Dear neighbors,
Our state faces another difficult budget year in 2026, made worse by actions in the other Washington. At a time when the federal government is cutting funding for Medicaid, SNAP, education, scientific research, violence prevention, clean energy, and more, our state must work to protect the investments and services we all benefit from.
In the 2025 session, despite a major budget shortfall, we ensured that our public schools received more than a billion dollars in new money for special education and the growing daily operating costs districts face. We rejected an all-cuts budget and instead did a 50/50 split with cutting programs and spending and raising new revenue, including an update to make our capital gains and estate taxes more progressive, and Business & Occupation tax surcharges.
We had to make difficult decisions, none of which were made lightly, but did our best to minimize harm. I am committed to working to rebalance and update our tax code, so we can continue to provide great schools, protect our environment, address public safety, enable access to healthcare and meet the growing needs of people across our state so we all continue to prosper.
Why are we in such a tough budget situation?
Washington state continues to grow. More people are taking advantage of programs such as early learning, long term care and home community services, the Washington College Grant, and more. It’s great that people are getting the help they need from their government, but it also costs our state a lot of money.
At the same time, we’re seeing the federal government freeze funding for important programs supporting agriculture, education, health care, scientific research, broadband infrastructure, clean energy, and more. President Trump’s H.R. 1 also includes billions of dollars in cuts to Medicaid, food assistance and more – funding our state can’t make up for on its own.
Continuing growth in inflation — driven in part by federal tariff policy — is also putting the state budget out of balance.
How does our tax code compare to other states?
If you rank states by percentage of income going to taxes, we’re 28 out of 50.
The reason average families feel the tax burden is because Washington still stands out as having one of the most regressive tax codes in the country. The lowest 20% of earners in Washington pay the most as a percentage of their income. That’s unfair for Washington families. Meanwhile, the highest 1% of Washington earners pay 4.1% of their income in taxes.
Our nearly century-old tax code relies mostly on flat taxes that do not distinguish between small businesses and large corporations, homeowners and skyscraper owners, working people and billionaires.
Are revenue collections really way up?
State revenue as a share of total personal income in Washington is much lower than it was 20 years ago. Aside from a short pandemic-era boom in funding, our state revenue has been about 5% of state personal income since the Great Recession and is projected to stay there or even decrease, according to the Washington State Economic and Revenue Forecast Council.
Because our economy has grown quickly and state revenue hasn’t kept up, we’re struggling to fund the schools, roads and services Washingtonians count on.
Total personal income is the best way to track the overall size of the state’s economy. It includes all components of economic growth: population, inflation, and what economists call “real” increases — meaning income growth beyond what can be accounted for by population and inflation. It’s a clean metric with decades of reliable data, which allows us to compare state revenue across long time periods. It captures the size of our economy and state revenue better than just counting the state’s population.
What’s next?
While we have made some progress in recent years, we must keep working to fix our upside-down tax code and ask the wealthiest among us to do their part so we can fund great public schools, health care, and public safety.
I am committed to working to protect the investments and services people in our communities count on and building a future of shared prosperity.
Sincerely,
Manka Dhingra
Senator, 45th Legislative District
Deputy Majority Leader
