Forecasting Olympia’s 2027 Budget Session
Washington’s 2027 legislative session will be a 105-day, odd-year budget session. Lawmakers must write the 2027–29 operating, capital, and transportation budgets that take effect July 1, 2027. That timing matters: the Office of Financial Management has already warned of “significant” shortfalls in both operating and transportation accounts and called the coming cycle “the most challenging budget” many officials have faced.
The fiscal backdrop is not mysterious. Spending has repeatedly outrun revenue. Critics note that four consecutive biennia appropriated more than projected revenues, while the 2025–27 operating total climbed above $80 billion after a large 2025 tax package and a 2026 supplemental that added hundreds of millions more. Caseloads in Medicaid, special education, long-term care, and legal liability continue to rise. Population and inflation explain part of the pressure; the rest is policy. Republicans and allied researchers argue the post-2019 expansion of programs, workforce costs, and one-time federal aid that became a permanent floor created a structural gap that new taxes have not closed.
The budget fight, GOP talking points
House Republicans have already previewed the argument they will bring to 2027: this is a spending problem, not a revenue problem. Ranking Appropriations member Travis Couture’s “Affordability First” approach called for statutory growth limits tied to inflation and population, no new programs, and several billion in efficiencies rather than another tax round. Washington Policy Center budget analyst Ryan Frost has made the same case: over a decade, spending grew far faster than the 39 percent inflation and 14 percent population increases OFM cites. WPC’s line is consistent—repeal or freeze recent tax increases, stop treating emergency-era spending as baseline, and do not budget against a legally unstable income tax.
Expect Republican talking points on energy and housing as well. WPC research has long argued that the Climate Commitment Act functions as a hidden energy tax, adding roughly 40 cents a gallon to gasoline and raising costs for heat, freight, and manufacturing. GOP members have asked to suspend the CCA and the low-carbon fuel standard as affordability measures. On housing, conservatives will press permitting and land-use reform over larger Housing Trust Fund appropriations they view as recurring subsidies with weak outcome metrics.
Education will stay on the table because K-12 remains the largest operating share and special-education costs keep climbing after McCleary. Republicans will argue that classroom dollars have been crowded by administrative growth and that higher-education staffing rose while enrollment fell. Transportation will collide with the same shortfall: deferred highway maintenance versus transit, culverts, and climate-account transfers.
What conservatives are likely to take to court
The clearest legal target is Engrossed Substitute Senate Bill 6346, the 9.9 percent tax on household income above $1 million. Collections do not begin until 2029, but the 2027–29 outlook already assumes billions from it. Conservatives have sued in Petter v. Washington, arguing the levy is a non-uniform property tax that exceeds the 1 percent cap because Washington courts have treated income as property since Culliton v. Chase (1933). WPC published records showing sponsors wanted the Supreme Court to revisit that doctrine. Initiative 645 would repeal the tax at the ballot if it survives. Budget writers who spend that money in 2027 will be writing checks on a contested account.
CCA transfers and any attempt to lock in new permanent programs against volatile auction revenue are secondary flashpoints. Conservatives will also watch LEOFF 1 pension surplus sweeps and any capital-gains or B&O expansions that resemble the income-tax fight. The Washington Research Council has flagged that 2027–29 “intent” language in the 2026 supplemental is not binding—and that is exactly why the next session will be a test of whether Olympia cuts to the new floor or spends against lawsuits still pending.
The 2027 session will not invent these issues. It will decide whether Washington treats a multi-billion-dollar gap as a reason to restrain government or as a reason to defend last year’s tax architecture in court and at the ballot.
References
Chapman-See, K. D. (2026). OFM guidance on 2027–29 agency budgets. Office of Financial Management. Summarized in Washington Retail Association and KHQ coverage.
Frost, R. (2025, December 19). Solving Washington’s deficit without tax increases. Washington Policy Center.
Washington Policy Center. (2025–2026). Budget, Climate Commitment Act, and income-tax analyses. https://www.washingtonpolicy.org
Washington Research Council. (2026). Promises for 2027–29. https://researchcouncil.org/promises-for-2027-29/
Washington State Legislature / courts. ESSB 6346; Petter v. Washington Millionaires Tax; Culliton v. Chase, 25 P.2d 81 (Wash. 1933).
Readers: This will be my final monthly post for the PNW Post (for now). it’s time to look for other opportunities. I thank the management, staff and my fellow contributors for the pleasure of contributing to the PNW Post over these last two years. Fair winds and calms seas to you all; cheers!
