Analyzing Washington’s Supplemental Budget: The Governor’s Proposal
by Jessie Simmons
Category: State Government Operations
The Governor’s 2026 supplemental budget proposals include the Operating Budget, Z-0559.2, the Transportation Budget, Z-0564.1, and the Capital Budget, Z-0568.1. When he was elected, he stated his goals were to solve the deficit, build one million homes, preserve vital services, protect the environment, improve public safety, and hire more police officers. The question is whether this package materially advances those promises or primarily preserves the existing trajectory.
Start with the deficit. The operating supplemental stabilizes the General Fund primarily through shifts and transfers rather than structural reductions. The clearest example is in the Department of Revenue section of Z-0559.2, where Working Families Tax Exemption remittances are funded with $569 million from the Climate Commitment Account while administration remains in the General Fund. You can find that language in the DOR appropriation section specifying Climate Commitment Account funding for remittances in fiscal years 2026 and 2027. That decision moves a large recurring obligation off the General Fund. It does not reduce the obligation. It reassigns the funding source.
Compensation policy reinforces that this is not a structural reset year. In the OFM collective bargaining supporting document for the operating budget, the state funds a retroactive 3 percent general wage increase effective July 1, 2025, and a 2 percent increase effective July 1, 2026, along with targeted base range increases, minimum wage floor adjustments, and expanded leave provisions. Those provisions are detailed in the OFM compensation summary for the 2026 supplemental. Those costs become part of the ongoing baseline. A budget that locks in compensation growth while claiming deficit resolution is managing the gap, not shrinking the long term spending trajectory.
On affordability, the package provides relief but does not meaningfully reduce cost drivers. The Working Families Tax Exemption provides cash to eligible households, but it does not lower housing costs, child care costs, insurance premiums, or energy rates. It is relief through transfer, not structural reform. The relevant evidence is in the Department of Revenue section of Z-0559.2 where the Climate Commitment Account is used to fund remittances.
Transportation tells a similar story. In Z-0564.1, the “Local Programs, Program Z Capital” line increases substantially, moving from approximately $962 million to over $1.18 billion across multiple accounts including the Carbon Emissions Reduction Account and Move Ahead WA. You can find that in the program summary table in the transportation bill under the capital program section. The bill also funds hydrogen corridor infrastructure, charging network expansion, and I-5 corridor planning, including seismic and ramp meter assessments. Those appropriations are located in the Department of Commerce and Department of Transportation sections in the early pages of Z-0564.1. These may be defensible long term investments, but they do not function as near term cost relief for families.
The OFM transportation supporting documents show additional baseline growth pressures. The transportation compensation document mirrors the operating side with the same 3 percent and 2 percent general wage increases and other negotiated adjustments. The central service charge document shows internal allocations to the Joint Transportation Committee from the Motor Vehicle Account. Those costs are small individually but represent the steady upward drift of baseline expenditures inside transportation accounts. Families ultimately fund those accounts through fuel taxes, fees, and related revenues.
The capital supplemental continues long term commitments. OFM Capital Document No. 1 shows a $4.4 million trust land transfer project in the 14th Legislative District under the 2025-27 Trust Land Transfer Program. OFM Capital Document No. 2 shows $74.186 million for small district and STEC school modernization projects across rural districts statewide. Those lists are in the OFM capital supporting tables attached to Z-0568.1. These investments may preserve vital services and address environmental priorities. They do not materially advance a one million homes strategy, nor do they function as deficit containment.
If the one million homes promise is the benchmark, this package does not operate as a housing production plan. There is no visible systemic reform in these documents targeting permitting timelines, infrastructure concurrency, land supply constraints, or regulatory cost stacking. A one million homes strategy would be dominated by those structural levers. The supplementals are dominated by account shifts, capital preservation, climate investments, and compensation funding.
On environmental protection, the package clearly aligns with that commitment. Transportation includes substantial Carbon Emissions Reduction Account spending, hydrogen and charging infrastructure investments, and coordination with Ecology for emissions tracking and approved methodologies. That language appears in the transportation bill sections governing use of climate related accounts and emissions reduction accountability. Environmental priorities are not being deprioritized in this cycle.
On public safety and hiring more police, the package supports system operations and funds collective bargaining for law enforcement related units, as reflected in the OFM compensation documents and bargaining unit listings. It also funds corrections capacity expansions, which can be found in the operating bill sections addressing corrections facility operations. What is not clearly visible in this supplemental is a large, discrete, measurable statewide police hiring initiative.
As to constitutionality, nothing in these documents appears facially unconstitutional. The Legislature has authority to appropriate, transfer, and amend statutory funding structures. The more relevant issue is statutory purpose and public trust. Using the Climate Commitment Account to fund a large affordability tax credit remittance is a policy choice that broadens the practical meaning of what climate revenues support. The evidence is in the Department of Revenue section of Z-0559.2 where Climate Commitment dollars fund Working Families Tax Exemption remittances.
In total, this package preserves services, protects climate investments, maintains capital commitments, and stabilizes the biennium through fund shifts and compensation funding. It does not read as a structural deficit correction. It does not read as a housing acceleration strategy. It does not materially reduce the underlying cost drivers families face. It reads as a continuity budget under fiscal stress, relying on dedicated accounts and internal flexibility to manage the gap rather than reset the trajectory.
Review the proposals here: https://ofm.wa.gov/budget/state-budget-2025-27/26-proposed-supplemental/budget-bills-2026-supplemental-budgets/
