SPOKANE, WA – Facing a “fiscal cliff,” the Spokane Valley City Council voiced concerns about the Legislature’s ongoing deficit with state lawmakers on Monday, who say more tax hikes are on the way.
The Democratic majority filled a multi-billion-dollar deficit back in April by passing the largest tax hike in state history. Republicans proposed alternatives to close the shortfall without increasing taxes, but their peers across the aisle declined to support them. Now, the state is facing another $2 billion budget gap.
State Democrats have already hinted at proposing an income tax on millionaires, much like the novel wealth tax that Gov. Bob Ferguson opposed last year. Other ideas from the majority include raising the state gas tax again, along with licensing fees and other charges, and imposing a highway usage tax.
“Obviously, the state is facing a pretty large fiscal cliff,” Councilmember Al Merkel said Monday during a meeting with state lawmakers representing the city. “What we hope for here at Spokane Valley is to make sure that the state doesn’t start evaluating the option of pushing more mandates down to the cities.”
Rep. Suzanne Schmidt, R-Spokane Valley, said she’s been working on “getting ready to play defense.”
Emails are already hitting her inbox warning of tax hikes ahead in the 2026 legislative session. State Democrats have enough votes to pass pretty much anything with a simple majority in both chambers.
Merkel owns a small business and said this January will be the first year he raises prices, not because of demand but because state policies are driving up costs. Rep. Rob Chase, R-Spokane Valley, said the majority sees it as a “revenue problem,” despite the deficit arising due to record-high spending levels.
Chase says it’s time for the Legislature to tighten its belt, as many jurisdictions are doing in response to state tax hikes. Sen. Leonard Christian, R-Spokane Valley, said he wants to “defund” programs that misuse public funding amid recent whistleblower claims about the Community Reinvestment Program.
While Ferguson has hinted that he’s open to cuts, Schmidt briefed the council on a few tax proposals.
“The first one is the income tax for anyone making over $1 million, that was 9.9%,” she said, noting that the state constitution currently prohibits income taxes. “I would imagine licensing fees gonna go up and gas tax gonna go up … I think we’re also going to look at probably … a highway usage fee.”
Schmidt said the transportation budget is struggling because people are not registering their vehicles.
Christian said another issue with the transportation budget is that the state spends billions of dollars on fish passages to restore the salmon population. The state’s Medicaid program poses another problem as the federal government tries to prevent illegal immigrants from receiving taxpayer-subsidized care.
Democrats have repeatedly claimed that illegal immigrants can’t receive Medicaid; however, the state explicitly provides coverage for “adults with certain immigration statuses, including those without one.”
“They’re saying it’s not Medicaid. Well, that’s what Apple [Health] is,” Schmidt said, noting the state recently allocated $150 million toward the program. “We’re fighting the federal government — even though we know we’re out of compliance — and I get it, but it’s an ideology thing; you know that.”
“They’re coming up against a short session with a failing budget across the board,” Christian said in response. “I would not want to be leadership in the Democratic Party, just to be honest with you.”
