News & Updates

The 2025 legislative session adjourned on time yesterday following the passage of the state’s 2025-27 operating, capital, and transportation budgets. Washington state operates on a two-year budget cycle, with the biennial budgets adopted during long 105-day sessions held in odd-numbered years.

This year, the state faced a significant operating budget deficit due to lower-than-expected tax collections and increased caseloads for state programs and agencies. To close the gap, legislators adopted a final compromise budget that includes a combination of new revenue and spending reductions.

The transportation budget also faced a shortfall, which was addressed through a bipartisan revenue package.

With session now concluded, the budgets have been sent to the Governor, who may sign them into law, veto them in full, or issue partial vetoes.

Operating Budget

For the UW, the final operating budget is an overall improvement compared to the earlier proposals from the House and Senate, but it still includes some difficult reductions. Like nearly all state agencies and programs, the UW will bear some of the burden during this difficult fiscal period.

The budget includes a 1.5% across-the-board reduction to UW’s base funding—an amount that splits the difference between the 2% cut proposed by the House and the 1% cut from the Senate. It also reduces the state’s share of the UW’s “fund split,” which is the mix of state funding and tuition used for employee compensation and central services. These reductions are consistent across all of the state’s public four-year and two-year higher education institutions.

Notably, the final budget does not include state employee furloughs or other cost-saving measures that had been in the House and Senate proposals. These omissions helped avoid deeper cuts to the UW’s overall budget.

However, most of the University’s legislative priorities were not funded. Given the state’s budget constraints, lawmakers had little appetite for supporting new initiatives or funding requests.

Regarding the Washington College Grant, the state’s flagship financial aid program, maximum awards will be provided to students attending public institutions with family incomes up to 60% of the state median family income (MFI). Preserving this commitment helps maintain access to the UW for Washington students.

Capital Budget

The 2025-27 capital budget includes full funding ($124M) for the UW’s top capital request: the construction of chemical sciences facilities and modernization of Bagley Hall on the Seattle campus. New facilities will help meet student demand, increase degree production, improve industry collaboration, and better support research.

Additional UW-related investments in the capital budget include:

• $3.9M (UW Building Account) for Phase 3 of UW Tacoma’s power infrastructure repairs.
• $1.7M for improvements to the UW’s soccer practice fields ahead of the 2026 FIFA World Cup.

However, the budget does not include funding for decarbonization projects on the Seattle campus. The University requested funding from the Climate Commitment Account (CCA) for the first 10 projects outlined in its five-part energy decarbonization strategy. Due to limited CCA funds, lawmakers generally prioritized completing existing state projects rather than funding new ones.

Transportation Budget

The UW typically has limited engagement with the transportation budget but this year, requested accelerated funding for access, safety, and efficiency improvements to the Burke-Gilman Trail on or near the Seattle campus. The final transportation budget fulfills this request, allocating $9.4 million in 2025-27 and $6.6 million in 2027-29.

The budget also includes funding for the UW’s sidewalk inventory and accessibility mapping project, the WSDOT-UW professional civil engineering master’s degree fellowship program, and the UW Mobility Innovation Center.

Questions?

Throughout the session, the UW Office of State Relations has advocated on behalf of the University in Olympia, working to mitigate budget reductions where possible during this very challenging budget year. For questions about the session outcomes, please contact Morgan Hickel at mhickel@uw.edu.

A detailed summary of the UW’s portion of the 2025-27 operating, capital, and transportation budgets will be available in the coming days on the UW Finance, Planning & Budgeting website here.

At a press conference yesterday, Gov. Bob Ferguson responded to the recently released operating budget proposals from both the House and Senate. He stated from the outset that neither proposal is one he could sign, citing an overreliance on new taxes—particularly a proposed wealth tax.

While the proposals include several new revenue streams aimed to addressing the state’s multibillion-dollar budget shortfall, Ferguson singled out the wealth tax as problematic. He described it as “novel, untested, difficult to implement, and most importantly for purposes of adopting a sustainable budget, will face immediate challenges in court.” His remarks effectively remove a broad wealth tax from consideration for inclusion in the state’s final 2025-27 operating budget.

Washington’s budget process begins with the House and Senate releasing separate proposals. Lawmakers then work together to reconcile the differences and craft a compromise budget. Once approved in both chambers, the compromise budget is sent to the Governor, who can sign it, veto it entirely, or issue partial vetoes. During his press conference, Ferguson emphasized that the legislature will need to pivot in order to secure his signature.

Despite his concerns, Ferguson expressed appreciation for elements of both budgets, specifically praising the inclusion of additional savings and reductions. He acknowledged the hard work of the House and Senate budget writers and noted that productive budget conversations are ongoing.

The legislature will continue working toward a final compromise budget, which must be approved by both the House and Senate by the end of the legislative session on April 27.

Questions?

The UW Office of State Relations is in Olympia every day throughout session. For questions about the legislative process or the UW’s advocacy efforts, please contact Morgan Hickel at mhickel@uw.edu.

Yesterday, the House and Senate unveiled their bipartisan capital budget proposals, which include full funding for the UW’s top priority: the construction and modernization of chemical sciences facilities in Seattle. Updating current facilities, originally built in 1937 and 1957, will help meet student demand, increase degree production, better support cutting-edge research, and foster innovation.

In addition, the House proposal includes funding for decarbonization efforts on the Seattle campus. The UW has developed a comprehensive five-part strategy to guide campus decarbonization and is ready to begin implementing it. This funding will also help the UW work toward meeting the targets set forth in the state’s Climate Commitment Act and Clean Building Performance Standards. While the funding provided does not cover the entire request, it allows the UW to begin work. The Senate proposal, however, does not include this appropriation, so the UW Office for State Relations is advocating for its inclusion in the final compromise budget.

Overall, both budget proposals are positive for the UW. The House and Senate will now work together on the compromise budget, which must pass both chambers by the end of session on April 27.

For a more in-depth overview of the capital budget proposals, see UW Finance, Planning & Budgeting’s briefs page. Details about the operating budget proposals can be found here.

Questions?

The UW Office of State Relations is in Olympia advocating on behalf of the University. For questions about the capital budget proposals or the legislative process, please contact Morgan Hickel at mhickel@uw.edu.

The Senate and House released their proposed operating budgets for the 2025-27 biennium on Monday. The state is facing a budget deficit of $12-16 billion over the next four years, caused by lagging revenue collections and increasing caseloads for state agencies and programs. To address this shortfall, both budgets use a mix of cuts and new revenue.

Both chambers propose spending reductions for the upcoming 2025-27 biennium. For the UW, the Senate proposal includes a 1% across-the-board cut, while the House calls for a 2% reduction. Additionally, both proposals reverse progress made on the University’s “fund split,” which refers to the blend of state and tuition dollars used to fund state employee compensation and central services. The proposals would reduce the state’s share of the split from 60% to 42%.

Taken together, these cuts and the reduction to the “fund split” leave the UW with insufficient funds for the employee contracts and cost-of-living adjustments authorized. The UW Office of State Relations has communicated this concern to budget writers and is urging them to preserve the University’s current fund split and to minimize across-the-board cuts.

It’s also worth noting that none of the UW’s legislative priorities were funded in either budget proposal.

To balance the budget, the Senate and House also rely on new revenue sources.

The Senate is considering five revenue measures:

• Financial Intangibles Tax: Imposes a tax on financial assets such as stocks and bonds at a rate of $10 on every $1,000 of assessed value for individuals with more than $50 million of these assets. Generates approximately $4 billion per year starting in fiscal year 2027.
• Employer Payroll Tax: Adds a 5% tax on payroll expenses above the Social Security threshold for companies with $7 million or more in payroll expenses. The proposal echoes Seattle’s “JumpStart” tax and would raise nearly $2.3 billion per year when fully implemented.
• Property Tax: Raises the current 1% cap on property taxes and allows the tax to grow based on population and inflation. Local governments have the option to take a lower growth rate. Generates about $779 million over the next four years.
• Tax Exemptions: Repeals 20 tax exemptions currently in law. Generates over $1 billion in the next four years.
• Sales Tax: Reduces the sales tax by half a percentage point from 6.5% to 6.0%.

In addition, the Senate budget includes a provision granting higher education institutions increased tuition authority to help offset the across-the-board cuts or cover additional state employee compensation costs.

The House proposal includes the following three:

• Property Tax on Intangible Assets: Imposes a property tax of $8 on every $1,000 of assessed value on certain financial intangible assets, such as stocks and bonds, with the first $50 million in assessed value exempt from the tax. Generates approximately $2 million per year beginning in fiscal year 2027.
• Business Taxes: Imposes a 1% Business & Occupation (B&O) tax surcharge on businesses with taxable income over $250 million. Also, increases the surcharge from 1.2% to 1.9% on specific financial institutions with annual net income of $1 billion or more. Generates nearly $600 million in fiscal year 2026 and $2 billion in fiscal year 2027.
• Property Tax: Maintains the 1% cap on property tax growth but allows for increases based on inflation and population changes, not to exceed 3%. The proposal also adjusts the levy equalization methods. Generates about $50 million in fiscal year 2026 and $150 million in fiscal year 2027.

The Senate and House will now collaborate to craft the final 2025-27 operating budget, which must pass both chambers and be sent to the Governor’s desk by the final day of session, April 27.

The 2025-27 capital budget proposals will be unveiled on Monday.

For a more in-depth review of the budget proposals, see the UW Finance, Planning & Budgeting’s briefs website.

Questions?

The UW Office of State Relations is working diligently in Olympia to preserve critical funding for the University, where possible, in this challenging budget environment. For questions about the budget proposals or legislative process, please contact Morgan Hickel at mhickel@uw.edu.

Washington state lawmakers develop three budgets each biennium: operating, capital, and transportation.

Yesterday, the House and Senate released their respective 2025–27 transportation budget proposals, along with accompanying plans to raise dedicated transportation revenue to address ongoing budget shortfalls. Like the operating budget, the transportation budget is facing significant challenges this biennium

While the UW is not deeply engaged on the transportation budget, this year the University requested accelerated funding for improvements to the Burke-Gilman Trail on or near the Seattle campus. If additional revenue is available, the House budget proposal accelerates $9.4 million in 2025-27 and $6.6 million in 2027-29 for access, safety, and efficiency improvements along this vital corridor. The Senate budget does not accelerate this funding, but its inclusion in the House proposal means it will be part of the final budget negotiations.

Both chambers are weighing new revenue sources to fund infrastructure investments, like the Burke-Gilman trail, and close the budget deficit. Each proposal includes an increase to the gas tax, although at varying levels. The House proposal also explores a new highway use fee based on vehicle fuel efficiency and a vehicle sales tax increase. Meanwhile, the Senate proposal includes higher electric vehicle fees, a new tax on luxury vehicles, and a fee on large-scale event venues.

The operating and capital budget proposals are expected in the coming days.

Questions?

The UW Office of State Relations is advocating on behalf of the University in Olympia. For questions about the budget proposals or legislative process, please contact Morgan Hickel at mhickel@uw.edu.

The Washington State Economic and Revenue Forecast Council released the state’s first quarterly revenue forecast for 2025 yesterday, showing a decrease of $845 million in revenue collections over the next four years compared to the November 2024 forecast. By law, the state must maintain a balanced four-year budget, which is why projections are through 2029.

The forecast projects a $479 million decrease in revenue collections for the 2025-27 biennium compared to November, and a $420 million decline for the 2027-29 biennium. The drop in revenue is largely attributed to lower sales tax and business and occupation tax collections, as well as reduced interest income for the state. Property tax collections have also slowed. However, capital gains and estate taxes are performing better than anticipated.

Next week, the House and Senate are expected to release their draft operating budget proposals, using this forecast to inform any final adjustments. Washington state is facing a sizeable budget deficit due to slowed revenue collections and rising caseloads for state programs and agencies. As a result, the final operating budget, which both chambers will negotiate after introducing their proposals, is expected to include a combination of spending cuts and revenue options to close the gap. The legislative session is scheduled to adjourn on April 27.

For a more detailed overview of the forecast, visit the UW Finance, Planning & Budgeting blog in the coming days.