-Welcome to City Inside/Out.
I'm your host, Brian Callanan.
The state legislature
begins its so-called short
session of 60 days this month.
But you can expect some long debates
over some controversial spending policies.
♪♪
Governor Bob Ferguson says
he's trying to bridge a $2.3 billion gap
between state revenue
and spending through mid 2027.
-In this proposed supplemental budget,
I providing a roadmap to the legislature.
-The plan cuts spending, pulls
a billion dollars from the rainy day fund
and for the first time
diverts money
from the state's
carbon auctions under the Climate Commitment Act
to fill the deficit.
Plus... -I support a millionaire's tax.
-The governor wants to tax people
who make more than a million dollars a year,
which could bring in $3 billion annually.
But that money wouldn't come in until 2029.
-It's time to get spending under control.
-The Republican minority in Olympia
is blasting
Ferguson's proposal for not solving
the state's budget problem.
While some Democrats
want to rebalance our economy
with a new payroll tax
on the state's wealthiest companies.
-There may be no kings in Washington state,
but we most certainly do have elites.
What's next with the state's
spending plan
and the possible impact of federal funding cuts?
-What do we need to do to protect Washingtonians
from an out-of-control,
corrupt federal government?
-Seattle-area lawmakers are weighing
in on this and more.
-But the communities need right now
is to be able to keep their health care.
-We are a complete outlier in not having
an income tax.
-It's a preview of the 2026
state legislative session...
Next on City Inside/Out.
♪♪
-And here we are with a number
of our Seattle-area
state lawmakers to break down what's happening
with our upcoming legislative session:
Senator Jaime
Pedersen is the senate majority leader
from the 43rd District
from downtown up to the U-Dub.
Senator, great to have you here.
-Thank you very much.
Also with us is House Majority Leader
Representative Joe Fitzgibbon
from the 34th district
from West Seattle out to Vashon Island.
Good to see you again. -Thanks, Brian.
And also with us, we have Senator Rebecca
Saldaña,
chair of the Labor and Commerce Committee,
also from the 37th District,
that's central Seattle down to Renton.
So glad you could make it.
-Thank you so much.
-All right, let's get going here.
Senator Pedersen,
I know you've been working on this
high-earners tax, a millionaire's
tax has gotten a lot of headlines.
I want to put that
on the side burner for a second here.
Let's talk about the here
and now when it comes to
this supplemental budget,
the governor's plan to fill
what he's calling a $2.3 billion deficit.
To fill that, he's talking about
$800 million in spending cuts, taking $1 billion
from the state's rainy day fund.
And then something unprecedented here,
talking about $600 million taken from the state's
sale of air pollution allowances.
Where do you want to start with this?
What do you think of this plan?
-Well, I guess what I would say is
we left in April with a balanced budget
and that has really been
thrown out of balance by the
malevolent actions of the federal government.
You know, included in the spending
that the governor is required to do
is a giant tens of millions of dollars
of investment in information technology
to try to
be able to verify
whether people are working
so that they can get Medicaid
and other benefits. Right.
That's required by the passage of H.R. One.
So, you know,
part of
part of the reason
for the spending
that we have to do is things
that we don't want to do.
And that, frankly,
we think are wrong and immoral.
We also have significant problems
created by the tariffs.
And as the most trade
dependent state in the country,
a significant effect that's flowing from that
reckless economic policy.
And then we have a whole series of cuts
coming to us, to our research institutions,
to Medicaid and other health
care spending, to food benefits,
all sorts of things that people
want to try to backfill from the
federal government.
So... -Other than that, pretty smooth session.
-Other than that is really easy, right?
So there there are a lot of challenges.
And then,
you know,
part of the problem
is that
because we're
in the second
year of a biennium,
we don't have
a lot of time either for cuts to take effect
or for new revenue to make a difference.
-Yeah.
-So, you know, I think largely to
to patch up
the mess that the federal government has created
is just going to require
some cuts and some moving things around.
I don't mean to make that sound less painful
than it probably will be
because we made a lot of cuts. -All right.
-Last session.
But, you know, I think the governors,
the governor's budget
is a reasonable starting point.
I'm I am certain that there
will be pieces of it
that the legislature ends up agreeing with.
And I think that it is
also a certainty that we will not do
exactly what he proposed. -Fair, fair.
Representative Fitzgibbon,
I wanted to talk with you specifically
about this plan
to deal with the air pollution allowances
and put these dollars elsewhere.
You were a leading voice in bringing the state's
Climate Commitment Act to life five years ago.
What do you think about
taking $600 million of revenue
away from our state's environmental needs
and putting that towards a deficit here?
-Yeah, I think a few things.
One, the governor,
you know,
this is the first budget he's had to draft
and he had no easy choices
in putting together
this budget for all the reasons
that Senator Pedersen outlined,
you know, and more.
This is a very challenging
budget environment,
and he had to make difficult choices
in order to propose
a balanced budget to the legislature,
including transferring $600 million
from the Climate Commitment Act auctions
to pay for the Working Families Tax credit,
which is a program
that that we created
five years ago to support the lowest
income people in the state,
which has been paid for out of the state
general fund since it was created.
And he's proposing paying for that
instead out of the Climate Commitment Act.
That's not an easy choice.
I think that when we look at the impacts
of extreme weather events
on our state, particularly
the most recent impacts of the atmospheric river
and the flooding, but also the, you know,
recurring droughts and wildfires
that we've seen for the last many years
as a result of more frequent
and severe extreme weather events.
We're already experiencing
the harms of climate change.
We also have the federal government
really trying to take us
the wrong direction
in forcing us to pollute more in ways
that our state doesn't want to do...
-Coal, etc.
-Coal with
rolling back vehicle emissions standards.
So I think this is a
really important time for us to try to maintain
and accelerate our work as a state
to move towards a clean energy future.
So I hope that we're able to find other pathways
to balance the budget
and that we're able to restore
as much of that money as possible towards
driving energy efficiency,
driving clean energy to really save
Washingtonians money, because energy bills
are a part of
the impacts to cost of living
that Washingtonians are experiencing.
And I think anything that we can do to
to help Washingtonians
feel less pain
from the cost of fossil fuels,
the cost of filling up
with a tank of gas or paying,
you know, an electric electricity bill
that's inflated
because the federal government
is forcing us to use dirty, expensive power is
is a smart, long term investment.
So I hope that we're able to to
to move
as many of those dollars back towards
decarbonization as possible.
-Thank you.
Senator Saldaña,
let me get some thoughts from you here.
I know you've been raising some concerns
about federal cuts to health care
and social services,
as your colleagues have here.
How that could affect our state.
The governor is talking
about putting 160, $165 million towards
food assistance in Medicaid programs
in his proposal.
Does that answer the concerns you have?
Is that enough?
Does more need to be put there?
I'm thinking about
some of the impacts of flooding, etc.,
to some thoughts about this.
-Yeah, and I know that it is
a short session and you know,
whether there's the votes
or not yet
for considering ways that we actually
look at revenue and to address the cuts
because as my colleagues have said and you know,
these cuts are being impacts
are coming
as a tax to the people of Washington
from the federal government and H.R.
One and
but what the communities need right now
is to be able to keep their health care.
They need to be able to feed their families
and be able to feel safe in our communities.
And and, you know,
cuts are really, really painful
and are impacting communities
that least can afford it.
And so that is why I have
partnered with Representative
Shaun Scott to introduce legislation
that is called Well Washington and would,
you know, put
take the Jumpstart idea and bring it
to the state level
and just have our the most well-off
corporations
be able to pay into that safety net
so that we have resiliency.
So that's what I'm what I'm proposing.
-Let me jump into that a little bit further.
And I want to make sure I point out to people
these different revenue ideas
that we're talking about here,
that revenue would not be coming in
for this session.
This is down the line here years
down the line, as a matter of fact.
But let's talk about this,
this idea that businesses
making more than $7 million
a year, as I understand it,
would be paying into this.
It's similar to
what the City of Seattle has going on with this
Jumpstart payroll tax that you mentioned.
Your plan would exempt Seattle companies
that are already paying this.
But can you tell us
why you're working
on this, that bigger picture here
and and how it would impact our economy?
There are some people who say you're going
to push big businesses out of the state.
What do you say to that?
-Yeah, so, I mean, I think part of it
is, is that, you know, these big businesses
that are doing so well in our state
and did it because we had a strong safety net.
We had we were investing in early education.
We were investing in our roads
and highways and our bridges.
And we are supportive of
and have a good environment
for businesses to thrive and to attract the best
talent in the world here locally.
And so I think part of it is that we're not
keeping up with what it costs for safety nets.
And so being able to work with business and labor
and community to adjust it.
But the idea is that they're already paying.
We're not seeing that businesses are leaving.
We've seen that revenue grow in Seattle
when we needed it most.
And being able to look at this
as well
as other proposals for revenue
because we have an upside down tax system
that over the last eight years we have,
you know, since our my
our party has been in control
of the Senate,
we have been taking
attempts to try to right size that.
And this proposal, along with others,
would further
allow us to be able to right size our tax
so that those that are
have the hardest time to pay
will be able to get some relief.
Affordability is a real issue
for the people of Washington right now.
-Thank you, Representative Fitzgibbon.
I was listening in
to the Rewire Policy Conference last month.
That's also a legislative
preview session of sorts.
You brought up the idea that maybe it's time
to consider a statewide income tax again.
As you put it, a very politically hot
topic has been for a long time.
Voters rejected this idea the last time in 2010,
the year you came into office,
as it turns out. Is a state income tax,
do you want to
do you want to bring that up this session or
where are we going with
that thought, do you think?
-I think that
Washington deserves that conversation.
I think it's a hard conversation
because we have this long history of not having
an income tax in the state
dating back to 1933 when a 5-4 decision
by the State Supreme Court
declared that income is property,
which, you know, almost no other state
adheres to that precedent.
Because of that decision,
we have had a tax code that relies very heavily
on other tools
which are not
keeping pace
with the needs
of our state sales tax, property
tax, business and occupation tax.
41 other states have a personal income tax.
I think it's
worth us asking
whether we could do a better job
for the people of our state.
With education,
with health care, with the safety net,
as well as could we reduce
some of the taxes that really weigh heavily
on Washingtonians
if we had a more balanced tax code
that asks the people who are doing extremely
well in today's economy to,
you know, to to support our shared needs.
-Do you think it would change our state's
economy in such a way that, again,
people would
would not want to move to the state,
would not want to live here, would not
want to start businesses here?
I've heard that argument before, too.
-I think if we do a good job,
it will support our state's economy.
I think it will enable us to rely less heavily
on things like the business
and occupation tax, which,
you know,
which we do hear from businesses,
big businesses and small businesses
is an impediment to their ability to
invest in Washington to grow jobs here.
I think a more balanced tax code
that relies on more legs of the stool
means that we rely less heavily
on things like sales and the B and O tax.
And I think that's good for Washington's economy.
And I've had that conversation
with business leaders
who, you know,
who don't necessarily
want to see higher taxes
in Washington, but do generally agree
that a more balanced tax code,
like most states have
would would put us in a more competitive position
relative to the other states.
-Got it.
Senator Pedersen, I want to talk about this
high earners tax you've been working on here.
The governor supports this idea,
a 9.9% tax
on those making over $1,000,000 a year.
Again, this plan would not bring in money 2026.
The earliest that could happen would be 2029.
So it's not for this year's budget.
Can you explain why you're pushing for this
and how you'd make it happen, especially
since the legislature passed a statewide
ban on income taxes less than two years ago?
Does that conflict with this?
-Yes. So
if we do proceed with the millionaire tax idea,
then that'll be an amendment to the
to the prohibition on an income tax
that we passed
as part of the initiative
to the legislature in 2024.
You know, just to be clear,
probably 95% of the bills that we pass
are changes to bills that we passed before.
Right.
And no legislature
can bind any future legislature.
So that's not a particularly
surprising thing that you would say, “Well,
with this exception, that's how it would be.”
I agree with what Representative Fitzgibbon
said about the importance
of changing our tax code
so that it's more balanced
and more sustainable for the for the state.
I think an important component of the bill,
if it proceeds, will be to figure out
what other more regressive taxes
we can use;
some of the proceeds to lower.
-Sales tax for example? -Sales tax.
It could be sales tax,
it could be property tax, it could be gas tax,
it could be the business and occupations tax.
What I think is
interesting, we had a presentation
from from our caucus staff
before our retreat here a couple of months ago
about the ways in which our tax code is
out of line with other states.
Our sales tax is actually sort of
in the middle of the pack
as far as even as high as it is,
even as high as it is,
it's sort of in the middle of the pack.
Our business taxes are high
relative to other states, particularly
when you take into account
the payroll taxes
that business. -I see. Okay.
-We're an outlier
in having a state property tax,
which is one of the main ways
that we fund public schools.
We are a complete outlier
in not having an income tax of any sort.
So, you know...
-Nine states is it, or eight?
-One of nine that doesn't have
a personal income tax, yeah.
And, you know, just to put this in perspective,
the tax in excess of a million dollars
on income in excess of a million dollars
would affect about 20,000 households.
-Yeah.
So if we can turn
that around
and create a tax cut for 4 million households,
that's paid for by 20,000 of our neighbors
who are doing the best... -0.5%
of our state's population.
-Exactly.
Contributing some some extra revenue,
then that seems like it could be a good
workable move.
-Okay, I'm
going to get some feedback
from your colleagues here if I could,
because I think one of the criticisms is,
all right,
it's millionaires today,
but it's going to be everybody tomorrow
paying income tax.
And I know this is this is one of
the different criticisms here.
Do you have a response to that,
Senator Saldaña,
when when considering this idea
of some sort of income tax?
-Yeah, well, I mean, I think that
I think the bill is what it is,
so I'll just take it as it's fate on its face.
And I think what
we're looking at is
how do we bring progressivity or,
you know, fairness into our tax tax system
with that balanced approach.
So, I mean,
I do think what we're trying
I mean, what I've been doing,
I think our caucuses have
been doing is really looking like...
We have three budgets at the state level.
But for a regular Washingtonian,
they don't know the difference, whether it's
a transportation or capital or operating and.
-Right.
-And so for us,
we've been really working to look at the
our state
budget as one budget
that has these three components.
And so when we're
looking at tax burden or benefits or
who's paying and who's,
you know, getting the services,
you know, we're looking more holistically.
And so when we look at that approach,
I think it's this is, you know, a way
that we're having those, the wealthiest
among us, be able to pay into our system.
There's many ways
that lower income or middle
income folks are already paying into it.
And so I don't see us
moving to a place
where we would do a straight across
income tax on all of that revenue.
And I do think
as we're looking
at the balance,
that there could be an idea that we'd replace
some other things with a progressive income tax
with those that are the least able
to pay, paying a smaller portion
are not paying at all,
and then those at the higher end paying more.
-Yeah.
Representative Fitzgibbon,
some ideas about this
slippery slope argument that if you start
with a tax on millionaires, it's
going to end up sliding towards everyone else.
-Yeah, I think a few things.
One, I don't hear a lot of support for taxing,
you know, low income or
middle income people's income.
I just I voters have...
-Voters have spoken a few times.
-Yeah, and the legislature understands that too.
I don't I don't hear from my colleagues,
“Oh, I think we should have
an income tax on people making $70,000 a year.”
I just don't think that there's support for that
at any level.
The other thing is, even under the current
outdated Supreme Court precedent from 1933,
we could already enact an income tax
at a flat level.
We could enact
a 1% income tax on all Washingtonians income,
and there's no support to do that.
So, so, so even absent that,
that outdated Supreme Court ruling,
which is something that I think that this idea
of a millionaire's tax would help us maybe
revisit with the Supreme Court.
That doesn't prohibit us
from enacting an income tax
that applies to all Washingtonians.
And you just don't see proposals to do that
because nobody wants to do that.
Nobody thinks that's the thing.
That's the tool
that gets us to a more sustainable
and more balanced tax code.
-Okay.
Some final thoughts about this millionaire's
tax where you want to guide the discussion,
I guess, during the session here
and this whole concept of a slippery slope
and this is something that everyone would
eventually pay down the line?
-Yeah.
So, you know, we talked earlier about the way
in which the legislature can change
anything that happened before this.
So that is true that a future legislature
could come back. That
would be a discussion for that time, right?
And so, for example, if
if there were a proposal five years from now
to lower the threshold
to half a million dollars,
and then in return for that,
abolish the state property tax,
you know,
I think that
that might be an interesting thing
to consider. The biggest point
from my perspective
is it's crazy that our Supreme Court,
90 years ago constitutionalized this
and made it impossible for the elected
representatives of the people
to be able to have this discussion. Right?
So we haven't been able
to put
those kinds of tradeoffs in front of the voters
and say,
“Hey, we think this would
be a good change for you.” Right?
So you know that
Representative Fitzgibbon
is exactly right, that ultimately it is
the fact that we live in a democracy, right?
That's the big constraint on this.
We're not going to
be taxing people making $50,000 a year.
-Okay. Thank you for that.
Representative Fitzgibbon,
I want to switch gears
and talk
about some issues
that might not be on everyone's radar
when it comes to priorities
for the upcoming session here.
You're working on a bill
that has bipartisan support
to potentially increase
the use of nuclear energy in our state.
Why are you pushing for this?
Talk to us about safety concerns, etc..
What do you got? -Sure.
So Representative Stephanie Barnard,
who's a representative from the Tri Cities area,
which is, you know, the hub of
nuclear science and energy in our state,
proposed a bill that I co-sponsored
that would
direct the State Department of Commerce
to incorporate nuclear energy
into the state's energy strategy.
I think it's valid for us to evaluate
what role nuclear can play in securing
baseload power, dispatchable
electricity as we transition
away from coal and natural gas.
We know we're going to need more power for
for things like home heating
and for electric vehicle charging in the years
to come. And we also know that energy is a
constraint on family budgets.
And I think we need to look at all options that
avoid greenhouse gas emissions.
And nuclear, I think, is worth looking at.
I think it remains to be seen
whether that can be done in a cost effective way.
There's lots of innovative ideas
for how to use both nuclear fusion
nuclear fission
in safer ways
than were in place in previous generations.
So whether it actually, you know,
we do have some nuclear power
in our energy mix today from the Columbia
Generating Station in Richland,
I think it's an open question
whether or not new nuclear
can help us meet the needs of the future.
But I think looking at it
in the context of its costs, its safety,
alongside when solar storage, geothermal,
all the other options that we need to develop
in order to transition
rapidly away from coal and natural gas power is,
you know, is is worth exploring.
-Thank you for that.
Senator Saldaña,
I want to make sure
we talk about
the measures
you're considering this session
to protect immigrant workers in our state.
Tell us about that. -Sure.
So I'm partnering with Representative
Lilian Ortiz-Self and the attorney general,
Nick Brown, on Immigrant Worker Protection Act.
And this piece of legislation would
help provide clarity and some protections
to our workforce here in Washington.
So if a an employer gets an I-9 audit,
which, you know, requires reviewing peoples
work permit... -Documentation,
and that this would require them
to make sure
that the workforce also has that information
so that they can prepare as well.
It also then provides clarity for employers
about what their rights and responsibilities are
in the face of I-9 audit and looking to have
that piece of legislation move forward.
There's another piece of legislation
that that Senator Valdez
and represented Cortez are working on around
making sure that people have clarity and about
if law enforcement
are coming
to pick people up
and they need to actually identify themselves.
-Got it. Okay. Thank you for that.
Senator Pedersen, I saved a special one for you.
The group Let's Go Washington
has filed a lawsuit against the legislators
or the legislatures rewrite of the state's
parental rights law from last year,
known as House Bill 1296.
They're also planning to submit an initiative
to the legislature this year
to overturn this bill. What's your approach
taking up this debate again?
-I think it is unlikely that
we will take up the debate again
if the initiative qualified, than I think
it's likely
that it will be in front of the voters
and they'll get to make a decision about
whether, for example,
they want to
abolish the right of parents
to choose whether to
send their kids to charter schools,
which is one of the things
that the legislature included in the
in the rewritten Parents Bill of Rights.
-Okay. Thank you for the preview there.
It is time to finish up.
Senator Saldaña, your expectations
for the 2026 short session.
What are you hoping to achieve in 60 days?
-Quite a bit.
As the chair of Labor and Commerce,
one of our biggest goals is to continue
to protect workers in the face of federal attacks.
That’s both our immigrant workers,
our agricultural workers.
And so we're looking at how we strengthen our own
portables, our safety nets,
and making sure that we are, you know,
helping as much as possible
and to defray the impacts of the federal cuts.
-Thank you.
Representative Fitzgibbon,
your hopes for the 2026 session.
-Yeah. Brian,
so much of our work in the 2026 session is
about responding to
and protecting Washingtonians
from things that Congress and the President
are doing to us.
Whether that's the budget hole
that they've created
by imposing huge amounts of red
tape on Medicaid and food assistance or,
you know,
withdrawing federal support
for those programs
or attacking our climate
and energy
laws, attacking immigrant families in Washington.
So I think everything
that we do
this session is really guided
by, you know,
what do we need to do to protect Washingtonians
from an out of control,
corrupt federal government?
-Wow, some thoughts here.
Can you
Trump proof
the Washington state government
here in the 2026 session?
I'll let you wrap up.
-You know, we're not going to be able to protect
everybody in the state from all of the
harmful actions that are coming
toward us from Washington, D.C.
But that is really our highest priority
to try to make sure that we maintain
our state's protections for immigrants, for
the people who live here,
whether they're
researchers at the University of
Washington and Fred Hutch or transgender kids.
All all of those people are disfavored,
along with our farmers
who are suffering from tariffs. Right.
So we'll do our best.
And eventually it will pass.
-Okay.
Thank you for this.
And we will be right back.
What are people saying
on social media about the state
legislative session ahead?
One person writes,
Another person comments,
We'd like to know what you think.
Send us
an email at contact@seattlechannel.org.
Or find us on social media.
Great to have that input.
And a big thanks to Senator Saldaña,
Representative Fitzgibbon and Senator Pedersen.
Thank you so much for being here.
-Thank you. -Thanks.
I'm Brian Cowan and we'll see you next
time on City Inside/Out.
♪♪