OLYMPIA, WA – Democrats in the Washington Legislature released a budget deal Wednesday balanced with one-time maneuvers, siphoning of rainy day reserves and slashing of child care funding.

“There will be a lot of people who are disappointed by this budget. We knew that,” Sen. June Robinson, D-Everett, chair of the Senate Ways and Means Committee, said Wednesday morning. “I think we did the best we could with the resources that we have available to us.”

The spending blueprint emerged less than 24 hours after Democrats celebrated House passage of a new income tax on millionaires that they hope will generate billions of dollars and put the state on more stable financial footing. But before that, they’ll confront an estimated $878 million budget hole in 2027.

The $79.4 billion plan makes changes to the $77.8 billion two-year budget lawmakers passed last year, which covers state funding for July 1, 2025, to June 30, 2027. It’s fueled in part by an $880 million withdrawal from the rainy day fund.

The biggest pots of new spending deal with addressing the state’s growing lawsuit payouts for government misconduct and grappling with major federal changes to safety net programs like Medicaid and food stamps. The takes and puts reflect a net increase of $621 million in new spending.

A handful of curtailed tax breaks would raise some new money in the near-term. Revenue from the income tax is not expected until 2029, when payments are set to begin.

Votes on the deal are planned in the House and Senate on Thursday, the last day of the 2026 legislative session. The agreement cannot be amended, leaving lawmakers with the option of an up or down vote. Gov. Bob Ferguson, a Democrat, will then have roughly three weeks to sign it.

The lead Republican budget writer in the House said he’s opposed and so too is his caucus.

“It’s just more reckless spending. Had my side of the aisle been in the room with the 3 million people plus that we represent, maybe we could have come up with, maybe, something a little bit better,” said Rep. Travis Couture, R-Allyn.

The budget deal released Wednesday is “not wildly different” from what moved off the floor of the House and Senate last month, Robinson said. Though the total spending shakes out a shade higher than either the House or Senate had initially proposed.

“This was a hard one,” she said.

Sen. Chris Gildon, R-Puyallup, the GOP budget lead in the Senate, called Democrats’ spending plan an “$80 billion House of Cards that’s built on a very shaky foundation.”

“It’s going to force really difficult budgeting decisions in future years,” Gildon said.

He and Couture were troubled by reliance on the rainy day fund to get through this budget and an anticipated $878 million in red ink in the early part of the next.

“I believe it’s two Washingtons represented in this budget, one who gets cut from and one who was not represented at the table, and one who gets what they need if their friends are in power,” he said.

The cuts

The heftiest cut comes for child care providers who serve low-income families that get state subsidies from the Working Connections Child Care program, to the tune of $143 million. That proposed cut lands in the middle of what the House and Senate had separately proposed last month.

The biggest portion of that reduction is from a change in how the state reimburses day cares. Currently, providers can receive a full month of subsidies even when a child who qualifies only attends one day that month.

The budget agreement would rework that policy. If children attend one to eight days in a month, providers will get paid for 11 days. If they attend eight to 15, that’s worth 15 days. And more than that gets providers a full month of pay, budget writers said.

Ferguson had initially floated capping enrollment in the program, but lawmakers balked at that idea.

Public education, from pre-school through college, won’t escape Democrats’ budget knife but, in some cases, the cuts won’t be as deep as feared.

The popular Transition to Kindergarten program for four-year-olds will get $27 million less, roughly a middle ground between the House and Senate budgets. Supporters say it will result in a loss of as many as one-third of the program’s 7,266 slots.

And the Legislature is on course to renege on a promised $100 increase per student in local effort assistance, or LEA, for eligible districts in the upcoming school year. The extra dollars were to go to districts that cannot raise the same amount per student from local levies as property-rich districts can. This move will save the state $25 million.

Universities and community colleges won’t suffer a major hit because Democrats are sticking with their plan to make a one-time shift of $240 million from the capital budget into the operating accounts of two-year and four-year institutions.

That money would come from an account for higher education building projects. House and Senate capital budget plans call for backfilling the construction funds using bonds.

An across-the-board reduction for higher education will require paring administrative costs.

On the spending side, the largest new line item is nearly $1 billion in the current budget to pay for the state’s ballooning legal liability. Robinson had previously called a similar sum in the Senate proposal a “significant down payment” to deal with the issue.

Reserves and revenue

Budget writers envision backfilling the $880 million in spending from reserves by sweeping an overfunded pension account for police and firefighters in 2029, at the end of the next budget cycle.

The House originally backed redirecting $330 million from the state’s carbon auctions to fund tax rebates for some residents and replacing that with money from the pension fund, but that idea didn’t make the final budget released Wednesday.

Both the House and Senate proposed tapping the state’s rainy-day fund to make ends meet. The Senate sought to do so at a lower level — $750 million. The $880 million withdrawal in the final plan is in line with what the House and the governor called for.

The budget deal projects nearly $1.3 billion in reserves at the end of this biennium, and $3.3 billion at the end of the next.

Democrats’ budget includes $36 million in new revenue, with money coming in from cutting tax breaks for data centers, prescription drug wholesalers and insurers.

But it also reflects a reversal in the state’s recently increased estate tax. That rollback is expected to pass before the session ends.

The budget assumes $2.3 billion in the next budget cycle from the income tax — if it survives challenges in court and at the ballot box.

And it directs $60 million from the Climate Commitment Act to wildfire funding that Commissioner of Public Lands Dave Upthegrove pushed for.

That sum would raise the funding to $120 million for the full budget cycle, in line with the sum envisioned when the Wildfire Response, Forest Restoration, and Community Resilience Account was created in 2021.

This story first appeared on Washington State Standard.