Budget squeeze has Washington eyeing new route for sales tax dollars

In a move that feels more like a giant game of financial musical chairs than traditional budgeting, Washington lawmakers are considering a bill that would reroute state sales tax money to better fund green transportation efforts—pulling it away from traditional general fund spending.

It’s coming very late in the session as the majority party, the democrats, scramble to find new sources of revenue. The proposal would not be a new tax but more of a robbing Peter to pay Paul situation.

Critics argue it’s taking money that would normally help fund schools and redirecting it to transportation efforts, which are typically paid for with the state’s gas tax.

Senate Bill 5802, backed by bipartisan sponsors—Democratic Sen. Marko Liias (D-Everett) and Republican Sen. Curtis King (R-Yakima)—aims to rebalance how the state splits up its sales tax dollars.

The bill already got a thumbs-up from the Senate Transportation Committee on April 4 and is now up for a hearing in the Senate Ways and Means Committee on Wednesday. That same hearing will also feature testimony on a big package of new revenue proposals, all designed to plug a $16 billion hole in both the general fund and transportation budgets.

Where will the money go?

Starting in July 2027, 0.1% of the state’s 6.5% sales tax would be permanently funneled into the Multimodal Transportation Account. That fund pays for everything from buses and ferries to pedestrian paths and rail systems—basically, anything that doesn’t involve you driving solo to work.

The bill also cancels or delays several previously planned fund transfers. For example, annual $57 million payments from the state’s Public Works Assistance Account and General Fund to transportation programs—part of the 2022 Move Ahead Washington package—are now off the table, at least through 2027. Another $111.9 million that was supposed to support the 2015 Connecting Washington program is also getting the axe.

On top of that, the bill speeds up repayment of some long-delayed tax bills for the Tacoma Narrows Bridge and SR 520 Floating Bridge projects. Originally, the state planned to start repaying deferred sales taxes 24 years after the projects were completed (2031 and 2041, respectively). Now, those payments will begin by the end of fiscal year 2026. Toll revenues are expected to eventually reimburse the state’s accounts—by 2032 for Tacoma Narrows, and by 2050 for SR 520.

Supporters say the net effect is more stability. “This is about making sure our budget can handle future bumps while keeping critical transportation investments moving forward,” Sen. Liias said during the committee he chairs. “It’s a balanced, long-term approach.”

Not everyone’s on board. Critics worry this kind of tax-shuffling could hurt schools down the line.

Will schools and other programs suffer?

Andrew Villeneuve, executive director of the Northwest Progressive Institute, testified against the bill, arguing that taking any money out of the General Fund—even just 0.1% of sales tax—puts pressure on other public services, especially education.

“With potential federal cuts looming, now’s not the time to start picking away at funding that supports K-12 schools, colleges, and universities,” Villeneuve warned. “Transportation is important, but not at the expense of our constitutional duty to educate Washington’s kids.”

Supporters counter that the move actually strengthens the operating budget by giving it more breathing room in the short term—about $500 million worth—and helps cover costs in the upcoming 2025–27 biennium.

The bill includes two new $304.7 million General Fund transfers to transportation for the 2027–29 period, likely as a way to soften the financial blow over time.

Bottom line? SB 5802 is a complicated mix of cuts, shifts, and early payments that could reshape how Washington pays for its roads and rails.

Matt Markovich is the KIRO Newsradio political analyst. Follow him on X. Read more of his stories here.

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