OLYMPIA, WA – Washington state legislative leaders met with reporters in Olympia on Friday to discuss priorities for the 60-day legislative session that begins on Monday, with several media outlets, including The Center Square, asking about potential fraud involving taxpayer subsidies to daycare providers.
With the state facing another budget deficit despite majority-party Democrats pushing through the largest tax increase in state history in 2025, there is talk of a millionaire’s tax to generate new revenue. There is also talk of potential capital flight to avoid the 9.9% tax on income above $1 million.
Republican budget leaders have proposed a “no new taxes” budget and suggested on Friday that state agency savings may be found if misuse of taxpayer money is revealed.
As reported by The Center Square, last month, Rep. Travis Couture, R-Allyn, released a budget framework that cuts $3.7 billion from the next fiscal budget, as the Office of Program Research showed that Washington faces a projected $4.3 billion deficit for the 2027-29 biennium, assuming current spending levels remain the same.
Among the suggestions discussed on Friday for cutting wasteful spending was identifying potential fraud, as recently reported by The Center Square, regarding taxpayer subsidies to daycare and adult family home providers by the Department of Children, Youth & Families.
“We can’t seem to get anyone from DCYF to explain to the Legislature what controls they’ve put in place,” Couture said. “What it seems like to me is they were dishing out payments to providers and maybe asking questions later. And that is a problem not just at DCYF, but at many state agencies.”
A viral video posted just after Christmas spurred an avalanche of news coverage of possible child care fraud in Minnesota, with similar allegations spreading to other states, including Washington.
Couture has prefiled legislation, House Bill 2058, that says “any private entity that receives public money through grants must hire a third-party auditor to conduct an audit of the entity. The third-party auditor must receive approval from the state auditor to conduct the audit.”
The audit would include the total amount of state and federal funds received by the entity, as well as an itemized accounting of how all public funds were spent, among other criteria.
“2058 doesn’t just target child care providers,” Couture said. “It is for all public dollars going to private entities.”
Rep. Timm Ormsby, D-Spokane, told reporters he has seen no evidence of actual fraud within DCYF taxpayer subsidies for childcare providers, but has heard media reports. He suggested that State Auditor Pat McCarthyand Gov. Bob Ferguson should be able to identify potential fraud.
“I am fine with accountability and transparency. I would like to know what controls are already in place,” Ormsby said. “We have internal audits. The Joint Legislative Audit Review committee serves that function, and we also have a state auditor.”
Ormsby said if those controls are not enough, then he’s open to looking at Couture’s bill.
“I have not seen any evidence of childcare fraud,” he reiterated. “That doesn’t mean that it doesn’t exist.”
Ferguson was asked about potential fraud on Friday and if he would support an outside audit.
Ferguson said Washington child care providers are already closely monitored by DCYF.
“We literally send someone every single year to every provider, so I would say we take that seriously,” he said. “If we see credible allegations of fraud, we take that seriously.”
As reported by The Center Square, former State Auditor Brian Sonntag, a Democrat who held the office for 20 years, suggested a thorough audit of DCYF is warranted.
“The public has every right and every expectation to know what’s going on with their public money,” Sonntag told The Center Square.
TCS also asked Ferguson about Attorney General Nick Brown’s news release last week, encouraging people to call police or report to the hate crimes hotline if they see reporters or independent journalists “harassing” members of the Somali community while investigating potential fraud.
“If somebody is knocking on the door and there are kids inside, I can understand why someone is concerned,” the governor said. “We have communicated with child care providers to make sure they understand what their rights are. That’s up to the individual, and if they feel like there’s harassment, that’s up to them.”
Ferguson did not respond to The Center Square’s request to publicly state his support for journalists working to investigate potential fraud and their First Amendment rights.
“I stand with the Somali childcare providers who have experienced targeted harassment, and condemn the surveillance campaign promoted by extremist influencers,” new Seattle Mayor Katie Wilson wrote on X on New Year’s Day, including a statement warning against filming day care centers.
That prompted a reply from U.S. Assistant Attorney General Harmeet Dhillon on X: “Asking questions/citizen journalism are NOT HATE CRIMES in America — they are protected speech, and if Seattle tries to chill that speech, @CivilRights will step in to protect it and set them straight!”
“Govern yourselves accordingly!” she added.
