Virtual Conversation | Recapping the 2021 Session: Legislative Republicans, May 18, 2021 Register

Legislature passes 2021-23 operating budget, making use of state revenue and COVID relief funds

On the last day of the legislative session, Washington legislators passed their 2021-2023 operating budget, appropriating $10.6 billion in COVID-19 federal stimulus funds and $59 billion in state revenue.

The budget will direct funds to a wide range of state programs. Written and negotiated by majority Democrats, it also includes revenue from a capital gains tax that passed the Legislature Sunday afternoon.

This is a budget that meets the moment and will guide a sustainable and equitable recovery based on lessons that we’ve learned over the past year,” said Sen. Christine Rolfes (D – Bainbridge Island), the Senate’s lead budget writer “It supports our smallest businesses, rebuilds our precarious childcare system, boosts public health efforts, sustains K-12 education, and even commits to protecting communities against the catastrophic fires we saw last Labor Day. It’s a reflection of our collective strength, determination, and will to recover together.”

The federal stimulus money comes from the American Rescue Plan Act (ARPA) of 2021, and the Coronavirus State Fiscal Recovery Fund, which is available for spending in this 2021-23 biennial budget and the 2023-25 biennial budget. Schools will receive the largest share of federal money – about $1.7 billion in total – for reopening, addressing learning loss, and other costs.

Other allocations of federal funding include:

• $1.1 billion for the vaccine deployment, recruitment of public health workers, contact tracing and testing
• $658 million to extend the state’s rental assistance program
• $528 million for childcare grants and provider rates
• $500 million in state funds for Unemployment Insurance benefit relief
• $340 million for grants to adults who have been impacted by COVID-19 but are unable to access other benefits due to their citizenship status
• $187 million to help prevent foreclosure for individuals under 100 percent area median income
• $170 million for family leave during the period of the pandemic

Hundreds of millions in mixed state and federal funds will be used to increase rates of certain Medicaid providers, increase behavioral health supports, implement the Working Families Tax Exemption, shore up foundational public health, and fund child care initiatives.

The budget also assumes a $415 million gain from the capital gains tax passed by the Legislature, which imposes a 7 percent tax on capital gains realized from the sale of long-term assets. Republicans took aim at the new taxes passed by Democrats.

Rep. Drew Stokesbary (R – Auburn) ranking Republican on the House Appropriations Committee, said:

Unfortunately, I can only restate all of my prior objections. The 2021-23 operating budget raises taxes for the sake of raising taxes. We could fund everything in this budget with existing tax revenue, yet the majority party is choosing to impose a capital gains tax to score political points. We know taxing innovators and investors will ultimately drive jobs and opportunities to other states – jobs that Washington families need.

In total, the budget assumes sixteen bills that impact the near general fund. Under the four-year budget outlook, the budget is projected to end the 2023-25 biennium with $98 million and $1.2 billion in total reserves.

After passing the House, it was award final passage in the Senate by a near party line 27-22 vote. Sen. Mark Mullet (D – Issaquah) was the only member to break ranks, voting no on the budget.


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