Strategic priorities
In This Section
Building homes people can afford: Our investment in housing initiatives
Washington’s population is rapidly growing, with an expected increase of more than 166,000 adults during the 2023–25 biennium. With housing stock expected to grow by 51,212 units over the same biennium, it’s easy to see that bold investments are required to reverse the existing housing shortage and meet demands. Rising rental costs driven by the lack of affordable housing has increased eviction rates, generating record high numbers of people facing homelessness and housing instability in our communities. Marginalized groups face more barriers than their white peers in accessing housing services after decades of biased housing, employment, and government policies. Washington is dedicated to improving access and availability of affordable housing, while addressing the underlying causes and ongoing effects of our statewide housing shortage.
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Proposal
Expanding affordable housing with vital interventions
Housing costs are increasingly burdening working families, making it difficult for adults to absorb essential costs such as child care and groceries. Almost half of Washington renters spend more than 30% of their income on housing costs, with a quarter of Washington renters paying more than 50% of their income on housing costs. Washington’s rapidly growing population is outpacing available housing, generating a housing shortage and need for 1.1 million more homes in the next 20 years. Almost 650,000 of these houses will need to be affordable for low-income households.
In 2023, there were more than 16,500 evictions filed in Washington, largely due to unpaid rent. Rising rents have left more than 198,000 people unstably housed or at risk of becoming homeless.
The proposed 2025–27 budgets continue and add investments for building more affordable housing units, while incentivizing local governments to help by making it easier to get building permits and lowering fees for new utility connections.
Continued capital budget investment in the Housing Trust Fund will support developing and preserving affordable housing for marginalized populations who have a harder time finding homes. This includes Tribal communities, individuals with intellectual and developmental disabilities, and Medicaid-eligible individuals who qualify for housing support through the Apple Health and Home Permanent Supportive Housing program.
The operating budget continues the work of Consolidated Homeless and Youth Homeless Grants programs, which successfully prevent adults and youths from becoming unhoused. In 2023 alone, the Consolidated Homeless and Youth Homeless Grants programs helped more than 19,500 households. Through the Department of Commerce’s Office of Homeless Youth, an impressive 92% of youth who accessed prevention services in the last year remain housed today.
A number of housing programs depend heavily on revenue from document recording fees, which have declined rapidly in recent years due to reduced property transactions. The proposed operating budget addresses a shortfall created by falling fee collections, maintains crucial intervention programs at existing service levels, and provides stability to those at risk of homelessness.
Affordable housing and homelessness budget highlight items
Affordable housing and homelessness summary of investments, 2025–27 biennial
This chart highlights select investments proposed by the governor in this budget area. The chart below provides the full list of investments. For more details about the items in the chart, refer to the Budget Recommendation Summaries (RecSums), organized by agency.
Grand total: $905,323,000
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Sending proven interventions into action: Expanding access to mental health and substance use disorder treatment
Following several years of trying to restore funding that was cut deeply during the Great Recession, Gov. Inslee launched a plan in 2018 to transform Washington’s behavioral health system. The rebuilding and transforming is paying off. New facilities and various reforms have reduced wait times for certain behavioral health services from months to days. An innovative new teaching hospital at the University of Washington opened this year, and the state broke ground on a new forensic hospital in Lakewood. Thousands of people are able to find care in their own communities at new facilities.
Washington’s growing population — combined with the urgent risks posed by opioids, such as fentanyl — require continued action. Any reductions will slow this progress. That’s why Gov. Inslee’s 2025–27 biennial budget continues delivering proven solutions and community-based care. This is especially important for communities disproportionately impacted by stigma and other barriers to accessing appropriate services.
5-8%
Of patients who visit the Emergency Department (ED) for nonfatal overdose, 5-8% die in the following year.
$1M
More than 24,000 Washington ED visits were for nonfatal overdoses in 2022. Investment of $1 million will provide EDs with real-time clinical guidance on prescribing medications for opioid use disorder (MOUD), and 24/7 follow-up appointment scheduling to connect these patients to treatment.
↑58%
Demand for Community Behavioral Health Supports (CBHS) is estimated to increase by 58% in the current fiscal year.
$106M
Funding of $106 million for Community Behavioral Health Supports will provide services for individuals transitioning from inpatient psychiatric care to community settings.
↑8%
Demand for competency evaluation and restoration services is estimated to grow by 8% each year. Growth has spiked in the past, leading to 60% overall growth since 2018.
350+
The new 350-bed Forensic Center of Excellence at Western State Hospital broke ground this year, and Washington continues to build capacity at other state and community facilities. In addition, legislation is proposed that will reduce demand for state services.
Continue filling gaps in behavioral health capacity
Treatment for mental illness and substance use disorder requires a wide range of specialized services and care. When there are gaps in the system, people fall through them. That’s why the state has been building and opening facilities that provide specialized care when and where people need it.
To meet needs and save lives, Governor Inslee’s budget continues investments in state capacity to treat patients and in community-based care. This includes services at state-funded hospitals and behavioral health facilities, with new construction such as the Brockmann campus in Clark County and the Forensic Center of Excellence at Western State Hospital. The newly opened UW Behavioral Health Hospital provides care and treatment, while also serving as a teaching hospital to train future behavioral health practitioners.
With opioid-related deaths continuing to rise rapidly in Washington state, funds are urgently needed to apply proven strategies for connecting people to treatment and recovery. The 2025–27 operating budget adds $22 million, all obtained through opioid-related settlements, to fund these services funding for these services. Examples include providing medications for opioid use disorder in emergency departments and schools. The state is also pursuing strategies to expand treatment and support more youth and young adults, pregnant people, and communities disproportionately impacted by the opioid crisis. Fern Lodge Behavioral Wellness in Stanwood, for example, will provide culturally sensitive healing and support through a partnership with the Tulalip Tribes. In the capital budget, a new $20 million investment from the State Building Construction Account is added for a substance use disorder clinic in Poulsbo that will help serve the Suquamish Tribe and neighboring communities in Kitsap County.
An ecosystem of behavioral health care that spans prevention and early intervention all the way through treatment and recovery leads to a healthier, safer Washington. We’re building on what works — making it easier to get the care that people need, at the right time and in the right place.
Community-based long-term civil commitment (LTCC) capacity
To better meet people’s needs, Washington state is building an ecosystem of community-based care while also increasing capacity at state-run facilities. This approach will help people connect with services earlier, closer to home, and at the appropriate level of care for their needs.
The map below shows the locations and estimated numbers of community-based long-term civil commitment (LTCC) beds by county, based on data available in November 2024. It includes:
- 275 beds currently contracted by the Health Care Authority (HCA) for fiscal year 2024
- 79 beds currently owned and operated by the Department of Social and Health Services (DSHS)
- 48 future beds planned at facilities owned and operated by DSHS
- 109 future beds projected for HCA contracts
The projected future total comes to 511 beds based on current plans. Counties still in need include Spokane, Benton, Chelan, Whatcom, Kitsap, Grays Harbor, and Clark.
Behavioral health budget highlight items
Behavioral health summary of investments, 2025-27 biennial
This document highlights select investments proposed by the governor for opioid use disorder response and behavioral health. The chart below provides the full list of investments. For more details about the items in the chart, refer to the Budget Recommendation Summaries (Rec Sums), organized by agency.
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Putting climate dollars and people to work across Washington: Building Washington’s clean and healthy future
Washington has enacted nation-leading policies to reduce pollution and help communities grapple with the effects of increasingly severe weather and sea rise. Environmental justice and equity are the center of these policies. Our clean energy economy is putting thousands of people to work and creating new industries on both sides of the state.
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Proposal
Helping communities and addressing the climate crisis
Washington stands as a national leader in fighting climate change, enacting policies that will reduce the harmful pollution that contributes to dangerous extreme weather and health impacts, while building a clean energy economy. In 2021, Gov. Inslee signed the Climate Commitment Act (CCA) into law. The CCA created a market-based cap-and-invest program to require the state’s largest polluters to reduce greenhouse gas pollution. The CCA is being put to work across Washington to benefit families, schools, workers, and more.
Climate action benefits families and communities in Washington, with projects all over the state that are improving Washingtonians’ health and quality of life and creating jobs and economic growth through innovative businesses.
Experts at the Washington State Department of Commerce estimate our power needs will nearly double by 2050. Nearly one million more people live in Washington today than in 2013. More people are switching to electric vehicles and electric heating systems. The rise of AI and other technology advancements is a growing factor in energy demand. Extreme weather strains our grid during cold snaps and heat waves.
We need more energy. We can meet a significant portion of energy needs by using what we already have more efficiently. Building efficiency standards and weatherization help us do this. The rest requires us to build and connect to more clean energy sources.
Inslee is proposing building on previous investments, with plans to invest in five key areas:
- Advance environmental justice and reduce the impacts of climate change on those it hurts the most
- Decarbonize the building sector
- Develop clean energy infrastructure and jobs
- Advance clean transportation and electric vehicles
- Make Washington more resilient to the effects of climate change
Climate and energy budget highlight items
Climate and energy: Summary of investments, 2025-27 biennial
Note: This policy brief highlights select investments proposed by the governor in this budget area. The chart below provides the full list of investments. For more details about the items in the chart, refer to the Budget Recommendation Summaries (RecSums), organized by agency.
Grand total: $1,996,175,000
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Ensuring services and programs are delivered by skilled employees
Washington’s state employees provide the essential services that our communities depend on. They teach and provide care for our children. They operate our ferries and plow snow off our roads. They inspect food for safety. They provide skilled care to people in our veterans’ homes, behavioral health facilities, and corrections institutions. These are important jobs, and when we don’t have skilled people to perform these important jobs, services are delayed and people are harmed.
Staffing shortages can pose risks for those in the state’s care or impact the state’s ability to reliably operate the ferry system. They can also be costly, increasing overtime costs or jeopardizing federal funding.
The 2024 Washington State Employee Compensation Survey found the state’s compensation still lags behind competitors in other in-state private and public employers, as well as other state governments. Fair compensation, affordable benefits, and supportive workplaces are necessary to attract, retain, and motivate the skilled professionals who keep Washington running.
Collective Bargaining Agreements (CBAs) are central to these efforts. CBAs are labor agreements that cover about 80% of the state’s workforce — including human services, general government, community colleges, and Washington State Ferries. These agreements also secure health care benefits for both public and school employees.
For the 2025–27 biennium, the Office of Financial Management reached 32 agreements that are tailored to the state’s workforce and operational needs. Key provisions include:
- Maintaining the health care premium split to keep benefits affordable.
- General wage increases to address the impacts of inflation.
- Competitive pay for low-wage workers.
- Targeted wage increases for roles with recruitment and retention challenges.
- Premium pay for employees who accept positions in hard-to-fill environments or shifts.
The total 2025-27 cost of these bargained agreements and other compensation increases for workers who deliver vital care to our most vulnerable neighbors and essential services to our broader community is $2.6 billion. These investments lead to a more stable economy and improve the quality of life for everyone.
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Sustaining law enforcement and firefighter pensions
The Law Enforcement Officers’ and Fire Fighters’ (LEOFF) pension system provides a retirement benefit to our first responders who put their lives on the line to protect us. Governor Inslee’s proposal builds on our state’s 20-year history of prudent management. Due to the state’s successful investment practices, LEOFF Plan 1 has an approximate $2 billion surplus and LEOFF Plan 2 is fully funded. Under the proposal, LEOFF Plan 1 and LEOFF Plan 2 will remain separate, but their funding is combined into a single, stable pool dedicated to paying benefits.
The proposal leaves a $1 billion buffer in the LEOFF system while also allowing for $1 billion previously contributed by the state to the LEOFF Plan 1 system to be returned for general state purposes. This approach ensures fairness for all retirees, maintains safeguards that prevent sudden cost spikes, and responsibly manages these plans. The existing LEOFF 2 Board will transition to the LEOFF Board and will include representation for LEOFF 1 members. The state will request an Internal Revenue Service (IRS) review to confirm that all measures meet federal standards, while local disability boards retain their full authority over medical benefits.
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Revenue proposal
Reinforcing Washington’s foundation for a more resilient future
Governor Inslee’s proposal reflects his commitment to putting working families first. Washington’s tax system has placed too much burden on working families, earning the shameful distinction as the most unfair system in the nation. Low-income families pay six times the share of their income compared to the ultra-wealthy. Recent measures, such as the Working Families Tax Credit and the capital gains tax, have helped reduce this imbalance. We’ve moved from having the most unfair tax system to the nation to the second most unfair, but more work remains. This proposal includes a wealth tax and business and occupation (B&O) adjustments to ensure those who benefit most from our economy pay their fair share. These changes will protect our progress on services and initiatives that improve lives and keep our economy among the strongest in the nation.
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Proposal
Our tax system is in need of modernization
Washington’s tax system, built nearly a century ago, is failing to meet the needs of our rapidly growing state and is increasing income inequality. Over the past decade, nearly a million more people have made Washington their home, driving up demand for vital services like schools, housing, health care, and child care. These essential services are disproportionately funded by working families, while the ultra-wealthy benefit the most and pay the least under our regressive tax system.
At the same time, costs are rising, federal pandemic-era support has ended, and revenue growth is slower than expected. To address these challenges, Governor Inslee has ordered a spending freeze and reduced nonessential services. While proposing sensible budget reductions, the governor remains focused on maintaining progress in education, behavioral health, housing, and other systems that support safe, healthy families and a strong economy.
History shows the long-term consequences of cutting too deeply during tough times. After prior recession reductions, it took nearly a decade to rebuild the state’s behavioral health system. The state struggled for years to fully fund K-12 education and make college affordable. Access to affordable housing lagged behind demand. To avoid repeating our past mistakes, we must maintain momentum in these areas and modernize our regressive tax structure to better serve all residents.
As leaders look at options for balancing Washington’s budget, protecting progress and putting working families first must remain the focus at the forefront.
Gov. Inslee proposes two reforms that will protect essential services and make Washington’s tax system more fair.
Wealth tax
By placing a modest 1% tax on worldwide wealth over $100 million — affecting roughly 3,400 of our state’s wealthiest individuals — Washington can establish a new, reliable revenue stream that most residents will never pay or even know someone who does. This approach would generate $3.4 billion to invest in essential services like education, housing, and child care. This reform makes sure the .0004% of people who have benefited the most from our economy contribute their fair share so we can protect our progress on the safety nets and systems that keep us all safe, healthy, and secure.
Business & occupation (B&O) tax reform
The business and occupation (B&O) tax is based on a company’s income and helps pay for essential state services. Under this proposal, only businesses making over $1 million a year in the “service and other activities” category would see a 20% increase. This change impacts 20,000 businesses and would last from October 2025 until December 2026, after which the rate reverts to the pre-October 2025 level. Starting in January 2027, all B&O tax rates would see a slight 10% increase.
Most small businesses wouldn’t be affected since they qualify for a small business tax credit or have an income below the current tax filing threshold under current rules, which remain unchanged. If they don’t pay B&O tax now, they won’t pay it under this proposal. By placing more of the responsibility on larger, high-earning businesses, we can support critical state needs.
Other revenue legislation
The governor’s budget proposal includes two additional impacts to general fund revenue collections. Legislation updating the administration of unclaimed property by the Department of Revenue will result in a modest increase in revenue. Additionally, the percentage of state sales and use tax shared with compacting Tribes is increased from 60% to 100% for those that have completed a qualifying capital investment. This change results in a reduction to state revenue and an increase in tax revenue for Tribes.
Revenue raised over the next four years for essential services
| FY 2026 | FY 2027 | FY 2028 | FY 2029 | 4-year Total | |
|---|---|---|---|---|---|
| Wealth Tax | $0 | $3.4 billion | $3.5 billion | $3.4 billion | $10.3 billion |
| B&O Tax Increase | $383 million | $662 million | $775 million | $805 million | $2.6 billion |
| Unclaimed Property | $2.1 million | $2.4 million | $2.9 million | $3.3 million | $10.7 miliion |
| Tribal Compact | $0 | $0 | -$12.7 million | -$26.2 million | -$38.9 million |
| Total | $385 million | $4.0 billion | $4.3 billion | $4.2 billion | $12.9 billion |