Former Gov. Christine Gregoire blasts WA Democrats’ tax strategy, warns businesses will leave state

Former Washington Gov. Christine Gregoire is publicly breaking with many fellow Democrats over the state’s tax-and-spending strategy, warning lawmakers they risk driving businesses and wealthy residents out of Washington.

Speaking at the Association of Washington Business Spring Summit in Vancouver last week, Gregoire sharply criticized Democratic lawmakers and Governor Bob Ferguson for relying on new taxes to address Washington’s multibillion-dollar budget shortfall instead of cutting spending.

“I would suggest to you, we don’t really have an income problem, we have a spending problem,” Gregoire said. “And we’re answering it by stacking one more tax, one more rule, one more regulation, and the one thing that the business community doesn’t need is that lack of predictability.”

WA Democrats can’t see the consequences of their actions, Gregoire says

Gregoire, a Democrat who served as governor from 2005 to 2013, questioned whether lawmakers fully understand the economic impact of the policies they are passing.

“If you haven’t come from it, you don’t know it, you don’t understand it,” Gregoire said. “We have to educate from the outside in. We have to explain things like sales tax on services you thought was a nice attack on big business, and here are the small businesses that have been tremendously adversely impacted, as well as the customers.”

The comments come as Washington Democrats approved the new 9.9% income tax on millionaires that lawmakers say will generate more than $3 billion annually, starting in 2029. Ferguson signed the measure into law earlier this year as lawmakers sought billions in additional revenue to close projected budget deficits while paying for rising costs and needs for services across the state.

Gregoire also criticized lawmakers for increasing the state estate tax rate from 20%, already among the highest in the nation, to 35%, saying legislators failed to understand the economic consequences of the move. According to Gregoire, lawmakers could not explain the long-term fiscal impact when she pressed them for details. She warned that continued tax increases could accelerate the departure of businesses and high-income residents from Washington.

“They will not pay … they’re leaving,” Gregoire explained. “When they leave, they stop paying capital gains. When they leave, they stop giving significantly to philanthropy, which would otherwise be necessary by government. So, do you understand? Do you see the consequences of what you’re doing? And the answer is no.”

State spending has more than doubled since Gregoire left office

Gregoire also pointed to what she described as unsustainable growth in state spending. When she left office in 2013, Washington’s operating budget stood at roughly $33 billion. Today, it has grown to about $80 billion. Rather than addressing spending growth, Gregoire argued lawmakers increasingly frame the issue as a revenue problem at the end of each legislative session. Supporters of the new taxes say the state needs the projected billions in revenue to fund education, housing, healthcare, and other public services as costs rise statewide.

“I think that’s a little bit too much of a growth, and yet, how we find ourselves at the end of every legislative session now is in the hole and projected to be in the hole,” Gregoire explained.

Gregoire’s remarks also highlight growing divisions across the state among progressive and moderate Democrats over taxes, business policy, and state spending.

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