to housing and prevent future encampments.
House transportation budget
Motor Vehicle Fuel Tax statutory distribution to cities: Additional $123 million over the next three biennia from proposed 9 cent increase to the fuel tax.
Transportation Improvement Board: $310.8 million, including:
- $3.9 million to Small City Pavement and Sidewalk Program.
- $24.6 million for Complete Streets grants.
- $9.3 in preservation funding for cities.
Safe routes to schools grants: $83.3 million.
Encampment response: $9.2 million to address homeless encampments on state-owned rights-of-way in coordination with, and directing funding to, local governments and social service organizations, focused on housing individuals.
Budget season kicks off with revenue packages and budget proposals that impact city budget priorities
March 24, 2025
The Legislature has tough budget decisions ahead as they release revenue packages and budget proposals. In a flurry of new bills, the Senate released a revenue package on March 20 that included new state revenues and state tax relief totaling $6 billion new revenues for 2025-27 including:
- New property tax proposal to change the property tax limit for the state school levy, cities, counties and special purpose districts to inflation and population, coupled with an expanded senior and disabled exemption from the state portion of the property tax (SB 5798) More
- Reducing the state sales tax from 6.5% to 6% (SB 5795)
- Wealth tax of $10 per $1000 value on investment assets over $50 million for 4300 residents (SB 5797)
- Repeal of obsolete and ineffective tax exemptions and preferences (SB 5794)
- Payroll tax of 5% on large employers with $7 million in payroll expenses on wages above the Social Security threshold, which is currently $176,000 (SB 5796)
The House followed with its package on March 21:
- New property tax proposal to change the levy limit to inflation and population, up to 3% (HB 2049) More
- Wealth tax of $8 per $1000 value on investment assets over $50 million for 4300 residents (HB 2046)
- New state B&O tax surcharges on high income corporations and financial institutions, imposing a 1% state B&O tax surcharge on 400 businesses with taxable income over $250 million and increasing the surcharge from 1.2% to 1.9% on financial institutions with income of $1 billion or more. (HB 2045)
We encourage city officials to contact your legislators and share your support for the changes to the property tax cap. It is also important to highlight the importance of preserving the Public Works Assistance Account and other programs critical to cities.
Watch CityVoice for more details on the state operating and transportation budget proposals introduced on March 24 and scheduled for hearings March 25. Capital budget proposals are expected to be scheduled for hearings the week of March 31.
Dates to remember
HB 1198 is scheduled for a hearing in the House Appropriations Committee on Tuesday, March 25 at 4 pm.
SB 5167 is scheduled for a hearing in the Senate Ways & Means Committee on Tuesday, March 25 at 4 pm.
SB 5161 is scheduled for a hearing in the Senate Transportation Committee on Tuesday, March 25 at 4 pm.
HB 1227 is scheduled for a hearing in the House Transportation Committee on Tuesday, March 25 at 4 pm.
Governor Ferguson releases proposal for additional $4 billion budget reductions
February 28, 2025
Governor Ferguson released a proposal for an additional $4 billion in efficiencies and cuts to state agencies, programs, and services to help bridge the state’s operating budget gap over the next four years. These reductions are in addition to the $3 billion already proposed by former Gov. Inslee in December and together represent about half ($7 billion) of the estimated $15 billion four-year budget shortfall.
Last month, Gov. Ferguson asked state agencies to propose additional savings that represent 6% of state agency budgets. The proposal does not include any new revenue proposals or address potential reductions to federal funding for the state.
The Governor and his staff team said they used the following budget principles to evaluate any proposed agency reductions:
- Efficiencies: Good government efficiencies and reductions to ensure state agencies are running as lean as possible and right-sizing government. Many of these are reductions that should be made even if there was not a budget shortfall.
- Proposed or not yet implemented spending: Given the budget situation, Gov. Ferguson very carefully examined proposed or adopted spending not yet implemented.
- Reconsider recent spending: For example, investments made two years ago for the current biennium. If the Legislature knew two years ago that the state would be facing a $15 billion shortfall, legislators likely would not have made all of these investments.
- One-time federal funding: During the COVID-19 pandemic, Washington received significant one-time funding from the federal government for various programs. Those one-time dollars are gone. In some circumstances, the state has backfilled those one-time dollars with ongoing general fund resources. Ferguson and his team took a close look at whether the state could take on those obligations for those federal dollars that were meant as a one-time investment during COVID.
The proposed reductions also focused on preserving direct cash benefits to residents (such as TANF and Medicaid), plus public safety funding, and education funding.
Examples of proposed reductions include:
- State worker furlough days: Requiring state employees to take one furlough day per month and reducing travel.
- Childcare rate increase phase-in: $144 million reduction by phasing in proposed rate increases for childcare centers over the next four years instead of increasing the rate all at once in July 2025.
- Public health: $49.2 million reduction in Foundational Public Health from $155 million per year to $133 million, noting that this is higher than the pre-pandemic funding level.
- Planning grants: $2 million reduction to GMA planning grants.
- World Cup: $5.5 million for World Cup security assistance.
- Clean buildings: $4.9 million in clean buildings technical assistance and training.
These difficult budget decisions mean that cities will need to continue messaging the importance of programs like the Public Works Assistance Account. While budget proposals will likely be released the week of March 17 (following the next state revenue forecast on March 18), decisions about budget priorities are under negotiation now.
Read more about the Governor’s proposal and watch his press conference.
Share AWC’s budget priorities with your legislators
February 10, 2025
Read AWC’s letter to budget leaders in the House and Senate with cities’ budget priorities and share the priorities with your legislators. While it is early in the budget process, we already know the state’s funding gap will make this a challenging budget year. We do not expect to see budget proposals until the week of March 17 following the next state revenue forecast, but decisions about budget priorities are under negotiation now.
Ask your legislators to support city priorities, including to:
- Retain full funding, $400 million, for the Public Works Assistance Account and prevent further funding sweeps.
- Support law enforcement with funding for criminal justice and enhance training capacity.
- Invest in local infrastructure and transportation.
- Address indigent defense funding.
- Increase access to behavioral health services.
- Address the affordable housing and homelessness crisis.
Governor-elect Ferguson releases budget priorities as Gov. Inslee’s proposals are set for hearings
January 13, 2025
The proposed operating (HB 1198/SB 5167), capital (HB 1216/SB 5195), and transportation (HB 1227/SB 5161) budgets for the upcoming 2025-27 biennium are scheduled for hearings in their respective fiscal committees as session kicks off.
Meanwhile, as the new administration transitions into office, Governor-elect Ferguson has also released his own budget priorities for the upcoming biennium. Those priorities recommend an additional $4.4 billion in budget transfers and savings from a 6% reduction for most state agencies (except for education and state law enforcement) to bridge the funding gap. Some of those reductions would be used to make additional investments in AWC priorities, including police recruitment and housing:
- Public safety: $100 million per biennium grant program to increase the number of trained law enforcement officers.
- Crime lab: $5 million to clear the backlog of approximately 15,000 cases at the Washington State Toxicology Laboratory.
- Housing: $600 million in the capital budget to build more housing including:
- $536 million to the Housing Trust Fund
- $65 million for the Connecting Housing to Infrastructure Program (CHIP)
- $10 million for the Supporting Housing Affordability Infrastructure Program for affordable housing impact fees and related infrastructure costs.
AWC is planning to testify on the proposals’ impacts to cities and remind legislators of city budget priorities for the biennium, including support for continued full funding of the Public Works Assistance Account (PWAA).
These hearings kick off the Legislature’s review of potential options to bridge its funding gap and difficult decisions on budget priorities, but we do not expect to see their proposals until later in March, after the next state revenue forecast.
Dates to remember
HB 1198 is scheduled for a hearing in the House Appropriations Committee on Monday, January 13 at 4 pm.
SB 5195 is scheduled for a hearing in the Senate Ways & Means Committee on Monday, January 13 at 4 pm.
SB 5167 is scheduled for a hearing in the Senate Ways & Means Committee on Tuesday, January 14 at 4 pm.
SB 5161 is scheduled for a hearing in the Senate Transportation Committee on Tuesday, January 14 at 4 pm.
HB 1227 is scheduled for a hearing in the House Transportation Committee on Wednesday, January 15 at 4 pm.
HB 1216 is scheduled for a hearing in the House Capital Budget Committee on Thursday, January 16 at 1:30 pm.
Governor Inslee’s budget proposal includes reductions to city programs
January 8, 2025
The proposed operating, capital, and transportation budgets for the 2025-27 biennium include reductions to several of AWC’s priorities, notably the Public Works Assistance Account (PWAA) and basic law enforcement training (BLEA) but fund other city priorities. The operating budget is $72 billion, but that reflects a $10-12 billion gap over the four-year budget outlook. To bridge the gap, the budget includes program cuts and new revenues from a new wealth tax and increases in state B&O taxes on services for companies with more than $1 million in revenues. The proposal also transfers $1 billion from the LEOFF 1 pension fund to the state general fund.
Highlights of budget impacts for cities are included below. For more information on specific programs, see the budget matrix and the article on the PWAA sweep.
Operating budget
- State shared revenues – fully funds state shared revenue distributions but does not fund AWC’s request to increase municipal criminal justice assistance to help with law enforcement retention and recruitment.
- Basic law enforcement academies (BLEA) – reduces funding for basic training from funding 33 classes to funding a total of 25 classes, including six regional academies. Reimposes a 25% cost shift back to local governments for training new recruits.
- Public defense – funds $6 million in new public defense grants to cities, in addition to funding existing $900,000 city grants, plus additional $20 million for innovative grant program for cities and counties. Funds evaluation of public defense system and state and national standards.
- Alternative response and co-responder programs – does not include ongoing grant funding for alternative response programs for local governments.
- Housing – continued investment of $1.2 billion in programs, including:
- $200 million for covenant homeownership program.
- $130.6 million for Housing and Essential Needs Program.
- $111 million for emergency housing and rental assistance.
- $76.6 million for local government grant program to transition encampments.
- $62 million for grants to support O&M costs of permanent supportive housing.
- Homelessness funding – $53.3 million to backfill programs for loss of document recording fees.
- Pension funding – merges the 3 closed pension programs (LEOFF 1, PERS 1 and TRS 1) and shifts $1 billion in excess assets from the LEOFF 1 pension to the state general fund.
Capital budget
- PWAA – sweeps $100 million for 2025-27 and $100 million in 2027-29 in addition to other diversions. This is especially disappointing given that full funding for the program was restored last year, after a decade of raids on the program for state funding needs.
- Broadband – fully funds state match for federal Broadband Equity, Access, and Deployment grants. State contribution: $230 million. Federal allocation: $982 million.
- Housing – continued investment in the Housing Trust Fund including $428 million for housing to benefit low-income and special needs populations, including permanent supportive housing.
Transportation budget
- Transportation Improvement Board (TIB) – $293 million
When the legislative session begins on January 13, we expect to see some additional budget priorities from Governor-elect Ferguson. Then the House and Senate will begin work on their own proposals for release after the March revenue forecast and a final plan before the session adjourns in April.
Gov. Inslee’s budget proposal includes a hit to the PWAA and reductions to law enforcement training
December 18, 2024
The Governor’s last budget proposal for 2025-27 includes $2 billion in reductions including sweeping $100 million out of the Public Works Assistance Account (PWAA), with another $100 million sweep of the account in the 2027-29 biennium. The Governor’s proposed cuts are coupled with significant new revenue proposals from a new wealth tax and increases in the state’s B&O tax on services. This is due to rising expenditures that are outpacing flat revenue forecasts, resulting in a shortfall in the upcoming biennial budget cycle and the four-year budget outlook. The revenue proposals do not include the option that would also assist local governments: AWC’s priority to fix to the arbitrary 1% property tax cap.
Cities now need to rally again to protect the PWAA. This vital resource was created in the 1980s to provide low- and no-interest loans to cities, counties, and public utility districts to fund basic infrastructure. The account is a national model to fund these crucial community needs and keep costs down for residents. The PWAA was swept during the last round of state budget cuts during the Great Recession and subsequent struggles to fund education in the wake of the McCleary decision. We finally achieved the full restoration of this critical funding just in the last few years.
Tell your local legislators how critical this funding is for our cities. If the Public Works Board (PWB) has funded a project in your community, share the details with them and explain how PWAA dollars made a difference. For added help, refer to AWC’s 2025 infrastructure investment fact sheet or the PWB’s fact sheet for your legislative district. Remind your legislators that cities and towns across Washington are struggling with infrastructure needs. In the latest City Conditions Survey, 78% of responding cities reported infrastructure funding as a priority.
The proposed budget also reimposes a 25% cost shift back to cities for the cost of new recruits attending the Basic Law Enforcement Academy (BLEA) and reduces the number of classes funded for the biennium from 33 down to 25. Talk to your legislators about the local impacts of the higher costs to cover training and having fewer classes for new recruits in your community.
Now that the Governor has released his proposal, we expect to hear from Governor-elect Ferguson with his budget priorities. The legislative budget writers will then spend the 105-day session working on a final plan.
Watch for more detailed information on the Governor’s budget proposal in the next CityVoice newsletter. Importantly, take time to contact your legislators before the session to urge them to protect the PWAA and address needs for law enforcement training and recruitment.