2026 Legislative Session Short Recap:
The 60-day legislative session opened at a rapid pace, with nearly 600 bills prefiled before convening and hundreds more introduced in the first week of the session. Significant federal funding reductions and a slowing economy created immediate pressure for budget writers. The resulting $2.3 billion operating budget deficit set a somber tone. After last year’s combination of cuts, delays, and tax increases, legislators were reluctant to revisit difficult reductions.
Layered onto these fiscal constraints were renewed conversations about major tax changes — supported by Governor Ferguson — and ambitions to advance substantial policy reforms. These factors contributed to a fast-moving and often tense session.
Ultimately, cuts weren’t as deep as projected and Washington made important strides to balance our inequitable tax structure. The landmark legislation of this session was the “Millionaire’s Tax” — which taxes income above $1 million AGI — in order to pay for tax relief for low-income households and small businesses and critical services for schools and children.
Locally, we saw major investments in three partner grassroots organizations in the Building Connections Initiative, through Capital Funding of $4 million for Mujeres in Action’s CASA Mia, $2 million for American Indian Community Center’s Forever Home, and $2 million for the Terrain Arts and Culture Hub. Each of these partners were supported in these efforts by our government affairs contractor, Capital Path Consulting.
Waters Meet Action Fund continued to refine our support process for partners. We continue to build our community of engaged and empowered advocates by offering access to our lobbying team with Capitol Path, sending out regular communications, and supporting advocates visiting the Capitol in Olympia.
Some highlights of our engagement include:
- The Action Fund sponsored the Get on the Bus campaign in partnership with Washington Low Income Housing Alliance. Led by organizer Duaa-Rahemaah Hunter, 99 housing and homelessness advocates, and allied organizations signed up to ride in two charter buses leaving from Spokane and stopping in Moses Lake and Ellensburg for Housing and Homelessness Advocacy Day (HHAD). Partners from Foundation for Youth Resiliency and Engagement (FYRE) in Omak joined to advocate for rural housing solutions and equitable tax policy.
- We funded 18 micro-grants of $1500 each to support organizations, and grassroots advocates to visit Olympia and engage in direct advocacy with lawmakers on a host of important issues and community needs.
- Jonathan hosted six Policy and Advocacy Briefings, keeping community partners informed and learning how best to leverage Waters Meet Action Fund resources — including our partners Capitol Path Consulting — and gathering support for collective actions.
- We kept our community partners and allies engaged and informed by sending nine Legislative Update newsletters and calls to action to our Action Fund email list.
- Jonathan and Zeke spent time in Olympia supporting housing and homelessness advocates at HHAD, joining Native Action Network’s Native Advocacy Day, and participating in the Greater Spokane Incorporated Community Flyover. They met face-to-face with over a dozen legislators to advocate for partners and other legislative priorities, including a successful push to reform and improve the Community Reinvestment Plan.
Key takeaways and lessons learned:
- Even in tough budget years, strong advocacy and organizing for capital funding and program investments can deliver outsized results.
- Short legislative sessions make it really easy to see good policy derailed by small delays and politics.
- Washington’s initiative process is a powerful policy tool — currently being leveraged by those who don’t share our values. The same opportunity exists for us to organize, advance our priorities, and win.
- Spokane’s Third Legislative District delegation is a powerhouse — consistently delivering resources and elevating eastern Washington priorities.
- “We’re gonna need a bigger boat.” Demand is growing — especially among rural partners — for opportunities to advocate in Olympia. Each year, we’re expanding support, and that momentum will continue.
Extended Legislative Recap
Operating Budget
Lawmakers began the session facing a multi-billion dollar shortfall in the four-year outlook. Governor Ferguson proposed an “All Cuts Budget,” relying on agency reductions and onetime transfers from the Budget Stabilization Account and the Climate Commitment Act (CCA) to sustain programs such as the Working Families Tax Credit. Shortly after releasing this proposal, the Governor endorsed a new “Millionaire’s Tax,” marking a significant shift from the prior session.
House and Senate Democratic proposals approached reductions differently but agreed on the need to draw from Rainy Day reserves to avoid destabilizing core services. A modest improvement in the February revenue forecast provided legislators limited flexibility. Both chambers relied on new revenue from several policy bills, including the Millionaires Tax.
After difficult negotiations in the House — including a 25 hour floor debate and consideration of nearly 80 amendments — Democrats advanced the tax measure and the operating budget. Both now await the Governor’s action, including the possibility of targeted line item vetoes, as occurred last year.
Significant reductions and select targeted investments include:
Child Care & Early Learning
Early learning programs saw the largest reductions, totaling approximately $143 million, primarily due to changes in attendance and enrollment policy. One notable bright spot was the creation of 10,000 new Early Childhood Education and Assistance Program (ECEAP) slots. This expansion was privately funded by the Ballmer Group.
K–12 Education
K-12 schools statewide saw reductions totaling $110.2 million over four years through changes to Transition to Kindergarten, bus depreciation calculations, Local Effort Assistance, and Running Start.
State Agencies
Most agencies received a 1% administrative reduction, a comparatively modest cut given last year’s broader furlough proposals.
Other notable budget decisions:
Higher Education
Major cuts initially proposed were ultimately avoided. Early discussions included evaluating potential closure of a career or technical college, but no such action was included in the final budget.
Climate Commitment Act
The Governor’s proposed sweep of the CCA to fund the Working Families Tax Credit was not adopted. Funding remains available for existing CCA supported projects.
Housing
Operating budget changes were limited. The primary policy action was SB 6027, which provides local governments with greater flexibility to use existing revenue streams to support operations and maintenance of affordable housing.
Core Services
The budget includes increased funding to offset federal reductions affecting:
- SNAP administration
- Medicaid
- Behavioral health programs
- Crime victim services
- Immigrant and refugee support programs
Capital Budget
The Capital Budget focused on four primary areas — Housing, K12/Higher Education, Natural Resources & Salmon Recovery, and Public Works.
Housing
- $123.4 million for the Housing Trust Fund
- $36.8 million for affordable housing supply and preservation
- Key program allocations within the Housing Trust Fund include:
- $55M for homeownership
- $50M for multifamily/rental housing
- $40M for housing preservation
- $8.3M for farmworker housing
K-12 Construction
One of the largest K-12 capital investments to date: $94.2 million for modernization and safety, including:
- $71.1M for Small District & STEC Modernization
- $13.9M for the Seismic Safety Grant Program
- $5.4M for distressed school districts
- $3.8M for the SCAP Enhancement Program Pilot
Natural Resources
- $15.7M for estuary and salmon restoration projects
- $39M for tribal clean energy and climate resilience initiatives
- About $9M for statewide water conservation efforts
Public Works
While the Legislature swept $375 million from the Public Works Assistance Account, the capital budget backfilled much of this with:
- $279.5M in new bond authority
- $100M in existing bond capacity
Regional Wins:
- $4 million for Casa MiA, Mujeres in Action’s permanent low-income housing for survivors of domestic violence and sexual assault.
- $2 million for the American Indian Community Center to help build a 25,000-square-foot facility and fully fund phase one of construction focusing on the facility’s core service components: an expanded food bank and space for family services and coordinated care.
- $2 million for Terrain to continue to build community through art and creativity by acquiring two historic properties for the Terrain Cultural Hub.
- $773,000 to support a new crisis and sobering center next to the Regional Stabilization Center for treatment of people struggling with addiction.
- $180,000 for the Northeast Youth and Family Services Creativity Project in the Chief Gary Park Neighborhood. This community garden will help increase food security, multicultural engagement, and youth empowerment.
- $258,000 to support affordable housing at the Richard Allen Apartments.
- WSDOT owned land is being sold for affordable housing; land that WSDOT purchased years ago while I-90 was being built. There are four acres between S. Freya St. and S. Myrtle St on 4th Ave and E. 3rd Ave that the department does not feel they need, therefore are selling the land to be used for housing development. The department shows they will allow Beloved Kijiji LLC the option to purchase the land and develop the property.
Revenue Overview
To balance the operating budget, legislators relied on several new or expanded revenue sources. The most consequential was the newly enacted Millionaire’s Tax. Additional revenue sources included targeting legacy pension overfunding, data center tax preferences, insurer tax structures, and prescription drug wholesale exemptions. Together, these actions allowed lawmakers to close the funding gap while avoiding deeper program cuts.
Millionaire’s Tax:
The centerpiece of the session’s revenue strategy was the creation of a 9.9% tax on Washington taxable income above $1 million, applicable to individuals and joint filers alike. Although adopted this session, the tax will not be levied until 2028, with collections beginning in 2029, allowing time for legal challenges, implementation, and system development within the Department of Revenue.
While the bill’s intent section references broad investment priorities — K-12 education, health care, higher education, human services, and other essential government functions — these statements do not legally bind the Legislature in future budgets. To secure sufficient support for passage, a series of commitments were negotiated that dedicate portions of future revenue to:
- Expansion of the Working Families Tax Credit to approximately 450,000 additional households
- Increased small business B&O credit
- Raising the B&O filing threshold to $250,000
- Sales tax exemptions for diapers, over the counter drugs, and personal hygiene products
- Setting aside 5% of annual revenue for the Fair Start for Kids Account
- Establishing a $200 million fund for cities and counties to offset impacts of other tax changes
- Providing universal free school meals statewide
- Correcting a sales tax error affecting school districts enacted during the 2025 session
Major Policy Wins
Of the more than 600 bills under consideration this session, 267 ultimately passed and are either signed or awaiting the Governor’s signature. Because of your advocacy, some important legislation was passed in a short session.
Community Reinvestment Program – HB 2523
Requires the Office of Equity and the Department of Commerce to review and update the CRP every five years, creates a work group to facilitate a transition plan for joint administration of the CRP, and requires a study of the program by June 2027.
Siting of Supportive and Emergency Housing – ESHB 2266
Within urban growth areas cities and counties must allow transitional housing, permanent supportive housing, indoor emergency shelters, and indoor emergency housing. The bill prohibits local permitting practices that function as de facto bans.
Residential Uses in Commercial Zones – ESSB 6026
Requires cities with populations above 30,000 (and planning under the GMA) to allow residential development in commercial and mixed-use zones, subject to defined exemptions.
Affordable Housing Revenue Flexibility – ESSB 6027
Expands local options to use existing housing revenues for operations, maintenance, and rehabilitation of affordable housing.
Sheriff and Police Chief Qualifications – SB 5974
Establishes minimum eligibility standards for sheriffs and police chiefs. Amendments narrowed implementation and delayed effective dates to avoid disqualifying currently serving officials.
Automatic License Plate Reader Regulations – ESSB 6002 (FLOCK Bill)
Establishes statewide rules governing ALPR use, including requirements for data retention, access, and crossagency sharing.
Law Enforcement Face Coverings – SB 5855
Prohibits state and federal law enforcement personnel from wearing face coverings, similar to recent policies adopted in California.
Allows a city or county to authorize a public corporation, housing authority, or nonprofit organization to operate as a land bank authority and establish a land bank.
Low-income Energy Assistance – HB 1903
Establishes a statewide low-income energy assistance program within Commerce and Utilities and Transportation Commission.
AGO Investigator Authority – HB 2156
Allows the Attorney General to issue civil investigative demands to produce documents and answer questions when investigating possible violations including Keep Washington Working Act, wage laws, and laws against discrimination.
Requires an employer to notify its workers within 72 hours of receiving federal Notice of Inspection of Employment Eligibility Verification Forms I-9
Domestic Worker Protections – SHB 2355
Establishes labor protections for domestic workers including any employee or independent contractor working in a private residence for four or more hours a month as a nanny, child care provider, home care worker, personal care provider, housekeeper, cleaner, cook, gardener or household manager, subject to certain exceptions.
Nonprofit Housing Providers Property Tax Exemptions – HB 2610
Expands the allowable use of property for the nonprofit homeownership property tax exemption and would allow the exemption to continue if the property is transferred to another nonprofit entity that is granted a different property tax exemption.
Concerning Inmate Funds – HB 2539
Increases the monetary threshold for defining inmate indigency to $100 and, beginning July 1, 2029, requires the Department of Corrections to periodically adjust the threshold based on the Consumer Price Index.
Notable Policy Failures
A sweeping regulatory proposal imposing new environmental, labor, and utility related requirements for data centers generated significant debate. Despite multiple amendments and shifting coalitions of support and opposition, the bill died when the Senate Ways & Means Chair unexpectedly withdrew it from executive session just before cutoff. It is widely expected to return next year.
For the second consecutive year, legislation prohibiting enforcement of laws restricting life-sustaining activities (sit and lie laws) in public spaces unless adequate shelter is available failed to advance beyond early committee stages. This bill died in Rules after making it through the Housing Committee in the House.
Environmental Crimes – SB 5360
A proposed tiered penalty structure for violations of major environmental statutes failed to advance after concerns about its scope and potential criminal liability exposure. Supporters anticipate continued refinement of the concept. This bill made it through the Senate but died in the House.
Local Government Affordable Housing Funding Options – HB 2559
Would allow counties, cities and towns to impose a short-term rental tax of up to 4% to be spent on affordable housing programs. This bill made it out of the House Housing Committee and died in House Appropriations.
Incentivizing Grocery Stores located in Underserved Communities – 2297
Authorizes cities to adopt preferential rates for city B&O tax, exempts sales made to grocery stores from retail sales and use tax and creates B&O tax and property tax preferences for certain grocery stores located in underserved community zones. This bill unfortunately did not make it out of Rules.
Nonprofit advance grant payments – HB 2587
Establishing a pilot program to advance funds to nonprofits to support grant performance.This bill did not make it out of appropriations.
Retirements and Elections
This session has also seen a number of retirements or announcements of those elected officials moving on to their next endeavors. It’s also worth noting that every house seat must run this year – so there will be many campaigns, many candidates and ways to engage. Below are a few local notable retirements and campaign updates from our region.
House Retirements:
- 6th LD – Both Republican House members, Graham and Volz are not seeking reelection. These Spokane County red seats are already attracting candidates.
- 4th LD – Suzanne Schmidt is retiring to seek the County Commissioner seat in Spokane County. This Republican Spokane Valley centered district will see several Republican candidates.
- 3rd LD – Timm Ormsby, current budget chair for House Democrats, will not seek reelection, opening up a blue Spokane seat.
